Buying DVC and renting out points - Investment

[pachelbel9]

I am considering doing something similar (look for a loaded contract and dump the first year or two's worth of points), and am wondering...if you don't want the risk of renting, isn't offering points for transfer a viable option? I realize it limits your potential customer base to current owners who are interested in all of your points (due to 1 transfer/year rule). Are there other downsides?

My parents have SSR, which covers us in off peak times (like our trip early May 2015). However, I'd like to buy BLT for high demand times (planning early Dec 2016 trip). We'd rotate on who books the trip based on feasibility of securing non-SSR 2br at 7 months out.

 

[Minniesgal]

I am considering doing something similar (look for a loaded contract and dump the first year or two's worth of points), and am wondering...if you don't want the risk of renting, isn't offering points for transfer a viable option? I realize it limits your potential customer base to current owners who are interested in all of your points (due to 1 transfer/year rule). Are there other downsides? My parents have SSR, which covers us in off peak times (like our trip early May 2015). However, I'd like to buy BLT for high demand times (planning early Dec 2016 trip). We'd rotate on who books the trip based on feasibility of securing non-SSR 2br at 7 months out.

It is an option but a limited one. You can only transfer once per year, you can't transfer banked or borrowed points and frankly using transferred points is a pain in the youknowwhat. You can't see them online and in fact often MS can't see them either. I cancelled a reservation earlier for 220 points which used 40 transferred points. When I called to rebook MS told me I only had 180 points. I said I can't have I just cancelled a 220 reservation. Took 45 minutes to sort out. Not ideal. I prefer to stay away from transferred points.

 

[pachelbel9]

It is an option but a limited one. You can only transfer once per year, you can't transfer banked or borrowed points and frankly using transferred points is a pain in the youknowwhat. You can't see them online and in fact often MS can't see them either. I cancelled a reservation earlier for 220 points which used 40 transferred points. When I called to rebook MS told me I only had 180 points. I said I can't have I just cancelled a 220 reservation. Took 45 minutes to sort out. Not ideal. I prefer to stay away from transferred points.

Wow, I had no idea that transferred points were such a hassle to use. Thanks for the info.

 

[Billy4akvt]

It's been awhile since anyone posted here, but I just found this thread and would like to add my two cents. I've rented out my points through David's a couple of times when me and my family couldn't make it down to Disney World, and I just want to say that the whole process was easy and efficient. We made enough to cover dues and then some. I wouldn't hesitate to use their service again should the need arise.

 

[chalee94]

It's been awhile since anyone posted here, but I just found this thread and would like to add my two cents. I've rented out my points through David's a couple of times when me and my family couldn't make it down to Disney World, and I just want to say that the whole process was easy and efficient. We made enough to cover dues and then some. I wouldn't hesitate to use their service again should the need arise.

was this before or during the pandemic, as that has had a bit of an impact in the ease of the brokered rental market?

 

[Miffy]

For anyone reading this thread: Please note that the original thread is from 2014. Much has changed since the pandemic.

 

[Billy4akvt]

was this before or during the pandemic, as that has had a bit of an impact in the ease of the brokered rental market?

was this before or during the pandemic, as that has had a bit of an impact in the ease of the brokered rental market?

Yes it was before this pandemic, but funny thing is right before. I have a couple of family's visiting on my account this coming November and December. I was a little short of cash this Christmas so I rented out my points for last year and this year and next year to make due. But my family will be visiting Disney on borrowed points from 2022 this Spring if hopefully this pandemic gets straightened out. On top of that I put a bid in that was already accepted for 50 more shares on DVC Resales a couple of days ago. They're not BLT shares but for the Polynesian with the same use year as my BLT, so it will work for us. I know it's a small contract, but with banking and borrowing we'll be enjoying those Pineapple Dolewhips that they serve over there soon enough.

 

[TinkB278]

How is the rental market since the pandemic? Going into buying DVC, the security of being able to rent out points was huge so I hope this isn’t changed much or for good.

 

[Cyberc1978]

How is the rental market since the pandemic? Going into buying DVC, the security of being able to rent out points was huge so I hope this isn’t changed much or for good.

the market is still there. However owners which had either regular or extended points expiring 11/30 are not able to make that much on their rentals. From what I’m seeing the going rate for those points have been anywhere between $8-$14 most the the lower rates

im expecting and hoping the market will return to more or less normal where you could rent your points for $18-$22 within the next year or so. This of course depends on the COVID-19 situation.

 

[CastAStone]

The math on buying explicitly to rent points has turned sharply since this thread started due to the increase in resale and direct prices and is a much tougher investment now. Historically you'd do better investing your money in an index fund in virtually every situation vs investing in renting DVC; in some cases you'll actually lose money when you (correctly) account for the buy in costs.

 

[Sandisw]

How is the rental market since the pandemic? Going into buying DVC, the security of being able to rent out points was huge so I hope this isn’t changed much or for good.

Honestly, I think it’s going to stay depressed in the next few years. I think we are going to see bigger discounts from WDW and because of it, price of rentals will have to come down to compete.

Yes, there will be a market, but I certainly think the cons have really come to light during this entire thing,

I see prices being back to the $12to $15 range for at least a few years, especially you may have owners with extra points they just cant use.

 

[_auroraborealis_]

Also, using brokers is really an issue. There is a very large thread on what a dumpster fire David's is and has been through this pandemic, which has exposed a lot of flaws in that company's business model and ethics.

 

[Lorana]

Hoping some of you DVC folk can help me with some advice. I've been running the numbers for the last few days regarding buying a resell and renting out the points during periods where I am unable to use them.

It seems to me that if I had say 160 points and rented them out (during years where no trip was planned), it would easily pay for the dues and eventually eat away at the initial purchase price. Using this reasoning it seems like an easy choice no? Am I over estimating the value of renting points out when not using them? It seems to me that you could definitely make your money back over a number of years of renting.

I don't know that I would ever consider purchasing DVC to rent out points to be an "investment." I suppose eventually it could be something to earn money, but I suspect the ROI does not make it a profitable business venture.

That said, to your initial question, renting out points in years you don't plan to take trips is definitely an option to help cover the cost of dues. Keep in mind that you owe taxes on the money from rentals, but it IS a way to help offset costs when not using your DVC points yourself.

As others have pointed out here, however, the rental market is likely to be depressed for at least a few years - both while the pandemic is ongoing, but also likely for a few years afterwards as the financial fallout for many families from the pandemic likely means expensive Disney vacations are not in the cards.

I am hoping to make use of the rental market myself from time to time. I rented some points at the beginning of this year for travel this summer due to expiring banked 2018 points, but those were all made before Covid-19 hit, and I was fortunate enough to be covered under David's original owner's policy and did not have any issues. I am likely going to rent directly myself going forward, rather than using a rental broker. At the very least, I don't like the terms of David's current owner's rental agreement, so if I do use a rental broker, I'll be looking for one that does not put all liability on the owner.

 

[Cyberc1978]

Honestly, I think it’s going to stay depressed in the next few years. I think we are going to see bigger discounts from WDW and because of it, price of rentals will have to come down to compete.

Yes, there will be a market, but I certainly think the cons have really come to light during this entire thing,

I see prices being back to the $12to $15 range for at least a few years, especially you may have owners with extra points they just cant use.

IMO I don’t think that will be the case - but it all depends on the discounts WDW will have.

for fall 2021 - spring 2022 there will be more owners than studios. So even if renters are able to find an owner with cheap points it does not matter as there aren’t any rooms to book.

If renters will settle for a 1Br then it might not be the same issue, but 1BR cost more points and therefore more money. Maybe accepting a higher rental rate for a studio will save money compared to a 1Br.

As a European I’m unable to travel to the states right now. If that continues I will be forced to rent my points which have already been banked. I will of course try and secure the more hard to get reservations as that mean more $$ to me. I don’t hope for this as I would prefer to spend my points on my family.

 

[Sandisw]

IMO I don’t think that will be the case - but it all depends on the discounts WDW will have.

for fall 2021 - spring 2022 there will be more owners than studios. So even if renters are able to find an owner with cheap points it does not matter as there aren’t any rooms to book.

If renters will settle for a 1Br then it might not be the same issue, but 1BR cost more points and therefore more money. Maybe accepting a higher rental rate for a studio will save money compared to a 1Br.

As a European I’m unable to travel to the states right now. If that continues I will be forced to rent my points which have already been banked. I will of course try and secure the more hard to get reservations as that mean more $$ to me. I don’t hope for this as I would prefer to spend my points on my family.

So wouldn’t less availability only hurt the market? Cost of a 1 bedroom makes renting more expensive than Disney.

Too many renters were burned with closures that the risk of non refundable has to produce a much bigger savings in the future.

As you mention, many owners needing to use points so not much will be easy to get which makes the price meaningless.

Yes, owners can certainly spec rent but that’s not as easy as there is no flexibility.

We shall see what happens but all indications are Disney discounts will be there which will make renting less attractive.

For you, I do hope that whatever you need to do with your points works out for you!!!

 

[Cyberc1978]

So wouldn’t less availability only hurt the market? Cost of a 1 bedroom makes renting more expensive than Disney.

IMO less availability is bad for those not having a reservation or able to make one. Those that do have a reservation it’s good for as they should be able to rent it.

Too many renters were burned with closures that the risk of non refundable has to produce a much bigger savings in the future.

I prefer renters coming back because I’m fair, so I offer a refund or able to reschedule if resort is closed.

As you mention, many owners needing to use points so not much will be easy to get which makes the price meaningless.

I think that’s a matter of opinion what will happen with too many points and too few studios.

Yes, owners can certainly spec rent but that’s not as easy as there is no flexibility.

We shall see what happens but all indications are Disney discounts will be there which will make renting less attractive.

For you, I do hope that whatever you need to do with your points works out for you!!!

agree there will be little or no flexibility.

 

[davidl81]

So wouldn’t less availability only hurt the market? Cost of a 1 bedroom makes renting more expensive than Disney.

Too many renters were burned with closures that the risk of non refundable has to produce a much bigger savings in the future.

As you mention, many owners needing to use points so not much will be easy to get which makes the price meaningless.

Yes, owners can certainly spec rent but that’s not as easy as there is no flexibility.

We shall see what happens but all indications are Disney discounts will be there which will make renting less attractive.

For you, I do hope that whatever you need to do with your points works out for you!!!

Even with 35% discounts that Disney is offering now renting at say $15 a point is still a better deal then going direct through Disney. We are taking a quick trip in November and I was able to rent 130 points for a 1 bedroom Savanna view for the same price as I would have paid cash for a Savanna View studio with the 35% discount. So unless Disney gets even more aggressive than that discount (which heck they might) I think rental prices wont fall that much.

 

[Sandisw]

Even with 35% discounts that Disney is offering now renting at say $15 a point is still a better deal then going direct through Disney. We are taking a quick trip in November and I was able to rent 130 points for a 1 bedroom Savanna view for the same price as I would have paid cash for a Savanna View studio with the 35% discount. So unless Disney gets even more aggressive than that discount (which heck they might) I think rental prices wont fall that much.

Oh, I didn’t mean to imply it’s non existent but rather saving a few hundred to be locked in may not be enough for many to risk it.

I would guess more renters look for studios or 2 bedrooms vs 1 bedrooms.

So, if you compare a fully refundable and changeable room at 35% to studios that are not it will be enough to sway some.

Again, the market will suffer and the days of having no problem renting for more than $15 won’t be as easy.

I know personally if I need to rent in lithe future, I’ll be doing it for less.

But really, since the thread was more about renting as part of the plan, I was referring to that.

 

[davidl81]

Oh, I didn’t mean to imply it’s non existent but rather saving a few hundred to be locked in may not be enough for many to risk it.

I would guess more renters look for studios or 2 bedrooms vs 1 bedrooms.

So, if you compare a fully refundable and changeable room at 35% to studios that are not it will be enough to sway some.

Again, the market will suffer and the days of having no problem renting for more than $15 won’t be as easy.

I know personally if I need to rent in lithe future, I’ll be doing it for less.

I agree and there is value to controlling your own reservations. That being said we can also look on this board and see how obsessed many people are in getting the best deal possible (ie getting SSR for $90 a point and not $92 etc) and realize just how much a few hundred dollars savings will motivate people. So far an exercise let's take AVK Savanna Room Studio in November for 7 nights. Rack rate is $640 a night and with a 35% discount and after taxes the final price is $3200. Points wise it is 116 points, so at $15 a point the cost is $1740. That is still a huge difference. There may be some rooms that don't quite have as high of a rack rate and it could change the math some, but overall renting still has a huge savings over direct at a lot of resorts.

The math is better direct at say SSR. One week in November there is $2125, where renting would be $1380, so you can make a case that the cost savings is not so big but its still fairly large.

 

[Sandisw]

I agree and there is value to controlling your own reservations. That being said we can also look on this board and see how obsessed many people are in getting the best deal possible (ie getting SSR for $90 a point and not $92 etc) and realize just how much a few hundred dollars savings will motivate people. So far an exercise let's take AVK Savanna Room Studio in November for 7 nights. Rack rate is $640 a night and with a 35% discount and after taxes the final price is $3200. Points wise it is 116 points, so at $15 a point the cost is $1740. That is still a huge difference. There may be some rooms that don't quite have as high of a rack rate and it could change the math some, but overall renting still has a huge savings over direct at a lot of resorts.

The math is better direct at say SSR. One week in November there is $2125, where renting would be $1380, so you can make a case that the cost savings is not so big but its still fairly large.

Absolutely things could work out, but the market was running higher than $15 prior to Covid.

Now, owners will have to lower to be competitive, make sure they include what will happen in an emergency like a resort closure, and deal with more posts here that will point out the risks are greater,

I know my own responses won’t be as wonderful as they were because I do think many people didn’t think about cancels outside ones control,

Saving $1500 is a lot,..but to do that, you really have to be okay with losing the $1700 too and in the post pandemic age, I think you could have people who are just as likely to decide to do a 5 night stay instead and just go with Disney.

So, if one is buying now and needs to rent points or is doing it to rent points, I just think I’d plan on getting $12 to $15 max in the next few years.