My calculations show a breakeven of 16 years, 30 years if financed...Am I incorrect?

[Mtnman44]

Your calculations are nearly an apples to oranges comparison..You are comparing "best case" of always being able to rent for $10 to the "worst case" of financing a DVC at 14% for 10 years (ouch).

Even so, don't forget to include in the calculation the fact that after the loan is paid off, you now have a valuable asset to either liquidate or use on more vacations for only the MF costs.

With renting you will have nothing but memories, good ones no doubt, but they won't get you a financial return.

 

[tjkraz]

Your calculations are nearly an apples to oranges comparison..You are comparing "best case" of always being able to rent for $10 to the "worst case" of financing a DVC at 14% for 10 years (ouch).

I think his assumption was a rental rate of approximately $5 over cost of dues. For 2009 he's renting at $10 which is $5 toward dues plus $5 "profit" for the owner. In a few years it might be $11 rental ($6 dues / $5 to owner.)

Even so, don't forget to include in the calculation the fact that after the loan is paid off, you now have a valuable asset to either liquidate or use on more vacations for only the MF costs.

Another very good point. Regardless of the breakeven, there are still many years on the back end which would be net savings. If your breakeven on BLT is 18 years, that leaves 30+ years of deep savings.

Or if you have to sell in the interim there are dollars to be recouped.

 

[Brian Noble]

I think the broader question is an important one, though, and one that too few people think about when buying any timeshare---will I still want this ten years from now?

If the answer is "probably not", then many folks will be better off renting. Just ans renting carries risk, so does owning---including the risk that your vacation habits or discretionary resources change.

 

[crisi]

Yes, I was wondering as to if I should buy in versues continue renting....

I just cant justify it with financing

Oh well, if I only had $20k lying around! (want 250 points)

Who knows maybe I will just take the plunge and do it anyways!

You might want to consider trying to find a small (like 50 point) resale. That would allow you to rent points by having someone transfer points to you - you'd retain control over the points and reduce risks. Since DVC has gone to one transfer in or out per contract per year, its a little more difficult to do this than it used to be. Once you are in, you can continue to purchase points in smaller increments.

 

[hakepb]

You might want to consider trying to find a small (like 50 point) resale. That would allow you to rent points by having someone transfer points to you - you'd retain control over the points and reduce risks. Since DVC has gone to one transfer in or out per contract per year, its a little more difficult to do this than it used to be. Once you are in, you can continue to purchase points in smaller increments.

I believe there are transfer-in limitations (not more than the points you own?) and/or you cannot use more than 3 UY's worth of points within a single UY?

 

[tjkraz]

Admittedly I don't follow the rental market closely but right now it seems to be a rentee's market (the non-member.) We rented back in '02 and paid $10 per point. If that's still a price one can reasonably expect to find, then renting points is not a business for me. Some resort dues have increased more than 40% over that time!

My guess is that the supply and demand is out of whack. Too many members renting points and not enough buyers. Perhaps the rentee market is even shrinking as people buy into DVC. I know we did!

Aside from that there are too many casual renters that will never demand top dollar. Certainly they will want more than $10 per point at some time. But when and how aggressively will prices climb upward?

That said, ownership brings certainty. The amount I paid for my points will not change. The value I get for those points will not change. Dues will, but the margin for adjustment has been pretty well established.

I knew renting was an option when we bought but one thing I told my wife was that I didn't want to end up deciding to buy several years down the road when points cost 30% more and contract durations were lower. While DVC has continue to roll-out longer contracts, prices are certainly a lot higher than the $79 per point we paid!

Renting may be cheaper now but it brings a great deal of uncertainty. What could DVC / Disney do to limit rentals? Will they curtail benefits and services offered to those staying on rented points? What will happen to pricing as dues climb higher and the economy improves?

And again there's the issue of not owning a tangible asset as a renter. I am 100% certain that I could sell my points today and make back all of my initial investment. That means I have taken 6 years worth of trips for the cost of my dues...$3.80 - 4.34 per point--plus some allowance for lost interest on the initial investment. Still much cheaper than renting!

 

[Mtnman44]

Thanks. Can't believe I didn't think of that.... doh!

I think his assumption was a rental rate of approximately $5 over cost of dues. For 2009 he's renting at $10 which is $5 toward dues plus $5 "profit" for the owner. In a few years it might be $11 rental ($6 dues / $5 to owner.)

 

[Mtnman44]

I'll just also add some of my thoughts to the "owning brings certain non financial benefits" line of thinking. Some of these include independence and the ability to plan your trip when and how you want. Being dependant on someone else, a stranger no less, is a no go for me. Then there is the transaction risk that is discussed on the board constantly. Then there is the uncertainty IF there will even be points available to rent when and where you want.

To me, planning the next 10 to 20 years of WDW vacations around private rental transactions is...well, let's just say that is not the way I would do it. Nor would I plan on buying peoples' airline miles and hope they can score me some good reward seats to fly to FL every year.

 

[permavac]

I believe there are transfer-in limitations (not more than the points you own?) and/or you cannot use more than 3 UY's worth of points within a single UY?

Actually, the "not more than the points you own" transfer issue (actually I think the rumor was 3x your points - but not positive) was brought up during another thread a while back and scared me a fair bit! Thankfully, that was debunked at the time, however, I don't remember who debunked it or what the specifics were. Dang my terrible memory! Anyway, at the time I was reasonably assured that this was not the case. If anyone else remembers feel free to refresh us...

Terri

 

[Brian Noble]

What could DVC / Disney do to limit rentals?

Wyndham has now done two things which, taken together, are going to lead to a pretty dramatic sea-change in how the commercial renters do business.

First, like DVC, they are limiting the transfer of points between owners. Unlike DVC, there will be no transfers at all. This has a larger impact on the Wyndham commercial renters than DVC's, because most Wyndham landlords have "status", and can obtain short-notice reservations at a discount. These landlords could buy up cheap transfer points and "wash" them through their VIP accounts. No longer.

Second, Wyndham now charges for guests on an owner's reservation. Each member gets some number of "free" guests---it varies based on how you acquired your points, and how many you own. After that, it is $100, minimum, per guest reservation---non-refundable.

DVC has clearly already taken some steps to make life less pleasant for the commercial renters---the limit to one transfer per year, and only speaking with the Member, never the guest. It will be interesting to see if they go any farther, and if so, what they come up with.