To All Dvc Members - A Comment On Point Value

[RUSSD]

oh, by the way, I need some $8 points for Sept. - Oct. 2003 at OKW & BWV! This is serious.

 

[EROS]

Originally posted by DougL
I think it is appalling that there are some owners where this is solely an investment. That goes against what I thought a DVC membership was all about.

Hey, DOUG, what's wrong with CAPITALISM?????? I see nothing in the DVC regs which precludes renting. I don't feel that we should "judge" those who use their membership as an investment vehicle.

 

[msdis]

Don't know about the rest of you and your "investments" over the last year............... but DVC seems to be one of the few "investments" that has NOT tanked this year, rented or not. Wish I could have rented out some of my stocks, yet retained their original value.

 

[MBIJ]

One point which has not been made in this discussion is that all points are not created equal, and therefore some will be worth more.

For instance, we're recent DVC owners having purchased a 100 point BWV resale as an intro into the program. We were lucky enough to have had the sellers bank all of their 2001 points, so immediately upon closing, we had 200 points with 100 expiring August 2003. For various reasons we knew we would not be going to WDW before 8/03 so we sought to rent those points. However, since they were banked, they could not be transferred. Therefore, they couldn't as easily be "combined" with an owners existing points to make a larger reservation. This, on some economic level, makes those points somewhat less valuable than points that could be transferred.

Similarly, for arguments sake, if the banked points were set to expire 7 months or less away, then those points have to be worth less than points that won't expire for 10 or 11 months. Why? Because if I'm renting BWV points which will expire in 5 months, then there is no advantage to someone trying to make a resie at BWV than an OKW owner trying to make that ressie. If I rent it with 11 months before they expire, then the rentee will only be competing against other BWV owners for the coveted "standard view" rooms and therefore those points have to be worth more.

I posted a message several weeks ago that I was renting those 100 points. I did receive some messages from owners that I was accepting too low a price, but I don't think it was a complete "firesale." I rented 98 of the points at 8.50/pt and am pretty satisfied. Since they were basically freebies from my resale, I think I made out OK. Just my 2 cents worth...

 

[DVCajun]

I have rented my points before and it's likely I'll do so again in the future. I'd rather use the points myself, but when life doesn't permit I'm certainly glad I have the option to rent them instead of losing them.

Regarding the going price for points, I personally feel that $10 is too low. That's why I don't rent my points on these boards. It's difficult to make a transaction for much more than $10 when others have the same product for a lower price. Ebay offers me a platform for renting my points that allows me a much fairer rental price. I simply set my reserve at the price I'm willing to take and so far I've always been able to get the price I require. No one can get a cash ressie for DVC accommodations (quality and size) for $10 a point, or even $12 a point.

The bottom line is that my points are worth more to ME than $10. I'm not here to give someone else a "deal" on their trip to Disney World. If they want a deal they can wait for a coupon code or rent from these boards.

 

[Dean]

Originally posted by Caskbill
I don't think too many people have any problems with those DVC'ers who need to rent out points on a few occassions, or need to rent one time because of a special circumstance, (such as job, accident, illness, get a better deal on a cruise, etc).

But we all know there are a few members who are in it for the profit. Just check out the ads on E-Bay - they're all Studios, 5-days, at OKW, and usually the two lowest seasons). To me this is no different than ticket scalping, which is illegal in most states.

This is obviously in violation of the rules governing DVC, but apparently DVC won't or can't do anything about it.I wish I did.

I disagree. Renting of points is expressly allowed. DVC cannot legally limiting renting and the VAGUE commercial reference in the POS is intended only to prevent someone from putting up a neon sign, IMO. To say it's OK to rent but not OK to make a profit is crazy. That is not to say that Disney could not make it difficult simply because they are the 600 pound Gorilla but they would not have a legal leg to stand on to simply prevent renting.

If I rent out my points, I am losing money at around $7-8 pp. I do include potential income on that money and I'm looking at the long haul since I took the money from savings, not just the last 2 years.

 

[Caskbill]

Just for information:

Member Guidelines for Disney Vacation Club, update August 1999:

Sec I, Para 3: Transferring vacation points between members:

Item 7) "Members are expressly prohibited from receiving compensation for engaging in any Transfer activity."

So, apparently if someone RENTS points to another member, and then transfers the points to the other member's account, that action is strictly prohibited. Apparently members may only TRADE points, or give them away free. We are strictly prohibited from selling ('renting') points to other members and transferring the points into their account.

But everyone else seems to think that renting to TOTAL STRANGERS is OK.

Sec II, Para 2: Types of Members and who can make a reservation.

Item 3) "Guests are Non-Members staying with or on behalf of a Member"... (It then goes on to state Guests cannot make their own reservations and members may make a reservation on behalf of a guest.

Now interpret this any way you want, but by definition a guest is defined as someone staying WITH or on BEHALF of a member.

Now it's clear to me that the intent was for members to allow family and friends to use their points to stay at DVC resorts. To me it's a long stretch to say that Disney had any intent on allowing members to set up a business of renting points for profit.

If I invite family or friends over to my house to spend the night, they are my GUESTS. If on the other hand I rent out a room to someone for lodging, they are not my guest, they are my tenant, and I am a landlord. They are not my guest.

 

[Buzzro]

Dr. P. I don't know how you arrived at your figures but that doesn't work. We bought a resale in 99 back when you could assume the loan from Disney. My annual costs (pymts. + dues) amount to $2,434.56 for 220 points. That comes to an annual cost of $11.06 per point. This has to be less then many are paying. I personally have never rented points and don't anticipate ever doing so. I have however considered rent before and believe that $10 per pt. is fair.

 

[Maistre Gracey]

Originally posted by Buzzro
Dr. P. I don't know how you arrived at your figures but that doesn't work. We bought a resale in 99 back when you could assume the loan from Disney. My annual costs (pymts. + dues) amount to $2,434.56 for 220 points. That comes to an annual cost of $11.06 per point. This has to be less then many are paying. I personally have never rented points and don't anticipate ever doing so. I have however considered rent before and believe that $10 per pt. is fair.

Buzzro, The way I calculate (and the way I believe Doc P. is calculating) is as follows:
I paid $65 per point, and I can re-use that point 40 times. Because I can use that point 40 times, I can spread the cost of that point over 40 years. This equates to $1.63 per point, per year. I add to that the average mtc per point fee. If I average my VB & VWL, it equals $3.92 per point. This year the total annual cost of a point is for me, is $5.55.

The mtc fee will rise, so this figure will change annually. Using this formula it is easy to calculate if you are better off paying cash for a ressie, or using points.

I hope that answers your Q...

PS- No, I do not figure lost interest income. I used to do that, until I realized that I would have blown that money on a Corvette. Either way that money would be gone, so I don't figure the interest on it.
Even if you were to figure the money would have doubled, which is unlikely since you would be drawing on it for your accommodations, that would only bring the per point cost to $7.17.

 

[Maria395712]

I feel we should be able to bank and borrow. If you can't go this year for whatever reaason, why lose them? Also I have borrowed to take family that cant afford to go.I want them to enjoy the ""magic". It's not a matter of "if you can't afford more points you shouldn't go. I've also given a night or two as a gift. Why not complain to dvc about the high weekend points? Also I lost my job this year and need to rent,but most years it will be for me and my family.I've been a member since '97' and just rented out points this year , but have bought in past $11.00 a point, and if people have bought for investment , so what?, the people who rent get the best deal.$10.00 a point for 11 points studio at bwv you can't even stay at the all stars for that and I never have trouble getting a ressie, I guess when that happens I'll complain.

 

[Maria395712]

I feel we should be able to bank and borrow. If you can't go this year for whatever reaason, why lose them? Also I have borrowed to take family that cant afford to go.I want them to enjoy the ""magic". It's not a matter of "if you can't afford more points you shouldn't go. I've also given a night or two as a gift. Why not complain to dvc about the high weekend points? Also I lost my job this year and need to rent,but most years it will be for me and my family.I've been a member since '97' and just rented out points this year , but have bought in past $11.00 a point, and if people have bought for investment , so what?, the people who rent get the best deal.$10.00 a point for 11 points studio at bwv you can't even stay at the all stars for that and I never have trouble getting a ressie, I guess when that happens I'll complain.

 

[Dancind]

Maistre Gracie says:

"I paid $65 per point, and I can re-use that point 40 times. Because I can use that point 40 times, I can spread the cost of that point over 40 years. This equates to $1.63 per point, per year. I add to that the average mtc per point fee. If I average my VB & VWL, it equals $3.92 per point. This year the total annual cost of a point is for me, is $5.55."

This works if you paid cash for your contract. I just went through this exercise because we were thinking of adding another 100 points at BCV at the current $80 price. This started when I got a credit card offer of 5.99% until paid off, figuring I would pay it off at my leisure over 7 years. Anyway, with finance charges added at this low rate, and adding maintenance fees with a modest projected increase of 2.5% a year, then dividing by the number of points I will get, my calculated cost per point came out to $8.86. That would be much higher if using Disney financing, and if the dues go up more than projected. Since we were thinking of adding the points so we could cruise every other year, we decided not to do it. Cheaper to pay cash for the cruise, so we will try to save for that! Still not a bad deal for DVC accommodations, but we already have 400 points for that (averaging at $7.88 per point cost). Looked at resales too, but they didn't come out much better. Yeah, I wish we had bought in 1992, but we didn't.

Diana

 

[Doctor P]

Even taking into account interest, the breakeven costs are very similar to those I quoted. Let's imagine that you double the cost of the points to take interest costs into account (that would be a 10% loan paid off over a period of approximately 14 years with no money down--a very generous allowance for interest). At $80 per point, your per year point cost for 40 years of points under this assumption would still be $4.00 per point, and allowing $4.00 per point per year for maintenance fees one still only is up to a current breakeven rate of $8.00 per point.

 

[Maistre Gracey]

Dancind, I am somewhat suprised by those numbers. I looked at Disney financing (11.50%), and found that over 10 years I would pay back 169% of what I borrowed. This would make the point cost (before mtc fees) $2.75. This would bring the total per year point cost to only $6.67....again, using Disney 11.5% financing for 10 years.

 

[Maistre Gracey]

Originally posted by Dancind
...and adding maintenance fees with a modest projected increase of 2.5% a year, then dividing by the number of points I will get, my calculated cost per point came out to $8.86...

Dancind, be carefull when you figure mtc fee increases. I figure zero increase, because I use this per point cost to compare it to a cash ressie price. We must compare 'today's prices to today's prices'. If you figure inflation into mtc fees, then you must also figure it into the price of the cruise, or whatever you are comparing it to.

 

[Dean]

Originally posted by Caskbill
Just for information:

Member Guidelines for Disney Vacation Club, update August 1999:

Sec I, Para 3: Transferring vacation points between members:

Item 7) "Members are expressly prohibited from receiving compensation for engaging in any Transfer activity."

So, apparently if someone RENTS points to another member, and then transfers the points to the other member's account, that action is strictly prohibited. Apparently members may only TRADE points, or give them away free. We are strictly prohibited from selling ('renting') points to other members and transferring the points into their account.

But everyone else seems to think that renting to TOTAL STRANGERS is OK.

Sec II, Para 2: Types of Members and who can make a reservation.

Item 3) "Guests are Non-Members staying with or on behalf of a Member"... (It then goes on to state Guests cannot make their own reservations and members may make a reservation on behalf of a guest.

Now interpret this any way you want, but by definition a guest is defined as someone staying WITH or on BEHALF of a member.

Now it's clear to me that the intent was for members to allow family and friends to use their points to stay at DVC resorts. To me it's a long stretch to say that Disney had any intent on allowing members to set up a business of renting points for profit.

If I invite family or friends over to my house to spend the night, they are my GUESTS. If on the other hand I rent out a room to someone for lodging, they are not my guest, they are my tenant, and I am a landlord. They are not my guest.

I'm sure you know that in several places in the POS it is stated specifically that members are allowed to rent their points. I will find them if you need me to. Regardless Disney couldn't legally prevent an owner from doing something they themselves are doing. Any rules preventing renting would need to apply to all who offer units for rent including Disney themselves. I doubt that even the "ban" on transferring points from one member to another for pay is enforceable but that's another matter. The question is whether members can rent their points and obviously they can both legally and within the rules. Even if the commercial issue were as broad reaching as some members would like to think it is (it's not), DVC has shown absolutely no interest or concern in this area.

 

[Dancind]

You're right, Maistre Gracey. Even still, I think we are better off paying cash for the cruises, since it seems the points required are going to increase every year. But figuring it in real time makes me feel better about using the points on weekends at DVC resorts. Maybe I should quit figuring out the "actual cost" and just go and have fun! Diana

 

[Maistre Gracey]

Originally posted by Dancind
...Maybe I should quit figuring out the "actual cost" and just go and have fun! Diana

I'll drink to that!

 

[doubletrouble_vb]

Maria395712...my earlier comment on prohibiting banking and borrowing was facetious...

That said...I think its clear that each member makes their own judgement on what DVC is worth to them and what is required to make them whole in the event they cannot use it. $7 would not make me whole...$10 would almost do it. If you assume 40 years usage you wind up with a much lower necessary value than if you assume 10. At 40 years out I would be 83 years old...to assume I would use the contract for 40 years, that I would be in better health than my parents, as well as still interested in Disney is way too many variables for me to accept.

Recovery of my principal by way of use or compensation over 10 years is on the basis of the less taxing assumption that I will be alive and enjoying vacations but possibly not DVC at age 53. And it frees me from hoping that my contract will have a cash value beyond 10 years.

 

[Doctor P]

doubletrouble_vb, I understand where you are coming from, but the fatal flaw in the perspective you offer is that it requires that one assumes that there is zero resale value in 10 years (or whenever). If you want to make the assumptions that you have made, then you must subtract from the calculation an estimate of the resale value at the time horizon you deem appropriate to stop using DVC or stop getting value. I'm enjoying this banter!