Jun. 17, 2007 - Does $18,000 for a week's vacation for the rest of your life sound good?

That's the average price paid last year for a time share. Despite that high barrier to entry, the time-share business is booming. But does it make financial sense to buy a piece of home away from home?

Well, in the example above, the cost would work out to about $600 for each week if you had the time share for 30 years.

Like a lot of consumers, I was always skeptical about the concept of paying upfront for a lifetime of guaranteed annual vacations at the same resort. The initial investment is a major turnoff, and the thought of always visiting the same place runs counter to many vacationers' idea of what travel should be.

But spending a few nights at a relative's poolside condo in Palm Springs last month convinced me that the time-share model can pay off.

Staying at a time share definitely has some advantages over being a hotel guest. For one thing, time-share accommodations generally offer more space than a typical hotel room, which is nice on a long trip with kids. In addition, going to the same resort every year means being part of a community, and time-share vacationers form lasting friendships.

Even if community is not your thing, time shares have come a long way. Virtually all time shares today are affiliated with global exchange systems, so owning one doesn't mean you're headed to the same resort near DisneyWorld for the next decade.

Still, there's that gigantic initial payment for a piece of resort property.

If $18,000 sounds high, consider this: One in five buyers purchases double that amount of time, according to the American Resort Development Association, the main industry group for time shares.

On top of that, all time shares also come with property maintenance fees, which average about $500 a year. To recoup that and the purchase cost takes time, and the math can get pretty complicated.

"When it all boils down, if you paid ... $10,000 for the property, you're going to break even in 10 years," said Mario Collura, a time-share owner and president of TRI West, a time-share resale company based in Marina Del Rey. He said it helps to think about a time share as the equivalent of two luxury hotel rooms because most units come with a kitchen and living room area.

Over 10 years, the time share begins to pay for itself. Ignoring increases in hotel rates, a luxury hotel room -- at $400 per night, or $2,800 a week -- would come to $28,000 after 10 years. By comparison, the $10,000 time share Collura cited would require an additional $500-a-year maintenance fee but still come in at $15,000 over 10 years, a considerable savings over the hotel.

His 10-year break-even analysis does not include money that could be made selling the property eventually because every time-share situation differs in terms of an exit strategy.

Generally, the safest time-share purchase is a deeded property that can be sold later or transferred to another family member, just like a house. He said other time-share arrangements that are less common in the United States may include a "right to user" clause that restricts ownership to a certain period of time. He said buyers have run into problems in places such as Mexico when they weren't aware of these restrictions before they agreed to buy.

People who do buy deeded time-share units with the idea of eventually selling also need to keep in mind that some properties age better than others.

"Over the long term, a good Hawaii property will maintain its value," he said, "but if you have a Motel6 in Palm Springs, there's not going to be a lot of demand for that."

Andy Sirkin, an attorney specializing in law covering time shares, described an even larger financial advantage to time share over hotel travel. He said the break-even analysis is misleading because it ignores the appreciation of the property and other financial savings, such as tax breaks.

"Taking a conservative average of 3percent per year, (a $15,000) property would be worth $19,500 at the end of 10 years. Assuming your cost per night would be $300 for the same house or apartment if you rented, you've had 70 nights ($21,000) plus $4,500 in appreciation, less your dues payments, which are likely to be about $1,200 per year or $12,000 over 10 years."

Confused?

It's no wonder that time-share developers from Sonoma to San Diego put so much effort into sales seminars aimed at teaching potential buyers how the model works.

My relatives, Aunt Marion and Uncle Jeff, have owned their time share in Palm Springs for years. But they still disagree about whether it was worth it. He says that while he likes staying at the same place fairly close to home, the financials don't really add up. She thinks they do.

Even The Timeshare User's Group, an online community of owners, admits that the financial advantage of owning a time share is arguable. According to a breakdown of costs by the group, buying a time share versus renting one produced a savings of just $378 over 10 years.

If the amount of savings realized is debatable, the appeal of time shares is not. Consumers' desire for flexible travel and super-sized rooms has helped drive steady growth in time-share sales and resort construction during the past decade.

Since 1995, real estate developers built about 400 time-share resorts, bringing the number to almost 1,700 nationwide, according to a study by Ernst & Young. Along with the uptick in building, time-share sales also grew in the same period, from $2billion in 1995 to $8.6billion in 2005.

Sales have also benefited from the Internet growing into a viable venue for information and transactions, and from the aging of original buyers who are now unloading their time shares purchased in the 1970s.

But time-share owners and experts say that focusing on the financials alone misses the point.

Sirkin extols other intangible benefits of time sharing, such as the emotional connection of owning property in a place that you love.

"I can defend it on the economics, but the beauty of the time share is you're at home," said Collura, the TRI West president who owns time shares at Ka'anapali Beach in Maui and the Four Seasons Resort Aviara in Carlsbad. "You get the owner breaks at the golf course; you get the owner breaks at the restaurants."

Angela Lee, a stay-at-home mom in Manhattan Beach, became a time-share owner to save money, but it's the amenities of time-share travel -- namely the spacious rooms -- that have made her a fan.

Four years ago, Lee wanted to send her mother and aunts to Hawaii. But after looking at spending about $3,000 on hotel rooms for the trip, Lee and her husband decided instead to buy into Worldmark, a vacation club that uses a point system. The Lees paid $13,000 for enough points to buy them three or four weeks of vacations every year, and they also pay $700 a year in maintenance fees.

She said her family has made the most of its membership, traveling to Big Bear, Park City, Utah, Disney World and Hawaii, and staying in relatively luxurious digs.

"This is for a person who wants to go on vacation and stay at a place that goes beyond a hotel room. If you want a five-star, there is a high possibility that you'll get it."

Still, she agrees with the 10-year break-even analysis that Collura laid out. She said that whether buyers are investing in a traditional time share or a vacation club, they should know exactly what they're getting in to and learn the intricacies of the particular plan to make the most of it.

Under that advice, signing on the dotted line for a time share after a 90-minute presentation would seem like a bad idea.

"Every company has a right to make a profit, but as a consumer, you need to get into these deals with your eyes wide open," said Stanley Hargrave, a certified financial planner in Riverside. Because of his proximity to the Palm Springs area, he sees a lot of clients who ask about buying into time shares.

In general, he's skeptical, though he sees some logic in buying on the growing time-share resell market.

"Time shares are significantly overpriced if you buy them (new). Make sure you read the contract agreement. Don't buy without involving someone who knows real estate law before you sign. They are not written for the normal consumer."

And don't buy on impulse. "If you are going to buy a time share, be very confident that this is a place you want to spend a lot of time because that's what makes it worth it," Hargrave said. "If it's just someplace you went and you liked it, don't do that. If you want to visit the place, plan it into your budget, that's probably a much better way to do it. It would probably cost you no more than the monthly payments."

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