Sensitive question

[jdove]

I realize in asking this question that it is probably a delicate topic -- and, I certainly don't want to raise the frustration level of existing DVC members in asking it -- it's a genuine concern of mine before investing in DVC:

So -- if one is generally not too picky about dates, and one is prepared to book vacations well in advance, why wouldn't a person simply pay $9.50 - $11 per point to rent from existing members? At that rate, a 150-point stay would run $1,500 -- almost certainly a good 40% off rack with no taxes.

That seems to me to be a simple break-even point at best for the DVC member who is paying ~$750 in annual dues -- assuming he/she invested $13k or so for the 150 points (a modest after-tax annual return on $13k would be approaching $750).

What am I missing?

Thanks (and respectfully),
JDove

 

[utahkennedys]

I can of course only speak for our family and we only bought a small number of points at OKW by resale this past Spring. Here is why -- and I thought it through for a long time before buying:

1. I liked the thought of owning points and having control over them. Frankly, I think renting points is probably pretty safe, but not as safe as having complete control over my points and reservation. Now, I can have a member transfer the points into my account when I need more (which we did for our Sept. trip), but once they are transferred they are "mine" - no more control for the other DVC member.

2. The rental price will increase. It won't always be $10/point. As costs go up at regular WDW hotels, rental points will increase. My maintenance fees can increase, but not my initial points which I paid for in cash.

3. I would only buy what I could afford in cash, since if you finance, you have to take into account all of the finance charges in any financial calculation. Frankly, when I looked at the finance payment schedule for 150 points, it was crazy to me.

4. I can always sell my points at some future point if I don't need them again.

I do not think DVC is for everyone. It works for us b/c we were able to buy a small contract, and will probably add on but again, only for cash to buy more points depending upon how our family's vacationing style changes as our kids grow.

 

[bom_noite]

Very good question, and, one I have thought about as well. The educated people on this board will probably give a more thorough answer, but, let me give you a few things I can think of:

1) Cost Increases: I am booked in for the next 40 years at a set point cost. You can rent points now for $10 to $11 (maybe less / maybe more). But, what will the cost be 5 years / 10 years / 20 years from now?

Keep in mind that I have an asset that I can sell. And, if I sold my 150 BCV points today I would stand to make a profit of about $1800 at current market price. That profit almost covers all of the membership dues I have paid to date.

Thus, if I sold today, I would almost be quits (give or take $500). And I have had 4 years of vacations. A buyer would have invested $6000 to this point.

2) Risk: By owning my points I have zero risk of making a reservation. While most people are honest, I am certain some risk is involved when you rent from a stranger.

3) Flexibility: I think flexibility is about even - but - with the ability to trade I think that I have an equal shot of getting the property I want as someone who buys points. If you buy points you are somewhat dependent upon finding a interested seller at the price you want.

Interesting point though.

 

[jade1]

If you dont plan on WDW every year or so it may be best to rent, and we certainly would rent DVC (instead of regular ressies) if we didnt have the funds to put down and dues every year.

That said we do visit 1 or 2 times a year (3 in 2006 on 1 AP) and are way ahead since our initial purchase (5 and 3 years ago). In other words for us at least the resale value of our DVC is worth more than our initial investment and all of the dues we have paid so far combined-meaning on paper all of our trips have been for free.

 

[jdove]

I wasn't expecting to hear that these could appreciate. That being the case, some of the concern eases. Also -- I guess the glass half-full way of looking at it is that with a modest amount of effort, worst case, you get most if not all of your $ back if you cannot use it in a particular year.

It is probably true that the $9 - $11 per point will increase at the same rate or faster than the maintenance fees.

Any additional thoughts appreciated. I'm on the fence but leaning toward buying at either the BCV or BWV. We've gone every year for years, and, with an au pair often joining us, we usually need to get two rooms (or this January, a two bedroom) both of which get pricey.

Thx,
JDove

 

[deide71]

I'm not offended at all. Actually, I asked myself the same ????

I figured the best after tax guaranteed rate I could make off of my $ to be 5% after taxes. $650.00 in my calculation. Then I would need an additional $850.00 in points to make my ressie. Subtracting $600 in dues one doesn't have to pay if renting (2006 dues for SSR) that would require an additional $250 off of my original 13,000, leaving 12,750 to earn interest for the next year.

I would give $1500 to a relative stranger, and not have complete control over my ressie. I also would not get 100 off of an AP or, more importantly to my DH, the golf membership.

I am also thinking resale prices will continue to increase in the future, as they have over the last 12 years. We originally purchased one 50pt contract and then added on 120pts in (2)60pt contracts to make resale a bit easier, and hopefully A bit higher. We may sell in 10-15 years for more than we paid for the contracts, which would be similar to earning a bit of intrest on the $$$$.

Or, we may love the flexibility and affordability af the plan and keep the points for all 48 years . May even (gasp) ADD ON!

The other scenario is renting the 150pts @ $10.00/pt. minus 4.00pt for dues a six dollar return on the original investment. A 7-8% return on the original investmet of 83.00/pt. (If we had sold the 170 2005 points we recieved without dues, the purchase price could be considered 73.00 the return would be 8-9%)

There are a million ways to crunch the numbers, all I can say is: "Been there, done that, happy to be a DVC owner!!!!!

 

[Mississippian]

Jdove,

I thought the same way you did, but decided to buy 50 points at BWV so that I could check room availability for myself, and perhaps buy points from other members. Paying to have points transferred into your account is technically against the rules (and I've never done it), but everybody seems to do it.

After signing the contract on the 50 points I read on this board that you could buy in the "sold out" resorts, so I went ahead and bought 150 more points at BWV, with Disney financing.

I could not buy the 50-point contract for $80 today, and the Disney financed contract was only $88, with no closing costs (I'm working from memory here, but fairly certain I'm right). So they have increased in value in one year. I expect them to continue to go up in value about 10 percent per year.

Finally, as someone pointed out, it's possible to get shafted as a renter of points. Not likely, but a nagging worry.

 

[Disney Doll]

Our biggest reason was to have control over the points.

While I mam quite sure that most people are honest, with my luck, I'd be the one to hook up with the owner who wasn't honest, rent points form them, and somehow have it screw up so I don't get my vacation and lose my money.

 

[bom_noite]

I wasn't expecting to hear that these could appreciate.

Certainly you should not view this as a money-making opportunity. I guess we got lucky in that we bought in at BCV when we did. As someone else pointed out - it is a supply/demand thing at BCV. Fewer rooms means fewer points available. And, the location and ammeneties makes it high on manys wish list. And, I do not see that changing in the short term.

Looking at the resale units you seem to get a better rate if you are buying more points. And, it appears that you will need more points to get two 2BR's for one week a year.

While I have absolutely no desire to sell my points, it is always good to know that I can sell them if a disaster occurs.

Obviously the investment has some risk: Huge down-turn in the economy, catastrophic damages to the entire property or Bill Gates deciding he wants to turn the property down the street in to Micro World that makes WDW look like a 60's circus.

I personally hope that Bill keeps working on Windows so that my PC does not crash daily! But, when ego is involved - anything is possible.

 

[Dean]

It's a valid question. And given simple accounting, you might do just as well renting. But as a member you have a few additional perks and much more control. So for long term use, I'd buy. For a few trips, I'd rent.

 

[jdove]

Fortunately for us -- our preference is to spend five nights -- Sunday thru Thursday -- in the off season! That cuts back on our point requirements...

JDove

 

[tmt martins]

Plus I think the majority of the people who rent either have lots of points ,need to just dump some fast ,or just trying to help pay down the start up cost.

I bought what I could afford if some other life thing happened and we can still get in our major week and a long week dat or 3 day weekend in still.

Knowing I can do an add-on later or just rent/tranfer some point when needed.

I work to have a life not live to work and my vacation time in very important to me knowing for the next 50 years I'm set takes alot of stress off of me.

 

[bom_noite]

Fortunately for us -- our preference is to spend five nights -- Sunday thru Thursday -- in the off season! That cuts back on our point requirements...

JDove

If you plan to stay really off season (Sep, Oct, etc.), then, you may opt to buy in at another resort at less up front cost. I just saw a ton of points on the timeshare store the other day for OKW. The initial cost is lower and the dues are lower.

Just because you own at OKW does not prohibit you staying at BCV or BWV. And, your chances are probably pretty good to get the rooms you want because you are going at such a slow time - but - others can tell you better then I can on availability.

At 11 months you rent what you need at OKW, then, at 7 months you try and switch to BWV or BCV! If you dont get it - well - at least you are still in the vicinity.

If you are certain you want to always stay at BCV - then - my thought would be pay the higher price and buy in at BCV.

Please post your decision when you arrive at it - Good Luck!

 

[lisaviolet]

I agree with the other posters....I wanted to own DVC and simply have the control.

But here is a reason that may seem completely ridiculous. Once I bought my initial contract I know longer give any thought to the money that we got together to buy it. To me it's gone. DVC was a dream for years on end and when we got the money it was just a given....DVC. So I think of it as gone.

Now...here is where it gets more insane. If I was to rent points I would hardly ever go...well not as much as owning DVC because I would say, "can't do it...do not have the funds to rent the points". (I did 95% Value before and still had trouble if there were a million other places the money or lack of should go....so renting would only increase that line of thinking). The dues well they don't feel the same in my head. They are a given and a bill. Very weird the tricks you play in your brain. Doesn't seem rational but it somehow is in my head. To find the points for renting...a million excuses and good reasons why not. To pay the dues well it's a large bill and has to be paid. Pointe finale.

I doubt rational people's brains work like this!!!

Good luck with your decision.

 

[mamatojon]

I agree with the other posters....I wanted to own DVC and simply have the control.

But here is a reason that may seem completely ridiculous. Once I bought my initial contract I know longer give any thought to the money that we got together to buy it. To me it's gone. DVC was a dream for years on end and when we got the money it was just a given....DVC. So I think of it as gone.

Now...here is where it gets more insane. If I was to rent points I would hardly ever go...well not as much as owning DVC because I would say, "can't do it...do not have the funds to rent the points". (I did 95% Value before and still had trouble if there were a million other places the money or lack of should go....so renting would only increase that line of thinking). The dues well they don't feel the same in my head. They are a given and a bill. Very weird the tricks you play in your brain. Doesn't seem rational but it somehow is in my head. To find the points for renting...a million excuses and good reasons why not. To pay the dues well it's a large bill and has to be paid. Pointe finale.

I doubt rational people's brains work like this!!!

Good luck with your decision.

I think I'm rational, LOL, and I think the same way! It does feel very different to have a monthly bill versus saving for a vacation, even though we still have to buy airplane tickets and park tickets... I don't know, it just feels different somehow. Go figure! LOL.

 

[susieh]

Yet another family here who think like that too! And we're both IT professionals so I like to think we think rationally!

I know DH would not consider going to WDW as many times as we have if we didnt have DVC - it's not just a vacation it really is a home away from home and a place we feel familiar with and able to relax in. For us, relaxing doesnt mean sitting on a beach or round a pool, it means 'doing active things' - and then being able to go 'home' at the end of the day.

 

[castleri]

I
Any additional thoughts appreciated. I'm on the fence but leaning toward buying at either the BCV or BWV. We've gone every year for years, and, with an au pair often joining us, we usually need to get two rooms (or this January, a two bedroom) both of which get pricey.

I would imagine that what you have paid for two rooms or the 2 bedroom would make a good start on the downpayment on a contract somewhere. I hope I never have to sell my contracts but the fact that right now every one of them - OKW, BCV and SSR (purchased from Disney) are selling for more or at least as much as I paid on the resale market gives me a good comfort zone. If the unthinkable happened and I had to sell I would feel that they had been pretty good investments even though they were not purchased with any such idea and I don't suggest anyone look at an initial purchase as that. I was fortunate enough to be able to buy two of the contracts with no financing and have been bouncing the balance on the third one around as 0% financing on my credit cards was offered so have paid no interest on it yet. I don't know if I would have been so quick to buy if I had had to use Disney financing.
The true value is that we have taken vacations we would never have considered if we didn't have DVC. We have stayed at all the WDW DVC resorts, GC and DLH in just about every season and hope to get to the off site ones some time in the next couple of years. My daughter had a wonderful week at Vail with a trade. We have used every size unit and have made some of the most wonderful memories you can think of with family and friends. Without DVC we would probably not have stayed onsite as much and definitely not have stayed in such wonderful types of rooms.
All that said you are wise to ask questions and look at all aspects before you decide. When you say you travel off season be aware that off season for DVC and off season for WDW in general are not always the same thing.
Good luck with your decision and hope you have a great January trip.

 

[Dean]

Fortunately for us -- our preference is to spend five nights -- Sunday thru Thursday -- in the off season! That cuts back on our point requirements...

JDove

The points per stay will be the same whether you buy or rent. You could always buy a very small package and have points transferred in when needed, then you'd have member status and low cost. As for off site timeshares, they will be MUCY cheaper than DVC any time of the year if you learn how to get them appropriately.

 

[mickeyfan2]

I would guess that the points resale price would go up and at some point start to go down as the number of years left decreases.

 

[girth]

A big reason we purchased was to make Disney a priority. If we rented every year, there would be way too many pressing reasons to skip it this year. My dw is way too practical. Owning means we have made a commitment to vacation regularly. Not everyone will need a reason like that, but I mention it to point out that some reasons to purchase rather than rent are somewhat intangible.