Renting vs Buying

[Roveer]

Let me start by saying that I'm not trying to provoke anyone with my discussion. Please don't take any offence by my wanting to discuss ownership vs renting. I know it's a somewhat touchy topic and we have been considering DVC purchase for the better part of 2 years, but really intensly over the past 6 months. There's just one part I can't seem to get past. Renting... We are renting for our upcoming easter trip and I have to say, the process has been pretty easy. I did a quick comparison of renting vs owning in a 10 year scenario fixing a few costs (maintenance fees, which would actually skew the percentage higher). Here's the part I can't seem to get past.

Rent DVC
points 220
cost pp 10
cost per year 2,200.00
cost per 10 years 22,000.00

Buy DVC
Points 220
Cost to Buy 19,275.00
Annual Maint 1,100.0
Cost per 10 years, 30,275.00

Difference 8,275.00
Percent Difference 27.33%

Basically it costs 27% more over a 10 year period if you own vs just renting points. Am I missing something here?

 

[CarolMN]

DVC contracts run longer than 10 years. The contract will still have value after the 10 years are up.

To compare apples to apples, consider prorating the initial cost of the DVC contract over the life of the contract or estimate the sale value after 10 years.. That will significantly change the results.

You have also assumed that you will be able to rent for $10/point for the next 10 years. Not sure that will turn out to be true.

There are also other issues around making reservations that you have not considered.

 

[CapeCodFam]

Renting is a great way to test drive if you will want to commit to a DVC timeshare. Ultimately, owning is less then renting and you own an asset which could be sold in the future.

I think you first need to ask yourself if you will vacation to Disney, at least every other year, for at least 5-7 visits and pay close to a moderate. That's a ballpark of breakeven costs for buying DVC. Once the breakeven happens, the savings compound for decades to come.

For me, it gives the added benefit of being forced to take a vacation. Otherwise, I'd probably find excuses why we couldn't go.

 

[chalee94]

Buy DVC
Points 220
Cost to Buy 19,275.00?

another alternative would be to buy a resale for $15k or so.

as already stated, a conservative guess would be that you would recover at least half of that if you choose to sell at the end of 10 years...

you also get to control the reservation directly.

it's worth it for some, and not for others.

 

[Roveer]

A good point that there is still value to the membership beyond the 10 years in my example. I guess if you just look at a point in time analysis (like mine) than you can skew the data.

 

[JJZMgailey]

I am very interested in more info on this very topic. I have been trying to convince my parents that we need to go in on this together since we have had 3 trips to WDW in the last 2 years...from Seattle...and have spent a fortune & a half each time!

She really thinks we should just keep renting DVC points for each vacation we go on...and I think we should buy DVC!

 

[jlewisinsyr]

A good point that there is still value to the membership beyond the 10 years in my example. I guess if you just look at a point in time analysis (like mine) than you can skew the data.

Residual value is huge in the equation. For the $22,000 you paid in renting, you have no residual value. For the $30,000 in dues, initial buyin, etc, you have at least half the original purchase price that could be returned if you sold your contract. So if the original buy in was $19,275, at a very conservative 50% return on a sale, you'd get back almost $10,000, flipping the whole equation you posted. Never the less the next 35 - 40 years of ownership will change the valuation of renting dramatically.

Then you have a few more variables as others mentioned, both for and against DVC. First, price per point for renting can increase (or decrease) and you hold a risk in renting and assume that availability would be there (someone who wants to rent). You have the dues issue, which may also effect the price per point issue. Perks reserved for DVC members which sometimes pass to non-members renting could be become very restrictive (ie. Internet).

 

[Paging Tom Morrow]

Rent DVC
Points: 220
Cost per Point $10
Cost Per Year $2,200
Total Cost 10 Years $22,000

Rent DVC
Points: 220
Cost to Buy $19,275
Cost Per Year $1,100
Total Cost 10 Years $30,275
Residual Value $16,500
True Cost 10 Years $13,775

Savings $8,225
DVC Ownership Saves: 37%