A timeshare, although it may be marketed as Real Estate, is, in fact, an investment. Some timeshares may be sold on a fee simple basis with the buyer receiving an ownership interest in a fraction of the unit. However, the most common type of timeshare is the right-to-use ownership; the buyer receives the right of property use for a specific period of time but not an actual ownership interest. Read on to answer the question, What are timeshares and destinations clubs?
- Less expensive than outright ownership of property.
- Enjoyment of a prime location and amenities without the expense or responsibility of upkeep.
- No real estate taxes, utilities or maintenance expenses.
- Flexibility through exchange programs (a top location is easier to exchange.)
No value appreciation. Possibly difficult to resell.
- Difficulty in selling or exchanging low-end or off-season time shares.
- Dependent on the sponsoring organization for management and upkeep.
- Limits in schedule and duration of occupancy.
An outgrowth of the time share market, destination clubs offer access to a portfolio of luxury resort properties in different locations in exchange for a hefty deposit and annual membership dues. The clubs offer affluent members the opportunity to vacation in a variety of luxury properties in exotic locations at a cost far below that of purchasing and maintaining a second home.
Because destination clubs focus on luxury resorts, they tend to market to the affluent. A typical upfront deposit is $100,000. Club plans vary in the allowed length of stay, advance and holiday policies and so forth. There are two membership models. The difference between the Equity and Non-equity model is that the equity model provides members with ownership of a portion of the real estate portfolio.