Purchasing to Rent

[Brittleebee]

I know this is a very contentious topic and it is not one that I’m personally interesting in doing myself, but my curious mind wants to take the driver’s seat and create a space for this discussion. Do we have any members here who have purchased contracts solely to rent the points for profit? I am truly interested in a “numbers only” standpoint.

 

[Chili327]

I know this is a very contentious topic and it is not one that I’m personally interesting in doing myself, but my curious mind wants to take the driver’s seat and create a space for this discussion. Do we have any members here who have purchased contracts solely to rent the points for profit? I am truly interested in a “numbers only” standpoint.

I can't imagine anyone purchasing ONLY to rent, they would have to be a fan & want to have the option & possibility of using points at least once in a while, but you may be right, there could be commercial renters that are doing it for profit only purposes, but I don't think you'll hear from them here.

 

[CarolynFH]

I believe there are commercial renters, and most certainly you won't hear from them here, because commercial renting of DVC is expressly forbidden. We know DVC monitors these forums; why draw attention to oneself by admitting one engages in forbidden activity, even through a screen name?

 

[byurick]

I honestly don't see how it can be all that profitable between the purchase point cost, closing/title fees and annual dues plus paying taxes on the rental income. Maybe if you bought points 10+ years ago I guess when they were half the price.

 

[MICKIMINI]

28 year DVC member here. It would be very risky. Put cash in the bank for a 5% return. Financing further reduces return.

Owners are required to pay income taxes on rentals. Depending on your rate and if your state also has income tax, that could wipe out any returns. DVC is also looking at commercial renters though no one really knows how serious they are, but it needs to be considered.

Renting to strangers who could do damage to the villa and you being responsible for that puppy or smoker could be a big deal. Just a few risks involved.

An $18 per point rental with a $10 MF = $8 - taxes = LOW RETURN. This does not even consider the COST of the contract. It is not a money maker.

 

[Tatebeck]

It's technically against the rules, so anyone that has done it doesn't typically talk about it. My personal thoughts are that it wouldn't make a ton of money unless you spend the time/effort to secure very hard to get/cheap rooms like AKV value and BWV standard rooms which would take more effort/most resort's points couldn't be used that way. And all of that just to do something that is against the rules anyway and could get you in trouble and your membership frozen/cancelled. Much easier to invest traditionally. Disney is for fun

 

[lilsonicfan]

I know this is a very contentious topic and it is not one that I’m personally interesting in doing myself, but my curious mind wants to take the driver’s seat and create a space for this discussion. Do we have any members here who have purchased contracts solely to rent the points for profit? I am truly interested in a “numbers only” standpoint.

what a clever way to suss out the commercial renters by infiltrating the very boards in which they participate. jkjk

 

[VGCgroupie]

I know this is a very contentious topic and it is not one that I’m personally interesting in doing myself, but my curious mind wants to take the driver’s seat and create a space for this discussion. Do we have any members here who have purchased contracts solely to rent the points for profit? I am truly interested in a “numbers only” standpoint.

I feel like are people here yes, I also feel like they are not going to admit it here.

There is a FB group I joined for rentals and there are a handful of people I know own 5000 pts for the purpose of renting. It's highly frustrating when I see a very hard get reservation being rented by them. Thus, why I think most wont admit that here in these forums.

 

[CraigInPA]

At the present resale pricing, it's not a good return on the investment. That's why you don't see a lot of this happening. Even people who purchased contracts 15 years ago, in the middle of the 2008-2010 fiscal meltdown, see a great profit to be made selling contracts they aren't using versus trying to rent out the points.

 

[CastAStone]

I honestly don't see how it can be all that profitable between the purchase point cost, closing/title fees and annual dues plus paying taxes on the rental income. Maybe if you bought points 10+ years ago I guess when they were half the price.

It’s profitable, especially as prices have fallen recently. But it’s too risky to be worth it IMO.

If interest in vacationing at Disney falls (which typically happens during recessions; we’ve only had 1 recession in the last 20 years so many people have forgotten that) you still have to pay the MFs and may not be able to get anything close to what you want for your points.

To the original poster, I agree with the others that no one will want to out themselves as breaking DVC’s rules (and to do so would technically be breaking the board’s rules too)

 

[JulieBeeRN]

I think that it would very risky to purchase a contract to solely rent out the points. The time, energy and anxiety would not be worth a marginal profit after paying dues, IMO.

 

[AstroBlasters]

If people buy extra points just to rent and cover dues… isn’t that technically buying just to rent?

It wouldn’t be hard to go to the Rent/Transfer forums and see which posters are renting 700+ points pretty consistently and then cross referencing that with reservations made with people not on the deed around the same time if Disney wanted to do so.

 

[obsesseddisneyfan]

I was thinking of buying Halloween week at the fort. I live in the West Coast and so would only want the week every few years. My husband and I thought we could rent the weeks we did not use for a nice profit...... however the rules about renting on CFW made me decide it was not worth the risk.

 

[tx911]

I feel like the number of people buying points for the sole purpose of renting has to be pretty low. Just too many better ways to grow money out there.

But, I think there are a healthy chunk of folks who have a lot of points and rent out a portion of them to partially or entirely cover MF, especially if going through a low-use period in their lives.

 

[Mikey15]

There’s a matter of distinction between commercial renting, and owners who use the product renting out some of their portfolio that they’re not using in any given year. The latter I believe is expressly permitted (exact language escaping me…), while the former is expressly prohibited (though I believe signs point to it happening anyway). There’s even a whole industry of commercial businesses like the board sponsor that make money from matchmaking & brokering rental transactions.

I was surprised when I ran breakeven calculations on different resale resorts, trying to justify a purchase on making back the purchase price and then enjoying the resort thereafter. It’s shorter than you’d think, even conservatively using the board sponsor’s rates instead of trying to rent privately for more.

If nothing else, the fact that you can legitimately rent out some points means finding a contract with double (banked) points can be like Magical Beginnings for resale. Maybe a double points SSR contract is $100 instead of $95, but if you rent out your “first year” points at $15-16 you’re reducing your all-in purchase price!

 

[Brittleebee]

I feel like the number of people buying points for the sole purpose of renting has to be pretty low. Just too many better ways to grow money out there.

But, I think there are a healthy chunk of folks who have a lot of points and rent out a portion of them to partially or entirely cover MF, especially if going through a low-use period in their lives.

This is more of what I meant, although I should’ve worded my original post better. My curiosity lies mostly with those who have ran the breakeven calculations and have purchased additional contracts to cover all maintenance fees and essentially have paid for vacations, or people whose desire to visit the properties have diminished an they solely rent for profit now.

 

[tx911]

This is more of what I meant, although I should’ve worded my original post better. My curiosity lies mostly with those who have ran the breakeven calculations and have purchased additional contracts to cover all maintenance fees and essentially have paid for vacations, or people whose desire to visit the properties have diminished an they solely rent for profit now.

No question, you can rent out half your points or maybe even less and cover your MF, regardless of how many total points you may have.

I feel like this is probably fairly common, especially amongst those with thousands of points.

The sticky part is whether that's considered "commercial use" or not. In my mind if you're not using the points for vacation and using them to make money (i.e. pay your MF), then it is commercial.

 

[Sandisw]

There’s a matter of distinction between commercial renting, and owners who use the product renting out some of their portfolio that they’re not using in any given year. The latter I believe is expressly permitted (exact language escaping me…), while the former is expressly prohibited (though I believe signs point to it happening anyway). There’s even a whole industry of commercial businesses like the board sponsor that make money from matchmaking & brokering rental transactions.

I was surprised when I ran breakeven calculations on different resale resorts, trying to justify a purchase on making back the purchase price and then enjoying the resort thereafter. It’s shorter than you’d think, even conservatively using the board sponsor’s rates instead of trying to rent privately for more.

If nothing else, the fact that you can legitimately rent out some points means finding a contract with double (banked) points can be like Magical Beginnings for resale. Maybe a double points SSR contract is $100 instead of $95, but if you rent out your “first year” points at $15-16 you’re reducing your all-in purchase price!

The contract prohibits using your membership for commercial purposes. Many of us here have different definitions of exactly what that means and how it should be defined by DVC...and they have the control of that definition. Last stated policy was that membershps would be reviewed if they saw 20 reservations in a membership within a 12 month period...though those were written when there was not an online booking system...and DVC would take it from there.

Specifics such as using a broker to help you find a renter, renting out spec reservations, etc. have never been included in any official documents put out from DVC so at this point, they have not included those actions as part of the whole "commercial purposes" definitions.

We do certainly have a recent report of someone who got flagged by DVC and had reservations canceled because of it. So, it does appear they monitor and while I doubt you are going to see a lot of reports when people do get caught, I doubt you are going to get a lot of responses here that they are using their memberships in ways that push those limits.

 

[Tatebeck]

No question, you can rent out half your points or maybe even less and cover your MF, regardless of how many total points you may have.

I feel like this is probably fairly common, especially amongst those with thousands of points.

The sticky part is whether that's considered "commercial use" or not. In my mind if you're not using the points for vacation and using them to make money (i.e. pay your MF), then it is commercial.

But to be considered commercial you would have to be using the points to "make money", and have bought the points for the express purpose of making that money.

This presents 2 problems/reasons why I personally see no problem with it and I don't think Disney does either.

1. Renting out part of your points (to cover dues/part of your expenses for trips booked with the rest of your points) is not technically using the points for "making money." It could easily be argued that they are using the DVC points that they purchased to go on vacations, and it would be true. That is what DVC is made for, vacation use. If this wasn't allowed, Disney would quickly shut down companies that offer DVC point swaps that allow you to rent out your points and go on other vacations instead.

2. It would be very hard to prove a commercial motive if someone is consistently using at least part of their points for personal vacations and renting the rest. Saying that they bought those points solely for making money looks like a losing argument. Also as you said many people do it and cracking down on partial renters would be cracking down on most of their members and they wouldn't come out looking very good and would have a harder time selling the product.

 

[intamin]

I think that it would very risky to purchase a contract to solely rent out the points. The time, energy and anxiety would not be worth a marginal profit after paying dues, IMO.

Yeah.. maybe if you didn't have a day job and this was the only thing you were doing for income then MAYBE but for the amount of capital needed, uncertainty of having a consistent buyer, potential losses through scams, broker fees (if using one), taxes and regulation by Disney potentially putting an end to your little operation all make it not worth it IMO. I'd much rather put it in a HYSA or mutual index and just let it grow by itself and do something else to make money.