Buy a big contract an rent off points?

[mikeymc1115]

We are looking into purchasing our first DVC contract and are a little stuck on points. Right now it is just DW and I but down the road there will certainly be more of us. What I'm getting at is that currently we will only need a certain number of points per year but I'm sure down the road that number will increase as our family grows. Does it make sense to buy a contract with what seems like a greater number of points than we currently estimate to need and simply rent off our remaining points whenever we want? Is that what many people do? Or do most buy smaller contracts and add on more contracts as they go? It just seems as though a better value pp and closing is to be had in the larger contracts. Plus if we were to rent off say half of our points it would just about cover our MF in those years.

Am I over analyzing things?

 

[Msmithmd]

If you have the cash spare, then you could buy what you think you need down the road, and rent the spare for now. But it seems easier to just buy what you need for now and save for later.

You can't know for sure if your first purchase home resort will end up being your favorite resort. You can add elsewhere later, if all your points aren't tied up at one place.

If you don't have the money to pay full cash for the purchase, then it's a no-brainer to buy only what you can purchase with current cash on hand.

Remember that DVC can restrict rentals tomorrow, in a way that could severely restrict or kill your business plan. There's no guarantee that they will continue their current rental indifference in the future.

If at some point DVC top management decides rentals are meaningfully impairing their ability to sell new product, then look out... So think of rental as a current flexibility convenience, rather than as a side business that you should start up.

 

[Dean]

We are looking into purchasing our first DVC contract and are a little stuck on points. Right now it is just DW and I but down the road there will certainly be more of us. What I'm getting at is that currently we will only need a certain number of points per year but I'm sure down the road that number will increase as our family grows. Does it make sense to buy a contract with what seems like a greater number of points than we currently estimate to need and simply rent off our remaining points whenever we want? Is that what many people do? Or do most buy smaller contracts and add on more contracts as they go? It just seems as though a better value pp and closing is to be had in the larger contracts. Plus if we were to rent off say half of our points it would just about cover our MF in those years.

Am I over analyzing things?

I don't think buying specific to rent is reasonable but buying more now knowing yo9u'll have the need later is a perfect choice. Generally in this situation I'd try to determine what you want now then some idea of what you need later. Likely the ideal choice is the perfect contract that gives you some extra now and a little under later on. This post of mine from another thread addresses that subject as does the thread in general to a degree but from the opposite direction. There are other variables of course such as a studio at VG is more than elsewhere and thus a cushion is likely not needed at all though I'd only buy GF to stay there mostly. But I wouldn't buy something I couldn't afford, my definition, pay cash and no consumer debt as a minimum.

 

[crisi]

I wouldn't buy a big contract to rent points out - not because of the rental issue (although I wouldn't do that either), but because of the possible resale issue.

If you own several small contracts and something happens - job loss, illness - you can sell as many off as you need to, but retain any you can. A large contract can not be split.

And if you are going for several small contracts anyway, you might as well buy what you need when you need it, and keep your money in more traditional investments. Renting DVC as a business - its doable, and probably even profitable, but there are better investments in my opinion.

 

[htmlkid]

We initially purchased 250 points at SSR as a resale. Then an amazing deal came up on a SSR 190 point contract that netted out after renting points that came with it to $32 a point. I specifically purchased that contract to rent out every year to cover the dues for both contracts. But then we fell in love with Aulani and now use those points to go there every year. I still believe if you can find an amazing deal that it's worth buying extra points to pay your dues. If you look at the net cost on the 190 point contract costing me $6k and netting me over 30% return each year.... That's not a bad investment. Granted a deal like that doesn't come around often....

Good luck in whatever you do

 

[Deb & Bill]

Don't forget about any liabilities for taxes when you rent out your points.

 

[mikeymc1115]

Don't forget about any liabilities for taxes when you rent out your points.

Could you elaborate please?

 

[Dean]

Could you elaborate please?

It's a taxable event. Basically rental income minus costs (mostly dues) equals money taxable at your marginal rate.

 

[bcvlover]

IMHO, you'd be better off using extra money to make a principal only down payment on your house mortgage, then going into debt for something that you may or may not need later down the line.

BCVlover

 

[DisWitt]

I'm glad that a DVC owner told me - before I bought - that he always wished that he had bought more points at the outset. He could never quite "find" the cash to do it later and always wanted more DVC, not less. To this day, I thank him for the advice because we bought probably double what I would have initially. And now I'm shopping for even more points because we love the vacations so much. So a little over-buying isn't a bad thing!

I wouldn't necessarily make a business model long-term off of renting (though many people have successfully done it). But buy what you can afford and know that you can always bank and rent what you don't need. We are already in a borrow-every-year situation which means (to me) that we need to rent or buy some points.

And to a PP's point, be sure to break what ever contract you buy into smaller chunks. We broke our initial purchase into two contracys with the idea that one could go to each DS if they inherit them. Easy and clean. But it also means that we could sell one (contract, not son) and still keep another.

 

[Dean]

And to a PP's point, be sure to break what ever contract you buy into smaller chunks. We broke our initial purchase into two contracys with the idea that one could go to each DS if they inherit them. Easy and clean. But it also means that we could sell one (contract, not son) and still keep another.

When one was buying retail that was reasonable. The problem with the current layout is that, for most, buying retail isn't reasonable and to get multiple contracts will usually add $5-10 a point PLUS $500 or so for each extra contract. It also means it may be harder to find the contract(s) that fit one's needs. IMO it isn't worth it simply for insurance on possibly selling later and certainly isn't worth it to buy retail for this option.

 

[erikthewise]

Buy what you need NOW. If you need more later, or think you do, you will be able to buy it. BCV was the most popular DVC resort, and it is has always been available either direct or resale for those willing to pay the going rate.

Unless you are desperately in need of a new job/hobby, don't buy to rent.

 

[crisi]

I'm glad that a DVC owner told me - before I bought - that he always wished that he had bought more points at the outset. He could never quite "find" the cash to do it later and always wanted more DVC, not less. To this day, I thank him for the advice because we bought probably double what I would have initially. And now I'm shopping for even more points because we love the vacations so much. So a little over-buying isn't a bad thing!

I wouldn't necessarily make a business model long-term off of renting (though many people have successfully done it). But buy what you can afford and know that you can always bank and rent what you don't need. We are already in a borrow-every-year situation which means (to me) that we need to rent or buy some points.

And to a PP's point, be sure to break what ever contract you buy into smaller chunks. We broke our initial purchase into two contracys with the idea that one could go to each DS if they inherit them. Easy and clean. But it also means that we could sell one (contract, not son) and still keep another.

Just as a contrast... I bought the minimum and resisted the desire to do a small add on when we wanted to sneak in an extra trip - I'm so glad. Even with 150 points for our family - its too many. My son is not a Disney kid. My daughter is, but she is fine with trips every few years. We like to vacation places other than Disney. At this point, the points are "paid for" and we have at least one promised trip that we need to get in - then I'll be making a decision to keep or sell - if we keep, we may just rent out the points with the thought of maybe using them in retirement - but I'm balancing that against my desire to have pets - you can't have a cat or a dog and spend a month away every year in a place that doesn't allow them.

 

[Deb & Bill]

... - but I'm balancing that against my desire to have pets - you can't have a cat or a dog and spend a month away every year in a place that doesn't allow them.

That is the big issue for us. We have two dogs and two cats. Last trip (we were gone twelve nights) cost us nearly $1800 for boarding, plus incidentals like vaccinations that were due. We don't have anyone we'd leave them with for the time we are gone. Tried that once and it was not good.

Bill was just talking about saving up our points next year (banking them) and taking a two or three week trip to Disney, plus add on a week at the beach using our other timeshare. But we wouldn't be able to afford the vet/boarding fees for three or four weeks.

 

[mikeymc1115]

So think of rental as a current flexibility convenience, rather than as a side business that you should start up.

I certainly would not be purchasing in order to turn a profit, I was just saying that it seems like I am able to rent off any unused points, if any at all, and get back some of my dues. I'm not looking to start my own business, just don't want to see points go to waste before we are a big enough family to use them. But who knows? Maybe we will end up staying at higher-point DVCs now that we have a chance to see them an pick out our favorites. We might end up needing those points anyway, as it seems a lot of people do.

 

[GiantsNiners11]

No, I wouldn't plan on this.

 

[mikron]

Buy all you can afford now. Pay taxes on the profit after dues and still worth the investment. Large point package is ok but if you need to sell could cost you money to lower price per point to sell. Point cost for rentins is at $13.00 to $15.00 with more guest then you will have points for.

 

[HokieGCC]

You can be sure that when you are ready to buy more points opportunities to do so will be plentiful. It is not a sure thing but likely that as time goes on points will get cheaper resale for the 2042 properties and you would be better off investing that portion of your money until you are going to want the points. Also, it is possible that family members will not take to Disney as an every year vacation. You may want to wait and see how that goes. I know some do it but taking infants to Disney is a chore and I would say that it is not enjoyed at all until about the age of 3 (5 is better). So, you may actually stop going to Disney at all for 3-5 years making even the smaller purchase a problem (to rent).

Lumping all this together you will have the information you need when your youngest child is somewhere around 8-10 years old to make a decision about DVC. Don't forget about soccer, baseball, softball, swimming, basketball, volleyball, and the gazillion things that your kids may get involved in.

All this is pure opinion based on my experiences and observations and everyone has their own formed opinion that are just as valid.

 

[bakerworld]

The fact that you're asking the question means that you're not comfortable with such a larger purchase so look for an irresistible purchase in a smaller amount of points. Resale is a patience/gamble game. To be successful you have to know when the trigger is pull-able for you.

Frankly our first contract is what we usually transfer out to other venues. Transferring if you can do it for when others don't want to vacation works but it doesn't always work and you better really want to stay where you buy because you'll end up there sometime.