By Eileen AJ Connelly, AP Personal Finance Writer
The promise of a free meal, a $100 gift card or even a few nights gratis lodging may pull you into the sales presentation at a timeshare resort. The question of whether it makes sense to invest tens of thousands of dollars may send you away puzzled — or worse, second-guessing the decision you made to sign the papers.
While real estate prices have plunged across the nation in the past two years, there's been no parallel decline in what developers charge for timeshares. For an average $20,000, buyers get the right to stay at a resort — usually in a 1- or 2-bedroom condominium with at least a mini-kitchen — for a set period of time each year. While some resorts cost less than $15,000, the price can double for certain locations and time slots.
The bottom has dropped out of the resale market in the recession, however. An Internet search reveals hundreds of "for sale" ads for timeshare deeds, often for as little as $1, even for prime times in places like Cape Cod, South Carolina's Hilton Head Island, Manhattan and Hawaii. There are a variety of reasons people sell — from not using the vacation time to no longer being able to afford the annual maintenance fees — and the resale market is flooded right now.
How, then, can you decide whether or not a timeshare is a good investment?
The key, owners and industry experts say, is in the way you think about the purchase.
If your goal is to buy a timeshare and resell it for a profit, you're going to be disappointed. Even before the economic downturn, resale prices were typically a fraction of what resort developers would charge for the same properties.
But if you buy hoping to lock in some nice vacation accommodations for the coming years, it may be worth your money.
The Timeshare Marketplace
"Timeshares are not an investment," said Angela Gridelli, an interior designer and decorative artist who lives on Long Island, N.Y., and currently owns four timeshares.
"A timeshare is not like purchasing a condo or a home," she said. "If anything, it's like a car, where the value on your timeshare is going to depreciate every year."
Gridelli said if she were to try to sell the two timeshares she purchased at full price— one in Aruba and one in New Jersey — she would take in 60% or 70% less than the roughly $25,000 each she paid. But she's not looking to sell — she uses her timeshares as a way to travel extensively, typically getting nicer accommodations than she could otherwise afford.