Renting vs. Buying....thanks!

[Fall1]

OK, so I must be doing something wrong. I can't make the numbers work out to make it worth it to buy DVC rather than to rent it.

We had our first DVC stay at BCV last month and LOVED it! If we buy, we'll buy BCV through resale. It just seems to me that it might make more sense to just keep renting.

Am I missing something? Thanks!!!!

 

[chalee94]

if you are going to wdw every year over the next 10 years or so, it would be cheaper to buy rather than to rent.

what are you using as your residual value for the BCV contract?

 

[disneynutz]

The truth is in the numbers and your vacation patterns.

Some folks think that owning looks good on paper but soon realize after owning that they are forced to do something with their points every year for their length of ownership.

The number of Members renting out their points have hit record numbers this year.

Bill

 

[saintstickets]

Don't forget in your calculations that at the end of the day, when renting, you have nothing...when buying, you still have your resort ownership that can be sold. It's very similar to buying a home vs renting an apartment. IF you want a place of your own and IF you can afford the initial payment, buying a home is better than renting in the long term. IF you plan on visiting WDW every year for the next 5-10 years, then buying is better in the long term. Also don't forget that rental prices will increase as maintenance fees increase but your initial purchase is a one time expense that can be sold in the future.

 

[chalee94]

The number of Members renting out their points have hit record numbers this year.

true. so some of the math depends on whether renters would continue to be able to book BCV for a consistently low price per pt over the next few years.

also depends on how committed they are to staying at BCV. owning at BCV is more expensive than, say, buying a resale at SSR and taking your chances at the 7 month window...but BCV may or may not have a higher resale value at the end of 10-15 years (given that BCV expires in 2042.)

some of the qualitative issues revolve around whether you'd rather have the ability to make and control your own reservations. if you can plan at 11 months out, owning at BCV takes away a lot of uncertainty.

but if you're not committed to annual trips to wdw, renting is probably the way to go, regardless.

 

[DVCGeek]

OK, so I must be doing something wrong. I can't make the numbers work out to make it worth it to buy DVC rather than to rent it.

We had our first DVC stay at BCV last month and LOVED it! If we buy, we'll buy BCV through resale. It just seems to me that it might make more sense to just keep renting.

Am I missing something? Thanks!!!!

Possibly; depends a lot on your math & specifically your inputs. I'd need more details to give you an answer.

How much did you pay for your stay?

How many points was it (if you don't know, give me the dates and room type & I'll check a point chart)?

How often do you plan to go?

Do you have the cash to pay for the in initial contract purchase up front or would you have to take out a loan?

 

[DebbieB]

You'll have more flexibility owning. For example, I had a reservation earlier this year that I changed dates & resort 4 times. With renting, you would have to keep going back to the owner and requesting changes, they may not have points available to make your changes. They may not be flexible with cancellations. You will also not get member benefits, like the $100 AP discount (of course, perks are not guaranteed to stay).

 

[Fall1]

Possibly; depends a lot on your math & specifically your inputs. I'd need more details to give you an answer.

How much did you pay for your stay?

How many points was it (if you don't know, give me the dates and room type & I'll check a point chart)?

How often do you plan to go?

Do you have the cash to pay for the in initial contract purchase up front or would you have to take out a loan?

Thanks! Here's my answers:

How much did you pay for your stay? I paid $11 per point

How many points was it (if you don't know, give me the dates and room type & I'll check a point chart)? 238 points for our stay

How often do you plan to go? Ideally we'll go each year for 1 week and if not at least every other year.

Do you have the cash to pay for the in initial contract purchase up front or would you have to take out a loan? We do have the cash.

 

[chalee94]

10 years renting 238 pts at $11 per pt: $26,180 (this may go up over time.)

------------------------------

buy 240 pts BCV resale at $83 per pt + closing costs = about $20,500

annual dues $5 per pt: $12,000 over 10 years (these would go up over time but i'm leaving them flat for comparability to renting.)

i'd ballpark that BCV will still be worth $50 per pt in 10 years, so less the 10% commission, you'd get back $10,800.

$20,500 upfront cost
$12,000 annual dues over 10 years
-10,800 resale value of BCV net of commission
--------
$21,700 is less than renting for 10 years*

*depending on your time-value-of-money rate, the rate of increase in dues relative to rental rates charged by BCV owners, and the decline in the value of BCV due to nearing expiration offset by increases due to inflation.

there are a lot of factors that differ for each individual and some of it is totally guesswork. if you are happy renting then keep renting. if you think the stock market will make a big recovery over the next 10 years, then put the money in a mutual fund and pull some out every year for vacation purposes...but if the market dips again over the next 2 years, you might not have much left in that account after vacation costs...who knows?

but it's very possible that owning can be a better deal...and allow you more control over your reservations. it just depends on your predictions for the future.

 

[DVCGeek]

chalee94 scenario looks reasonable to me.

Another way to look at it, assuming you (or family, etc.) use the whole life of the contract:

I see some current listings @ TTS for as little as $80pp, but also several @ $83 - $90, so $85 sounds like a good price.

250 x $85 = $21,250.00

Let's assume you get first points & trip in 2010 and start paying dues then, seller pays closing just for the sake of argument. Also, I'm going to assume dues go up 4% every year, meaning in 2041 (the last year I think you'd get points) they would be ~$17.54 per point, or $4,385.69.

So, for the 32 years of points in my calculation, total dues are $81,523.32, for a grand total cost of $102,773.32.

Now, I think it is safe to assume renting points will always cost AT LEAST as much as dues for that year, and probably won't drop below the $11 you paid since cash ressies will almost certainly go up. Using that standard (which I think is unrealistically low for the rentals), and only 238 rental points so this isn't apples to apples, you would lose $7,469.70 by buying because rentals would end up being $95,303.62.

If we assume the rental price will be the greater of $11 or 21% more than actual dues, then I get the rental going from $11 through 2024 and then slowly climbing to ~$21.22 in 2041. That would total $103,188.90 in rental fees, so you'd save $415.58 by buying.

Now let's say that the rental price goes up at the same percentage rate as dues every year (which might keep pace with half the price of a cash ressie from CRO for example), sticking with 4%. That would then work out to $11.44 through $38.59 per point rental, total $170,718.54, and by buying you'd save $67,945.22. I think this is PROBABLY the most likely type of scenario.

Finally, let's say dues and the rental price stay perfectly flat [almost guaranteed not to happen, but for the sake of argument...] You are then looking at $83,776.00 for the rentals vs. $40,005.60 in dues for a resale total of $61,255.60, thus saving you $22,520.40.

SOOOOOOO, it really depends a LOT on what you think the future rental market will be like relative to costs of owning. I think that most likely you would save money (possibly a LOT) in the long run by buying assuming you or your family will continue to use it, but that certainly can't be guaranteed...

Hope that helps!

PS- I am admittedly leaving out the "time-value-of-money rate" type of arguments because then you can really get your head to spin, but I will acknowledge it as a valid factor for some, especially when paying cash for the up front purchase. If you finance I think that becomes less of a factor.

 

[jarestel]

OK, so I must be doing something wrong. I can't make the numbers work out to make it worth it to buy DVC rather than to rent it.

We had our first DVC stay at BCV last month and LOVED it! If we buy, we'll buy BCV through resale. It just seems to me that it might make more sense to just keep renting.

Am I missing something? Thanks!!!!

If renting is currently working for you, I'd recommend that you continue with that. If the time comes when you'd like a more permanent arrangement you can always buy in then.

There's no hurry to buy, and should you decide to take the plunge one day, resales will probably be cheaper in the future than they are today anyway.

Good luck!