Rent cost per point?

[soonertxmickey]

For all you spread sheet junkies I have a question. Is the $10-11/pt rate arrived by supply and demand? Has anyone ever done an analysis as to if that would offset the cost of the years ownership? Take the emotion out and just look at it in $$. For instance: if you owned a 100pts it would cost you x dollars if you rented your points for that year. I am kind of lost trying to plug the initial purchase price in. Would that be spread over the 37yrs left? Thanks in advance.

 

[OlderMan]

Isn't the initial purchase price a "sunk cost" in accounting terminology?

I would think that anything over and above the maintenance fees is gravy. Assuming that my above postulation is correct.

(Too many years in financial accounting!!!!)


As my college profs said: "Discuss"

 

[StayFLA]

I've seen seen cost analysis threads floating around. I think in the "Should I join DVC", "Is DVC for you" type threads. I looked at purchase cost and added $6 per point per year for 47 years for dues (it's only a guess). I took that total and divided in the total points I get over 47 years. It's a rough cost per point. I liked it, so I bought. You'll see posts on investing the buy in cost etc. I don't read the rent boards, but rent price is probably "the going rate" that people are willing to sell at.

Ralph

 

[robinb]

The reason why the rental price for points is $10-$11 is because that is how much most people ask. Most people just want to get rid of extra points and they consider anything over their dues costs "gravy". I asked (and got) $12 per point on both of my last rental transactions.

Are you trying to determine the true cost of your points on a yearly basis? That's a pretty hotly debated issue here and the answer depends on what your assumptions are. FWIW, I know very little about finance (and I suspect it shows, LOL!).

Here are some questions to ask yourself:
How much did you pay for your points?
Did you finance? If so, then you need to include the interest in your calculations.
What about dues increases? Look here for a Dues History: http://personalpages.tds.net/~rb/DIS/DVC/DVCDuesHistory.htm I know that I am paying a $1 more per point for my BWV points than when I bought them 6 years ago.
What about inflation? Time value of money? What if you invested you purchase price instead?

Here is a quick and dirty calculation ...
If you ignore everything except for initial purchase price of 100 points at SSR in 2008: $10,400
Dues: $3.80 per point for a cost of $380 the first year with a 3.4% yearly increase in dues (average increase for OKW over life of DVC).

I get a total cost for 37 years to be $37,732 or $1019 per year or $10.20 per point.

 

[JimMIA]

Isn't the initial purchase price a "sunk cost" in accounting terminology?

Yep, sure is! However, many people still include it in their calculations of what a point is "worth." I know it's not correct accounting, but it's widely done here on the DIS.

If I were asked to figure out what one of my points was worth, I'd say about $2 sunk cost + $5 dues = $7.

I think the rental prices are strictly supply and demand, and the old adage "Location, location, location" is certainly true. I'm not talking about resort; I'm talking about marketplace. On the DIS, there are people trying to unload "distressed" points for less than the going rate -- often $9, sometimes as low as $6. Some owners set their prices at $11-12 and stick to that (and get it); others take the easy route and offer for $10.

Personally, I don't rent, but if I did I'd either get at least $15 or I wouldn't rent. You can't get that on the DIS, but I've been told it's often done in other venues.

 

[OlderMan]

...I didn't think anyone else on the DIS would know what a 'sunk cost" was.

Thanks for restoring my faith!!

PS: Let's hear it for financial accounting!!!! (OK, maybe I'm pushing things?)