Mention passive income investing at your next office BBQ and within minutes you’ll hear the term “timeshare.” More likely than not, several coworkers will pipe up to extol the virtues of their own timeshare investments. But before you let yourself be wooed by talk of beachside balconies and free vacations, take a step back, because what looks like a Jimmy Buffet dreamscape is just another money pit in disguise. When you see the truth behind the big three timeshare myths, you’ll understand exactly why multi-family homes are a far more secure choice for your investment dollars.
Myth #1 – Free vacations for the rest of your life.
This common timeshare myth pulls in more investors than any other. When you own a timeshare, the myth goes, your family will be able to use it freely whenever you want. Imagine all the money you’ll save on vacations! Some timeshares even allow you to vacation elsewhere within the timeshare network. Sounds like a sure-fire way to save money on family vacations, right? Wrong. No vacation is free, even if your lodging is. You’ll need to buy plane tickets, food, rental cars and everything else you’ll need. The only thing you’ll save on is the actual cost of renting a hotel or condo.
Keep in mind, too, that while your family is enjoying the sand and sun, you’re losing out on weeks of rental income. That’s thousands of dollars you aren’t making. If you’d invested in multi-family homes instead, you could be earning money while you’re vacationing instead of missing weeks of passive income – but that’s a detail you aren’t likely to hear from a timeshare salesman.
Myth #2 – You’ll earn a steady stream of passive income.
The single worst thing about timeshare properties is that they rent from week to week. This means that one month, your condo or beach house might be rented every day, while in some other months it might be occupied for only one week – or not at all.
Unlike multi-family homes (which require month-to-month leases at the very least, although yearly leases are much more common), timeshares offer no stability. You won’t know for sure exactly how much passive income you’ll earn each month until you’ve earned it. So not only do you stand to lose thousands of dollars every month, you’ll never be able to predict your income. Planning on buying a new house or sending Junior to college? The unpredictable nature of timeshare investing will make all of your financial planning more difficult. It’s just one more reason why Florida foreclosures that have been transformed into rental properties are a far better investment choice.
Myth #3 – Management will take care of everything.
If you’re living in New York and you want to buy real estate in Florida, you clearly can’t be responsible for managerial duties. Timeshare salesmen capitalize on this idea by assuring you that they’ll do everything, from finding renters to making repairs. It sounds like a great setup, but in practice it can suck your savings account dry. Consider this: the people that rent your timeshare only do so for a week or two at a time. They pay (if at all) a minimal deposit, and they aren’t emotionally invested in your property. So if they rip the wallpaper, clog the toilet, stain the carpet or constantly lose your remote controls, what’s it to them?
The result is a steady stream of added costs. Not only are you responsible for things like broken floor tiles or leaky faucets – you’re also responsible for beds and curtains and dishware and patio furniture. Even if these items are in working condition, your timeshare manager may decide they aren’t up to par with the stuff in the other units and that they therefore must be updated. That manager may then purchase, say, an entire dining room set. You won’t know it until you get the bill. And if you refuse to pay for updates? Well, he just won’t rent out your property. It’s a catch-22 that’s all-too-common in the timeshare world, but it’s not a problem when you invest in multi-family homes.
Keep in mind that these three myths are only the tip of a very large iceberg. If you want to earn passive income and create a lifetime of vacation memories for your family, skip the timeshare and go with multi-family homes instead. You won’t have to guess your income from week to week. You’ll deal with far fewer hidden costs. And, most importantly, you’ll earn a much larger profit in the long run. So make the most of your investment and earn the adoration of your family at the same time. Because while it might sound like a great idea now, forcing your family to vacation on the same strip of sand for the next 30 years is going to get old pretty fast.
