How many times have we tried to justify a big ticket purchase to our partner with the old excuse “but it’s an investment.”

Buying in to a timeshare holiday property falls in to that category (“we’re investing in and prepaying our future holidays”) along with the classic car, gym membership (“I’m investing in my health”), costly clothes purchase (“I’m investing in my appearance”) and the list goes on.

Any of these purchases can be a good idea for a whole range of reasons but don’t con yourself into thinking the major benefit is they’re a good financial investment.

Just to check we weren’t alone in being wary of timeshare investments we checked with two of our property guru mates, Chris Gray of Empire Property and Louis Christopher of SQM Research, who had similar concerns.

Timeshares are where you buy into a property, usually a resort style apartment in a holiday complex, with a group of other investors. Your investment entitles you to a certain number of week’s use of the property each year.

Sounds pretty good doesn’t it? Lock in future holidays at today’s prices with the flexibility to swap weeks at another resort.

Most people are in the property market for capital growth, but there is a limited growth in the holiday property market. That makes it a riskier investment than normal property ownership, but timeshares are also more an investment in your leisure rather than for serious financial gain.

In property there’s never any right or wrong, just pros and cons that suit different people at different times. Timeshare is no exception.

Pros

. Enforced vacation

By having holiday accommodation effectively booked each year you’re made to take some time off. This can be a great motivation for workaholics that seem to get stuck in their routine and just accumulate leave each year.

. Swap and see the world

A lot of timeshares allow you the flexibility to swap your time with other people. There are heaps of online forums of holidaymakers looking to go somewhere different each year so by having accommodation to trade you can see the world by swapping your place with others.

. The numbers can work

The initial investment and ongoing maintenance costs of a timeshare property can be a significant expense, but by doing the maths before investing the venture can work out financially in your favour. It’s all about the right purchase prices and a reasonable annual maintenance fee.

Cons

. A lack of control over your investment

This is primarily because on top of the compulsory strata fees, selling the investment can be a difficult process. It can be hard to find buyers to on-sell your timeshare to and doing so can attract a significant discount to what you paid.

In some resorts you’re forced to sell through the management company rather than a real estate agent of your choice.

. Ongoing maintenance fees

Like any property there are annual maintenance costs attached which can be significant in the case of holiday accommodation as lifts, pools and gyms (the things people expect on holiday) are expensive to maintain.

The costs you face all come down to the property agreement and if vacancy rates are high, there may be additional costs that are passed on to you.

That’s why the agreement with the timeshare management company is crucial in terms of the rent you receive from the property and the ongoing management fees. If you’re relying on the manager to fill the property year round, that reliance is a big risk.

If you have weighed up the pros and cons and decided timeshare might work for you, here are a few key considerations in making the big purchase.

Look at the resale market as there are currently plenty of investors looking to exit their properties for whatever reason. In these tough times as people are forced to give up their leisure investments in a fire-sale like environment.

Make sure any purchase is with a reputable company that you’re comfortable investing with. And it’s a deeded property that gives you an actual investment in the property being shared. Some timeshares are simply a ‘right to use’ and expire after a certain period so make sure you’re investment is binding and lasting via a deed of ownership.

And of course it needs to suit your schedule. You want to be able to choose the time you go each year and be free to trade and sell your holiday time with other “timesharers”. If you’re locked in for the same week at the same place each year you might come to quickly rue the investment. Flexibility is crucial.