DVC Membership for Profit?

[noname70]

Are there people who use their DVC Membership for Profit only?
I see some of the same people on the rent board w/lots of points for sale regularly.
Is there a subculture out there who never vacation w/DVC and only sell points at a profit? :

 

[Kick Save]

Admittedly, we have more points than we can use solely to rent some of them off, mainly to cover the annual dues and anything over that is nice. But, it's pretty tough to turn a profit on it, I'd think. I think I did the math a while back and on like 200 BWV points you'd be recouping your initial investment for like 8 or 9 years, and that's by only renting.

I guess if you owned enough points, it could be a nice secondary source of income, but you'll get more money off eBay than by renting here for 10-11 a point.

 

[bongo59]

yes you can make money renting easily..............

 

[byoung]

We paid $500 3 years ago on Ebay for OKW s-t , and though it was a good deal.

 

[Kick Save]

yes you can make money renting easily..............

Margins will be pretty thin for a while, though. Much better rental for profit options out there than DVC.

 

[brasey]

I bought 200 SSR points during F+F promotion and it would take almost 12 years to break even on renting points if you sold them here for the higher price of $11 per point and that is if dues and point rentals stay steady. Cost was 16600 + 9552(dues over 12 years)= $26152 invested. It would take just under 12 years to recoup all that money at $2200 per year of renting all my points. The premise still pretty much stays the same at 400 points also so the thought of the more you buy the more you make really does not hold water. The money making part comes in for people who bought years ago, did the vacations and are now renting points at a better margin.

 

[jgreenedc]

If you assume purchase price of $85 pt (including closing) and a net of $6 per year per point ($10 rental less $3.98 for dues), you get a 7% return. Not great but not terrible. Now if dues go up but the price to rent does not, your return will go down. Another factor is appreciation (and eventual depreciation) of the points themselves. But on SSR The End is 48 yrs away, so it may be a while before the value goes down. If you buy OKW points for a few dollars less, obviously your return would go up.

This also assumes that you can rent 100% of your points (or at least bank them) every year . . .

 

[spiceycat]

in ways.

but not always in money profit.

I think the time I spend with my family and friends or alone at one of the most fun places in the world - is a profit.... to my emotion bottom line.

but hey everyone is different.

I learned long ago about renting. on mother's first DVC trip - some other people were there from Al - say that they rented this guy points..... at the time I though how horrible.... show what a difference a few years can do. They wanted to rent from me on their next trip. and I told them I didn't rent my points....

Now, I do rent some of my points.

Oh well - change is part of growth....

 

[brasey]

If you assume purchase price of $85 pt (including closing) and a net of $6 per year per point ($10 rental less $3.98 for dues), you get a 7% return. Not great but not terrible.

7% is nothing until it is actually paid for. The lay out for the initial points means no actual profit for over 11 years selling every point.

 

[CarolMN]

If you assume purchase price of $85 pt (including closing) and a net of $6 per year per point ($10 rental less $3.98 for dues), you get a 7% return. Not great but not terrible. Now if dues go up but the price to rent does not, your return will go down. Another factor is appreciation (and eventual depreciation) of the points themselves. But on SSR The End is 48 yrs away, so it may be a while before the value goes down. If you buy OKW points for a few dollars less, obviously your return would go up.

This also assumes that you can rent 100% of your points (or at least bank them) every year . . .

Not sure how you calculated your 7% return. Did you include the value of your time for renting? Or the taxes that should be paid on the "profit"? Or the Orange County resort tax? Or the Florida sales tax?

FWIW, the state & counties of Florida apparently believe that those who rent out their timeshares owe them resort/lodging/sales taxes.

Check out this recent article from the South Florida Sun-Sentinel:

http://www.hotel-online.com/News/2006_May_30/k.FLT.1149096358.html

Here are just a few sentences of the article which also mentions our DVC Forums Sponsor - Tom Yeary :

Though time shares -- typically sold in one-week increments -- are generally exempt from the resort tax, there are exceptions.

Some resorts, particularly those owned by larger hospitality companies with enormous booking engines, treat unsold units as hotel rooms, making them taxable. The same goes for individual owners who rent their time shares to friends, family or strangers.

It is not known what percentage of resort-tax collections come from such rentals. But there is little reason to think the county is getting everything it has coming to it.

I doubt very few (if any) members who rent actually collect or remit those taxes, but if the government units ever decide to get serious about enforcing their tax laws, some could find themsleves in an "expensive pickle".

Best wishes -

 

[Dean]

I also don't believe that DVC is worth owning for profit alone. Even if you bought back when the point were lower as many of us did, you'd really have to compare to what you could sell for now, not compared to the price pp 10 years ago. But if one already owns it or has too many points, it can be a reasonable way to float it for a while.

 

[jgreenedc]

The 7% return I posited was simply cost to purchase a point (I assumed $85 inclusive of closing costs) vs. first year return on that point, $6 ($10 rental less $4 dues). 6/85=.07. No consideration for time spent to rent, sales or state tax, or anything else. This simple math is certainly not meant to suggest that DVC is a great investment; in fact I'm quite certain that 99 out of 100 financial advisers would tell you it's a bad idea (and not just because they want you to buy their investmetns). This is particularly true if you're going to finance a purchase. But if you pay cash, don't mind the work of renting, and are willing to take the risk that the value of points won't decline soon, then it's also not a crazy idea.

 

[bongo59]

I also don't believe that DVC is worth owning for profit alone. Even if you bought back when the point were lower as many of us did, you'd really have to compare to what you could sell for now, not compared to the price pp 10 years ago. But if one already owns it or has too many points, it can be a reasonable way to float it for a while.

Dean, my original 48 dollar a point (750 points)bought in 1991 paid for itself in 1994...................everytime i rent a point from that contract..............it is gravy...............total gravy. I also wont rent for 10 a point any longer.............COLA has occured to my extra points.............renting can be very profitable if you chose to go that route.................i dont do it very often but 2005 was a yr when i rented over 2000 points.

 

[CPTJAK]

Dean I agree with you DVC will NOT give a good Return on Investment (esp. if it is kept until it expires) via renting, but it is a good way, as you state, to "float" when you can not take a vacation or would like to go somewhere else.

compare a 5% CD with reinvestment of Maintenance fees:

100 points at $93 per point=$9300 invested in DVC vs 9300 in CD at 5%
DVC "Profit"
rent 100 points at $11=1100 minus mf of 400 = $700
Original investment 9300/48 years=194
so 700-194= 506

504 x 48 years=$24192

Now put same 9300 in a CD:

9300 x5%= $465
plus MF not spent = 465 + 400 = 865

865 x 48 years = 41520 plus original 9300 = $50820

If my calculations/assumptions are correct you would have to rent the points for $14.61 to match the yield of a CD.

And of course a CD is not much work while I assume there is some extra work involved in renting as well as risk.

 

[Plutofan]

Not sure how you calculated your 7% return. Did you include the value of your time for renting? Or the taxes that should be paid on the "profit"? Or the Orange County resort tax? Or the Florida sales tax?

FWIW, the state & counties of Florida apparently believe that those who rent out their timeshares owe them resort/lodging/sales taxes.

Check out this recent article from the South Florida Sun-Sentinel:

http://www.hotel-online.com/News/2006_May_30/k.FLT.1149096358.html

Here are just a few sentences of the article which also mentions our DVC Forums Sponsor - Tom Yeary :

Though time shares -- typically sold in one-week increments -- are generally exempt from the resort tax, there are exceptions.

Some resorts, particularly those owned by larger hospitality companies with enormous booking engines, treat unsold units as hotel rooms, making them taxable. The same goes for individual owners who rent their time shares to friends, family or strangers.

It is not known what percentage of resort-tax collections come from such rentals. But there is little reason to think the county is getting everything it has coming to it.

I doubt very few (if any) members who rent actually collect or remit those taxes, but if the government units ever decide to get serious about enforcing their tax laws, some could find themsleves in an "expensive pickle".

Best wishes -

My concern is that if they go after timeshares could they change the rules and treat all bookings as subject to the tax including members booking their own reservations. If you look at substance over form, a DVC member is really renting a room from Disney each year for 36+ years since we have no ownership at the end of the term. When a DVC member rents out their points they are just renting to a different person each year. Disney has a good thing going since the real profit is selling or should I say leasing out the timeshares. The majority of the members are really not making much of a profit renting out points when compared to the return they could have gotten by investing the initial up front costs. By changing the rules Florida could just go after the association or developer and not the individual people who rent out their points. Am I analyzing this to much or does anyone else have any concerns?

Thanks

 

[salmoneous]

If my calculations/assumptions are correct you would have to rent the points for $14.61 to match the yield of a CD.

One thing that isn't in your calculation are income taxes. You would have to pay them on the CD's. What income taxes would be do on the timeshare?

 

[Plutofan]

Either way you will pay income taxes. You will owe income taxes on the interest income or income taxes on the profit of renting.

 

[Dean]

Dean, my original 48 dollar a point (750 points)bought in 1991 paid for itself in 1994...................everytime i rent a point from that contract..............it is gravy...............total gravy. I also wont rent for 10 a point any longer.............COLA has occured to my extra points.............renting can be very profitable if you chose to go that route.................i dont do it very often but 2005 was a yr when i rented over 2000 points.

We're not talking the same language. My point was that one who is looking at this from a financial standpoint and has owned for a while needs to compare to what they could sell for, not compared to the price pp paid back when. My 2 contracts were between $40-54 per point, the ones I no longer have were even less. Looking at this from a strictly $$ standpoint, I'd have to use somewhere in the $75-80 pp range depending on contract to figure rate of return. If not, I'd be far better off just selling. Truth is, as I'm sure you've seen, my plan is just that. I plan to sell in a year or two and retain a very small contract for perks, as a reservoir for transfers and an occasional trips outside of exchanges.

 

[Boston5602]

I found this web site on another post here on the Dis and it looks like it is set up just to sell ( rent ) DVC points at a profit for this person.


DVC renter web site

the site even links to the DIS for point charts and info

 

[brasey]

I found this web site on another post here on the Dis and it looks like it is set up just to sell ( rent ) DVC points at a profit for this person.


DVC renter web site

the site even links to the DIS for point charts and info

Boston,
I checked it out and they have a pretty well set up website so they may be doing well with it. Like I have stated in a previous thread that you can turn a nice profit if you buy up all the ridiculously low point sales on the rent/trade thread for under $8 and $9 and sell for $12 then you can do well. 1000 points turns into almost $2000-$3000 at that exchange rate. There are enough points to be bought so it is not a far fetched idea. But as usual it takes money to make money.