Timeshares Part 3: Advanced Strategies

The following is for informational purposes only and not meant to be investment, legal, or tax advice. Please consult a CPA or an investment professional.

Timeshares are a horrible way to spend money and require you to sit through high stress pitches. People who buy timeshares are often stuck with an obligation that costs them more money every year and delivers a fraction of the value they were promised. Although this structure is very unfortunate for the timeshare owner, it can be a source of cheap vacations for savvy travelers that know how to take advantage of the timeshare system. This article will go over advanced strategies you can use to get great vacations at a fraction of the cost the timeshare owner paid and with no money down.

Why own when you can rent

In addition to the myriad of other reasons not to buy a timeshare, timeshares depreciate in value over time. If something depreciates in value you should not own it. A plane, boat, and most cars fit into this category. A timeshare has built in depreciation via three mechanisms: annual increases in the maintenance fee, periodic raises in the points needed to book, and physical wear and tear on the properties.

Owners that can’t sell or can’t use their timeshare for whatever reason will often rent their timeshare. This gives you the opportunity to get the same unit that someone has paid tens of thousands of dollars to acquire and a maintenance fee for a small nightly rate that is usually better than comparable hotels. Better yet, in most instances you get the benefits the timeshare owner would normally get while staying at the property.

There are basically two ways to rent a timeshare directly via a group or through an exchange.

Renting directly

Renting directly through a Facebook or Reddit group is potentially the cheapest avenue to rent a timeshare. The owner doesn’t have to pay an exchange commission or payment processor fees thus saving 10-15%. However, the downsides are so numerous that I would highly recommend not doing this. Renting a timeshare requires the owner to take extra steps such as a rental contract and coordinating your stay with the location. If they mess up the paperwork you could arrive and not be able to stay in your room. Also there is always a small, but materially higher chance that you get scammed as you have no way of verifying if the person actually owns the timeshare they are renting.

Renting from an exchange

The better choice is to rent through an exchange, the two most prominent of which are Redweek and Koala. Airbnb and VRBO also have timeshare listings, but Redweek and Koala both specialize in timeshare rentals so they have more timeshare inventory.

Redweek has been around longer than Koala, has a far larger inventory of properties with over 3 million members, and has a more antiquated interface. It has a membership fee of $19.99 that allows you to book all listings or a free membership when you book any “Verified & Protected” booking. When booking renters will also pay a 6-10% service fee which is embedded in the price you pay, not separately listed. Unlike hotels, many listings appear to have strict no cancellation policies, which means you will not get a refund if you cancel. Others have more flexible cancel 65 days or more before check in and receive 50%/100% back policies that are still a lot more onerous than hotels.

 Renters need to be more cautious on Redweek because many listings are not verified meaning they have verified key details of the timeshare or protected meaning they hold your payment until you check in. Verified listings also do a second verification that the reservation is in your name so you have no issues checking in.

A listing that is not Verified & Protected called “DIY listings” will have a lot of the same downsides of renting directly. A booking that is Verified but not protected is likely fine, but will require you to make payment outside of the platform. This saves the owner money, but because you don’t have Redweek holding your funds and only releasing them to the owner after you check in, you have less leverage if something goes wrong. Whenever possible, I would stick with Verified & Protected listings.

Koala is a newer (venture capital backed), but smaller competitor to Redweek. The process is largely similar to Redweek’s except all of the listings are verified, the overall workflow is more similar to a hotel booking website, and Koala handles the payments. Renters are charged a 10% fee when booking fee. Koala also has a relationship with Expedia which means many of its listings are also available on VRBO.

Disney Rentals

Disney is a unique animal in the timeshare ecosystem that warrants a separate discussion. David’s Vacation Club Rentals (DVCR) is the preeminent place to rent Disney timeshares. You typically save between 30-50% relative to the average cost of a comparable Disney room. The DVCR system is similar to Redweek and Koala, but differs in one critical respect, you buy the points directly from DVC. DVC sells points for $20, $23, or 25. More luxurious properties are $25 per point, regular properties $23, and “advantage” properties are $20 per point. Also not all Disney properties are DVC properties , but most are, see the list of all properties at the bottom of this page. As is the case with all timeshares, peak periods cost more than less busy periods. There are other brokers and also groups on Facebook where Disney timeshare owners rent timeshares, but David’s is far easier to book with and has a near zero chance of getting scammed.  

DVC’s booking process is not quite as streamlined as a hotel booking site, but it is not rocket science either:

1. First you choose when you plan on going and where. DVC recommends booking up to 11 months out for more in demand properties.
2. Complete their online request form which includes your travel dates, resort and room choice, guests on the reservation and a $105 deposit which is fully refundable if you don’t successfully book.
3. Within 24-48 hours they will find a stay that matches your request.
4. You receive a Disney Confirmation number, a payment link, and rental agreement. You have to make final payment within 24 hours of a reservation being secured and sign the rental agreement.
5. Enter the Disney confirmation number in your Disney app to link the reservation to your account.

You get most of the same benefits as a Disney Vacation Club timeshare owner which include:

• Free parking. Hotels often charge $20-25 a night for parking so this adds up over a 7 day stay.
• No resort fees.
• Deluxe resort guests get 2 hours extra in Magic Kingdom and Epcot at selected nights. All Disney resorts allow deluxe resort guests to enter 30 minutes before the park opens.  
• The ability to book advanced dining reservations and fast passes 60 days in advance of your check-in.

A few issues with DVCR to keep in mind:

• Cancellation is not free. Their cancellation chart starts with receiving 100% of your total reservation price less the $105 deposit 120+ days out from check-in, and is reduced to 0% 15 days before check-in.
• You will not receive discounts or have access to Disney Vacation Club exclusive events and lounges that a Disney Vacation Club timeshare owner typically receives
• The reservation needs to be paid upfront whereas Disney lets you pay up to 30 days prior to arrival and usually allows cancellation up to 30 days in advance for a full refund, although it varies by package and resort.
• Disney resorts are significantly more expensive than off property non-Disney hotels.

Last minute bookings

Although I have not tried this myself, allegedly some really great last minute deals can be had on Redweek and Koala. Unlike hotels which live to fight another day, a timeshare owner with a specific week has to use it in that week, lose it, or under some circumstances roll it over to the next year. Some timeshares are more flexible, but most of the listings on these sites are for a specific week. This creates a great opportunity to book a timeshare really cheaply as the owner is highly incentivized to take anything rather than zero.

Buying a timeshare resale for “nothing”

For the litany of reasons covered in this series, a timeshare is a horrible purchase. People that are desperate to get out of timeshares will often sell them for nothing or a nominal amount. In theory this sounds like a great set up to get future vacations cheaply, but in reality it isn’t. Resold timeshares are usually not a great purchase for the following reasons:

• You are signing up for an obligation via the annual maintenance fee and special assessments. If the price of a vacation roughly approximates the annual maintenance fee then a timeshare’s value should be zero or even negative. Why pay even $1 for a timeshare if you can replicate the same stay with a similar hotel for less than the maintenance fee? Even if a resold timeshare is attractive at current maintenance fee and hotel rates per night, it may not be in the near future if maintenance fees are high or a special assessment occurs. You may benefit in the short run, but in the long-term you still bought an obligation that you have to pay forever.
• Timeshares that are resold may not come with the same benefits as timeshares sold by developers. This may include features such as the ability to exchange points for other stays or into the affiliated hotel group, which significantly diminish the “value” of the timeshare.
• There are legal fees and closing cost associated with timeshare sales which are usually a few hundred to upwards of $1,500+.

Finn Law Group has a great series that explores the timeshare resale market.

Timeshare exchange

Resort Condominiums International (RCI) and Interval International (Interval) run the two largest timeshare exchanges. A timeshare exchange lets you “swap” your timeshare for a stay at a different timeshare. The more in demand and luxurious your timeshare location the more points or “trading power” you receive from the exchange. Both exchanges have membership fees (RCI $109, Interval $89) and exchange fees to book vacations of $179-249.

In theory one could buy a timeshare that is selling at a really low price, but which could generate significant points or trading power. They could then profit from the difference between the annual maintenance fee and the “free” vacation they get every year by swapping the timeshare on an exchange. I have seen a few comments on Reddit threads from people claiming they do this, but it is difficult in practice and your odds of success are low. Put simply, the present value of your timeshare payments will almost always exceed the present value of your future vacation benefits even if you are paying next to nothing for a timeshare.

Maintenance fees increase every year and a timeshare with older properties that is more likely to sell for a low price is also more likely to have a special assessment.  Even if you were to find a timeshare where the math works out where the value of the hotel stay you receive significantly exceeds your maintenance fee, it is likely to be temporary. Maintenance fees increase every year and therefore your spread relative to the market price of a comparable hotel will decrease overtime to the point where you are losing money every year. When coupled with inflation in the number of points needed to get a night, your timeshare will become unsellable, thus saddling you with a lifetime obligation. Another hurdle is the membership and booking fees mentioned above which are material relative to annual benefit you will likely receive from a low or $0 value timeshare.

Renting a timeshare yourself

Instead of buying a resold timeshare with the intention of profiting from exchanging, another strategy people employ is to buy a resold timeshare and rent it. For the exact same reasons why profiting from exchanges at best only works temporarily, the same can be said for renting your timeshare. The rate your receive from renting will eventually go below the annual maintenance fees and the fees associated with renting a unit are substantial for both the renter and lessor. For example, on Redweek the lessors pay $59.99 per unit/week as a posting fee, an $18.99 annual fee, $99 for verification, and a 5% commission on the rental price for full service. For these reasons, it is not impossible but very difficult to profitably employ a buy to rent strategy with timeshares.

Conclusion

The best way to get a good deal from timeshares is to rent one from someone else. Redweek, Koala, and David’s Vacation Rentals are great platforms that let you rent timeshares for significant discounts relative to the cost of similar accommodations. Buying a resold timeshare is unlikely to be profitable even if you exchange or rent it as you are effectively buying an obligation that grows every year. The annual maintenance fees, inflation in points per night, and the fees involved in exchanges/renting make a buy to exchange or rent strategy largely untenable over the long run.