Is Renting DVC Really THAT great of a deal?

[Jimmy Geppetto]

https://www.dvcresalemarket.com/blog/best-economical-dvc-resorts-to-purchase-spring-2022/

This is why. This math has some limitations, like linear depreciation. But assuming it's in the ballpark, why would you buy $14, $15, $17 points and lock up five figures and take on the risks of owning when you can just rent for $19?

Add in the cost of financing, and renting is a total no-brainer to me.

And yes, renting can have some upside, like skip a year, change resorts, do it big this year. Renting does also have risk and downside, as does ownership.

So no math to back it up. Just qualitative opinions? I'd be interested in seeing your math.

 

[BeachClub2014]

So no math to back it up. Just qualitative opinions? I'd be interested in seeing your math.

 

[DonMacGregor]

 

[disneydreamer1980]

When I bought in years ago and prices weren’t astronomical, (snd when my parents bought in to OKW in the early 90s at around $50 per point) ownership was a great deal but nowadays with prices being what they are, plus dues, I don’t see how there is much of a savings over renting. Over rack rate for sure, but not too much over renting I wouldn’t think. Not at todays prices. If I had to choose today I’d rent instead of buying

 

[RoseGold]

So no math to back it up. Just qualitative opinions? I'd be interested in seeing your math.

Closing costs alone are several hundred dollars. That's enough to flip the math. If you have any way to invest five figures of money, the margin will be even slimmer. Add in disgraceful DVC financing, and it flips the whole table for years. When financing, I don't see why anyone wouldn't just rent until they can save for it, instead of opening up the risk of foreclosure and paying all the costs associated with financing.

I bought my points closer to $10 on that table, but I'm still leaving $30/point on the table by not selling now. And of course, you can't buy it at that now.

The margin is slim between renting and buying, better in many cases. IMO, that small "savings" doesn't at all reflect the cost and risk with tying up five figures. Historically, this has done well, maybe you believe this is an "investment" that will keep going up at these rates. I don't believe that's possible, but no one has a crystal ball. DVC could also plummet, which seems like a real possibility with current general Disney decisions.

I own a lot of DVC, but not because I think it's cheaper than renting points or staying at Swolphin, because it isn't. So, yea, I think renting is mathematically a pretty good deal and should cost more, given the current cost of DVC.

 

[bakerworld]

We aren't usually in a rent situation but last year we had an issue so I tried to rent for the first time. Our renter was able to stay at SSR over Labor Day weekend for $200/n. I thought that was a pretty good deal for her and for us.

 

[Robbie Cottam]

When I bought in years ago and prices weren’t astronomical, (snd when my parents bought in to OKW in the early 90s at around $50 per point) ownership was a great deal but nowadays with prices being what they are, plus dues, I don’t see how there is much of a savings over renting. Over rack rate for sure, but not too much over renting I wouldn’t think. Not at todays prices. If I had to choose today I’d rent instead of buying

For my upcoming RR vacation renting would have cost me approximately 7200 dollars

The entire 50 year contract was 36k….
Yea taxes will need to paid paid…. But 5 year and break even .

I am willing to bet the price per point renting will stay around 20 per point, over the next year or two but be close to 30 a point in the next 5 to 7.

The math always looks better in the beginning for renting…. But completely turns around at 8 to 10 years, if you plan on using the membership…..

 

[AC168]

For my upcoming RR vacation renting would have cost me approximately 7200 dollars

The entire 50 year contract was 36k….
Yea taxes will need to paid paid…. But 5 year and break even .

I am willing to bet the price per point renting will stay around 20 per point, over the next year or two but be close to 30 a point in the next 5 to 7.

The math always looks better in the beginning for renting…. But completely turns around at 8 to 10 years, if you plan on using the membership…..

Yes … this. No brainer to buy even at these high prices. Not having money available is one thing but if you do and are ok being locked into periodic DVC stays through the years … strikes me as no brainer to buy over rent over rack rate.

 

[DVC Doctor]

I am willing to bet the price per point renting will stay around 20 per point, over the next year or two but be close to 30 a point in the next 5 to 7.

Robbie, I really enjoy your posts and usually agree with you, and I hope you are correct, but it is hard to see $30pp in the next 5-7 years for an average DVC point rental. Sure, perhaps there will be some spec rentals that may get that, but that seems extreme as it is a 50% increase on top of a significant 5 year rental rate increase. As with all pricing, the only reason people will want to rent DVC points from someone is to save $$$ from Disney rates. to be honest, I am still shocked to see $700+ nightly rates for studios like BLT, etc and have no idea how average people pay that rate. So the future still looks great for DVC as both an owner and a renter.

Also, I want to state that 2020 was a TOUGH year for anyone renting points as Covid hit during spring and summer breaks and I had a bunch of rentals during that time. I too preserved 100% of the points for anyone that rented from me and I was able to rebook (some a year or two later) and some got a refund if I could rent to someone else. In this situation, I felt that non-broker rentals such as Robbie and myself, and many others that were willing to work for their clients (friends) were much better than the brokers like David.

 

[DVC Doctor]

Yes … this. No brainer to buy even at these high prices. Not having money available is one thing but if you do and are ok being locked into periodic DVC stays through the years … strikes me as no brainer to buy over rent over rack rate.

Well, a no-brainer usually assumes paying cash for a DVC purchase as finance charges really shift the cost per point in a significantly bad direction.

 

[sipnride]

"When financing, I don't see why anyone wouldn't just rent until they can save for it"

It's odd to me that there's so much tsk tsk when it comes to financing DVC but honestly people in this country (USA!) finance cars we can't afford and don't really need all the time. We buy appliances and make superficial improvements to our homes, often without actually needing to do so and none of which will ever actually provide ROI. Many families put tens of thousands into weddings, bar mitzvas, quinceañeras, etc that if one were to think about it from a purely financial perspective is no better than throwing that money into a BBQ pit and setting it on fire.

I think grown people are very capable of deciding whats valuable to them. DVC ownership isn't a fancy coupon book its an experience, the planning, the anticipation, the compelling excuse to travel to your favorite destination every year, a vehicle for bringing family together year in and year out. That it has a decent chance of holding its value and possibly appreciating is an incredible bonus. I don't see why anyone would want to criticize that.

 

[RoseGold]

It's odd to me that there's so much tsk tsk when it comes to financing DVC but honestly people in this country (USA!) finance cars we can't afford and don't really need all the time. We buy appliances and make superficial improvements to our homes, often without actually needing to do so and none of which will ever actually provide ROI. Many families put tens of thousands into weddings, bar mitzvas, quinceañeras, etc that if one were to think about it from a purely financial perspective is no better than throwing that money into a BBQ pit and setting it on fire.

Sure. And I bought $100 in Powerball tickets. It's a free country and people can do what they want with their money.

This thread is about math. There are many circumstances renting is mathematically better or the same than buying right now. When you are justifying years long break-evens, with a lot of risk and assumptions, or if financing is even in this discussion, you aren't buying for math. Right now, at current DVC pricing, renting is a great mathematical option.

 

[Robbie Cottam]

Robbie, I really enjoy your posts and usually agree with you, and I hope you are correct, but it is hard to see $30pp in the next 5-7 years for an average DVC point rental. Sure, perhaps there will be some spec rentals that may get that, but that seems extreme as it is a 50% increase on top of a significant 5 year rental rate increase. As with all pricing, the only reason people will want to rent DVC points from someone is to save $$$ from Disney rates. to be honest, I am still shocked to see $700+ nightly rates for studios like BLT, etc and have no idea how average people pay that rate. So the future still looks great for DVC as both an owner and a renter.

Also, I want to state that 2020 was a TOUGH year for anyone renting points as Covid hit during spring and summer breaks and I had a bunch of rentals during that time. I too preserved 100% of the points for anyone that rented from me and I was able to rebook (some a year or two later) and some got a refund if I could rent to someone else. In this situation, I felt that non-broker rentals such as Robbie and myself, and many others that were willing to work for their clients (friends) were much better than the brokers like David.

I may be off on my SWAG about 30 a point in 5 to 7 years… but I don’t think by much.

Inflation is rampant…. Disney is going to be forced to drive up the rack rate.

People are going to want a “deal”.

In the late fall of 2020 I have people emailing me about points for sale post I have made years prior looking for anything…. Trying to get a “deal”

Rental companies are going to have to charge more for there cost of doing business.

The cost of buying DVC will become a larger perceived barrier to entry, causing more would be buyer to rent while they wIt and see.

As rough as the economy is likely to be for the next couple of year…. I think you will see upward move in the rental price.

But I might be wrong I refuse to stay a holiday inn EVER!!

 

[Starport Seven-Five]

It's odd to me that there's so much tsk tsk when it comes to financing DVC but honestly people in this country (USA!) finance cars we can't afford and don't really need all the time. We buy appliances and make superficial improvements to our homes, often without actually needing to do so and none of which will ever actually provide ROI. Many families put tens of thousands into weddings, bar mitzvas, quinceañeras, etc that if one were to think about it from a purely financial perspective is no better than throwing that money into a BBQ pit and setting it on fire.

I think grown people are very capable of deciding whats valuable to them. DVC ownership isn't a fancy coupon book its an experience, the planning, the anticipation, the compelling excuse to travel to your favorite destination every year, a vehicle for bringing family together year in and year out. That it has a decent chance of holding its value and possibly appreciating is an incredible bonus. I don't see why anyone would want to criticize that.

For me this comes down to interest rate. Even in the best times we were seeing double digit rates for DVC financing. Auto loans rates were orders of magnitude lower for the last decade so I wouldn't give that the same stigma (we financed vehicles despite having the money available because <2% rates are cheap money).

When you're paying a high interest rate, the cost of the purchase balloons quickly.

 

[sipnride]

For me this comes down to interest rate. Even in the best times we were seeing double digit rates for DVC financing. Auto loans rates were orders of magnitude lower for the last decade so I wouldn't give that the same stigma (we financed vehicles despite having the money available because <2% rates are cheap money).

When you're paying a high interest rate, the cost of the purchase balloons quickly.

No I definitely didn't mean to downplay that. Those interest rates are brutal and getting worse thanks to the fed hike. I think my point is just that financing dvc seems to draw a lot more heat than spending money on other purchases which are often just as foolish if the only thing we're doing is looking at the numbers. Whether financing or paying cash the moment you drive that new car off the lot there goes 30% what you paid right out the passenger window. Not that I'm criticizing that, only saying that when we play the "what people could do with their money" game we should also consider what people actually do with their money and judge this against that.

 

[Robbie Cottam]

The longer this thread runs the more I’m convinced that the only right answer is what is best for each family….

Me personally would rather buy things over time…. 9.9 interest for DVC was a small price to pay…… actually for a while it was tax deduction…

Oh and I lease new cars. And almost never finish the lease before I get a new one….

 

[sipnride]

The longer this thread runs the more I’m convinced that the only right answer is what is best for each family….

Me personally would rather buy things over time…. 9.9 interest for DVC was a small price to pay…… actually for a while it was tax deduction…

Oh and I lease new cars. And almost never finish the lease before I get a new one….

How were you able to deduct the interest?

 

[Robbie Cottam]

How were you able to deduct the interest?

check with your accountant, not legal or financial advice

https://ttlc.intuit.com › help-article › tax-credits-deductions

 

[Unclelude]

Ima relatively new owner at 2 years. I have a fairly detailed spreadsheet going ... I have stats against Rack rate/ Actual cash/ Rental

In 2 years here's the summary ( the realized value is gross cost - rate + estimated resale ... I know 'realized' not the best term here cuz I'd have to sell the contract to realize it ... roll with it... )

Realized Rack Value	Realized CashValue	Realized Rent Value
$7,137.74	$4,649.58	-$251.38

I should start pulling ahead in my next stay. These numbers have a $65 difference between what I paid, and current resale. ( I initially bought 100 pts direct -- there's some credit card magic that lessens the gap, in the end, its just gross cost including dues etc... my point is a $65 gap is fairly big, resale would be much better ... and I'm almost 'even'... )

At 2 years, I'm about 1/3 of the way thru my gross cost vs rental ... ( and essentially even considering resale )... I expect that will slow down as dues will be a bigger drag as a percentage of gross ... but who knows what will happen with dues and rental rates...

Anyway, that's my math!

Have fun!

 

[DVC Doctor]

It's odd to me that there's so much tsk tsk when it comes to financing DVC but honestly people in this country (USA!) finance cars we can't afford and don't really need all the time. We buy appliances and make superficial improvements to our homes, often without actually needing to do so and none of which will ever actually provide ROI. Many families put tens of thousands into weddings, bar mitzvas, quinceañeras, etc that if one were to think about it from a purely financial perspective is no better than throwing that money into a BBQ pit and setting it on fire.

I think grown people are very capable of deciding whats valuable to them. DVC ownership isn't a fancy coupon book its an experience, the planning, the anticipation, the compelling excuse to travel to your favorite destination every year, a vehicle for bringing family together year in and year out. That it has a decent chance of holding its value and possibly appreciating is an incredible bonus. I don't see why anyone would want to criticize that.

What makes DISboards interesting is the variety of opinions people have to try to challenge each other

Truth be told, I think it is a bad idea to buy a $200pp contract with 10% down and 10% financing as renting is so much cheaper. On the other hand, if you have to buy, then I would advise to buy a small 25 or 50 point contract and then transfer into your account points as needed.

I may be off on my SWAG about 30 a point in 5 to 7 years… but I don’t think by much.

Inflation is rampant…. Disney is going to be forced to drive up the rack rate.

People are going to want a “deal”.

In the late fall of 2020 I have people emailing me about points for sale post I have made years prior looking for anything…. Trying to get a “deal”

Rental companies are going to have to charge more for there cost of doing business.

The cost of buying DVC will become a larger perceived barrier to entry, causing more would be buyer to rent while they wIt and see.

As rough as the economy is likely to be for the next couple of year…. I think you will see upward move in the rental price.

But I might be wrong I refuse to stay a holiday inn EVER!!

There are a handful of nice Holiday Inns, but i agree that the cost to buy and finance will be an issue for many people in 2023 and beyond