Renting out DVC points and addonitus

[Cyberc1978]

Thats you others would never use RCI or wouldn't even know about it.

There are going to be an extreme excess of points over the next couple years that people have. They can view it as getting ride of their points for some quick cash because they don't have any more vacation time to use anyways.

SSR points were available on this forum for $13/point just the other day. You probably could work something out to take all the points as well to get a slight discount so they didn't have to rent out to multiple people.

Don’t get me wrong I would definitely prefer to not use RCI.

I expect to rent my surplus of points again next year, and demand a premium for them. I just book the harder to get reservations.

 

[CastAStone]

if you’re trying to use it as investment income, I would suggest you go do some time value of money calculations. On my math, compared to the average long-term return of the S&P, Saratoga springs does give you a positive return at $14.50 per point (What Davids is currently paying), but it isn’t anywhere near enough to cover the dues of your other points or anything like that. Like most investments that beat the S&P, It sure comes with a lot of risk. And in this case, you’re stuck putting more money in (via dues) whether the market is trending up or down.

 

[kevtlas]

I usually rent out my extra points and find it worth it. We have 790 points and whatever we earn from the rentals help offset the price of the dues.

 

[Ruttangel]

So, if renting is going to be hard, is it worth doing what @Cyberc1978 said and get those thanksgiving, Christmas and New Year bookings made in your own name at 11 months and then re-renting?
I guess these should still have a high demand and a premium price?

 

[ohmyminnie]

If I get a confirmed reservation then rent that out, it is my understanding that if the person I rent to damages the room, I would be liable. Is that correct? That makes me hesitant about renting to someone I didn't know. Would it be different if I just rented the points through a broker?

 

[CastAStone]

If I get a confirmed reservation then rent that out, it is my understanding that if the person I rent to damages the room, I would be liable. Is that correct? That makes me hesitant about renting to someone I didn't know. Would it be different if I just rented the points through a broker?

Couldn’t you have them indemnify you as part of your rental agreement?

 

[ohmyminnie]

Couldn’t you have them indemnify you as part of your rental agreement?

I'll have to explore the various options. I will probably go through a broker if I decide to do it at all, but was just wondering what others did if they rented privately. Thanks!

 

[Deb & Bill]

Make sure you don't rent out so many reservations that you fall under DVC's watchful eyes for commercial renting.

 

[sethschroeder]

I usually rent out my extra points and find it worth it. We have 790 points and whatever we earn from the rentals help offset the price of the dues.

Typically though people calculating are also accounting for the costs of the base points as well.

 

[Brian Noble]

if you’re trying to use it as investment income, I would suggest you go do some time value of money calculations. On my math, compared to the average long-term return of the S&P

This is really good advice. I haven't done the calculation myself for a while now, but when I do I always come up with a similar answer: I'd be better off taking the purchase price of the extra "rental" points and just putting it into a low-cost index fund that reinvests dividends, adding the dues I'm not paying each year on the points I didn't buy to that account, and paying the dues on the points I *did* buy out of the proceeds.

As an added bonus, this takes much less work than it does to be a DVC landlord, even at a small scale.

 

[EM Lawrence]

I’d like to resurrect this thread. I get that buying a large amount of DVC points in order to turn a profit probably does not make a lot of sense compared to other investing strategies.

But what if you can afford to pay cash for a large contract, and then rent half of the points every year to cover the annual dues for the whole contract? The goal is not to turn a profit, but instead to cover your ongoing expenses.


In this scenario, what would be the downside? Obviously if the rental market dries up you are stuck paying all of the dues. And there is always the risk of a problem renter, or another pandemic/catastrophe that wreaks havoc on the rental market. Aside from those things, are there downsides that I have overlooked?

I may not have considered all the angles, and I’m sure there a plenty of people that do this. Any advice?

 

[justadreamaway77]

I’d like to resurrect this thread. I get that buying a large amount of DVC points in order to turn a profit probably does not make a lot of sense compared to other investing strategies.

But what if you can afford to pay cash for a large contract, and then rent half of the points every year to cover the annual dues for the whole contract? The goal is not to turn a profit, but instead to cover your ongoing expenses.


In this scenario, what would be the downside? Obviously if the rental market dries up you are stuck paying all of the dues. And there is always the risk of a problem renter, or another pandemic/catastrophe that wreaks havoc on the rental market. Aside from those things, are there downsides that I have overlooked?

I may not have considered all the angles, and I’m sure there a plenty of people that do this. Any advice?

We are working on doing this. Waiting on ROFR for a contract that will put us at 450 points. We really only need 250-270 points each year to do a 1week/1bd and a long weekend/studio trip each year. We wanted the points for later in our life, so we can do more trips when we retire. If we pass ROFR, the plan is to rent/transfer most of the points each year. This will offset the cost of the points.

 

[Brian Noble]

I get that buying a large amount of DVC points in order to turn a profit probably does not make a lot of sense compared to other investing strategies.

But what if you can afford to pay cash for a large contract, and then rent half of the points every year to cover the annual dues for the whole contract? The goal is not to turn a profit, but instead to cover your ongoing expenses.

From where I sit, what you use the money for doesn't really matter, because money is by definition fungible. So, if you have that much cash, I think you'd be better off buying the points you need and putting the rest in an investment vehicle. Pay your dues out of that investment account. It's probably a better deal, and it is certainly less work.

 

[gisele2]

I don't know the percentage of honest people who report this as income, but I sure do! I'd rather not find out what happens if you don't

You pay taxes and then 8% of interest since the time you were suppose to pay the first time. This is what you face in Canada if you forget your obligations .

 

[CarolMN]

In this scenario, what would be the downside? Obviously if the rental market dries up you are stuck paying all of the dues. And there is always the risk of a problem renter, or another pandemic/catastrophe that wreaks havoc on the rental market. Aside from those things, are there downsides that I have overlooked?

Remember that you will always be competing with Disney. When Disney is offering discounts / free dining offers, etc., you may need to charge less or offer better terms to get customers.

Remember that your time is valuable and getting that rental income comes with time and effort on your part.

Know yourself. Will you be able to consistently resist the temptation to use the points for yourself - to go more often, stay in larger accommodations, invite others along, etc.

My advice is to be absolutely sure you can afford the dues without renting before proceeding.

Good luck!

 

[RoseGold]

JMO, but I wouldn't buy points intending to rent them out. Before 2020, maybe I would have said something different.

I don't think it's a bad idea to sell the BLT for SSR if you are 7 month booking anyway and want to take the cash out. But tread carefully, because closing and commission might kill the savings.

 

[CastAStone]

From where I sit, what you use the money for doesn't really matter, because money is by definition fungible. So, if you have that much cash, I think you'd be better off buying the points you need and putting the rest in an investment vehicle. Pay your dues out of that investment account. It's probably a better deal, and it is certainly less work.

And much less risky! Will the glut of points make DVC rentals even possible at the in-demand resorts over the next 12-24 months? When everyone is vaccinated will everything worth renting book out in minutes or hours at 11 months? I don’t know! Will Disney be discounting like crazy for a while making rentals a far worse deal? I don’t know! Will the changing point charts that are putting rental rates on par with or occasionally even higher than cash rates on certain dates have a serious impact on demand? I don’t know!

I know I’d want to know before i spent $60K or whatever on the assumption that everything will be the same post pandemic as it was pre-pandemic.

 

[TinyTGO]

We have been thinking of lightening up our points. Does anyone have an idea of what a 220 point Old Key West (2042) membership is worth?

 

[CastAStone]

We have been thinking of lightening up our points. Does anyone have an idea of what a 220 point Old Key West (2042) membership is worth?

After the broker fee probably a little over $20K. Check the ROFR thread on the purchasing DVC board for the latest latest, or board sponsor DVCResaleMarket has a calculator on their website.

 

[gisele2]

I don't know the percentage of honest people who report this as income, but I sure do! I'd rather not find out what happens if you don't

You pay taxes and then 8% of interest since the time you were suppose to pay the first time. This is what you face in Canada .