Buy Resale just to Rent Points?

[mustinjourney]

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.

That's pretty much exactly the path I was led down...then I bought a second and third contract and now have no current plans to rent out the points.

 

[zavandor]

When I started looking into DVC it was 2011. At the time points were being rented for $9-10 and stayed that way for a long time. On the boards people pointed often that while the MF increased every year, rentals were still at $10, discouraging anyone to buy a contract with the intension to rent points most of the time.
Fast forward a few years and we are now in a moment when renting points at $13+ is quite easy. Will it stay this way? No, during the next recession, (when, not if) market will plummet again and renting points will be more difficult. I wouldn't buy a contract as an investment, however it's good to know that it's possible to rent excess points, at least for the moment, to offset MFs.

 

[bwbuddy5]

I probably should clarify a bit - the only reason I started considering purchase was what I had read here about rental point availability. For instance, if I wanted to stay in a grand villa at AK second week of June, Sunday through Friday, it currently requires 525 points. Am I correct that it will difficult for me to find a single owner with that many points to rent? If I instead rent from two owners, breaking up the week, won't I have to check out and check back in midweek, perhaps changing GVs? If I rent from two owners, using two 2BR villas instead of the GC, but for the entire stay from each renter, do I have any guarantee that we will be adjacent?

 

[cvjw]

I probably should clarify a bit - the only reason I started considering purchase was what I had read here about rental point availability. For instance, if I wanted to stay in a grand villa at AK second week of June, Sunday through Friday, it currently requires 525 points. Am I correct that it will difficult for me to find a single owner with that many points to rent? If I instead rent from two owners, breaking up the week, won't I have to check out and check back in midweek, perhaps changing GVs? If I rent from two owners, using two 2BR villas instead of the GC, but for the entire stay from each renter, do I have any guarantee that we will be adjacent?

Yes, you would probably have a hard time finding an owner with that many points at one resort that they want to rent out at one time. When I rented out close to 1000 points, it was at three different resorts. I would not have been able to rent a grand villa for you.

Yes, if you rent from two separate owners and split your reservation, you will have to check out and check back in on the day the reservations change. They will try and keep you in the same grand villa, but there is no guarantees.

If you rent two 2 bedroom villas from different owners, there is no guarantee that they will be on the same floor, much less adjacent. You can have each owner request that the reservations be marked as "traveling together", but that is about all you can do.

If you want a grand villa every few years, I would divide the points needed by 3, and buy a contract. When you use banked, borrowed and current year points, you would not need a huge contract. Plus, you would control your own reservation which is worth something too

 

[CarolMN]

.....(snip)........If you rent two 2 bedroom villas from different owners, there is no guarantee that they will be on the same floor, much less adjacent. You can have each owner request that the reservations be marked as "traveling together", but that is about all you can do...............

This would be true even if the OP booked two 2 bedrooms from his own account. One can ask to have "traveling with" noted on each reservation, but there is never a guarantee that they will be near to each other. That really depends on what rooms are vacant at the time of check in.

 

[KAT4DISNEY]

I probably should clarify a bit - the only reason I started considering purchase was what I had read here about rental point availability. For instance, if I wanted to stay in a grand villa at AK second week of June, Sunday through Friday, it currently requires 525 points. Am I correct that it will difficult for me to find a single owner with that many points to rent? If I instead rent from two owners, breaking up the week, won't I have to check out and check back in midweek, perhaps changing GVs? If I rent from two owners, using two 2BR villas instead of the GC, but for the entire stay from each renter, do I have any guarantee that we will be adjacent?

The check out and back in was improved the last time we had that - no issues at all, which is how it used to be. And for 2 rooms, even if you owned both reservations they wouldn't necessarily be close to each other. Two owners could have the "traveling with" noted on their reservations just the same as you would.

Finding a large number of points can be more difficult though. The GVs are not the fastest to book at many times of the year and available at 7 months too which improves the renting options. It depends on what resort and time of year you would be considering.

 

[ldo]

In your case, I would recommend buying the smaller contract with banking/borrowing for peace of mind, ease of your personal transaction, getting a smaller contact, which is less $ invested and also easier to sell, if you need, later, and far less years that you need to rent points. IMHO, there's really not much risk in buying a 200 point contract resale. Just review use years (UY) and travel patterns to get a UY that would work in case you need to canx. Such as, a Dec UY works well for Dec stays b/c if you need to canx, assuming it's more than 31 days out, you have the rest of the year to use your expiring and banked points--which means a full year to rent those out. Even if the canx is last minute, you have a year to use/rent the holding points (making reservations 60 day out). Rentals on holding points will be much less, but still something.

 

[bwbuddy5]

Finding a large number of points can be more difficult though. The GVs are not the fastest to book at many times of the year and available at 7 months too which improves the renting options. It depends on what resort and time of year you would be considering.

All of you guys are making sense with banking and borrowing. Of course, given your comment about GVs being available at 7 months, why shouldn't I just buy a resale at Hilton Head, (which we visit every couple of years as well, btw) to take advantage of lower price per point?

 

[KAT4DISNEY]

All of you guys are making sense with banking and borrowing. Of course, given your comment about GVs being available at 7 months, why shouldn't I just buy a resale at Hilton Head, (which we visit every couple of years as well, btw) to take advantage of lower price per point?

As I mentioned, the time of year and resort does make a difference though. If going in the fall or Dec is the determined time it might be more difficult.

 

[Disney Dad ADL]

All of you guys are making sense with banking and borrowing. Of course, given your comment about GVs being available at 7 months, why shouldn't I just buy a resale at Hilton Head, (which we visit every couple of years as well, btw) to take advantage of lower price per point?

HHI is more expensive than it looks due to the high annual dues. In the long run it's probably cheaper to buy VGF than HHI on resale prices in terms of $/pt . SSR is easily the lowest cost if you are looking for the "cheapest" points.

Although if you're main goal in buying DVC is to reduce the stress of getting the reservation that you want, then it seems like it would make more sense to just buy the resort you want and (mostly) guarantee the resort you want rather than worrying about 7 month availability. GVs are generally limited in number, so availability can be extremely erratic. If a handful people decide they want a GV at the same time as you, then they will be gone, no matter what the seasonal demand should be.

 

[Dean]

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.

One would likely need to own AND RENT around 2000-3000 points a year to come up against that limitations. It's not an issue of intent or profit but volume in spite of what some would like to believe.

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.

The critical portion here is that this is the best case scenario and if everything goes right it MIGHT make sense. It's a high risk investment for that purpose, 10% is not sufficient a return IMO for the risk assuming one's only consideration was owning to rent. Obviously if it's to use mostly but also to rent, it's a different consideration.

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?

IMO it doesn't make sense to own to visit every 4-5 years even if one wants/needs a difficult to get option. A solid every 3 years is the biggest gap that's reasonable but in reality even the every 3 years is very risky because you have to be within the 3 yr window, not 3.5 years or so. It may be more difficult to find a rental but not that much more if one plans ahead.

SSR is the cheapest and they have both 3 BR and the Tree House villas. HH & VB will be more long term because of the dues, VB will be even more though. If one were going to go the route in question though, it'd likely make more sense to own somewhere like BLT that's a higher demand, secure the standard view and rent the higher demand times.

 

[bwbuddy5]

HHI is more expensive than it looks due to the high annual dues. In the long run it's probably cheaper to buy VGF than HHI on resale prices in terms of $/pt . SSR is easily the lowest cost if you are looking for the "cheapest" points

I know that's the prevailing thought, but I've never really supported the "life of the contract" comparison. If I bought 200 points at HH instead of BLT, my purchase price would be $12,000 less. In turn, I only have to pay around $300 more per year in annual dues. That would be worth it to me, especially since we visit Hilton Head Island quite often any way.

 

[Disney Dad ADL]

I know that's the prevailing thought, but I've never really supported the "life of the contract" comparison. If I bought 200 points at HH instead of BLT, my purchase price would be $12,000 less. In turn, I only have to pay around $300 more per year in annual dues. That would be worth it to me, especially since we visit Hilton Head Island quite often any way.

Ok, as long as you thought about it, especially if you want to go to HHI, I'm sure you know what is best for you. Although I am not sure from a rental perspective how popular HHI points are, though I suppose at 7 months it doesn't matter. I'm guessing that WDW points would be easier to rent out, and you could charge more $/pt at higher demand WDW resorts.

One other caveat about HHI is that the annual dues are high right now due to Hurricane Matthew. There is a special fee to pay for repairs (they had to take a loan) that supposedly will be built in to the MFs for the next 5 years.

 

[bwbuddy5]

One would likely need to own AND RENT around 2000-3000 points a year to come up against that limitations. It's not an issue of intent or profit but volume in spite of what some would like to believe.

The critical portion here is that this is the best case scenario and if everything goes right it MIGHT make sense. It's a high risk investment for that purpose, 10% is not sufficient a return IMO for the risk assuming one's only consideration was owning to rent. Obviously if it's to use mostly but also to rent, it's a different consideration.

IMO it doesn't make sense to own to visit every 4-5 years even if one wants/needs a difficult to get option. A solid every 3 years is the biggest gap that's reasonable but in reality even the every 3 years is very risky because you have to be within the 3 yr window, not 3.5 years or so. It may be more difficult to find a rental but not that much more if one plans ahead.

SSR is the cheapest and they have both 3 BR and the Tree House villas. HH & VB will be more long term because of the dues, VB will be even more though. If one were going to go the route in question though, it'd likely make more sense to own somewhere like BLT that's a higher demand, secure the standard view and rent the higher demand times.

I understand why you feel that way, but the way I see it, if one could be confident that he could consistently book his desired grand villa at the 7-month window, it's a no brainer- buy HH--one saves several thousand dollars in purchase price, while only paying a few hundred more per year in maintenance fees.

 

[Dean]

I know that's the prevailing thought, but I've never really supported the "life of the contract" comparison. If I bought 200 points at HH instead of BLT, my purchase price would be $12,000 less. In turn, I only have to pay around $300 more per year in annual dues. That would be worth it to me, especially since we visit Hilton Head Island quite often any way.

Comparing to SSR over 26 years taking the current sales price range with a $15 spread, escalating dues at 3.5% for each and investing the difference in a long term investment one would need to get 4.5% return on the invested amount after tax to break even during that time. In addition, one would own an asset that was worth less, likely more difficult to sell, did not give an 11 month option for WDW, was inherently more dues risky and was worth Zero in under 26 years. The numbers would look dramatically worse for VB. IMO just looking at WDW usage, it would be a poor choice to buy HH even if one didn't plan to reserve during the home priority window for those price ranges. Certainly if there were other benefits like planned usage at HH during higher demand times that would be reserved during the home priority window it could be a different ballgame. As I've said before, there is a price difference where it would be reasonable but for me that number is more in the $30-40 a point price difference looking at price alone for WDW usage.

 

[Dean]

I understand why you feel that way, but the way I see it, if one could be confident that he could consistently book his desired grand villa at the 7-month window, it's a no brainer- buy HH--one saves several thousand dollars in purchase price, while only paying a few hundred more per year in maintenance fees.

I posted above before seeing this post but I did address much of the question. It doesn't save anything long term and it adds risk. Plus I think it's a bit of a stretch to presume long term availability for a GV at 7 months.

 

[bwbuddy5]

I posted above before seeing this post but I did address much of the question. It doesn't save anything long term and it adds risk. Plus I think it's a bit of a stretch to presume long term availability for a GV at 7 months.

Excellent points. I'm more of a short term cash flow, live for the moment kind of guy. And I know that I would have to spend $12000 more up front this year (a big pain), while paying $300 less per year (small relief). So, even though everything you said is true, I'll probably opt for the more manageable pain route.

I may have not mortgaged my home if I looked at how much I'd be paying over 30 years, but it wasn't so bad when I broke it down to months!

 

[Dean]

Excellent points. I'm more of a short term cash flow, live for the moment kind of guy. And I know that I would have to spend $12000 more up front this year (a big pain), while paying $300 less per year (small relief). So, even though everything you said is true, I'll probably opt for the more manageable pain route.

I may have not mortgaged my home if I looked at how much I'd be paying over 30 years, but it wasn't so bad when I broke it down to months!

This sounds like the how much are the payments vs how much is the real cost discussion for cars and the like. I'm sure you know where I come down on that subject and your words put you on the other end philosophically as I read them. But the numbers you quote don't match up. $300 a year difference in fees between HH & SSR is roughly 215 points. The cash difference is only around $3250 for that size contract between those 2 resorts both resale. And in reality the difference is even less because it's more expensive to close at HH because Beaufort requires a lawyer to do the closing, a difference I didn't include above. To use at HH during peak times every few years adds value but so does having an 11 month window at WDW. Plus as I mentioned above, I consider HH to be considerably more risky for several reasons. I think the risk of a faster dues escalation is there as well as the risk of a special assessment or even more dues in lieu of a SA. And while you'll likely see me post that the years on the tail end are worth less say between SSR & AKV for example, the closer dates and longer difference in RTU results in a significant difference in value. Even comparing 2042 resorts, I think it's far less likely that VB & HH will be extended than the rest though I don't think one should make decisions with the possible extension being a large factor but I do see it as a minor one.

 

[bwbuddy5]

This sounds like the how much are the payments vs how much is the real cost discussion for cars and the like. I'm sure you know where I come down on that subject and your words put you on the other end philosophically as I read them. But the numbers you quote don't match up. $300 a year difference in fees between HH & SSR is roughly 215 points. The cash difference is only around $3250 for that size contract between those 2 resorts both resale. And in reality the difference is even less because it's more expensive to close at HH because Beaufort requires a lawyer to do the closing, a difference I didn't include above. To use at HH during peak times every few years adds value but so does having an 11 month window at WDW. Plus as I mentioned above, I consider HH to be considerably more risky for several reasons. I think the risk of a faster dues escalation is there as well as the risk of a special assessment or even more dues in lieu of a SA. And while you'll likely see me post that the years on the tail end are worth less say between SSR & AKV for example, the closer dates and longer difference in RTU results in a significant difference in value. Even comparing 2042 resorts, I think it's far less likely that VB & HH will be extended than the rest though I don't think one should make decisions with the possible extension being a large factor but I do see it as a minor one.

Good stuff. My $12000 difference discussion began back when someone mentioned they thought BLT would even be cheaper.

It's funny, my family would tell you I'm the tightest guy they've ever met--except when it comes to vacation. Otherwise, I'm sure I'd make them stay offsite--or maybe even go to Six Flags instead!

 

[Dean]

Good stuff. My $12000 difference discussion began back when someone mentioned they thought BLT would even be cheaper.

It's funny, my family would tell you I'm the tightest guy they've ever met--except when it comes to vacation. Otherwise, I'm sure I'd make them stay offsite--or maybe even go to Six Flags instead!

I don't think BLT is a fair comparison because by nature of the choices (HH for WDW) you're assuming the 7 month window at best. The cheapest on property option is the best comparison to be apples to apples for this purpose, that's SSR. OKW should be even a little cheaper short term but will be more long term. BLT will be cheaper long term but it will be more up front as you state. It will have a significantly higher value now and it will have an infinitely higher value in 2042 as will SSR. It will also give one options that HH and not even SSR does in terms of additional resort access. Depending on one's goals and how they use it, BLT 185 points could be more comparable to 215 HH if one uses the standard view options regularly. That reduces the buy in for BLT considerably and also increases the difference in dues. But it depends on how much one uses it. If one uses them the same that difference isn't applicable. One can use the same argument for BWV standard or AKV value. I haven't run the numbers for BWV standard or BLT standard in this direction but I have for AKV value vs SSR. In that sense one is roughly break even if they use the value roughly 2/3 of the time assuming they buy the lower number of points compared to SSR used at AKV for standard view. Full disclaimer, I ran that on the old points schedule so it's likely now never going to make sense to buy AKV for value. The other component, one we really don't know yet, is how the standard view option at SSR will shake down. I expect SSR to continue to be easily available but I won't be surprised if that often means one is relegate do the preferred view routinely like at BWV & BLT. Since SSR is likely to be the place one stays a significant portion of the time owning HH in all likelihood (along with AKV non value & OKW), one could also potentially compare less SSR points to more HH points, further increasing the divide. As a minimum one could ensure the lower points costs of standard by owning there. HH would also be more difficult to sell if one needed too later though I wouldn't go in planning to sell at a later date. I'm sorry but I personally feel that buying HH simply for cheap WDW access with no plans to stay at HH periodically is a poor choice with the current numbers. IMO the spread would have to be MUCH more for the choice to be reasonable, esp when we've seen such an increase in difficulty at the 7 month window the last few years.