Are you into real estate and do you want to improve your investment portfolio? Do you know that timeshare properties could be a great investment option for you?
As a real estate investor, you will probably know the value of building a diverse portfolio. Experts suggest adding different options such as commercial properties, residential real estate, and vacation homes to your investment bundle.
The approach gives you a balanced mix that maximizes the income and growth potential, and minimizes long-term risks. You may think outside the box and pick a timeshare contract to bring more variety to your portfolio.
Owning it sounds alluring as it lets you enjoy luxury vacations or gift them to your children. Timeshares are forever, and you may even bequeath them to the next generations.
Sadly, it is only one side of the picture, as timeshare ownership is the worst thing for your investment portfolio. Let us explain why you should steer clear of it.
No value addition
Investors expect their investments to grow in value so that they can make money by selling eventually. While commercial and housing markets are hot, you cannot visualize the same for timeshare ownership.
These properties rarely increase in value, and you have more chances of losing. The total cost is high because it covers sales presentations, giveaways, and incentives.
Moreover, depreciation is another factor that leads to a loss of value year after year, even if you do not use the property. The last thing you want to own is a loser, so skipping it is a wise decision.
Negative cash flow
A timeshare property is an absolute mismatch for an investment portfolio because it is a negative cash flow option. In simple words, it yields nothing, but you have to spend on it by paying hefty annual maintenance fees.
The worst part is that you must pay even without using the place for holidays. You must offload it sooner than later to save on the cost of ownership.
Fortunately, several timeshare exit companies are there to help people get rid of these contracts with minimal effort. Let experts handle it so that you can be stress-free about the legal aspects of contract closure.
No assurance of rentals
Most investors look for properties with lucrative returns. You may want to rent your timeshare if a vacation is not on the cards for you.
Firstly, the rental window is small, often just a week. So you cannot expect hefty earnings in a short period. Moreover, the rental demand for timeshares is low, and you may never find someone who is genuinely interested.
Some contracts even stop owners from renting, while others have restrictions on rentals. There is hardly a possibility of earning anything from the ownership of this asset.
The best you can do is plan vacations, but you will probably not want to holiday at the same place every year. Buying a timeshare as an investment is a blunder, and you should steer clear of it in the first place.
Even if you already own one, eliminating it from your portfolio should be a priority. The sooner you offload the burden, the more you can save and the less you need to stress.