Buying Resale vs. Renting?

[ChesapeakeTechie]

Has anyone done a recent breakdown on buying resale vs. renting points? Thinking out loud...

If we look at a hypothetical SSR contract with a purchase price of $85/pp for and current annual MF's of $5.17 it seems we can get a pretty good picture of costs.

Since the contracts end in 2042 we can see we have 25 years of MF's left and we can spread out the purchase cost to look at annual costs if we amortize everything.

$85/25 = $3.40/pp annually
$5.17/pp MF annually

$8.57/pp annual cost

If we can rent points at between $10-$12/pp it seems like a fairly small premium to pay over owning the points?

Thoughts and comments would be welcome!

Disclosure - currently own DVC but have been a bit discouraged with the lack of availabity when trying to book even close to 7 months out.

 

[katmatry]

I believe SSR expires in 2054

 

[oliver123]

I imagine that renting points will also increase by 3% on average per year. As if not there will become a time when renting is cheaper then the dues and I doubt that will happen!

 

[larissawbb]

Where can you rent points for $10 to $12 dollars pp?

 

[ChesapeakeTechie]

I believe SSR expires in 2054

Yes you are correct -

 

[ChesapeakeTechie]

Where can you rent points for $10 to $12 dollars pp?

On the DVC Rental board it seems like some folks who need to rent points out quickly are in this range.

 

[Minniesgal]

On the DVC Rental board it seems like some folks who need to rent points out quickly are in this range.

I would expect those to be exceptions to the norm and that the norm is much more in the 13-15 a point range.

Whenever we have rented we have got 14 or 15 a point quickly and easily so 10-12 is only from those who have had an unexpected change or who are disorganised.

We have never had problems booking but we bought where we want to stay and tend to book home resorts only at 11 months. I would say if you are struggling with lack of availability that only gets harder when having the interface of renting.

 

[_auroraborealis_]

On the DVC Rental board it seems like some folks who need to rent points out quickly are in this range.

Sure. But they are also renting distressed points. If you look, most of them are having trouble finding properties and dates for people's requests.

 

[Dean]

Has anyone done a recent breakdown on buying resale vs. renting points? Thinking out loud...

If we look at a hypothetical SSR contract with a purchase price of $85/pp for and current annual MF's of $5.17 it seems we can get a pretty good picture of costs.

Since the contracts end in 2042 we can see we have 25 years of MF's left and we can spread out the purchase cost to look at annual costs if we amortize everything.

$85/25 = $3.40/pp annually
$5.17/pp MF annually

$8.57/pp annual cost

If we can rent points at between $10-$12/pp it seems like a fairly small premium to pay over owning the points?

Thoughts and comments would be welcome!

Disclosure - currently own DVC but have been a bit discouraged with the lack of availabity when trying to book even close to 7 months out.

It's been a while since I've done it and it is highly dependent on the villa size and various assumptions. You're basically locking in a portion of the room costs but you're also committing for the long term. IMO the 2 best models to compare to are private DVC rentals and what one would have spent not using DVC. Unless the cash price is in the range of the private rental, I think that is an unreasonable comparison unless one would stay with that method not owning. The numbers will fair better for studios and 2 BR than 1 & 3 BR villas. It's also likely inflation will outpace rental prices. I do think your rental price for comparison is a little light unless you can hold out for short notice rentals which are hit or miss for availability. If you rent RCI exchanges (prohibited by RCI policies), you'll likely never break even compared to buying.

 

[CarolMN]

IMO, getting a villa for $10-$12 pp is not very likely for most times of the year. In general, points advertised for that price are about to expire and availability is very limited Points are worthless if there are no villas available to be reserved. For comparisons, suggest you use the pp charged by the larger brokers. Even the individual owners who rent will want near than that amount. If the offered price is significantly lower than the "norm", you need to do extra due diligence to find out why - there's usually a reason!

 

[zavandor]

Has anyone done a recent breakdown on buying resale vs. renting points? Thinking out loud...

If we look at a hypothetical SSR contract with a purchase price of $85/pp for and current annual MF's of $5.17 it seems we can get a pretty good picture of costs.

Since the contracts end in 2042 we can see we have 25 years of MF's left and we can spread out the purchase cost to look at annual costs if we amortize everything.

$85/25 = $3.40/pp annually
$5.17/pp MF annually

$8.57/pp annual cost

If we can rent points at between $10-$12/pp it seems like a fairly small premium to pay over owning the points?

SSR expires on 2054, so it's 2.29/pp. Added to the MF, it's $7.46 per year. This calculation doesn't account time for value money, so probably we are nearer what you calculated anyway. Is $4-$5 pp a discount big enough? For me it is. For example, this year I wasn't sure if I would have the opportunity to go to a conference in San Franscisco and add a few days at Disneyland. So I booked VGC at 7 months and kept my finger crossed. I ended cancelling, unfortunately. You cannot do this if you rent, almost everyone who rent has a no cancellation policy. For me being in control of the reservation is very important, others enjoy the freedom of renting and are happy paying the extra and can live with the limitations.

 

[Wakey]

Has anyone done a recent breakdown on buying resale vs. renting points? Thinking out loud...

If we look at a hypothetical SSR contract with a purchase price of $85/pp for and current annual MF's of $5.17 it seems we can get a pretty good picture of costs.

Since the contracts end in 2042 we can see we have 25 years of MF's left and we can spread out the purchase cost to look at annual costs if we amortize everything.

$85/25 = $3.40/pp annually
$5.17/pp MF annually

$8.57/pp annual cost

If we can rent points at between $10-$12/pp it seems like a fairly small premium to pay over owning the points?

Thoughts and comments would be welcome!

Disclosure - currently own DVC but have been a bit discouraged with the lack of availabity when trying to book even close to 7 months out.

If you buy your ADs will increase year on year, if you rent the rental price will like increase year on year (particularly given demand v supply) - at the moment that represents 50% more inflation every year per stay (for simplicity assuming $6 per point dues compared to $12 per point renting). I haven't done the maths but that is compound, so in 10 years that inflation on both dues and renting could be an overall circa 50% uplift per point on the cost now. So assuming you rent 100 points it could cost you $1800 dollars per trip instead of $1200. So in ten years time the cost each trip could be around double what your dues would be if you bought. Of course you have outlayed your capital and that has a cost even if you don't borrow. If you get a contract with a long date on it, past performance (caution, may not be representative of future performance) chances are you can sell it at a profit on what you paid in 20 years (albeit eaten into by inflation) . I think if you don't borrow to fund Dvc can be a reasonable investment. Of course lots of variables- Dvc renting may get a lot more expensive (demand increases, Dvc buy in goes up, new parks etc), dues could increase by more than anticipated etc. Personally if I had the cash in the bank and visit Disney every other year minimum and intend do do so for 20 years I'd consider it over renting. Borrowing money- no way.

 

[disneynutz]

Owning locks you into doing something with your points every year. You also have to deal with the DVC website and the policies and rules of the DVC that can change.

Now if the cost savings is great and you currently vacation at Disney each year anyway, owning may be the way to go.

Bill

 

[Wakey]

Owning locks you into doing something with your points every year. You also have to deal with the DVC website and the policies and rules of the DVC that can change.

Now if the cost savings is great and you currently vacation at Disney each year anyway, owning may be the way to go.

Bill

Bill here owns I think, but always gives sensible and cautionary advice I have found.

 

[BillPA]

if you had that $85 in a stock/bond fund, you would receive about 6 - 6 1/2% return. $5.10-$5.52 a year, not the simple $2.29 for 37 years. Add to that your dues at $5.17, increasing 3-4% a year your total per point will be more like $10.27-10.69 per point for that first year.

 

[LAX]

SSR expires on 2054, so it's 2.29/pp. Added to the MF, it's $7.46 per year. This calculation doesn't account time for value money, so probably we are nearer what you calculated anyway. Is $4-$5 pp a discount big enough? For me it is. For example, this year I wasn't sure if I would have the opportunity to go to a conference in San Franscisco and add a few days at Disneyland. So I booked VGC at 7 months and kept my finger crossed. I ended cancelling, unfortunately. You cannot do this if you rent, almost everyone who rent has a no cancellation policy. For me being in control of the reservation is very important, others enjoy the freedom of renting and are happy paying the extra and can live with the limitations.

I agree the best part about owning is the flexibility it offers over renting. I supposed one can get trip insurance to cover last minute cancellation when renting, but that's at least an additional $100-$200 cost in addition to the difference in cost per point. While a direct reservation offers even more flexibility than owning, it's quite a bit more expensive than even renting.

I think it comes down to what you value more, saving money or flexibility. That's not to mention the peace of mind of knowing that your reservation won't disappear on the day of check-in even if you get reimbursed for your payment should that occur.

LAX

 

[CaliAdventurer]

We spent 24k in the 2 years that we rented points (leaving on our last rented trip this thurs) before we felt comfortable and knowledgeable enough to buy. We have 3 trips planned before next summer and that alone will save us the same amount or more. (Disney resorts are our THING and more so than ever) Subtract the dues etc, we have already made a HUGE dent in the outlay for our resell contract. I feel like the more you rent, the more hooked you get, the more money you "waste". UNLESS you don't have the capital and then renting is the next best way to save money and have extraordinary stays at Disney.

You also have to factor that you can't rent points for 10-12 bucks. Its $14 for 7 months and sooner and $15-17 for 7-11 mos. And rising about $1 per year. You can get flash sales and last minute or SSR maybe for the lower prices. I'd do my calcs at $15. Anything school holiday or resort other than AKV or SSR will be 7+ mos. And remember that a good direct sale from Disney for a villa can be as cheap as renting and you dont have to pay in full upfront like most renters require and you keep the flexibility to make changes and cancels for no charge. Brokers charge a few dollars per rented point for a no excuse required policy.

My advice: If you love it, put a ring on it ; )