$$ of renting points 5 years ago

[thecajunmouse]

after reading several threads from people considering whether DVC is worth it, i was wondering how much points rented for 5 years ago, 8 years, etc.
for non-DVC members it seems like a pretty good deal to rent points, but i assume that will increase just like everything else.
where does the $10-11 per point get set? does it gradually trend upward? does that price/point change depending on the season or depending on the rack room rate? i was just wondering how that has changed over the past years of DVC. i'm sure you veterans have a lot of insight.
just curious and as a new member with DH trying to already get add-on-itis i was wondering how i will fare in the future if we buy more points and we wanted to go places other than disney. i know disney is in our future a whole lot for the next several years...we have a 2-yr old, 10-mth old and one due in june...they all will be 15 months apart. but we have been known to leave a kid or two for a vacation for us...going skiing for example...and it seems sometimes better to just pay cash rather than using your points.

 

[spiceycat]

it was $8 a point.

then Disney started if you buy with us you will get this much money for your first year point.

well that amount was $10 - so overnight it went to $10.

yes by now it probably should be at $12 - but it has not happened...

I can see a reservations at BCV or BWV getting $12 - maybe VWL too - but OKW and SSR will probably still be $10. too much competition.

 

[MrShiny]

The price per point would never vary with the season too much, because the amount of points for a given reservation does that.

Rental rates have drifted upwards, but not as fast as rack rates. However, I think you will see as rack rates increase, so too will retal points.

It's supply and demand. Right now, the supply seems to outpace demand somewhat.

You know, what would really make these rates take off is if there were some sort of third party that would handle it and protect both sides.

 

[thecajunmouse]

bump.

 

[DebbieB]

Keep in mind that it is up to the individual member what they rent their points for. If you want to try to rent your points for $15 and can find a buyer, you can. On the other hand, some desparate members may rent for $8.

 

[dtndfamily]

I think that the rental rates will also increase with the increase in maintenance fees, even more so than with the increase in rack rates. If they were tied closer to the rack rates we would have seen the average rental rate jump much more over the last few years. Once MFs climb to higher levels my guess is we will see the average rental rates also increase accordingly.

 

[Splash Mountain Fan]

This is new to me but here is my opinion.

I completely agree with many others who say, “Do NOT look at an investment into DVC as a sound financial decision.” Many mistakenly purchase into DVC with sole intent of renting all or a large portion of their points thinking they are making a good profit.

Why do owners rent so cheap??? I believe when they price their points for rent they are not calculating their finance charges or another MAJOR (but simple) factor into the pricing: The time value of money. They look at their fixed initial purchase cost of DVC as being amortized over the life of the whole contract (100 points @ 80.00 pp = $8,000 / 38 years = $211 per year). Then they add the variable maintenance fee cost. (100 points @ $4.24 pp = $424 this year). So they see their total 2005 cost as $635, and are comfortable renting their points at $10 pp, which profits them $365 (100 points @ $10 pp = $1,000 - $635 annual cost). This would be correct to assume for 2005 only. For each subsequent year the FV (future value) of the initial cost needs to appropriately be calculated. For $211 is obviously not as valuable 10 years from now as it is today (If you where to invest $211 at a MODEST 5% annually over the next 10 years, the value of your investment would increase to $344). But 10 years from now, most will still see their fixed annual cost at the original $211 when in reality it should be $344).

So what I’m saying is, the renter’s profit margin will shrink each year if the rental price per point continues to stay stagnant and does not increase at a more rapid pace. This is why an investment in DVC should not be for financial reasons alone.

 

[mydogdrew]

I think that the rental rates will also increase with the increase in maintenance fees, even more so than with the increase in rack rates. If they were tied closer to the rack rates we would have seen the average rental rate jump much more over the last few years. Once MFs climb to higher levels my guess is we will see the average rental rates also increase accordingly.

Agreed. However, remember that maintenance fees will always reflect inflation trends while point rental rates reflect the market for accomodations. The going rental rate has been $10 for the last few years while dues have increased. Recent history has seen an erosion of the value of DVC in some eyes. I tend to think you are correct over the long-term. However, it is a substantial risk factor for DVC owners (all timeshares for that matter). There is something unique about DVC - its generally easy to rent for at least twice your MF's. Pick any other timeshare and you can usually find something to rent for MF or even less. A timeshare quickly becomes a liability as soon as the underlying rental value is less than the dues.

 

[Alexander]

We rented points 3-4 years ago. We rented from four different people at rates of $9.00 and $10.00.

Why anyone would consider DVC to be a good financial investment is beyond me. It is a pre-paid vacation. Vacations are not good financial investments. They are priviledge spending. Many people cannot afford to take vacations, so I feel priviledged that we can.

Do I think we made a good choice buying into DVC? Well there are two answers here:

Yes because we don't have to shell out a ton of cash every year to pay for accomodations, and yes because we are staying in very nice accomodations.

No because we didn't buy in sooner!
There is nothing I can do about the latter, so we'll just enjoy our vacations!

Good financial sense??? I just don't get that. There are so many other ways to invest your money. And who cares what people rent their points for. It's their own business. Many of us give our points away to family and friends.

 

[Johnnie Fedora]

Rental rates are low, especially here on the DIS because many DVCers simply don't care about the value of what they are offering. It's not that they couldn't get more for what they are selling. They figure if they don't dump them for $10 or less, they will never sell them, and the fret-factor kicks in. DIS board policy encourages the selling of points and not exsisting reservations, this helps keep point costs down because you are selling an unknown. Since you don't know the time of year or resort, a fiscal comparision can't be drawn between the reservation your selling and what a buyer could get the same reservation though CRO.

The smaller resorts should definetly sell for more, but if your selling points, you have no idea whether the reservation will be at SSR or BCV.