It’s smart to be cautious about any financial investment. The last thing you want is to pour tens of thousands of dollars into something, only for it to collapse and take your money with it.
Luckily, timeshare Clubs have been developed to minimise the risk to Owners/Members as much as possible.
Remember how we talked about the Developer and the Club being two separate entities? The Developer is just a regular company, but the Club is set up using a Club-Trust structure, where a timeshare Trustee (sometimes known as a Custodian) protects the occupancy rights of the Owners/Members by holding Club property in trust.
If you’re confused, it’s okay – what that all means is that the Club is completely separate from the Developer’s financial activities, so, if the Developer suffers a financial collapse, the Club is safe. It uses its Owners/Members’ maintenance fees (we’ll talk about what those are in a minute) to maintain timeshare properties and keep everything running smoothly.
A Club can collapse, but the possibility of it happening is extremely low. As long as a Club’s management company budgets wisely, keeping enough aside to manage ongoing expenses, there is very little risk involved with buying timeshare.
It is important to acknowledge that while timeshare is legally classed as an investment product, it is a lifestyle investment in holidays for the future, and is not intended to provide financial gain. You should not expect to make money on your timeshare ownership.