Renting VS Owning

[Gary K. D.]

I was just reading some of the threads on the DVC Community Board and came across a DVC'er seeking advice about selling her DVC points....One comment was a little disturbing. In addition to all of the usual reasons..needing the money, building a house, losing interest in Disney, etc...the sellers stated that she could "rent" the points on this Board for about the same price or less than her dues and mortgage. While I have rarely seen points go for $4-$5, the thought that even a soon to be former DVC member would abandon ownership because renting seemed like a better deal is of concern. Indeed many times we offer renters a 75% discount from Disney's rack rate. Is it time to look more at the discount from those rack rates rather than a price per point? Any thoughts?

 

[lalaUT]

Gary,

You make and interesting point. I joined in 2000 and at the time suspected that as Disney raised the price for its rooms the price to rent would go up as well. I am a DVCer that on the whole uses about half my points (only go every couple years) so I rent the points I don't use.

Disney is able to change their room rates and over time maintenance rates go up as well. Therefore their is justification for point rental to increase as well. I still want to provide others a great deal, but I think your point is that perhaps we are giving too good a deal.

Given the nature of the board and how it works the only way is for DVCer to ask for per point. In the same breath that I say this I have points for rent for $10 when I really think that $11-11.50 provides a good deal to both sides. So I am part of the problem.

Frankly, I don't want to get nothing for banked points that will expire so asking $11 in an environment of 8.50-10 seems risky to me.

In short we have a lemming problem, and the only way to correct it is to start following those few that charge $11/point today.

Mike

 

[disneyberry]

Given the nature of the board and how it works the only way is for DVCer to ask for per point. (snip) In short we have a lemming problem, and the only way to correct it is to start following those few that charge $11/point today.

[SIZE="+0"]This is a touchy subject, so I just have some short comments regarding the above quote. Actually, there is a small minority of DVC members who bypass the subject of points entirely, and set their rental rates by the night (i.e. saying your unit goes for $120/night), or by the entire stay (i.e. $2000 for the entire week). IMHO, this has always seemed to be a more intuitive way of pricing than by the point. Changing to move away from any per point pricing would do far more to correct anything than trying to just charge $1 more or $2 more per point.

Points were never meant to have a value, even by DVC Mgmt. They really are only a symbolic representation of our portion of ownership interest relative to the whole membership; and they happen to also facilitate members' reservation process in our interactions with DVC Member Services. They just were never meant to be rented using an arbitrary rate per point.

(BTW, should this discussion be moved off the Rent/Trade board and to the main DVC board instead?)[/SIZE]

 

[snowbunny]

Well... you don't have to rent your points.
As has been discussed on other threads, there are (some) owners who bought mega-points specifically to make a profit renting them. In that case, the owner can price them how he/she wants but will end up renting them for whatever the market will bear.
I'm trying to buy a small contract and probably will end up attempting to rent additional points from time to time, because I don't have the disposable income to pay maintenance on 300+ points. I'll be at the mercy of the free market, as will the owners who need to rent out their points.

 

[AFMom]

I have rented some points twice (husband in the military and unable to plan a vacation, etc) - both times for 10pp - but I do feel the price is too low. It may be a profit for people who bought when the points were significantly cheaper - but we bought in the Fall - and the purchase price is only going up. Also - maint fees have gone up. I couldn't believe the rack rate of the last rental I did! I saved my renter over $2000. I think that's great - but do feel that for our time, money spent, and risk, asking $11-$12 pp is completely reasonable. Hopefully the 10pp thing will become a thing of the past as more and more owners are paying more and more for their points.
That said - I love to be able to easily rent my points to wonderful DIs-ers whom have always been great to work with - that alone may be worth only getting $10!

 

[Cruelladeville]

The problem with renting points is the same problem with renting a room at any hotel--you have nothing to show for the bucks you spent. While I have put money into buying DVC, it's my maintainence fees that I really don't get a return on, if I sell the points I receive my initial investment back. This is at least in the short run, obviously it won't always be that way. Nevertheless, for now it's obviously to my advantage to own rather than rent.

 

[Johnnie Fedora]

A cost comparision to the CRO rate (including the 11% tax) should be the single most important factor in determining a particular rental rate offered by DVC members. The total cost for the length of stay compared to the CRO rate should be what guides the reservation cost. Like many members, renters often want to stay M-F. $10/pt is way to low in comparision with Disney's rates for such a stay. A M-F DVC rental stay should be more than $15/pt.

DVC members who rent their points really should adopt a more tiered approach to renting. M-F points are $15-17/pt, F-S points are $8-12.

There are not many discounts from Disney now, and occupancy seems to be much higher than in the recent past. It should be easy to ask more $ for points. It's just there are to many members who are stuck in the $10/pt mindset, while dues and CRO rates have been going up 5%/yr.

Members who want to receive a fair $ amount for thier rental will have to change their rental tactics if the $10/pt "group think" remains the same. Those tactics will include the booking multiple studio units over Xmas and NYE, etc. in order to rent-out the high demand times in order to receve a fair rental rate.

 

[DisFlan]

We've rented points in the past without a problem, but we ended up buying DVC because as owners, WE control our points and reservations. Plus, we know we'll be going back many times in the future and it's nice to know that all those lovely DVC accomodations are already PAID FOR. All we have to do is get there. And enjoy.

If you only plan on staying at a DVC resort once or twice in the future, then renting is probably a good idea. If it's an every-year event, buying seems like the economically prudent route. After a few years, you will have probably spent more to rent than it would have cost to buy a small or medium-sized contract to start with.

As for rooms through CRO, the $2000-3000 (and going up) you might have been spending a year for a smaller room at other Disney resorts could have paid for a 150 point contract in just a few years. Then the rest of your stays are gravy.

DisFlan

 

[GiriVis]

My initial thinking tells me that the rental rate per point should go at least with inflation of around 5% per year. Also, as an owner, we have capital tied up in the investment in the points. There is time value of money. All told, I feel the point rental value should go up by at least $1/year

Any thoughts
Giri

 

[SoCalKDG]

Well, checking EBAY I came across the following info for rentals.

5 day vacation studio - Sunday to Friday. 5 nights, 6 days. Any season except Premier

This is what they went for

OKW - $575 average over 5 rentals. Total max pts. 55
BWV - $725 average over 4 rentals. Total max pts. 55(the standard view was offered)
VWL - $850 average over 2 rentals. Total max pts. 70

So on Ebay to the general public, you can get $11 per point for OKW, $13 per point for BWV, and $12 for VWL.

So $10 is too cheap, and each resort costs differently as well.

So if you have time, it looks like you should list on EBAY. Put the starting bid at $9.00 per point, give a buy it now for $11-$13(depending on resort) and you get the added convienience of a contract through EBAY as well as the money up front.

By the way, I've never rented my points. I haven't even went on my first official trip home yet(this April).

If tourism stays hot, Disney will continue to raise room rates resulting in the increase if $ per point that we can get.

Now I wish I had enough points to actually rent out some. Ha

 

[DrTomorrow]

Every DVC owner is free to try to charge whatever they wish. To talk about some minimum price as a "fair rental rate" is, IMHO, kinda wacky. And looking at what rack rates are is meaningless, unless the renter is getting the same services from the DVC owner as they would from CRO; and even then, rack rate is only what Disney would like to get for a room.

I can understand if someone is a DVC owner with the primary intent to be a DVC Landlord who wants to squeeze out as much $$$ as they can get. I'm a DVC owner for personal use - DW and I, friends & family - and if I do have any points left over, I'd like to rent them out as easily and painlessly as possible, preferrably to a DISer, and will gladly forego a few $$$ to do so.

IMHO - YMMV

 

[Johnnie Fedora]

Not so sure the rack rate is meaningless, I know I've paid it on several occasions, and I bet many others have too. It is more than a suggested retail price.

 

[dizplanner]

I think there are limits on what can be charged but I'm not sure what the per point price is. But for example, if the person is going during a time that typically has discounts, you are not likely to get more than the discounted rate of a woods room at WL for a night at VWL studio - or the discounted rate of a standard room at BC or BW for a night at BCV or BWV studio. In fact, you will have to discount some more to compensate for the restrictive cancellation policies. 1 and 2 bedrooms are harder to calculate because they are not discounted very often for cash stays and the hotels don't have compariable rooms.

Using the AP discounted rate listed on Mousesavers for Jan 2005, it comes out to $140/night with tax for a WL woods view. If you multiple this by 7 and then divide by 104 (number of points to stay in a studio a week in Adventure season), you get $9.42. So $10 a point is not unreasonable in this case.

The Feb-April AP discounted rate for WL woods view is $190. The points for a week are 134 in Magic season. This works out to $9.92. So again $10 a point is not unreasonable.

Looking at rate rates, it comes out to $17.26 in value season and and $18.35 in peak season. You will need to discount off this to compensate for booking restrictions plus AAA discounts are pretty easy to get - say a 25% discount - about $13.50. When the deep room discounts that Disney is giving dry up, I can see the points coming up to about this amount.

Now, BW and BC discounted rooms are not as cheap so you could possibly justify a higher price. Mousesavers does not list an example for the value season, but it works out to about $300/night for the spring. The point cost is the same at BC/BW, so it comes out to $15.67. Using rack rates and a 25% discount, I get $17 a point. So maybe those resorts should be going for more, but given you can book with any points after 7 months, I doubt you can ask much more.

I did one other calculation - going off the rack rates of a studio itself. Since I think Disney's prices are overpriced for DVC rooms, I'm going to make the discount 40%. This comes to about $13.50 again for VWL and only slightly more for BC/BW. For a 2 bedroom, $13.50 works out to about a 25% discount.

So bottom line, until Disney's room discounts dry up, I figure points will go for $10. When they do, I figure the point price can rise to about $13.50.

 

[crdshrk007]

o.k., this is what I figured I paid per point.

$1,600 down payment ( got coupon from disney to match down payment,)
165.79 per mounth 10 year loan
51.01 dues per month

165.79 x 120 $19,894.80 10 year loan
1,600.00 down payment
51.01 x 600 30,606.00 dues for 50 years
52,100.80 total

160 pts per year for 50 years = 8000 PTS

52,100.80 divided by 8000 pts = $6.51 per point per year overall.

I know dues will go up, but selling at $10 a point is really not that bad.
sure we all would like to get more for our points, but I think a profit of $3.50 a point is o.k.

 

[SoCalKDG]

Using the AP discounted rate listed on Mousesavers for Jan 2005, it comes out to $140/night with tax for a WL woods view. If you multiple this by 7 and then divide by 104 (number of points to stay in a studio a week in Adventure season), you get $9.42. So $10 a point is not unreasonable in this case.

This would be fine except people are smart enough to ask for a Sunday/Friday 5 day rental. So we are looking at 12 points a night vs. the discounted $140/night, which gives us 11.60 per night. Even with this, So $10 a point is not unreasonable. Going below this should only occur when in dire straights.

 

[LIFERBABE]

o.k., this is what I figured I paid per point.

$1,600 down payment ( got coupon from disney to match down payment,)
165.79 per mounth 10 year loan
51.01 dues per month

165.79 x 120 $19,894.80 10 year loan
1,600.00 down payment
51.01 x 600 30,606.00 dues for 50 years
52,100.80 total

160 pts per year for 50 years = 8000 PTS

52,100.80 divided by 8000 pts = $6.51 per point per year overall.

I know dues will go up, but selling at $10 a point is really not that bad.
sure we all would like to get more for our points, but I think a profit of $3.50 a point is o.k.

But $3.50 is technically not your profit. If you use Ebay there are those fees you will incur. If you use the boards, most will pay by PayPal and you have those fees. Technically you would have to claim that as Income so that's a fee too. Stamps, envelopes, phone calls etc. are all costs. Price is your only real asset the rest are liabilities.
There are other costs that would be incurred by the member, that are not incurred by the renter. Not to mention many of the financial sacrifices many members make daily just to own DVC.
Also will your points be as valuable to you when you are 80 as opposed to 40?
I feel my points are like gold while I have a young family, because we could be enjoying those points now. 40 years from now, I will probably give them away as gifts or donations because they wont mean that much to me. So I weigh the younger years more heavily than the later years.
Im not for gouging, but fairness to everyone involved.
Also WL and AKL have never been priced like the other Deluxe Resorts because of their smaller room sizes so I don't think that's a fair comparison.

I agree with the comparison of BC and BW. The cheapest we were able to stay at BC was $240 plus tax per night and that was a SOG overflow rate. Rarely will you find BW or BC for less than $200 per night if ever.

 

[Evita]

Dr Tomorrow,

The original poster sounds like a ''landlord trying to squeeze out as much in $$$$$ as he can.'' That seems obvious from all his other posts. I think I saw the term "mega points" used in one of the posts....perhaps this does belong on another board.
Like the Board of Ethics.