Buying to Rent Question

[MrsRoyale]

Hello all,

We are already DVC members at Copper Creek, and we were looking at purchasing a second contract. The idea is that we would use the points from Copper Creek for personal use, and use the points from the second contract to rent out, but only until that contract is paid off, and then we would use those points for personal use as well. Both of these contracts were/would be direct purchases.

My question/concern is this....since the people that you would rent to are technically your guests, what happens if they horribly misbehave, or if they trash the room or something like that? Does that affect you negatively in any way?? I am just curious...

Thanks!

 

[Sandisw]

You are responsible for your guests and years ago, they would freeze owners accounts until a guest settled an unpaid bill or damage.

Recent reports are that it may not be the same now, so it may be worth an email to DVC...I would not rely on info from frontline CMs.

Just remember, renting for commercial purposes is not allowed so think about then when deciding how many reservations in a rolling 12 month period you want to have booked as too many may catch the eye of Disney.

 

[MrsRoyale]

Oh! Thanks very much! This has been most helpful!! Yeah, we were not looking at renting out more than once a year and only until our contract was paid off, so maybe I should check with our sales rep. Thank you!

 

[Ruttangel]

Just wondering why you would buy the second contract direct? If it’s resale you will get to your cash target quicker?
The shorter the period to rent the lower the risk

 

[MrsRoyale]

Just wondering why you would buy the second contract direct? If it’s resale you will get to your cash target quicker?
The shorter the period to rent the lower the risk

We would rather do direct because of the benefits. We want to be able to access all the perks that being DVC members has to offer, some of which are not available thru resale

Quite frankly we were not expecting to buy for a few more years, but there's a really good offer going on right now that we would like to take advantage of but since we were not prepared to buy we are trying to find ways to make it work, if that makes sense

 

[Ruttangel]

We would rather do direct because of the benefits. We want to be able to access all the perks that being DVC members has to offer, some of which are not available thru resale

Quite frankly we were not expecting to buy for a few more years, but there's a really good offer going on right now that we would like to take advantage of but since we were not prepared to buy we are trying to find ways to make it work, if that makes sense

I understand....but if you already qualify for the benefits you are not gaining much apart from the ability to combine points at new resorts. The usual plan on here is minimum direct the rest resale

its completely your decision though, I am just curious

 

[MrsRoyale]

I understand....but if you already qualify for the benefits you are not gaining much apart from the ability to combine points at new resorts. The usual plan on here is minimum direct the rest resale

its completely your decision though, I am just curious

You make a very good point, and I agree with you. But my understanding, and please correct me if I am wrong since we are relatively new to DVC, is that points that you buy resale cannot be used for any other purpose than just going to Disney? We are looking at using the points to book Adventures by Disney, DCL, and RCI which I believe cannot be done with resale points, right?

 

[Ruttangel]

You make a very good point, and I agree with you. But my understanding, and please correct me if I am wrong since we are relatively new to DVC, is that points that you buy resale cannot be used for any other purpose than just going to Disney? We are looking at using the points to book Adventures by Disney, DCL, and RCI which I believe cannot be done with resale points, right?

Ok, now your purchase makes a bit more sense.
Resale can use RCI not the others,
BUT the points needed for those trips is insane and would be better to rent points out and pay cash to travel

 

[Sandisw]

You make a very good point, and I agree with you. But my understanding, and please correct me if I am wrong since we are relatively new to DVC, is that points that you buy resale cannot be used for any other purpose than just going to Disney? We are looking at using the points to book Adventures by Disney, DCL, and RCI which I believe cannot be done with resale points, right?

In addition, the resale points can not be used at RIV or any future resorts so that is a plus to direct, as well as using for the other options,

As mentioned, it is not always a good value but it is still easier than renting points, and not having to deal with it for the occasional trip.

 

[sethschroeder]

we were looking at purchasing a second contract

How many points are you purchasing? Personally just think its an undue risk as opposed to just waiting.

only until that contract is paid off

How much of it will be a loan and how quickly will you have paid it off? Even at 150 points its only roughly an 11% discount so much of that could be wiped out via interest. So in the end if you do happen to wait you will 1) have cash on hand to pay in full and 2) remove risk between now and when you have cash in hand.

You would really just need to run the numbers to see how much extra it really would be by waiting.

 

[limace]

Yeah, I am worried about your math-both wanting to rent to pay for a contract, and planning to buy direct to fund trips outside of dvc. The latter is typically a very poor financial proposition-you’d be much better off buying resale and the renting those points out for cash to cover your trips.

 

[RoseGold]

It’s going to take a LONG TIME to pay off those points. Let’s say you’re in pre-covid times, $10 over dues, big assumption, but rounding up. You still paid $150 plus the interest ticking on this loan. Your rental will barely cover the loan interest and the dues.

You sure took on a huge risk and commitment for very little money, if this works at all.

Edit for math: Let's say you paid $150/point at RIV, have a 10% interest rate, and managed to rent out for $10 over dues, $18.50. Interest on the loan alone was $15. You paid someone $5/point to use your points, and that's not even counting closing costs.

Let's say you rented out at crazy VGC rates, $20. You still lost $2.50 a point.

 

[MICKIMINI]

...and don't forget you have to pay taxes on rentals which could be 25% or more. Personally, I buy resale contracts typically loaded with points, especially from the prior year which can be bought in a contract for $0 and rent those points but it is a one time benefit. For instance, a 100 point contract can be rented for $15+/- PP or $1500 minus taxes ($375 @ 25%) for a net of $1125 which offsets your purchase by $11.25 PP. After that, renting might put you in the negative - in other words you are paying someone to enjoy your points!

Personally, and from 25 years profitably buying and selling DVC I urge you to do the math and do more research as there are ways to make DVC enjoyable and profitable but buying direct for future use is nearly impossible IMO to achieve your goals. Just my 2 cents.

 

[_auroraborealis_]

For ABD and cruising you get $5-8 per point. Not even cover dues as value. Plus, all the special rules around cancelling or moving the trip dates.

If you are already okay with the risks of renting, renting and paying cash is better. And even then, the ROI isn't super. It is one thing when you are using them incidentally for that purpose every 5-8 years, but the value is poor when it is used as the intended purpose.

 

[havoc315]

A few financial rules of thumb:
1 -- Don't buy DVC if you will be using their financing for any significant portion, as the interest rate kills off any benefit
2 -- Don't buy, especially new, for the express purpose of thinking you can make money on renting points. Renting out points is nice to do occasionally if you're not going to be using your points by the end of their use year. But there is no guarantee you'll be able to rent them all out every year (look at this year), and no guarantee as to the price you'll get for them. In other words, don't count on clearing more than a few dollars per point, after paying dues.
3 -- Don't buy DVC for the express purpose of DCL, Adventures by Disney, Disney Collection. As pointed out by others, it's a very very bad value in points. It's like paying extra for those trips.

As to new vs resale... If you already have a new contract to get the benefits... then the main "pro" of buying new is the ability to stay at the Riviera and anything new that will be built in the future. If you're not planning on re-selling any time in the next 20 years, I don't think the re-sale restrictions on the Riviera will really hurt you. So arguably, buying new at the Riviera (with current incentives) is a better deal than some of the more expensive re-sale properties (like Grand Floridian, where re-sale points are almost the same as new at the Riviera). On the other hand, some of the other resorts are great deals on re-sale.

 

[Deb & Bill]

Buy DVC points to use at DVC. It's much too expensive to use for anything else. Renting out points takes time, just invest your money in the stock market. It's up right now.