getting extra pts to rent to cover MFs

[twinsouvenirs]

I read about someone considering 'overbuying' to use the planned surplus to rent out to cover maintenance fees. Does anyone do this? Is there any pushback from DVD, and have you generally been successful doing so?

The idea is attractive, but I'm wondering whether it would work practically or if you'd encounter issues.

 

[Jetsetter42]

I'm also intrigued by this idea. Ay feedback from owners who rent out points would be welcome.

 

[Missyrose]

I read about someone considering 'overbuying' to use the planned surplus to rent out to cover maintenance fees. Does anyone do this? Is there any pushback from DVD, and have you generally been successful doing so?

The idea is attractive, but I'm wondering whether it would work practically or if you'd encounter issues.

The biggest risk you'd be taking is if Disney decides to change its rules on renting, would you still be able to afford the MFs on the larger contract? Also, on a less practical note, I would think it might be hard to part with a large chunk of your points. At least It would be for me. There would be that devil on my shoulder whispering about what we could use those points for. And since I'm three contracts in, we know my DVC willpower is fairly weak.

 

[DVCcurious]

Really bad financial decision.

Let's walk through some estimated numbers and see what this looks like.

Let's suppose you need 100 points per year for your vacation.

Option 1: $7500 up front, $550 per year.

You can buy the points for $75, so your up-front cost is $7500. Dues are 5.50 per point, so your dues on 100 points would be $550.

Option 2: $15,000 up front, $0 per year

You can rent points out at $11. So to cover your $550 dues you would need 200 points and you'd need to rent 100 of them. So 100 points rented at $11 per point = 1100. Your dues on 200 points would be 200 points at $5.50 per point for dues.

The difference between the two options is with option 2 you are spending $7,500 today to save $550 per year until your contract expires. The break even on this is 15 years assuming you can put your $7500 in a savings account and average a 1% return over that 15 year time period. I know that dues will increase and probably at a higher rate than what you can get from a savings account. So maybe the break even will really be 10 years. But to me that's still way too long to make this strategy worthwhile.

You are taking on a lot of risk for a very little benefit.

 

[Splashboat]

You also have liability if there is damage to the room or if they don't pay and you get stuck too late to do anything with the points. I would rather do a transfer of points then rent if possible.

 

[MickeyFan612]

First off anyone considering this strategy should make sure they can handle the extra monthly, yearly debt! As with a rental property you need a reserve of cash in case it sits empty for months! Right now points rent quickly at $13/ point but it wasn't that long ago that rental prices were depressed! If our economy tanks again, less vacations will be taken and more DVC owners will be renting points allowing more supply and less demand!

I would only consider this strategy if all the following were in place for me:

1. I had the money to handle all maint fees if need be!
2. I found the perfect deal that I felt I could easily sell and get out from
under if needed!
3. For me it would have to be a contract loaded(with 2 years or more of maint free points) at no more than $60/ point) I'd be looking at a SSR or AKV contract and even those resorts are hard to find in that price range but not impossible! I've seen a couple of these deals posted recently but they still need to pass ROFR!

The numbers will work but you have to make them work- If you pay a premium for points I recommend using because the best value in DVC is actually using your points!

 

[MickeyFan612]

Posted twice-)

 

[rlduvall]

All good advice, but also don't forget what a hassle it can be to rent points. Maybe if you use a Service it wouldn't be so bad, but over the years I have spent hours checking on reservations for people . . . just to never hear back.

 

[EEGRAM]

Also, on a less practical note, I would think it might be hard to part with a large chunk of your points. At least It would be for me. There would be that devil on my shoulder whispering about what we could use those points for. And since I'm three contracts in, we know my DVC willpower is fairly weak.

So very true. The more points you have the more incentive/urge to travel.

 

[twinsouvenirs]

Also, on a less practical note, I would think it might be hard to part with a large chunk of your points. At least It would be for me. There would be that devil on my shoulder whispering about what we could use those points for. And since I'm three contracts in, we know my DVC willpower is fairly weak.

Hahaha I love it and that is an EXCELLENT point I'm pretty sure that I'd be the same way since I am already looking for add ons and haven't even stayed on our points.

 

[twinsouvenirs]

Excellent insights all. I think I'll just stick with our plan of buying what we need and obsessively planning as many vacations as we have paid time off

 

[Deb & Bill]

DVC threw a wrench into David's original business plan, so he modified it to what it is now. They could find a way to throw yet another wrench into it, making it harder to rent out your points.

 

[Dean]

The potential returns doesn't make sense nor justify the additional investment. IMO, the times when this might be an issue is when you're looking at very small needs due to the large difference between very small contracts and normal starter contracts or possibly when you might need more points in a few years. If it made sense financially why not buy thousands of points and get some economy of scale with the work and returns.

 

[DougEMG]

I do rent out a fair number of points, but i got my points extremely cheap, about $33/point after renting out free points that came with the contracts. Resale rates today are a lot higher then when i bougth and really don't make it attractive to buy purely to rent out.

I do plan to always rent out enough to pay for all the MF, but i also can afford to pay all the MF if i couldn't rent out any points, just means i would be spending more time at WDW.

 

[kenspidey]

DVC threw a wrench into David's original business plan, so he modified it to what it is now. They could find a way to throw yet another wrench into it, making it harder to rent out your points.

I don't think they will though. Flexibility is one of the key reasons DVC is so successful. As long as its a big profit engine I don't think Disney will monkey with it too much.

 

[jerseyduke]

Really bad financial decision.

Let's walk through some estimated numbers and see what this looks like.

Let's suppose you need 100 points per year for your vacation.

Option 1: $7500 up front, $550 per year.

You can buy the points for $75, so your up-front cost is $7500. Dues are 5.50 per point, so your dues on 100 points would be $550.

Option 2: $15,000 up front, $0 per year

You can rent points out at $11. So to cover your $550 dues you would need 200 points and you'd need to rent 100 of them. So 100 points rented at $11 per point = 1100. Your dues on 200 points would be 200 points at $5.50 per point for dues.

The difference between the two options is with option 2 you are spending $7,500 today to save $550 per year until your contract expires. The break even on this is 15 years assuming you can put your $7500 in a savings account and average a 1% return over that 15 year time period. I know that dues will increase and probably at a higher rate than what you can get from a savings account. So maybe the break even will really be 10 years. But to me that's still way too long to make this strategy worthwhile.

You are taking on a lot of risk for a very little benefit.

EXACTLY!

Actually it is even worse, because renting points is income and therefore taxable.

This concept would only make sense if you saw the initial purchase as an investment and were speculating on the price of that rising as well. Since the resale market is at a high right now, this probably isn't the best idea.

Even in todays world, there are a lot better ways to "invest" your money

 

[chalee94]

I don't think they will though. Flexibility is one of the key reasons DVC is so successful. As long as its a big profit engine I don't think Disney will monkey with it too much.

They HAVE done so in the past, so given the actual evidence, I don't share your optimism.

 

[Missyrose]

I don't think they will though. Flexibility is one of the key reasons DVC is so successful. As long as its a big profit engine I don't think Disney will monkey with it too much.

I disagree. Renting points takes dollars directly out of the Mouse's pockets, so if the ever end up seeing it as a problem they have to solve, they'll change the rules again.

 

[crisi]

They HAVE done so in the past, so given the actual evidence, I don't share your optimism.

Its three changes, none of which impact your "right" to rent, and suddenly DVC rentals are less attractive:

1) Magical Express is only available on CRO reservations or to DVC members with their member ID and guests traveling with the member.

2) Dining Plan is only available on CRO reservations or to DVC members with their member ID and guests traveling with the member.

3) Room allocations prioritize members before renters, RCI trades and guests. Members become less likely to end up with the room without a balcony, non requested HA rooms, or rooms with lousy views.

And none of them take more than writing a system report and putting in some processes and rules around a match between the name on the reservation and the name on the contract.

 

[jerseyduke]

OP,

Do not get lost in the debate about the rental process. While I believe missyrose and others make VERY valid points, the fact still remains the profits from point rental alone is not a very nice investment.