What is the difference between renting and buying a timeshare

You can earn year-round revenue: Not only will your vacation rental be the consummate host for your next getaway, but it will also help you earn money to fund your vacations. Underwriters will look at your debt-to-income or DTI ratio, so if you already have a mortgage, you will need to be able to show you have enough of a financial cushion to borrow for a secondary residence.

Of course, you can outsource these tasks by hiring professionals, including a full-service vacation rental property management company like TurnKey Vacation Rentals.

Pros and cons of investing in a timeshare Timeshares allow multiple, joint owners to use a property as a vacation home under a time-sharing agreement. Here are some of the pros of owning a timeshare: You can make repeat visits to your favorite vacation destinations: If you have a location that you like to frequently visit, and you tend to take vacation the same time each year, timeshares can be a good option for vacations, Newton says.

In theory, you can exchange your timeshare week for different locations depending on availability, however a common complaint is that the availability is scarce in desirable locations, Newton points out. Timeshare rooms are often spacy: Timeshare properties often have rooms larger than hotels, making this a nice option for larger families, Newton says. In fact, one survey found that 52 percent of Americans have unused vacation days that expire.

Due to the pre-paid nature of the products, timeshare gives owners the discipline to vacation more consistently, says Peter Roth, vice president of marketing, communications and industry relations for American Resort Development Association. The trade association represents vacation ownership and resort development industries. Timeshares can certainly help you save on vacation, Roth says.

One of the most important decisions in choosing to buy a timeshare is whether to go with a brand that offers fixed-week or points-based ownership.

Though fixed-week arrangements do allow for rental opportunities or trading with other owners, they are very limited in terms of flexibility. It stands to reason that points systems have been embraced by more and more resort brands, and have grown in popularity. Think of points as a sort of currency. Owners can book dates throughout the year, and even break up their week into shorter stays at some destinations.

The benefits of points clubs extend beyond resort bookings, as well. At the Marriott Vacation Club, for example, owners have access to various collections in their Destinations Exchange Program, and can trade points for cruises, culinary tours, and excursions like mountain biking and river rafting.

In a nutshell, it boils down to options. Many of the best windows at the best resorts think Park City at Christmas, or Aruba during spring break come with high redemption costs.

Moreover, these prime windows tend to get booked fast — in some cases, within a few days of availability. This means you not only need to own a lot of points to book that dream vacation — you might need to plan it up to a year in advance. You may want to wait to hold off on buying a timeshare while staying in one. Consider carefully what you value in vacation, and give thought and time to your decision — make the final call from the comfort of home.

Renting a timeshare from an owner is another great way to explore the benefits of ownership before committing. Are you a traveler who enjoys spending winters by the shore? For example, the owner of a week in January at a condominium unit in a beach resort might trade the property for a week in a condo at a ski resort this year, and for a week in a New York City accommodation the next.

Exchange clubs can involve challenges, however. Usually, owners are limited to choosing another property classified as similar to their own. Plus, additional fees are common, and popular properties might be tricky to get.

If you don't have the full amount of the timeshare purchase price upfront, expect to pay high rates for financing the balance. Since timeshares rarely maintain their value, they won't qualify for financing at most banks. If you do find a bank that agrees to finance the timeshare purchase, the interest rate is sure to be high.

Alternative financing through the developer is typically available, but again, only at steep interest rates. Although owning a timeshare means you won't need to throw your money at rental accommodations each year, timeshares are by no means expense-free after the initial purchase.

A timeshare owner must also pay annual maintenance fees, which typically cover expenses for the upkeep of the property. These fees are due whether or not the owner uses the property. You might recoup some of these ongoing expenses by renting your timeshare out during a year you don't use it if the rules governing your particular property allow it.

However, you might need to pay a portion of the rent to the rental agent, or pay additional fees such as cleaning or booking fees. Purchasing a timeshare as an investment is rarely a good idea. Since there are so many timeshares in the market, they rarely have good resale potential. Instead of appreciating, most timeshares depreciate in value once purchased. Many can be difficult to resell at all. Instead, you must consider the value in a timeshare as an investment in future vacations.

If saving or making money is your number one concern, the lack of investment potential and ongoing expenses involved with a timeshare are definite drawbacks. There are a variety of reasons why timeshares can work well as a vacation option. If you vacation at the same resort each year for the same one- to two-week period, a timeshare might be a great way to own a property you love without the high costs of owning your own home.

Timeshares can also bring the comfort of knowing just what you'll get each year, without the hassle of researching, reserving, and renting accommodations, and without the fear that your favorite place to stay won't be available.

Your time has economic value, too. Additionally, some timeshares offer perks, such as the right to use fitness rooms and hot tubs. Some even offer on-site storage, allowing you to conveniently stash equipment such as your surfboard or snowboard, thus avoiding the hassle and expense of carting them back and forth.

And, the fact that you might not use the timeshare every year doesn't mean you can't enjoy owning it. Many owners enjoy periodically loaning out their weeks to friends or relatives. Some donate the timeshare weeks, as an auction item at a charity benefit, for example. If you don't want to vacation at the same time each year, flexible or floating dates provide a nice option. Unfortunately, such a donation offers no tax deduction. If you'd like to branch out and explore, consider using the property's exchange program.

Just make sure a good exchange program is offered before you buy.