I'm sure this has probably been previously discussed, but is there an easy way to adjust resale per point value based on the number of points available.
For example, value of a resale normal level of points (no banked or borrowed) vs. a loaded contract vs. a stripped contract? Do you just add/sutract the missing points by the going rental rate ($15pp)? And how do you know what the "normal" number of points would be ? Just take the average from previous months?
A couple thoughts:
I think the price you could get by renting them at one of the rental companies is a good rule. There is some difference in value based on the time available to book with the points. More than 11 months out, more than 7 months out, etc. I am in ROFR for a contract with some banked points what will be expiring within 6 months of closing. Those points should be valued more like “Last Minute” where the value is $5-$9 before considering maintenance fees.
You need to consider maintenance fees. If the contract expects you to pay the maintenance fees on all available points, then an extra point is only worth rental value minus maintenance fee.
It will be difficult to determine a base price to compare since we do not have access to all the actual resale transaction price history. Instead I would recommend generating a relative price you would pay. And then when comparing for available point counts, just add or subtract based on the above mentioned rates. This will tell you how much more you should be willing to pay for a loaded vs stripped contract. I generally think the market undervalues available points. So you should always buy loaded and sell stripped.
For me personally, to value each resale resort, I have created a Net Present Value model that considers the value of all future points in a contract (minus the maintenance fee) discounted to present day value. I value all the points at current rental store rates paid to owners. (With an assumed 3% annual inflation escalation in rental rates and maintenance fees). For hurdle rate, I use an 8% annual rate of return.
The model does a pretty good job of demonstrating the 2042 contracts vs longer ones. I find the discount on contracts expiring sooner is about what you should expect using an NPV model. My model says BRV is worth $94.77/point and CCV is worth $140.86. $45 is pretty close to the difference in the listing prices. Therefore I consider it economically the same to buy either contract.
Things the model misses:
Small point contracts are easier to impulse buy and thus seem to have a much higher vale per point. My NPV model does not consider this. Some premium locales are more premium than others, but the rental store pricing doesn’t differentiate. (ie Beach Club appears to be a higher valued location than Animal Kingdom.)
