Buying DVC and renting out points - Investment

[rspencer38]

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.

 

[DougEMG]

Renting out your points when not using them is fairly easy (right now) and it certainly covers the MF and more (right now). Does that make DVC a good investment, that's not something I'm qualified to speak to since I'm just an IT guys, not a financial advisor.

Issues to consider are increasing annual MF, how easy it is to rent out points, how much will those points will rent for, the value of all contracts eventually goes to zero, Disney could make it more difficult to rent out points, how much are you paying for your points, etc

Having said that, I do rent out enough points each year to pay for all my MF. That has worked out well for me, but I got lucky and purchased my points at the bottom of the resale market and even if I don't rent out any points it isn't a big deal for me. So for me my points are an investment, just a cheap way to vacation at WDW.

 

[chalee94]

are you taking income taxes on the rentals into account?

some would say FL also has the right to come after you for hotel taxes - that is another risk you are taking.

disney does have a line in the DVC contracts that forbids "commercial renting" so there is always the chance their lawyers come after you. (right now, they have drawn the line at 20 reservations per year as the meaning of "commercial renting", so 160 pts probably won't run into trouble, but they can still adjust their policies to annoy those who are renting their pts.)

i would agree that it's "possible" to make your money back but there are ways to make higher returns with both real estate or stock investments. personally, i would only buy DVC to the extent i planned to use it.

 

[rspencer38]

Oh I definitely plan to use it, I'm just trying to minimize the exposure to losing money!

 

[disneynutz]

Renting can have some risks. Currently there are brokers that you can rent through but they have only been around for a couple of years and could go away tomorrow.

At the point where Disney feels that they are losing money due to renting, they will makes changes to the rules and policies.

Bill

 

[Daddio]

Renting can have some risks. Currently there are brokers that you can rent through but they have only been around for a couple of years and could go away tomorrow.

At the point where Disney feels that they are losing money due to renting, they will makes changes to the rules and policies.

Bill

8 years, to be exact.

~ David

 

[kenspidey]

8 years, to be exact. ~ David

I don't see David's going anywhere.... Just rented some points through them and it was painless and seamless .... Can't recommend them enough.

 

[mjillard]

If you don't plan on a lot of trips you could find many more worthwhile investments than a timeshare. Then when you do make a trip, you can be the one renting points through David's or something similar. Then you would get the eleven month window at all the resorts (theoretically).

 

[disBOBney]

The short answer is: yes, renting out your points on years your not using them is easy enough and somewhat profitable. I have rented excess points through David's several times, the transactions were quick and easy. In regards to the other posters concerns, I agree it is not good enough to be considered an "investment".
My warning is if you are not already an owner and you become one, you will probably find that you will be using those points much more than you thought. And your investment in magical vacations will pay off handsomely (imho).

 

[rspencer38]

Thanks for all the replies! Perhaps investment wasn't the best choice of words.

We have traveled to Disney almost every for the last couple of years (except this one) and will be heading back again next year (DVC RENTAL!!). I anticipate that we will likely try to visit Disney every 2nd year. That is why I inquired at about covering the expenses by renting points.

 

[Minniesgal]

We bought our points to use but it is great that if something unexpected comes up or if life gets in the way we card rent a years points. We didn't buy to rent or to try and make money but the flexibility helps.

 

[Dean]

Oh I definitely plan to use it, I'm just trying to minimize the exposure to losing money!

Your best bet to avoid losing money is to make your best choice up front. That includes best resort, size and price. There may be a discrepancy on savings vs preference, i.e. VGF will be more than SSR for example. One must then weigh savings/value vs preference. As a rule one of the best approaches to long term value is to underbuy in resort and points size assuming one doesn't go too small on the contract (usually under 150). Obviously there are many factors that will vary from person to person.

I don't see David's going anywhere.... Just rented some points through them and it was painless and seamless .... Can't recommend them enough.

But if the rules or implementation changes, David's could be gone tomorrow.

Thanks for all the replies! Perhaps investment wasn't the best choice of words.

We have traveled to Disney almost every for the last couple of years (except this one) and will be heading back again next year (DVC RENTAL!!). I anticipate that we will likely try to visit Disney every 2nd year. That is why I inquired at about covering the expenses by renting points.

At EOY it really depends on unit size and LOS. For a studio for a week EOY it's likely not worth fooling with, for a 2 BR that often it may be. As a rule I'd say if you can't make do with a 150 pt contract EOY without expecting to rent it's likely not worth it for most. I do know people that make EOY work but generally it's a specialty situation.

 

[mort1331]

I asked this question myself a few years ago when I was first looking. I received the same answers, all very good. But now a couple of years into the process and I must say, its the best thing we have done.
I was lucking with my first contract to have it loaded and low cost. Lowered my cost by renting out the loaded points with Dave( very easy ). And have just finished purchasing my second contract, both 200/220 points. For now we rent some points still since we have a little excess. Not much and the extra lets us book 1bdrm for the extra room, because we can.
We thought we would be going EOY, but we have now been going every year and sometimes twice.
The future is still up in the air, but we wouldnt do it any other way.

 

[dankil13]

My situation is very similar in that we have been going or plan to go to WDW every other year. Typical we rent points from family/friends who have excess and rent but sometimes I feel like it is inconvenient to them as they feel the need to provide a "family" discount. So we are looking to buy next year (I wish I had bought a few years back when prices were at the bottom).

I have run the same numbers as you and came to the same conclusion. It seems better to buy the full amount of points needed for 1 vacation and rent the year I don't go versus buying a smaller contract and borrowing/banking points as needed. I wouldn't call it an investment, but the total cost of ownership is definitely appears to be lower (provided renting is still an option and the market allows for increases to offset some maintenance fee increases).

 

[bighoo93]

My situation is very similar in that we have been going or plan to go to WDW every other year. Typical we rent points from family/friends who have excess and rent but sometimes I feel like it is inconvenient to them as they feel the need to provide a "family" discount. So we are looking to buy next year (I wish I had bought a few years back when prices were at the bottom).

If it would relieve your guilt, offer to pay them the same amount that they would get by renting their points out with David. You pay them $11/point, so they get exactly what they normally would, but you get the $3 discount by not using David's service. This is what I offer family and friends and they love it. BTW, let me hasten to add that I've used David's service on both sides of the rental agreement, and they are they best and I could not recommend them more highly.

I have run the same numbers as you and came to the same conclusion. It seems better to buy the full amount of points needed for 1 vacation and rent the year I don't go versus buying a smaller contract and borrowing/banking points as needed. I wouldn't call it an investment, but the total cost of ownership is definitely appears to be lower (provided renting is still an option and the market allows for increases to offset some maintenance fee increases).

I agree with you in terms of buying the full amount of points rather than half and playing the bank/borrow game. However, make sure you compare it to the alternative of renting your points every other year (from David or family) and having the money you would have used for a DVC payment sitting in a modestly conservative mutual fund earning ~8%. I was fortunate to buy in around the market bottom a few years back, but even though I don't know the exact typical prices today, I'm sure the numbers look less favorable for buying now.

 

[Dean]

I have run the same numbers as you and came to the same conclusion. It seems better to buy the full amount of points needed for 1 vacation and rent the year I don't go versus buying a smaller contract and borrowing/banking points as needed. I wouldn't call it an investment, but the total cost of ownership is definitely appears to be lower (provided renting is still an option and the market allows for increases to offset some maintenance fee increases).

I think it depends on many factors that include the number of points in question, one's personal risk and situation as well as home resort in question. For one who needs 100 a year and buys 150 because of contract availability and lower price, I'd agree assuming that owning DVC makes sense in general. The latter is really the issue, it likely doesn't for many in this situation and the emotions are taking over.

 

[agie65]

The short answer is: yes, renting out your points on years your not using them is easy enough and somewhat profitable. I have rented excess points through David's several times, the transactions were quick and easy. In regards to the other posters concerns, I agree it is not good enough to be considered an "investment".

My warning is if you are not already an owner and you become one, you will probably find that you will be using those points much more than you thought. And your investment in magical vacations will pay off handsomely (imho).

You can rent or bank them, but do not ignore the warring.

We started week vacation off site, once we bought already have 63 days, still counting in a yr.
Kids are happy, brings smile on my face.

 

[kcdisneymom]

I have never regretted the investment. Even with all the ups and way downs of life, it was a comfort knowing the extra $ or family fun was there.

 

[djohn06]

I asked this question myself a few years ago when I was first looking. I received the same answers, all very good. But now a couple of years into the process and I must say, its the best thing we have done.
I was lucking with my first contract to have it loaded and low cost. Lowered my cost by renting out the loaded points with Dave( very easy ). And have just finished purchasing my second contract, both 200/220 points. For now we rent some points still since we have a little excess. Not much and the extra lets us book 1bdrm for the extra room, because we can.
We thought we would be going EOY, but we have now been going every year and sometimes twice.
The future is still up in the air, but we wouldnt do it any other way.

I agree. I did the same thing. Sold 2 years worth of points on a loaded contract and recieved 40% of my principle back within a week after closing.

Now prices were a lot lower then too. You might be able to get 30% back today.

Yield wise, you can probably get anywhere from 8 to 11 percent. But, you can't expect a whole lot in terms of capital appreciation. The prices now are at a 52 week high.

 

[bethy]

See, for me the idea of dealing with renting - even through a great broker - gives me hives. I'd almost rather lose the points outright! I just don't have the bandwidth at this point in my life. It's probably a good thing we don't have a ton of points and are always borrowing to the max. Point requirements are high at VGC and Aulani - the main places we use our points.