(I'm cleaning out my backlog of posts that I never finished. I wrote this piece on timeshares last year, then became distracted by the fact that our country had elected a reality TV actor as president to post it. After learning that Trump sells timeshares - of course he does - it seemed only right to post now).
Question: What's the difference between syphilis and a timeshare?
Answer: You can get rid of syphilis.
I have, on occasion, railed against stupid purchases like a fancy cell phone and new cars. While these certainly affect the average consumer, they are also one-time mistakes that can be moved on from. As such, they're the worst possible purchase one can make.
That honor, in my humble opinion, would go to the venerable timeshare. I'm assuming everyone knows what timeshares are, but just in case: A timeshare is essentially a fractional ownership in a property, usually a vacation rental. For X dollars, you get some set amount of time, typically one or two weeks a year at the place. There are minor variations within the plan; sometimes you buy points that can be used for a number of resorts within a particular company's portfolio of properties, but that's the gist of it.
Running through the non-financial aspects of timeshares should be sufficient to dissuade most people from buying into these disasters. They're inflexible, tying you to one property. They are also disturbingly permanent (more on this later), meaning you better fucking love Orlando during the second week of August after your kids grow through their Mickey Mouse phase.
And yet I see people still buy these disasters.
The economics don't make sense. Timeshares don't really save very much money over the standard way of vacationing (i.e., just renting a hotel room). The place isn't "yours"; you pack your stuff in and out like anyone else would. There are no discounts or bargains in the timeshare world (unless you want to buy one, more on that later).
But short term value is secondary to long term considerations. Timeshares are permanent. This is the most significant risk in acquiring one, probably. Because a timeshare is an indefinite ongoing obligation for continued annual expense. Besides the initial cost to purchase the timeshare, you've got the annual fees. In addition to the initial cost of the timeshare, you have to pay a maintenance fee each year, ostensibly to maintain the property. This is, in essence, a blank check for the timeshare company to milk you. $500-2,000 a year for the privilege of using your week or two.
The flytrap really closes when you wise up and decide to get rid of your timeshare. Because it's not easy - there are professional organizations, an entire industry's worth, aimed at getting you out of your timeshare. These folks make no secret you're going to have to pay some pretty hefty fees to escape (Full disclosure: I have no idea how they do it; to be honest, they could also be scammers, but I think it's a real thing).
Timeshare salesmen will tell you that your ownership can be sold, which is a cruel joke. Moreover, these same companies claim timeshares appreciate in value, which is crap as we'll see. The illiquidity of this "investment" is nothing less than total. Every penny you pay for a timeshare is locked down tight, trapped in a place where you can't put it to work in another investment. Like a house purchase, only worse, because no one wants to buy them*. Don't believe me? Here are Ebay listings of timeshares for sale. Most of them are a buck, plus the current owner will pay the cost to transfer the property to you and, often, pay the first year's maintenance fee just to get someone to take it off their hands. I mean, how shitty does something have to be when you can't get rid of it?
On that note, I should also mention that you can't even give them away - a lot of charities won't accept them. I've heard some craftier timeshare owners who have given their timeshares to fraternities and sororities as a gift for their annual retreat; by the time the greeks realize the real deal, the paperwork's signed. At this point, we're really getting into moral issues - you're trying to unload something that you know fundamentally sucks. The best way, logically, to unload it is to find an idiot (or clueless kids) and prey upon them.
So who sells these things in the first place?
Timeshare salesmen are INCREDIBLY dangerous. I remember an early family vacation to Cancun in the late eighties, when my father and I were approached by a guy pushing a timeshare sales event. Free breakfast for sitting through a pitch. My father seriously entertained the offer before declining. In retrospect, the fact that my father even briefly considered this is terrifying because my dad is a smart guy. This might have been his first exposure to timeshares.
Later, I learned that they offer more than just buffets. Concert tickets and free mini-vacations are standard fare as bait to get people to commit to listening to a three-hour pitch. Sounds like a good deal - all you have to do is sit there and collect your free stuff - but the fact of the matter is, they wouldn't do it if they didn't make the money back AND THEN SOME.
Nowadays I see people pitching these things at festivals and airshows. They seem to really crop up when the economy is overheated, as it is now, and usually pitches are targeted to middle income people. At the pitch there's a lot of high pressure sales, lots of pushing to have you sign in the room without thinking about what you're doing. The type of people who think that they can just sit through the pitch, collect their "gift", and leave. Hell, I think that I could. But the very fact that this business model has persisted proves that, on average, you and I are wrong and they are not. My advice, then, is to simply not go into the room. And if you do, realize that most states have a brief period after the deal where you can legally rescind your commitment to buy.
One other thing. If I've failed to dissuade you from summarily rejecting a timeshare on principle, check out The Queen of Versailles if you'd like a good look at the type of people who run timeshare companies, there you go.
*Yes, you can get home equity loans, but they're usually a bad idea. See the 2009 financial crisis if you doubt this.
Noah's Inner Monologue
Scribblings of a man who can barely operate an idiotproof website.