Buying a beach front property or a vacation villa may be easy for the rich and wealthy, but not for common middle class people. The introduction of the timeshare concept gave hope to those people who could not afford to buy a brand new vacation home. That is one of the reasons why the timeshare industry has grown by leaps and bounds ever since its inception in the United States.

One of the aspects of a timeshare property that attracts most people is that they can have a wonderful vacation home without having to worry about its upkeep and maintenance. But at the same time, people have many misconceptions about timeshares.

One of the biggest misconceptions is that they compare timeshares to regular real estate property and consider it as an investment option. But in fact, it should be thought as an investment in your dreams (i.e., vacationing at a place where you want to go every year). Investing in real estate could reap profitable returns, but if you invest in a timeshare, a profit may not be guaranteed. In fact, you may end up losing money.

What if you expect no profits from your purchase but want to make sure you won't incur any losses, either? People who buy timeshares often ask this question. They want to make sure it's really worth their while to buy a timeshare. In order to answer the questions, you need to ask a few more. What would it cost you to rent accommodations elsewhere? Will the timeshare appreciate in time? What kind of interest rate is available for timeshare purchase? Read on, and you'll find a simple method of calculating these factors so that you can analyze the feasibility of buying a timeshare.

Consider the worth of your investment as profitability. The profitability should be a measure of the comparable rental rate, rate of appreciation and your finance rate. If the sum of all these is a negative number then, assume that you are losing money in your investment. The rental rate is the ratio of the rent of that vacation property to the buying price of that timeshare. Suppose if corresponding rent of that vacation timeshare is $1,000 and the buying price is $10,000 then the rental rate is 10%. Now if we include the annual maintenance cost, membership and all other miscellaneous expenses, if it comes around $500. So the actual saving in rent will be $500 now and the rental rate will be the ratio of $500 to $10,000 which gives us 5%.

Let's start with an annual property appreciation of 10% and a finance rate of 16%. By adding the amount received for rent payments to the appreciation value and subtracting the interest paid on financing, we'll end up showing that you are losing 1% more than your assets over a year's period. Of course, this is only a rough estimate which may not give you the true picture. It should only be considered as a place to start. Both depreciation and finance rates will vary from year to year, too.

The maintenance fees and other fees may also vary with different locations. Some resorts charge reasonable maintenance and other fees, but some exorbitantly high fees. So, this is also should be a factor in deciding which resort to choose. It is not a smart idea to pay unusually high fees when you don't know whether you can utilize the property year after year and you may think of renting out the unit which is not a profitable proposition either.

Another good idea is to add up the cost of your timeshare for the entire year (i.e., all fifty two weeks) and see. For the above investment, it may be around 520,000. But does the timeshare property cost that much if somebody wants to buy it as a real estate property? The extra money goes into the pockets of real estate developers who are selling the timeshare. So carefully weigh in all the factors discussed above before buying a timeshare property.