DVC Membership used strictly as an investment

[longboard55]

I would never do it for that reason, but based on the numbers it would work as a great investment. If you rent points it is a good dividend and they go up in value way over 10 year t bills, that is how you judge these things. Now if you base your dividend on actually using the unit and the amount saved it is even better. There is a reason they keep jumping in price.

 

[MickeyFan612]

I know one of the rental brokers has been in business for over 5 years, but the rental market certainly wasn't as robust as today (I have no idea how good private rentals were 5 years ago though). Thus, it probably wasn't a very good idea to load up on DVC contracts even at distressed prices as "investments" since every unused point would have further raised the break even point. Plus, it obviously would have been a very risky bet to hope that timeshares (even DVC) would increase in value with time. Now is different since there is supposedly a really high demand for points to rent. If someone can get DVC contracts at rock bottom prices now, one can likely make money solely by renting out all the points on a yearly basis and not even care when the contracts become worthless as they expire.

LAX

Five years ago the rental market was imo just as good as it is today, if not better when you consider maint fee increases. The lowest point rental on my spread sheet was $11/ pp for SSR and those were points rented from my first deal that for obvious reasons I wanted to move quickly. When your deals all come w/ two to three years of maint free points it really doesn't matter if you rent for $11 or $12/ point, my breakeven points were all about the same- 3 and a half years. Unused or expired points were never an issue for me but I could definitely see where mismanagement of points could prolong your break even point. I did not initially purchase all of my contracts as investments, sort of got addicted to the great deals!. As it turns out I definitely do not think I did as well w/ my stock market investments since essentially I was able to continually invest point rental income into more awesome DVC deals. It was like buying a house w/ two to three years of rent already paid! My real profits came when I later sold to invest in my true goal of owning real estate. I never dreamed that after reaching my break even points so quickly that some of my contracts would also double in value! Thanks to DVC , I was able to put 25 percent down and pay renovations out of pocket, I now own 5 properties that all cash flow beautifully!

 

[ELMC]

DVC as an investment can be done and has been done. People who tell you otherwise are either unaware; trying to dissuade you from competing with them; or trying to save you from the high percentage chance that something will go horribly wrong. I think most people here on the DIS fall into the very benevolent third category.

Yes DVC is a timeshare, but many things that have an original purpose other than being an investment can be an investment, each one bringing with it specific levels of risk and reward. Pokemon cards, art, classic cars, wine, stamps, racehorses, and yes, timeshares.

In 2001 I bought a Black Lotus Magic the Gathering card for $100. I bought it to play a fun little card game. Today that card is worth $5,000. I didn't buy it as an investment, but what an investment it has become. (Just not for me, I sold it six months later for $150 and was thrilled that I made 50% on my money in six months).

 

[DVC Doctor]

In 2001 I bought a Black Lotus Magic the Gathering card for $100. I bought it to play a fun little card game. Today that card is worth $5,000. I didn't buy it as an investment, but what an investment it has become. (Just not for me, I sold it six months later for $150 and was thrilled that I made 50% on my money in six months).

I don't play the game, but I can Google.

Was is the alpha or beta version?

Black Lotus is usually considered to be the most valuable non-promotional Magic card ever printed. Its Alpha and Beta versions in particular are considered to be extremely valuable, due to the more limited print runs and black borders of those sets. Alpha is the most sought after with an estimated 1100 ever printed, and beta with 3300 ever printed. A Gem Mint Alpha version of the Black Lotus was auctioned for more than $27,000 in November 2013

 

[ELMC]

I don't play the game, but I can Google.

Was is the alpha or beta version?

Black Lotus is usually considered to be the most valuable non-promotional Magic card ever printed. Its Alpha and Beta versions in particular are considered to be extremely valuable, due to the more limited print runs and black borders of those sets. Alpha is the most sought after with an estimated 1100 ever printed, and beta with 3300 ever printed. A Gem Mint Alpha version of the Black Lotus was auctioned for more than $27,000 in November 2013

It was an Unlimited version. About 18,000-20,000 in print depending on who you ask. But in reading your post I'm not sure I understand what you're trying to say. Are you agreeing with me about the investment aspect or saying that I cherry picked the most rare example? Or maybe I'm reading too much into it and you simply were asking a question.

There are hundreds of examples of this happening, I just tried to use a familiar one. Here's a less familiar one. Lion's Eye Diamond, a card printed in 1996 was generally considered worthless and could be had anywhere and everywhere for less than a dollar. Until one day a rules change made the card insanely powerful and almost overnight it began to sell for $20, eventually peaking close to $250. A few years later the price fell to about $80. So whether you made money on it or not all depends on when you got in and when you got out. That sounds a lot like DVC to me. It also sounds a lot like the stock market, and many other investment vehicles. My point is that anyone out there who looked at this card game and saw it for something that it wasn't intended to be, an investment, could have done incredibly well...or incredibly poorly depending on their timing. The same can be said for DVC. The people asking the questions in these threads, "Can DVC be an investment?" are looking at it through a different lens. Maybe it will work out, maybe it won't. But it has for some, that much is certain. The good news is that even if you lose money on a card, you can still play the game. And even if you lose money on your DVC, you can still stay at the resorts.

 

[ELMC]

DO NOT FORGET - all DVC investments will eventually drop in price to $0 as it is a RTU 50 year contract and this is a guaranteed 100% loss in your initial investment, no matter what the cost is. The DVC investment plan is just a game of musical chairs where people can rent and recoup their original investment and hope to get some profit renting. At this moment, the music is playing and everyone is smiling (making money), but one day in the future the music will stop and some people will be left standing without a chair - game over.

I just read this again and I like it, but I think it's a bit of an oversimplification. I don't think everyone is smiling and making money. I think the vast majority of DVC owners are smiling and using their timeshare exactly how they planned on using it when they bought it. There is a very small subset of the ownership that is using it as an investment and, if they do it correctly, it is plausible to believe that they will get in and out having made a "profit". Meanwhile, everyone else, including the people they sold it to, will just use it happily until it fades into the sunset and their RTU expires. To use your example, we'll all be left without chairs, which is exactly what we knew would happen when we started playing the game.

 

[MrInfinity]

Nobody is saying you can't buy something you intend to consume, and then end up selling it for more than you paid for it. This happens with lots of things. I have plenty of rare collectibles that are worth money. My DVC has even gone up in value. Still -- If you have $20k, and you want to invest it for future growth... and you ask around. No financial advisor will ever tell you... "You should buy $20k worth of MTG cards -- hope you get a rare one, sit on it for 15 years and turn a profit". Or "You will get the best return on your money by buying a timeshare". It's just not sound advice. Nobody is advising against buying DVC -- we love our DVC -- but one should not buy it as an investment if you are not otherwise interested in using the product. There is always going to be something better to buy. It has already been pointed out that even during the best of times to have bought DVC, one still could have made more money, faster, and with less effort and risk by making more sound investments. Buy DVC if you want to enjoy DVC and save a little of the cost of your future vacations by prepaying for them up front -- but consider it an expense. If you go around telling people that timeshares are a good investment strategy, well, you should probably be one of the "guides".

 

[DVC Doctor]

It was an Unlimited version. About 18,000-20,000 in print depending on who you ask. But in reading your post I'm not sure I understand what you're trying to say. Are you agreeing with me about the investment aspect or saying that I cherry picked the most rare example? Or maybe I'm reading too much into it and you simply were asking a question.

I have no interest in MTG, but just Googled it after reading your post. Congrats on having a rare item. It was just a curious question, nothing more.

I just read this again and I like it, but I think it's a bit of an oversimplification. I don't think everyone is smiling and making money. I think the vast majority of DVC owners are smiling and using their timeshare exactly how they planned on using it when they bought it. There is a very small subset of the ownership that is using it as an investment and, if they do it correctly, it is plausible to believe that they will get in and out having made a "profit". Meanwhile, everyone else, including the people they sold it to, will just use it happily until it fades into the sunset and their RTU expires. To use your example, we'll all be left without chairs, which is exactly what we knew would happen when we started playing the game.

What I meant, it that the "self selected" DVC members that post on this bbs (not necessairly representative of a typical average DVC member) and other bbs sites have been glowing with people buying and renting DVC as an investment. For a newbie, this may seem like easy money, and or some members, it is. But to think buying DVC at today's prices is a "good investment" in terms of ROI only is probably going to disappoint many people.

I have always said that DVC is an "INVESTMENT" as anything that costs $10,000+ to buy certainly is a financial investment. However, most people prefer to think this is a vacation investment. And some lucky people that bought low and rent high are happy with their financial gain.

It has already been pointed out that even during the best of times to have bought DVC, one still could have made more money, faster, and with less effort and risk by making more sound investments. Buy DVC if you want to enjoy DVC and save a little of the cost of your future vacations by prepaying for them up front -- but consider it an expense. If you go around telling people that timeshares are a good investment strategy, well, you should probably be one of the "guides".

True, but it is tempting to try to merge both a vacation club and investment in the same thing. How many people can book a magical vacation as part of their IRA, ROTH, Mutual fund, Index fund, Bonds, etc?

Has anyone bought DVC as part of their IRA and is that possible?

 

[ELMC]

If you go around telling people that timeshares are a good investment strategy, well, you should probably be one of the "guides".

To be clear, I am absolutely NOT recommending this course of action or providing advice of any kind. I am strictly speaking historically. Please read post #21 in this thread where I believe I am quite clear about the risks and challenges facing someone thinking about this course of action.

I would greatly appreciate it if you wouldn't characterize my ideas on the subject as my giving investment advice, regardless of whether you do so in the form of a question, suggestion, or statement. All I am saying is that under the right circumstances it can be done; it has been done; and there are those that currently and properly engage in the practice who make a lot of money doing so. That is fact, not opinion, and so I'm clear....should certainly NOT be construed as advice or a proposed course of action for anybody.

 

[ELMC]

What I meant, it that the "self selected" DVC members that post on this bbs (not necessairly representative of a typical average DVC member) and other bbs sites have been glowing with people buying and renting DVC as an investment. For a newbie, this may seem like easy money, and or some members, it is. But to think buying DVC at today's prices is a "good investment" in terms of ROI only is probably going to disappoint many people.

Yes, I completely agree.

 

[Dean]

Nobody is saying you can't buy something you intend to consume, and then end up selling it for more than you paid for it. This happens with lots of things. I have plenty of rare collectibles that are worth money. My DVC has even gone up in value. Still -- If you have $20k, and you want to invest it for future growth... and you ask around. No financial advisor will ever tell you... "You should buy $20k worth of MTG cards -- hope you get a rare one, sit on it for 15 years and turn a profit". Or "You will get the best return on your money by buying a timeshare". It's just not sound advice. Nobody is advising against buying DVC -- we love our DVC -- but one should not buy it as an investment if you are not otherwise interested in using the product. There is always going to be something better to buy. It has already been pointed out that even during the best of times to have bought DVC, one still could have made more money, faster, and with less effort and risk by making more sound investments. Buy DVC if you want to enjoy DVC and save a little of the cost of your future vacations by prepaying for them up front -- but consider it an expense. If you go around telling people that timeshares are a good investment strategy, well, you should probably be one of the "guides".

Buying a timeshare as an "investment" from a financial standpoint would probably fall more under the category of speculation than true investing. If I were to average 7% long term on something that was depreciating and I was looking at as an investment, I'd be VERY disappointed. My floor would be 7% and return of principle over 10 years.