Why Buy when you can rent?

[gcbsdad]

I am a very happy DVC owner of 210 points at SSR. Someone I know asked the question to me, why they should buy if they can rent points for around $10.00? I told them that the rental $$ can go up substantially over the years and I am locked in.
Is there anything esle that I am missing?

I think they really want to buy but they need convincing.

[deedeetoo]

How about the risk associated with renting. We thought about renting first. The cost seemed reasonable and we liked the accomodations. But we couldn't get past the trust factor. Unless you know the person you are renting from, you are sending money to a stranger that you met over the internet and are trusting them to make a reservation for you. Sure you can get a contract, but if you show up at WDW and don't have a room, you can't sleep in your contract.

We just couldn't bring ourselves to do it. This is why we started looking at buying.

[Chuck S]

How about the risk associated with renting. We thought about renting first. The cost seemed reasonable and we liked the accomodations. But we couldn't get past the trust factor. Unless you know the person you are renting from, you are sending money to a stranger that you met over the internet and are trusting them to make a reservation for you. Sure you can get a contract, but if you show up at WDW and don't have a room, you can't sleep in your contract.

We just couldn't bring ourselves to do it. This is why we started looking at buying.

I agree with this, if I were not a member, I would not rent from one...it is just beyond my comfort level. I'd travel less or stay at a value through Disney. From a renters prospective, it would just be too risky for my personal tastes. And I know that 99.99% of member rentals go off without a hitch, but with my luck, I'd have the one that goes wrong.

[Figment2]

How about the perks? Renters, technically, are not due any of our perks (free valet, discount at restaurants, etc). Then there is the major perk (as far as I'm concerned) the discount on my AP.

Cyn

[Plutofan]

Disney can change the renting rules when they want or a taxing authority can decide to step in. If either of these happen the rental rates will go up and by that time the price to buy may have increased.

[fishermouse]

You can ask that same question about a house or car even furniture. Personally I like owning my own "STUFF". It's paid for up front, except dues, I doubt if points will go for $10.00 much longer. Especially with DVC cutting down on transfers. Nothing wrong with renting if that's what you like.

[eileenkeeney]

I was pondering this question today, as I am considering buying more points at a different resort than the one I now own.

Buying in is one type of risk (loss on my investment due to decreasing value or my lack of opportunity to use my points and loosing them in some future year) , and renting from someone else is another type of risk (stressing about it from the time I make the reservation to the time I check in). .

I prefer the long term risk to the short term rental risk.

There is not a lot of difference between what these points cost an owner and what they rent for. There is a much greater difference between the cash price and the cost of using points.
Currently there is an abundant suppy of points for rent.

Maybe the ideal situation is to own a small contract (if one can get one, since these are the ones most often rofr'd); and to rent via point transfer.
What I don't know, is how many of the available points to rent are from owners who can do a transfer (due to not splitting a years points to rent between multiple renters).

[disney junky]

As an owner, we are free to do what we want. As a renter, you are at someone else's mercy. I love knowing my options. I agree with everyone else. There is that trust factor. Can't get past that.

[MonkeyPants]

if you are a die hard disney fan and plan to go every year or what not then its still a value.

will be using simple math to make it easier

I bought 150 at SSR..price roughly 15,000

dues (figure 50 years at 4 a point ) 150*4 a point *50 years = 30,000

total price 45K

now take renting

150 points costs 1500 (that is if points stay at 10 a point for renting)

factor in the 50 years and it = 75,000 (30K more then if renting points)

sure its simplified and there is no guarantee that dues wouldnt go higher or that you'd use all point every year (but many of us know we are more then likely to use them)

IMO over the long haul owning is cheaper then renting which is cheaper then book via travel agency or disney directly

[Granny]

I am a very happy DVC owner of 210 points at SSR. Someone I know asked the question to me, why they should buy if they can rent points for around $10.00? I told them that the rental $$ can go up substantially over the years and I am locked in.
Is there anything esle that I am missing?

I think they really want to buy but they need convincing.
If they aren't sure of wanting to vacation at WDW for the next several decades, then renting might well be a better option for them.

On the other hand, if they rent for a few years and then buy into DVC they will be kicking themselves for not buying sooner!

If they're not sure, renting is a good way to go to get the DVC experience without the commitment. My guess is that if they enjoy it a lot, they'll want to buy in eventually. :)

[bom_noite]

I have posted my thoughts on Rental Rates a few times in the past.

One way of forecasting Rental Rates is by comparing that to the Rate of the room. Logic would tell you that as Rack Rates go up so will the Rental Rates.

But, that has not happened! In the 3.5 years I have been an owner and haven lurking around here I have seen the rates hold steady at about $10 per point.

So, not only has the WDW rate increases not affected them, but, inflation has not either! Something else must be involved?

Obviously that is supply and demand. Each year DVC has increased it's membership by 10K to 15K members. Assuming 20% rent points annualy, that is another 2K to 3K folks who are cabable of renting points. Regardless, do we have another 2K to 3K potential buyers?

Renting DVC points is certainly not something that is well publicized. Prior to buying if you offered me a room at 50% of WDW's Rental Rates I think I would have smelled a rat!

My theory is that Rental Rates will continue to hold steady in the short term (1 to 3 years). In the long term they will creep up with inflation. At some point it is possible that more people will see the huge descrepency between WDW and Rental Rates. This will cause increased demand and at that point Rates will increase some.

How is that for a theory?

[salmoneous]

I am a very happy DVC owner of 210 points at SSR. Someone I know asked the question to me, why they should buy if they can rent points for around $10.00? Part of the issue is that you can't count on renting for $10/point. People get $10 if they are lucky, if they wait around and pounce on a deal, if they are flexible, etc.

But if you make all your plans, and then just want to line up some points that fit into your plans, and you want to go ahead and book something NOW, you're probably going to have to pay substantially more than $10.

And if you want to go at a popular time where you need somebody to book you at exactly the 11-month window - or better yet, have already made a reservation for the now-sold-out time you want, you are going to pay even more.

[Dis-best]

There is one more thing to consider. After using your DVC for 10 years and selling it for the same price that you paid than you stayed at Disney for free. Also, if you purchased one of the premier DVCs (ie: BCV), where the resale value appreciated, than that is even better.

[3DisneyKids]

As a former renter and now owner, this was my dilemma as well. I rented several times successfully--never got burned or even close to it. Each transaction was smooth.

However, the risk for me was about cancelling and control. If something happened (and with 3 kids, something ALWAYS happens... :rotfl: ... ) my money would simply be gone if it was at all close to the time we were supposed to travel. And even if it was still far out from the travel date, I would have to call the owner, see about getting dates changed, etc.

Renting can be a great solution on both ends, but you have to be iron clad about your dates and hope like heck nothing gets in the way off your trip.

For us, we knew that we would want a couple of trips each year, so it makes great sense.

[bom_noite]

There is one more thing to consider. After using your DVC for 10 years and selling it for the same price that you paid than you stayed at Disney for free. Also, if you purchased one of the premier DVCs (ie: BCV), where the resale value appreciated, than that is even better.


That is a great point, thanks for bringing that up - as it is one of my usual rants!

In May, 2003 (not 1993 as originally posted!) we bought 150 BCV pts for $84 per point, but, took advantage of an offer where DVC reduced it $10 a pt if we gave back our first years points. So, it worked out to be $74 per point.

Thus, our cost was: $11,800. We Paid cash - so no interest.

Now, we can sell those points for about $96 (conservative - would ask $100):$14400.

Lets not forget Dues though. I would think we have paid in approximately $2200 in dues.

Thus, the equation is:

Costs: $11,800 (Purchase) + $2200 (Dues) = $14,000
Assets: $14,400 (Equity)
Profit: $400

And, oh, by the way - for my $400 in profit I was allowed to stay in rooms that I calculated would have cost me $13,000 (I did not have all of the rack rates - so I estimated conservatively and actually came up with $13,300).

In all, over the 3 years we have used 450 vacation points. The renter would have paid $4500 to get the rooms I did.

Ok, I got lucky and bought at BCV that has gone crazy in resales. But, one of the things I usually harp on is this:

In every cost/benefit analysis I have seen the analysis does not consider the points bought as an asset. Rather, the analysis assumes that the asset will be used through 2042/2052. Barring a major disaster in the world / US economy, that Asset will continue to appreciate in value. I could sell tomorrow and be Very Dumb, Extremely Fat and One Happy Duck!

So, if you look at it in those terms - who has the advantage?:

Renter: (-$4500)
Me: (+400 and $13,000 in Vacation Rooms)

I would love to see others do the same type of analysis! Those that bought years ago and those that bought last year. I may start a post on that if no one picks that up here.

Or, if someone can point a thread or orther resource that shows:

Historical DVC Purchase Prices
Historical DVC Resort Rack Rates
Historical Dues

I will do it for every resort and for every year.

[dianeschlicht]

How could you have purchased BCV in 1993?!?!?!?!? OKW was not yet completed then, and BWV, VWL and BCV weren't even on the map yet.

[bom_noite]

How could you have purchased BCV in 1993?!?!?!?!? OKW was not yet completed then, and BWV, VWL and BCV weren't even on the map yet.

Bought on Speculation. In fact, we also own 200 Contemp points!

Sorry, I meant 2003. Will edit the post so it is not confusing!

[crisi]

Here is mine:

150 BWV points in 2002 for $63 = $9450

Another $500 (approximate) closing costs (resale puchase) = $9950

Average $4.50 in dues for 4 years (2003, 4, 5, 6) = $2700 = $12650

Sell today for $93 (conservative) = $13950

Less 12% commission to reseller = $1674 = $12276

Current Cost of DVC (to date, three vacations, 20 nights) = $374

[bom_noite]

Current Cost of DVC (to date, three vacations, 20 nights) = $374

So you are -$374 (+ 20 nights at WDW) and the Renter is -$2000.

Interesting!

[Plutofan]

What you need to remember is that the assumption is that you will sell before the price starts to decline. You are also assuming inflation on room rates will keeps the resale value high. Also you are assuming that Disney will continue ROFR. If for some reason Disney stops ROFR or if Disney lowers the floor this will have a big effect on prices. The analysis that people are posting is only valid if you intend not to hold it until the lease is up. At that point you own nothing. Also people are a little to high on the resale prices that they are using. You should really use actual resale prices that are being posted on the three big resale boards. The going rate for commissions from what I have benn told is 10%.

[bom_noite]

"Also people are a little to high on the resale prices that they are using. You should really use actual resale prices that are being posted on the three big resale boards."

Found on Timeshare Store (Sale - Pending):

Notes: 32 points coming on 12/1/06 and 70 points coming on 12/1/07. Priced at $98 per point.

I have 8 pts now, 150 coming 12/1/06 and 150 coming 12/1/07.

My wife and I LOVE OKW - so - we have actually thought long and hard about selling our 150 BCV and buying 230 OKW.

If I called Mr. Yeary today I would start the bidding at $101 and not settle for less then $99. In my analysis I assumed $96 (but, in fairness did not consider the resale costs associated - nor the opprotunity cost of my investment and dues).

And, I hear your point and agree with it. But, this is another way to do the analysis. Instead of looking 36 years in the future - what is the net +/- today! And, I think the numbers show that Crisi and I are way ahead of the Renter.

[Dis-best]

"Also people are a little to high on the resale prices that they are using. You should really use actual resale prices that are being posted on the three big resale boards."


I know about the Timeshare Store, but can you post the other two retail stores?

[fishermouse]

Even with all the rationalization no time share or "vacation Club" can be considered a great finacial investment, unless you buy/rent enough to make a yearly profit of at least 6%. IMO we don't buy for profit we buy for the convienence and the knowledge that we can vacation when we want at a place we really enjoy at areasonable cost. The money spent on DVC if invested wisley would profit far more than anything you can make on renting or selling. It's for the vacations and DISNEY MAGIC we go several times a year with DVC I know this would not happen if I did not own my little piece of Disney.

[bom_noite]

I know about the Timeshare Store, but can you post the other two retail stores?

I think they are:

***********: Who had no BCV contracts posted.

atimesharestore: Who had 7 BCV contracts that were being offered at an average of $98.57 per point. The offer prices were: $99, $100, $99, $98, $101, $99 and $94 (Pts not available until 2008). Without the $94 pt contract the average was: $99.37.

Based on that, I may amend my thought: $102 to start and settle for $100.

[Plutofan]

"Also people are a little to high on the resale prices that they are using. You should really use actual resale prices that are being posted on the three big resale boards."

Found on Timeshare Store (Sale - Pending):

Notes: 32 points coming on 12/1/06 and 70 points coming on 12/1/07. Priced at $98 per point.

I have 8 pts now, 150 coming 12/1/06 and 150 coming 12/1/07.

My wife and I LOVE OKW - so - we have actually thought long and hard about selling our 150 BCV and buying 230 OKW.

If I called Mr. Yeary today I would start the bidding at $101 and not settle for less then $99. In my analysis I assumed $96 (but, in fairness did not consider the resale costs associated - nor the opprotunity cost of my investment and dues).

And, I hear your point and agree with it. But, this is another way to do the analysis. Instead of looking 36 years in the future - what is the net +/- today! And, I think the numbers show that Crisi and I are way ahead of the Renter.

I know that you can get your price for the BCV. I believe that it would be very difficult to get $93 for Boardwalk. I just saying that everyone needs to come up with their own research, own assumptions and look into every number to make sure it is applicable to their situation.

What I was saying is if someone is not planning on selling then they need to look at things differently than a person who is only going to keep DVC and then sell it before it expires.

[Plutofan]

I monitor all three resales boards daily. One thing that concerns me is that there are a lot more contracts up for sale now than usual. It would be curious to see if it is because of the rule changes, or normal this time of year or if it is because a new DVC may be announced. I have some experience in the resale market since I have bought 5 resale contracts this past year and have gotten what I consider good prices and I am also in contact with the top four DVC resellers.

[crisi]

What you need to remember is that the assumption is that you will sell before the price starts to decline. You are also assuming inflation on room rates will keeps the resale value high. Also you are assuming that Disney will continue ROFR. If for some reason Disney stops ROFR or if Disney lowers the floor this will have a big effect on prices. The analysis that people are posting is only valid if you intend not to hold it until the lease is up. At that point you own nothing. Also people are a little to high on the resale prices that they are using. You should really use actual resale prices that are being posted on the three big resale boards. The going rate for commissions from what I have benn told is 10%.

Yep. We didn't buy intending to resell in the short term, so short term resale values weren't a factor in our ROI calculations - it was long term "will we break even" I look at resale values as gravy.

But we did do some simple calculations based on "what if we had to sell in a year, two years, three years." At that point, we were told by our resale broker that the commission was 12% (we didn't buy from Tom and it was several years ago now). We figured if we needed to dump in the first few years - we wouldn't break even, but after about three - even if resale prices had stayed stable, we'd break even if we added in the "value" of a Deluxe hotel room for our stay. We didn't factor renting - I wouldn't do that, too much risk and bother.

[Plutofan]

Yep. We didn't buy intending to resell in the short term, so short term resale values weren't a factor in our ROI calculations - it was long term "will we break even" I look at resale values as gravy.

But we did do some simple calculations based on "what if we had to sell in a year, two years, three years." At that point, we were told by our resale broker that the commission was 12% (we didn't buy from Tom and it was several years ago now). We figured if we needed to dump in the first few years - we wouldn't break even, but after about three - even if resale prices had stayed stable, we'd break even if we added in the "value" of a Deluxe hotel room for our stay. We didn't factor renting - I wouldn't do that, too much risk and bother.

I agree. I am just surprise the prices that people get on the resale boards. When I was looking for a VWL contract I was shocked to find out that I could buy through Disney, not have to worry about ROFR for just a fracation over what people were asking for resale after factoring in commissions. With Disney I could have gotten banked points, no commission, pay a fraction of current year MF (Disney prorates) and pay with a credit card and get 2% of the purchase price. Disney had the points in inventory at that time. I just have a hard time paying some of these high prices.

[mitzelf3]

I think that most renters are comparing the savings of renting to staying at a Disney resort, not to buying into the DVC. Renting is definitely cheaper than paying rack rates to stay onsite, so it is a great deal. Also, the initial cost of joining the DVC is significant, and beyond many folks' budgets, where paying to rent points, one vacation at a time, is not as great an expense.

[crisi]

I think that most renters are comparing the savings of renting to staying at a Disney resort, not to buying into the DVC. Renting is definitely cheaper than paying rack rates to stay onsite, so it is a great deal. Also, the initial cost of joining the DVC is significant, and beyond many folks' budgets, where paying to rent points, one vacation at a time, is not as great an expense.

Yep. And its MUCH less of a committment. When you buy DVC you are really committing to regular Disney vacation - for at least the several years it will take you to make your money back (though I've heard stories of people who have made DVC work for one big family reunion trip and then resold it). But if you can afford the committment, and are making it, I think you are better off over the long run with a purchase - less risk, more control - and points can't rent for $10 forever.

[tixx]

renting point for 8-9 is not hard it very easy i see no reason to own anymore points than the bare minium, to be able to be in the system carrying more point than that is just a luxury item never confuse luxury with saving money...

now as far as just renting point i think its a great little known way enjoy ejoy a nice Disney vacation with spending 20k upfront

I will leave it to a board accounant here to show you the cost of money vs. the cost of renting...at $9.00 per point they are very very close

[tixx]

Even with all the rationalization no time share or "vacation Club" can be considered a great finacial investment, unless you buy/rent enough to make a yearly profit of at least 6%. IMO we don't buy for profit we buy for the convienence and the knowledge that we can vacation when we want at a place we really enjoy at areasonable cost. The money spent on DVC if invested wisley would profit far more than anything you can make on renting or selling. It's for the vacations and DISNEY MAGIC we go several times a year with DVC I know this would not happen if I did not own my little piece of Disney.


I am in total agreement, andto think some peole in know put there deposit on a 9% visa card and they think its a good idea

[bom_noite]

Yep. And its MUCH less of a committment.

I agree with what everyone is saying, but, I think this post (and others in the past) are saying: "How do you justify to a Renter that buying in as good as owning?"

Based on that, I think the analysis we have provided answers the question posed by the OP and provides a counter argument to the renter: "If you are going to go to WDW every year it makes more sense to buy then rent!"

The point of my analysis was this: If you plan to go every year (or every other year) and rent - then - you are not better off then people who bought. In fact, you are behind. And, I would invite anyone to look at the numbers that Me and Crissi put forward and argue different!

I think if you plan to go every other year or every 3 years, then, IMHO it still makes sense to buy a smaller contract and bank/borrow!

If you go once in a blue moon - not economical - renting is the way to go! But even then a DVC membership could make sense:

My boss, last year, made his "once in a lifetime" pilgramage to WDW. And, he took his family and his wife's family! 12 in all! I tried to explain he could rent a OKW GV (using the Disboards), save a ton and be more comfortable!

I offered up the suggestion twice - and both times he changed the subject. Was not my money, nor my vacation and I am not one to force my opinions (unless I am posting here - hehehehe!).

He rented 5 (count them: 5) rooms at POR! He spent a mint (I have to guess 4K minimum)! And, then said to me afterwords "the rooms were just average!"

And, after all that I could argue that he could have: 1) Done his homework, 2) Bought a loaded contract with Banked/Borrowed Points, 3) Used the Points on a GV and 4) Sold the contract after the points were used!

In the end he would have saved a few 1000!

[salmoneous]

Just as a side note - when looking at current resale prices to see what a 100+ point contract would sell for, be sure to thrown out any contract with <100 points. There is a significant price premium for small contracts.

[doubletrouble_vb]

I think owning is superior to renting right now only if you plan to go to Disney annually. Otherwise you may be paying a slight premium by renting but the lack of commitment to a timeshare is rather handy. If you go three or four years in a row and never go again you are golden. When I bought my VWL the $10 price point left a reasonable gap for paying on the principal (if you had one). Today I dunno... I think that's why you have more people making reservations and renting those rather than just posting the points.

As far as the risk goes...its really no different than the risk you might have if you rented a shore house, ski house or lake house...or even worse a share in a house.

[lizanne]

My reasons for choosing owning over renting are quite simple. We are owners since 1992. Every year since we have had a two week vacation(something we did only rarely prior to that). We have been on 2 cruises, have traded thru II twice, and the other years have had great times at WDW. Sometimes we were able to rent a GV and invite other family members.

We have 5 children, and back in the day when they went on vacations with us (they're all adults now), we always had to get two rooms or a suite and that was very expensive.

Back when we bought the cost per point was much, much less and we also had free park tickets through 2000. I don't know if we would (could) buy now because it is very expensive.

I think everyone has to evaluate their own situation. It's not for everybody but for us it's worked out great.

[dkbayne]

I have 2 current rentals from what are very nice people. I don 't think those 2 parties or the 99.9% honest renters appreciate people posting that they can't be trusted. I am only the renter and I didn't like it very well. All you have to be is smart about it. There were 2 renters that emailed me about my rental request and it didn't take me long to figure out I didn't have the trust factor and kept looking. We do own a time share and have for about 15 years and we love where it's at, but a trip to Disney once every few years is also fun for us. Just please keep in mind that everyone has different situations.
Let's all be kind.

[crisi]

I have 2 current rentals from what are very nice people. I don 't think those 2 parties or the 99.9% honest renters appreciate people posting that they can't be trusted. I am only the renter and I didn't like it very well. All you have to be is smart about it. There were 2 renters that emailed me about my rental request and it didn't take me long to figure out I didn't have the trust factor and kept looking. We do own a time share and have for about 15 years and we love where it's at, but a trip to Disney once every few years is also fun for us. Just please keep in mind that everyone has different situations.
Let's all be kind.

I'm not saying they can't be trusted, nor is anyone else. We are saying we don't trust them. Too much risk. When you rent, you have two private parties involved. Neither Disney nor this board will get involved if either party gets scammed. There are risks at both ends. Are most people here honest? Yep. Would it be really easy for me to create a sock, go to the public library (so my ip address is different) rent my points to you, get your deposit, cancel the reservation, do that three or four times and leave you and three or four others high and dry? Yep. Would you have legal recourse? yep. Would it be a pain in the back end to sue me or prosecute me from another state? Yep. Throw in a little identity theft and you can't even find me to prosecute.

Even though that risk is small, it is significant enough for me not want to do it when I can get a room at a moderate for only slightly more from CRO with no risk at all, much better cancellation policies, etc.

Is that too much risk for me? Yep. I don't buy on eBay either.

[1000th happy haunt]

I like having control over my own reservations. We booked a quick trip to WDW for the Pirates and Princess Party. Last month DH and I were in the airport (cashing in a free flight voucher and then getting on a flight to head out to Disneyland), and decided to add on one night to our January trip. It was quick and easy to call Member Services right then and there and add an additional night. If we had rented the points I would have had to wait until after our trip and contact the person we rented from to ask them to extend our trip by one night.