Has anyone compared owning points to renting points?

[crisi]

If your concern is Comcast, then you are throwing another variable into the mix.

Disney has never made rentals difficult. They haven't been helpful, but they've never put a lot of roadblocks up for people on either side of the rental equation.

No one knows how a new Disney parent company - or a sale of DVC to a different timeshare company if new Parent doesn't want DVC - could change this equation. Its possible that Parent Company might offer better discounts to DVC members - but restrict them completely from renters. Its possible that Parent Company could start charging DVC members for room damage - making it riskier for members to rent out their points. Parent Company could be even tougher in their trademark defense than Disney has been - making it near impossible to run a site like this. Parent Company could drive the parks into the ground, making our DVC investment worth a lot less - so renting may become really cheap and DVC very easy to trade into - or they could breathe new life into the parks - making people burned out by the past several years want to return and making points harder to rent. Parent company could lower the price of Disney hotels - so that renting is no longer attractive - Disney has always implied "if we want to compete with the point rental business, you won't have a point rental business." Which would be fine for the renter - they'd still get a great room at a great price, just from Disney (or Disney's parent company, or whomever Disney's parent company spins the hotel division off to).

No one has that crystal ball.

 

[invalid_char]

Originally posted by WebmasterDoc
The $10 pricing has happened within the past year.

With all due respect Doc, I do not believe this statement to be true. We first started to look into DVC exactly 3 years ago when the VWL were for sale and the prevailing price then was in fact $10 per point, with some even being offered on the rent/trade board for up to $12 per point. I remember this very clearly because several people were up in arms about renters charging more than $10 per point.

As far as what the price was 10 years ago, I can't really comment beyond the fact that the rental option was probably less well known then.

Again, regarding the $10 per point figure, I am inclined to believe my own memory and everyone is free to believe their memory. As far as what that figure will be in the future, everyone is also free to make their own prediction. My prediction stands that it will not appreciate as much as dues will and no one can prove that right or wrong.

Thank you all for your input.

 

[tjkraz]

Interesting thread.

Before buying into DVC we rented points twice at OKW. Having experienced how well the rental process went, we did actually ask ourselves whether we would be better of continuing to rent or if we should buy ourselves.

In doing some quick calculations similar to your own, we basically determined that our break-even point on buy vs. rent was about 12 years. I think that's pretty comparable to your numbers.

Basically, our indecision ended right then and there. Breaking-even at 12 years and then having another THIRTY-EIGHT years worth of vacations at a fraction of the cost was enough to convince us.

With the prevailing mantra here being "I wish we had bought sooner", I just couldn't justify waiting any longer. We spent $2000 to rent points at OKW at a point when DVC was selling for about $78 per point. While a portion of that $2k certainly would have gone toward annual dues if we had purchased instead, another big chunk would have gone toward reducing the initial investment.

Points are now apporaching $90 per point, and will only continue to go higher.

 

[Deb & Bill]

Originally posted by Desnik
...I think the decision has to be based on the individual. Here are the reasons we feel it isn't worth it for us to buy and continue to rent.
...
-When renting we receive the same DVC discounts and treatment as a member.
...
-DH won't fly so the other vacation destinations DVC offers do us no good.

So for now for us we will continue to rent and not buy.

Technically, renters are not entitled to DVC perqs according to the DVC literature, so you could lose that benefit in the future if they decided to enforce it. I have read on these boards about someone who did not get Member on their room key, but got Guest instead which did not entitle them to the DVC benefits.

We only use our points for DVC resorts since anything else to us is not cost effective.

 

[Solo]

The annual return on the points you own is the rental value minus the dues. In this example it is ($10 – 4 = $6). So, the return on your “vacation bond” is ($6/$75 = 8%). This not precise, but it is a useful number that everyone can relate to.

Assumptions:

1 – Cost of points is $75. Financing costs are not considered.

2 – For this analysis, point value is $10.

3 – For this analysis, annual dues are $4.

4 – Inflation will have about the same effect on point value, dues etc.

5 – The portion of dues paid for taxes are not considered.

6 – Residual property value is not considered.

Yes, yes…I know…points may cost more, rent for more and dues vary.

Discussion:

Conceptually, DVC has aspects of a “vacation bond” for short- mid-term analysis, but is more like having a “reverse mortgage” for long-term consideration. Short-term ownership will almost certainly lead to a depreciated value and loss of principal when selling This is especially true when using a broker due to the relatively large commissions of 12%, closing costs, resort transfer fees, title insurance, etc. DVC is the best value when held and used for a long time.

If you hold your “vacation bond” until your DVC property expires, you will receive a predictable fixed, annual, after tax rate of return on your initial investment of about 8%.

Financially, if you are able to earn an 8% guaranteed rate of return on money for the next thirty-eight years, you might be better off to invest the principal and use the yield plus what you would spend on maintenance fees.

The real determination of “value” depends on what you want to get for your vacation dollar. If you have a better financial alternative, is there a better vacation alternative?

Each individual situation will have different considerations. The other “pros” and “cons” probably make the decision for most people. For example, reduction of the “hassle factor,” resort quality, security, etc. are “pros.” “Cons” are whatever you want them to be. For example, point management is a little more complex than money management. For many, the Disney concept may not always fit your vacation style.

I'll be interested in reading additional posts on this, but may not have time to respond.

Good luck with your decision.

 

[Disney4ever4569]

I really don't think that there are too many people that bought DVC just to rent out the points. I'm sure there are a few. I think there are more people that bought DVC, and either couldn't use it or decided not to use it. As a result, they're renting out there points every year, maybe until they get there intital investment back, before they sell.

it just dosen't make sense that too many people that wanted to invest a lot of money would think "Let me buy a timeshare and then rent it" "Yeah that's a way to make a lot of money!".

Anyway, I do agree that a lot of people probably rent enough points to cover there dues. I'm considering doing that myself. My real motivation is to take Disney vacations!!!

 

[vanstoj]

I think your assumption about rental points remaining at $10 lookks to be flawed as a recent post suggested (which generated a lot of discussion), it looks like it might be heading into the $12 range. Also, I think home resort might result in certain resorts generating more per point than others because they are smaller resorts and people need to 11 month booking window in order to book into these resorts. think HH during summer.

 

[PamOKW]

Since 9/11, WDW has been in a slump. Resort prices came down and unbelievable discounts were made available. Since December, things are picking up (read recent trip reports) and we may soon see WDW resort prices stabilizing. Once that happens, rental prices may be freer to move up as well. Rentals need to be less than Disney prices. There also seems to be a growing awareness of the rental process. How supply and demand works out will, of course, also influence prices.

Rentals in the early 90's were negligible because it couldn't be done as easily as it can now on the Internet -- and especially right here on these boards. Awareness of what "DVC" was also created a problem that has been resolved as 75,000+ members are out there spreading the word.

Renting points always puts you at the mercy of someone else both to make the reservation and to come up with a fair price. I can see where it's a good idea for occasional trips or when the cash outlay to join is a problem. Otherwise, the cost of renting is inching up and the cost of purchasing DVC is also increasing. As people pay more for DVC in both initial cost and dues, the price has to go up for rentals or they are treating strangers to great Disney trips.