Are we better off renting points for our trips?

[chris4disney]

DH and I have gone back and forth about purchasing DVC for several years now. We've rented points and stayed at BCV twice and BWV once. I think late last year/early this year we had decided that YES... we were going to purchase 100 points at BCV on the resale market. That would be enough points to get us a studio for 5-7 nights a year with some proper planning. Would we want more points then that... SURE. But just thinking sensibly with our budget.

Now fast forward to the current economy... that DVC purchase is not going to happen in the near future. My work is seasonal and in the construction industry... enough said. So I'm kind of bummed about not being DVC owners yet. But as I think more about the numbers, I'm starting to wonder if just continuing to rent points might be a better way to go for us. I mean the last two years we've rented 104 points twice costing us about $1,200 each year. If we had purchased 100 BCV points our annual dues would have been almost $500. And I know that as a member you get a large discount on the annual passes, but if we only go once a year for 5-7 days would we ever buy them? I think the biggest thing to also consider is that we would have to get a loan to purchase a 100 point contract. So now we have to add in interest from our loan.

I don't know... you guys are the DVC experts. Am I on the right track thinking that renting as we go might be financially better for us? Or is a 100 point DVC contract eventually going to save us money... even if we have to get a loan to pay for part of it?

What stinks is that now is the perfect time to purchase DVC on the resale market because there are so many people in financial trouble trying to dump their contracts so they are selling them for less $$.

I've also thought about maybe purchasing just a 50-60 point contract and then just paying cash for the weekend nights if need be. That way the upfront cost is less and the annual dues are less. But will that really save us money in the end if we have to pay cash for 1-2 nights every trip?

AAAAAAAAAHHHHHHHHHHH!!!!!!! Wouldn't it be nice to just win the lottery and not have to worry about decisions like these!! A yes, I'll take 2000 points please!

 

[tjkraz]

In the long run owning is better, IMO. Financially it will cost you less (comparing the same point usage on a rental vs. purchase.)

And owning gives you total control over the points. If you want to rent 11 months out, you need to really jump thru some hoops and have a big up-front cash outlay. Cancellations are also difficult / impossible when renting. As a member you call whenever you are ready to book and can make any changes necessary within the framework of the program rules.

But buying also means you are committed to paying annual dues and you cannot skip a couple of years without losing (or renting) the points.

 

[Brian Noble]

For the first year, it really depends on how you value the capital costs of the points. I amortize the capital cost of any timeshare purchase at 8% annually. At 8%, a resale OKW point bought with cash, "costs" about $10.16 (8% * $70 for amortization and lost opportunity, plus $4.56 for dues).

So, in your first year, it's about a break-even proposition by my reckoning. Others account for the costs differently, so YMMV. This also assumes that you do not have to finance your purchase. If you do, your costs are significantly higher.

Going forward, if you assume that rental costs and MFs increase at about the same rate, (debatable, but reasonable) eventually owning beats renting, because the owner's cost basis subject to inflation is smaller than the renters. As Tim points out, you also have other advantages of control, etc.

On the flip side, owning carries higher risk than renting---it is harder to accomodate changes in your vacation habits if you own. You may have to sell some or all of your points, or buy more. For renting, if your habits change, you just spend more or less money. But, points are not as liquid as money. Likewise, if Disney's costs suddenly skyrocket, as an owner you are locked into paying them until and unless you sell. As a renter, you can decide that you are simply going to do something else that is less expensive.

At the end of the day, I'm not a big fan of financing a leisure purchase. If you really want to become Members, my advice would be to take less expensive or less frequent trips, and use the savings to build up some cash until you have the few thousand you'd need to make a sensible resale purchase in cash.

 

[bookwormde]

By my calculations points cost members between $7 and 10 by the time you include maintenance fees, capital (cost of purchase amortized over the life of the contract and lost interest on the invested money.

So with what you can rent points for right now it is about a break even. With that said it gives you the control and security of making your own reservations. The real bargain is to do DVC on weekdays and if you do not mind moving doing CRO discounted reservations on the weekend.


bookwormde

 

[Uncle Remus]

And don't feel bad about not bein' able to cash in on the low prices seen on
the resale boards, Disney will exercise their ROFR 'n snatch those back up.

 

[joeytdog]

Very Similar to you, I have rented points the last three years. Every year the price has gone lower on renting.....$14 the first year (novice, used dvc request.com) $12 the 2nd year and $11 this year

Now that the 4/3 promotion has been released you can rent for even less, I wouldnt suspect it to be that difficult to obtain $9/$10 per point

If this trend continues, then yes renting is better than owning

Here is how I see it:

I would want 200 points and only at BCV or BC

So 200 points a year, and lets say $5 maint fees. You can rent for $10 per point more (lets say $10)

So a difference of $5 per point

Renting: 200 points x 10 pp x 30years is $60,000

Purchasing: 200 points x 5ppmaint x 30 years plus buy in at $80 is $46,000

Buying 200 points would cost $14,000 less over the long term, assuming rental prices and maint fees increase the same accrodingly

Now, if I had $16k to buy the 200 points I would because I would save $16k over 30 years

BUT, and this is KEY, if I had to finance the $16k initial purchase, then the savings is somewhat wiped out because $16k at 10.75% over 10 years, the interest is $10,000.......If you did it over 5 years, it is $5000 in interest

So, basically, renting is not a bad alternative to owning, if you have to finance the purchase (which I would have to)

If you can front the intial buy in and not finance, then buying now is the way to go.


***************That all being said, I am this close to buying in myself and financing the purchase, but even though I love BC and BCV, the later expiring resorts (AKV and BLT) make the cost justifications better as you have more years to use them*****************************

This assumes MF's and Rental Prices increase at the same rate. Right now that is not happenning and you have to wonder if the more resorts being built and more points that become available, if the cost to rent willl continue to go down. I can tell you that with the 4/3 promo, renting points costs you more and only makes sense at the $9pp and under line


Whatever I am rambling incoherent now

Want DVC

Need DVC

 

[Nparrotte]

There are pros and cons to both sides. My DW and I own 275 points. I agree the maintenance fees can be a drag but in my experience over the last couple years the perks have been worth it. We go multiple times a year so we have an annual pass, thus we save $200 b/c of the DVC discount. There are discounts for dining, entertainment and shopping, which we take advantage of as well. If you think that in the future you are going visit multiple times a year I think that it is worth it. If you only go once a year it is a very tough decision especially if you base that decision on what would cost you less over time.

 

[Scott]

When you crunch the numbers, don't forget that you also have "equity" once it is paid off. So, if you should choose to sell after 15 years, you get some of that initial purchase price back.
Scott

 

[dianeschlicht]

I have to agree that ownership is better than always relying on renting and never having complete control of a reservation. It's a bit like comparing owning a home to renting an apartment. Yes, you had a place to live during the duration of the rental period, but when you move out, you have nothing more to show for it than a place to stay during that time period. With DVC ownership, you have the equity to sell if you move on. We paid off our initial contracts with cash, and now it's just annual maintenance fees. I figure we have the equity PLUS we are only paying a little over $2000 a year to stay in deluxe accommodations in WDW for around 28 days a year. That's a good deal in my book!

 

[pinnocchiosdad]

If I were to do it again I think I might have foregone the purchase and just rented. I own 260 AKV points. Between the loan and the MF's it costs me about $5100 a year. I see many adds renting points for $10. That would cost only $2600 for my 260 points. We like BCV and since it is not our home resort we can only reserve at 7 months out. If we rent we can reserve at 11 months out. Some years we will pass on Disney and vacation elsewhere. That puts us in a position to bank or find a renter for our points which technicaly Disney does not allow. To do it all over again, I would still buy but I would do it diferently. I would rent points for my Disney trips and keep saving until I have enough to pay cash for my DVC membership. JMHO

 

[anonymousegirl]

One of the reasons I chose to buy rather than rent because I did not like the uncertainty of renting. You do not control your ressie, the owner does. Also, there is always a chance of running into a unscrupulous or inexperienced renter who takes your cash and fails to provide the ressie. It doesn't happen often, but the risk is always there.

 

[chris4disney]

One of the reasons I chose to buy rather than rent because I did not like the uncertainty of renting. You do not control your ressie, the owner does. Also, there is always a chance of running into a unscrupulous or inexperienced renter who takes your cash and fails to provide the ressie. It doesn't happen often, but the risk is always there.

I see what you are saying and I'm sure it's happened. I guess we've just been lucky and found a DVC member that we've rented from multiple times with no problems what so ever! He has also rented to friends of ours and again they had no problems. So I feel very comfortable with the thought of renting points again, if I knew it was going to be from this same DVC member.

 

[anonymousegirl]

Yes, I know it isn't a common problem but it can still happen, whether the renter is scamming and knows he/she won't provide the ressie, or in some cases, a first time renter that makes an error that isn't caught before it's too late.

And by renter, I mean the owner who is renting the points to someone, not the rentee, who is renting from the owner.

 

[thesupersmartguy]

In 10 years renting points at your current rate would be $10,000. Buying into DVC at roughly $80 a point would cost $8,000, and the contract is good for another 34 years at least. So $40,800 over 34 years renting from other members, or $8,000 now plus the annuel dues of about $475 a year which comes out to roughly $24,150 for the full 34 years.

Hope this helps.

 

[Caskbill]

A couple of minor things not mentioned for owners....

Part of your annual dues are Florida Property Taxes and may be deductible on your income tax.

If you finance to purchase, the interest paid may be deductible on your income taxes.

If you don't have the AP, there are still other discounts that can make a few dollars difference here or there. DVC discounts at Restaurants, activities rentals, and so on.

Finally, one thing not mentioned is you can bank and borrow points. This lets you adjust your vacation habits from year to year. You could purchase a smaller contract and then not take a WDW vacation every year but only every couple of years. If one year you still want to go but are out of points, then just rent points for that one year.

 

[Kickapoo Joie Juice]

One of the reasons I chose to buy rather than rent because I did not like the uncertainty of renting. You do not control your ressie, the owner does. Also, there is always a chance of running into a unscrupulous or inexperienced renter who takes your cash and fails to provide the ressie. It doesn't happen often, but the risk is always there.

That was a concern of mine, too, especially if you wanted to stay at VWL over early december, you ask the owner in early Jan to book you a reservation, you pay the owner in early jan for at least 50% of the ressie, which can amount to several thousand dollars if it's for a big reservation, then you have to trust that nothing goes wrong over the next 11 months, like, the owner runs into financial difficulty and decides to sell the dvc, or takes your money, runs into trouble, and re-rents your points without telling you, or just decides to bank the points at the last minute and you don't have a reservation when you show up.

Just too nerve wracking if you plan out your vacations far in advance. That being said, if you tend to vacation by the seat of your pants and go last minute, the smaller time frame provides less opportunity for something to go wrong on the owner's end.

FWIW, we were renters and never had problems, and now we're owners and see the benefits of both sides. I just like the security of knowing the ressies are there.