How to Assess the Value of a Timeshare

How to Assess the Value of a Timeshare
Assess value

Calculating the Value of a Timeshare

Start by gathering up all of the expenses involved with each timeshare you are assessing. You may find these in the marketing brochures but be sure to compare them to the terms of the actual timeshare agreement to make sure that there are no hidden fees. Timeshare fees usually include an upfront purchase price, annual maintenance fees, and, sometimes, other costs that the maintenance fees do not cover, such as property taxes or cleaning fees.

Determine the market value of the rental of the timeshare. For example, if your timeshare allows you two weeks per year in a condo on the beach in Key West, do some online research to find out what you would have to pay to rent a similar condo for two weeks. You may even be able to find rental rates for the same condo as some other timeshare owners may be renting out their time if they are not using it.

The only difficult part of the timeshare assessment process is determining how to figure in the upfront costs. Some timeshare salespeople will try to convince you that you will get your upfront purchase cost back (plus more) when you sell the timeshare down the road. This may or may not be true, depending on what happens to the real estate and timeshare market in the future. A conservative approach is to take the purchase cost into consideration over a period of years. For example, if your upfront purchase price is $15,000 and you expected to hold the timeshare for 10 years, you might amortize that cost over the 10 years, or consider the expense to be $1,500 per year.

Compare your actual costs of owning the timeshare with the market rental rate to find out if you are getting any benefit of owning the timeshare. Let's look at an example:Costs of timeshare:$15,000 upfront cost ($1,500 per year)$400 per year maintenance costs (utilities, repairs, building maintenance)$250 per year property taxes$50 per year cleaningMarket value of timeshare:Two weeks in a similar rental would cost $3,400Total market value minus total cost = net value of owning timeshare$3,400 - $2,000 = $1,400 per year

If comparing multiple timeshares, choose the one with the highest net value.