2019 Proposed DVC Annual Dues Increase Impact on DVC Rental Pricing

[Dan1]

Apologies if the incorrect Forum.

I read a few days ago that the 'proposed' 2019 annual maintenance dues are going to be huge .... at least for our three home resorts (AKL 10%; BWV 9.5%; SSR 9.5%), blamed in a large part from what I read on the new collective bargain agreements.

For those who are long time DVC owners (we just purchases AKL and BWV this year.....SSR a couple of years ago), I'm curious if prior year's substantive annual dues increases were followed a short time later by a general increase in the rental costs of DVC units, either by third party rental organizations or direct.

Or, is the DVC rental cost market dependent on some other factor?

Thanks!

 

[Jerry5788]

Apologies if the incorrect Forum.

I read a few days ago that the 'proposed' 2019 annual maintenance dues are going to be huge .... at least for our three home resorts (AKL 10%; BWV 9.5%; SSR 9.5%), blamed in a large part from what I read on the new collective bargain agreements.

For those who are long time DVC owners (we just purchases AKL and BWV this year.....SSR a couple of years ago), I'm curious if prior year's substantive annual dues increases were followed a short time later by a general increase in the rental costs of DVC units, either by third party rental organizations or direct.

Or, is the DVC rental cost market dependent on some other factor?

Thanks!

I would guess that as long as the third party rental organizations can still buy for $13 to $14 then there is no need for them to raise their rental price of $16 to $17. They make a spread (cost + $3). They would only have to raise the price if they can't get owners to sell to them at the price of $13 to $14.

I imagine prices in rental market will increase in line with rack resort rates but exact timing for this to digest I am not sure.

 

[CraigInPA]

As long as DVC owners continue to accept the $13 or $14 price per point, the rental companies will have no reason to raise the price they pay. If the economy stays strong, rental demand will continue to out strip supply of rental points. That, and the recent change by DVC to up the OTU points price to $19, and the recent significant increase in maintenance fees, and Disney's continuous increase in deluxe hotel room prices, may cause the rental companies to raise the price they pay per point.

 

[childsplay]

I would tend to agree with the other posters. Historically, I've owned for almost 20 years...I would say that the price Disney charges for deluxe hotel rooms is a bigger driver of rental rate increases compared to dues increases.

 

[DougEMG]

Cash rates and broker rates drive rental rates. I think we are okay with cash rates as they keep going up. I would hope that the brokers start having a harder time getting points and have to up their rates.

 

[deerh]

I think rental rates will rise BIG TIME! Why? 1. The economy 2. Add parking to the rates as DVC members don't pay for parking, all others do!
3. Dues going up 6-7-8-9-10%. If I rent out points, I won't rent them for less than $18-19/ point. But, never do, as I use all the points every year.
Just My opinion, YMMV....

 

[hakepb]

AKV dues were $6.76/point and they went up $.68/Point instead of a typical $.24 (at 3.5% average).
That’s “only” $.44/point more than the expected increase in dues this year.
I think it might take a few years of large dues increases to make a large change in the rental prices.

 

[AdamsMum]

Where is this information coming from?

 

[CarolMN]

Where is this information coming from?

You can see the proposed budget for the resorts that you own on the member website. Look under Condo Association News & then Meeting Notices and Information.

If you want to see a listing of all the resorts' proposed 2019 dues, head over to DVCNews.com

 

[DougEMG]

AKV dues were $6.76/point and they went up $.68/Point instead of a typical $.24 (at 3.5% average).
That’s “only” $.44/point more than the expected increase in dues this year.
I think it might take a few years of large dues increases to make a large change in the rental prices.

I'm not convinced of that.

Most owners want to make at least double their MF/point on their rentals.

I just had someone contact me about a BWV rental, they had tried at one of the major/large point brokers and were told there were no BWV points available. Brokers are going to have to up their prices if they want to attract enough points to rent out.

 

[deerh]

Also, in addition to the following, add how much "Rack Rates" at WDW are going up...
1. The Economy
2. Dues going up 6-7-8-9-10%
3. Add parking $25/day that you do NOT have to pay when renting..
4.No TAXES ever if renting

I know if I were renting/selling my points to rent, I would not take $12-13-14-15-16-17/point... But, this is me and if you want to rent them out for less,
do it.. Not me......

For example-BWV 2BR Dec 8-13, 2019 is $1349/nite according to MouseSavers (tax included). For 5 nights-$6745.
Renting 150 points (standard view BWV 2BR)- If charging $19/point---$2850...
For that price, someone is getting a great deal!!
Also--add $25/nite in the above for parking..$25x5nights-$125 SO TOTAL IS:$6870

Same example above, with 25% off "rack rates"
BWV-$1011/nite x 5 nights---$5058
Plus Parking-$25/night x 5 nights-$125
TOTAL IS: $5183

Still a good deal!! I will be honest, I think the renting of points for $13/14/15/16 is WAY too low!!!!

 

[Marionnette]

I did some quick math using BWV as an example.

Let's assume that I were to buy 100 BWV points today at the resale price of $130/pt., all in, which is not beyond the realm of possibility in today's market. With a contract that is expiring in 2042, that would mean there are 2,300 points available over the lifetime of the contract. IOW, I would pay $5.6521 per point overall.

Add in the 2019 dues ($7.1722) and my OOP is $12.8243 per point in 2019. And that ignores any opportunity cost or interest paid if I were to finance the purchase. With brokers paying as little as $13 per point, that's not much of an incentive to rent the points out. I have plenty of family members who are willing to take my points off my hands for what they cost me. No need to rent to a stranger at those rates.

 

[LSchrow]

I did some quick math using BWV as an example.

Let's assume that I were to buy 100 BWV points today at the resale price of $130/pt., all in, which is not beyond the realm of possibility in today's market. With a contract that is expiring in 2042, that would mean there are 2,300 points available over the lifetime of the contract. IOW, I would pay $5.6521 per point overall.

Add in the 2019 dues ($7.1722) and my OOP is $12.8243 per point in 2019. And that ignores any opportunity cost or interest paid if I were to finance the purchase. With brokers paying as little as $13 per point, that's not much of an incentive to rent the points out. I have plenty of family members who are willing to take my points off my hands for what they cost me. No need to rent to a stranger at those rates.

We were all ready to add BWV resale until the 2019 maint came out.
Another contract would give us a buffer, and renting out some would help offset dues. But like you said, it just doesn't make financial sense to buy now & rent - net from renting would barely cover our actual, and certainly wouldn't put a dent on our existing contracts' 2019 dues (which will be over $6K).
Ah, well, guess we saved a bunch of money not adding on

 

[DougEMG]

I did some quick math using BWV as an example.

Let's assume that I were to buy 100 BWV points today at the resale price of $130/pt., all in, which is not beyond the realm of possibility in today's market. With a contract that is expiring in 2042, that would mean there are 2,300 points available over the lifetime of the contract. IOW, I would pay $5.6521 per point overall.

Add in the 2019 dues ($7.1722) and my OOP is $12.8243 per point in 2019. And that ignores any opportunity cost or interest paid if I were to finance the purchase. With brokers paying as little as $13 per point, that's not much of an incentive to rent the points out. I have plenty of family members who are willing to take my points off my hands for what they cost me. No need to rent to a stranger at those rates.

Your numbers definitely show that buying at today's price to rent out is a losing proposition.

 

[deerh]

I did some quick math using BWV as an example.

Let's assume that I were to buy 100 BWV points today at the resale price of $130/pt., all in, which is not beyond the realm of possibility in today's market. With a contract that is expiring in 2042, that would mean there are 2,300 points available over the lifetime of the contract. IOW, I would pay $5.6521 per point overall.

Add in the 2019 dues ($7.1722) and my OOP is $12.8243 per point in 2019. And that ignores any opportunity cost or interest paid if I were to finance the purchase. With brokers paying as little as $13 per point, that's not much of an incentive to rent the points out. I have plenty of family members who are willing to take my points off my hands for what they cost me. No need to rent to a stranger at those rates.

All above is true, HOWEVER, you are assuming dues will stay that way (7.1722) for 24 years.. Nope.. Say 4-5%/year added to that. So in 2030, it would be 48% more in dues.. (10.61/pt). As for PURCHASING BWV now, I agree. As for RENTING my points now, I won't rent them $13-14-15-16/point. They are worth way more to me than that price.. So.. assuming hotel (Rack rates) go up 4%/year.. In 2030, that $1349/night for a 2BR is now $1996/night! But, renting them now for $16/point is a good deal. I just won't rent them that cheap. As I said before, we use our DVC, so I never rent them out and almost always borrow points, so no problem for me..

 

[Marionnette]

All above is true, HOWEVER, you are assuming dues will stay that way (7.1722) for 24 years.. Nope.. Say 4-5%/year added to that. So in 2030, it would be 48% more in dues.. (10.61/pt). As for PURCHASING BWV now, I agree. As for RENTING my points now, I won't rent them $13-14-15-16/point. They are worth way more to me than that price.. So.. assuming hotel (Rack rates) go up 4%/year.. In 2030, that $1349/night for a 2BR is now $1996/night! But, renting them now for $16/point is a good deal. I just won't rent them that cheap. As I said before, we use our DVC, so I never rent them out and almost always borrow points, so no problem for me..

No, I am not assuming dues will remain the same. I specifically stated that the calculation was for 2019 and only for BWV purchased at the current resale rate for a 100-pt. contract. If you bought when BWV opened, you got 50 years of points and you paid a heck of a lot less, bringing your buy-in cost per point over the lifetime of the contract well below the $5.60+ that I calculated. It has nothing to do with hotel rates or rack rates. Just a simple calculation that shows buying now with the expectation of renting the points out regularly is not a profitable endeavor.

 

[Wakey]

Rental rates have been too low for 12 - 18 months.

Now they are WAY too low.

I’ll rent myself until rates with the brokers represent the true cost- at least $2 more a point to me.

 

[deerh]

I can rent points ALL DAY LONG to people I know and still give them a great deal @ $18-19-20/point.... They still would save $$$$...

Would save them Thousands!!!

For example-BWV 2BR Dec 8-13, 2019 is $1349/nite according to MouseSavers (tax included). For 5 nights-$6745.
Renting 150 points (standard view BWV 2BR)- If charging $19/point---$2850...
For that price, someone is getting a great deal!!
Also--add $25/nite in the above for parking..$25x5nights-$125 SO TOTAL IS:$6870

Same example above, with 25% off "rack rates"
BWV-$1011/nite x 5 nights---$5058
Plus Parking-$25/night x 5 nights-$125
TOTAL IS: $5183
And I charge them $2850...

 

[Bing Showei]

I can rent points ALL DAY LONG to people I know and still give them a great deal @ $18-19-20/point.... They still would save $$$$...

This is, of course, a hypothetical, as you’ve mentioned in another thread that you don’t rent your points out because you actually use them.

Sure. At $19/point, you’d still save people money over each/discounted rack, but those same people could save even more $$$$ renting from a broker or other direct owners on the boards who don’t share your perspective on point values, which based on prevailing market rates, suggest there are plenty.

 

[deerh]

This is, of course, a hypothetical, as you’ve mentioned in another thread that you don’t rent your points out because you actually use them.

Sure. At $19/point, you’d still save people money over each/discounted rack, but those same people could save even more $$$$ renting from a broker or other direct owners on the boards who don’t share your perspective on point values, which based on prevailing market rates, suggest there are plenty.

This is very true! I hardly ever have any points left and usually borrow.. I just think the "brokers and other people who DO rent are shortchanging themselves and losing big $... BUT, as long as there is a market.. As for Renting points- Don't see them (price/pt) ever going down.. With "rack rates" going up and Star Wars Land, and "Skyliner"/ etc, they will go up... I just think the "Renters" are WAY below what they should be charging...