DVC plans to target commercial renters

[tom1944]

Yes…. the commercial renters seem very worried…

https://www.disboards.com/threads/2-800-aul-blt-poly-points-to-rent-transfer-starting-at-20.3959190/

If all those points get rented at the prices stated is my rough calculation of a net profit of over $35,000 accurate? I have difficulty defining that as anything but commercial.

Most likely my 40 plus years as a tax agent forms my thought process.

 

[theMoreDisneytheBetter]

Well if you stay at AKV during May and Sept you can actually 8 weeks and it only cost you 670 points. Remove 1 week and you are well below 600 points.

True. I guess I’m just spoiled by what DVC has made possible for us. I couldn’t imagine that much time in a studio. I need my washing machine.

 

[Cyberc1978]

True. I guess I’m just spoiled by what DVC has made possible for us. I couldn’t imagine that much time in a studio. I need my washing machine.

You could use one of the free ones at the resort or you could use one of the old fashioned ones in your room

 

[Spivey378]

Yes…. the commercial renters seem very worried…

https://www.disboards.com/threads/2-800-aul-blt-poly-points-to-rent-transfer-starting-at-20.3959190/

“As we find ourselves every year, our family has more points than we can use in 2025.”

 

[tx911]

“As we find ourselves every year, our family has umpteen thousand more points than we can use in 2025.”

 

[drusba]

Yes…. the commercial renters seem very worried…

https://www.disboards.com/threads/2-800-aul-blt-poly-points-to-rent-transfer-starting-at-20.3959190/

Yes, there appears to be some who might be deemed to be professional renters using this site to do rentals -- the one in the post you mention has apparently been a member of this site since 2010, but I cannot find any posts made by him beforel 2022, and since then all of his posts on this site have been for doing rentals. I have seen others on this site who are similar, e.g., one poster joined in 2002 and historically has posted little over the years except posts to do rentals.

 

[theMoreDisneytheBetter]

It’s fun to imagine how one might spend 2800 points in a given year. We’re talking Bungalows, TP penthouse 2BD at Poly, GF 3BD, etc over Christmas AND Easter kind of territory.

Alternatively could you spend half a year at the Cabins at Ft Wilderness? Even more at a studio somewhere?

 

[theMoreDisneytheBetter]

Actually looking at their post history on the other thread they have more points than that, because back in October they were posting about other UY as well.

 

[Genie+]

A Wyndham type solution looks interesting to me because I don’t think it would bother most people here. ALL of that criteria would need to met simultaneously before the count even begun, and even then it still allowed 2 each and every year. I figure DVC is familiar with its existence, how it may or may not work for this membership, and which parts are legally possibly, impossible or need to be worked around. Whether DVC thinks it’s at all feasible I have no clue. Sounds like they already have something in mind though, considering they said ‘hopefully by this time next year we’ll see improvement.’

From what I’ve seen even lawyers have disagreed on exactly where renting and DVC stand. Some legal points are pretty clear and consistently agreed. It’s the grey areas where most disagreements happen. When we bought there was not a definitive interpretation. I took my best guess as to what I could or could not rely on. Personally we went with:

We have the ability to rent, yet not the right to rent for profit.

The ability to rent is the opportunity for us to rent when we are following everything else in our contracts. I did not take it as a separate thing, that we could just rent whenever/however suited us. If we are using our contracts for personal use and end up with excess points on occasion, and if there is availability before the points expire, we may rent.

The right to rent for profit is not protected. We cannot complain if there is no availability left, if Disney Hotels had an offer or did Disney made any other move that decimated the DVC rental market, etc. Basically Disney, DVD and DVC don’t need to consider how little or big our profit margin when they make decisions. Any impact to our rental profit potential does not matter. As long as something still exists for owners to rent that possibly could offset any part of their ownership costs (when they are using the contract for personal use and end up with excess points on occasion), the ability to rent is still being met.

So many interpretations exist Above is what I took away from discussions about FL timeshare law and DVC contracts, at least for my own personal expectations when deciding whether to buy.

 

[nalababybear]

If all those points get rented at the prices stated is my rough calculation of a net profit of over $35,000 accurate? I have difficulty defining that as anything but commercial.

Most likely my 40 plus years as a tax agent forms my thought process.

Back of napkin for me puts it at roughly between 28-35k profit depending on time of acquisition and presuming these are all resale points.

Opportunity costs if these dollars were simply sitting in an index fund are roughly 30k. So he's doing all that work of points and management of them for a potential 5k profit annual.

Some may say that's a great return advantage on some 300k invested in real estate ownership. Most who own real estate will certainly not.

 

[Cyberc1978]

A Wyndham type solution looks interesting to me because I don’t think it would bother most people here. ALL of that criteria would need to met simultaneously before the count even begun, and even then it still allowed 2 each and every year. I figure DVC is familiar with its existence, how it may or may not work for this membership, and which parts are legally possibly, impossible or need to be worked around. Whether DVC thinks it’s at all feasible I have no clue. Sounds like they already have something in mind though, considering they said ‘hopefully by this time next year we’ll see improvement.’

I think it would - so let’s agree to disagree

 

[Genie+]

Back of napkin for me puts it at roughly between 28-35k profit depending on time of acquisition and presuming these are all resale points.

Opportunity costs if these dollars were simply sitting in an index fund are roughly 30k. So he's doing all that work of points and management of them for a potential 5k profit annual.

Some may say that's a great return advantage on some 300k invested in real estate ownership. Most who own real estate will certainly not.

That does open 2 questions though:

Why would so many people keep renting thousands of points every year if there is no financial advantage to be found?

Does it matter how big/small the financial advantage when considering commercial rentals?

Points being used for commercial purposes are a different pattern of usage on average than personal usage. In many ways. Predictably as well, considering even the first DVC contracts knew enough to include Commercial Use Prohibited.

 

[theMoreDisneytheBetter]

Also with respect to your math, on average the stock market returns more, but there are years when it is down (a lot). Whereas outside of the pandemic, most of the time it’s easy enough to rent out Disney points. So for a commercial renter - and to be clear we are not - the mindset may be something like:

1. Buy loaded contracts cheap - and if they are affiliated with a broker (as some have speculated here) - with limited transaction costs. Brokers may even get the first look at contracts and can manipulate the sales process.
2. Strip points and rent out for however long they want to hold the contract for
3. Flip (and perhaps act as their own agent/get paid a commission on the sale) and repeat.

Also while it is no longer the case anymore, PayPal and the like used to not report income, so those who chose to could also not report their rental income making their earnings “tax free."

 

[Genie+]

I think it would - so let’s agree to disagree

Is there any other way? Lol

 

[Nabas]

It’s fun to read this DIS thread from 2007 that discusses renting DVC points.

https://www.disboards.com/threads/is-renting-out-your-dvc-for-profit-legal.1513498/

 

[lowlight]

Back of napkin for me puts it at roughly between 28-35k profit depending on time of acquisition and presuming these are all resale points.

Opportunity costs if these dollars were simply sitting in an index fund are roughly 30k. So he's doing all that work of points and management of them for a potential 5k profit annual.

Some may say that's a great return advantage on some 300k invested in real estate ownership. Most who own real estate will certainly not.

The contracts themselves have a not-insignificant value. You buy 10k points through shells, recoup the initial points investment through rentals in about 7 years (plus profit), then you have 10000 points that you can rent for 3x-5x dues. When you want out, you sell for market value and get most of your initial investment back. Being a landlord is the surest way to money, this is basically being a timeshare landlord. The people who bought VGC and sold when it peaked at 300/pt after years of rentals are probably pretty happy right now. Maybe my math is off, and it’s a terrible idea and the thousands of people who do it are wrong. Someone here will point it out if I am wrong.

 

[DVCPAT]

Also with respect to your math, on average the stock market returns more, but there are years when it is down (a lot). Whereas outside of the pandemic, most of the time it’s easy enough to rent out Disney points. So for a commercial renter - and to be clear we are not - the mindset may be something like:

1. Buy loaded contracts cheap - and if they are affiliated with a broker (as some have speculated here) - with limited transaction costs. Brokers may even get the first look at contracts and can manipulate the sales process.
2. Strip points and rent out for however long they want to hold the contract for
3. Flip (and perhaps act as their own agent/get paid a commission on the sale) and repeat.

Also while it is no longer the case anymore, PayPal and the like used to not report income, so those who chose to could also not report their rental income making their earnings “tax free."

With real estate rentals, you report income and it can be tax free. Renting DVC points short term is way too much work compared to processing a lease. Also, you own real estate and have total control of its value. Disney owns DVC and sets the rules.

 

[tom1944]

Back of napkin for me puts it at roughly between 28-35k profit depending on time of acquisition and presuming these are all resale points.

Opportunity costs if these dollars were simply sitting in an index fund are roughly 30k. So he's doing all that work of points and management of them for a potential 5k profit annual.

Some may say that's a great return advantage on some 300k invested in real estate ownership. Most who own real estate will certainly not.

Would the business deduction be the dues paid for the points rented. A second deduction be the price paid for the contract over the number of years left on the contract?

Any other deduction of significance?

 

[nalababybear]

Also with respect to your math, on average the stock market returns more, but there are years when it is down (a lot). Whereas outside of the pandemic, most of the time it’s easy enough to rent out Disney points. So for a commercial renter - and to be clear we are not - the mindset may be something like:

1. Buy loaded contracts cheap - and if they are affiliated with a broker (as some have speculated here) - with limited transaction costs. Brokers may even get the first look at contracts and can manipulate the sales process.
2. Strip points and rent out for however long they want to hold the contract for
3. Flip (and perhaps act as their own agent/get paid a commission on the sale) and repeat.

Also while it is no longer the case anymore, PayPal and the like used to not report income, so those who chose to could also not report their rental income making their earnings “tax free."

All true; just general sweeping back of napkin math for demonstrative purposes. You CAN certainly make a business out of it if you really do try and scale-- we've touched on that upthread and as you pointed out the above strategy works quite well and I believe is a point where DVC is looking to actively curtail now.

Yes, stock market can be MUCH higher (and lower). Last year SP500 is over 20% up. Last ten years 11% Last 20 9% -- so pretty good and consistent if in it for the long run by doing NOTHING aside investing it and not touching it.

 

[nalababybear]

That does open 2 questions though:

Why would so many people keep renting thousands of points every year if there is no financial advantage to be found?

Does it matter how big/small the financial advantage when considering commercial rentals?

Points being used for commercial purposes are a different pattern of usage on average than personal usage. In many ways. Predictably as well, considering even the first DVC contracts knew enough to include Commercial Use Prohibited.

Great question.

#1 - Why hold? It's a long term commitment with a bi-modal usage pattern.

-Young with young families. then Grandkids with expanded families. There's that valley portion when it's Disney Adult travel and typically lower point usage before picking up again in real spades with the grandkids.

-Why sell and pay brokerage fees when you rent to bide the time and a relative financial push to bide the time?

#2 - Margins matter in business. Yes, you CAN make this a business. There's proof there already. Just above is the template to that.