The Economics and Value of Renting Your DVC Points

[boba_balla]

Still going thru the closing process for my first DVC contract, and although we do intend to mainly use it for our own travel, the fact that there is a huge rental (and also resale) market for the points did make us more comfortable with the decision of becoming DVC members. While we love going to Hawaii and Disney parks, there was still that uncertainty of whether we'd enjoy it year after year, or if our kid would eventually grow out of Disney/Hawaii. It's good to know that we might even be able to make some money if we know we can't use the points one year and end up renting them out.

 

[intamin]

Interesting article. Without going too much into accuracy and whether things may be over- or under-stated (I'll just say that I wouldn't rent points for "Max $16/pt"), there's the issue of how "rental mentality" can affect enjoyment of the ownership.

If I think of my Aulani subsidized points costing me $7.34/pt/yr then I may be happy to splurge 80-85 points ($600) per night on a 2BR in peak summer (it's probably an extra $3/pt if you use the article's methodology and add upfront cost). If I think of those points as costing me $20/pt/yr in foregone rental value, those 80-85 points per night ($1600-$1700) now seem costly for that same room. Maybe I'll book a 1BR instead and rent some of the points? Maybe I skip Hawaii this year and rent all the points?

One should be aware of the option to rent, and even take advantage once in a while, but enjoying the ownership should come first. You can't take it with you, and an occasional stay with people you love in a Grand Villa, CCV Cabin, Treehouse Villa, Poly bungalow etc can be memorable for a lifetime...

Agreed 100%. Between the time value of money, taxes and rental fees it’s worth it to rent points if you truly can’t use them yourself but otherwise should not be done on a regular basis.

I’ve done some quick napkin math to compare how much each point is worth by dividing the rack rate by the number of points and most of the time it comes out to high 20s-30 which just goes to show the best use of points is for your own use.

 

[DanCali]

Agreed 100%. Between the time value of money, taxes and rental fees it’s worth it to rent points if you truly can’t use them yourself but otherwise should not be done on a regular basis.

I’ve done some quick napkin math to compare how much each point is worth by dividing the rack rate by the number of points and most of the time it comes out to high 20s-30 which just goes to show the best use of points is for your own use.

The rack rate math is less relevant to me, and maybe others, because I would likely never pay cash rates to stay at Disney resorts. It's a bit like examples of redeeming reward points for a business class ticket and saying it's great value because those points are worth $5000-$10,000. They're only "worth" that if you were going to buy that ticket anyway.

We've been going to Orlando on and off for ~15 years but, until buying DVC, we used "cheaper" options available via our Sheraton/Marriott ownership. When staying offsite, even using that ownership itself in Orlando is expensive for me (I'd rather use that "timeshare currency" at beach locations in the Caribbean or Hawaii) but options like Interval Getaways, or the 30% owner discounts we get on Marriott cash rates are generally all sub-200/night for a 1BR, and sometimes closer to $100/night.

Even after owning DVC, those options are still much less expensive than booking comparable rooms as a DVC owner, but I'm willing to compromise on a studio onsite vs a 1BR offsite because the DVC experience is so much more memorable. So for us, DVC was a tradeup in the level of experience and memories rather than cash savings (like redeeming for that business class ticket rather than paying cash for coach).

 

[BuzzLightyr]

Someone dug up a 2021 thread and replied to it. Interesting to revisit.

Original analysis did not factor in time value of money. Rates lower then, and much higher now.

S&P500 index fund was the clear winner. Omg, what a run up in the market.

The original analysis didn't factor in inflation which is a big benefit. If you think of an annual redemption cost as half dues and half upfront. The dues move with inflation. The upfront is inflation protected.

For the cheap contracts out there.. The upfront has decreased. The value, rental or xaash has increased. The economics which were meh in 2021 have gotten better and that's why you have seen commercial renters for certain properties.

 

[intamin]

The rack rate math is less relevant to me, and maybe others, because I would likely never pay cash rates to stay at Disney resorts. We've been going to Orlando on and off for ~15 years but, until buying DVC, we used "cheaper" options available via our Sheraton/Marriott ownership. When staying offsite, even using that ownership itself in Orlando is expensive for me (I'd rather use that "timeshare currency" at beach locations in the Caribbean or Hawaii) but options like Interval Getaways, or the 30% owner discounts we get on Marriott cash rates are generally all sub-200/night for a 1BR, and sometimes closer to $100/night.

Even after owning DVC, those options are still much less expensive than booking comparable rooms as a DVC owner, but I'm willing to compromise on a studio onsite vs a 1BR offsite because the DVC experience is so much more memorable. So for us, DVC was a tradeup in the level of experience and memories rather than cash savings.

That’s fair, for us we don’t consider the off property resorts I think because we didn’t like having to deal with a rental car. We wanted to uber/Magical Express (RIP) to Disney and get off and be done with it. The appropriate value comparison is very subjective.

 

[LAX]

Someone dug up a 2021 thread and replied to it. Interesting to revisit.

Original analysis did not factor in time value of money. Rates lower then, and much higher now.

S&P500 index fund was the clear winner. Omg, what a run up in the market.

The original analysis didn't factor in inflation which is a big benefit. If you think of an annual redemption cost as half dues and half upfront. The dues move with inflation. The upfront is inflation protected.

For the cheap contracts out there.. The upfront has decreased. The value, rental or xaash has increased. The economics which were meh in 2021 have gotten better and that's why you have seen commercial renters for certain properties.

Interesting observations.

LAX

 

[DVCSunDevil]

So for us, DVC was a tradeup in the level of experience and memories rather than cash savings (like redeeming for that business class ticket rather than paying cash for coach).

This. So many people try to fit every aspect into a spreadsheet and try to decide on DVC solely on the $$ benefit. There is absolutely a financial benefit to buying DVC, mind you…it has been discussed on many threads here. However, not everyone takes into consideration the “intangible” benefits that DVC ownership provides.

 

[Sandisw]

This. So many people try to fit every aspect into a spreadsheet and try to decide on DVC solely on the $$ benefit. There is absolutely a financial benefit to buying DVC, mind you…it has been discussed on many threads here. However, not everyone takes into consideration the “intangible” benefits that DVC ownership provides.

This is so true. I personally don’t use rental rate to determine the value of my points when deciding if how I am spending them.

The value for me is in their use, even though I know renting them can earn me more.

 

[aammtt20]

Yup, I have rented my points before, but I don't let that get in the way of enjoying my points. For example, there are times when I pick a 1 bedroom even though I could fit everyone comfortably in a studio. But I don't say to myself, "oh i would save x amount of points in a studio and then I could rent those excess points for y amount of dollars, I'm leaving money on the table by booking a 1 bedroom" what I do say is "I realize 1 bedrooms are a bad point value vs studios, but I'm using a luxury vacation project and I'd rather have more space and a larger kitchen to enjoy myself while I'm on vacation." It's the same with booking high point views. I know it'll be silly to book a theme park view at the Poly tower because of the points costs, but sometimes you just want to look out your balcony at fireworks and you can't really put a price on that (I mean technically you could, but I'm just gonna override that part of my brain when I book haha)

 

[disneylandtour]

I've never rented points. But I have a question. I understand you get 1099-ed for the rental income. What can you use to write off against this? I assume at least the related MF for the rented points? Can you also pro-rate the purchase per year and use that as well? I'm just curious how people are handling this aspect of it.