Everyone needs to take a vacation from their everyday lives. It is important to schedule time away with your family. When it comes to the practical end of going out of town, finding a good place to stay is important.
Investing in a timeshare or co-owning a vacation home will make the decision much more simple. Here is a breakdown of these two types of property.
What is a Co-Ownership?
A co-ownership works much different than a timeshare. This is when you decide to purchase a home with someone else. With this type of real estate transaction, the parties interested in purchasing the home together will get a mortgage together, or separate mortgages or pay cash.
Since you are purchasing a home with one or more individuals, your name will be listed on the deed. This allows the owners to have more control over the property. Each owner can leave his or her share of the home to specified beneficiaries for many generations. Timeshares are usually owned and controlled by for-profit businesses.
In a co-ownership, it is important to note that the terms of agreement will have to be worked out between the interested parties. The interest of the owners will be documented in details in a legal, written co-ownership agreement. It is recommended that this agreement is prepared or at least reviewed by a lawyer before the home buying process closes. A lawyer experienced in real estate and co-ownership will provide you templates so you can start discussing with your potential co-owners.
With a timeshare, these terms are established by the company that owns it.
What is a Timeshare?
A timeshare is a piece of property that has multiple individuals who pay to use the property for a period of time each year. Every resort that sells timeshares will draw up the paperwork to reflect the terms of agreement.
It is important to note that timeshares do not belong in full to the individuals who pay into it. Depending on the contract, some of these agreements allow for partial ownership, or a “right to use” of the property. Many are personal property, not real estate property. For that reason, the shareholder does not have a claim of ownership to the property.
Essentially, there are 4 types of timeshares that you can invest in.
- Fixed Time - a buyer pays for the rights to use the unit for a specified week every single year. There is no flexibility with your week, so if you do not use it, you will lose it.
- Floating Time - this allows the buyer to reserve their week ahead of time. It does allow for more flexibility, but it doesn’t guarantee you will get the week you want. This is on a first come first served basis.
- Right-to-use - the buyer can lease the property from the owner for a specific time each year. This type of timeshare does not allow the buyer to own the property in part; simply there is a lease agreement established.
- Points Club - with this type of timeshare, you not only have the flexibility on the time you can stay in the unit, but also on the location.
Difference in Annual Maintenance Fee
Most potential timeshare buyers overlook the annual maintenance fee that increases over time. This annual maintenance fee is collected by timeshare corporations whether there are fixes or improvements in your unit or not.
With co-ownership, the co-owners decide upfront in the written agreement how much to collect for the maintenance account with a maximum amount. This account will deplete only when fixes or improvements are made to the property. Otherwise, the money will remain as savings, belonging to the co-owners.
How much does it cost to co-own a Vacation Home?
Co-ownership makes owning one or many vacation homes affordable for most people, not only for the rich. Generally, it does not cost more to own a vacation home than a timeshare, especially after the tax benefits of real estate ownership. During bad times, your co-owned property usually keeps its value better than a timeshare. You have the right to sell your share of the property anytime to friends, family or strangers, just like with any property.
Where Can You Co-Own a Vacation Home?
Anywhere you want to co-own a home is possible. What are your favorite places to live or to visit? San Francisco? Hawaii? Let Realtaasa know what you have in mind and we will help you from A to Z. It will take more organization to find others who want to go in on the purchase with you. Realtaasa brings parties together for the purpose of co-buying any home legally and safely. Sign up with Realtaasa to learn more how you can co-own one or many vacation homes within your budget and at your favorite spots.