Third party commercial renters

[Sandisw]

I know you are looking for a detailed, specific rule, but there are plenty of reasons for Disney to prefer to keep it vague. If they designate a number of rentals that owners are allowed to make, any “professional” renters would do that exact number of point rentals year in, year out, safe in the knowledge that they would never be questioned. While a member who has owned points since 2010 to take his extended family on a GV trip every year, never renting out points, might be unable to travel one year due to health reasons and rent his points out instead, accidentally exceed the limit, and be flagged as “commercial”, even though someone like this should clearly be cut some slack. You can tell Disney that they “need to be specific” all you like, but I suspect that they prefer to use a “we know it when we see it” approach.

And I am perfectly okay, and I think most owners would be okay with having clear guidelines, even if it means those renting know what is okay…that’s the whole purpose.

I don’t want ambiguity when it comes to decided if what I am doing is okay. If I know that I can’t use a rental broker to rent, then that should be said. Don’t let me do it and say, whoops, that’s a no no.

I think you still have to go back to the 2007 language as insight into DVCs level of reaonsableness in setting standards.

To tell me, well, go ahead and rent and will let you know if you are in violation just can’t work…unless there is no risk to me as an owner to violate.

At least in the 2007 language, you know you were capped at 20 reservations total in a 12 month span unless you provided proof none were rentals…

That is what we need today if those are not still the level of triggers…

 

[Sandisw]

Real estate is one of the riskiest and therefore most lucrative investments in the financial world, if you know what you’re doing. Show me a time where being a DVC owner meant losing your initial investment. It may and likely will happen, but it hasn’t and people have made bank doing it.

That isn’t the point I was making. I am saying that if DVC has listed 8000 as a way to encourage personal use, then they are setting a top limit on any level of renting someone could do. Meaning DVC capped the potential income anyone could make on DVC already.

I didn’t say that they would let you rent all 8000, just that the extreme owner who might is few and far between and wouldn’t be a profit for close to 10 years, thst is was enough for DVC to set that threshold that high.

To be clear, I am not saying that DVc should allow it, as long as they prohibit the commercial enterprise memberships.

 

[DougEMG]

Spec rentals are worth more than your rental would have been. That’s the whole point of this thread. You’re shocked they wouldn’t cancel a more valuable reservation to rent yours for less? I’m not. I literally had one of the big brokers tell me they wouldn’t rent my points and I needed to book a bunch of spec rentals for in demand rooms and weeks and they would list it. They told me exactly what weeks and rooms. Again, that’s the whole point of this thread.

Isn't this indicating that at the very least some of the spec rental are being made by many individual DVC owners not by rental companies themselves with there own points.

It seems to me that the issue is spec rentals. There are 2 problems that the spec renting is causing:

1. This is blocking off rooms which may or may not ever get used. If the spec renter doesn't get a reservation within a certain length of time they probably move the dates forward, blocking off another set of rooms.
2. This is making the highly desired rooms available at 11 months to a much large pool of people than just the owner themselves.

As has been said previously, we are legally allowed to rent our points which makes spec renting allowable, even though I may wish it wasn't as I'm a BWV owner and find it very annoying to try and get standard rooms.

The driver of spec rentals is the high price that the room can get compared to the low point cost that DVC set on the room. There is a point mismatch. DVC needs to rebalance the point costs of the rooms as much as they are allowed and ensure that new resorts don't have those ultra cheap rooms to begin with.

I'm not sure though that DVC cares about the problem enough to do anything or even thinks it is a problem. Those cheap rooms are a good marketing tool for them to sell points. Selling small contracts is a way to sell more points pushing more people to cheaper rooms. Building large point hogs like the bungalows and cabins that most people can't book lets them sell more points while creating an imbalance in the room demand from the very beginning of when a resorts opens.

 

[DougEMG]

As someone who uses their points for personal use and rents out points as well, I definitely want to know the exact rules around what I am allowed to do when renting.

Advice here has been "don't use your points to take a Disney cruise, rent the points out and pay cash". So if you rent out all your points for a year because you are doing the cruise is that allowed or not? At least with the 20 reservations per 12 months we had something to go by.

The reply that Sandisw got seemed more a warning/advice to not try and run a commercial business, but nothing to actually stop you.

 

[lowlight]

Isn't this indicating that at the very least some of the spec rental are being made by many individual DVC owners not by rental companies themselves with there own points.

Oh, absolutely. I never meant to imply only the large brokers were spec renting on their own points. If you want my historical take on it, as someone who followed this closely for years…

Based on the inventory of confirmed/spec rentals available on third party websites versus even 3 years ago, some websites have doubled their amount, some quadrupled, and in the case of the renter on Redweek.com, they seem to have almost completely moved to spec renting to the exclusion of anything else. My guess is that most brokers just wanted to rent points, but for years were happy taking that spec rental off your hands and selling it for 34 a point if it was desirable, while still paying you the same old 15-18 a point as if it were a normal point rental. Then COVID hit and they found themselves taking in way more confirmed rentals as people booked rooms for themselves (likely the desirable ones since they were for personal use), got sick and couldn’t go and wanted a quick way to get rid of it and sought out brokers. Again, the brokers were happy to take them off their hands and sell them for 30+ and give the owner 15-18.

They probably had a meeting at some point and said, hey listen, we can double our profits by spec renting. We need to make owners spec rent, and we should strip and flip all our contracts and use those points to spec rental and take the whole purse ourselves. That likely led to forming massive separate named LLC’s and doing this on scale, because money is addicting apparently.

This is just my theory, I may be wrong. It explains why spec rentals boomed during COVID, why strip and flip accelerated, and why 11 month availability of the most in demand weeks and rooms has far accelerated past organic origins, at resorts that have been sold out for many many years (so there is no change in owner patterns).

There are many problems with DVC, some you’ve mentioned. There should never have been treehouses or bungalows (because it allows the undervalued rooms) or two person tower rooms or value and concierge rooms in DVC if the goal was to keep things simple and equal and not create an environment ripe for profit by any means necessary.

 

[Sandisw]

Oh, absolutely. I never meant to imply only the large brokers were spec renting on their own points. If you want my historical take on it, as someone who followed this closely for years…

Based on the inventory of confirmed/spec rentals available on third party websites versus even 3 years ago, some websites have doubled their amount, some quadrupled, and in the case of the renter on Redweek.com, they seem to have almost completely moved to spec renting to the exclusion of anything else. My guess is that most brokers just wanted to rent points, but for years were happy taking that spec rental off your hands and selling it for 34 a point if it was desirable, while still paying you the same old 15-18 a point as if it were a normal point rental. Then COVID hit and they found themselves taking in way more confirmed rentals as people booked rooms for themselves (likely the desirable ones since they were for personal use), got sick and couldn’t go and wanted a quick way to get rid of it and sought out brokers. Again, the brokers were happy to take them off their hands and sell them for 30+ and give the owner 15-18.

They probably had a meeting at some point and said, hey listen, we can double our profits by spec renting. We need to make owners spec rent, and we should strip and flip all our contracts and use those points to spec rental and take the whole purse ourselves. That likely led to forming massive separate named LLC’s and doing this on scale, because money is addicting apparently.

This is just my theory, I may be wrong. It explains why spec rentals boomed during COVID, why strip and flip accelerated, and why 11 month availability of the most in demand weeks and rooms has far accelerated past organic origins, at resorts that have been sold out for many many years (so there is no change in owner patterns).

There are many problems with DVC, some you’ve mentioned. There should never have been treehouses or bungalows (because it allows the undervalued rooms) or two person tower rooms or value and concierge rooms in DVC if the goal was to keep things simple and equal and not create an environment ripe for profit by any means necessary.

Given the boom in spec rentals, I am goint to 100% agree with you that when they began to happen, and found to be a good thing for an owner, all those brokers who middleman for owners and renters, made it part of the business model.

Now that I know that spec renting is popular with renters, then it is something that I would do if I want to rent points...and while some see it as wrong, others thinks it is great because you have a better opportunity to get a higher rate!

 

[mort1331]

I am saying that DVC could very well say that turning your ownership interests into a commercial enterprise is tempered by the cap of 8000. The contract pretty much says that…”to encourage personal use, we cap you as a person to 8000”

Not saying someone renting 8000 points can’t make a lot of money..they can, but in the scheme of things, maybe DVC believes that level of income is acceptable.

Now, do I think, given the explosion of the rental market by so many more owners, and how easy it is now to rent, that maybe thst 8000 threshold should be lower?

Sure..but I definitely wouldn’t want it lower than 6000 because I can see people wanting that many points for themselves, family and friends

In terms of the other piece, I will go on record that many owners out there do not want a system that penalizes them or makes the product worse just to stop brokers.

And that what many owners care about are the rules for themselves using their memberships being fair and reasonable. If those are fair and reasonable then the rest will fall in place.

So, is it fair and reasonable to be allowed to rent your points using whatever means you want? Is it fair and reasonable to be allowed to change the name on a reservation if you can’t use it or want to rent it without a cancel and rebook? I’d say yes…others may not.

See, I am focusing in on the personal use aspect of the contract and not the commercial use one because those are the rules that need to be fair and reasonable.

ETA: Run the numbers on how long it would take someone who buys 8000 points to begin to make a profit from renting, against buy in cost and dues, not to mention TVM.

Buy and renting 8000 would take the same time as someone who bought 100 and rented. As long as all the points are rented its the same return on investment. Cant see why someone would need to lower the per point cost just because they have more points to rent. Just takes them longer to rent out.

 

[Sandisw]

Buy and renting 8000 would take the same time as someone who bought 100 and rented. As long as all the points are rented its the same return on investment. Cant see why someone would need to lower the per point cost just because they have more points to rent. Just takes them longer to rent out.

Sorry, I was unclear....what I was trying to say is that by capping the total points owned by any one person...across all contracts in which they have a vested interst...that DVC is capping the maximum one could make IF they decided to invest in DVC as a commercial enterprise.

Even if the worst case scenerio happend, and that owner rented all points every year, it would take long time to get their initial investment of $800K (using a $100/pt buy in number, which, depending on resort, will be higher) at the current rental rates.

Sure, the potential is there to make money eventually, and sure, it would be reasonable to expect DVC to see someone renting all 8000 points as doing it as a commercial enterprise...but, its also possible that these instances would be few and far between that its potential for setting up commercial enterprises is really low.

And, yes, if I buy 100 points and rent all of them year are year, I am making money. But, if the amount I am making is small, is DVC going to keep the threshold of commercial enterprise that strict? My guess is no, but nothing more than a guess.

Since I can rent, and renting is part of a personal use membership....sometimes it seems like people forget that...there is going to be a balance that DVC has to come up with that allows my right to rent to be there while at the same time, having some level of commercial enterrise definition...and that is the unknown..what threshold of activity does DVC want to use to shift what is happening in someones membership.

I have said before, the answer I got yesterday that took me right back to the contract, implies that maybe they are simply no longer defining it in a way that they did before...I don't know....which is why I sent follow up questions.

 

[muppets3d]

I'm not convinced the problem is caused by Aunt Edna who lets her nieces and children stay at Saratoga Springs when they want to go to Disney. I'm not even convinced the problem is caused by Grandpa Joe who bought points when his kids were young, and now he and his wife takes the kids and grandkids every few years in a grand villa and they rent some points in the off-years to help offset dues.

I am convinced the problem is large-scale rental brokers (google rent DVC points and they are all on the first page of results). These brokers own thousands of points, likely tens of thousands between their employees to get around the points maximums. They nab all the rooms they know they can rent, leaving the table scraps for us normal owners without the convenience of walking dozens of reservations for weeks or months - or in all likelihood, bots to start their walks.

Yes, the real problems are just a few room types - like studios at AKV and BWV. But think of how much easier our booking experience would be within the 11 month window if those thousands of points were owned by actual organic owners. Not all of them will want a Concierge studio for Thanksgiving. Not all of them will want a Boardwalk View studio for Food and Wine or a theme park view studio at BLT for Independence Day. Etc. But all of the brokers want them because they know they'll be able to rent them out immediately. I'm not saying those rooms would be open months into the 11-month window if the brokers were shut down. They'd still be very tough for non-owners to get and the very limited room types like Concierge studios would book up solid well within the 11 month window.

 

[Kailunkat]

Spec rentals are worth more than your rental would have been. That’s the whole point of this thread. You’re shocked they wouldn’t cancel a more valuable reservation to rent yours for less? I’m not. I literally had one of the big brokers tell me they wouldn’t rent my points and I needed to book a bunch of spec rentals for in demand rooms and weeks and they would list it. They told me exactly what weeks and rooms. Again, that’s the whole point of this thread.

No - they AREN'T worth more. They rent faster/easier but the broker is taking the same cut regardless. They don't get an additional fee from the Spec side versus custom side. Do you see what I'm saying? The cost is passed on to the consumer/renter and the owner gets the same cut of the sale.

 

[GoingSince1990]

These brokers own thousands of points, likely tens of thousands between their employees to get around the points maximums. They nab all the rooms they know they can rent, leaving the table scraps for us normal owners without the convenience of walking dozens of reservations for weeks or months - or in all likelihood, bots to start their walks.

Do we know this to be true, though? I've always believed that David's (one of the leading brokers) simply matches owners who have excess points with vacationers who want to rent those points. And David's actually discourages "spec rentals", instead encouraging owners to offer their points to make reservations in response to specific reservation requests (and they do not offer any extra payment for spec rentals):

Confirmed Reservations​

Our guests prefer to select their required dates, resorts and room types so points available for rent are always more popular than confirmed reservations. We understand that sometimes an confirmed reservation made by a owner can not be safely cancelled without possible risk to the owner and so for that reason, we offer the ability to rent confirmed reservations made by owners. We will advertise the confirmed reservation exactly as it is made, offering it for the points required. Pricing will follow our current model of standard and premium.

Please contact us for more information as it may be more beneficial for you to cancel your confirmed reservation and have the points made available in your account for immediate rental.

https://dvcrequest.com/dvc-owners/information

 

[muppets3d]

Do we know this to be true, though? I've always believed that David's (one of the leading brokers) simply matches owners who have excess points with vacationers who want to rent those points. And David's actually discourages "spec rentals", instead encouraging owners to offer their points to make reservations in response to specific reservation requests:


https://dvcrequest.com/dvc-owners/information

Yes, I saw a YouTube video with an interview from a DVC rental broker who admitted it in a roundabout way.

 

[muppets3d]

No - they AREN'T worth more. They rent faster/easier but the broker is taking the same cut regardless. They don't get an additional fee from the Spec side versus custom side. Do you see what I'm saying? The cost is passed on to the consumer/renter and the owner gets the same cut of the sale.

Many brokers charge more for rooms booked within the 11 month window, and of course if the broker owns the points themselves then they don't have to pay a large commission to the DVC owner - they can keep it all for themselves, after expenses are paid. That is why at least some brokers own points themselves, vs. only working with owners.

 

[Chuck S]

Well, their ownership would be public record, at least for the Florida based resorts, right?

 

[muppets3d]

Well, their ownershi would be public record, right?

Yes and I have read posts on here of people who have seen records at Orange County for folks who own thousands of points.

 

[DonMacGregor]

None of us are lawyers, I keep saying that because you are very much “it’s in the contract so it’s good”, but contract law exists for this very reason. People get sued over “ironclad” contracts every day and lose.

There are actually several lawyers in the discussion, but they’re all smart enough not to paint that target on their own back. LOL

 

[DonMacGregor]

Well, their ownership would be public record, at least for the Florida based resorts, right?

Yes and I have read posts on here of people who have seen records at Orange County for folks who own thousands of points.

I believe someone on another thread did some digging at the Comptroller’s office and found a number of LLC’s that had purchased a large number of contracts. Now, we can safely assume that some very small number of those are brokers like the forum sponsor, who have “buy-it-now” promotions that would explain an LLC buying (and then selling) some number of contracts, but if memory serves me, there were a few of those LLC’s whose purchases significantly outweighed sales.

Maybe someone remembers who it was and in what thread.

 

[Kailunkat]

Yes and I have read posts on here of people who have seen records at Orange County for folks who own thousands of points.

Also just to be clear - I totally believe that’s a possibility. I am just struggling with the economics of only having confirmed listings as a business model. I think if a business was going to operate with 5 figures worth of points that they would have to take on some of the custom listings as well in order to keep all those points profitable.

Im also totally in favor of limiting the number of contracts you can rent per year or other such measures discussed here (like making Aunt Edna part of your friends and family list). So I’m really not trying to excuse the commercial renting - just giving another perspective.

 

[Chuck S]

But just remember, the entire discussion is pretty moot, as LLCs are permitted to own points. And if DVC is saying that the 8,000 limit is a suffcicient deterrent (at least to DVC) for commercial renting, and they are no longer using the 20 reservation limit, then they are doing nothing wrong.

I mean, consider how many thousands of points DVC itself owns own, and rents out. In addition to the points used for trades to the Disney Collection and breakage points. It will be interesting to see what further responses Sandi gets.

 

[lowlight]

There are actually several lawyers in the discussion, but they’re all smart enough not to paint that target on their own back. LOL

With how diverse law practice is (like medicine) I likely wouldn’t speak up if it wasn’t my area of expertise, either.

No - they AREN'T worth more. They rent faster/easier but the broker is taking the same cut regardless. They don't get an additional fee from the Spec side versus custom side. Do you see what I'm saying? The cost is passed on to the consumer/renter and the owner gets the same cut of the sale.

You posted a screenshot of David’s, the only broker that doesn’t sell spec rentals for more. I understand you are new to this, so I guess I’m all the more confused why you are so confidently incorrect. I’m not making this up or imagining it, I wish I were. The board sponsor, Dvcrentalstore.com, has a 12/8/24 to 12/15/24 listing for Riviera 2BR for 9816, or 31.2 per point. This isn’t even on the top 10 for in demand room types and locations and weeks. It’s a popular owner week, not so much a popular renter week. If that’s an owner spec rental, they are paying that person likely 15 a point. If it’s their rental, they are clearing the full 31.2.