Timeshares and vacation rentals are increasingly popular accommodation options. Here, we'll answer common questions about how they differ and highlight the pros and cons of each from both an owner and guest's perspective.

What is a Vacation Rental?

The Basics: The rental property belongs to an owner, who decides when to rent their space to guests. The owners are often limited by the rules of their condo board, homeowner's association, or local government, depending on circumstance and location. Some owners opt to hire a property management company to maintain the premises and handle guest communication. Since the rental is fully the owner's property, he or she can choose its decoration, amenities, and dates of availability.

What is a Timeshare?

The Basics: A timeshare's ownership is differentiated by the fact that its ownership is shared. Typically, each owner has a certain amount of time each year (usually broken down by weeks) that he or she can use the property. There are two common types of timeshare agreements:

Deeded Timeshare

Under a deeded timeshare, a buyer is granted a deed to the property and is consequently a partial owner of it. In the U.S., this can mean the owner has the right to sell their portion, give it away, or bequeath it in a legal will.

Right-to-Use Timeshare

The right-to-use arrangement is more similar to a lease than an outright ownership. This type of agreement grants use of a property for a set week period over a set number of years, but as there is no ownership, the buyer can lose the right to access the property when the agreement expires or should the timeshare company go bankrupt, for example.

The timeshare arrangement you prefer depends on whether you want to invest in a property or simply rent one for a vacation.

For Buyers Considering Investing In A Vacation Rental or Timeshare

Buying a Vacation Rental

-Vacation Rental Benefits for Owners

  • You fully own a property
  • You can customize the decor and design it to appeal to certain demographics like pet owners or seniors
  • You can use a variety of methods to attract customers: personal sites, listing sites, even partnerships with local tourist organizations

-Vacation Rental Drawbacks for Owners

  • You're liable for any damages or issues with the property
  • If you live out of the area, you may have to pay a property management company to take care of the property

Buying a Timeshare

-Timeshare Benefits for Owners

  • It's less of an initial investment than a vacation rental
  • You have guaranteed time to use the property or sell that time to others

-Timeshare Drawbacks for Owners

  • You don't fully own the property
  • You may have to pay maintenance fees and property taxes
  • You may have to use a special broker to sell your unused time, subject to the requirements of the timeshare contract

For Guests Considering Booking a Vacation Rental or Timeshare

Booking a Vacation Rental

-Vacation Rental Benefits for Guests

  • Vacation rentals are available all over the world: cities, towns, resort areas, even the middle of nowhere
  • You can find a property that matches your specific needs
  • Owners are often willing to accommodate guests' needs, and guests might be able to get a better deal on their reservation

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-Vacation Rental Drawbacks for Guests

  • Owners may not maintain the property to your standards
  • Communication with the owner may be difficult if they are not located nearby

Booking a Timeshare

-Timeshare Benefits

  • Timeshares are often located in desirable resort areas
  • Timeshare properties are held to a certain uniform standard of care, cleanliness, and amenities

-Timeshare Drawbacks

  • Timeshares have restrictions on decor and modifications
  • You will have limited control over which specific timeshare in a resort you will get, as they are only available on unused weeks
  • You often have to book in week segments, limiting shorter or longer term booking availability

Want to learn more?

Read about the vacation rental industry here!