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Gregory Bottaro
  • Stamford, CT
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Has anyone tried using Vacation Points for Rental Income?

Gregory Bottaro
  • Stamford, CT
Posted Aug 29 2014, 15:10

I recently sat in a sales presentation at a Marriott Vacation Club so I could earn a free trip snorkeling on the catamaran. As I sat there listening to the sales pitch I had a lightbulb go on and I wanted to find out if anyone else has come up with the same idea, or if anyone has tried it. I'm new here so I'm sorry if this has been discussed, but Brandon invited me to post this here: 

Marriott now sells "Vacation Club Points" instead of timeshares. You don't purchase a deed to a specific property, you purchase the deed to a number of points. With those points you can then "rent" a vacation property that is part of their network. The points renew each year, so if you buy 1000 points, you have 1000 points to use towards vacations each year. You are essentially participating automatically in a property exchange (like Interval International if you are familiar with timeshares). With Marriott now you don't need to be a part of II, you simply buy points and turn them in when you want to go somewhere. 

There are 3 levels of ownership depending on how many points you own. The highest level is Premier Plus, for people that own over 13,000 points. The advantage of being a Premier Plus member is that you are treated like a king when it comes to reserving a property. You have first dibs on any property you want, 13 months in advance. 

The concept is this: You reserve the highest valued property well in advance. Then you rent the week to someone else, using airbnb, craigslist, or redweek.com (which is created for this purpose), for a profit. The highest week on redweek goes for $12,500 that I saw. This week is at the Ritz on St. Thomas over over Christmas. To rent this week as a Premier Plus member costs 6,000 points. If you bought 13,000 points to become a premier plus member, you can rent 2 villas at the Ritz over Christmas week (costing you 12000 points), and then rent those 2 weeks out for $12,500 each (earning you $25,000). You can also bank points for 3 years so with your excess (extra 1000 points/year) you will have 3000 points after 3 years to rent a different week to re-rent, or double the whole scenario so that every 3 years you'll have 6,000 points and be able to reserve a third week earning an extra $12,500 that year. 

There are maintenance fees associated with the points. You have to pay 45 cents/point each year. This equals $5,850 if you bought 13,000 points. Of course there are income taxes to figure in, as well as interest if you take out a loan for the points up front. Other than that though, how is this structure different from rental property other than not dealing with depreciation on a brick and mortal house, or bad tenants? (Marriott is fully supportive of this use of points. They also said that they take the credit card of the vacation renter upon checkin to pay for added room charges and liability). This seems like a huge improvement on the rental income game. Any thoughts?

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