DVC - change from personal use to rental use?

[BoardwalkSuzy]

Say you buy into DVC when kids are little (like mine), go to Disney for 15 years, then kids get bored with Disney and want to do other things. Can you rent out your points - say 1 or 2 reservations every year for as many years as needed, until perhaps interested grandchildren come along? Would that be considered a business and not be allowed by Disney?

I've read that as long as you are not running a commercial business making 20+ reservations per year, you are OK then. This way we could cover the maintenance fees, have a little income, and be able to deduct all deductible expenses in the meantime.

I like to hold assets, not sell them off. Selling always means about a 10% loss (commissions, etc). Like my father always said, "A rolling stone gathers no moss" - hold your assets, don't liquidate them he always advised.

Is there anyone out there that has been in this boat, or does everyone just liquidate their DVC points?

 

[TisBit]

OK, I will bite. Here goes my opinion and it is just that, an opinion. DVC prohibits "commercial" renting of points. They have attempted to define this a little bit with the limit on # of reservations per year, etc etc. But, that does not make their definition all inclusive as to define commercial. So if you make more than 20 they can stop you from making more, but also have stated they can waive this on a case by case basis. It also means that they can decide that less than 20 is also commercial.

The red flag on your proposal that I see is that the membership would be used exclusively as a business (with tax right offs, etc etc) which most definitely falls into the commercial end of it.

This is a big gray area and I would not count on it. One day they might prohibit renting all together. I am sure you will get lots of opinions and unless they have reason to check, I am sure you will not be caught (but if they did check and they saw a period of several years where you never used your membership and a lot of different random names, it would send some flags).

 

[chalee94]

basically, i'd say you have it right. renting a few reservations every year for a few years would not qualify you as a "commercial" renter under current rules (as always, though, DVC may change the rules in the future).

depends on where things are...many owners who bought in the 90s could sell at a profit a few years ago. i would suggest renting rather than selling in a recession...but if the economy hits a boom part of the cycle in a few years, maybe it's worth cashing out rather than deal with renting.

(i still like going to wdw as a grown-up though, so what do i know...? )

 

[BoardwalkSuzy]

(i still like going to wdw as a grown-up though, so what do i know...?

I just introduced my DH to DL just a few months back for the first time - he's AARP aged now, and was expecting him not to like it at all. He's a naturalist, scientist, geologist, and didn't think lights, magic, rides were his thing - he even told me he didn't like roller coasters, even as kid. Well, he liked DL! I even pointed out to him all the couples that were maybe 70+, without kids, romantically going on rides at DL (so cute)!

We did learn we had to be careful where we eat, though, and maybe pack and bring in our own vegetables to eat - wish the table service restaurants offered vegetables. Seems ground meats and cheese entrees overly dominate the food scene at the parks, neither of which we eat.

The worst thing I guess that could happen is that Disney takes away the benefit of being able to rent, and that is it. After all, almost all the terms of DVC ownership are subject to change. Don't think that would be nice though, especially if you've put the points into a Trust for your children.

 

[dbs1228]

We always said we would "out grow" Disney that is why we never bought in over the past 10 years. Well every Feb. when we get home from a 7 - 10 night stay with our 3 daughters we are already talking about the next Feb. trip to Disney. We even have my parents and Aunt and Uncle coming with us every other year and loving it! DH and will have 2 girls in college next year just bought dvc in Feb and have 2 ressie on the table (one is for me and 2 girlfriends celebrating my friends 50th B.day, the other our annual Feb trip with college kids coming for the long weekend) with a possible 3rd one for just DH and myself this fall. I think we love Disney more then the kids! I see us going more in the future expecially when our youngest (freshmen in highschool) goes off to college, call us crazy but we love it!

 

[ToddyLu]

I think you and your wife will enjoy trips without the kids. DH (45) and I (41) go annually and stay for at least 9 nights. We never run out of things to do. We need all our points and would never think of renting them...we need each point we have.

 

[spiceycat]

teens right.

well when they go to college they will appreciate DVC again. Of course the problem is they want to go without you.

on your next DVC trip - you might consider US/IOA instead of Disney - teens seem to like it better.

their objections will pass.

 

[aggiemullins]

I've actually talked to a couple of guides about this, because renting is an enormous benefit to owning. I've asked their opinion on it and told them up front I planned on renting somewhat frequently, mainly to lower the buy-in.

Also, we have more points then my family needs because we like to have a buffer if we want to take friends or family without using 3 years worth of points. If we don't use the extra points that year, I'll rent them out.

As the guides have stated to me, what they mainly look for in "commercial renting" are the people who (first and foremost) own multiple thousands of points, who have multiple trips per year with multiple different names and addresses that don't match the deed.

I'm not sure how many points you're talking about, but if you're the typical family, I'm assuming it's no more then a few hundred which doesn't fall into the realm that they're concerned about, which is someone who has a few hundred thousand dollars worth of points making around 10-15% Return on Investment and doing serious undermining to the Cash Reservations of Disney World.

Believe it or not, I've had more then one guide confirm that those people do exist, especially since it's so much safer then the stock market these days. By the way the guides sound, it's not easy for DVC to shut them down. Probably because they have to prove that the people renting points from these entrepreneurs aren't friends or family, which is probably no easy task.

So to answer you question, I truly think you don't have to worry about it. I've been renting points for years when I can't use them. Even if the worst thing you can imagine happens, which is them telling you to quit renting your points, then you just go back to Plan B and sell it.

But as a relatively new father who grew up going to DW, I suggest to save those points. From your children's prospective in a few years, it's whole new experience going with your own kids and reliving the magic through their eyes. Something of which I'm sure your kids and yourselves will appreciate in the long run.

 

[5forDiz]

Yes, some tax deduction(s) but that will be negligible after recording rental income.

And DVC, as others here have mentioned, could change renting rules.

Also, renting means the member is responsible for guests that you make reservation for : ie, damages, packing room over capacity etc. In addition to your time calling MS to check on availability, making reservation, maybe changing reservation, arranging ME & DDP if renter wants it, etc. So you need to decide if you really want to contend with the whole rental picture - many members find renting to be no worries, speaking for DH & I personally, we wouldn't want the worries, if we had points we weren't using would only deal with family and close friends or transfer the points over to another DVC member for their use.

Best wishes on your planning

 

[crisi]

If you are going to take deductions for a business, you'll need to take the income as well. Timeshare ownership in a small business is often considered by tax professionals to be a huge audit flag. Also, whether its a business or not, you will be subject to sales and hotel tax in Florida (although almost no one pays this, I would highly encourage you to pay it if you plan on taking any deductions on your taxes for ownership. If you are audited, the Feds will very likely talk to the states.)

 

[Deb & Bill]

There have been a few horror stories of non-members leaving a bill behind when their credit card wouldn't accept it once they left the resort. The member got word when they tried to make a reservation that their account was frozen until the bill was paid.

Should your renter damage the resort, you are responsible for the damage.

And should your renter decide they want a bigger villa, better view, different resort, they could wind up using points that they didn't pay for. That, too, has been reported.

And as has already been reported, DVC could implement specific renting rules.

By the way, with the increase in DVC members with all the new resorts, more members are trying to rent out their points, so you might not make the money you want. Especially with all the deals Disney is offering. They can sell the DVC resorts for less that you can renting out your points and they throw in the dining plan for free AND offer daily full cleaning.

 

[Dean]

Taking tax deductions and not using it routinely does not make it a "commercial use" from DVC's perspective. I doubt they will do much else in this area of the rules other than possibly tweak a few things along the way. Assuming one has a normal number of points I don't think there's any way to get into the commercial realm under DVC's rules with this plan.

 

[sweetdana]

There are limited rules now, but Disney has rights to change anytime. I would keep it in mind, but not buy with this as an intention. You may be disappointed. Buy with intentions of using, as as MF grow every year, tthe avergae rental price per point has not. As more and more buyers buy.. there are more and more points for rent. Keeping rental prices low.

 

[BoardwalkSuzy]

By the way, with the increase in DVC members with all the new resorts, more members are trying to rent out their points, so you might not make the money you want. Especially with all the deals Disney is offering. They can sell the DVC resorts for less that you can renting out your points and they throw in the dining plan for free AND offer daily full cleaning.

Sounds like lots of risks involved, but I've dealt with many tenants over years, so know there are lots of things that can go wrong - I could actually write a book on tenant stories - both funny, and many shocking, and should some day since I've been managing properties for a long time, and my family also managed properties, commercial and residential.

From what it looks like, I would think that renting out a reservation made early on for a prime event - F&W festival, Thanksgiving, Christmas, may all come with premium value, though - far more than just renting out points at last minute.

Thanks for the stories you've heard. I'll do more research on those risks involved, since sometimes never know if can't use points one year - may be doing some other big trip or something else, kids might not want to go or not available to go, many things can happen - but don't want to sell the points or lose their rental value either.

 

[5forDiz]

Sounds like lots of risks involved, but I've dealt with many tenants over years, so know there are lots of things that can go wrong - I could actually write a book on tenant stories - both funny, and many shocking, and should some day since I've been managing properties for a long time, and my family also managed properties, commercial and residential.

From what it looks like, I would think that renting out a reservation made early on for a prime event - F&W festival, Thanksgiving, Christmas, may all come with premium value, though - far more than just renting out points at last minute.

Thanks for the stories you've heard. I'll do more research on those risks involved, since sometimes never know if can't use points one year - may be doing some other big trip or something else, kids might not want to go or not available to go, many things can happen - but don't want to sell the points or lose their rental value either.

You will see slightly higher rates that some members post for rental points at holiday times, etc. but probably not what you'd expect; maybe $2 more than what is typically seen on average. Also on Rent/Trade board here a booked reservation may not be posted for rent more than 30 days prior to check-in date ( read the Stickies atop Rent/Trade board ) in order to discourage folks from booking popular reservations with no intentions of using for themselves. Of course, there are other avenues elsewhere that you can offer your points for rent.

 

[Dean]

There are limited rules now, but Disney has rights to change anytime. I would keep it in mind, but not buy with this as an intention. You may be disappointed. Buy with intentions of using, as as MF grow every year, tthe avergae rental price per point has not. As more and more buyers buy.. there are more and more points for rent. Keeping rental prices low.

I think it would be foolish to buy DVC with the intent of renting it out or even to buy extra points with this intent to cover part of the costs. However, there are times when one doesn't need as many points as others and sometimes situations change. Thus I think that have enough points for the episodic use that generates extra points some years is a valid reason to own to rent those points. Plus some that own have situations change, that may be financial or usage changes. The latter applies to me in that I almost never use my points to stay other than to supplement a night here and there. Almost all of my stays are through the exchange company the last few years. I will likely sell most of my points once the economy has recovered and keep only 25-100 mostly for the perks. The bottom line is I see owning and deciding to keep and rent mostly as totally different than buying to rent.

While DVC could teak the rules, the specific ability to rent is included in the POS and IMO, under FL law assuming the company allows any renting.

 

[Deb & Bill]

...From what it looks like, I would think that renting out a reservation made early on for a prime event - F&W festival, Thanksgiving, Christmas, may all come with premium value, though - far more than just renting out points at last minute. ....

And many of your fellow members will hate your guts for doing that. Especially if they were a few minutes slower at trying to get that exact same reservation. Now they see you selling the exact time/place they wanted/needed and were unable to get. And won't have the opportunity to get from the wait list because you are selling it to the highest bidder.

DVC was originally intended for family vacations. Not for making a quick buck.

 

[LSchrow]

bored of wdw??!!
nope
we bought when our kids were little, and now still enjoy going, just in different configurations.
DH and i go to the F&WF with friends, DD and i go to the F&GF - every year. every other year, i go with DB and his family and my DPs.

we're able to take multiple inexpensive vacas just about whenever we want, realxing and just enjoying life outside of the parks. at home, we have a beach nearly, a great backyard with pool and lots of ammenities, are a short train ride to b'way shows, etc, but go to wdw for days of pure pleasure and relaxation. i doubt we'll ever tire of our slice of heaven at the BWVs

 

[brittsmum1998]

Your children are only 4 and 5 yrs old. You have plenty of time hopefully before they get sick of Disney (I hope). By that time, rules may and could change. If they are sick of it already I would be 2nd guessing my investment.

 

[crisi]

Your children are only 4 and 5 yrs old. You have plenty of time hopefully before they get sick of Disney (I hope). By that time, rules may and could change. If they are sick of it already I would be 2nd guessing my investment.

It comes quick though. That was about the age mine were, and now they are almost eleven and twelve and we have an August trip its hard to work up excitement about. Particularly when they've discovered a bigger world (we went to Mexico this winter and to Europe last summer).

Not to mention that school schedules become harder to work around (the Mexico trip was the last one we will have pulled them from school for - now its just vacations), and the vacations get filled with sports, camp, and activities. We get two weeks in late August now - that is our vacation window. Unless we want to travel over Spring Break or Christmas - and I hate crowds.