DVC as an investment

[wiltonken]

You did not take into the equation the future point rental value. For example I paid $51 a point at OKW and if I rented all my points today I would make close to 15% in profit.

 

[DougEMG]

You did not take into the equation the future point rental value. For example I paid $51 a point at OKW and if I rented all my points today I would make close to 15% in profit.

Not sure who this reply was to, but in my calculations I look at the rental income all the way out to 2042. Hence why making guesses about what the rental income will be each year is difficult and that is what will play a huge factor in ones profit.

 

[Dean]

You did not take into the equation the future point rental value. For example I paid $51 a point at OKW and if I rented all my points today I would make close to 15% in profit.

Rental prices have historically lagged or been somewhat unrelated to sales prices of any type. I see no reason for that to change thus while it's easier to legitimately adjust for dues increases, it's more difficult to impossible to adjust for rental increases. Likely the best way to do so is to assume a lower than inflation adjustment. I'm not sure a spread of 3% increase for rental prices and 4% for inflation is quite enough to account for this, maybe 2-2.5% vs 4% is more reasonable. As for calculating return based on historical purchase, that is not an ideal approach with no other factors. If one looks at it from a true investment situation you've got to include other factors that include the TMV & return of principle.

 

[Goofy DVC]

In some respects, isn't it in Disney's best interest to allow/support some renting?
Let's say I can't go to DW this year so I bank the points but I can't go next year either. If I didn't rent my points or give them away then in theory that room so to speak would be empty as my banked points expire??? So no park tickets, meals, and stuff purchased by someone. I know points not used go in to inventory at 30 days out, but if there was a large number you would have to think that they would just expire.
In addition, renting might provide someone who is having financial problems a short term fix rather than selling their contract.
Also, when we bought in 93 I could've sworn that Disney actually gave a sample rental lease in the event that we would ever rent. Maybe I'm mistaken as we have never rented out our points or rented points from someone else. That would be too much work /hassle for us.

 

[disneynutz]

In some respects, isn't it in Disney's best interest to allow/support some renting?
Let's say I can't go to DW this year so I bank the points but I can't go next year either. If I didn't rent my points or give them away then in theory that room so to speak would be empty as my banked points expire??? So no park tickets, meals, and stuff purchased by someone. I know points not used go in to inventory at 30 days out, but if there was a large number you would have to think that they would just expire.
In addition, renting might provide someone who is having financial problems a short term fix rather than selling their contract.
Also, when we bought in 93 I could've sworn that Disney actually gave a sample rental lease in the event that we would ever rent. Maybe I'm mistaken as we have never rented out our points or rented points from someone else. That would be too much work /hassle for us.

I am sure that Disney enjoys the extra money spent by DVC owners while on vacation, I don't think that most allow their points to expire.

Disney doesn't care that you have to sell your contract because someone else will buy it. Once Disney sells the original contract, they are guaranteed that someone will own it for 50 years or more.

Bill

 

[Dean]

In some respects, isn't it in Disney's best interest to allow/support some renting?
Let's say I can't go to DW this year so I bank the points but I can't go next year either. If I didn't rent my points or give them away then in theory that room so to speak would be empty as my banked points expire??? So no park tickets, meals, and stuff purchased by someone. I know points not used go in to inventory at 30 days out, but if there was a large number you would have to think that they would just expire.
In addition, renting might provide someone who is having financial problems a short term fix rather than selling their contract.
Also, when we bought in 93 I could've sworn that Disney actually gave a sample rental lease in the event that we would ever rent. Maybe I'm mistaken as we have never rented out our points or rented points from someone else. That would be too much work /hassle for us.

Likely the best position for Disney is to have the rental option but not have it viable. That way they could use renting as a sales options but avoid competition. Rooms don't really go empty, unused rooms go to breakage inventory where DVC/DVD can rent them through CRO. So more revenue for CRO and once they hit the threshold of 2.5%, the rest goes to pure profit for DVD. Essentially someone will use the room and whoever does will likely spend money and might also buy DVC whether it's through CRO or a family member. I agree with Bill, from a decision standpoint, they aren't worried if you have to sell or simply give it back to them.

 

[SpaceMountain77]

Yes, DVC is a phenomenal investment . . . . . . . . . . for memories and, specifically, a lifetime of memories year after year

 

[disneynutz]

Yes, DVC is a phenomenal investment . . . . . . . . . . for memories and, specifically, a lifetime of memories year after year

Not to rain on your memories, but DVC is only a discounted room, people who don't buy DVC have just as many memories of Disney as we do don't they?

Bill

 

[Dean]

Not to rain on your memories, but DVC is only a discounted room, people who don't buy DVC have just as many memories of Disney as we do don't they?

Bill

They certainly have the potential to but some also have bad memories from buying DVC as well.

 

[crisi]

Not to rain on your memories, but DVC is only a discounted room, people who don't buy DVC have just as many memories of Disney as we do don't they?

Bill

Or memories of things completely unrelated. Memories are precious, and they are made LOTS of places that don't involve Disney World at all - or even vacations at all.

 

[SpaceMountain77]

Not to rain on your memories, but DVC is only a discounted room, people who don't buy DVC have just as many memories of Disney as we do don't they?

Bill

That was sarcasm. A lifetime of memories year after year is the DVC tagline that appears on many of the buses and billboards at the WDW resort.

 

[disneynutz]

That was sarcasm. A lifetime of memories year after year is the DVC tagline that appears on many of the buses and billboards at the WDW resort.

Guess I need to read more buses and billboards.

I still trying to find out what the best kept secret is!

Bill

 

[BWV Dreamin]

They certainly have the potential to but some also have bad memories from buying DVC as well.

Haha that's funny!

 

[BWV Dreamin]

Rental prices have historically lagged or been somewhat unrelated to sales prices of any type. I see no reason for that to change thus while it's easier to legitimately adjust for dues increases, it's more difficult to impossible to adjust for rental increases. Likely the best way to do so is to assume a lower than inflation adjustment. I'm not sure a spread of 3% increase for rental prices and 4% for inflation is quite enough to account for this, maybe 2-2.5% vs 4% is more reasonable. As for calculating return based on historical purchase, that is not an ideal approach with no other factors. If one looks at it from a true investment situation you've got to include other factors that include the TMV & return of principle.

Nice data. Another not so scientific factor, in my opinion only, is the competition against the value resorts. When renting deluxe vs. deluxe accommodations, the the rental rates are competitive. When renting deluxe vs. value accommodations, the spread is not such a savings. Also with the addition of AoA, that has also but a kink in the potential rental rates.

 

[Dean]

Haha that's funny!

It wasn't meant to be, buying DVC has not been a blessing for everyone that's done so. Some made a bad choice, their situation changed or their preferences changed over time; many were some combination of those factors. There are ways to make DVC more risky and also to make it less risky, there's no way to totally remove risk. IMO they include not overbuying (resort, # of points), resale over retail, having enough info and experience, no consumer debt and pay cash. That's not to mention other factors on the buyers side such as mortgage situation, job stability and the like and totally ignores factors beyond our control such as acts of nature major unexpected events. Every component of added risk also adds instability. Think derivative mortgages.

Nice data. Another not so scientific factor, in my opinion only, is the competition against the value resorts. When renting deluxe vs. deluxe accommodations, the the rental rates are competitive. When renting deluxe vs. value accommodations, the spread is not such a savings. Also with the addition of AoA, that has also but a kink in the potential rental rates.

Historically rental prices haven't gone up as much as retail prices. When I bought in 1994, I needed to rent some then I didn't use and did so at $10.50 a pt. When the crash hit after 9/11, I stayed at my prices and did not go down and now we have more formal pricing with the rental companies. I realize there are other factors but they are difficult to compare and likely even out. The reality is that even on it's best day, DVC or even Disney Value are still an expensive trips just for the hard coded costs.