Random thought on high maintenance DVC

[PlutoNotPlanet]

I have been avoiding high MF resorts when looking for new SAP points. I recently had a random thought inspired from below

per Florida law, if an owner defaults on TS mortgage or dues, the timeshare developer can take back the TS property but can’t go after the owner for the amount owed.

The reason I avoided VB was apparently the $14/pt MF at present the even higher MF in the future. But let's say if I don't want a long commitment and will need to have more points just in the next several years. I would have the following options:
Option 1: do DVC rental
Option 2: buy extra points via transfer
Option 3: buy additional resale contracts and sell afterwards
Option 4: buy additional resale contracts and then let it go foreclosure...

Option 4 is the new thought, which sounds a little crazy... But if works, when comparing with rental or transfer, it could make sense economically.
Here is the math, if I get a loaded 100-pt HHI at $50pp, in 4 years, I get 600 points (100 banked at purchase and strip 100 the last year). The cost would be 5000 + 500 (closing) + (12+12.5+13+13.5)*100MF = 10600. Per point cost is ~$17.7, which is comparable to rental. It can go down to ~$16.8 if I hold 2 more years (13450/800).

Someone needs to slap me lol. What are the consequences I did not take into consideration?

 

[mort1331]

Credit rating

 

[TCRAIG]

Closing costs for HH will be higher than $500 (SC requires a lawyer for closings) and - at least right now - I think loaded HH will run you more than $50. for 100 points…

 

[Sandisw]

I personally wouldn’t want a foreclosure on my credit so it would not be a strategy that I would use

And, why not just invest in something like SSR at $100, pay fewer fees and sell it in 4 years for $50/point?

 

[CarolynFH]

Do you own other D.V.C. contracts? If so, if you default on dues for VB, I believe that D.V.C. will freeze your entire account including any other resorts you own, whether in the same membership or not. I don’t think they’ll let you default on just the one contract and use your other contracts as normal.

 

[PlutoNotPlanet]

Credit rating

Is there a deed-back/surrender option in DVC?

 

[PlutoNotPlanet]

Closing costs for HH will be higher than $500 (SC requires a lawyer for closings) and - at least right now - I think loaded HH will run you more than $50. for 100 points…

Very true. This is a bad example.

I personally wouldn’t want a foreclosure on my credit so it would not be a strategy that I would use

And, why not just invest in something like SSR at $100, pay fewer fees and sell it in 4 years for $50/point?

Yeah, this math is clearly better. And we know in 4 years SSR will probably worth >$60/point. Subtracting the listing fee, should still be above 50. Plus, the upfront cost is not too much more. Good slap!

 

[PlutoNotPlanet]

Do you own other D.V.C. contracts? If so, if you default on dues for VB, I believe that D.V.C. will freeze your entire account including any other resorts you own, whether in the same membership or not. I don’t think they’ll let you default on just the one contract and use your other contracts as normal.

Ok, this would be the slap on the face. So, the answer is a clear no no

 

[CarolynFH]

Is there a deed-back/surrender option in DVC?

If you call and ask, they’ll say No and refer you to a reseller. But there have been rare reports of D.V.C. buying back contracts, at what seemed to be far below resale prices at the time. Speculation is the contracts were about to go into foreclosure, but I don’t think we have details.

 

[AstroBlasters]

I have been avoiding high MF resorts when looking for new SAP points. I recently had a random thought inspired from below


The reason I avoided VB was apparently the $14/pt MF at present the even higher MF in the future. But let's say if I don't want a long commitment and will need to have more points just in the next several years. I would have the following options:
Option 1: do DVC rental
Option 2: buy extra points via transfer
Option 3: buy additional resale contracts and sell afterwards
Option 4: buy additional resale contracts and then let it go foreclosure...

Option 4 is the new thought, which sounds a little crazy... But if works, when comparing with rental or transfer, it could make sense economically.
Here is the math, if I get a loaded 100-pt HHI at $50pp, in 4 years, I get 600 points (100 banked at purchase and strip 100 the last year). The cost would be 5000 + 500 (closing) + (12+12.5+13+13.5)*100MF = 10600. Per point cost is ~$17.7, which is comparable to rental. It can go down to ~$16.8 if I hold 2 more years (13450/800).

Someone needs to slap me lol. What are the consequences I did not take into consideration?

So, you are asking to be absolved for taking on financial obligations that you don’t intend to repay?

You shouldn’t need credit score companies or other DVC related consequences for you to know that is not ethical.

 

[sndral]

Is there a deed-back/surrender option in DVC?

I’ve read of deed-back/surrender being offered by DVC in the past to those who’d used Disney financing & had a mortgage they were unable to pay, however, I’ve not read of that solution being offered for delinquent MFs. Realistically since you can generate more from renting your points than you’d owe on MFs the issue doesn’t come up for non mortgaged properties.
I’m not sure if the Florida law referenced would apply to Vero Beach, a timeshare located in South Carolina.

 

[eticketplease]

I’ve read of deed-back/surrender being offered by DVC in the past to those who’d used Disney financing & had a mortgage they were unable to pay, however, I’ve not read of that solution being offered for delinquent MFs. Realistically since you can generate more from renting your points than you’d owe on MFs the issue doesn’t come up for non mortgaged properties.
I’m not sure if the Florida law referenced would apply to Vero Beach, a timeshare located in South Carolina.

HHI was mentioned earlier that is in SC but VB is actually in FL

 

[sndral]

HHI was mentioned earlier that is in SC but VB is actually in FL

Oops, I got it backwards - thx, I’ll correct my post .

 

[PlutoNotPlanet]

So, you are asking to be absolved for taking on financial obligations that you don’t intend to repay?

You shouldn’t need credit score companies or other DVC related consequences for you to know that is not ethical.

It’s not about repay at all. Maybe foreclosure is not the right term.
By no means I am saying defaulting on maintenance fees is any better than defaulting on mortgage, but I am just discussing the math. And it can only happen when VB and HHI has negative resale value, meaning due per point is higher than rental value, or barely covers the listing cost.

 

[PlutoNotPlanet]

I’ve read of deed-back/surrender being offered by DVC in the past to those who’d used Disney financing & had a mortgage they were unable to pay, however, I’ve not read of that solution being offered for delinquent MFs. Realistically since you can generate more from renting your points than you’d owe on MFs the issue doesn’t come up for non mortgaged properties.

Thanks for the comment!

I’m not sure if the Florida law referenced would apply to Vero Beach, a timeshare located in South Carolina.

HHI was mentioned earlier that is in SC but VB is actually in FL

You both spotted on this big loophole. I intended to use VB as it has the lowest per point price and it’s in FL. But the math didn’t look too good so I switched to HHI, which is the second lowest one but actually not if FL.

 

[AstroBlasters]

It’s not about repay at all. By no means I am saying defaulting on maintenance fees is any better than defaulting on mortgage, but I am just discussing the math. And it can only happen when VB and HHI has negative resale value, meaning due per point is higher than rental value, or barely covers the listing cost.

I think the rubber hits the road moment would be if the cash price from Disney (with whatever incentives they are offering) was lower than dues.

That is when resale prices could in theory drop to $0.

With the newly implemented 1099-k reporting rules for PayPal and Venmo…. my guess is that renting is going to net people a lot less after tax than it did before.

 

[Chili327]

So, you are asking to be absolved for taking on financial obligations that you don’t intend to repay?

You shouldn’t need credit score companies or other DVC related consequences for you to know that is not ethical.

Technically this is the world we live in now, repercussions and fines are just “a part of doing business”.

 

[DJRUK]

If you’re only looking for extra points for a few years, Options 1 (renting) or 2 (transfers) seem like the safer, lower-risk choices. If you really wanted, maybe a low-cost, lower-dues contract (like SSR) that holds value better and can be resold without the foreclosure route?

Foreclosure technically exists as an option but, as others said I'd be thinking of the credit impact, ethics and the risks. Whilst your math makes sense at face value, there is always a chance that resale values and dues fluctuate. If dues spike or resale demand changes, the savings may not pan out as planned.

 

[PlutoNotPlanet]

If you’re only looking for extra points for a few years, Options 1 (renting) or 2 (transfers) seem like the safer, lower-risk choices. If you really wanted, maybe a low-cost, lower-dues contract (like SSR) that holds value better and can be resold without the foreclosure route?

Foreclosure technically exists as an option but, as others said I'd be thinking of the credit impact, ethics and the risks. Whilst your math makes sense at face value, there is always a chance that resale values and dues fluctuate. If dues spike or resale demand changes, the savings may not pan out as planned.

Totally. Didn't really think thoroughly when I posted it. And I was more referring to a voluntarily giving up the right and the responsibility, rather than pretend the contract does not exist. Now I know "deed-back/surrender" is not a thing for high MF, at least not yet. And thanks for the input!

 

[crisi]

Do you own other D.V.C. contracts? If so, if you default on dues for VB, I believe that D.V.C. will freeze your entire account including any other resorts you own, whether in the same membership or not. I don’t think they’ll let you default on just the one contract and use your other contracts as normal.

In two shakes.