Buy Resale just to Rent Points?

[bwbuddy5]

I know, sounds crazy, but hear me out. I'm nearing retirement, and plan to take the extended family to WDW when I do so, then perhaps maybe every 4-5 years thereafter. I've been reviewing the point rental sites, but find myself uncomfortable in that I may not find either the DVC resort I want, or a renter who has the amount of points I need for the trip.

So, what if I just bought a DVC resale at the location I want, to get the 11-month peace of mind in the years that I actually plan on making use of the points? It appears to me that I could rent the points for enough to pay for the annual dues (in the years I don't use them myself), and I would still breakeven with my initial purchase price after a few trips (compared to renting someone else's points).

So, what am I missing?

 

[supersnoop]

Using a contract for "commercial" purposes is against the terms of the contract. It's not a well-defined term in the contract, but renting out points for 4 out of every 5 years could get you sideways with Disney.

 

[bwbuddy5]

Using a contract for "commercial" purposes is against the terms of the contract. It's not a well-defined term in the contract, but renting out points for 4 out of every 5 years could get you sideways with Disney.

My intent wouldn't be for commercial gain, more to just guarantee the points are there when I need them, and to otherwise break even. But, I understand what you're saying.

 

[disneynutz]

You have to work the numbers and expect that Disney will change the renting rules if you are taking money from the mouse. Plus you have to deal with a rental broker or a direct guest and renting can be taxable income event.

 

[mustinjourney]

I was asking the same questions to myself a few months ago when I got started in all of this -- short answer is that if you get the right price on a loaded contract, then it is possible to get annual returns around 6-10% assuming nothing goes wrong.

http://www.disboards.com/threads/buying-dvc-and-renting-out-points-investment.3321628/

Some people have done some advanced spreadsheets that you can play around with the data -- although I can't find them right now.

 

[mustinjourney]

I know, sounds crazy, but hear me out. I'm nearing retirement, and plan to take the extended family to WDW when I do so, then perhaps maybe every 4-5 years thereafter. I've been reviewing the point rental sites, but find myself uncomfortable in that I may not find either the DVC resort I want, or a renter who has the amount of points I need for the trip.

So, what if I just bought a DVC resale at the location I want, to get the 11-month peace of mind in the years that I actually plan on making use of the points? It appears to me that I could rent the points for enough to pay for the annual dues (in the years I don't use them myself), and I would still breakeven with my initial purchase price after a few trips (compared to renting someone else's points).

So, what am I missing?

Google "buying DVC as an investment" and read through all of the different links it gives you. This topic has been covered a lot...and the information is largely still applicable today.

 

[mustinjourney]

I was asking the same questions to myself a few months ago when I got started in all of this -- short answer is that if you get the right price on a loaded contract, then it is possible to get annual returns around 6-10% assuming nothing goes wrong.

http://www.disboards.com/threads/buying-dvc-and-renting-out-points-investment.3321628/

Some people have done some advanced spreadsheets that you can play around with the data -- although I can't find them right now.

I think this link is the one with the calculator...

http://www.disboards.com/threads/dvc-financial-analysis.3436588/

 

[bwbuddy5]

Thanks for the links, good financial analyses. I'm actually an accountant and my inquiry is not so much financial but practical. Bottom line, I plan to visit WDW every 4-5 years, want to stay in DVC accommodations, and don't want to worry about trying to find a renter who has enough points for what I want. It's hard to put a value on peace of mind and convenience.

So, I have no desire to do anything but break even. If I proceed with a resale purchase, how confident should I be that I could get my points rented in my off years?

 

[_auroraborealis_]

Depends on the price.

 

[Disney Dad ADL]

According to David's website, all points are rented out if you allow him to borrow points and give enough time. You get $11-$13 per point depending on your resort.

Though I have not rented points, The sense I get from other owners is that it has historically been pretty easy to rent out points. I guess the question is whether you think that breaking even is worth the effort of renting vs the potential risks which are:

- room demand goes down due to continued increase in park prices, continued decrease in international visitors, recession, lack of interest in Disney etc.
- DVC overbuilds, flooding the market with points and decreasing point value on the rental market
- large annual dues increases outpace increase in rental prices
- DVD does something to discourage rentals. I do not believe it is legal for them to outright ban renting, but maybe there is something they can do to make it undesirable.
- liability for damage to rooms and unpaid room charges (pretty rare I believe, but have heard a few stories about how a renter somehow gave a bad credit card and Disney tried to get the owner to pay)

Some more active owners have mentioned it has been a bit more difficult renting out this year, but that's just based on what I've read rather than any real knowledge.

Say you can break even renting out your points, but you can save 30% on the years you actually use your points every 5 years or so. Say 30% of $2500 is $750. Is the work and risk of renting out DVC worth saving $750 every 5 years to you? If the answer is yes, then maybe buying to rent is a good idea.

Personally, I wouldn't take the risk and hassle just to take a trip every 5 years. I would just pay cash for a room and be done with it, but i suppose if the rental market continues to be good and increases as it has in the past, then your plan will work out in your favor.

 

[KAT4DISNEY]

Thanks for the links, good financial analyses. I'm actually an accountant and my inquiry is not so much financial but practical. Bottom line, I plan to visit WDW every 4-5 years, want to stay in DVC accommodations, and don't want to worry about trying to find a renter who has enough points for what I want. It's hard to put a value on peace of mind and convenience.

So, I have no desire to do anything but break even. If I proceed with a resale purchase, how confident should I be that I could get my points rented in my off years?

The easiest peace of mind is just "renting" a DVC villa from Disney. For trips every 4-5 years that's what I would do if you didn't want to rent thru an owner. Owning to go that infrequently is not very efficient and may or may not be financially good.

So, lets say you're looking to retire at 65 and go every 4-5 years after that. Are you going to want to go past your mid 70's? That would be 3 or 4 trips total you'd be buying for. Or if into your 80's? Another 1 or 2? I'd just pay cash.

You also never know about taking extended family. Disney is expensive and they may not always want to go. So now you have excess points that were never needed and more to rent out all the while tying up cash in the DVC.

 

[bumbershoot]

The easiest peace of mind is just "renting" a DVC villa from Disney. For trips every 4-5 years that's what I would do if you didn't want to rent thru an owner. Owning to go that infrequently is not very efficient and may or may not be financially good.

Terrific point and idea. Plus you get daily housekeeping.

 

[mustinjourney]

The one thing the OP mentioned was wanting to take extended family on some trips more or less right away. If you are planning on doing two or three bedroom suites, then DVC pays for itself rather quickly. Especially if you can get a loaded contract.

A two bedroom at VGF can run around $2000 a night, which is $14,000 for a week. Same room is around 305 points during First weeks of December. In as little as two visits, the cost of the resale (loaded 150 point contract with extra 150 from previous UY) is already more than paid for.

Even if you got that room for $1500 a night, that is still $11,000 with taxes for the week. So two weeks is $22,000. Also, it can be difficult to score a two bedroom from Disney. Their inventory is rather low.

You can get a loaded VGF 150 point contract for just about that or less.

 

[bwbuddy5]

The one thing the OP mentioned was wanting to take extended family on some trips more or less right away. If you are planning on doing two or three bedroom suites, then DVC pays for itself rather quickly. Especially if you can get a loaded contract.

A two bedroom at VGF can run around $2000 a night, which is $14,000 for a week. Same room is around 305 points during First weeks of December. In as little as two visits, the cost of the resale (loaded 150 point contract with extra 150 from previous UY) is already more than paid for.

Even if you got that room for $1500 a night, that is still $11,000 with taxes for the week. So two weeks is $22,000. Also, it can be difficult to score a two bedroom from Disney. Their inventory is rather low.

You can get a loaded VGF 150 point contract for just about that or less.

Yeah, that's the same type of analysis I did. I started on the Disney website using AKL as a starting point, and found that a cash purchase for a large party for Sun-Fri in June was over twice as much as renting DVC points for basically the same accommodations. That's a lot of extra money to pay for daily maid service! I guess that's what keeps Dave in business!

Then, I branched off of that analysis to come up with buying resale and renting out the points when I don't use them, and it started to seem to make sense.

 

[cvjw]

I would not expect you to have any trouble renting out your points thru a broker. I rented out about 1000 points a few months ago. It was a very easy process and they were all rented within a few weeks. Probably could have had then rented earlier, but I wanted to make large reservations using many points at once as opposed to several studio only rentals.

Another thought for you is to figure out how many points you need every 4 years for your extended family vacation. If you need 600 points for the week, you could purchase around 200 points and bank/borrow and use 3 years of points at once for your trips. You would not have to rent points every year, just every few years when you had some extra

 

[bwbuddy5]

I would not expect you to have any trouble renting out your points thru a broker. I rented out about 1000 points a few months ago. It was a very easy process and they were all rented within a few weeks. Probably could have had then rented earlier, but I wanted to make large reservations using many points at once as opposed to several studio only rentals.

Another thought for you is to figure out how many points you need every 4 years for your extended family vacation. If you need 600 points for the week, you could purchase around 200 points and bank/borrow and use 3 years of points at once for your trips. You would not have to rent points every year, just every few years when you had some extra

great answer, I had thought of banking and borrowing as well, lots of thing to think about!

 

[bwbuddy5]

btw, I'm a former DVC owner at Boardwalk, sold it after 10 years worth of vacations to finance my daughter's wedding, at roughly twice what I had paid for it, who says DVC is not an investment!

 

[Brian Noble]

I was asking the same questions to myself a few months ago when I got started in all of this -- short answer is that if you get the right price on a loaded contract, then it is possible to get annual returns around 6-10% assuming nothing goes wrong.

This sounds about right.

Thanks for the links, good financial analyses. I'm actually an accountant and my inquiry is not so much financial but practical. Bottom line, I plan to visit WDW every 4-5 years, want to stay in DVC accommodations, and don't want to worry about trying to find a renter who has enough points for what I want. It's hard to put a value on peace of mind and convenience.

So, I have no desire to do anything but break even. If I proceed with a resale purchase, how confident should I be that I could get my points rented in my off years?

You have to decide whether to bet on continuing growth in the economy supporting ongoing travel demand (favors owning), or whether to expect a dip in travel demand over your planning horizon (favors renting). Point rentals are great for Members right now, but they were anything but for many years during the Great Recession, and it was a buyers' market.

I think if I were planning to only travel every 4-5 years, and in light of the long run we've had plus some fairly significant uncertainty in global markets going forward, I would be planning to rent---either from a Member, or just from Disney directly. That's also taking into consideration that your family's plans might change in 5-10 years vis-a-vis whether they want to/are able to travel.

 

[bwbuddy5]

This sounds about right.


You have to decide whether to bet on continuing growth in the economy supporting ongoing travel demand (favors owning), or whether to expect a dip in travel demand over your planning horizon (favors renting). Point rentals are great for Members right now, but they were anything but for many years during the Great Recession, and it was a buyers' market.

I think if I were planning to only travel every 4-5 years, and in light of the long run we've had plus some fairly significant uncertainty in global markets going forward, I would be planning to rent---either from a Member, or just from Disney directly. That's also taking into consideration that your family's plans might change in 5-10 years vis-a-vis whether they want to/are able to travel.

That's funny, great thoughts, but although an accountant, I love risk. I would use your analysis to say since there's been more good travel years than bad, I would probably buy. I'm definitely more of a pixie dust kind of guy.

 

[bumbershoot]

If it pays for itself, compared to paying cash, in one big trip, then what's the point of worrying about renting it?

Rent it if you can but don't worry about it. Not if it's paying for itself so quickly. After all, it paid for itself. And if the dues are making it NOT really pay for itself, then go back to the drawing board because maybe it's not worth owning.