“The purchase of a timeshare is often an emotional and impulsive decision.”
Forbes Magazine
Early in my Army career, I served as a legal assistance attorney at Fort Bragg, North Carolina. One day, I met with a young soldier and spouse who were seeking legal advice on terminating a timeshare contract. A few years before, the couple signed a long-term contract for a timeshare in Cancun. Between field exercises and deployments, however, they were not able to use the timeshare, but they were still required to pay all fees associated with the contract. Unfortunately for the couple, there was no legal recourse in terminating the timeshare. They had to decide whether to continue to pay for something they couldn’t use or default on the contract and deal with collection agencies and suffer the negative consequences on their credit report.
Purchasing a timeshare, recreational vehicle or vacation home is an exciting adventure, but it is important for servicemembers and spouses to thoroughly weigh the pro’s and con’s before entering into something so significant. Factor in the military lifestyle and deployment cycles to make sure you will actually have the time to enjoy your purchase.
The purpose of this blog is not to persuade or dissuade you from making such a purchase, but rather to help you make the best decision based on your circumstances.
Timeshares
A timeshare is a vacation property that you normally use for a week once a year. It requires the signing of a long-term contract in which you pay for the property and a yearly maintenance fee which increases over time. There are different types of timeshares, so it is extremely important to understand how each type works. For example, if you enjoy vacationing at the same place each year at the same time of year, a fixed-week timeshare may be for you. This type of timeshare offers predictability for you, but it also offers little flexibility. The terms of the contract are extremely important and will dictate the flexibility in your options. For an additional fee, some contracts permit you to trade times and locations with other owners. You may also be able to rent out your week if you can’t use it, but this is dependent on the terms of your contract and it normally costs extra to do this. Finally, you may be able to allow family members or others to use your timeshare week in years you are not able to use it, but you as the owner are still liable for damages caused to the property.
A major drawback of timeshares is that you are required to pay annual fees that increase. You have no say in the increases, which can average over $700 per year. As you can imagine, as properties get older more fees may be required for upkeep and renovations. You may also be subject to special assessments. The fees and assessments must be paid whether you use the property or not. Timeshare contracts often include a “right to sell” clause, but realize that timeshares are very difficult to sell. If you search the Internet right now you will see tens of thousands of timeshares for sale. If you are fortunate enough to sell your timeshare, it is often at a very sharp loss. Finally, remember that if you purchase a timeshare in another country, you are subject to that country’s laws and regulations which may change with no notice to you.
RVs
Have you and your spouse ever considered traveling the country in a recreational vehicle? Let’s take leave and hit the open road, or let’s travel cross-country during our next PCS. As with timeshares, there are positives and negatives to owning an RV. Recreational vehicles are extremely expensive to purchase. Depending on the type of recreational vehicle you are in the market for, you can easily pay as much as purchasing a small home. You do get to avoid paying the expense of hotels, but there are campground fees and exorbitant gas prices to consider. To put it mildly, RVs are gas hogs, averaging 6-10 miles per gallon.
RVs also are expensive to maintain. In addition to the regular maintenance items such as changing the oil or replacing tires and brakes, maintenance is also required on the appliances and amenities inside the vehicle. Storing an RV is also a consideration. You may not live in an area where you can store an RV in your driveway, and you may be precluded from storing one in certain communities that are governed by homeowners’ associations. There are storage lots on many military installations, but often there are storage fees.
Before buying, here are a few suggestions to help you make an informed decision. Speak with current RV owners and ask them what they like and don’t like. Many will tell you that they love the lifestyle of traveling in an RV and that they actually travel more than they used to. Also, consider renting an RV and trying it out before purchasing your own. Doing so will help you ensure you are in love with the concept before making such a major purchase. If you ultimately decide to purchase an RV, consider buying a used one. There are many high quality, used recreational vehicles with low mileage and you won’t incur the depreciation associated with the purchase of a new one.
Finally, whether you rent or purchase, understand that the army and other services operate campground and RV sites throughout the country. The Army Morale, Welfare and Recreation website offers an interactive map that shows such locations in all fifty states. Access the map here:
Vacation Homes
In addition to timeshares and RVs, vacation homes are a popular option. Before purchasing, however, do your homework and ensure you understand the pro’s and con’s of owning a vacation home.
Ask yourself, where will your vacation home be located? The further away from where you live, the greater expense you will incur to get to your home. Also, as your family grows, travel expenses will also grow. A rule of thumb is that if a vacation home is located more than two hours away from where you currently live, you are much less likely to use it. The two-hour rule is even less likely for military families given that we move to new duty stations every few years. Before purchasing a vacation property, ensure you spend an adequate amount of time there. It is not wise to purchase a vacation property after visiting an area just once. Get to know the area and see what the area has to offer.
Decide whether you want to rent out your vacation property to others when you cannot use it. Renting it out will help pay your mortgage, but you will also incur additional expenses of using a rental management agency or when renters do not properly care for your property and cause unexpected damages. There will also be times when the property sits empty so you will need to ensure you can handle the mortgage without assistance from renters. Finally, check the local area and ensure renting is permitted, as some areas have restrictions.
Finally, ensure you can comfortably afford a second mortgage. Do a scrub of your finances and make sure you can afford the mortgage and related expenses that go with a vacation property.
So, should you purchase a timeshare, RV or vacation home? Do not, as the quote I used at the beginning of this blog says, make “an emotional and impulsive decision.” Instead, carefully weigh the pro’s and con’s and make the best-informed decision you can.
*Kerry L. Erisman is a military spouse, Dad of two awesome teenage boys, Army retiree after 28 years of active duty service, attorney, and Associate Professor with American Military University. He writes and teaches on important military spouse issues including leadership, critical thinking, and education for Military Spouse Magazine and other military spouse publications.