Pricing of Rental Points

[Richyams]

I've got an e-mail drafted, I will post it later for opinions.

I plan to send it to every bidder on every Ebay auction. It briefly explains DVC, states that the going rate is $10 or less per point, has a link to the point calculator and a link to the rent/trade board here.

I know, there will still be scalping of highly desirable reservations, but it may hurt a deal or two.

 

[DGuiltinan]

for your reply to Tinkerbell, and for your good points.

I agree with you that you have to factor in the principal payments as well, and that ownership can be the best way in many circumstances. I think the primary consideration for a prospective DVC owner is, "Can we afford this?". I believe, that if they have any personal debt, at an interest rate of 10% or higher, that they could pay off instead, they probably are better off reducing their debt.

The proper way to look at a potential DVC investment is to look at the incremental impact. Ask yourself "What else could do with this money?". If you have to finance your membership in DVC, you have to consider not only the interest portion of your monthly payments, but also what you could otherwise do with the monthly principal payments.

To exemplify, if you financed $10,000 (150 points at $67 per point), at 7% (is this about what they charge?), your are paying $700 in Interest. I know, you may say that the interest comes down as you pay off the loan, but remember, if you did not have to pay down the principal of that loan, you could be, instead, reducing the principal balance on your home mortgage, at, say, 7%. So, the incremental cost of this DVC investment is $10,000 x 7% per year, or $700 per year. And don't let the DVC salespeople fool you, this cost does not go away as you pay off the loan. It is a carrying cost that will be with you in year 1, and in year 20, and in year 43.

So, this $700, divided by 150 points, equates to $4.67 per point. Add to that an estimated $3.50 in annual maintenance costs, I would now come out with a total point cost of just over $8 per point.

This $8 per point may be acceptable to you. It adds up to a studio for about $100 per night, a great deal in my opinion.

On the other hand, if you have no debt, or better yet, have savings built up, the incremental impact is much less, and the per point cost to you may very well be less, because you very well may have the savings in the bank or money market accounts earning a rather small return. Let's say Doc P has $10,000 in the bank, earning 3% interest. By spending $10,000 on a DVC membership, his annual cost, the lost interest income, is $10,000 x 3%, or $300 per year, or $2 per point, plus $3.50 maintenance for a total of $5.50 per point. I think this is how Doctor P is looking at the whole picture.

In conclusion, DVC ownership decisions are clearly very personal in nature. The decision should based upon how much you love WDW, and how much you love the idea of having a vacation plan in place for perhaps the rest of your life.

But, don't just blindly accept someone else's opinion as to how much a point costs a DVC owner. Rather, ask yourself, "What is the incremental cost to me?". You may very well find that DVC ownership is the right thing for you.

I just convinced myself in the writing of this letter that DVC ownership IS the right thing for me!! I wish my wife would let me buy a resale... Karen, are you listening?????

 

[SimbaNoodle]

I bought my DVC membership because I love Disney and the villas looked great. If Disney really wants to sell memberships, just put potential buyers up at one of the All Star Resorts for one night with 2 kids and then the next morning show them a 1 br villa and they will buy on the spot, at least I did.

I just got back last week from 6 nights in a 2BR at OKW. We brought some people that had never stayed in a villa before and they were shocked at how spacious and nice the villas were. They said they would never come back without us.

Also, I have a 1br villa @ WL for rent during NYE. LOL.

 

[Maistre Gracey]

WOW!!!!
I am with Doctor P on the cost/investment end (very, very well put Doc!), and I'm with Richyams on the morality of renting stuff.

Nicely said!!!!!

 

[sgtdisney]

As long as you have a majority of DVC owners who are not in it to make a profit you will see the price people charge to rent points at the level that it is currently at, if not lower. Most of us did not join DVC to make money. I have never had an occasion to rent points, nor do I ever plan on it. If I did, it would be because a few points were set to expire and then I would charge what I consider to be cost for them. I suspect most members who have expiring points are happy to get 5 to 10 dollars a point for them rather than lose them and aren't in the market to charge 15 to 16 a point and profit from it. As long as you have a majority of people willing to accept $10 or less, I doubt you will be able to drive the price up above that very far for most sales unless you have found someone who doesn't know what the market is really bearing.. Now, if Richyams sends those letters out as he says, the ebay market may just dry up.

 

[FredS]

Originally posted by Dean
DVC members are expressly allowed to rent per FL law and the POS.

Just curious as to where you think this is "expressly" stated in both Florida law and public offering statement??

 

[CarolMN]

Originally posted by FredS
Just curious as to where you think this is "expressly" stated in both Florida law and public offering statement??

When we puchased BWV in late 1999, item #6 on the Product Understanding Checklist read as follows:

6. You may sell, rent, transfer, or will your Ownership Interest. DVD has a right of first refusal to repurchase your Ownership Interest on the same terms and conditions, including financing, that your buyer has offered. DVD currently provides no assistance in resale or rental of your Ownership Interest. In the event you attempt to resell or rent your Ownership Interest, you would compete with DVD for buyers and renters at a substantial competitive disadvantage.

Don't have time this morning to find my CD and search for the information in the POS, but I'm sure it is also in there somewhere.

HTH.

 

[CarolMN]

OK. It didn't take as long as I thought it would. The following is from the Disclosures section of the POS:

IIA. DVD DISCLOSURES
...(snip).....Ownership Interests are offered for personal use and enjoyment only and should not be purchased by any prospective purchaser for resale or as an investment opportunity or with any expectation of achieving rental income, capital appreciation, or any other financial return or valuable benefit, including any tax benefit. Owners attempting to resell or rent their Ownership Interests would have to compete, at a substantial disadvantage, with DVD in the sale or rental of its Ownership Interests. Generally, there is no established market for resale or rental
of Ownership Interests, and the many restrictions upon the use of an Ownership Interest may adversely affect its marketability or rentability. [Section 12]

Ownership Interests should also not be purchased with any expectation that any Vacation Home located at DVC Resorts can be rented, or if it is rented, that any particular rental rate can be obtained for such rental. Club Members should be aware that several resort hotels are in operation within and around the DVC
Resorts, including hotels owned and/or operated by The TWDC Companies, and that DVD will also rent its Ownership Interests to the general public. Accordingly, any Club Member who attempted to rent reserved Vacation Homes for his or her own account would compete with these resort hotels and DVD for renters without any assistance from The TWDC Companies, and would be at a substantial competitive disadvantage. Club Members should not purchase an Ownership Interest based upon any expectation of deriving any rental or other revenue or profit therefrom. [Section 12]
.......

Here's some more from the POS (Sections 11 & 12):

11. Restrictions upon Sale, Transfer, Conveyance, or Leasing of Ownership Interests.
The sale, lease or transfer of Ownership Interests in the Club is restricted and controlled. Pursuant to the provisions of the DVC Resort documents, the sale, lease and transfer of Ownership Interests are subject to restrictions and controls. For example, no Club Member may directly rent, exchange or otherwise use his or her Ownership Interest without making a prior reservation of an available Vacation Home at a DVC Resort on a first come, first served basis. Club Members should refer to the public offering
statement for their Home Resort for details.

12. Personal Use and Enjoyment.
The purchase of an Ownership Interest should be based upon its value as a vacation experience or for spending leisure time, and not considered for purposes of acquiring an appreciating investment or with an expectation that the Ownership Interest may be rented or resold. Ownership Interests are offered for personal use and enjoyment only and should not be purchased by any prospective Purchaser for resale or as an investment opportunity or with any expectation of achieving rental income, capital appreciation, or any other financial return or valuable benefit, including any tax benefit. Owners attempting to resell or rent their Ownership Interests would have to compete, at a substantial disadvantage, with DVD in the sale or rental of its
Ownership Interests. Generally, there is no established market for resale or rental of Ownership Interests, and the many restrictions upon the use of an Ownership Interest may adversely affect its marketability or rentability.

-12-
Ownership Interests should also not be purchased with any expectation that any Vacation Home located at DVC Resorts can be rented, or if it is rented, that any particular rental rate can be obtained for such rental. Club Members should be aware that several resort hotels are in operation within and around the DVC
Resorts, including hotels owned and/or operated by The TWDC Companies, and that DVD will also rent its Ownership Interests to the general public. Accordingly, any Club Member who attempted to rent reserved Vacation Homes for his or her own account would compete with these resort hotels and DVD for renters without any assistance from The TWDC Companies, and would be at a substantial competitive disadvantage. Club Members should not purchase an Ownership Interest based upon any expectation of deriving any rental or other revenue or profit therefrom.


I'm not a lawyer, but my interpretation of the above is that renting points is perfectly OK. However, Disney wants those who rent to understand that they are competing with Disney when they rent their points and there is absolutely no obligation on Disney's part to assist them.

 

[WDWguruDH]

_______________________________
WOW!!!!
I am with Doctor P on the cost/investment end (very, very well put Doc!), and I'm with Richyams on the morality of renting stuff.

Nicely said!!!!!
_______________________________

Me too....
Doctor P - The thing that the other calculations keep forgetting is that you would have to pay $2-3000 a year in vacations (depending on points, etc.) without DVC, thus you have to take that OUT of the account that is earning 3% a year - do any calculations you like and that account won't last close to 40 years before it is empty.
Richyams - The only thing I disagree with you on, is the presumption that I can tell others they can't do what they are legally doing with their points or try to sabotage their efforts to do so. I do agree with the morality and negative impact on the rest of us though - hopefully some of the "pure" business owners will have a change of heart

 

[FredS]

Originally posted by CarolMN
...and the many restrictions upon the use of an Ownership Interest may adversely affect its marketability or rentability. [Section 12]

Ownership Interests should also not be purchased with any expectation that any Vacation Home located at DVC Resorts can be rented, or if it is rented, that any particular rental rate can be obtained for such rental...... [/i]

Here's some more from the POS (Sections 11 & 12):

Pursuant to the provisions of the DVC Resort documents, the sale, lease and transfer of Ownership Interests are subject to restrictions and controls. For example, no Club Member may directly rent, exchange or otherwise use his or her Ownership Interest without making a prior reservation of an available Vacation Home at a DVC Resort on a first come, first served basis.

......and the many restrictions upon the use of an Ownership Interest may adversely affect its marketability or rentability.



I'm not a lawyer, but my interpretation of the above is that renting points is perfectly OK. However, Disney wants those who rent to understand that they are competing with Disney when they rent their points and there is absolutely no obligation on Disney's part to assist them.

Hi, Carol. I agree with your general interpretation at this time. However, if something is "expressly" allowed, that is a legal term of art generally considered to be absolutely clear and unequivocal, which I don't think this is. I pared down some of your quotes, and also wanted to point out a few others in the POS which are related:

7(d) ...However, Ownership Interests should not be purchased with any expectation that Vacation Homes MAY (my emphasis) be reserved and rented to third parties.

also

the BCV Declaration of Condominium says
12.1 ...Use of Vacation Homes and recreational facilities for commercial purposes or for any purposes other than the personal use described in this Declaration is expressly prohibited. "Commercial purpose" includes a pattern of rental activity or other occupancy by the Owner that the Board, in its reasonable discretion, could conclude constitutes a commercial enterprise or practice."

I agree that Disney seems to not have an objection to the occasional renting of points. However, I think that by their references to renting they are not actually waiving any future objections, but are actually REPEATEDLY pointing out that there ARE restrictions on any rental (which may or may not be more heavily enforced in the future) and that you should neither assume that you MAY rent, or CAN rent, to third parties. (I think the use of both may and can indicate that not only might there not be availability, but also that you may not necessarily have the permission to rent.)

My original post on this thread was to see if there was actually any expressly stated provision which gave unrestricted rental permission. I didn't think it possible, as it would certainly seem to conflict with what I had surmised from skimming the POS, etc.

 

[Dean]

Originally posted by FredS
Just curious as to where you think this is "expressly" stated in both Florida law and public offering statement??

I can't quote the statute but can tell you that a resort, condo or the like cannot prevent one owner from doing something another owner can do. They couldn't legally prevent one renting what they own unless they prohibited rentals in general which they obviously are not going to do. Sometimes condo's, etc will vote not to allow rentals or short term rentals but this applies to all owners including management.

What they could do is act like the 600# Gorilla and make it difficult if they wanted just because they've got lawyers. They could also prevent usage of certain copywrite issues.

Carol has answered your other question but in this circumstance they couldn't prevent one renting what they own regardless of what is in the POS.

 

[Dean]

Originally posted by Richyams
I've got an e-mail drafted, I will post it later for opinions.

I plan to send it to every bidder on every Ebay auction. It briefly explains DVC, states that the going rate is $10 or less per point, has a link to the point calculator and a link to the rent/trade board here.

I know, there will still be scalping of highly desirable reservations, but it may hurt a deal or two.

Rich, do what you want but I believe ebay has rules against interfeering with an auction and I think this would qualify under that aspect. You could find yourself banned from ebay.

 

[Dean]

Originally posted by DGuiltinan
But, don't just blindly accept someone else's opinion as to how much a point costs a DVC owner. Rather, ask yourself, "What is the incremental cost to me?". You may very well find that DVC ownership is the right thing for you.

I just convinced myself in the writing of this letter that DVC ownership IS the right thing for me!! I wish my wife would let me buy a resale... Karen, are you listening?????

I agree with your post in general and I think we look at things the same way. It is a personal decision and is not for everyone but it is for some who have decided against it.

 

[FredS]

Originally posted by Dean
I can't quote the statute but can tell you that a resort, condo or the like cannot prevent one owner from doing something another owner can do. They couldn't legally prevent one renting what they own unless they prohibited rentals in general which they obviously are not going to do. Sometimes condo's, etc will vote not to allow rentals or short term rentals but this applies to all owners including management.

What they could do is act like the 600# Gorilla and make it difficult if they wanted just because they've got lawyers. They could also prevent usage of certain copywrite issues.

Carol has answered your other question but in this circumstance they couldn't prevent one renting what they own regardless of what is in the POS.

Again, I was just confirming that it isn't actually "expressly allowed" in the POS or the law. It seems obvious that Disney has no problem with "non commercial" renting at this time, but there are enough ambiguities, too many limits, in their paperwork and the law that I would not feel confident pointing to any particular provisions and assuming a judge would agree that it is "expressly" allowed as that legal term is usually interpreted. I figure as long as no one abuses the renting situation then it should never become a real issue!

 

[Dean]

Originally posted by FredS
Again, I was just confirming that it isn't actually "expressly allowed" in the POS or the law. It seems obvious that Disney has no problem with "non commercial" renting at this time, but there are enough ambiguities, too many limits, in their paperwork and the law that I would not feel confident pointing to any particular provisions and assuming a judge would agree that it is "expressly" allowed as that legal term is usually interpreted. I figure as long as no one abuses the renting situation then it should never become a real issue!

I would disagree with your interpretation. It is stated in at least 3 different places that it IS expressly allowed. If you are using the vague commercial reference to say it's ambiguous, I think you missed the point. It is obviously expressly allowed, just with a "possible" qualifyer. As for abusing renting, some would say that any renting other than for your dues and to family and friends, is abusing renting. Personally I think those people are using wishful thinking and are reading far too much into one line in the POS ignoring all the other facts. I can't recall ever seeing anyone post that they would like to rent but feel it's not "legal". Everyony one, to the person, that I recall saying people can't rent also feel people shouldn't be allowed to rent for one reason or another. I have seen a couple of people post that you can't rent that have just taken other people's word for it then when they realize it's within the rules, they fall into one camp or the other.

 

[WDWMom]

Go Doc, Go Rich
Go doc, Go Rich

Ebay may do what it wants but I see what Rich is proposing as buyer education. If Ebay chooses to stop it that tells me something of Ebays true motives.

 

[fkj2]

Have just read the last few posts on this particular page but since the general consensus is that owners are permitted to rent points, I don't think it is appropriate to email potential renters from the ebay site. Look, if potential renters don't know that they may be able to rent points more inexpensively from this site, that's unfortunate. But, it isn't any different from potential car buyers who don't utilize or know about sites that may give them additional info to purchase a car more reasonably. Or those vacationers who use Priceline, or expedia, or Mousesavers.com or whatever discount site out there. Why not email all potential WDW guests for that matter and tell them directly they can do better from DVC owners? I just don't think we need "Big Brother".

 

[Richyams]

I am about to buy a new car from Zeke's Toyota. I am told by Fred that I can get the car for 30-40% less than I was going to pay. It is a perfectly legal method.

Has Fred done something wrong or immoral? Has Fred in any way wronged Zeke?

No

Now fred just has this thing about people overpaying. He takes it upon himself to inform potential car buyers of a method of buying cars that will save people 30-40%. Now while Fred does think that its wrong the way Zeke does nothing to inform people that there is a much cheaper way to buy cars, Fred realizes that many dealers like Zeke are preying upon an uninformed public.

Is Fred wrong?

This time Fred takes it upon himself to print up flyers describing this method of buying cars. He stands on the public corner, just North of Zeke's handing a flyer to each person that pulls into Zeke's.

Now is he wrong?

 

[FredS]

Originally posted by Dean
I would disagree with your interpretation. It is stated in at least 3 different places that it IS expressly allowed. If you are using the vague commercial reference to say it's ambiguous, I think you missed the point. It is obviously expressly allowed, just with a "possible" qualifyer.

No, I guess you didn't read my post. I won't repeat the excerpts from the POS, etc. but "expressly allowed" as a legal term means clear and unequivocal. Since there are statements that no owner should purchase with the belief that renting either CAN or MAY be allowed, and also references to "extensive restrictions" which affect rentability it definitely is not "expressly allowed" except perhaps as a layperson might misunderstand that term. Contracts which expressly allow something will usually use those specific words e.g., "Owners are expressly allowed to rent their vacation time..." Again, I don't think that Disney will interfere with renting as most owners might choose to do, but their attorneys certainly worded things such that it is not clear, unequivocal, unlimited, etc.!

And I think your vague reference to Florida law relates to the fact that Disney can't sell points to you and to me, but let you rent and not let me rent under the same situation. As the developer, they can have an entirely different set of rules, however.

 

[fkj2]

Now fred just has this thing about people overpaying. He takes it upon himself to inform potential car buyers of a method of buying cars that will save people 30-40%. Now while Fred does think that its wrong the way Zeke does nothing to inform people that there is a much cheaper way to buy cars, Fred realizes that many dealers like Zeke are preying upon an uninformed public

Wrong? No, but it does strike me as a little OCD.

Potential renters have the responsibility to do their homework when looking for a price deal. It is similar to Disney offering all-inclusive packages for parks, resorts, transportation, meals, or guests buying everything a la carte. I know people who always travel on a package. Do I think it's a mistake, yeah, but they think it's a deal.

I guess if one has the available time to police Ebay and has the motivation, then there probably isn't anything wrong with it. Unusual? Excessive? I just can't imagine anyone being that controlling to want to involve themselves in a public auction. No one is forced to shop Ebay or rent points for that matter. And where might it stop? Or should all ebay auctions be policed? Does the auction site here get observed and are people offering too many $$$$ for Disney memorabilia?