Questions about the math for those with experience

[lymaniii]

We are buying VGF 200 points and I think it's a pretty good choice considering the small availability there and its location next to MK. It's a steep price to pay, but I think I'm feeling okay about it.

Looking at point rentals and resales and all the tricks of the DVC world, I do have some questions for those most experienced folks...

1. If I can rent out points for $11 and buy Vero points for $40, would I end up breaking even on the investment (minus dues) after about 4 years if I never used them myself? I guess the crux is, how easy is it to rent out your points and reliably have a taker?

2. If I pay $155 per point at VGF and pay about $1k a year in dues, how do people generally decide how much each point is worth when deciding whether to use the points or pay cash? I've seen some threads about DCL in this regard, but wonder if there's a really straight-forward way.

 

[nalajms]

I don't know if I look at this differently from others.

I take the total sales price (less dues) and divide by total points remaining. That gives me the price per point for the buy-in. Then you add on dues to give you the full price per point.

1. Say you buy a 100pt VB at $40 per point with current UY (2014) points. That would be 2900 points left, maybe about $4.3k buy-in. My calculation gives me $8.69 per point with dues. If you rent it out at $11 per point, it means you're making $2.31 per point. To get back the $4.3k, you'd have to rent out 1,880 points, or 18.8 years worth of points. This is assuming dues do not go up and renting at $11 per point.

Even if you ignore the buy-in cost and just use the annual dues ($11 - $7.75), you'd make $3.25 per point. That means recouping the 4k would take about 1,300 points!

2. I price out the room on Disney or Orbitz. Total OOP (with tax) divide by points needed for room. If it's less than what is currently renting, I would book cash. However, booking cash means you can't book at 11mon. There's not always availability and discount rooms are usually limited.

 

[lymaniii]

That was really helpful. Thanks!

Not sure what the abbreviation OOP means.

Is renting out points a pretty sure-fire bet, or are there times when there aren't buyers?

 

[Andrew015]

OOP = Out of Pocket.

I am not an expert in renting, but $11.00 with advanced notice should move pretty well without any trouble. If you are in a pinch, you can always sell to a re-seller (i.e. David's Vacation Rentals - you will see his advertisements all over these boards). I believe he buys for $11/pt and resells for $13 or $14 per point.

 

[disneynutz]

Buying points for the purpose of renting would be considered commercial use and is prohibited by Disney. Disney has never published how or when they have or will crack down on commercial renters.

Commercial renters are competing with Disney and as everyone knows, you don't take money from the mouse.

Bill

 

[lymaniii]

Just to clarify, I'm not interested in buying the point specifically to sell them, only to understand the math. We're buying the VGF points so that we can use that. I have wondered whether I should buy some points from a less expensive resort that I could use more flexibly and rent out if I don't need them. Seems a low risk thing to do... Unless they can shut down the renting altogether somehow.

 

[supersnoop]

Just to clarify, I'm not interested in buying the point specifically to sell them, only to understand the math. We're buying the VGF points so that we can use that. I have wondered whether I should buy some points from a less expensive resort that I could use more flexibly and rent out if I don't need them. Seems a low risk thing to do... Unless they can shut down the renting altogether somehow.

Do the math on a property with lower maintenance fees. The break-even for higher-priced resorts may come sooner than you expect.

They can't restrict renting, per se, but they can prohibit "commercial use." I believe that's defined as by the pattern of renting.

 

[Dean]

We are buying VGF 200 points and I think it's a pretty good choice considering the small availability there and its location next to MK. It's a steep price to pay, but I think I'm feeling okay about it.

Looking at point rentals and resales and all the tricks of the DVC world, I do have some questions for those most experienced folks...

1. If I can rent out points for $11 and buy Vero points for $40, would I end up breaking even on the investment (minus dues) after about 4 years if I never used them myself? I guess the crux is, how easy is it to rent out your points and reliably have a taker?

2. If I pay $155 per point at VGF and pay about $1k a year in dues, how do people generally decide how much each point is worth when deciding whether to use the points or pay cash? I've seen some threads about DCL in this regard, but wonder if there's a really straight-forward way.

IMO it only makes sense in general to buy VGF for very specific situations, basically you plan to stay there every trip or nearly so, can afford it (pay cash), won't use for cruise, etc. Of course there's the initial, "does DVC make sense for me" issue and "would it save me money" question. IMO savings are best calculated on what you would have spent without owning DVC but it's reasonable to look at additional value from that point to what you get (and don't get) with DVC. While one could buy and rent out, I don't think the numbers will work out at all reasonably from an investment standpoint. DVC's commercial ban isn't based on intent so you'd be OK there unless you went larger. It certainly doesn't make sense to buy there to rent then buy somewhere else to use. My suggestion is to keep your life simple and your risks and aggravations as small as possible. IF DVC makes sense in general terms and you're not planning on staying at VGF basically every trip, don't buy there. As for VB or HH, they will most certainly be more in the long run due to the dues there plus you wouldn't have an 11 month WDW priority window.

I do not believe one will get enough extra on rentals to cover the extra buy in, not even close. One would pay almost triple retail VGF compared to say SSR but only rents out for modestly more pp.