Rent vs. Buy

[LauraLap]

Pllleeeeeeease help us! We're spinning our minds deciding whether it makes more sense to rent points every year or to buy. I'm sure this has been talked about at nauseum, but I'm still hoping for a new discussion.

So, please help me decide (before I go crazy), rent or buy!

ETA: We have the money and will pay in cash. BUT, this money is either going to DVC or onto our mortgage.

 

[dizplanner]

The choice is personal. I'll try to give you some pros and cons as I see it.

Advantages to renting
No commitment past the current vacation
No need to come up the entire cost of a contract or the down payment plus finance payments

Advantages to buying
You control your reservation
No hunting for someone to rent from when you want to take a vacation
Less expensive (I figure my cost is about $6-7 per point - renting will run you $10-12)
Better chance to get accomendations you want (you control calling right at 11 or 7 months)
Some people like "having" to take vacation to Disney every year
You can cancel the vacation with no penalty up to 30 days before (or up to the end of your banking window) - many rentals are non-refundable

I originally planned on renting (four years ago) but ended up buying instead via resale.

 

[vandy]

Agree to previous post.

If it was me, I would only rent points once just to see if DVC and a particular resort was worth purchasing at. After that one time, I would not continue to rent. I would much rather see that money go towards paying for my DVC ownership rather than never seeing that money again by renting points. I have not checked lately what points rent for, but my guess would be that your annual cost of DVC ownership would not be much more than the cost of renting points.

Let me put this in very, very simple terms. (This does not figure in any finance charges or the future increases in annual dues, but then it does not figure in the potential increase in room rates or the cost of renting points either!). Let's say you buy the basic 160 point AKV contract at $96.00 per point. This means your total cost is $15,360. If you divide that by the remaining years of the contract, which is 48 (?), this means your yearly cost for your purchase is $320.00 per year. Now add on the cost of your annual dues which for this year at AKV is $4.71/point. 160 points will cost you $753.60 in fees this year. Your yearly expense of purchase cost + fees for this year is $1073.60, or $6.71 per point. How does this compare to the cost of renting? The last I knew, $10 per point was about the average cost of renting.

 

[lapeter]

We are in the process of buying. Contract is at Disney. I second the above comment of "having" to vacation at DW. We normally go in the winter and that means flying from Maui, a long way. Here is part of what motivated us. Last winter we went to Australia for three weeks, first trip there. We spent a fortune and had an OK time. We would not go back. That place is expensive and granted we saw things we could not see anywhere else. Also a long flight. About a month later we met our daughter, lives in NYC, at DW and spent six days there. We paid rack rate for BC and had a great time. My wife and I were saying why did we spend so much money in Australia to have just an OK time, when we could spend a lot less money and have a great time at DW. That started me looking into DVC. Having the points will "force" us to go twice a year, darn. That's my story and I'm sticking to it.
Al

 

[DVC Mike]

I just couldn't rent year after year. I guess I'm a control freak, but I'd rather make my reservation direct with Disney and not have to search around for somebody who has the points I need, and then hope that I have a reservation when we get there. Also, I wouldn't want to have the no cancellation / no refund limitations that most rentals have.

I'd rather have the flexibility of owning.

 

[jarestel]

Renting points is by far the most cost-effective way of staying in DVC accommodations while avoiding any long-term commitments. That's a pretty nice savings and the main reason for renting vs buying. And if you could develop an ongoing relationship with 3 or 4 DVC owners who were willing to do an occasional rental, that would eliminate the uncertainty factor to a large extent.

If I had it to do over again, I might be more inclined to rent vs own. Renting does carry a risk factor though.

Good luck!

 

[Brian Noble]

This means your total cost is $15,360. If you divide that by the remaining years of the contract, which is 48 (?), this means your yearly cost for your purchase is $320.00 per year.

As an aside, I'm not a big fan of this sort of straight-division analysis. This makes sense only if your alternative to buying DVC is to take that $15K and stuff it in a mattress for 48 years. It's more prudent to use *some* interest rate for the initial purchase price over time---the rate you pick is entirely up to you, but 0% (flat division) is not particularly reasonable.

My preferred interest rate still puts the cost of owning close to renting for the first year. Over time, you would expect owning to pull ahead---an owner only suffers inflation on dues; a renter suffers inflation on the entire cost.

The reason to own vs. rent isn't really about the dollars and cents. It's about whether or not you're committed to vacationing at Disney on a regular basis for the next decade or more. If you are, then with cash on hand, owning probably makes sense in the long run.

 

[vandy]

As an aside, I'm not a big fan of this sort of straight-division analysis. This makes sense only if your alternative to buying DVC is to take that $15K and stuff it in a mattress for 48 years. It's more prudent to use *some* interest rate for the initial purchase price over time---the rate you pick is entirely up to you, but 0% (flat division) is not particularly reasonable.

My preferred interest rate still puts the cost of owning close to renting for the first year. Over time, you would expect owning to pull ahead---an owner only suffers inflation on dues; a renter suffers inflation on the entire cost.

The reason to own vs. rent isn't really about the dollars and cents. It's about whether or not you're committed to vacationing at Disney on a regular basis for the next decade or more. If you are, then with cash on hand, owning probably makes sense in the long run.

I totally agree, but I wanted to give the OP a very simple analysis of what the cost of ownership versus the cost of renting would be for this year alone. As I also stated, this does not include future increases in dues, nor the increase in room rates or rental charges. I did not figure in any interest rate for putting the money into an investment because it did not sound like that was an option. They will be spending this money either on renting points or purchasing so any interest income would only be achieved on any dollar savings if renting versus owning was cheaper. The key phrase from the OP is "rent points every year". I take this to mean they plan on vacationing at Disney every year and staying on rented points at a DVC resort so the comparison is between renting versus owning and not owning verses any potential interest income. Again, I totally agree with your comment, but I just don't think that comes into play here since they are spending the money, it's just how they do it: rent versus own.

I have a hard time believing that renting points is a more cost-effective way of staying at a DVC resort over the years. A previous post stated that renting is more cost-effective "while avoiding any long-term commitments". That may be true if you do not want the commitment, but, if having the committment does not bother you, having the flexibility of ownership appeals to you and owning is cheaper or at least comparable to renting, I do not see why one would rent year-to-year.

Renting points once to investigate DVC is fine, but I don't see the advantage of doing it year after year. If you really plan on taking a Disney vacation every year as stated in your post, I still think owning is better than renting. Your ownership also carries a dollar value should you decide to sell in the future. It is everyone's hope that the value of their yearly vacations plus the value realized from the sale of their contract would be greater than their DVC expeditures.

 

[Brian Noble]

I wanted to give the OP a very simple analysis of what the cost of ownership versus the cost of renting would be for this year alone.

Then you should have included the lost opportunity over the first year, as well.

 

[disneynutz]

Pllleeeeeeease help us! We're spinning our minds deciding whether it makes more sense to rent points every year or to buy. I'm sure this has been talked about at nauseum, but I'm still hoping for a new discussion.

So, please help me decide (before I go crazy), rent or buy!

ETA: We have the money and will pay in cash. BUT, this money is either going to DVC or onto our mortgage.

I would rent for a couple of vacations to really see which resort you like and to experience the DVC accommodations for yourself.

Many a new owner is faced with doubt after the excitement wares off.

 

[Deb & Bill]

We are owners and have recently sold a few of our contracts. Both Bill and I have looked at it and decided that if we didn't already own DVC (at the fantastic low price of about $50 a point in 1997), we would just find ourselves a good owner to rent from on an occasional basis. We used to go two to three times a year, but we got tired of direct deposit to Disney. So we now go once a year for a nice trip and that's all we'll do.

Buying into DVC now at $100+ a point just doesn't make any sense to me. Dues are twice what they were when we bought in and will continue to go up. Rental prices have been very stable for many years. I expect they will go up in the future, but not that much because so many owners want to rent them out and will undercut another owner's price.

 

[VLee]

I echo many thoughts by Deb and Bill. I too have 7 contracts and have thought that perhaps it would be best to sell a few and use only what I need for one trip a year.

Undoubtedly, the ownership has factored into my spending way more at Disney than I would have otherwise...especially when you factor in plane tickets, dining plans, and the dues, which now amount to about $2,400 a year for me.

I have rented out several times which helps to pay for the dues, and I am glad that my contracts are small, so that if I decide to sell some, it should be a little easier.