DVC Membership for Profit?

[Daddio]

brasey:

Thank you for your kind comments about my site noted above.

Actually, I only put the site together because I had quite a few extra points available that I wanted to rent and the first question I asked myself was "how could I do this in an easy and trusting manner"? I am in the design business so it was quite easy to throw a site together. The points went quickly and while I was renting them, I had people asking me if I would take some of their points off their hands. So I did and in a short time, they were gone too.

Being the Disney freak that I am, I found this new venture to be fun as I got to talk to different people every day about Disney. The site grew and took on new content as I tried to cover most of the questions people have about renting points.

Today it is a hobby. When it becomes a job, I will give it up.

 

[DrTomorrow]

Daddio - let me add my congrats on a nicely designed site. I confess that I'm surprised you were able to get approval to use the official DVC Logo and Mickey Mouse images from Disney - they are usually pretty tight with that.

I also found this a little amusing:

As an added benefit, you may exchange 2 table-service meals for either 1 Signature Dining Experience at one of our finest restaurants, such as the acclaimed California Grill or for 1 Disney Dinner Show, such as Hoop-Dee-Doo Musical Revue. Children ages 3-9 must order from the Children's Menu where available.

Our finest restaurants? Cut and paste, anyone?

Be well!

 

[jdvm]

You've asked a good question and I think you can see from the chatter that, yes, there are people out there primarily renting. There's nothing to prevent and I personally think that when you add in your time in dealing with all of the red tape, it is a questionable activity. But there's nothing to prevent and it's just a fact of life. I'll admit that I do worry that the rental process taxes Member Services as the rental process can be high maintenance. And that can come back to haunt those of us who just use our points for us.

 

[CarolA]

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.

The other thing you failed to take into consideration was the long term investment potential of your initial investement. Had you placed that in a mutual fund that was making even 5 percent and left it alone in several years you will be well ahead of the $6 per point you are making (even figuring your tmie and effort are worth SOMETHING)

 

[greenban]

What's great about the DIS and the DVC specifically is that we all have different backgrounds, and needs and plans, and the DVC can meet it.

Early in life, I spent a ton of cash on a beautiful engagement ring for DW (then fiance). While I don't regret it, I took a very liquid asset (cash) and turned it into a fixed and hard to convert asset (ring). [I'm happy with that choice, no complaints, but I have learned something in the insuing 16 years]

What I initially did with the DVC is to again convert some cash (levergaed through a corporation) and purchased the DVC. Instead of just glimering on DW's hand, everytime I used (for employees) or now rented points I 'earned' a return and got to keep my asset.

When DW and I fell in love with the DVC and agreed to retire there (in our early dottage hopefully), we decided instead of fixed assets without liquid returns, such as a honking anniversary ring, to 'invest' in our retirement. The returns I get from renting excess (for now) points, allows me to either buy more DVC after paying our MFs, or slowly buy my midlife crisis corvette, or a Kitchen set, etc. (or even that honking ring, sigh)

Now for the investment purists out there, this is not THE way to go, but in our specific case, I have a relatively liquid investment (The DVC), with a very good rate of return (much better than any legal investment I'm currently aware of - have you seen your stocks this week?). So I learned enough to purchase a luxury with some form of return.

Finally, we and I suspect most of you are deversified. All of our egss are not in one basket! (Even though it is Walt's basket).

Just another POV!

-Tony

 

[jgreenedc]

The other thing you failed to take into consideration was the long term investment potential of your initial investement. Had you placed that in a mutual fund that was making even 5 percent and left it alone in several years you will be well ahead of the $6 per point you are making (even figuring your tmie and effort are worth SOMETHING)

Depends on what you do with the $6 a point you make . . . over the course of the life of the point, you would come out ahead buy buying a point and renting if you invest your annual proceeds in that mutual fund each year, even assuming no appreciation in point value. At 5% return, in 36 yrs (2042) that $85 is worth $492.30. Starting at $0 and putting $6 away per year from now to 2042 with the same 5% annual return, you get $603.77. If you sold the points sooner, presumably you'd get much of your initial investment back (maybe more if values continue to go up). Of course, you have to be disciplined enough to put away that $6 per point every year - and I doubt I'd be that rigorous about it.

Again, I'm not pushing this as an investment and there are surely better options out there. Just food for thought.

 

[Cinderpals]

I think that the whole process takes a lot of time and follow through. I recently went through it because I read that it made sense to pay cash for the cruises. Plus, I ended up having to buy transferred points because our family ends up using up a lot of points !! Oh well....At least, I know that I helped expose a few new families to the DVCs.

As far as going through the whole process and not vacationing at WDW, I wouldn't choose this as a way to make a few bucks. There are other ways to make a better return on the money put into buy these contracts.

I'm glad there are folks out there that do "rent" their points as I seem to need more than I currently have.

 

[vbalacek]

I do not think that Florida could currently require DVC owners to pay resort tax. Under general tax concepts, owning a DVC is different than renting points out.

For federal income tax purposes, owning DVC (a time-share) is owning an interest in real property-- not a prepaid vacation. The government has looked at time-shares in several instances, and continuously made that ruling.

In general, state tax law tends to follow federal income tax classifications (although I do not know this is actually the case in FLorida, it is the general rule country wide and would seem to reflect the fact that we pay state property taxes through our dues). If so, the only way to come after owners for a "resort tax" would be for Florida to pass a law specifying all time-shares were not real property interests; and now would be subject to the resort tax. I think such a law would be unpopular in Florida since timeshares, and their developers, is big business. (I'm also not sure how practically they could collect the tax-- its usually on cost of accomodations, but how would it be charged for DVC? On new purchases? What about those who already brought in?)

I think the difference with rentals is an owner, is actually renting real property accomodations. Under general principles, this is typically considered rental income and should be subject to tax.

 

[Plutofan]

My concern would be could Florida come in reclassify DVC since your ownership reverts back to Disney when the term of the lease is up? I do not know the answer but it appears that the Disney DVC structure is different than most timeshares where you retain your ownership interest. When things are different it opens the door to seperate one group of timeshare owners from another with different rules.

 

[salmoneous]

Not that I think people really want to discuss the issue much here, but for those who are curious, do a search on Florida Administrative Code 12A-1.061 Rentals, Leases, and Licenses to Use Transient Accommodations. You can also do additional searches on the Florida Tourist Development Tax (125.0104).

 

[Dean]

My concern would be could Florida come in reclassify DVC since your ownership reverts back to Disney when the term of the lease is up? I do not know the answer but it appears that the Disney DVC structure is different than most timeshares where you retain your ownership interest. When things are different it opens the door to seperate one group of timeshare owners from another with different rules.

No, a RTU or leasehold could not be reclassified. It is an ownership based on real property. They could say all timeshare visitors have to pay a resort tax but it'd apply to ALL who visit for all timeshares in the affected area or state. Many countries do this including MX and Aruba.

 

[Brucechen]

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

This is true. Pretty funny some of the scenarios psoted on here about how you can't make much money renting points. I've averaged close to a 12% return in my 8 years of rentals. Don't hold your breath looking for my points here because, really, there are far better ways to market and sell your points. People here miss the point just like they've missed every other money making opportunity the rest of there lives.

Talking about how you need to recoup your buy in amount before you turn a profit is a good one. People, the money spent buying in isn't gone. DVC points have value, the money isn't gone. Why do you need to recoup it first? Maybe when you buy stocks you guys aren't turning profits either until your money is recouped. DVC has value and has increased in value as a matter of fact. My $55 contarcts purchased 13 years ago are now worth $80+/pp.

Sorry Bongo, some people will never get it. No sense trying to explain it.


Bruce

 

[Brucechen]

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

Yes, OK, the renters are paying taxes. There is no tax on rentals. Who is going to tell the IRS, the person who rented your points? MS going to notify the IRS? Your bank? Lets see a show of hands for those that report the rental money as income......................... Tony(Greenban), Gblast, Bongo59, anyone?????????????????

I don't think so and I've got 8 years of proof.

Bruce

 

[Plutofan]

Say what you will but if there is a material mistatement on your tax return then the statue of limitations goes beyond the normal 3 years. When you add in tax fraud penalties, interest, understatement penalties etc your profit will disappear very quickly just to cheat the goverment. I am sure that there will be a lot of value if the IRS seizes your property. You better be able to prove all the cash deposits that go into your back account or hope that you never get audited or ever rent to someone that works for the IRS. Good luck. You are correct that there is value to the points but the value goes go to zero when the lease term is up.

 

[Blue&Gold]

People here miss the point just like they've missed every other money making opportunity the rest of there lives.

Not everyone here misses the point... Your ad hominem attack detracts from the point you are making.

While I'm no Warren Buffet, I don't feel I've missed every other money-making opportunity of my life.

 

[noname70]

Thank you for all of the replies so far to this post (never thought I would ever post something w/over 2000 views). I feel like a best seller (pun intended)

 

[Cruelladeville]

Renting for most of us is a way of getting things cheaper, which does have some value, although perhaps you can't see it on paper. If I can get a room on AP rates for cheaper than my points, I rent the points to pay for the room. I have gotten the room, someone got the points they wanted, and Disney rented a room. It works for me. Now, DH bought a contract, and concentrated on putting the rent money back in the savings account, and had his initial investment back in about 4-5 years. That's a hard way to be profitable, though, since a lot of people think you are CRO, so they can change ressies as often as the wind changes direction.

DVC is more enjoyable when you use it on yourself.