Since 2004, Aconsumercredit™, has been the leading authority in timeshare cancellation, helping hundreds of families realize the financial freedom of dissolving their timeshare contract. From coast to coast, timeshare owners have a variety of legitimate, understandable reasons why they wish to cancel their timeshare; often, the needs revolve around escalating membership and maintenance fee expenses that create hardship for timeshare owners. Today we also want to discuss the risks involved with renting a timeshare and why it really isnt a very good option for owners.
Buying a timeshare is substantially easier than affording one for the long-term. Families budget for the onset cost of timeshare ownership, with assurances that the vacation option will remain workable for them, within certain cost parameters. This is one of the most misleading aspects of timeshare sales, and resort sales teams are highly skilled at helping the consumer see the value, at the current rate of cost. What they don’t tell you, or deliberately touch very lightly on, is the fact that the affordable timeshare you buy today, may be substantially less affordable in the future. But they don’t want you to think about that, because if they were truly honest, the statement would sound more like this:
“You are buying a long-term lease that is as difficult to dissolve legally as a mortgage. The costs that you are paying today are not guaranteed, and can double, or even triple in a short period, depending on factors that are beyond your control including damage, natural disasters, and even buy-outs from other timeshare companies.”
How many consumers would buy a timeshare, if the proposition was clearly presented in the most honest terms? Few to none. Legally, timeshares are required to disclose that “fees may increase”, but they rarely take the time to explain how that can impact the affordability for the average family. Signing a long-term contract is intimidating enough, but if more consumers understood that by purchasing a timeshare, they are agreeing to increased costs that will be entirely beyond their control.
This surprise in terms of affordability hits families hard, and creates real financial difficulties. But timeshare companies promise that owners can also successfully “rent out” their timeshare, if they are unable to use their allocated weeks, to offset the cost.
We want to share some of the problems our clients have encountered when attempting to recoup the expense of their timeshare through rental, and how it can create legal problems and additional costs for families who are looking for some financial relief.
Why Do Timeshare Owners Want to Assume The Risks Involved with Renting Out Their Weeks?
There is nothing more frustrating than paying for something you aren’t using, whether it is a monthly gym membership, or a timeshare resort contract. Every month, you are reminded of your financial obligation, because you are making the required payments. But if you are unable to use your timeshare for whatever reason (lack of vacation time, cost of airfare or even health concerns and the ability to travel), that monthly or quarterly payment becomes something you quickly resent. You are paying for something that you are not getting any value from.
Our clients, and other timeshare owners we’ve talked to for more than decade, have several beliefs in common about their timeshare. They are trusting individuals who simply believed what they were told by the resort sales team. And so, when the cost of owning a timeshare becomes burdensome, they resort to a promise they were sold during the sales presentation: “you can earn money with your unused weeks by renting your timeshare.” It seems plausible and easy to believe, because if you enjoy using your timeshare, others will too.
Some resorts even suggest market value prices for renting out your timeshare for a week. Depending on the resort, individuals can earn from $100 per day to more than $1,500 on average for a full-week rental. At least, that’s what the resort tells its members, and they make it sound very easy to rent out the timeshare and have that rental income substantially reduce the cost of leasing time there.
Unfortunately for many timeshare owners, they experience hidden costs, inconveniences and additional stress when they begin to rent their timeshare for profit.
The Cost of Finding Suitable Renters
One of the most encouraging things that a timeshare owner can see, is several listings for timeshare rentals in their resort. By default, some consumers believe that is a sign of a strong demand for timeshare units on their resort. After all, why would there be so many owners trying to rent their timeshare weeks, if it wasn’t possible to earn some money doing so?
The opposite is true. One clear sign of a problematic timeshare, IS the availability of many rentals. From our industry experience, a resort that has several private rental listings indicates that:
Cost of ownership is inflated for timeshare members.
There is little to no demand for non-owners to rent the timeshare.
Timeshare owners are not using their weeks. Is something wrong with the resort?
The resort experience may be compromised if it is constantly used by one-time renters, versus families and timeshare owners. It can change the culture, and your enjoyment of the resort, if you bought into a family style community that has suddenly turned into “party central”, by renters who have no regard for the property or other guests.
In addition to facing increased competition to rent out your timeshare (where supply exceeds demand), the amount you can ask for as rental may or may not be regulated by the resort. It places timeshare owners in a rental price competition with other owners, and makes it more difficult to successfully rent out your weeks.
Opportunistic resorts know that they can make additional money from their members, by offering to assist administratively, and help families rent out extra weeks for income. They assure consumers that they will screen only qualified renters, to attempt to reduce the risk of damage to the property, and the resort IS in a position of trust with the timeshare owner, so it makes sense to many consumers.
Of course, there is a fee attached to that service, which is frequently requested “up front” before the owner has seen a single dime of profit from their weeks. Some resorts indicate that the administrative fee they charge is non-refundable, which means the owner could end up paying more, even if the resort is unable to rent the unit. It is completely unfair to timeshare owners, but another profit source for large resorts.
This service fee trap is another example of how resorts put consumer needs last, by locking them into an inflexible long-term (and almost predatory) timeshare contract, while continuing to look for additional ways to charge their members more money. You pay the bills; the resort earns astronomical profits, and you are still trapped in a timeshare contract that is becoming less affordable over time.
Property Damage and Other Liabilities
If you have decided that you would like to avoid the administrative fees charged by the resort, for renting your timeshare, be aware that there are several legal liabilities that can cost you more money.
Timeshares that offer rental services assume the liability of the renter. If they have found someone to rent your property, and damages to the property or unit occur, in most cases, the resort is responsible for that liability. However, if you have decided to privately rent your timeshare to a friend, another family member, or to advertise and rent it to a stranger, any damage to the unit, or even the extended property of the resort by that renter, is returned to the timeshare owner.
Some owners have created a rental agreement with private, one-time or short-term renters, that makes the renter responsible for damages. However, the resort may have specific liability guidelines, and the resort is under no obligation to accept that private contract as a reallocation of liability. In short, if your renter does damage, you are required to pay for it (no matter what kind of contract you have).
Is It Worth it?
There are two options for timeshare owners when it comes to converting weeks into for-profit rentals. The first involves paying a sometimes-expensive administrative fee to the resort, who will manage the rental of your weeks. A safer option, but one that has hidden costs that cut into the profit of your rental.
The second option is to advertise and find renters, and enter a contract with them for a short-term lease of your timeshare. Since it is difficult to really identify a good renter from one that will potentially cost thousands of dollars in damage, it’s a risk many timeshare owners have realized does not pay off financially.
Don’t buy into the myth that you can run your timeshare as a profitable earning investment. It rarely works out to be an advantage financially, for timeshare owners.