is my rudimentary math right?

[Y-ASK]

What I claimed is that 2025 use year points are worth less TODAY, in 2005, than 2005 use year points. Not because of inflation, but because of utility.

That was the part that I did not understand and now I see what you are saying. Now it finally all makes sense, thanks for the followup.

I'm not an advocate of purchasing into DVC just so you can rent all the points. I've considered that particular issue quite a while ago but have formed my opinion against that idea. DVC should not be bought as an investment but if you can rent points and offset the cost by purchasing more points than needed and renting what's left over to pay the maintenance fee it might work out for the good.

Y-ASK

 

[JimMIA]

An unrelated issue: If you really believe your annual points only cost you $6 each, why not buy 1000 points and rent them each year for $10-$11 each. Then you'd be making $4000-$5000 each year for the next 48 years, and that would only increase as rental prices go up!

I actually considered doing a variation of that, like Y-Ask suggested.

I bought OKW at 73, so I'm comfortable that my per point cost is about $6 right now...understanding that it will rise as dues rise. I decided against it for a couple of reasons.

One the gross margins aren't high. It's the kind of thing you can make dozens of dollars doing.

Two, all of the projections you might do are based on everything going absolutely perfectly. Problem is, Pobody's Nerfect. You're going to lose some points here and there because of cancellations, banking deadline problems etc, and that will cut into the margins.

Three, it seems like a pretty labor intensive undertaking to me. I'm sure it's fun to help people plan their vacations, but I don't think I'd want to HAVE to do that.

And finally, from some of the stories I've heard, renting points can be a lot of aggravation...especially if you are dealing with people who are new. I've seen most of the experienced renters take a very businesslike posture on rentals, and I know they do that for good reason. I know they've learned lessons along the way. That was probably the most compelling argument for me -- that it would be more hassle than it was worth.

I'd rather just enjoy my points.

 

[erikthewise]

Just to clarify my "buy 1000 points and rent" comment, I am not suggesting anyone actually do that. Not only because I think it's a slimy way to do business, but because I don't think you'd actually make anywhere near as much money as suggested. The whole point of that example was to cast doubt on the valuation of $6/pt.

 

[Caskbill]

Just to clarify my "buy 1000 points and rent" comment, I am not suggesting anyone actually do that. Not only because I think it's a slimy way to do business, but because I don't think you'd actually make anywhere near as much money as suggested. The whole point of that example was to cast doubt on the valuation of $6/pt.

Actually, there are some people who are doing just that. We know of one member who rents a lot of points via e-bay. One of the DIS members on this board once did an analysis of this particular person's past ads, and calculated he was doing about $35,000 a year in rentals.

It's tough to figure profit margins, but if this person purchased at an average price of $65 for example, and is renting points anywhere from $12 to $20 per point, I'll bet it's become a nice profit maker.

In fact, looking at e-bay right now and looking at some past rentals, I see many 5-night vacations that went in the $780 - $870 for BWV.

The one at $870 purchase would be something as high as $19.33/point (Standard view Adventure/Choice season) or as low as $9.15/point if it was BWV preferred view, Premier season. (highly unlikely). Current ads are for July so that's 11 pts/night or 55 points total. That means the $780-$870 selling ranges posted would be in the $14-$16/point range.

If the average goes for $15/point, and this person paid about 65/point to purchase, and $4/point maintenance, then in a little over 5 years everything is 100% paid for, and it's high profit after that. $15 - $4 maintenance = $11/point profit. Or roughly $600 profit on every week's rental made. Rent 50 weeks a year and that's $30,000 profit, or roughly $41,000 net.

 

[Y-ASK]

Just clarify my position, I don't have a problem with someone purchasing a bunch of DVC points and renting them, only that it's really not for me. I plan to mix my rental plans with my family's love of WDW. That way I will be able to enjoy more for less .

Y-ASK

 

[jmminarik]

Rudimentary math is actually preferable to the CPA/MBA stuff for this kind of a decision.

Amen.

-Joe