Point Strategy

[Richard Costa]

Hello,

Due to virus I had cancel my trip and with points expiring by 8/31/20 I rented them out of neccesity. This got me wondering if many out there buy DVC for the primary purpose of renting as added income?

Thank you.

Rich

 

[JoshF]

That has to be tougher this year. Where did you rent them?

 

[Richard Costa]

That has to be tougher this year. Where did you rent them?

Here on this board.

 

[Deb & Bill]

Not a good decision. You will never get rich renting out DVC points. One job loss and you can't pay the fees or use the points. DVC takes your contract back. Plus with the cluster caused by the virus, closing the parks and renting, some of those brokers might never come back. I've seen lots of people say they've had enough Disney for a long, long time after this.

 

[Richard Costa]

Not a good decision. You will never get rich renting out DVC points. One job loss and you can't pay the fees or use the points. DVC takes your contract back. Plus with the cluster caused by the virus, closing the parks and renting, some of those brokers might never come back. I've seen lots of people say they've had enough Disney for a long, long time after this.

And thanks for the word of caution. And for sure the concern about job loss is real.

Can you explain what you mean about brokers never coming back? I have not dealt at all with brokers recently.

Thanks.

Rich

 

[jarestel]

I bought DVC points to use not to rent. Of course, I don't view DVC as any sort of "investment" which differentiates me from many other members.

 

[Richard Costa]

I bought DVC points to use not to rent. Of course, I don't view DVC as any sort of "investment" which differentiates me from many other members.

Thank you. When you say your intent to use them vs. rent them differentiates you, does that mean others do use it primarily for renting? Just trying to gather as much information as I can.

Thanks so much.

 

[Noah_t]

At the start of the year I spent a lot of time on this and ran quite a few projections. First you have to have the capital to buy contracts right out. You then need to be very selective of the resort as there are lots of variables in Maintenance fees and years left on contract. Now keep in mind this is all taxable income so after you do your prospectus dont forget the government wants their cut. If you are someone who does their homework you could structure your company properly to maximize take home by either using a corporation or a limited partnership. Consult a CGA. So my conclusion was there is definitely money to be made.

Then the pandemic hit........ Not only is the rental market dropping significantly but its my opinion the resale prices are also dropping. There seems to be some people who want to argue the point, mostly brokers, but IMO the evidence is irrefutable. Also historically its taken a year to really hit the bottom. I own BLT and was able to rent out my points at 17$ within days. Now there are people at 14$/Point and i really think its going to go lower. I no longer see a viable business here.

What there is though is an opportunity for someone to get a really good deal on some DVC points especially larger contracts. Waiting i bet they will drop even more. You probably could still rent points to help offset it but I really will not be counting on it. For me I am prepared to take an extended vaction if my points dont move. Maybe someone else can make the math work for buying DVC to rent but I am not willing to take the chance.

 

[Richard Costa]

At the start of the year I spent a lot of time on this and ran quite a few projections. First you have to have the capital to buy contracts right out. You then need to be very selective of the resort as there are lots of variables in Maintenance fees and years left on contract. Now keep in mind this is all taxable income so after you do your prospectus dont forget the government wants their cut. If you are someone who does their homework you could structure your company properly to maximize take home by either using a corporation or a limited partnership. Consult a CGA. So my conclusion was there is definitely money to be made.

Then the pandemic hit........ Not only is the rental market dropping significantly but its my opinion the resale prices are also dropping. There seems to be some people who want to argue the point, mostly brokers, but IMO the evidence is irrefutable. Also historically its taken a year to really hit the bottom. I own BLT and was able to rent out my points at 17$ within days. Now there are people at 14$/Point and i really think its going to go lower. I no longer see a viable business here.

What there is though is an opportunity for someone to get a really good deal on some DVC points especially larger contracts. Waiting i bet they will drop even more. You probably could still rent points to help offset it but I really will not be counting on it. For me I am prepared to take an extended vaction if my points dont move. Maybe someone else can make the math work for buying DVC to rent but I am not willing to take the chance.

Thank you for our reply especially the tax ramifications.

My takeaway from the past week was how quickly my points were rented, by some who are there this weekend before the parks are even open. That shocked me.

Again, I did not set out to make money. This was necessitated by Disney not letting us use our points next year and the prospect of loosing those points.

Again, thanks very much.

Rich

 

[CarolMN]

It's a risk, especially now & going forward. Once we get through the Covid situation, Disney is going to want It's resorts full again. When they start discounting and offering promotions (like free dining), renting points is going to be tough, and prices may drop. In addition to Disney, there are already lots of owners who will be competing with you for rental customers. You will also be dealing in a world with bargain hunters, browsers and scammers. It takes a while to figure all that out. Owners who rent often do not consider their time in the ROI equation.

IMO, renting is not as easy as some would have you think, and it can be a time-suck, too. DVC is a risky "investment" .

 

[CarolynFH]

Thank you. When you say your intent to use them vs. rent them differentiates you, does that mean others do use it primarily for renting? Just trying to gather as much information as I can.

Thanks so much.

I think most owners buy to use their points and rent only occasionally when they can't use their points. There are owners who buy enough to rent to offset the cost of using their points, and there are those who rent a lot, but I'd be very surprised to find that's a majority of members.

 

[zakdavid]

I rented points once when I did a resale add on that cane fully loaded and I didn’t need those points. The contract was a much better deal than the stripped contracts so I went for it and rented the points. Beyond that I bought them to use, and I don’t want to rent my precious baby if you only buy to rent I feel like there’s much better ways to make money

 

[Deb & Bill]

And thanks for the word of caution. And for sure the concern about job loss is real.

Can you explain what you mean about brokers never coming back? I have not dealt at all with brokers recently.

Thanks.

Rich

Many of the brokers were left with people losing their trips. And the money may have already been gone (reinvested in something else, salaries, boats, etc). Now they can't repay the renters. And the owners who got their part to make the reservation probably already spent the money they got based on a no cancellation policy. So they can't return the money they were paid. Brokers are coming up with all kinds of schemes to "make the renters whole" without really making them whole. In the end some may file for bankruptcy. Plus lots of people who recommended brokers in the past or used them to rent out their points, won't touch them with a ten foot pole now. No communication between the owner and the renter, only with the middleman who doesn't really do much except hold the money. So the points supply for the brokers may dry up. No way to make the renters whole without using the broker's cash to make a reservation. It will be nasty for a while.

 

[jarestel]

Thank you. When you say your intent to use them vs. rent them differentiates you, does that mean others do use it primarily for renting? Just trying to gather as much information as I can.

Thanks so much.

I have no way of knowing what strategies other members employ regarding their points of course, but I would be surprised if there wasn't some level of high volume renting from a few owners though it's probably not that prevalent. DVC will attempt to identify patterns of commercial renting as well.

My feeling is that most members utilize their points for personal use with an occasional rental thrown in here and there.

 

[kevtlas]

Hello,

Due to virus I had cancel my trip and with points expiring by 8/31/20 I rented them out of neccesity. This got me wondering if many out there buy DVC for the primary purpose of renting as added income?

Thank you.

Rich

We usually wind up renting most of our points since we are stationed overseas and don’t make it back to the states very often. I’m sure there is some “profit,” but after you figure in dues, up front costs and taxes, I’m probably just breaking even over time, if that is even true.

 

[_Iowa_]

It’s a bad investment. If something comes up and you have to rent that’s one thing, but you’d be far, far better off choosing something more traditional if your goal is simply to make money

 

[heynowirv]

I see a lot of new people on here who are gold sponsors which leads me to believe their intent was/tis to rent points. As others have noted Disney watches for patterns of usage.They don't like when others Are profiting here.
We bought DVC when our kids were 10 & 11 and had many wonderful vacations and now we have grand children to spoil at WDW as well. That's the intent and wonders of Disney.

 

[CastAStone]

In addition to Disney, there are already lots of owners who will be competing with you for rental customers.

This. People are going to have so many points and whenever the overall Disney situation turns positive, there will be so little availability, and at some point 2 years down the road for a number of people it’s going to be dump the points on the cheap or see them expire...I wouldn’t want to be in a position where I was relying on rental income for the next few years. Maybe come 2027 or so...

 

[CarolMN]

I see a lot of new people on here who are gold sponsors which leads me to believe their intent was/tis to rent points. As others have noted Disney watches for patterns of usage.They don't like when others Arte profiting here.
We bought DVC when our kids were 10 & 11 and had many wonderful vacations and now we have grand children to spoil at WDW as well. That's the intent and wonders of Disney.

Most of the recent submissions to the R/T Board seem to be from owners who were negatively impacted from the closures ( & not from the "regular" renters). A lot of those have not posted here enough to qualify for the waiver and go on to buy a rental plan do they can try to recover something from their points before they expire. I'm glad they are choosing to start posting more on the DVC forums.

 

[heynowirv]

I bought DVC points to use not to rent. Of course, I don't view DVC as any sort of "investment" which differentiates me from many other members.

There are many of us who bought so I we have great memories of vacations we with our children. And hopefully more with our grandchildren.