What our Points are Worth!

[10gigi]

Thanks for everything guys! I couldn't agree more!
Speed Weasel
Don't worry about Tink! My husband has a thing for Snow White!
LO
Have a Super Day!

 

[KNWVIKING]

Of course the renter always has the option to reject or even ignore a low number, but the problem with setting a price and trying to stick with it is that your product has a very limited shelf life. It's not like you're holding a Ted Williams rookie card that's only getting more valueable with age. Your points are going to expire. Go ahead and ask 12.00 pp at 11 months, but what's the price going to be when you get no takers and the points expire in another month or so ?

 

[Speed Weasel]

KNWVIKING--Valid point...however, if I understand the original poster's intent, a DVC owner needs to plan for this contingency when they decide to rent.

Start out on the renting path with a plan. I want $xx per point. I will take $xx point, if asked for by renter. I the points are not rented by 'xx date' then I will use/gift/donate them. In other words, put some thought into what can happen instead of just reacting with a fire sale. As renters come to the board and see the fire sales, they will get trained to operate in the fire sale mode, and begin to expect it. I can just hear it now from the renter...I'll give you six bucks per point now or you can wait until there is only a month left and me, or one of my buddies, will scoop it at 4 bucks a point while you are desparate. Might as well rent them to me now and get the extra two bucks. The entire "market" for the points will decrease.

As others on this thread have mentioned, there are many people that did not buy for investment purposes, but rather to 'prepay' on their personal vacations. Great, I am glad they purchased for reasons that made sense to them...but what happens when you cannot take the vacation that was 'prepaid' in a particular year? It is nice to know that today you can go to the rental market and recover your 'prepayment'. But if rental rates drop to the $4-6 per point (or even $8), you are only partially recovering those prepayment costs.

Just my humble opinion...Take your own psychology course

 

[crisi]

That assumes that you start down the rental path long before your points expire. I don't think that is a realistic option for "casual" renters as opposed to those in the business of renting points.

People in the business of renting points should have a plan. They should be informed about their market. They have an interest in keeping point rental cost high and getting ROI.

But they are competing with the casual renter.

The casual renter has a few points that they thought they might use, but can't. A trip planned that they had to back out of when some other life event got in the way. Or guests that backed out on them, leaving them with an extra ressie for a studio. A situation like anniet's where they bought some points for next year or the year after - but want to get rid of this years points now. Or they've decided to rent this years points to pay for a cruise - and $10 a point is what they figured.

The casual renter may be more interested in recouping his costs for the year - i.e. a lot of casual renters are happy if they get "dues plus" - instead of getting ROI on their investment. They are trying not to lose money. Ten dollars a point is great! and they may be thrilled with $8. (If they are renting to pay for a cruise, they may need ten - but aren't likely to bother with looking for $12 as long as $10 covers the cruise). They may have spent some time trying to rent or give their points to family or friends before turning to the rent/trade board - which may have further shortened the window to make them fire sale points. They likely aren't planning a year out to rent their points. They may want to rent their points quickly with as little fuss as possible. They aren't interested in keeping rental costs high, or worried about the long term resale value of their contract.

In other words, people in the business of renting points have to understand their competition.

 

[mydogdrew]

Speed Weasel, I'm with you except that you have to deduct the dues from the $10. I would only capitalize the $6 of the $10 rental price. So, a $10 rental rate yields $6 against your original investment. Accordingly, if you require a 10% return and the best you can do is $10 per point then you better not pay more than $60 per point. A $70 resale would yield ~7% on $10 rental (assuming that dues and rental rates are constant). The bottom line is that if rental rates don't follow dues inflation, you might be better off renting than buying.

 

[Speed Weasel]

Originally posted by crisi
That assumes that you start down the rental path long before your points expire. I don't think that is a realistic option for "casual" renters as opposed to those in the business of renting points.

People in the business of renting points should have a plan. They should be informed about their market. They have an interest in keeping point rental cost high and getting ROI.

But they are competing with the casual renter...

All very valid points! Although, I do think that most 'casual' renters think about what they are doing with their points more than two months out. But with that said, things happen and situations arise...welcome to life. Since the owner wanting to rent points does ultimately have to compete with the fire sales, they will need to distinguish their 'product'.

What makes your points better than the fire sales? The overwhelming benefit is flexibility. The renter can choose their own travel date(s) (and even resort), upto 11 months out at the home resort. Gives them time to watch for airline sales, or build frequent flier miles. The renter can choose the time of year that is special to them, has an event that they want to attend, is less crowded, and/or fits their schedule (school, work, etc.). As an owner you have to promote these benefits, not just assume that people know the benefit. Tell them! Many times!

Case in point...Airlines have weekend getaway sales lists every week. I am sure that they do not like having to discount the fare, but they have excess capacity that they can sell for something (something is better than nothing). As a flier, I can take a chance that the place that I want to go is on this weeks list. But if I know that I want to go to Orlando on my birthday for 6 days, I better be making advance flight arrangements.

As a owner planning to rent the points, you just have to find the target renter. It may or may not be on this board, especially if this one is getting a reputation for cheap last minute arrangements.

 

[PamOKW]

As long as we're talking about the logistics of renting ---

I'm curious how long-range rentals are handled. If I rent to someone at the 11-month or similar long range mark, what do you require for payment? When do you require full payment and what do you do about a cancellation? It seems that finalizing a transaction ASAP would be preferable to having months of "what ifs" regarding whether the rental will be a done deal. As I think about it, there is a degree of "work" in doing a rental.

 

[crisi]

I think this board has a reputation of appealing to the savvy Disney guest - quite different from being known for cheap last minute arrangments. And the savvy Disney guests knows that "good deals" on points may be available. They may do their original reservation through CRO for CSR six or eight months out. And then they start watching. They watch for annual pass rates to be released that might get them into the Poly for the same cost. They watch for a DVC owner willing to rent points for cheap or someone with a reservation in hand for their dates that they need to cancel. They may be able to be flexible with their dates until the day they need to cancel their CRO room (which, if they have a room only package, they only need to cancel five days out). They watch for the now elusive code or a deal like the FTP. If they need to call CRO three times a week to make sure rates haven't changed - some of them are willing to do so. Likewise, they are willing to answer every "for rent" ad with "I'll give you $6" in the hopes that someone will take them up on it. After all, they still have those CSR reservations in hand, its no loss to them but a little time if every DVC owner says no.

It doesn't take a rocket scientist to go over to the rent/trade board and find out that $10 is pretty standard. Some people will want $11 or $12 - but - as you said - they'd better distiguish their product

 

[Dean]

Originally posted by mydogdrew
Speed Weasel, I'm with you except that you have to deduct the dues from the $10. I would only capitalize the $6 of the $10 rental price. So, a $10 rental rate yields $6 against your original investment. Accordingly, if you require a 10% return and the best you can do is $10 per point then you better not pay more than $60 per point. A $70 resale would yield ~7% on $10 rental (assuming that dues and rental rates are constant). The bottom line is that if rental rates don't follow dues inflation, you might be better off renting than buying.

You also have to account for return of your initial investment and I'd never go over about 20 years for that so you're talking $4 roughly for dues and another $3 pp for return of principle at $10 pp rental or only about 6%. That only gives on $2-4 pp per year "income" or interest.

 

[mikesmom]

I'm not even following the economics thread here (I'll leave that for DH) but I do agree with the OP in one way. I have wandered over to the RentTrade Board ocassionally and seen someone looking for points say, at BWV during F&W or anywhere Christmas week and then saying "want bargain price of less than $9/point" or "already have ressie at AS and want better price". That does tend to annoy me when they pick a time that is sold out and couldn't get a room at ANY price and apparently would like a DVC member to subsidize them. It does tend to make me at least roll my eyes.

Obviously we can always say no.

And just to chime in on the members/family/renters discussion, we have rented 3 times. Once to non member who was wonderful. Twice were to family members who cancelled out and left us holding the bag on borrowed points!

 

[Boardwalk III]

To PamOKW,

Regarding payments and refunds. I have only rented points once (for $10 point) and it is a lot of work as you get many inquires but often have trouble getting the availability of dates they want (lots of calls to DVC, e-mails to inquirers etc). I did end up renting to a wonderful woman from England. Everyone's terms are different, but I required payment in full up front and no refund (but I was willing to change reservation dates if the need arose). Personally, I would not rent if I had to worry about someone wanting a refund. Hope that helps!

 

[Bill K]

Priceless!!!

 

[CaptainMidnight]

Originally posted by lat
For anyone to tell me how much I should rent it for and how I should rent it is ludicrous, unless they paid my pts and are paying my dues.

I happen to dissagree. If you participate in detrimental rental practices that cherry pick prime holiday weeks for the lowest amount of points and auction those off for the highest dollar amount to gain the most for-profit dollars, I feel other members have a right to express concern over those practices. It's a free country and this forum is intended to share feedback and discussion. The above for-profit rental practices are not the intent of DVC and there is a legitimate aurgument to be made that it violates the terms of the agreement you signed as a commercial business, although there is wider agreement that the DVC board would not striclty enforce such clauses. Some would aurgue that is not what the pruchase agreement states, but there is certainly enough language there for there to be a legitimate aurgument for either side.

So, whether you think it's ludicrous or not, the more wide spread these cherry-picking-prime-week-auction-practices become, the less those times are available for owners and thier family vacations. The fraction of time this occurs now might be so small now it doesn't matter. But it is certainly legitimate to express concern and hope the practice doesn't accelerate, ludicrous or not.

By the way, although I;m concerned about "cherry-picking-prime-week-auction-practices", I'm fine with normal renting and support the rent trade board as a great option for owners and renters.