A question on renting out points...

[MrRomance]

I guess the my main question would be is it worth buying extra DVC points for the sole purpose of renting them a smart idea? In other words I'd be buying contracts as investments.

Here is my situation...

I am going to be coming into some money fairly soon that I didn't expect to have. Putting the money in the bank will return next to no yield, stocks are too high risk for my nerves to take and I don't have a mortgage or debts.

If I were to purchase 2 x 250 point contracts at 2 of the more desirable DVC resorts and rented them out, I could potentially see a healthy return. The risk I guess is that I can't rent them out and get stuck with the dues which wouldn't be good. The upside would be if I ever wanted to do a big family celebration, I'd have the points to use.

ANyone else done this? Anyone considered it?

What is the likelihood that I could rent the points out successfully every year? Would it be better to put them in the hands of an agent?

Any views guys?

TIA

 

[disneynutz]

We rent out our extra points but I wouldn't call it an investment. When you consider the cost of your purchase, dues, and the work of being a landlord and vacation planner you don't really make any money.

We do it because we love Disney and we enjoy giving others a chance to stay at a DVC resort.

Bill

 

[Deb & Bill]

Have you considered the tax liability you might owe, especially from being a non-US citizen?

 

[mousefansmom]

I guess the my main question would be is it worth buying extra DVC points for the sole purpose of renting them a smart idea? In other words I'd be buying contracts as investments.

Here is my situation...

I am going to be coming into some money fairly soon that I didn't expect to have. Putting the money in the bank will return next to no yield, stocks are too high risk for my nerves to take and I don't have a mortgage or debts.

If I were to purchase 2 x 250 point contracts at 2 of the more desirable DVC resorts and rented them out, I could potentially see a healthy return. The risk I guess is that I can't rent them out and get stuck with the dues which wouldn't be good. The upside would be if I ever wanted to do a big family celebration, I'd have the points to use.

ANyone else done this? Anyone considered it?

What is the likelihood that I could rent the points out successfully every year? Would it be better to put them in the hands of an agent?

Any views guys?

TIA

We have two contracts and typically we use the points each year. However, we have rented extras on occasion. I am finding that this is more and more difficult....The Disboards have posting requirements that sometimes limit activity for posting. There are only a handful of other sites that allow "for rent" postings. For example...we booked Vero Beach for Spring Break this year and now our plans have changed and we will not be using the reservation. I have had the posting up on two sites (this is prime Easter week for a deluxe studio, and there is no DVC inventory left at VB for this week), at a very reasonable $11 per point, willing to flex on the dates a little and an offer a contract and references. I have had a few nibbles, but nothing concrete. I thought this reservation would go quickly and that I could help someone get a sold out reservation, but on Friday I will cancel and the points go into holding (which is fine for me because our next trip will be very flexible and I can easily use the points myself). I really think that a few years ago this reservation would have been gone almost immediately, but not currently. I would shy away from buying points with the intent of renting-too risky. However, buying with the intent of having great accomodations for ourselves has worked for us over our 10 years or so of owning.
Just my $.02

Good luck on your decision!
Mousefansmom

 

[ELMC]

I guess the my main question would be is it worth buying extra DVC points for the sole purpose of renting them a smart idea? In other words I'd be buying contracts as investments.

This is a popular misconception, and one that I urge you to look into further. Timeshares are NOT investments, they are a vacation purchase. Or, if you do want to consider them investments, they are very, very bad ones.

Investments imply that your principal remains intact. However, much like a motor vehicle, your initial investment will depreciate from day one until it will eventually approach zero (date of contract expiration). So you will need years of making a profit just to recoup your initial investment.

There are a few people that are mega point owners and have turned it into a business. But it's just that, a business not an investment. It requires large amounts of cash, time and connections in order to make it work.

My opinion is that you should first determine whether or not buying DVC is a wise way for you to spend your money. If you determine that it is, buy a contract that suits your needs at a resort you like. If you ever have extra points, try to rent them out and treat the cash as a little bonus. But IMO you should definitely NOT buy a DVC contract as an investment.

 

[Bonnie151]

Are you a higher rate tax payer? I suspect any gain would be quickly wiped out by tax if you are!

Being serious, though, you need to run the numbers. It's more difficult with fluctuating exchange rates, but you should be able to come up with reasonable ranges. I personally wouldn't buy with the sole intention of renting, but we did end up with a slightly larger contract than needed and renting out the extra points has been an incy wincy bonus for us.