Selling Contracts vs Renting Out Points

[Gr8scott]

After many years of DVC ownership and having multiple contracts at Bay Lake Tower we’re weighing our options of either renting out our points vs selling outright. We realize there are tax implications of both and realtor commissions should we sell, but curious to hear what else to consider from the financial side of things. We likely will go through a broker should we decide to rent out and appreciate anything we should consider in doing so. We don’t know what we don’t know, and are looking to avoid surprises in either scenario. Any information you can provide is appreciated.

Apologies if posting in the wrong forum so mods please move to where appropriate.

 

[zavandor]

Do you have a blue card? If you do, maybe keep at least enough points to keep it, it would be much more expensive to qualify for the card later. Are your points unrestricted? In general, I wouldn't recommend to keep points if you don't plan to use them. It's not a very good investment, better to sell and invest the money otherwise. If you think you might use them in the future and you have direct or unrestricted points, then it may make sense to keep them.

 

[Gr8scott]

Do you have a blue card? If you do, maybe keep at least enough points to keep it, it would be much more expensive to qualify for the card later. Are your points unrestricted? In general, I wouldn't recommend to keep points if you don't plan to use them. It's not a very good investment, better to sell and invest the money otherwise. If you think you might use them in the future and you have direct or unrestricted points, then it may make sense to keep them.

Yes, Blue Card and Unrestricted Points but if I sell I highly doubt we would re-purchase contracts later.

 

[Disney_escape]

Not sure of the rental numbers, but if it is $18 (Davids rental I think) minus yearly dues= $10 bucks roughly to you, if you net $145 per point selling (after fees) then you are looking at 6.9% income stream off of the sale price, plus possible future value growth on your points. And if you want to go back to Disney later you have the points still.

 

[RoseGold]

If you're over it, there's something to be said to just selling and moving on. Renting is hassle, and you're supposed to report that income too. The agencies issue tax forms for rentals, or at least they should.

 

[cvjw]

We ran the numbers last year on our BCV contract. We decided to sell. We had rented the points for a few years before selling. We rented thru a broker, so they did all the work. I just got tired of renting and worrying about being on the hook if a renter damaged the room. We have no regrets, but we had already sold 2 other contracts - so we are almost out of the Disney business. And totally OK with that decision!

 

[kmc8826]

After many years of DVC ownership and having multiple contracts at Bay Lake Tower we’re weighing our options of either renting out our points vs selling outright. We realize there are tax implications of both and realtor commissions should we sell, but curious to hear what else to consider from the financial side of things. We likely will go through a broker should we decide to rent out and appreciate anything we should consider in doing so. We don’t know what we don’t know, and are looking to avoid surprises in either scenario. Any information you can provide is appreciated.

Apologies if posting in the wrong forum so mods please move to where appropriate.

If you haven’t tried renting I would do that first. As long as you are going through a broker it is a pretty painless process and getting money for minimal work is always nice.
I have sold two contracts. It also wasn’t difficult. At that time I was just unhappy with the resorts I had bought and wanted a change. Although both renting and selling have tax ramifications obviously more so with selling.
From my casual looking at it (I have a BLT resell I have thought about selling) now is not the best time to sell…unless you are certain you want out.

 

[RAD]

You might want to just hold onto them for awhile, unless you want the money now. I say this because a couple years ago I sold three BWV contracts, which sold in less than a month and had multiple offers. I decided to sell my last contract and listed it in August, as of 12/22 not one single offer had been made. Might be due to interest rates going up, fear of what the economy will be doing the next few months, or folks saying enough with all the WDW price increases. Also, when I listed the broker I'm using had 42 BWV contracts for sale, as of this morning there are 58 listed.

 

[Brian Noble]

we’re weighing our options of either renting out our points vs selling outright.

It seems like you are viewing this primarily as a financial decision.

If it were me, I'd make the decision based on my expected future plans. If you are taking a break (even an extended one) from Disney, then renting makes a lot of sense. If you are not planning to come back in the foreseeable future, sell.

This is based partly on finances--every time I look, the after-tax return on renting is comparable to (or less than) the expected after-tax return on a low-fee broad-based index fund. But it is also based on effort and risk. Even through a broker, renting takes a little bit of work each year. Renting also is subject to changes in demand--the rental market has been overheated for the past few years. Will that continue? Maybe, maybe not.

 

[undchefreak]

Since you have multiple contracts, you can always put your toe in the water and list one contract for sale to see how the market is for your resort. I only have one contract, but for you it doesn't need to be all or nothing. I think smaller contracts sell faster, so maybe one of your smallest (if they are different sizes).

 

[StarCruzer]

You might want to just hold onto them for awhile, unless you want the money now. I say this because a couple years ago I sold three BWV contracts, which sold in less than a month and had multiple offers. I decided to sell my last contract and listed it in August, as of 12/22 not one single offer had been made. Might be due to interest rates going up, fear of what the economy will be doing the next few months, or folks saying enough with all the WDW price increases. Also, when I listed the broker I'm using had 42 BWV contracts for sale, as of this morning there are 58 listed.

A recession + steadily rising DVC prices for the last few years is the likely culprit on this one, though still a surprise. We bought DVC about 4 years ago and there's been over 40% increase in price per point at the resort we bought at. Not sure if a 10% increase in value per year is normal for DVC.

 

[Robbie Cottam]

I maintain that I have always made money renting points.

If you rent and next year you want to use the points they are available.

If you sell, next year you will be a renter.

I have never used a broker. I use a contract. Even with covid, the amount of work it took me was not enough to even give it a value.

That having been said, there are risks in renting.
If you don't like taking risks. Sell.

If you want the flexibility of still owning and maybe going again.
Rent