I'm curious if anyone else here happens to own DVC points and, if so, rents them out? I've just started doing this. It isn't the "best" financial move -- I could do something better to make more money with a $15k up front investment -- but the fact that I can rent them most of the time, but then use them every few years for myself as I please, is pretty attractive to me. It will pay for itself, if I rent them all, in 12-15 years.

Just curious if anyone else happens to do that -- or with some other timeshare (although DVC is a bit unique in how they work, so it isn't like a normal timeshare situation).

- John...

John, I apologize up front for quasi-hijacking your post, but I have a question for anyone who has timeshares.

First, background of why I'm interested: my parents own a considerable amount of time shares. I'm not sure exactly how much, but I know it's a lot. They get something like 6 weeks of time per year in some pretty nice locations.

They're in their mid-70s now and wanting to exit. They're finding it problematic. First reason: maintenance fees are clobbering them. Second reason: they don't use them as much any more. Third reason: none of their kids (me included) wants to become time share owners due to the aforementioned continually climbing maintenance fees. Fourth reason: the resale value on them is terrible.

I've done some research on getting rid of time shares because selling them seems almost impossible, unless you have a super HOT location. Disney probably qualifies for super HOT...so this may not apply to John's scenario.

But here's the crux: I have read that many time share contracts require owners to tie the time shares to their estate to ensure perpetual payment of the maintenance fee. Ergo, if I want to inherit ANY of my parents' estate, I have to agree to inherit ALL of it, including the time shares.

My understanding is that this is the time share model: lock in the ownership for lifetime, unless it gets sold. Then gradually "bleed away" the estate and transfer the ownership and bleeding to the next generation.

I've thought about ways to get rid of them. Could I find someone who is on a fixed income that the time share companies could not sue if they failed to pay the maint fees and transfer the ownership to that person in exchange for me paying them $1,000? Does the contract stipulate that the timeshare company can undo any transaction of title if the new owner is not capable of paying the ongoing maintenance fees?

Anyone who knows about that stuff, let me know. John, how is your DVC set up regarding maintenance fees? Do you know if/when/how you are allowed to transfer title to them if you decide some day you don't want them any more? Are there any qualifications the new owner(s) must meet to get you out?

Sid,

I've read that about timeshare and estates. I don't understand how the law allows the timeshare companies to encumber the children of a signator.

If a person dies and owes more than the estate is worth, the debts die with the estate. The children/heirs are NOT required to pay the debts so long as they didn't establish ownership by paying the debts previously. That is why lawyers advise people NOT to pay any of the debts for their parents if they are seriously ill - or at least not out of their own funds. They also advise that if you are an authorized signer on a credit card, don't use it once the person who owns the card is unable to use/pay it themselves.

So, DVC are indeed a bit different. Basically, you buy into a certain number of points for a specific Disney resort -- and each resort has a set expiration date. I bought Saratoga Springs -- which all expire in 2054 (and Disney gets complete ownership back).

Disney resale has been fairly steadily increasing in value every year. What cost $80 per point on the resale market 10-15 years ago is now at at least $100/point.

Maintenance fees have also risen, of course -- anywhere from 0.5-3% per year. It fluctuates based on expenses (such as renovating units, new roof, and so on).

Also, Disney has the Right of First Refusal for all after-market sales. In general, they buy back anything that goes for "too cheap" (currently anything under $97/point gets bought back by Disney). This also helps keep the value higher.

So, because DVC is so different from a normal timeshare, I'm not sure I can help you much, Sid, sorry.

- John...

Barb, I need to clarify something... what you said is TRUE. The time share companies cannot encumber ME...UNLESS I agree to inherit their estate.

Example. My parents have a home worth $150,000 and time shares with annual maintenance dues of $5000. Let's say for simplicity purposes that's all they have. They name me as their sole heir to inherit their house upon death.

I have two choices upon their death:

1) Take both the house and the time shares.

2) Refuse both the house and the time shares, at which point the time share company takes ownership of the house.

I think it's legal because it is my parents who signed the contract basically making the time share company "heirs" via the requirement to pay the maintenance fees until the time shares are transferred to another owner.

My fear is that neither my parents nor I (if I chose to inherit them) can just give them away or sell them to anyone. I remember when we accompanied my folks on a stay at their time shares once the company invited us to hear a presentation, but first we had to prove we make more than $50K per year.

Oh -- and if you don't pay your maintenance fees, Disney forecloses on you. There are people that just deal in DVC foreclosures to try to get good deals -- but it is a complex situation. Plus, Disney tends to buy most of those back themselves which, again, keeps the resale price pretty decent.

- John...

Sorry, John I don't I'm not familiar with DVC.

But Sid, I always heard that an heir just had to refuse to accept the timeshare and the company could not force them to. It might be time to lawyer up and ask someone who has experience in that...a good estate lawyer.

JB, yes you are correct just like I think Barb is correct, but I think both of you MISSED MY POINT. Let me try once more.

No one can FORCE ME to do anything. BUT...here's the catch: it's all or none. I either take the WHOLE estate (including the time shares) or I take none of the estate and it gets gobbled up via the time share. If I want Mom and Dad's house and money, I have no choice but to also take the time shares and the maintenance fees that go with them.

Basically, I think time shares have done something similar to the old feudal concept of entailment, where a piece of real estate gets perpetually encumbered and the owner can do anything with the property...except get rid of it!

So YES! I can refuse the time shares, but there is no scenario where I can refuse the time shares but still take the house.

I think what happens is many heirs decide they want mom and dad's estate (house, money, stocks, etc) in spite of the requirement to also take the time shares, so they VOLUNTARILY accept the time shares figuring "What the heck? We might use them and just sell them later..." only to realize 20-40 years later after the fees have quadrupled that now their personal estate and heirs are likewise stuck with the same dilema.

Pretty genius on the time share companies, isn't it? Sell a product that has a fee attached to it that will be paid...forever...because only people with a certain amount of wealth can own it. The only down side if no one agrees to take the Deed as an heir is you get to take someone's entire estate. The time share company wins either way. If I were a time-share lawyer, that's how I'd write the Deed. Bullet proof. Perpetual income for them.

John -

I've got friends who own DVC memberships, but they all seem to use them. We've discussed it a time or two, but while we've enjoyed the Disney properties a couple of times, we aren't crazy for Disney. I figure the next time I do Disney I'll have grandchildren that are at least 5 or 6 years of age - and I don't currently have any.

DVC is it's own critter.

As for the regular time shares that Sid brings up, that seems to me that a good estate planner can find a way around it. Between trusts, TOD, etc, it should be possible to plan to have nearly nothing that is left in the estate for the timeshare company to go after.

We are probably going to add one or the other of our now-adult kids to our title on the house, as a beneficiary deed. In Missouri, we can do a beneficiary deed that is revocable and does not actually convey the deed until both of us are gone. It circumvents the estate/probate process.

JB, I hope you are correct.

My parents recently were talking with a time share rep about exiting the program, and they called me up and I talked to her. She said, "You can't refuse these things." Me, being the no B.S. person I am, basically said, "Oh yeah, prove it!"

She went off into a spiel that ended when I finally told her to stop abusing my parents and pass the phone back over.

But then I started thinking about it. I researched the term "perpetual inheritance", and while I didn't find a smoking gun, I found stories similar to what I've described.

Maybe it's all B.S. Maybe time shares just rely on intimidating folks who are too meek to fight them. I am not meek, but I also know that the freedom to contract exists. As long as someone is of sound mind and legal age, why would it be illegal for them to agree to encumber their estate? We have other terrible products that do similar things, such as reverse mortgages. Heirs who wish to Mom and Dad's house must pay off the mortgage, or the house goes to the lender, right?

Also, as I mentioned earlier there companies that exist for the sole purpose of "getting out of time shares." If these contracts are illegal, why the need for companies like this? I think it would be simple to declare the contract void. *shrugs

SID:

Here's a thought. To avoid timeshare issue, have your parents create a trust and move ALL of their assets into it so that the only thing that would be in their estate are the timeshares. Have them rewrite their will to exclude all family members from inheriting anything from the estate, or have them name every timeshare as the benefactor of the estate. The trust would just pass down bypassing probate depending on how it's structured.

Well, this really got off topic. :(

I'll try again another time to see if anyone wants to talk about the DVC ones. They are very different. They go up in value and are easy to resell (within a week usually). They are nothing like what we're now talking about here, luckily. No one is afraid to inherit them. :)

- John...

On a side note, DVC points rent for about double what their annual maintenance fees are.

As an example, if you bought 100 points for around $10,000, they would cost you around $600/year in maintenance fees or you could easily rent them out through a broker that handles most of the work for $1300/year.

- John...

John [MI], did you get that info from the DVC or open market research? If you can rent it out and get $700 back, that is excellent result in comparison to other Timeshares/points systems..

Sid I just re-read your message of the phone conversation with the lady from the time share. Your parent are being bullied by the lady representing the timeshare. Plus there are other ways to describe the treatment of your parents by the timeshare but I can not mention it here or my message would not be posted.

Sid If I was in your shoes like I mentioned in your other post I would seriously consider quit claiming deed the time share to the HOA company or the company that transferred the timeshare to your parents. Record the quit claim deed before you send it to the HOA or what ever the company that your parents deed the timeshare.

elliot: That's my own reseaerch and is easily verifiable. I'm not buying from Disney (where you would barely break even in renting them out). I'm buying it after-market.

Again, DVC points are very different from other timeshares. There is currently no problem renting them out -- the market is huge.

Also, they have consistently been going up. Two years ago, they rented out for $11 per point. Today it is $13 per point. And that is my income AFTER the commission is taken (the company gets $3/point as their commission -- so they are actually renting them out for $16/point). And, again, my maintenance is right around $6-$7/point.

Disney works hard to keep the prices high. They buy back anything that drops below market value by more than a dollar or two per point.

- John...

How can we timeshare our rentals to renters ? Not a rent to own... but they could move fron my rental to yours and perhaps a dozen others but not to anyone who isnt in our group.? Forever renters. Forever and ever

15k is not a huge amount to lose if it doesn't work out. I suppose that if you can't rent them, you could use them every year.

I'm not interested myself, but since you have already invested, come back in a couple of years and let us know how well it has worked.

I should mention that I'm very familiar with DVC before buying these. My Dad owned them for many years, so I get how they work and such. He just always used them and didn't rent them. I've been considering doing it for years, but we finally made the offer to purchase this week. Hopefully, it goes through -- it just needs to pass Disney's First Right of Refusal. If they don't buy them back, then we're all set. I should know within a month.

But, yes, I'll let you know how it goes in a few years. Our currently plan is to rent out all of the points through the 2020 year -- and then, after that, we'll likely rent enough just to cover the maintenance and then use the rest as we please. Then, on years when we don't feel like going, we'll rent them all again.

To answer your question -- it is not easy to just give you one number. The great thing about DVC points is that you can use them for different size rooms at different places at different times through the year -- and the number of points per night varies.

For my wife and I, we'd just want a studio/1-bed and our favorite resort is Animal Kingdom. So, there, with our 130 points, we could get 9-12 nights most of the year (it depends a bit on the season). A few nights less if I wanted to get a Savanna view room so that I can look right out at a giraffe in the morning. :)

Or, it'd do 4 nights in a 2-bedroom villa that sleeps 8 at Saratoga Springs. So, there is a lot of flexibility.

- John...