Selling DVC Points

[vod2117]

First of all, thank you in advance for information provided.

I am looking to purchase into any of the DVC resorts as I feel this may be a good investment, especially since I am young and feel the years of ownership into the program will pay off.

First of all, if I purchase 160 points and resell them, would you say I will at least break even, or turn a profit on the original purchase price if I finance it? I know that there are yearly dues but I was thinking that financing it over a 15 or 30 year term may make it relatively profitable.

What are the liabilities I may have if I resell points? Will Disney hold me responsible for any ancillary fees incurred at the resort or will it be the responsibility of the actual guest?

Which is the most popular resort, or which resort would I have the highest chances of selling the points at?

I know I may have more questions but this is a start. I am really considering this for my future and think it may pay off.

Again thank you for any advice.

 

[com_op_2000]

OP, Are you getting your terms mixed up?
Do you want to purchace DVC, rent the points out all the time, and not use this for yourself?
Are you looking to buy now, rent or use the points yourself, and resell at a higher price later on?

DVC is a timeshare and reading these boards you will see that the reason to purchase this luxury is to use the points at DVC resorts. Have the resale prices gone up in the past few years - yes. Will they continue to, most likely NOT due to fewer years available to recoupe the outlay. Do not purchase DVC and finance for a long period of time hoping to make a profit at some point.

 

[vod2117]

OP, Are you getting your terms mixed up?
Do you want to purchace DVC, rent the points out all the time, and not use this for yourself?
Are you looking to buy now, rent or use the points yourself, and resell at a higher price later on?

DVC is a timeshare and reading these boards you will see that the reason to purchase this luxury is to use the points at DVC resorts. Have the resale prices gone up in the past few years - yes. Will they continue to, most likely NOT due to fewer years available to recoupe the outlay. Do not purchase DVC and finance for a long period of time hoping to make a profit at some point.

I would be looking to rent the points out to people other than myself; basically to sell the points each year but retain the contract. I would hope that by doing so I would turn a profit. Please advise if that makes sense.

 

[Maverick]

I think you are talking about buying into DVC and then renting out your points each year. If so, it would take many years to recoup your initial investment, even if you buy resale, especially if you finance the initial buy-in costs.

Using a simple example... If you buy a resale contract for 100 points at $70 per point ($7,000) at a resort that has $6.00 per point yearly maintenance fees, and if you rent out your points at $13 per point every year (thus a $700 yearly profit on the 100 points), it will take 10 years to break even.

That calculation doesn't take into account money you lose on interest, financing costs of your loan, your time managing the rental of the points, etc. When you factor those in, the break even point moves further out.

One thing I'm pretty sure of... Disney is one of the few DVC 'owners' that makes money consistently on their investment. In general, a timeshare is not something most owners (like us) can make money with.

Mav

 

[Syndrome]

Also, something to consider.............
Its my understanding that Disney can at any time in the future opt NOT to let owners rent out their points if they deem nesessary. That alone would be enough deterant for me.
Also, Disney does not really want commercial renting of points ........to many "other" people using your reservation, and Disney may send you a letter about it.

Just what I have heard.

 

[com_op_2000]

I would be looking to rent the points out to people other than myself; basically to sell the points each year but retain the contract. I would hope that by doing so I would turn a profit. Please advise if that makes sense.

That would be a violation of your DVC contract. You can not buy into DVC, then rent out points each and every year. You need to research/check the propectis (sp) for DVC before doing what you are thinking about.

 

[com_op_2000]

What are the liabilities I may have if I resell points? Will Disney hold me responsible for any ancillary fees incurred at the resort or will it be the responsibility of the actual guest?

Yes, you can be head accountable for any ancillary fees and/or damage done by the rentee.
That is why I have never rented out points as I do not want anyone messing with my account.

 

[tjkraz]

Also, something to consider.............
Its my understanding that Disney can at any time in the future opt NOT to let owners rent out their points if they deem nesessary.

Not sure that they could block rentals entirely but DVC could take steps to make it more difficult. They do have a history of complicating the process in recent years (not communicating with non-members, limits to associate status, limits to perks for non-members, etc.)

That would be a violation of your DVC contract. You can not buy into DVC, then rent out points each and every year. You need to research/check the propectis (sp) for DVC before doing what you are thinking about.

Well, "commercial" ownership is disallowed but the term "commercial" isn't really defined. Legally, i'm not convinced DVC would have a leg to stand on if they tried to brand an owner "commercial." They have issued written threats to some owners based upon the make-up of their reservations (excessive reservations which do not include the owner.) I've never heard of any action being taken despite it being common knowledge that there are owners with THOUSANDS of points used solely for rental purposes.

But to circle back to the first point, DVC could take even more steps to complicate point rentals.

Buying points for the express purpose of renting is not a risk-free venture.

OP: Keep in mind all of the cost components involved. You're spending money to acquire the points, sounds like you would finance which adds interest expense, and the annual dues. You would also be responsible for income taxes on the net proceeds.

 

[franbot]

I don't think a purchase would be worth it with the intention to just rent to others.

 

[Msmithmd]

DVC is not an investment. It is a way to get a discount on future hotel room (villa) stays.

The long-term historical return of the diversified stock market is better than what you're considering trying to do with DVC. Once you account for buy-in, interest on purchase loan, and annual dues it would be a very long time to even break even- before you even consider accounting for opportunity cost/time value of money. And even with stocks, I wouldn't ever recommend you take out a loan in order to invest in the stock market.

Buy DVC only if you have the money to pay cash for your purchase, and intend to use most of the points for your own stays. There are better and less risky ways to make investment earnings, in my opinion.

 

[Missyrose]

Financing your purchase over 10 years would essentially double the cost once you calculate the interest. Extending that interest another 5-10 years? There is no way you'd ever break even, let alone make money. Plus their is absolutely zero guarantee that prices won't bottom out as the end dates for the contracts draw near. You'd put out a ton of money in the hope that maybe you'd make a few hundred dollars in profit, maybe? Buy. DVC if you want to stay at DVC resorts, do not buy any timeshare as a financial investment. Period.

 

[summabreeze85]

They will deem your contract commercial if you make more than 20 reservations per calendar year. That's easy to work around...just make bigger reservations.
As far as investments go, you will do much better on something that doesn't expire after so many years. Although timeshares are deeded and you own approx .0000765% of Disney property, get yourself a concrete piece of real estate.