Rent Points to Offset Contract Cost

[gtfpjames]

Hello, this is a hypothetical question, just to see if i am looking at this correctly.
Looking at a 320 point PVB with a February UY. 0/2019 640/2020 (320 from 2019) and 320/2021
If we were to rent the 640 points (we don't plan to travel until 2021) @ $15.50 $9,920.00, would this reduce my cost basis in the contract by that amount.
I have no doubt i have missed something here.
Thanks in advance.

 

[tellingson]

Hello, this is a hypothetical question, just to see if i am looking at this correctly.
Looking at a 320 point PVB with a February UY. 0/2019 640/2020 (320 from 2019) and 320/2021
If we were to rent the 640 points (we don't plan to travel until 2021) @ $15.50 $9,920.00, would this reduce my cost basis in the contract by that amount.
I have no doubt i have missed something here.
Thanks in advance.

Aside from needing to subtract the cost of annual dues ($4345.6 at current rates) + taxes on the profit, I believe that is correct.

Edit: So it would probably reduce your actual cost bases by ~$5000, but you would have the 1-2 years to pay the other costs (annual dues + taxes). Additionally, you won't get all of the money from renting your points up front.

 

[Sandisw]

Just be aware that things have gone a little bit crazy in the rental market right now with resort closures,

In addition, I anticipate that Disney will come out with some good incentives in the next year or so to help with the closure and to fill rooms so be aware that the rental market could look different,

But, yes, renting points will offset the cost.

 

[MICKIMINI]

We've done it many times in the past and it has worked out perfectly. Beware that the rental market in general is an issue due to covid19 and all the cancellations. It is just a mess right now. Lack of availability for could be an issue for a couple years - we just don't know how it will play out.

The safest way to rent seems to be private, which I will be switching to or you can do 1 transfer a year to another DVC member as another option. You can't schedule any renters until after you close and have points in your account.

OP is correct that you need to subtract your dues and pay income taxes on it too, but it still makes a huge difference. Most brokers and sellers do not expect you to pay 2019 (prior years) MF's. Best to negotiate that up front and state it in the contract. More $$ for you! Good luck!

 

[gtfpjames]

Thanks to everyone! I just wanted to make sure i was looking at this the right way.
I work with numbers all day, but for some reason this stuff just makes my eyes glaze over!
Yes the listing states we only pay the 2020 MF's.
Thanks again, i have learned so much in the lsat week!

 

[Deb & Bill]

Your other issue would be finding anything to rent out by Jan 31, 2021. From mid-Sept through mid-January, it is very hard to find anything to book once you get closer to seven months out. If you don't close until August or so, you won't have much time left to try to rent out the 2019 points that were banked. You could still rent out of the 2020 points as long as they were banked. So you might want to consider those banked 2019 points as pretty much lost unless you want to transfer them to RCI, but you can't rent an RCI reservation.

If you plan to travel in 2021 (like from Feb 1, 2021 until Jan 31, 2022, you could at least bank the 2020 points as long as you close by Sept 30, 2020. Or the current owner could bank them once they accept your contract so you won't have to worry about getting it closed by that date. You could have a really nice trip on the extra points, maybe a bungalow instead of a studio.

Just don't let the fantasy of renting out your points before they expire and all the cash rolling in fog your vision.

 

[gtfpjames]

With the longer closing times I have been reading about, that make perfect sense. Thanks!