Purchase large contract

[ckelly14]

I think I already know the answer to this one, but I'm considering a larger contract, and need some advice. Considering larger contracts are cheaper and easier to get, does it makes sense to get a larger contract, use half for a trip and the other half to rent for points? In this way, couldn't you "finance" your yearly MF's?

 

[disneynutz]

If something happens to your ability to rent, you are stuck with a large contract that may be difficult to sell.

Two contracts totaling the same size would give you added flexibility and security.

Bill

 

[chalee94]

it's theoretically possible.

some people do it.

many of us think renting is a hassle and such a plan adds a lot of risk...and would suggest you think twice and buy what you'll use to vacation at DVC resorts and only that.

 

[ckelly14]

I guess I need to be patient...

 

[disbound09]

I think I already know the answer to this one, but I'm considering a larger contract, and need some advice. Considering larger contracts are cheaper and easier to get, does it makes sense to get a larger contract, use half for a trip and the other half to rent for points? In this way, couldn't you "finance" your yearly MF's?

That actually would work if you don't mind the risk factor and a little work on the rental part. Plenty of people are listed here on rent/trade plan. You can't predict what Disney will do in future towards rentals but historically they have done nothing yet to restrict it.

 

[Deb & Bill]

That actually would work if you don't mind the risk factor and a little work on the rental part. Plenty of people are listed here on rent/trade plan. You can't predict what Disney will do in future towards rentals but historically they have done nothing yet to restrict it.

That you are aware of. There have been a few members who had been instructed to cease and desist their rental operations. DVC has also changed the process of adding associate members to contracts. Used to be rather unlimited. Now it is limited. Dining plan could be paid for when you checked in. Now you have to pay when the plan is added (that's one extra step you have to take).

 

[abdmom]

Within the sales contracts, I believe there is a clause that says that more than 20 rentals per year is prohibited. It is certainly possible for them to decrease that number.

At the present time, though, renting out points is relatively painless as well as profitable. I've rented mine out about 20 times over the course of 7 years, usually in clusters of about 300-400 points over the course of 1-2 weeks or so. I wish I had more.

 

[disbound09]

That you are aware of. There have been a few members who had been instructed to cease and desist their rental operations. DVC has also changed the process of adding associate members to contracts. Used to be rather unlimited. Now it is limited. Dining plan could be paid for when you checked in. Now you have to pay when the plan is added (that's one extra step you have to take).

I assume that Davids is some sort of brokerage business. Is this how they bypass the 20 limit? If it was a needed option that seems the easiest. I understand the risk in renting to unknown tenants that you are liable. Being new to this myself I am not really versed in the in's and out of renting pts although that is how we stayed in the past thru private individuals. Good info.

 

[Dean]

I think I already know the answer to this one, but I'm considering a larger contract, and need some advice. Considering larger contracts are cheaper and easier to get, does it makes sense to get a larger contract, use half for a trip and the other half to rent for points? In this way, couldn't you "finance" your yearly MF's?

I would not generally do this. Buying a modest amount extra that you'll likely use someday is reasonable even if you have to rent once of twice to use up points, but it is not reasonable to buy just to do rentals even to get a cheaper per point cost. I'd say yes to buying 150 when you only need 100 but not 400 when you only need 200.

Within the sales contracts, I believe there is a clause that says that more than 20 rentals per year is prohibited. It is certainly possible for them to decrease that number.

Not quite accurate, that's what happens when you get the info from the boards rather than reading the POS. What the POS does is 2 things. It expressly allows renting but prohibits "a pattern of commercial renting". Quotes are for emphasis, not an exact quote. There is no definition in the POS a few year ago they did promulgate a definition and the things that trigger a look are 20 or more a year or a website for renting. Realistically one would have to have several thousand points to fall afoul of this issue with the current definition.

 

[lovin'fl]

I was considering this very thing yesterday. I calculated if we owned 800 points and rented 400 per year, we would have our total annual dues paid for and even have a small bit left over. If I had 200 OKW (we do already) and 200 BWV and 200 AKV (we are buying 100 now) and 200 HH (we have 75 already) we would pay $4576.36 for 2013 annual dues (just for reference...AD go up a bit each year) and we'd make $4800 if we rented 400 pts at $12/pt. The 400 pts we'd have remaining for our use (MIL and FIL use 100/year...so 300 for us) would be plenty enough. Then, if either (or both ) of my lovely DDs (or my DS even) agree to get married at WDW, we would have 800 pts to use to book rooms for some of the family. Plus, when the kids are grown and DH and I want to live in FL for the winter we could stay for a month or so at WDW (though DH is planning to buy a condo in FL). Is this against DVC policy (to rent out 1/2 your points each year)? I told DH of my idea and he seemed interested but he told me that I'd have to get a little job to pay for the purchase of all these points (we'd need 200 BWV, 100 AKV and 125 HH...I figured @$25K or so). I worry about renting though. It seems like there is a good demand for it, but there is always the risk of last minute cancellations and whatnot. Just an idea.

 

[rojen]

I was doing the same calculations about buying about 100 points more than we need in order to rent them and cover MFs. I figured I'd count on being able to rent them for the next two years. I think it's a safe assumption that the rental market will hold up for that long. It's risky to plan on renting for longer than that though.

You never know if there will be a restriction on renting points, or if the room market will become saturated, or the economy will tank again. Since the rack rates keep shooting up, I'm guessing Disney has no problem filling rooms and won't move to restrict rentals for the foreseeable future.

Just my opinion on it all. My theory was that if I could keep renting for more than two years, it would be gravy, but I wanted to recoup my extra expense in purchasing extra points to a two year window. Easier to do if you buy a loaded contract too. You'd want to be in a position to use all of your points and pay all of your MF without renting in case policy changes.

The two smaller contracts make sense in this regard, you'll pay more up front, but the utility of being able to sell your points in case of a change in policy will be huge.

 

[DisneyFansInLINY]

I was considering this very thing yesterday. I calculated if we owned 800 points and rented 400 per year, we would have our total annual dues paid for and even have a small bit left over. If I had 200 OKW (we do already) and 200 BWV and 200 AKV (we are buying 100 now) and 200 HH (we have 75 already) we would pay $4576.36 for 2013 annual dues (just for reference...AD go up a bit each year) and we'd make $4800 if we rented 400 pts at $12/pt. The 400 pts we'd have remaining for our use (MIL and FIL use 100/year...so 300 for us) would be plenty enough. Then, if either (or both ) of my lovely DDs (or my DS even) agree to get married at WDW, we would have 800 pts to use to book rooms for some of the family. Plus, when the kids are grown and DH and I want to live in FL for the winter we could stay for a month or so at WDW (though DH is planning to buy a condo in FL). Is this against DVC policy (to rent out 1/2 your points each year)? I told DH of my idea and he seemed interested but he told me that I'd have to get a little job to pay for the purchase of all these points (we'd need 200 BWV, 100 AKV and 125 HH...I figured @$25K or so). I worry about renting though. It seems like there is a good demand for it, but there is always the risk of last minute cancellations and whatnot. Just an idea.

I think that it might work out for you why, (please note that I am no mathematician lol): Your initial costs are estimated at $25,000. Your estimated maintenance fees are $4576.36 but that price increases each year. You would rent 400 points each year at $12 per point. Most of those contracts are good for 29 years so I used 29 years as the maximum number of years you would be able to rent 400 points. So I multipied $4576.36 (maintenance fees) by 29 and came up with $132714.44. And then I multipied $4800 (rental income) by 29 and came up with $139200.00. Now take the initial costs of $25,000 plus $132714.44 (maintenance fees over 29 years) minus your rental income of $139200.00 (based on 29 years) and you have spent $18,514.44. Your maintenance fees as of right now, without having added any points on, for 29 years would be $60,552.80. So now if you do all of those add ons and rent points, you would have more points and saved over $42,038.36. I took $60,552.80 minus $18,514.44. However, these fees are all based on 2013 and assuming that you would be able to sell 400 points every year at $12 per point.

 

[lovin'fl]

Thanks...that makes it look even more appealing. Hmmmmm...

 

[ELMC]

I think that people are not considering the whole picture when talking about buying extra points for the purpose of renting them out. Yes, it is nice to have the ability to rent out extra points to cover your maintenance fees. But what you are overlooking is that those points come at a cost.

If you were to buy a contract and do nothing with it but rent out the points, in most cases it would take anywhere between 7-10 years before you simply get your money back (depending on what you paid for the contract and what you get for your rentals, etc.). So essentially what you are doing is giving Disney a big chunk of your money right now, and then letting them give it back to you a little at a time for 7-10 years until they give it all back just so you can reap a benefit in year 11 and after. I can't help but feel that there could be a better use for that money that could also offset maintenance fees.

 

[disneynutz]

A lot of things can change in 10 years, dues my go through the roof, Disney could crack down on renting or send a renting report to the IRS. Disney could be bought by another company.

I wouldn't buy just to rent.

Bill

 

[eangel12]

I am debating buying into DVC. We have rented for the past two years but wonder if it would be more cost effective to just buy. Our only hesitation is whether we would use Disney as our kids get older. We really love to cruise too. Our 3 year old begs us every day to take him back to DW! Decisions decisions!!

 

[kisly59@optonline.ne]

I'm with you. Buy because you want to be a part of the vacation club and, if the opportunity arises, rent it if you need to. This is so overwhelming, it feels like starting your own timeshare business!! Good luck to you all, but I'm in the Disney Vacation Club for me and my family to enjoy.

 

[kisly59@optonline.ne]

Once you start your kids on Disney, they tend to love it for the rest of their lives. At least that has been our experience. We started taking our kids there when our daughter was almost three and our son was just about to turn one. They are now 19 and 17 and love Disney more than ever. I know that even when they are out of the house and on their own, if they hear that Dad and I are going to Disney, they will want to come. The funny thing is that the cruise is the trip that my 19 year old did not want to go on the last time we went because she felt like at that age, there was no place for her. She couldn't hang with the rest of the teenagers because she is over 18 and she didn't want to hang with the adults. I think she'll change her mind when she's gets a little older. It's been my experience - once a Disney fan, always a Disney fan! Good luck!

 

[abdmom]

I think that it might work out for you why, (please note that I am no mathematician lol): Your initial costs are estimated at $25,000. Your estimated maintenance fees are $4576.36 but that price increases each year. You would rent 400 points each year at $12 per point. Most of those contracts are good for 29 years so I used 29 years as the maximum number of years you would be able to rent 400 points. So I multipied $4576.36 (maintenance fees) by 29 and came up with $132714.44. And then I multipied $4800 (rental income) by 29 and came up with $139200.00. Now take the initial costs of $25,000 plus $132714.44 (maintenance fees over 29 years) minus your rental income of $139200.00 (based on 29 years) and you have spent $18,514.44. Your maintenance fees as of right now, without having added any points on, for 29 years would be $60,552.80. So now if you do all of those add ons and rent points, you would have more points and saved over $42,038.36. I took $60,552.80 minus $18,514.44. However, these fees are all based on 2013 and assuming that you would be able to sell 400 points every year at $12 per point.

You forgot the lost opportunity cost. If you had taken that $25000 and invested it at 4% for 29 years, you would gain approximately $54000. So, your total cost would be $54000 + $18514.44 = $72514.44.