Buying a beach front property or a vacation villa may be easy for the rich and wealthy, but not for common middle class people. The introduction of the timeshare concept gave hope to those people who could not afford to buy a brand new vacation home. That is one of the reasons why the timeshare industry has grown by leaps and bounds ever since its inception in the United States.

Many people love timesharing properties because it is like being on vacation and at the same time being at home, without worrying about keeping it clean and tidy; but, on the other hand, people have many prejudices about timeshares.

One of the biggest misconceptions is that they compare timeshares to regular real estate property and consider it as an investment option. But in fact, it should be thought as an investment in your dreams (i.e., vacationing at a place where you want to go every year). Investing in real estate could reap profitable returns, but if you invest in a timeshare, a profit may not be guaranteed. In fact, you may end up losing money.

But what if you still want to buy timeshares, expect no profit from them, but neither loss at the same time? There is always one question in the minds of those people who are planning to buy timeshares. Is it really worth buying a timeshare? To answer this question you have to go through an analysis of various factors. An analysis should consider factors like comparable rent of alternative accommodation, appreciation of the timeshare property and your finance rate. How do you do it? Here is a simple calculation...

What is the worth profit of your investment? The profit on your investment should consider the comparable rental rate, finance rate and rate of appreciation in value. If these results are a negative number, then it is most likely that you are losing money. The ratio of rent for vacation property and what it costs to buy a timeshare is something to consider. For example, if the rent on your vacation timeshare is $1,000 with a buying price of $10,000, the rental rate would be 10%. Also consider the other expenses of maintenance, membership and any other expenses, which amounts to about $500. With this in mind, the actual savings in rent would be about $500 with a rental rate ratio of $500 to $10,000, in other words, 5%.

Let's start with an annual property appreciation of 10% and a finance rate of 16%. By adding the amount received for rent payments to the appreciation value and subtracting the interest paid on financing, we'll end up showing that you are losing 1% more than your assets over a year's period. Of course, this is only a rough estimate which may not give you the true picture. It should only be considered as a place to start. Both depreciation and finance rates will vary from year to year, too.

Different resorts will have different fees for maintenance and other items. You'll find the fees reasonable at some places and terribly high at others. Therefore, when deciding on a resort, it's wise to look into the fees you will incur there. If you haven't been guaranteed use of the property for a number of years, you shouldn't consent to paying exorbitant fees. You also have to consider the feasibility of renting out the unit at times you may not want to use it. High fees will deter renters and deflate profits.

Another good idea is to add up the cost of your timeshare for the entire year (i.e., all fifty two weeks) and see. For the above investment, it may be around 520,000. But does the timeshare property cost that much if somebody wants to buy it as a real estate property? The extra money goes into the pockets of real estate developers who are selling the timeshare. So carefully weigh in all the factors discussed above before buying a timeshare property.