Why do dvc owners rent points out ?

[TheSnowWhite_]

I keep seeing people saying it’s a better deal instead of owning dvc just to rent dvc because as a renter you don’t have to pay the initial hefty cost of 20k + whereas renters are basically renting at just a little more than what dues are for owners. What renters are telling me is that the dvc owners think they are making money by renting but they aren’t because they had to pay the initial money and they in essence prepaid for future vacations that now renters are able to enjoy and reap the benefits ? So if this is true why do dvc owners rent them out ?

 

[MerlinandtheMouse]

Friendly tip, you’ll probably get more DVC members responses if you post in the DVC boards!

But I’d say on average, most owners that rent will make anywhere from $4/pt - $8-$10/pt (some even more!) depending on their initial buy-in cost, dues, and desirability of home resort/room. Of course, you’ll have to consider the tax you’ll pay for the rented income but still, renters will likely come out ahead in most situations with some amount of profit. Some have found the process worth it and rewarding, some feel they don’t even have enough points to fulfill all the personal trips they want, let alone renting some out (hi, it’s me).

Many also rent to cover any losses of unexpected cancelled trips or other plans/trips they might want to make that year outside of a Disney trip. It’s not always about making profit, per se, but making sure you don’t lose the value of those years points if something else arises. DVC has a pretty active rental program with many professional and owner-to-renter outlets to use. There’s a comfort knowing that if you can’t make it to Disney one year or another you can rent out your points so you don’t lose anything, and very likely make a small profit while doing so. Your moves may vary

 

[ChrisL.]

Renting is a good choice to try before you buy, but if you find yourself enjoying the product a little to much and you become a habitual renter, it would have been a way better choice of just buying a 100 pt. resale Saratoga Springs contract.

 

[WDW Traveler]

As recent owners (as of early 2022- my in laws added us to two of their long paid off DVC contracts), we rented out some points this year. My in-laws were always very good with their points, and they ALWAYS banked and hardly ever borrowed, so almost every trip they took/we took, was with the previous UY points. They are in their 80's now and have turned the contracts over to us to pay for/use. This year, we had 22UY points that had been banked into our 23UY we needed to use by Dec '24. We had taken several trips over the past couple of years, gave a room to our nephew to use in August '24, and still had some points left over. We knew we weren't going to go before the end of November, so we ended up trying the rental route. We ended up renting all but 4 remaining points from '22. And now we still have '23 points that we will be banking into '24. So, the rental amount we got will go towards our dues payment for next year and renting about 1/3 of our points, covered about 2/3 of our dues. For us it wasn't about profit by any means, it was to not see those points go to waste.

 

[lew4949]

Another reason owners may rent out points is to recoup some of the initial cost they paid for their contract by renting the first year or two of points. This is particularly effective if they've bought loaded contracts with points from previous use years that they haven't had to pay maintenance fees for. For example, I was lucky enough to buy a 200-point BLT contract recently that had full 2022 and 2023 points on it, but the first points I had to pay maintenance fees for were the 2024 points (which is the common practice). By renting out the 400 2022 and 2023 points at $18 a point, I was essentially able to knock a nice chunk off what I paid for that contract.

 

[purrenh1]

I agree with MerlinandtheMouse that you'll get a lot of responses in the DVC threads!
But I can answer with some more numbers I hope will help you.
I am a recent (2021) owner of DVC. My buy in cost is over and done with and won't change over time (no loan to pay off, etc.). I paid X dollars in 2021 for a resort contract that lasts until year 20XX. Dividing the purchase price including closing costs by the years remaining by the points will give you the dollars per year that just the purchase price cost you (what it should be worth to you, in the event you might want to rent your points out). My number is about $3.50 per point, but for people who purchased at lower prices and earlier, it's probably much lower; people who purchased shorter term contracts like Boardwalk and Beach Club, which expire in 2042 and are still expensive (whether from Disney or on the secondary market) will have higher figures. I did a price comparison in February 2024, for example, showing that figure would be over $7 for a Beach Club contract purchased this year at then-market rates (indirect purchase), though for Old Key West it could still be under $5 depending on price. There are websites that will show you lowest cost to own and/or buy in each year. I understand Copper Creek and Bay Lake Tower are doing pretty well in that metric currently.
On top of that buy in cost, we pay yearly dues that go up yearly (as do the prices to rent, obviously). For the DVC properties in Orlando, those range from $7.33 to $9.36 this year. If you add the buy in cost per point per year to this annual dues number, you'll get a sort of break even amount (with no consideration given to opportunity loss for having spent the initial money, nor to other factors), which might range from $10 to over $16.
If you find a rental for just over $16, that's pretty good (it's probably for expiring points that the owner could not use on time). Most online services charge over $20 per point with occasional discounts, and private owners do rent them out for less (see the forums under DVC). I would guess no owners are regularly renting their points out for only a gain of $1 or $2 per point, which for most stays would mean a hundred dollars or more. They might do it in years where they are going on a different non-Disney vacation and want the money back for that year, or probably for a ton of other reasons. Only a few would be renting at a loss or small gain.
Feel free to reply if you have any follow up questions.

 

[longboard55]

Gets tricky with points when you have to cancel, I had some points I was going to lose so I rented them. Worked out fine and actually made money over the basic yearly charge

 

[Brian Noble]

What renters are telling me is that the dvc owners think they are making money by renting but they aren’t because they had to pay the initial money and they in essence prepaid for future vacations that now renters are able to enjoy and reap the benefits ?

Not quite. A typical rental does make (a little) money even accounting for the opportunity cost of the purchase. However, at typical rental rates, it's not much better than the long-term rate-of-return from a diversified stock index fund.

It is possible to do better than that, but it requires either a high-volume business that "strip mines" contracts, or booking very specific unit types and offering them as confirmed reservations for rent.

 

[Philsfan77]

I keep seeing people saying it’s a better deal instead of owning dvc just to rent dvc because as a renter you don’t have to pay the initial hefty cost of 20k + whereas renters are basically renting at just a little more than what dues are for owners. What renters are telling me is that the dvc owners think they are making money by renting but they aren’t because they had to pay the initial money and they in essence prepaid for future vacations that now renters are able to enjoy and reap the benefits ? So if this is true why do dvc owners rent them out ?

I see people say this, especially in one of the largest facebook groups, and generally speaking, I don't think they really know what they are talking about when they say it. My personal mindset is, I'm ok taking the risk (upfront cost), and have someone else paying my mortgage, than be the person paying someone elses mortgage.

Personally, we use our points, but we have had to rent out twice. My per point costs at the time I rented (Current Years dues + the value of that years points was $10.42 the year we rented out 150 points for $22 a point - roughly $11 a point made or $1,650 more than the value those points held to me). More recently we rented out 60 points and my points were worth $10.63 that year and we rented them out for $17 a point (these were expiring points from a cancelled reservation). Roughly $400 we got back for this in terms of the value those points held to me.

While it isn't the same as home ownership, elements of it aren't far off, as at the end of the day, after years of usage, I could still sell my product and recoup my full initial buy-in (plus rental costs i've made over the years - roughly $2000 ahead the 2 times we rented) and 10 years worth of vacations to Disney, and this is despite the downturn in the resale market.

The renter simply has the vacation and is out their money, I could sell today and break just about even on my initial buy-in, and be up the $2000 in rentals I made, plus the years of vacations, minus the dues we paid for the years we used our points. All-in I think I'd come out right now, down roughly $6,000 after subtracting paid dues from the years where we used our own points and didn't rent. The flip-side to that is, as out of state residents we saved roughly $1800 on annual passes the year we got them as DVC, and we've saved roughly $2500 (guesstimating here) over the years on merchandise and food discounts as DVC owners.

All-in I'd say if we were to sell today, all of the trips we've taken would (just the room stays) would have cost us around $2000 right now, that includes stays primarily in 2 bedrooms at Copper Creek, Riviera, Old Key West and The Grand Californian. We've sprinkled in some studio and 1-bedroom stays as well.

To Brian's point, investing that money would obviously be the smarter decision if I was just in it for a ROI, and then using some of that money to rent, would probably be the smarter play, but I like having the points for myself and the flexibility to use them as I see fit and be able to cancel/change vacations or rent if needed along the way.

 

[dvczerfs]

We have been DVC members for 25 years. We have never rented our points out to anyone. If I recall, it’s been some time but you are not supposed to buy points for the purpose of renting them out and making a profit. I believe we signed an agreement when we bought not to do that.
When we bought, we paid $58 per point, which at the time was one night in a value resort. I have been coming to Disney over fifty years. I bought DVC to save money on resorts I would not at the time be able to afford to stay at. All the vacations we have taken over the 25 years, we broke even about 18 years ago. My points will give me three weeks in a one bedroom at Boardwalk for $2400 per year which are my fees. Could I have stayed cheaper on rt192, sure.
Most members will rent their points because they simply can’t use them. Can’t get here to use them for whatever reason life threw at them.
If you want to invest your money for retirement or to make money, DVC is nt the place.
In a nutshell, my point value when I make a reservation is $58 in 2024. If you bought today, let’s just say at $200 per point, you are betting it will be a lot more than $200 per point in the future. Take the initial investment a good estimate in fees and tax’s and divide it by the length of your contract. That’s was your paying, approximately per year for DVC. Basic math. You will see that number change as the years go by because the cash rates go up and up.
Now, I live and work here, do we use our points like we use to, no. It’s like camping in your backyard. lol. Now, once a year we splurge and will stay in a bungalow or a WL cabin. I thought about selling them but they have been paid off for many years and $2400 a year to stay on property won’t get you to far if I were to pay cash.
People have been fighting and arguing for years over is it a value or not. It’s a commitment. If you think Disney is a faze in your life, probably not for you. For me, it’s been in my blood since I was eight. It saved me a a lot of money. The higher room rates climb, the more money I save.