DVC RENTAL QUESTION

[April Mayfield]

Hi everyone!
We're totally new to all this DVC stuff and I have a random question. If it costs $176 a point to buy into the DVC program, why are people renting their points for $10-18 per point? Aren't they losing a TON of $??? My husband doesn't believe that it's really $17 per point and costs 60 points for BW for our January dates because that's only $1020 for 5 nights, which is the same cost as a moderate. Please clear this up for me...he's making me nuts!!

 

[Wakey]

Going rate to rent points is $13+ a point. To buy new resorts is $180 a point now, but many people bought a long time ago, or buy resale where points can be had for much less (Saratoga for example $80 a point).
As to losing money, I do not understand? All they are doing is renting that year's points. They pay dues on those points (around $6 a point) so if they rent for $13 a point they are making a tidy profit , after payment of dues, not counting initial capital outlay.
It's like renting a house- you wouldn't pay the cost of the house in a single year's rent.
Yes someone renting points to stay can get a good deal compared to Disney rack rates - paying the moderate price for a deluxe DVC. This is even paying $17 a night, to a broker who is taking probably $3 a point cut after paying the renter $14.

 

[April Mayfield]

Going rate to rent points is $13+ a point. To buy new resorts is $180 a point now, but many people bought a long time ago, or buy resale where points can be had for much less (Saratoga for example $80 a point).
As to losing money, I do not understand? All they are doing is renting that year's points. They pay dues on those points (around $6 a point) so if they rent for $13 a point they are making a tidy profit , after payment of dues, not counting initial capital outlay.
It's like renting a house- you wouldn't pay the cost of the house in a single year's rent.
Yes someone renting points to stay can get a good deal compared to Disney rack rates - paying the moderate price for a deluxe DVC.

Thanks for the quick response. We thought that when people were buying in at $17,600 for 100 points that they were having to buy those 100 points every year.....do you automatically get those 100 points a year for the life of ownership and only pay annual dues after $17,600 is paid off? Sorry for the questions...this is just foreign to us.

 

[Wakey]

Thanks for the quick response. We thought that when people were buying in at $17,600 for 100 points that they were having to buy those 100 points every year.....do you automatically get those 100 points a year for the life of ownership and only pay annual dues after $17,600 is paid off? Sorry for the questions...this is just foreign to us.

Yes that is correct. Contracts last 50 years from when the resort first goes on sale (some of the originals were a bit shorter).

 

[chiisai]

Thanks for the quick response. We thought that when people were buying in at $17,600 for 100 points that they were having to buy those 100 points every year.....do you automatically get those 100 points a year for the life of ownership and only pay annual dues after $17,600 is paid off? Sorry for the questions...this is just foreign to us.

The dues are paid each year, whether you pay the initial buy-in (in your example $17,600) immediately or take out a loan to pay it off over time. I am not an owner, so someone else will need to share the avg annual dues as an example.

 

[Best Aunt]

You buy a contract which lasts until the ending point of all contracts sold for that resort. If you buy a 100 point contract, you get 100 points every year.

You pay for the contract.

You also pay dues every year.

 

[Deb & Bill]

Going rate to rent points is $13+ a point. To buy new resorts is $180 a point now, but many people bought a long time ago, or buy resale where points can be had for much less (Saratoga for example $80 a point).
As to losing money, I do not understand? All they are doing is renting that year's points. They pay dues on those points (around $6 a point) so if they rent for $13 a point they are making a tidy profit , after payment of dues, not counting initial capital outlay.
It's like renting a house- you wouldn't pay the cost of the house in a single year's rent.
Yes someone renting points to stay can get a good deal compared to Disney rack rates - paying the moderate price for a deluxe DVC. This is even paying $17 a night, to a broker who is taking probably $3 a point cut after paying the renter $14.

You are going to be hard pressed to find someone who will rent their points for $13 a point. More like $15 a point to start and up.

 

[hakepb]

FYI, you might have a hard time booking Boardwalk studios less than 7 months in advance.

 

[Marionnette]

Going rate to rent points is $13+ a point. To buy new resorts is $180 a point now, but many people bought a long time ago, or buy resale where points can be had for much less (Saratoga for example $80 a point).
As to losing money, I do not understand? All they are doing is renting that year's points. They pay dues on those points (around $6 a point) so if they rent for $13 a point they are making a tidy profit , after payment of dues, not counting initial capital outlay.
It's like renting a house- you wouldn't pay the cost of the house in a single year's rent.
Yes someone renting points to stay can get a good deal compared to Disney rack rates - paying the moderate price for a deluxe DVC. This is even paying $17 a night, to a broker who is taking probably $3 a point cut after paying the renter $14.

Once you take that "initial capital outlay" into consideration, renting out your points @$13 is not that great of a "profit". Dues are closer to $7/pt. than they are to $6/pt and are likely to go up considerably if Disney loses their property tax appeal. Someone who purchases a 100-pt. BWV contract today @$100/pt. would pay about $10,630 once they pay closing costs. That amounts to a purchase price of $4.25 per point on the 25 years of points remaining in the contract. So, given $6.47 pp for 2017 MFs and the buy-in cost, the owner is already in for $10.72 per point. The so-called "profit" on renting out at $13/pt. is extremely small ($2.28 per point). If you factor in the opportunity cost of the purchase or any interest paid on a mortgage or personal loan taken out for the purchase and you get an even smaller profit. If they went thru one of the brokers to rent out their points, the broker makes more on that exchange than the owner does.

Most owners who rent their points don't do it on a regular basis. They may want to take a year or two off from Disney and so they offer the points up rather than lose what they invested in those points. Those who do rent their points on a regular basis are looking to get more than $13/pt. for them.

 

[crisi]

Most owners who rent their points don't do it on a regular basis. They may want to take a year or two off from Disney and so they offer the points up rather than lose what they invested in those points. Those who do rent their points on a regular basis are looking to get more than $13/pt. for them.

Or bought them for a song. If you managed to buy SSR points below $60 in 2010, or OKW points back when it opened, your math is very different.

I also suspect a lot of rental happens in the gap years - the kids get too busy for family vacations, the grandkids haven't arrived yet, your DVC has been paid off for ages, you might as well rent the points.

 

[Lynne M]

Here's how DVC works.

That $176 per point initial buy-in cost buys you a share in ownership of a resort. I own 150 points at VWL (now Boulder Ridge), so I'm a part-owner of that property (a really little part. )

My ownership is expressed in points. Every year for the life of the contract, I get 150 points to use to "pay" for my lodging at Boulder Ridge, or any other DVC resort. I don't have to use them all at once, I can do 3 nights in a studio at Boulder Ridge, and later in the year do 4 nights in a 1-bedroom at OKW, for example.

As a part-owner of the resort, I'm responsible for paying my share of the costs of keeping the place running. That's what maintenance fees are - the property taxes, landscaping costs, utility costs, housekeeping costs, etc, get added together and divided up and each of us Boulder Ridge owners pays our share.

So, the cost of renting might seem inexplicably low to your husband, but that's why people buy DVC (or other timeshares). In return for buying a chunk of the resort, I get to stay in a nice villa at the resort for a much lower cost than that that villa would be for the general public.

 

[_auroraborealis_]

Put another way: If I had to pay $17,600 for 100 points every year, why would I do that instead of paying cash? Even in the highest of seasons, a Poly Studio is $840/night. That's 21 nights paid cash. But the 100 points, same season, would only buy 4 nights on points!