Why Buy when you can rent?

[gcbsdad]

I am a very happy DVC owner of 210 points at SSR. Someone I know asked the question to me, why they should buy if they can rent points for around $10.00? I told them that the rental $$ can go up substantially over the years and I am locked in.
Is there anything esle that I am missing?

I think they really want to buy but they need convincing.

 

[deedeetoo]

How about the risk associated with renting. We thought about renting first. The cost seemed reasonable and we liked the accomodations. But we couldn't get past the trust factor. Unless you know the person you are renting from, you are sending money to a stranger that you met over the internet and are trusting them to make a reservation for you. Sure you can get a contract, but if you show up at WDW and don't have a room, you can't sleep in your contract.

We just couldn't bring ourselves to do it. This is why we started looking at buying.

 

[Chuck S]

How about the risk associated with renting. We thought about renting first. The cost seemed reasonable and we liked the accomodations. But we couldn't get past the trust factor. Unless you know the person you are renting from, you are sending money to a stranger that you met over the internet and are trusting them to make a reservation for you. Sure you can get a contract, but if you show up at WDW and don't have a room, you can't sleep in your contract.

We just couldn't bring ourselves to do it. This is why we started looking at buying.

I agree with this, if I were not a member, I would not rent from one...it is just beyond my comfort level. I'd travel less or stay at a value through Disney. From a renters prospective, it would just be too risky for my personal tastes. And I know that 99.99% of member rentals go off without a hitch, but with my luck, I'd have the one that goes wrong.

 

[Figment2]

How about the perks? Renters, technically, are not due any of our perks (free valet, discount at restaurants, etc). Then there is the major perk (as far as I'm concerned) the discount on my AP.

Cyn

 

[Plutofan]

Disney can change the renting rules when they want or a taxing authority can decide to step in. If either of these happen the rental rates will go up and by that time the price to buy may have increased.

 

[fishermouse]

You can ask that same question about a house or car even furniture. Personally I like owning my own "STUFF". It's paid for up front, except dues, I doubt if points will go for $10.00 much longer. Especially with DVC cutting down on transfers. Nothing wrong with renting if that's what you like.

 

[eileenkeeney]

I was pondering this question today, as I am considering buying more points at a different resort than the one I now own.

Buying in is one type of risk (loss on my investment due to decreasing value or my lack of opportunity to use my points and loosing them in some future year) , and renting from someone else is another type of risk (stressing about it from the time I make the reservation to the time I check in). .

I prefer the long term risk to the short term rental risk.

There is not a lot of difference between what these points cost an owner and what they rent for. There is a much greater difference between the cash price and the cost of using points.
Currently there is an abundant suppy of points for rent.

Maybe the ideal situation is to own a small contract (if one can get one, since these are the ones most often rofr'd); and to rent via point transfer.
What I don't know, is how many of the available points to rent are from owners who can do a transfer (due to not splitting a years points to rent between multiple renters).

 

[disney junky]

As an owner, we are free to do what we want. As a renter, you are at someone else's mercy. I love knowing my options. I agree with everyone else. There is that trust factor. Can't get past that.

 

[MonkeyPants]

if you are a die hard disney fan and plan to go every year or what not then its still a value.

will be using simple math to make it easier

I bought 150 at SSR..price roughly 15,000

dues (figure 50 years at 4 a point ) 150*4 a point *50 years = 30,000

total price 45K

now take renting

150 points costs 1500 (that is if points stay at 10 a point for renting)

factor in the 50 years and it = 75,000 (30K more then if renting points)

sure its simplified and there is no guarantee that dues wouldnt go higher or that you'd use all point every year (but many of us know we are more then likely to use them)

IMO over the long haul owning is cheaper then renting which is cheaper then book via travel agency or disney directly

 

[Granny]

I am a very happy DVC owner of 210 points at SSR. Someone I know asked the question to me, why they should buy if they can rent points for around $10.00? I told them that the rental $$ can go up substantially over the years and I am locked in.
Is there anything esle that I am missing?

I think they really want to buy but they need convincing.

If they aren't sure of wanting to vacation at WDW for the next several decades, then renting might well be a better option for them.

On the other hand, if they rent for a few years and then buy into DVC they will be kicking themselves for not buying sooner!

If they're not sure, renting is a good way to go to get the DVC experience without the commitment. My guess is that if they enjoy it a lot, they'll want to buy in eventually.

 

[bom_noite]

I have posted my thoughts on Rental Rates a few times in the past.

One way of forecasting Rental Rates is by comparing that to the Rate of the room. Logic would tell you that as Rack Rates go up so will the Rental Rates.

But, that has not happened! In the 3.5 years I have been an owner and haven lurking around here I have seen the rates hold steady at about $10 per point.

So, not only has the WDW rate increases not affected them, but, inflation has not either! Something else must be involved?

Obviously that is supply and demand. Each year DVC has increased it's membership by 10K to 15K members. Assuming 20% rent points annualy, that is another 2K to 3K folks who are cabable of renting points. Regardless, do we have another 2K to 3K potential buyers?

Renting DVC points is certainly not something that is well publicized. Prior to buying if you offered me a room at 50% of WDW's Rental Rates I think I would have smelled a rat!

My theory is that Rental Rates will continue to hold steady in the short term (1 to 3 years). In the long term they will creep up with inflation. At some point it is possible that more people will see the huge descrepency between WDW and Rental Rates. This will cause increased demand and at that point Rates will increase some.

How is that for a theory?

 

[salmoneous]

I am a very happy DVC owner of 210 points at SSR. Someone I know asked the question to me, why they should buy if they can rent points for around $10.00?

Part of the issue is that you can't count on renting for $10/point. People get $10 if they are lucky, if they wait around and pounce on a deal, if they are flexible, etc.

But if you make all your plans, and then just want to line up some points that fit into your plans, and you want to go ahead and book something NOW, you're probably going to have to pay substantially more than $10.

And if you want to go at a popular time where you need somebody to book you at exactly the 11-month window - or better yet, have already made a reservation for the now-sold-out time you want, you are going to pay even more.

 

[Dis-best]

There is one more thing to consider. After using your DVC for 10 years and selling it for the same price that you paid than you stayed at Disney for free. Also, if you purchased one of the premier DVCs (ie: BCV), where the resale value appreciated, than that is even better.

 

[3DisneyKids]

As a former renter and now owner, this was my dilemma as well. I rented several times successfully--never got burned or even close to it. Each transaction was smooth.

However, the risk for me was about cancelling and control. If something happened (and with 3 kids, something ALWAYS happens... ... ) my money would simply be gone if it was at all close to the time we were supposed to travel. And even if it was still far out from the travel date, I would have to call the owner, see about getting dates changed, etc.

Renting can be a great solution on both ends, but you have to be iron clad about your dates and hope like heck nothing gets in the way off your trip.

For us, we knew that we would want a couple of trips each year, so it makes great sense.

 

[bom_noite]

There is one more thing to consider. After using your DVC for 10 years and selling it for the same price that you paid than you stayed at Disney for free. Also, if you purchased one of the premier DVCs (ie: BCV), where the resale value appreciated, than that is even better.

That is a great point, thanks for bringing that up - as it is one of my usual rants!

In May, 2003 (not 1993 as originally posted!) we bought 150 BCV pts for $84 per point, but, took advantage of an offer where DVC reduced it $10 a pt if we gave back our first years points. So, it worked out to be $74 per point.

Thus, our cost was: $11,800. We Paid cash - so no interest.

Now, we can sell those points for about $96 (conservative - would ask $100):$14400.

Lets not forget Dues though. I would think we have paid in approximately $2200 in dues.

Thus, the equation is:

Costs: $11,800 (Purchase) + $2200 (Dues) = $14,000
Assets: $14,400 (Equity)
Profit: $400

And, oh, by the way - for my $400 in profit I was allowed to stay in rooms that I calculated would have cost me $13,000 (I did not have all of the rack rates - so I estimated conservatively and actually came up with $13,300).

In all, over the 3 years we have used 450 vacation points. The renter would have paid $4500 to get the rooms I did.

Ok, I got lucky and bought at BCV that has gone crazy in resales. But, one of the things I usually harp on is this:

In every cost/benefit analysis I have seen the analysis does not consider the points bought as an asset. Rather, the analysis assumes that the asset will be used through 2042/2052. Barring a major disaster in the world / US economy, that Asset will continue to appreciate in value. I could sell tomorrow and be Very Dumb, Extremely Fat and One Happy Duck!

So, if you look at it in those terms - who has the advantage?:

Renter: (-$4500)
Me: (+400 and $13,000 in Vacation Rooms)

I would love to see others do the same type of analysis! Those that bought years ago and those that bought last year. I may start a post on that if no one picks that up here.

Or, if someone can point a thread or orther resource that shows:

Historical DVC Purchase Prices
Historical DVC Resort Rack Rates
Historical Dues

I will do it for every resort and for every year.

 

[dianeschlicht]

How could you have purchased BCV in 1993?!?!?!?!? OKW was not yet completed then, and BWV, VWL and BCV weren't even on the map yet.

 

[bom_noite]

How could you have purchased BCV in 1993?!?!?!?!? OKW was not yet completed then, and BWV, VWL and BCV weren't even on the map yet.

Bought on Speculation. In fact, we also own 200 Contemp points!

Sorry, I meant 2003. Will edit the post so it is not confusing!

 

[crisi]

Here is mine:

150 BWV points in 2002 for $63 = $9450

Another $500 (approximate) closing costs (resale puchase) = $9950

Average $4.50 in dues for 4 years (2003, 4, 5, 6) = $2700 = $12650

Sell today for $93 (conservative) = $13950

Less 12% commission to reseller = $1674 = $12276

Current Cost of DVC (to date, three vacations, 20 nights) = $374

 

[bom_noite]

Current Cost of DVC (to date, three vacations, 20 nights) = $374

So you are -$374 (+ 20 nights at WDW) and the Renter is -$2000.

Interesting!

 

[Plutofan]

What you need to remember is that the assumption is that you will sell before the price starts to decline. You are also assuming inflation on room rates will keeps the resale value high. Also you are assuming that Disney will continue ROFR. If for some reason Disney stops ROFR or if Disney lowers the floor this will have a big effect on prices. The analysis that people are posting is only valid if you intend not to hold it until the lease is up. At that point you own nothing. Also people are a little to high on the resale prices that they are using. You should really use actual resale prices that are being posted on the three big resale boards. The going rate for commissions from what I have benn told is 10%.