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The Advantages and Disadvantages of Timeshare Ownership

The economics of timeshares is simple. Suppose a developer builds a 2,600-square-foot, four-bedroom, three-bath condo on the Oregon coast; normally that unit would cost someone $700,000. However, the developer decides to market the property as fractional ownership and sells each of eight people a one-eighth deeded share for $125,000.

That allows each of them to use the condo six and a half weeks per year. These shares can either be fixed weeks or can be set up so that the time periods rotate by one month each year. As an alternative, if someone wants more time in the condo, a one-quarter share could be purchased for $225,000, which allows a thirteen-week stay per year.

A big advantage of timeshares, or fractional ownership, is that you get a vacation property without having to worry about taxes or upkeep. Of course, you have HOA fees that typically run $100 to $300 a month, depending on location and amenities.

Also, these condo projects usually allow you the option to rent or trade your weeks, and they handle these arrangements through their management company for a small fee. You may also be able to trade your weeks through a professional exchange company for other timeshare projects around the world. It’s not hard to see why timeshare sales have gone through periods when they are quite popular and other times when their market has imploded. The ups and downs are a reflection of economic times.

One advantage to timeshares is that you don’t have to work through a developer to buy one. There are brokers who specialize in timeshare sales, as well as a brisk Internet market for the units and advertisements in local classifieds.

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