How Do Timeshares Work?

Understand different timeshare systems and how to get a timeshare

How do timeshares work

There are a lot of misconceptions about timeshare deals. People want to know what timeshares are, how does a timeshare work, are timeshares worth it, and of course, what is a timeshare? These are all reasonable questions, especially considering the fact that the truth about timeshares is rather complicated. After all, compared to a rental, lease, mortgage, a straightforward sale, or other ordinary real estate transactions, timeshares are rather unusual.

Here, you’ll get the whole timeshare truth, and gain a full understanding of timeshare meaning, and the various nuances of this type of real estate product.

Table of Contents

The Truth About Timeshares

The key to understanding timeshares is in the word “share.” You and one or more other buyers share the overall price of a property by buying it in sections of time. Basically, you get it part of the time, and other parties get it the rest of the time. Timeshares are split among multiple parties, usually in increments of one week, sometimes a month. The shorter the period during which you get to use it, the less you will pay for your share of time. But let’s see how the pros define it.

What are timeshares?

According to Investopedia, a timeshare is, “[…] a model of shared ownership of vacation property where multiple buyers own units of use-time.” 

These “allotments of usage” tend to come in one-week increments on the same property. This model can be applied to any kind of real estate, but it is most often applied to vacation rentals like condos, apartments, and campgrounds. But the most common type of property for which it is used is vacation resort properties.

Time sharing is also often referred to as fractional ownership. This is because you are a partial owner of the property. You sign an agreement that says you own the property and have agreed to use it during a given period each year. In other words, you own a “fraction” of the property, and that fraction is expressed in limited-time usage.

This means that during your use-time, you will also be responsible for the maintenance, care, and upkeep. This will be discussed more fully later on.

Timesharing can also be applied to other types of property such as private jets, recreational vehicles, fishing boats, etc.

How do Timeshares Work?

The first thing you need to know about timeshares is how the sharing of usage time works. Typically, timeshares are modeled after one of three different systems. They are Fixed Week, Floating Week, and Points.

Fixed Week

In a fixed week system, buyers can select a specific time of year during which they will use the property. One party might buy a week at the start of January. Another might buy a week in the middle of July. These parties would use the same week each year for their vacations. This can make it difficult to change use-times, especially if the entire year is sold out. But it can also be convenient since you can plan for your annual vacations with relative ease. 

Floating Week

With the floating week system, a buyer may be able to select a week during a given month or season, giving them more flexibility for their vacation planning. Floating weeks will usually be more difficult to obtain during peak vacation season. The earlier a week is reserved, the better the chance that it will be available. This system is sometimes referred to as a flex week system.


The point system is like an expansion of the flex week system. But instead of being able to choose from weeks in a set period, the buyer may spend points to select from an even wider selection of time slots, and sometimes even different properties. The points system has the most flexibility, but the chances that you won’t get the reservation you want can be even greater.

The overall takeaway here is that the more flexible the timeshare model, the lower the chances that you will be able to get the reservation you want. With a fixed week timeshare, you are all but certain to get your reservation. With the floating week system, you need to book in advance to be sure to get the week you want. Finally, with the points system, you have many more options, but the odds of getting the spot you want go down considerably unless you book far in advance.

How to Get a Timeshare

The first step is to find a seller. This could be an individual owner who wants to sell off a property by dividing it into timeshares or the owner of an existing share of use-time. But this kind of sale is usually handled by a specialized brokerage, a vacation resort, a property management firm, or a real estate company.

Then you will need to look at the various types of timeshares available and choose the one that suits your lifestyle best. Select the type of timeshare package that suits you best. Options include:

  • Deeded Ownership: This type is most similar to the fixed week model, but may include floating weeks.
  • Right-to-Use: The more flexible of the two, right-to-use gives you a certain amount of time each year for a period of years. It could be one week a year for five years, or one month a year for ten years, and so on.

Then, usually, you will need to choose between new and used units. This does not refer to the age of the building, rather, it refers to the state of ownership of the use-time itself. Buying a timeshare “used” means buying from someone who already owns a use-time on a given property. Buying it new means buying directly from the resort or property management firm.

Note on Timeshare Investments: Once you have looked at all the options, it is important to understand that buying a timeshare as an investment is usually ill-advised. This is because you only have very limited responsibility and control over how the property is treated and maintained. Timeshare properties will usually depreciate more rapidly than properties owned by a single party. Therefore, consider your timeshare to be an investment in your well-being and quality of life, and not as an item for the asset column in your investment portfolio.

How much is a timeshare?

The idea of a timeshare is to access quality, desirable vacation properties at a much lower cost and with far less responsibility. The timeshare price you end up paying depends on several factors.

Factors Affecting a Timeshare Price

  • Upfront Costs: The upfront time share price is the value listed. Of course, you are not paying the total value of the property. Rather, you are paying for the use-time, which is a portion of the full value of the property. For example, if you are buying a one-week timeshare for a property that is valued at $400,000, then the upfront cost to you might be approximately $7,600. Clearly, this is much more affordable than buying a vacation home outright. But it must be said that there are several other factors affecting price. 
  • Maintenance Costs: It stands to reason that everyone who owns a timeshare on a given property will be responsible for a portion of its upkeep. The national average for timeshare maintenance is around $1,000 per year. These fees will tend to increase each year. In most locations, regulations prevent management companies from increasing them by more than 10 to 15% each year. It should also be noted that if a given party is believed to have left more mess than they are entitled to leave or to have caused damage during their use-time, then a special assessment may be applied which will come in the form of a bill.
  • Special Assessments: Like the special assessment mentioned above, these fees can come at any time and tend to be unexpected. Special assessment fees can come after flooding or storm damage takes a toll on the property. If a pest infestation is discovered, a special assessment will triggers bills to be sent out to all of the timeshare owners. If you wish to avoid special assessment bills, your choice of location is key. Choosing a location where storms, crime, and other hazards are less likely to occur can save you money on the total average cost of timeshare ownership.

Other Costs

Finally, the total cost of a timeshare is not just monetary. As a timeshare owner, you will be proportionally responsible for the care, repair, and maintenance of the property. This responsibility can trigger stressful legal and financial issues which may take their toll on you. When considering timeshares for sale, you must do your research on the location and the company offering the timeshare.

If possible, it is nice to know as much as you can about your fellow timeshare owners. Some management companies may encourage get-togethers, which can be as enjoyable as they are productive.

Learning how much a timeshare will cost requires some due diligence on your part. When you make your choice, it is wise to budget for maintenance and special assessments, as well as for the overall costs of your regular vacations. If you consider these as part of your total costs, then your timeshare ownership should come with few unpleasant surprises.

Be the first to comment

Leave a Reply

Your email address will not be published.