Using DVC as an investment?

[dj1cincy]

I am considering purchasing my DVC through The Timeshare Store (TTS). It certainly appears that I can save a good chunk of money going through TTS. I want to buy as many points as I can afford and then rent or transfer all the points annually with the exception of the points I need to vacation on. Points seem to be renting or tranferring at a rate of about 2 -2 1/2 times the cost from when you buy them annually through your dues.

Does your home base property play significantly in whether or not a prospective renter or transferrer chooses my points or someone else's? What is the down side in purchasing Vero Beach as apposed to Boardwalk. The initial investment is tremendously lower and the points are good at any DVC resort. Other than the 11 month window versus the 7 month window, is there are reason someone would opt to buy from Boardwalk instead of Vero Beach?

Dan

 

[tor]

My neighbor was offered 83 per point for ss because of 15% discount from friends and family ending feb 1 but check on that plus ss lasts 14 or 15 years longer that makes it cheaper than most resales and no maintenance during first year if you need a name for the referral pm me i could use the bonus they give

Second the 11 month versus 7 month window is important imho because during the peak times it seems impossible to get standard view at the bwv or any res at the bcv at 7 mos and even HH can be tough for the summer

third dont quote me but i believe ss ends in 2054 leaving you 48 years so 83 per point makes your cost $1.73 per point per year plus maint 3.98 per point ss 2006 the cheapest currently for a total of 5.71 per point they typically sell for 10 per point leaving you 4.29 per point before tax profit sounds great but in my experience only 3 years selling points there are e few traps one is the time involved scanning posts emailing people calling dvc it usually takes about 3 hours per transaction for me without disney offering the free meal plan or some other outstanding deal that has you renters canceling you leaving you the bag of expiring points

i would say you could do it but another thing is it violates the rules and if disney ever cracks down on it you are again left without recourse i recommend buying it for yourself and selling what you dont want

 

[Deb & Bill]

This will probably get moved to the planning board instead of the Rent/Trade Board. Never plan on using DVC as an investment. It should only be considered as a pre-paid vacation plan. You can see right now how other members are trying to undercut member renting out their points. I can only see this a big trouble in the long run.

Since Disney is in the business of renting out the villas when members trade out to non-DVC locations, you are interferring with their business. You don't know how they will consider members renting to non-members in the future.

VB has the highest dues of all the DVC resorts. In the long run, you would probably pay more for your points just because of the higher dues.

DVC could also sell off the non-WDW resorts if they desired.

As the number of on-site DVC villas increases, the off site villas will have a harder and harder time getting an on-site reservation after 7 months. There doesn't seem to be any non-busy times any more.

 

[Plutofan]

I would never buy Vero in order to rent it. It may be cheaper to buy in but when you factor in the high dues it becomes a lot more expensive. This is coming from someone who just bought a Vero beach contract. The only reason we bought it was to get a beach cottage. By far the cheapest per point place is SSR. The dues are lower and there is a 15% off until the end of the month with a referal. I would not buy DVC to just rent. As someone stated in a previous email up front point costs would be around $1.73 plus annual dues of $3.9802 with out financing it. If you need financing you may get lucky and get a rate of around 6% as a second home at best. Disney's financing is a lot higher. The yearly interest on a $9,996 (120 points x $83.30) would be about $600 or $5 per point. Thus your yearly cost could exceed $10 per point and the current rental rates range from $10 -$12. Plus you may spend a lot of time checking reservations. There are alot of better investments for your money than renting.

 

[Caskbill]

Note: The Rent/Trade board is strictly for performing point transactions. As Deb said, this thread belongs on the regular DVC-Boards. I'll move it over there and you'll probably see a lot more responses.

 

[CALNEVA DISNEYFANS]

I am considering purchasing my DVC through The Timeshare Store (TTS). It certainly appears that I can save a good chunk of money going through TTS. I want to buy as many points as I can afford and then rent or transfer all the points annually with the exception of the points I need to vacation on. Points seem to be renting or tranferring at a rate of about 2 -2 1/2 times the cost from when you buy them annually through your dues.

Does your home base property play significantly in whether or not a prospective renter or transferrer chooses my points or someone else's? What is the down side in purchasing Vero Beach as apposed to Boardwalk. The initial investment is tremendously lower and the points are good at any DVC resort. Other than the 11 month window versus the 7 month window, is there are reason someone would opt to buy from Boardwalk instead of Vero Beach?

Dan

Dan, no disrespect, but you should look into the definition of "investment". DVC is NOT, I own OKW and plan on buying into VWL, but I buy what works for my travel plans and any unused points I rent.

You should find a really good investment for your money, buy a SMALL point contract at the location of your choice... and with the extra money you make on your INVESTMENT you can afford to rent points (via transfer) from other DVC members at the going rate of $9 - $12 point.

 

[jdvm]

Everyone looks at things differently....but I would never view a DVC interest an investment. I analyzed in very thoroughly to see exactly when we would get our money back, but I never view it as an investment per se. please be careful.

 

[CarolA]

A timeshare is NOT an investment.

At some point this timeshare will decrease in value... Remember it's a time limited deed.....So I don't think with only 10 years left it's going to go for $80 a point for example (I could be wrong, but I would expect this is a risk!)

In addition, the contract is weighted towards Disney... so if they want the 7 month window can change, the transfer rules can change etc... So at some point they could tell you that all those VB points are only good at VB. I don't think they will, but once again that is an investment risk....

Plus as others have pointed out rentals are going at $10 per point and have been for several years... I did the math and I can do better with a traditional investment. Dues are running $5 a a point so all you are making is $5 a point... then there is the cost/hassle etc.. I just sold some extra points to put the money in to a tradional investment. I looked at renting and it made no financial sense.

 

[Gary K. D.]

As long as members continue to rent points for bargain basement prices, DVC will NEVER be an investment vehicle. Had I not purchased the bulk of my points 5 years ago, I would be in the market to rent from one of the generous (foolish) members on this board. I would have no investment, I could rent for a little at $7.50 per point which would translate into a rental at the Beach Club of less than $100 per night weekdays when Disney has their "Rack Rate" up to $340.00 per night and I would not have to worry about point usage or management. The fact that Disney has had to lower the price of Saratoga Springs to attract new buyers in spite of the longer ownership may well portend the immediate future of DVC. While many have made paper profits on their purchase, the recent buyers at Saratoga Springs are counting their potential losses should they be forced to sell in this market. In spite of the apparent glut of points on this Board, there are many more buyers than sellers and a 60% discount over the Rack Rate is just too much to offer anyone who happens upon this site. Proper point management WILL yeild a better $ per point rental. When you are not forced to fire sale your points because you forgot to bank them, the rental prices willl become more acceptable to the owners.

Just my opinion.

 

[MrShiny]

Well, I think it is designed to not really be an investment vehicle. However if you factor in the value of the vacations taken on points not rented, then it does deliver a net return in terms of utility.

Even without that, my SSR points carry about $4 in dues and taxes. Say the going rate of rental stays around $10. Say the dues increase on average 2% per year. Assuming I rent out points for $10 each for 40 years, I'd have inflows of $80,000, with outflows for dues and taxes of $48,322 so income over dues and taxes of $31,678. Now those 200 points didn't cost $158 each, so it works out.

Before you start talking about inflation, realize that the buying power of those points will increase over time, as rack rates no doubt increase.

Two things will determine the rental price - the dues and taxes (that should determine the bottom that someone would ever accept) and the rack rates. Rentals should always be significantly cheaper than rack rates because the renter assumes the risk of dealing with a third party (who in mot cases is unverifiable).

It's meant to be a savings against future vacation expenditures, but it can generate a modest profit as well.

The selling price of SSR has little to do with the rental market, IMHO. it's simply supply and demand. The more DVC rooms there are, there will be downward price pressure.

While the price of DVC ownership will decrease as the contracts near their end, I think rental prices will increase. They are flat at $10 now (which is a big psychological sticking point), but I do recall back five years ago they were routinely less. Look at rack rates - they have drifted up, but not hugely in the last 5 years either.

Still, in 2030 I don't think you'll find a $300 deluxe room at WDW. More like $1000. Wanna bet rental rates go up then too?

 

[Jimbo]

You should factor how much time it takes to rent out points in your calculations, too. It can be a lot of trouble, and it's easy to underestimate it.

I had 520 points to rent a couple of years ago. But I found that most people just wanted to rent enough points to spend a few weekdays in a studio. So I had a 120 point transaction, a 68 point one, one for 55 points, a 32 point one and even a 10 point one. I spent a ton of time on the phone with Member Services, plus I was shuffling around contracts and confirmations. And there were a few "window shoppers" that I spent time with, too. It was a real pain.

I eventually offered a volume discount just so I could unload the last 235 points at once. It was worth it to me.

 

[Steamboat Bill]

Most timeshares are NOT investemtns, however let me make this as simple as I can.

I bought DVC in 2000 (about $68 per point) and I bought some stock in 2000.

My DVC has gone up in value to ($98 per point) and my stock crashed.

I only wish my stocks went up as much as my DVC investment

 

[Doctor P]

While I believe that DVC is a good buy for us and is a great prepaid vacation plan that really takes the sting out of otherwise expensive vacations, an investment it is not.

Assume you buy 150 points at $80 per point. That's $12,000. In 36 years, that $12,000 will be worth $96,000 if you invest it at 6% (realistically available in safe investment vehicles right now) and will be worth $96,000 in 48 years if you invest at 4%. Add to that amount the dues you will pay at a conservative $4.00 per point, and that is another $600 you have to play with per year. So, at minimum, at the end of 40 years you have approximately $120,000. Rent all your points at $10 per point per year and you get a total of $60,000. Take away your $12,000 purchase and you are down to $48,000. Take away your dues of $24,000 and you are down to $24,000 (or roughly $600 per year). On a $12,000 investment that is, at most, going to be a 5% return excluding the costs of renting, and assuming you rent all your points and are successful at renting every last point. Bottom line: buy the minimum you need for your own vacation habits or projected vacation habits and invest the rest in a safe vehicle that will give you spending money for your trips.

 

[Par8hed]

As the number of on-site DVC villas increases, the off site villas will have a harder and harder time getting an on-site reservation after 7 months.

Ok- Enlighten me here. Unless every on-site owner consistently books their home resort only during the priority booking period (11-7 months) how would the odds of booking a non-home resort differ than how they are today?

 

[Gary K. D.]

Where do I go to get $98.00 per point...I will sell everything I have at that price, today. You will be lucky to get $75.00 per point after commission and for many members out there, that translates into a loss.

 

[CarolA]

While I believe that DVC is a good buy for us and is a great prepaid vacation plan that really takes the sting out of otherwise expensive vacations, an investment it is not.

Assume you buy 150 points at $80 per point. That's $12,000. In 36 years, that $12,000 will be worth $96,000 if you invest it at 6% (realistically available in safe investment vehicles right now) and will be worth $96,000 in 48 years if you invest at 4%. Add to that amount the dues you will pay at a conservative $4.00 per point, and that is another $600 you have to play with per year. So, at minimum, at the end of 40 years you have approximately $120,000. Rent all your points at $10 per point per year and you get a total of $60,000. Take away your $12,000 purchase and you are down to $48,000. Take away your dues of $24,000 and you are down to $24,000 (or roughly $600 per year). On a $12,000 investment that is, at most, going to be a 5% return excluding the costs of renting, and assuming you rent all your points and are successful at renting every last point. Bottom line: buy the minimum you need for your own vacation habits or projected vacation habits and invest the rest in a safe vehicle that will give you spending money for your trips.

Doctor P, This is the point I was trying to make. You have a great analysis here!!!! To me this is why DVC should be bought AFTER you make your investments... I love my DVC, but I don't think it will finance my old age LOL!

 

[dns]

I have read through this discussion thread and definitely agree that this should not be viewed as an investment. With that being said there are the occasional times where I just plain forget to take care of my points, something that would never happen with an investment, and I do end up renting them at bargain rates just to be rid of the constant cat and mouse game that a travel agent is better suited for. However, I still fail to see why the rental of points ranges between $8 to dare I say $12/point when the same discounted rack rate 6 night reservation could be getting $18 to $27 per point. Is it just that we are not willing to take the risks that would net us those type of returns, all that is required is making a reservation for a school vacation week when things get booked up in a hurry far enough in advance and finding possibly another means of advertising besides the rent/trade board.

I personally believe there are a lot of people on the boards that have made a career and a living in trading/renting points. When there is room for a middleperson you always have to wonder if you can manage your assets better and start thinking outside of the boards, sorry I meant box.

 

[CALNEVA DISNEYFANS]

Where do I go to get $98.00 per point...I will sell everything I have at that price, today. You will be lucky to get $75.00 per point after commission and for many members out there, that translates into a loss.

Me too. I'll sell at $98... dont forget commissions and other closing costs. DVC NOT AN INVESTMENT

 

[tor]

I too would love to rent for more than $8 to $12 dollars per point but it is difficult when you do the legwork and some one comes along and offers 7.50 per point because they forgot the deadline. We only hurt ourselves in the long run