Does this make Sense?

[Redeemed]

Our family has been struggling for a several months now on wether to buy DVC or not.

We would like to go to Disney every 2 years, and have outgrown hotel rooms.
We always stay at high end properties.

As I put all the math together, it seems a whole lot cheaper to me to just rent the points I want every 2 years, versus buying points and having to pay maintence fees yearly.

So why ever buy points when can just rent them?
I know I must be missing some logic here.

Please help!

 

[Deb & Bill]

If I didn't already own points that I bought many years ago, I would be renting. Find someone you really can trust and like and see if you can be their steady renter. You don't get the DVC member perks, but those can come and go anytime.

The price per point is just obnoxious now in my opinion. I'd never buy points for the price they are selling for now. Maybe a resale at SSR or OKW.

 

[Dean]

Our family has been struggling for a several months now on wether to buy DVC or not.

We would like to go to Disney every 2 years, and have outgrown hotel rooms.
We always stay at high end properties.

As I put all the math together, it seems a whole lot cheaper to me to just rent the points I want every 2 years, versus buying points and having to pay maintence fees yearly.

So why ever buy points when can just rent them?
I know I must be missing some logic here.

Please help!

I'll just deal with the rent vs buy question. Renting will give you more flexibility but buying will be cheaper in the long run for EOY. Assuming you would go EOY, you'd need around 150 points EY. You could buy those points at SSR or AKV for in the range of $10K and yearly dues of $700 or so. Renting that many points EOY would be around $3000-3600 ($10-12 pt) which is about the least you can count on, IMO. You'd be in the negative $1500-2000 roughly, EOY. Even if you use the time value of money in the equation, you "break even" in about 6 trips. Certainly if your situation changes, the benefits would also change, such as you didn't want to go to WDW as much later in your lift. You might consider buying even less, say 75-100 points and paying for points transferred in. That way you have more options outside DVC and less commitment long term. I would not approach this planning to rent EOY ongoing.

 

[NewDCLGuy]

From a financial standpoint, if you can always easily rent points cheaply, you are right, it often doesn't make sense to buy. However,

1) There is no guarantee you can always easily rent points cheaply.

2) There are non-financial reasons that motivate people to buy.

 

[Brian Noble]

buying will be cheaper in the long run for EOY.

I think this depends on the figure you use for opportunity cost. Mary Waring's set of assumptions has renting cheaper than buying EOY. That may have changed now that resale prices have dropped significantly though.

http://www.mousesavers.com/dvc.html

My sense: unless you are *sure* you're going to be coming back to Disney for quite some time (at least 5-7 trips, so at least 10-14 years) renting is probably wiser. That's just a gut feeling though, not based on any numbers.

 

[SabresFan]

I'm considering buying DVC. I've looked at renting instead, but never felt it was worth the risk to me. You really are at the mercy of the person you are renting from - they are the only ones that can call DVC to make the reservation, and DVC will allow them to cancel it at any time. The transaction is entirely between you and the member renting the points, and has nothing to do with DVC.

Certainly, if you can find somebody you can trust, then renting will almost always be cheaper than buying, and without having to commit a big chunk of change at the outset. Maybe you are acquainted with some local DVCers that wouldn't mind skipping WDW for a year, and you can do both them and you a favor by renting from them. But if you're just finding renters off of Craigslist or eBay, I personally find that WAY too risky. Even if it is half off or more, it's not worth it to me.

Yes, I do know that there is a better than 90% success rate with renting, and you could probably improve your odds by going through some kind of service, since there is at least one other party you can call on if it falls through, and the service won't want to risk their hundreds of successful rentals by fronting for a scam artist (if they can avoid it).

But for me, the anxiety level of "will the reservation be there when I show up on the first day of vacation" won't be worth it. Even if I do get there and everything is perfect, just as promised.

Of course, if I do buy DVC, I might some day want to rent out my points, so I don't want to put too much of a damper on these things. But I at least know how honest I will be in that situation (very honest), and I assume most DVCers are equally honest, but there's that small percentage out there that are simply out for the quick buck.

 

[Dean]

I think this depends on the figure you use for opportunity cost. Mary Waring's set of assumptions has renting cheaper than buying EOY. That may have changed now that resale prices have dropped significantly though.

http://www.mousesavers.com/dvc.html

My sense: unless you are *sure* you're going to be coming back to Disney for quite some time (at least 5-7 trips, so at least 10-14 years) renting is probably wiser. That's just a gut feeling though, not based on any numbers.

Brian, there are several issues that make this different ( or generate different results) than Mary's posted info which is very good overall, as far as it goes. From what I can tell Mary assumes that you would invest the full retail upfront amount and earn 7% after taxes. She actually used the then non discounted retail price of $104 pp but ignored closing likely because there were no closing costs until a few years ago. When you reduce the initial buy in to $65 pp or so, the numbers change dramatically. Her assertion that buying EOY would never break even is also flawed. I'm assuming that's because she was comparing to buying 160 EY points compared to renting EOY at 160 points because that was the min direct buy in at the time, essentially throwing the other 160 EOY away. From a strictly numbers standpoint owning the number of points one will use will always favor renting routinely over the life of a contract. This assumes an appropriate buy in price, reasonable fees over the entire time, etc. Now whether the added long term obligation and risk is worth it when you look at this and other options (like discounted regular rooms) is a somewhat different discussion.

 

[McCrae]

If you believe that the cost of staying at a Disney property will increase over time it is highly likely that the cost of renting will increase to reflect the higher alternative costs.

In the end all DVC contract will expire worthless, however that does not mean that the value of the points wont increase between now and then. Early buyers into DVC have seen some increase in the value of the points purchased and if room rates continue to increase this trend will probably continue.

On paper people who bought BLT just over a year ago are already sitting on a profit. We bought our points at 99.

If you think you would be interested in going to the Disney resorts on a fairly regular basis the most sensible option is tho buy rather than rent, especially when interest rates and returns are so low.

 

[DenLo]

I think one big difference in renting and buying the points yourself is control. You can be in control of everything when you own the points. You can call MS and arrange your own dates, check several different resorts, add the DP, add guests to the reservation, cancel days and add days. Whereas renting you have to ask the owner to do this stuff for you and you don't know if it gets done. Some owners are good to their renters others sometimes ignore the renters requests or either because they are tired of be bugged by the renter or they are on vacation or busy and are not looking at their emails or calls.

I was surprised to see the post by Deb and Bill that you could connect with an owner and become a their steady renter. That to me would be the only time regular renting might really work. But I still agree that if you do the math over the years you will not be saving money by renting.

 

[Swayhoover90]

Brian, there are several issues that make this different ( or generate different results) than Mary's posted info which is very good overall, as far as it goes. From what I can tell Mary assumes that you would invest the full retail upfront amount and earn 7% after taxes. She actually used the then non discounted retail price of $104 pp but ignored closing likely because there were no closing costs until a few years ago. When you reduce the initial buy in to $65 pp or so, the numbers change dramatically. Her assertion that buying EOY would never break even is also flawed. I'm assuming that's because she was comparing to buying 160 EY points compared to renting EOY at 160 points because that was the min direct buy in at the time, essentially throwing the other 160 EOY away. From a strictly numbers standpoint owning the number of points one will use will always favor renting routinely over the life of a contract. This assumes an appropriate buy in price, reasonable fees over the entire time, etc. Now whether the added long term obligation and risk is worth it when you look at this and other options (like discounted regular rooms) is a somewhat different discussion.

Mary Waring's cost analysis and others like it are very well thought out and ring very true in many respects. However, it looks at it through one, unemotional perspective. If there are 100 people that are considering renting vs buying there are also 100 different situations and set of emotions (make that 200 if there is a spouse involved) that come into play that will skew the analysis.

It is like buying a car. Why does one person buy a red one vs a blue one, a sports car vs a mini van. Sometimes money is a factor. Sometimes family situations are a factor. Sometimes a person just wants a yellow Corvette and money be damned.

Each Person can look at the analysis and say I can invest that amount of money and rent and come out better off. But would you actually invest that exact money? Or would it end up going to household bills, McDonald's for the kids, etc. over time?

I know for us purchasing in a lot of respects was emotional. Instead of asking ourselves can we go to WDW next year we are now saying "yes we can and if we don't we lose the points."

As the credit card commercial might put it..."100 points at BLT, $12000. Yearly MF, $400. Knowing you are going back to WDW and getting a good deal on accommodations, Priceless."

 

[Coach81]

Renting is a risky thing...

 

[fx2594]

Unless you plan on stopping your trips at some point, I think buying will be better. Even with EOY, you can rent your points to pay some of the maintenance costs.

 

[william1375]

Buy a small resale contract. Use the bank/borrow/use system to get to your desired total and if needed as an owner you can get a much more secure transfer for additional points from other owners.

 

[Deb & Bill]

If you believe that the cost of staying at a Disney property will increase over time it is highly likely that the cost of renting will increase to reflect the higher alternative costs....

On paper people who bought BLT just over a year ago are already sitting on a profit. We bought our points at 99. ....

In 1997 when be bought our OKW points at about $50 a point (got credit for our Polynesian stay), points rented at about $10 a point. Today, they rent for about $10 a point.

As for your BLT points, add the 10% commission price to your selling price and you have lost money.

 

[Dean]

Mary Waring's cost analysis and others like it are very well thought out and ring very true in many respects. However, it looks at it through one, unemotional perspective. If there are 100 people that are considering renting vs buying there are also 100 different situations and set of emotions (make that 200 if there is a spouse involved) that come into play that will skew the analysis.

It is like buying a car. Why does one person buy a red one vs a blue one, a sports car vs a mini van. Sometimes money is a factor. Sometimes family situations are a factor. Sometimes a person just wants a yellow Corvette and money be damned.

Each Person can look at the analysis and say I can invest that amount of money and rent and come out better off. But would you actually invest that exact money? Or would it end up going to household bills, McDonald's for the kids, etc. over time?

I know for us purchasing in a lot of respects was emotional. Instead of asking ourselves can we go to WDW next year we are now saying "yes we can and if we don't we lose the points."

As the credit card commercial might put it..."100 points at BLT, $12000. Yearly MF, $400. Knowing you are going back to WDW and getting a good deal on accommodations, Priceless."

Correct to a degree however DVC must makes sense financially before it is reasonable for the emotions to play in the equation.. Mary's info only covers certain situations and the assumptions currently listed in those scenarios are not totally applicable to the many scenarios, esp when resale is involved..

 

[ToddyLu]

Sometimes a person just wants a yellow Corvette and money be damned.

I wanted the savannah view from the balcony...money be damned.

 

[Swayhoover90]

Correct to a degree however DVC must makes sense financially before it is reasonable for the emotions to play in the equation.. Mary's info only covers certain situations and the assumptions currently listed in those scenarios are not totally applicable to the many scenarios, esp when resale is involved..

I totally agree! I was ready to purchase emotionally when DVC was first conceived with OKW as the only resort but the financial side was not right. I knew for the last 3 years that we would buy in someday but the finances weren't right. Finally, this year, we were able to make it happen.

 

[nunzia]

Renting is a risky thing...

That says it all. I don't want the fate of my vacation resting somewhere besides with me...If you are fine with that and don't mind dealing with the whole renting process, then you could do that. If you are truly going every year or so there will come a point where you are behind, not ahead, of what you would have spent buying outright. I never consider the lost value of money since that's pie in the sky..My rate of return is barely positive, and in many cases negative for now. I like the security of controlling my own points and if I need to rent out some there are alot of people who don't mind renting..I can also sell my points if I decide I want to and come out at least even and ahead if you count the vacations under my belt.

 

[Dean]

That says it all. I don't want the fate of my vacation resting somewhere besides with me...If you are fine with that and don't mind dealing with the whole renting process, then you could do that. If you are truly going every year or so there will come a point where you are behind, not ahead, of what you would have spent buying outright. I never consider the lost value of money since that's pie in the sky..My rate of return is barely positive, and in many cases negative for now. I like the security of controlling my own points and if I need to rent out some there are alot of people who don't mind renting..I can also sell my points if I decide I want to and come out at least even and ahead if you count the vacations under my belt.

There are ways to control the risk. To a degree, it is possible to have a confirmed cash reservation with Disney and still have an issue, certainly less overall risk than a private rental, but some risk none the less.

 

[chalee94]

As I put all the math together, it seems a whole lot cheaper to me to just rent the points I want every 2 years, versus buying points and having to pay maintence fees yearly.

So why ever buy points when can just rent them?
I know I must be missing some logic here.

how long is your model? through 2042?

if you are only calculating, say, 10 years out, how much money are you expecting to get back when you sell DVC in 10 years? many people leave this out of the equation entirely.