Madeira Beach, Florida

Photo courtesy NIST Boulder Laboratories

Buying Property a Week at a Time

­Usually, when you think about buying real estate, you envision an entire piece of property that you own by yourself. You can use it whenever you want and do whatever you want with it.

A timeshare is a different kind of real-estate purchase. Instead of paying full price for the property and owning it yourself, you pay a share of the price. This share allows you to use the property for a certain period of time every year. The rest of the year, other people who purchased shares get to use the property. How long you get to stay there depends on your share. A 1/52 share will get you one week per year.

There's really just one kind of property that people only want to use once a year -- vacation property. That's why you'll find the vast majority of timeshares in vacation hotspots like Florida, Colorado and Mexico. A timeshare provides a nice place to stay while on vacation, so people who tend to return to the same vacation spot year after year are prime candidates for timeshare ownership. They never have to worry about finding accommodations for their annual trip, and the property is maintained for them, although share owners do have to pay maintenance fees.

Most timeshare purchases are deeded (or "fee simple") timeshares. This means that the purchaser is buying an actual share of ownership in the resort. Non-deeded timeshares, also known as right-to-use, certificate or vacation-interval timeshares, are more like a club membership. The purchaser owns the right to use the property for a specific time period but doesn't own any real property. The terms of a non-deeded timeshare can include an expiration date, while deeded timeshares confer permanent ownership.

While a 1/52 share is average, there are smaller shares (1/104, or one week every other year) and larger shares (1/12, which gives you an entire month to use the property each year). Larger shares can usually be split up for use at different times of the year. The specific time of year that a share can be used can affect the price -- a share in the middle of prime tourist season will be more expensive. The specific time when your share can be used is scheduled ahead of time, although it may be possible to trade shares with other people at the same resort or even with timeshare holders at other resorts. We'll discuss timeshare trading in more detail later.

Next, we'll break down the dollars and cents of owning a timeshare.