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A timeshare is a vacation property that is divided among multiple owners. Rather than incurring the massive cost of property ownership on your own, a timeshare allows you to pay for only what you use. It's simple. You'll buy time at any resort you choose. Resorts generally sell timeshare in one-week blocks, but you can buy as many or as few of these shares as you'd like. Other owners have also purchased time at the resort and the cost of the unit is then divided among all of you. In addition to the money saving benefits that this shared ownership affords, it also generally means larger and better-equipped units than you'd find in a hotel room of similar pricing.
Will a Timeshare Limit My Vacation Possibilities?
No. Many vacationers shy away from the idea of timeshares for fear of being tied down
to one locale for the life of their contract, but timeshares are actually very flexible. You can use a timeshare to travel the world. In fact, it's estimated that up to 70% of timeshare owners use their property to travel to destinations other than their "home resort" (the resort that is contracted to them).
How Can I Travel With a Timeshare?
Here, you have a couple of options. You can either choose to buy timeshare with a well-known vacation club like Marriott, or you can purchase a timeshare that is affiliated with an expansive exchange company like Interval International or RCI. There are a few major differences in these options.
Like their hotelier counterparts, vacation clubs have timeshare resorts all over the world. Ownership at one of their resorts will give you access to all of their resorts in the network. Exchange companies like RCI, on the other hand, create affiliations with resorts around the world. They then allow owners of these resorts to trade their week at their home resort for a week anywhere in the network at a resort of similar quality.
Where Can I Buy Timeshare?
You can find great timeshares for sale on the online resale market. Buying online is an excellent alternative to purchasing directly from the resort because you won't have to deal with any aggressive timeshare sales presentations; and when you buy resale you can often save thousands off the resort price. |
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There are a variety of investment types, which all depend on the level of risk an investor is willing to accept, when dealing with property investments.
The safest of these investments are called “core” properties. These investment properties generally seek an internal rate of return of less than ten percent (10%). Buyers of core properties use a limited amount of debt debt, which is usually less than 50% of a property’s value. An example of a core investment would be a retail property with a solid tenant locked into a net lease of ten (10) or more years. Another core investment would be a fully leased office building in a historically strong market with a high occupancy rate, such as Midtown Manhattan.
After core properties, the next-safest investments are called “core-plus.” These generally seek an internal rate of return of ten percent to thirteen percent (10% - 13%). Buyers of core-plus properties often use slightly more debt than core investors, usually from 50% to 75% of a property’s value. Core-plus investments are relatively safe, but provide the owner with an opportunity to increase the internal rate of return, in exchange for taking on slightly more risk. For example, a buyer may acquire an office building that is well occupied, but which has several leases expiring over several years. If the building is located in an office market that averages 90% occupancy, a property owner could reasonably assume that their building could consistently achieve that level. Core-plus investments also include the need for minor renovations, such as upgraded lobbies, common areas, bathrooms, or exteriors. After completing the necessary upgrades, a property owner could eventually raise rates, and in turn, increase the investment’s yield. |
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