The timeshare industry tends to have a bad reputation because the fees and financial responsibilities of the owners are generally not highly discussed during the purchase period. Only afterwards, when the owner begins getting bills do they fully understand the financial commitment of a timeshare. As a timeshare owner, you will be responsible for annual fees to your home resort each and every year, regardless if you use the timeshare or not. This basic understanding seems to be a surprise for a lot of people as all timeshares are not a pay as you use system. Each year, the owner will be billed for maintenance fees regardless of use.
The maintenance fees generally include the owners pro-rata portion of all operating expenses of the resort as well as reserves for future upgrades and maintenance. Operating expenses include property taxes, furniture, management fees, landscaping, advertising, and basically any other expenses that the resort incurs. The resort passes through all expenses to the owners.
In addition, resorts reserve the ability to access its owners special assessments. These are non-budgeted or unplanned expenses that are incurred by the resort and need to be paid for. These can include damage from storms, flooding, roof replacements, pool refinishes, or any other large scale expenditure that was simply not in budget.
These special assessments are usually an unwelcome surprise to timeshare owner since it is an unexpected expense. Most timeshare companies recognize that this is not a popular way to build trust with its owners so they generally only do special assessments in those truly unforeseen circumstances that warrant immediate expenditures.
Maintenance fees can vary widely and will depend on the size of the unit, resort location, operating expenses of the resort, age of the resort and other factors. Since maintenance fees are a recurring expense that will almost always increase over time, it is extremely important to understand the financial commitment before going forward with a purchase. Maintenance fees almost always increase year by year so do not assume that the expense will remain the same at the time of purchase.
Maintenance fees and special assessments are definitely not the best thing about timeshares but you need to understand them and understand the ongoing financial commitment. Timeshare ownership is not for everyone. However, for those people who do travel every year and know that they will travel, timeshare ownership can make real financial sense and save you money over time on accommodations. Exchanging for prime weeks or for highly sought after timeshare resorts or destinations can easily exceed the maintenance fees as compared to nightly rental rates.
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