Rent points to Make money?

[felway17]

Again I have to apologize.... I am a newbie to the DVC...

I origannly purchased 150 points.

Then I got that nice card in the mail saying about the sale for $79 a point as SSR.. So I purchased another 100 points.


My point is this... If I was to buy 200 points.. at $79 a point comes to roughly $15,800. And lets say for ease maintance fees are $5 a point.


If rented all 200 points for $10 a point. I would have $5 to pay for each point then...

In the 50 years use time... that would be $50,000.

Does anyone do this? Or do most people think the return is not worth it?

 

[PamOKW]

There are some people who conduct a quasi-business of renting points. The majority of people rent points when they are not going to be able to use them. Renting points is not necessarily "hard" but it does require time and effort. It was interesitng when someone also factored in the value of their time when it came to renting points -- the return ended up not being as great as when that is not considered.

 

[wildcatwmn]

Another way to look at it would be as an averaged income of $664/year, or $1K/year after you paid it off (starrting in year 16)...not sure you can do much with that.

I think it definitely makes sense if you are not using your points or need a cash infusion to go on DCL or an alternate vacation.

 

[Dean]

The return is not reasonable if the return is your end goal, even if one bought at $50 pp or less. I'd definitely recommend against anyone buying with the idea of renting in mind. Still, it's nice ot have that option if needed to handle extra points.

 

[Disney4ever4569]

I feel it should not be the main goal of DVC'er. There's been a lot of discussion on this board about renting points with all kinds of different views. All the people that have analized it as a total finanical situation come to the same conclusion. Even if you've paid $79 per point, buying points just to rent them is a poor investment compared to other things you can invest in. DVC was never meant to be a money making venture. Its an investment in your Disney vacations. DVC has a lot of great features to it, like the ability to rent out your points when you can't use them. If it wasn't for the DIS boards, even that would be a lot harder to do. Anyway, enjoy your points. More is never a bad thing.

 

[felway17]

Ok I was just trying to take a census....

Most people agreed with my thoughts...

But I did see how you could make some money.. at least a small bit on it.

 

[Richyams]

Besides all that, its considered pretty slimey to buy points for the sole purpose of renting them out.

Think of the harm you have to cause fellow members by reserving prime units and prime time at the eleven month window. You will want to maximize your profit and to do that you must deprive members who wish to use their points for themselves the opportunity to get these prime reservations.

So besides not being all that profitable, its really a degenerate, slimey thing to do.

 

[erikthewise]

Even if we set ethical issues aside (which I am not suggesting), it's a tough way to make a living. You wouldn't make much money if you buy at $95/pt and rent at $10/pt. After paying roughly $4 in dues and at least $4 in interest on the principal, there's not much left.

 

[felway17]

Slimey, is a good point that you bring up... I did not think of it that way... thanks for pointing that out..


Secondly.. most people on this board are assuming that I would get a loan for the points.. But does it changes things if you were to pay cash up front?

Imagine it, it could be a steady income stream....

 

[Dean]

Originally posted by felway17
But does it changes things if you were to pay cash up front?

Not in the least. For one who did mainly buy to rent, they would truly NEED to consider the time value of money. The only difference is that it's possible the anticipated return would be less than the interest on the loan.

If I were buying for the purpose of renting, I'd want a return of priciple over no more than 20 years and a ROR of at least 8% and truly more like 10%. This would be a high risk venture and like any other high risk venture, should have high returns to make it worthwhile. The low returns of a CD would have little influence on that decision, in spite of what some would like to think.

As for implying those who rent are slimey, that is a personal opinion that many do not share. It is also name calling that is a violation of the BBS I believe. And IMO, there is no ethical difference in how one rents or what season one rents as long as the reservations were available to everyone that OWNS at that resort. This would exclude special season preference lists and lottery's only. This makes me laugh every time someone posts the idea that one who plans to rent should hold back and wait for other members to reserve the best times then rent what's left. That is truly nuts. (And yes I know you're not talking about me, LOL).

 

[Disney Doll]

It wouldn't be something I would recommend as a usual course of action, but it's nice to know that the option exists if the day ever came when you couldn't use all your points!

Doesn't seem to me to be as much of a money-maker as a way to not LOSE money.

 

[childsplay]

Do you have to pay taxes on the "rental income"? If so, that would certainly have to factored into the equation.

 

[disneyberry]

<font face="times" size="+0">Don't forget that you're supposed to pay income taxes on the rental income. And you cannot deduct the entire amount of yearly dues either, so unless you're renting for a very low amount $4/pt or less, you will have some rental income that you should be paying taxes on. Of course, there are some who don't bother to pay taxes... but that's something else....</font>

 

[GAIL HAYDEN]

Originally posted by disneyberry
<font face="times" size="+0">Don't forget that you're supposed to pay income taxes on the rental income. And you cannot deduct the entire amount of yearly dues either, so unless you're renting for a very low amount $4/pt or less, you will have some rental income that you should be paying taxes on. Of course, there are some who don't bother to pay taxes... but that's something else....</font>

I received income for renting out my timeshare for a week. I understand that I don't have to report income from any rental less than 15 days, but the property management company reported that income to the IRS. Do I have to report it when I file?

If you use the dwelling unit as a home (based on degree of personal use) and you rent it for fewer than 15 days during the year, do not include any of the rent in your income and do not deduct any of the rental expenses. If you do not meet the tests for using your timeshare as your home, the income is reportable on Form 1040, Schedule E (PDF), Supplemental Income and Loss.
http://www.irs.gov/faqs/faq11-3.html
some things are better left answered by tax consultants or CPAs.

And, the fact that some pay taxes and some don't is really none of anyone's business but the person not paying or paying them.

 

[disneyberry]

<font face="times" size="+0">Heh, looks like I'd posted at the exact same time that childsplay posted.

BTW, just thought I'd post a few links and references for anyone who might be seeking more info about timeshare rentals + income tax. The following two threads on the TUG were very helpful for me:
http://www.tug1.net/tugbbs1/Forum1/HTML/004381.html
http://www.tug1.net/tugbbs1/Forum1/HTML/005921.html
Also, in addition to the instructions for IRS Form 1040 Schedule E + Form 4562, Publications 527, 946, and 551 are also useful.

Taxes aside, there is so much that has to be factored into renting out DVC points, that IMO, in the end you really can't make much profit, if any at all... especially when you count the value of your time (as Pam mentioned).</font>