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Time share apartments are sometimes marketed as good investments that will go up in value and that you can rent out to earn money. Never fall for these sales pitches. Time Shares are never good investments. They are at best bad investments and at worst pure scams. We here at 21ventures think it is strange that time shares are still legal considering their predatory sales tactics, dishonest advertising and non existing value. We think the development of new time shares should be outlawed and that existing time share communities should be converted to share holder owned properties where each time share owner is award shares.
Time share developers sometimes offer gifts if you sit through their seminars. They do this in the hope of selling a time share unit to you. If you want their gift we encourage you to sit through their seminar but warn you not to fall for their sales tactics. Time shares are never a good investment. They are louse investments and they are a very expensive way to vacation. Never buy anything that is sold this aggressively. This is true for everything from exotic financial instruments to mineral rights and swamp land. If the thing they are selling was as good as they claim then they would have buyers lining up around the block to buy. They would never need to advertise it at all.
You can usually live in luxury hotels cheaper than what the time share ends up costing you once all fees have been included. This is due to the fact that you will need to pay a monthly or yearly maintenance fee as long as you are the owner of the time share. This is true regardless of whether you use it or not. The only way to avoid paying this fee is to find a buyer for time share and sell it to them. This can often be very hard.
Developing and selling time shares can be very profitable. We can however due to the immorality of the business not recommend this investment either. We will however despite this take a look at why time shares are so profitable to develop and why they are such a bad investment to buy.
The developer develops a time share community. Each unit in the community would sell for 70 000 if it was sold as a regular apartment. They cost 50 000 to build. If the developer sold it as a regular apartment he would earn 20 000.
Each unit is sold as a time share unit. It is sold on a weekly basis. Each house will in other words have 52 time share owners. Each unit is sold for 2 500. A sum that most people can afford to pay to buy a piece of their dream. Once the time share owner has sold all 52 units he has received 130 000. He has earned 80 000 on the unit. A spectacular 160% return on the 50 000 investment.
It does however not end there. The owner of the time share company, IE the developer will also charge each unit a maintenance fee to keep the time share in good shape and to maintain public areas. It is not unusual for this fee to amount to many hundreds a year. In this scenario we are going to assume that the maintenance fee is 400 a year.
The owner of the time share company will collect a total of 20 800 in maintenance fee every year. A lot more than the maintenance actually costs. Especially if there are many time share houses/apartments in the development. The owner of the time share company will continue to make large profits from the time share year after year. The owners are often able to pocket up to 80% of the maintenance fee.
The only person who benefit from time shares is the owner. Never invest in a time share units.