Adding Up the Actual Cost of a Timeshare

The idea of vacation ownership has been rooted in the idea that, if you’re taking annual vacations (or even more frequent trips), it can make more sense financially to own a functional real estate interest or timeshare. After all, the old thinking goes, “Why would you keep saving for hotel rooms every year when you can actually own a piece of paradise?

Unfortunately for timeshare owners, the timeshare industry has never really worked that way in practice. Even deeded timeshares and fixed-week fractional interests came with annual maintenance fees, property taxes, HOA fees, and special assessments that made owning a timeshare more of a financial burden than anything else. 

The modern wave of vacation clubs with point systems, exchange company fees, and complicated reservation systems makes the whole process even more arcane and expensive. Chances are, though, that the true cost of a timeshare is not going to be explained to you in the timeshare sales presentation. You probably won’t see everything, in fact, until you get your first set of bills.

This article will help you understand the true cost of a timeshare by breaking down the amounts you can actually expect to pay — from the purchase price and mortgage through tax payments and special assessments. In many cases, a timeshare purchase is not a wise personal finance decision.

The Costs That Come With a Timeshare

Even sophisticated buyers can be shocked when they add everything up and see that a timeshare isn’t a great deal at all. Knowledge, as always, is your best weapon against being taken advantage of by timeshare companies.

Let’s look at all the different costs that come along with a timeshare.

The Timeshare Purchase and Mortgage

The cost most people think of when considering a timeshare purpose is the upfront money you pay to a developer for the timeshare interest. That number can vary based on the type of timeshare you have — whether it’s a fixed- or floating-week deeded timeshare or a points-based vacation club like Hilton Grand Vacations Max, Marriott, or Disney Vacation Club. 

In either case, the more you buy (whether it’s a deeded real estate or points representing the right to use a wider variety of timeshare resorts at more times), the higher the price tag. According to the American Resort Development Association (ARDA), the average cost of a timeshare interval is over $24,000. Some timeshares can cost over $100,000. 

For our hypothetical, we’ll assume a round purchase price figure of $30,000. Let’s say that you make a $3,000 down payment. That means that you would need a $27,000 mortgage to cover the difference. 

Unlike the loan for your home, however, mortgage interest rates for timeshares can be quite high — as high as 20% in some cases. Here, we’ll assume you get a slightly lower, very common rate of 15.9% for 10 years.

To figure out your total costs, you have to take the principal ($27,000) and add it to the mortgage interest you’d be paying over 10 years. On those terms, your $30,000 timeshare will actually cost you $54,072.51 over 10 years, meaning that you would pay almost as much in interest ($27,072.51) as in principal over 120 payments!

If that number gives you some sticker shock, keep in mind that we haven’t even talked about any of the other fees yet.

Annual Timeshare Maintenance Fees

According to ARDA’s research in 2019, maintenance fees can vary from as low as $640 per year (for a small studio timeshare) to nearly $1,300 for a three-bedroom unit. For our hypothetical, let’s assume an annual maintenance fee of $1,000 for seven nights of timeshare usage per year.

You need to realize, though, that the fee will not stay at $1,000 for long. Like so much else in this world, maintenance fees are subject to inflation. For our hypothetical, we’ll assume 8.5% inflation per year. That means that, over the course of 10 years, you’d spend $17,096 in maintenance fees alone. In 20 years, you’d spend a whopping $53,489!

Because fees can differ from company to company, the amount that you might be paying in 20 years can vary greatly. You can calculate inflation of your specific fees by using Centerstone Group’s Maintenance Fee Calculator, which features the current U.S. inflation rate.

Timeshare Property Taxes, Homeowners Association (HOA) Fees, and Special Assessments

Timeshare ownership also comes with legal taxes and obligations, as well as monthly and annual fees, you will be required to pay as a matter of law. In many cases, failure to pay these amounts means that your timeshare could be subject to foreclosure.

Property taxes will vary according to the state where your timeshare is located as well as the size of your interest. (A studio unit in Maui, Hawaii, or Orlando, Florida may have higher taxes than a larger unit in Missouri, for example.) For our purposes, we’ll assume $500 in property taxes per year, which means $5,000 paid at the end of 10 years, and $10,000 after 20 years.

Another monthly or annual cost of timeshare is membership in a resort’s homeowner’s association (HOA). The HOA pays to maintain roads, amenities, and common areas within a resort. Annually, you should expect to pay roughly $400 per year on regular HOA fees. That’s $4,000 after 10 years, and $8,000 after 20 years.

But what if there is a natural disaster and a resort needs repairs? Or what if the resort undertakes a special renovation? Chances are that your normal HOA dues will not cover that, and you’ll be charged special assessments by the HOA for those projects. These are much more difficult to predict. In our situation, we’ll say that you only have to pay $500 in special assessments every 10 years, for a total of $1,000 at the end of 20 years.

Fees for Using, Reserving, and Exchanging Your Timeshare

You’re not done yet, though. All of those costs just get you the timeshare. They don’t actually let you use it. Timeshare companies have dozens of hidden fees you likely won’t learn about until it’s too late.

First, if you want to book some time at your vacation home, you’ll need to make a reservation and pay a reservation fee. That is typically around $50 per stay. If you make one five-night stay per year, that’s $500 after 10 years and $1,000 after 20 years.

But will you use your timeshare every year? Many timeshare owners don’t. In that case, you may want to lend your timeshare to a friend. That will cost you as well. Guest certificates cost $100 each. If you lend out your timeshare three times per decade, you’ll have paid $300 after 10 years and $600 after 20 years.

Maybe, though, you want to roam the world a bit and you join (or are forced to join) a timeshare exchange company like Interval International or RCI. For those services, you’ll pay around $65 per year. After 10 years, that comes to $650. After 20 years, that’s an extra $1,300. 

Don’t forget, also, that you have reservation fees every time you actually book a stay using an exchange company. For a seven-day stay, you could expect to pay around a $270 reservation fee. Do that every year, and over 10 years, you’ll be looking at $2,700 worth of fees. Over 20 years, that’s an extra $5,400. 

Finally, though it’s hard to plan for them, never forget that timeshare resorts also have a lot of fees for specific situations. Want to list your timeshare on the resale market? Get ready to pay a commission to the realtor. The same thing is often true if you want to use your timeshare unit as a rental. Basically, if you want to use your timeshare to make money, expect that you are going to have to pay extra for that opportunity.

So, What Is The Total Cost of a Timeshare?

Now that we have those expenses, we can get a total. (Keep in mind that some of the estimates themselves are conservative.) For a $30,000 timeshare unit, your total cost for 10 years will be $84,818.51. 

Let’s say that you have seven nights at your timeshare per year, and that you use every single one of those nights every year – a scenario that is almost never the case. Then, you will have spent $1,211.69 per night for your timeshare unit. And, if you don’t use all your nights, your average price per night will only go up.

After 20 years, you’ll have paid $126,861.51 — more than four times the original “purchase price” of your timeshare unit. Assuming that you use every single one of your nights for 20 years – something that is nearly unheard of – you would be spending $906.15 per night. That might be a slightly better deal than over 10 years, but it’s also vastly more expensive than staying in a nice hotel or resort.

Tired of Paying Through the Nose? Centerstone Group Can Help

Looking at numbers like this can make it a bit easier to understand why so many owners want out of their timeshare contracts. That is where Centerstone Group can help. As the premier timeshare exit company, we help our clients to achieve legal and ethical timeshare exits. Whether we use contract cancellation, our proprietary pressure campaigns, or get you help with our legal partners, we have years of experience finding exit solutions that work.

If you are a timeshare owner and you want to stop the bleeding, we’d be honored if you’d consider letting us help you. We are an A+-rated company with the Better Business Bureau (BBB), and we have dozens of reviews from our satisfied customers. Contact us today for a free consultation and case evaluation.