Can you be a “Flex Buyer” with DVC?

In the vacation home industry, you may hear the term “flex buyer”, referring to a buyer who will use the vacation home for personal vacation use, as well as rental income. While some buyers are strictly buying vacation homes for rental income and others just for their personal use, you may find many people in the middle. These flex buyers want the rental income to help cover expenses and possibly even earn a profit. Still, they also want some opportunity to enjoy their vacation home for themselves and their family.

Economical Reasons for Buying DVC

When it comes to the economical reasons for purchasing Disney Vacation Club (DVC), the dominant answer is savings. While some have purchased strictly for income potential, that is undoubtedly a minority and likely less than 1% of all buyers. However, the number of buyers of DVC that are in the middle may be a bit higher. These “flex buyers” of DVC may vacation on some of their points for personal use and rent points at other times either to offset the costs of dues or to potentially even put a little extra cash in their pocket.

Over time, the number of flex buyers has grown and is growing, although still a minority of owners. In the early days of DVC, nearly all buyers purchasing for economical reasons would have been doing it strictly for the savings. However, as DVC evolved and retail rates for Disney premium resorts climbed, there was a realization of an opportunity to rent DVC points.

Benefits of Renting Your DVC

DVC points could be rented by a vacationer for less than rack rates but still at a high enough amount to more than cover the cost of their dues. In fact, as you can see from the chart below, published in the article, The Economics and Value of Renting Your DVC Points, from DVC Rental Store, the rental potential per point can cover the cost of dues as well as the initial purchase price when amortized over the life of ownership.

While the annualized ROI may not be overwhelmingly high, it has proven to be reliable and easy to do, especially with third parties such as DVC Rental Store. Additionally, the potential for a higher ROI is also possible. The ROI projections shown above assume the DVC contract is sold in five years at a net sum of zero. Over the past five years, the blended average selling price of DVC resales has increased by 23%, which would have more than covered the costs of purchasing and selling for most contracts. We are also assuming the contracts purchased have no banked points, which would be additional rental income.

If you find yourself in a position where points may go unused, renting has always been a no-brainer. But with ROIs conservatively approaching 7-8% for some Disney Vacation Club resorts, it may be worth considering buying additional points to offset the costs of dues and perhaps achieve some extra income.

Have questions about how taxes play into renting your DVC Points? Head over to DVCFan.com and check out Paul Krieger’s article, “Do I Have to Pay Taxes When Renting My DVC Points?”.

*Statements and opinions included in this article should not be construed as professional advice. Please consult your accountant and/or tax attorney.

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