Does renting to pay really work?

[gopherit]

What I mean is, does anyone here utilize $$ from renting points to pay off the points they have? Say you buy 300 pts and rent half a year to at least cover your maintenance fees?

We are NOT looking to profit or raise pts price or anything like that... I'm looking at this from the perspective of an owner who would be willing to sacrifice a few points annually now if it meant having more points in the future. I have a friend who owns a beach house -- she figures she rents it out on the summer weeks for the next 10 yrs, then she has it paid for, never to rent again -- all hers. That sort of thinking. I thought I recalled someone on these boards saying they use one contract for rent and they apply the $$ towards their annual dues. Just wondering who does this and how that works out for you, have you ever been caught short on that plan, lack of a renter, burned by a renter, etc.

I know I could do the math myself, but I figure someone has probably already done this, as thorough as this Board is! Just point me towards the right thread...

And thanks!

 

[CarolMN]

Renting points to strangers is not as easy to do as one might think after reading these boards. It is time consuming and at times can be frustrating. IMHO, you will earn every penny you "make".

Do a search on renting and see what you think after reading some of the posts from owners (and renters) who have had problems.

Best wishes -

 

[bobbiwoz]

I wonder how the hurricanes have affected those who rented points during these times. It seems that owners were able to cancel without penalty, did some renters get refunds? I don't think it would be good to "budget" rental money before the ressies are actually used.

Bobbi

 

[WithDisneySpirit]

I don't know if it works or not, but I recall reading a post regarding this very thing just last week or two! The poster was posting to that longtime thread about DVC owners that own 1000 or more points with DVC. He was a BIG owner and was renting a portion to pay off all the points so he could gift all his children with 250-350 each when they turned 30 or so.

Look that one up and maybe PM that person for info.

Lisa

 

[Dean]

Originally posted by bobbiwoz
I wonder how the hurricanes have affected those who rented points during these times. It seems that owners were able to cancel without penalty, did some renters get refunds? I don't think it would be good to "budget" rental money before the ressies are actually used.

Bobbi

I think most people that rent do so with all or a portion being no refundable. Of course I'm sure most people would be willing to work with a renter to everyone's benefit in the end.

 

[Cruelladeville]

I only rent a few of my points in a year, usually 150 or so, but it's a lot of hard work! You are working with people who have no idea how DVC works, they just read on one of the boards that you can save money by renting from an owner. It's especially bad getting people who think you are MS, and have nothing better to do than find out what dates are available, just for curiosity, but they don't actually want to rent.

You can use the cash for dues or paying down the balance, which is what I am doing, but it is difficult. Having said that, I have made several friends from renting who return to me year after year to rent points, and I seldom have to advertise anymore. This year, for some reason, I could have easily rented another 400 points, if I had them to rent. I even rented out my DB's 400 points.

 

[dianeschlicht]

I doubt renting would be worth the hassle for me. Besides, we only have 380 points, and I need them for US!

 

[Happy Birthday Cat]

Originally posted by bobbiwoz
I wonder how the hurricanes have affected those who rented points during these times. It seems that owners were able to cancel without penalty, did some renters get refunds? I don't think it would be good to "budget" rental money before the ressies are actually used.

Bobbi

I can tell you from my own experience. I had someone rent points for the period when Frances hit. Even though I had a contract with them I allowed them to cancel the trip. They wanted to re-schedule but couldn't in the time they wanted to go. So we are returning their money so they can use it at a Non DVC hotel. I couldn't hold them to the contract under these circumstances. I also truly believe that you treat others as you would want to be treated, so I retuened their money and they will have a nice Disney vacation.

Now if I had counted on that money to make some kind of a payment, it wouldn't have been so easy to take the course I took.

Renting is not easy and there are no guarantees.

HBC

 

[pumpkinboy]

No way I'd rent to pay for more points than I could currently afford. It would just be too much work!

But, if the occasional arbitrage opportunity presents itself, well then, it just might be worth it to take advantage of it. In my example, we had Veterans' Day weekend reserved in a 2BR BWV Std view (5 nights - 2 of them weekend nights), having secured this way back at the 11 month mark. Now I had been playing with some numbers (a spreadsheet of course) comparing points stays to cash stays, finguring out when it might be worth it to pay cash rather than points. I was on the phone with MS reserving something else at about 10 months out, when I inquired whether the DVC member discount was available for our two weekend nights, as I had calculated that even after tax the difference between cash and points was coming out to $90 a night (assuming $10 per point). Since I knew of some nice folks who wanted to reserve a studio at BWV, I took the cash nights then contacted these folks and offered them the nights they wanted at $10 a point (they were very pleased). So in this arbitrage I was able to save myself $180 and get an 8 night BWV ressie for these nice folks.

Of course, all the rest of our points are fully spoken for, unless I find another great arbitrage opportunity.

 

[PamOKW]

Just seconding that renting is not as easy as it appears on the surface. It does take a lot of time and is subject to all kinds of variables. I've been lucky and have dealt mostly with members who understand the system. It's very hard to explain to people who are coming at DVC with little or no knowledge.

Whether it makes financial sense also depends on how much you pay to buy your DVC stake and how much you can manage to charge for your rental. With prices heading toward $100 per point, I'm not sure that $10 per point brings in much profit to the owners -- they may even be losing money once they factor in finance costs.

 

[brunoflipper]

i found the renting process to be taxing at times, but within a week i was able to rent 600 points and had down payments for half of the points and complete payments for the other half... i have a renters agreement that basically states once you rent the points they are yours to use, with all the same restrictions and requirements that would have applied to me as an owner, until they expire... i do not give refunds, for any reason (i.e. if, however, during the hurricane, dvc would have put points back into my account, the renters would have been able to use the points at a later date per dvc's terms attached to those points)... i try and keep the transaction as professional as possible, which i believe people appreciate... i'll reschedule the points for a renter as much as they want until they expire but i will not return any money... all of the renters agreed to the terms without hesitation... if i agreed to the terms of the contract, that is how i would expect to be treated and i would expect the person renting to me to do the same... to each his own, but i am not renting points out of the goodness of my heart and when i rent points i am exposing myself to a signficant degree of financial risk... i will work to ensure that i am adequately protected throughout the transaction and also that the renters are happy with and have their reservations as they requested them...

now as for our particulars, we paid 69/pt for our 300 point contract in june= $20700
it came with 600 points (banked 03 and all of 04)
we rented those points @ 10/point= $6000
applying all of the rental income to our total
20700-6000= $14700 pts
then we booked a trip for this upcoming spring (with our friends who agreed to pay for their half of the points at the going rate because that is how we traveled when we rented) using 300 points, so from them we will get another $1500
14700-1500= $13200 was the balance we were left with one week after closing, which as far as we are concerned gets us down to $44/point... but we also have to consider our half of the trip to WDW this year (which if we had not bought DVC, we'd have paid $1500 to rent)... our logic may sound convoluted but it works for us...

granted, we are not counting MF and some of the funds are still in transition...
but all told, thanks to a 0% interest and some overtime the total amount will be paid off by the end of october and if we ever need to again we will rent our points (only if they are going to go unused) and consider any money we make back gravy....

 

[DarrenSt]

We have rented and it does pay we made enough topay for our cruise and pay our dues for 2 years and have some spending money left over. We looked at using points to pay for the cruise and it was way to high so we rented out the number of points we would have used and it was great. We got on average 12-15 dollars a point and not one problem all rentals went off without a hitch. We got some rentals from an ebay auction we ran and some from our work places.

 

[Happy Birthday Cat]

Originally posted by brunoflipper
i do not give refunds, for any reason (i.e. if during the hurricane, dvc would have put points back into my account, the renters would have been able to use the points at a later date per dvc's terms attached to those points)... i try and keep the transaction as professional as possible, which i believe people appreciate... i'll reschedule the points for a renter as much as they want until they expire but i will not return any money... all of the renters agreed to the terms without hesitation... if i agreed to the terms of the contract, that is how i would expect to be treated and i would expect the person renting to me to do the same...

We agreed to the terms of our DVC contract and DVC went against them to return points that would have been lost otherwise. In the case of a hurricane, DVC went against what we as owners signed contracts stipulating. I have a feeling that you wouldn't say to DVC "no keep my points, I agreed to the contract and don't want them back". If DVC had been ridged about cancelling reservation and/or not returning points with the threat of Frances, there would have been an uproar. Instead they did the right thing for us as owners.

There are not too many examples of where I would agree to return money to a renter but in the case of a hurricane and not being able to re-schedule in an appropriate amount of time, it was the right thing to do.

But back to my original point. You can not count on rental income. Imagine if you had counted on it right around the time of 9-11?

HBC

 

[brunoflipper]

Originally posted by Happy Birthday Cat
...I have a feeling that you wouldn't say to DVC "no keep my points, I agreed to the contract and don't want them back" ...

no i would not have and i never gave any indication that i would have said that... as i stated i n my original post i would have told the renters "dvc has put points back into my account, tyou are able to use the points at a later date per dvc's terms attached to those points" and i will make the reservations for you...

i edited the post to include "however"...

ultimately, i don't do refunds only rescheduling... if that makes a renter uncomfortable they are free to find another owner to rent from or pay rack rates...

i do agree with your points about not being able to count on income from renting... imagine what will happen to the travel industry, in general, and renting points, specifically, when the next terrorist attack happens, particularily if it were at wdw or dl...

 

[DrTomorrow]

Another thought - wouldn't any rental income be taxable? For example, the one poster who rented 600 pts @ $10/pt yielding $6000 - if one is in, say, the 25% bracket, that's approx. $1500 going to Uncle Sam.

[Not sure on the numbers, so don't pounce....]

 

[childsplay]

Originally posted by DrTomorrow
wouldn't any rental income be taxable? 600 pts @ $10/pt yielding $6000 - that's approx. $1500 going to Uncle Sam.

/B]

I would suspect that the vast majority of "rental income" never sees the "ole 1040".

We have never rented and probably never will, but i can imagine that trying to make the numbers work would become extremely difficult if you threw that fly into the ointment.

 

[DarrenSt]

Up here they don't even look at it we get sent a tax form but our accountant doesn't even bother with it and if they look into anything it shows up as an inquiry on our credit report but because we financed through Disney it doe not even show on our history as a loan or asset.

 

[DrTomorrow]

Originally posted by childsplay
I would suspect that the vast majority of "rental income" never sees the "ole 1040".

So would I, and I just brought it up as the OP was wondering about the pros/cons of being a "DVC Landlord". And all it takes is one disgruntled renter to tip the IRS off to unreported income to open up a whole can of worms, particularly if the amounts are in the $5-10K range every year....

 

[childsplay]

Originally posted by DrTomorrow
all it takes is one disgruntled renter to tip the IRS off to unreported income to open up a whole can of worms, particularly if the amounts are in the $5-10K range every year....

Agreed, which is just one more reason for me not to rent my points......I'm really not interested in having the IRS crawl into my gluteus maximus with a microscope over a couple thousands dollars.

 

[labst60]

From IRS Pub 17 re: renting property not used as a home (since our shares of DVC are deeded, my first guess is that this would apply)...

If you do not use the dwelling unit as a home, report all the rental income and deduct all the rental expenses.

After you consider current year maintenance fees and the current year "depreciation" on the contract, net rental income would be minimal for those of us renting at $10 per point. Obviously, calculating the depreciation is somewhat complicated, but my point is that I don't believe anyone should be adding their gross rental income to their regular salary on the 1040 and paying taxes on that amount.