How to Navigate This Popular Vacation Market

A few Mai Tais on the beach, a warm glow from the sun, and then a friendly "membership consultant" offers you a deal to lock in a week's stay at the resort each year for a great price... but only if you book before leaving.

Many of us have heard sales pitches for timeshare vacation homes. Some salespeople are overly pushy for you to make these typically "impulse" buys.

We've even heard of bait-and-switch tactics leading to massive lawsuits. The Manhattan Club pulled this a few years ago when it sold 3,600 more timeshare units than it had available. People paid their fees but couldn't book a vacation for years.

My stepmother Kate faced a similar scheme with a timeshare that suffered from poor management and a lack of maintenance. It cost her $3,000 to get out of her contract.

So why would people want to own one of these timeshares? Turns out, they're still popular. My stepmother even went on to buy three other timeshares – all of which she enjoys.

Some folks love having the same place – or the same collection of places – booked to make planning easier. Many places let you swap your week for other locations, meaning you might own a week in say, Florida, but one year you might want to change it to Wyoming.

On the downside, timeshares are pricey and don't appreciate like real estate. And you're more or less stuck with them... The popular timeshare-marketplace website RedWeek states that the resale value of a timeshare is about 30%-50% less than the original price.

If you're considering buying a timeshare, you need to understand all of the pros and cons. Here are the top five considerations we recommend based on our research into buying a timeshare here in the U.S...

1. Think about the length of use. Figuring out how long you'll use the timeshare will help. Ask yourself if you will still be willing to travel in five, 10, or 20 years. And if the timeshare is across the country, how easily will you be able to get there every year?

Some timeshares allow you to pass your deed to your heirs as an inheritance. Although it's a popular selling point, the paperwork and associated fees might not be worth it. Make sure to get all of the details before buying.

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2. Stay flexible. If you're happy going to the same location every year, a fixed week would be a great choice. If you want to travel everywhere but have a prepaid stay with a particular hotel chain, a points-based system might be the better option. Understand that no matter what, timeshares require you to plan your vacation a year in advance.

3. Shop around. Take the time to compare timeshares. Popular destinations tend to have higher prices and are harder to book. But they are also teeming with different timeshare companies.

One option is to try another nearby area instead. Kate told us her timeshare in Myrtle Beach, South Carolina, is more expensive and more difficult to book than her place just down the coast in Hilton Head. Yet both offer her favorite activity – golf.

I also recommend renting a timeshare before buying. You can then check out the property and the surrounding area before you buy. Plus, you can chat with other owners to get a more realistic picture of ownership.

4. Plan your financing. Some places charge ridiculous amounts of interest on financed purchases. We recommend paying up front to avoid higher charges. If you can't do that, absolutely make sure to run the numbers. Compare the financing offered through the company with the rates of a personal loan. It's good to track what your average payment would be per year (including the maintenance fee) and compare with nearby hotels that offer similar amenities for the number of bedrooms you want.

Use these numbers to figure out what is in your budget, and plan for things like annual increases in fees and travel expenses. A good salesperson should be able to tell you the frequency and amount of the industry's average increase. Compare that with the average annual maintenance-fee increase of 5% per year since 2010, according to Consumer Reports.

5. Consider your family. Maybe you like traveling with a number of family members and friends, or maybe you prefer going solo. Large groups tend to benefit from timeshares as they often include kitchens and sleep more people than a standard hotel room. So going alone often isn't worth the cost.

And if you are considering a timeshare, I recommend going with a trusted resort name like Marriott or Starwood. The options for finding a place to stay are better, and the newer programs offer more ways to use your membership.

I'm not personally in the market for a timeshare right now. But if I could get one with enough flexibility, easy booking services, and a great price for my budget, I'd consider it.

Whatever you do, don't sign off on anything if there's no deed or if you haven't seen the property. And take note of how much the salesperson will tell you – if he can't tell you the average rate of fee increase or how early you have to pre-book your stay, don't buy it.

There is one thing we heard from every owner we spoke with – prepaying for a vacation rental is like forcing yourself to stop your busy life once a year and get some rest. Skipping a year would mean throwing out the money you paid. Whether or not a timeshare is for you, making time to get away and unplug will help you live a healthier, happier retirement.

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