Buying Points You Don't Need

[gppnj]

I had an idea, and I was hoping to get some people's thoughts on it.

I have all the points I need for right now. Of course, in the future, I'll get more vacation time, and then further on is retirement, so in theory I would be able to use more points down the line than I can now.

Here's what I was thinking: This deal at SSR right now is really good. It occurred to me that maybe it would be a good idea to buy some (I think the minimum to get the 15% off is 120 points), rent out 100% of those extra points (at least for the next five years or so), and use the proceeds to pay for maintenance and part of the mortgage. In this way, the points partially pay for themselves. Then in a number of years I'd have the points for use when I wanted to start using them, and if I consider the income from renting to offset the cost, I would have effectively gotten them at a really low price. (All long I'd have the tax deductions on them as well, I guess.)

Does this make sense, or is this a crazy idea? I'm not sure if there's some facet of this that I'm overlooking.

 

[DrTomorrow]

This comes up every now and then. It should work, but there are a few issues to be aware of:

1. This assumes that you'll always be able to rent your points, and rent them at a price that makes it worthwhile.

2. You assume some of the risks of being a landlord: people cancelling ressies, legal contract-y stuff, a renter knocking a fist-sized hole in the wall, etc.

3. Financial issues. Better minds than mine know the specifics, but rental income is income and I'm not sure how deductable the annual dues are.

4. And the biggest issue here on the DIS: you start to eye those 'points to rent' for another trip to WDW!

 

[CarolMN]

Are you prepared to spend the time it will take to rent out the points? It's not always a quick & easy process - if you do it on a regular basis, you are going to run into some "high maintenance" renters. You also will need to consider paying taxes - renting so often may put you on someone' "radar".

Are you 100% sure you will want to spend the additional vacation at Disney 5 years down the line (I love Disney, but I still like to go other places, too). I never thought I'd be willing to sell, but it does cross my mind rather frequently now - we've owned since 1999.

Are you willing to assume the risk of a significant decrease in general travel (like we did beginning in 2000)? Migth be harder to rent points and do keep in mind that you will be competing with Disney (who doesn't hesitate to discount heavily to fill the rooms). You will also be competing with other DVC members - another reason not to assume you will be able to get $10/point every time.

Are you buying with money you don't really need for anything else right now - especially since you plan to finance? DVC is not exactly a "liquid" holding. Would this additional purchase put you in a real bind if your job circumstances change?

Just some more things to thing about before you jump.

Best wishes -

 

[Chuck S]

I agree with Dr. Tomorrow...there can be some problems with buying points for the sole purpose of renting them. As long as you are aware of the potential pitfalls, and plan to make use of the points yourself in a few years, I'd go for it.

 

[gppnj]

Are you prepared to spend the time it will take to rent out the points? It's not always a quick & easy process - if you do it on a regular basis, you are going to run into some "high maintenance" renters.

I was initially scared about renting. The whole thing seemed very intimidating. However, I got my feet wet with that recently, and I was suprised by how easy it was.

First of all, I rented the points instantly - literally within minutes of my posting the availability. (That's a sign to me that people in other threads are correct when they say that people rent out their points too inexpensively.) The people paid right away and have been very nice. That's not to say that exery experience will be as pleasant, but I'm not expecting the rental part of this to be too problematic.

You and other posters have raised some other good issues, though. Thanks to all for the feedback so far.

 

[aDVCwannabe]

that your extra points can be used to gift vacations to others for family or business reasons? i am looking forward to gifting my nieces in college with spring break trips! the extra points might also be used to gift someone a honeymoon or anniversary trip! will save me out-of-pocket expenses for such events!

 

[AFMom]

I know it's not the most sound financial plan - we could do better other ways, I know - but DVC is part of our vacation retirement plan! We don't really need all 250 points right now, and will not be able to use them every year - but we could buy them now - and figured the price would only go up - and we know we'll use them all in a few years after DH retired from the military. So for now - when we can't use them - they will be rented, transferred, or gifted to relatives that are in need of vacations! We've rented a few times painlessly already, and also transferred to another member - all from these boards, and never had a problem.
Certainly the above mentioned problems could arise - and I'm in the camp f people that say - don't buy unless you can afford them without renting them out - but I'd rather buy now - rent what we aren't using , and then have them all to use (paid off long ago) when we retire - and still have whatever we can use now!

 

[Deb & Bill]

More points also means more dues. If you don't intend to use those points, you will also be paying for any financing, plus the maintenance fees. Each month that little bit can add up.

I'd only buy what I can afford and forget about trying to rent out extra that I buy. Have you seen some of the most recent requests out there? People want points for 7.50 a point? Maybe a bit more? As SSR sells out, there could be more and more people renting out points and it could become an even bigger buyer's market instead of owner's market. Right now it looks like the people renting out the DVC reservations are already getting a very good deal and I don't see it slowing down unfortunately. Too many members are trying to rent out their points.

I still see people wanting points in places other than SSR, so you'd have the 7 months advantage for most of the reservations and not the 11 month advantage.

Plus I see a lot of very particular people want to rent reservations, making demands of the owner, wanting to set up escrow accounts, wanting to make their demands firm and not the member's demands firm.

Who knows what could even happen with this renting situation anyway? Might Disney make some requirements that make it hard to rent out reservations?

I'd wait until I was really ready to use the extra points and maybe buy a resale.

 

[mom2rb]

We have more than we need right now. We have 420. Our boys are young enough so that we only need the one bedroom. I don't see two big teenage boys sharing a pull out sofa. But 2 years ago was the best time for us to buy and in April we did an add on. DH's car is paid off and is still in great shape. The payments are the same as the car note was. We have rented points out twice and taken a big family trip once. So far it has been easy.

 

[gppnj]

I appreciate everyone's replies.

After much thought, I do think I could make an unnecessary add-on work in terms of the numbers. However, I've decided to err on the side of simplifying my life and avoid it for now.

I will still be doing a small add-on if they do a DVC in California, and I'll be doing a somewhat larger add-on if there's ever a DVC at AKL. But for now, I'm going to pass on the fairly large add-on at SSR.

Thanks.