Sell or rent out points in perpetuity WWYD

[DougEMG]

Fun with number. Assuming an annual investment rate of 5% on both your selling amount and rental income, an annual MF increase of 4% per year with rental rates increasing annually at 2% (my personal believe is that rental rates are going to track close to double what MF will be), starting MF of $5.40/point and starting rental rates of $13.00/point

Clearing $75 on the sale, means that renting is better after 14 years.
Clearing $80 on the sale, means that renting is better after 15 years.
Clearing $85 on the sale, means that renting is better after 17 years.
Clearing $90 on the sale, means that renting is better after 18 years.
Clearing $95 on the sale, means that renting is better after 19 years.
Clearing $100 on the sale, means that renting is better after 22 years.
Clearing $105 on the sale, means that renting is better after 24 years.

Note - this does not take into account what the points would be worth in the resale market at those time periods. For myself I was running the numbers out for my resorts till they expired.

If I owned something like BCV and could get over $100 for it, I think I would definitely sell it rather than renting it. But if I actually owned BCV, I'd just use it

Most of the contracts that I own and would have considered selling are OKW or SSR - neither of which fetches that I high a price in the resale market compared to a BCV, VWL or BLT.

 

[DisDadDVC]

Fun with number. Assuming an annual investment rate of 5% on both your selling amount and rental income, an annual MF increase of 4% per year with rental rates increasing annually at 2% (my personal believe is that rental rates are going to track close to double what MF will be), starting MF of $5.40/point and starting rental rates of $13.00/point

Clearing $75 on the sale, means that renting is better after 14 years.
Clearing $80 on the sale, means that renting is better after 15 years.
Clearing $85 on the sale, means that renting is better after 17 years.
Clearing $90 on the sale, means that renting is better after 18 years.
Clearing $95 on the sale, means that renting is better after 19 years.
Clearing $100 on the sale, means that renting is better after 22 years.
Clearing $105 on the sale, means that renting is better after 24 years.

If I owned something like BCV and could get over $100 for it, I think I would definitely sell it rather than renting it. But if I actually owned BCV, I'd just use it

Most of the contracts that I own and would have considered selling are OKW or SSR - neither of which fetches that I high a price in the resale market compared to a BCV, VWL or BLT.

Are you assuming flat line depreciation of the timeshare?

 

[DougEMG]

Are you assuming flat line depreciation of the timeshare?

I'm actually running the numbers out till the resort expires with a vale of $0. I guess I should make that clear.

 

[jerseyduke]

Fun with number. Assuming an annual investment rate of 5% on both your selling amount and rental income, an annual MF increase of 4% per year with rental rates increasing annually at 2% (my personal believe is that rental rates are going to track close to double what MF will be), starting MF of $5.40/point and starting rental rates of $13.00/point
.

I think this has to be the case as well. Or keep about the same spread as they are now, adjusting for time/inflation.

If the spread gets too low, I would think people would be less apt to rent.

What is perhaps the most curious about point rental is this:

I need a room for 9/29 thru 10/2 (3 nights). OWK Studio is 37 points. At 14$ pp, that is 518. at 13pp that is 481.
Checking Disney's site, same days, with tax, at All Star Sports(the cheapest) - 450. Pop Century (2nd cheapest) - 483.

I know there will probably be some early fall discount in the future, but based on the above, how can you NOT rent???

As an aside, OWK, from DIS on those days...373 + tax.!!! Renting is only about 20$ more per night for OWK that cash at the all stars. the case difference between those rooms is 200+ per night (Do not forget hotel tax is high)

 

[DisDadDVC]

I think this has to be the case as well. Or keep about the same spread as they are now, adjusting for time/inflation.

If the spread gets too low, I would think people would be less apt to rent.

What is perhaps the most curious about point rental is this:

I need a room for 9/29 thru 10/2 (3 nights). OWK Studio is 37 points. At 14$ pp, that is 518. at 13pp that is 481.
Checking Disney's site, same days, with tax, at All Star Sports(the cheapest) - 450. Pop Century (2nd cheapest) - 483.

I know there will probably be some early fall discount in the future, but based on the above, how can you NOT rent???

As an aside, OWK, from DIS on those days...373 + tax.!!! Renting is only about 20$ more per night for OWK that cash at the all stars. the case difference between those rooms is 200+ per night (Do not forget hotel tax is high)

99% of people aren't even aware of it.

 

[jerseyduke]

99% of people aren't even aware of it.

I am sure. But I think more people find out about it every year. I know your 99% is a figure of speech, but 1% is still a lot of people!

Now it is in the guide books, word of mouth takes time.

But maybe it will never be an issue, who knows. I guess my point was 'for those who do know, how can you not rent?' And since the CROs go up every year, point rental prices will have to follow.

I think...but I have been fooled before......

 

[DisDadDVC]

I am sure. But I think more people find out about it every year. I know your 99% is a figure of speech, but 1% is still a lot of people!

Now it is in the guide books, word of mouth takes time.

But maybe it will never be an issue, who knows. I guess my point was 'for those who do know, how can you not rent?' And since the CROs go up every year, point rental prices will have to follow.

I think...but I have been fooled before......

I mean 99% of people that go to Disney... Also, I think even then, there is a very limited supply of DVC rentals. Most of the brokers have waiting lists for points. I supposed greater demand could drive the price of rental points up to be closer to CRO. But I can't see there being a much greater number of people renting. There are only so many unused points out there each year.

 

[Dean]

Rental rates haven't tracked or kept up well but resale value is likely to be the best guide for comparison of one property to another. Dues are not a great guide because they are not necessarily tied to demand.

 

[DVCcurious]

You guys have been a big help. I've decided to rent. Renting gives me more options in case I want to use more points in the future than I've planned. Also I would use the sales proceeds to pay off a 3.75% HELOC and it seems there is an agreement here that at 4% rate of return I'm better off renting than selling.

So thanks for clarifying the choice for me.