Please explain DVC points

[Time2Ponder]

I don't own DVC but I REALLY REALLY want it! DH doesn't, so that's not happening ANY time soon. We are renting points in December for 6 days, 5 nights (excluding weekends, of course). I am renting for $9.75 per point. My stay at Saratoga Springs is 55 points. I am staying at a Deluxe/Home Away From Home resort for LESS than I'd pay to stay at a Moderate! Obviously, I'm thrilled.

OK, so my question is this...if I can get such a great deal by renting points, what would justify me actually making the purchase? We plan to go to WDW EVERY year. But keep in mind I also own timeshare off site, that has served me very well, too. But for Disney fanatics like myself, I can't help but want to own DISNEY and be totally immersed in the magic 24/7.

So...should I rent every year? Or take the plunge?

From a page in my DVC informational/resource website (http://www.mouseowners.com/DVC101.html)

"Is DVC for me?
While you are the only one who can make that decision, here are the general rules of thumb to determine if DVC will work for you:

1. You can afford the initial cost and Maintenance fees.
2. You travel to WDW at least every other year.
3. You stay onsite in moderate or deluxe accommodations.

Those buying into DVC will typically reach a breakeven point on their investment 6-8 years from the date of purchase when compared to paying Disney’s cash room rates. Variables for individual owners include the manner in which they use their points and purchase price (including interest if financed.) But frequent visitors to Walt Disney World can obviously save a great deal on their accommodations in the long run after they have passed that breakeven point."

Kim

 

[Steamboat Bill]

I own DVC and love it. However, I am very practical when it comes to finances and like to compare apples to apples (unlike DISboard posters) and here is my "opinion"

Only buy DVC if you pay cash (no financing). If you can't afford to buy without financing (especially the 10.75% rates Disney charges) then DO NOT BUY and continue to rent.

To: Deniselew
you forgot to include "lost opportunity costs" in your calculations. If you bought DVC for $16,000, then you lost the 5% CD income that you could have earned if you did not buy. Thus, please add $800 per year to your MF calculations.

DVC is the BEST for staying in one of the seven DVC properties!!! Trading and cruises, etc are not worth it in my opinion.

Yes, you can rent for $9 (from an owner) if you are lucky, but getting $12 rental (if you are the owner) is harder.

 

[Denise L]

To: Deniselew
you forgot to include "lost opportunity costs" in your calculations. If you bought DVC for $16,000, then you lost the 5% CD income that you could have earned if you did not buy. Thus, please add $800 per year to your MF calculations.

DVC is the BEST for staying in one of the seven DVC properties!!! Trading and cruises, etc are not worth it in my opinion.

Yes, you can rent for $9 (from an owner) if you are lucky, but getting $12 rental (if you are the owner) is harder.

Truth be told, that $16,000 would not be in a 5% CD every year . But like I said, my crude math.

It took me about 5 minutes to get $12/pt. I think it's possible to do that every other year. Maybe even $13/pt.

 

[Steamboat Bill]

Truth be told, that $16,000 would not be in a 5% CD every year . But like I said, my crude math.

It took me about 5 minutes to get $12/pt. I think it's possible to do that every other year. Maybe even $13/pt.

Most people forget about the "lost opportunity" costs in buying a TS, car, boat, etc. Sure you may not buy a CD, but at least this is making a true comparison for different purchases.

$12-13pp is awesome news...the final straw in me getting banned from DISboards was when I posted an ad for $14pp DVC rental and linked it to another thread I created to try to get people to increase their point rental rates. I was very much against the $9-10pp rentals, but DIS wanted to let the market seek its own level.

Unfortunately, with 100,000 DVC owners, there are many uninformed consumers. I felt like someone down the street from me UNDERPRICED their home by 10-20% and felt it was devaluing my $40,000-$80,000 DVC "investment". Yes, I know TS are NOT an investment, but at the amount of $$$ I see people throwing into DVC, anyone with 1/2 a brain would have to question if this is a smart decision to buy or simply rent.

 

[Time2Ponder]

$12-13pp is awesome news...the final straw in me getting banned from DISboards was when I posted an ad for $14pp DVC rental and linked it to another thread I created to try to get people to increase their point rental rates. I was very much against the $9-10pp rentals, but DIS wanted to let the market seek its own level.

Unfortunately, with 100,000 DVC owners, there are many uninformed consumers. I felt like someone down the street from me UNDERPRICED their home by 10-20% and felt it was devaluing my $40,000-$80,000 DVC "investment". Yes, I know TS are NOT an investment, but at the amount of $$$ I see people throwing into DVC, anyone with 1/2 a brain would have to question if this is a smart decision to buy or simply rent.

Well, first, people can do with their points whatever they please. If they decide to drop rental prices to $8 ppt, well, that's their prerogative. And if such an action "devalues your investment," honestly, that's just tough luck. If you're not happy about that, perhaps you should sell your points and just rent for the times that you go down there. It seems it would be potentially more economical for you, plus you wouldn't have to worry about low rental prices; in fact, the low rental prices might just make your day.

Second, the rental prices reflect what the market will bear. Personally, I don't think you'd get many potential renters who would be willing to pay $14 ppt. For example, the CRO list price for one week in a 1BR at SSR this October is $3200. This reservation, which requires 194 points, would cost $2700 at $14 ppt. With only a $500 difference in price, if I were a potential renter, I'd be much more comfortable going with Disney at that point. Why? Because I can cancel with no penalty, and I can be absolutely sure of what I'm getting (as opposed to trusting an owner).

Now, if you're looking at $12 or $10 ppt (totals of $2300 and $1900 respectively, and savings of $900 and $1300 over list price respectively), well, then those larger savings maybe will convince me to go with a rental as opposed to Disney.

It seems to me that, for the non-commercial owner who only occasionally will rent out his/her points, $10 - $12 per point for a rental will recoup MF plus pad the pocket a bit. If that's a sure thing, why mess with it? And if I'm an owner who mostly uses my own points, I'm honestly much more likely to be concerned with my enjoyment of my points/product than with the rental market's supposed "devaluation" of my time at Disney.

All JMO, of course.

Kim

 

[Steamboat Bill]

Well, first, people can do with their points whatever they please. If they decide to drop rental prices to $8 ppt, well, that's their prerogative. And if such an action "devalues your investment," honestly, that's just tough luck. If you're not happy about that, perhaps you should sell your points and just rent for the times that you go down there. It seems it would be potentially more economical for you, plus you wouldn't have to worry about low rental prices; in fact, the low rental prices might just make your day.

That is exactly why I am selling some of my DVC and buying a Marriott!!!!

I had 4 DVC contracts for 250 points each. I am NOT a commercial renter. I just originally considered buying DVC for DCL cruises, exchanges, hotel stays, etc. However, after I bought, I found those exchanges very expensive as a $/point value. The BEST DVC value is only at the 7 home resorts.

Thus, I started to rent my extra points. Renting is pretty easy, however, there are people that rent $8-9 pp and this is sad because they are leaving money on the table. If they got educated and everyone used $10 as a minimum, we all would be better off.

DISboards posters are the only people that actually get MAD if you try to help them make more money. TUGbbs posters seem "more financially educated" and are not blinded by pixie dust...

I will ALWAYS keep at least one DVC contract as I love it....I just see the light at the end of the tunnel and it looks to me like a potential correction in the DVC market. I may be wrong, but if I can rent for $8-9pp, then I would be STUPID to buy (or even keep what I already own).

 

[spiceycat]

Bill - there are several disers (not owners) who expect to rent at $7 to $9 per point.

when they ask me - simply say I can rent for more - if they don't like my price too bad - someone else will.

 

[littlestar]

We just gave my parents some BCV points. They usually stay at a Marriott on a Getaway week through II, but wanted some addtional days onsite when they want to do the Disney parks. A small points package is great for those onsite trips in studios (park days) Sunday through Thursday and then they move over to their Getaway week to have more room and relax.

It's nice to be a member (discounts on annual passes, golf, etc.,) - even if it's a little package like 55 or 60 points. Plus, if you owned a small package, you could have a transfer done to your DVC account if you needed more points for a particular trip (one transfer in or out per use year so plan carefully) and then you would have control over your reservations instead of a stranger.

If you just want to stay DVC occasionally, then I'd say rent. But if you know you're going to want it every year, I'd think about buying some points.

 

[Steamboat Bill]

There are three DVC resales on eBay right now:

50 HHI
75 BWV
80 VBR

The BWV would be my reccomendation. I expect it to sell for for over $7000!

 

[Carl D]

One of the biggest problems I have with factoring in lost oppurtunity costs is that most people figure X rate of return on the entire capital cost, and never deduct any money for comparable accommodations every year.

They think this $16,000 is just sitting earning interest.
Every year you must deduct the cost of deluxe, on site accommodations.

 

[Steamboat Bill]

One of the biggest problems I have with factoring in lost oppurtunity costs is that most people figure X rate of return on the entire capital cost, and never deduct any money for comparable accommodations every year.

They think this $16,000 is just sitting earning interest.
Every year you must deduct the cost of deluxe, on site accommodations.

I agree with you in spirit...but you are now comparing apples with strawberries.

My post was to compare "buying" a DVC TS vs "renting" DVC points.

For MANY people, it would be cheaper to rent than purchase DVC. This may not apply to Marriott, Hilton, WM, FF, Suntera, and others.

One more thing I forgot to include was paying the tax on the 5% CD interest off the $16,000 investment. Thus, subtract 30% of the $800 earned = $560 per year in true lost opportunity costs + yearly MF = Grand total spent.

Now compare grand total spent vs rental rates of $9-$10pp and that is comparing "apples to apples".

 

[Steamboat Bill]

There are three DVC resales on eBay right now:

50 HHI
75 BWV
80 VBR

The BWV would be my reccomendation. I expect it to sell for for over $7000!

ok I am quoting myself...kinda weird.

I have changed my mind....I think 50 HHI points represents FANTASTIC value for someone considering a DVC purchase. The buy it now price is $4000 which is $80pp. In fact, I am considering buying it myself.

The reason it is such a great deal (if you get past ROFR) is that it allows you the cheapest entry into DVC and you can transfer points into your account from other members for about $10pp. When you consider MF = $4pp, then the markup is only $6pp.

One of the tough things about DVC is figuring out how many points to buy. Too few and you need to rent, too many and you become the rentor.

With a 50 point account, you will have to rent points when you need them and bank the 50 points in years you skip Disney.

Listen...I am not ant-DVC, I am not anti-DISboards...nor an I anti-Disney...I am simply anti-dumb decisions.

If you want the CHEAPEST entry into DVC ownership...this is your golden opportunity!

May the pixie dust be with you (for any of the DIS members who knows what I mean)

 

[Carl D]

I agree with you in spirit...but you are now comparing apples with strawberries.

My post was to compare "buying" a DVC TS vs "renting" DVC points.

Yes, but you are assuming you will always be able to rent points, and rent them for that price. With the DVC crackdown on renting, that may not be a sure thing.

Also you must factor in the lost interest income after the breakeven point (if there is one). In other words, you would be losing years of interest on the money you spend to rent points after DVC has paid for itself.
If DVC pays for itself in 10 years, there is 40 years worth of cumulative rental costs afterward that you would be losing interest on.

 

[Denise L]

All this money stuff aside , I'm glad we bought at Disney. It's fun to plan a vacation there and what really matters is enjoying time with our family. Add all the magic that I feel when I'm at DL or WDW, and the decision is easy! We didn't buy to rent out any points, but if we have extra ones, we'll try it every now and then. Otherwise, we can use them, no problem!

Whoever is thinking of buying should go stay there and see for themselves. You'll know if it is right for you and your family!

 

[Steamboat Bill]

Yes, but you are assuming you will always be able to rent points, and rent them for that price. With the DVC crackdown on renting, that may not be a sure thing.

Also you must factor in the lost interest income after the breakeven point (if there is one). In other words, you would be losing years of interest on the money you spend to rent points after DVC has paid for itself.
If DVC pays for itself in 10 years, there is 40 years worth of cumulative rental costs afterward that you would be losing interest on.

The DVC crackdown was on point transfers not point rentals. This was a major complaint for me as the crackdown does nothing to stop commercial renters and hurts average members like me who preferred to transfer extra points to DVC owners, rather than renting to a non-DVC owner.

Now I have to rent extra points to non-owners and that is more of a hassle for me (but brings in more revenue than transferring).

I did not buy DVC to make money, but if I have extra points, I am going to rent/transfer them at a reasonable rate.

Most DVC members talk with adjectives like "magic" "pixie dust" "pie in the sky" and that is ok, but when you spend $20,000-$80,000 on a purchase, you should seriously evaluate other options.

Getting back to the OP.....the current eBay ad for 50 HH points is a steal!!!

 

[Carl D]

The DVC crackdown was on point transfers not point rentals.

It was also on rentals. I believe it was in the Member Clubhouse.
There was a million page thread about it on Disboards (actually intertwined with your thread). There was also a 1/2 million page solo thread.

Correction, it was in Vacation Magic.

 

[Carl D]

From the August Vacation Magic:

Policies protect personal use and enjoyment
In a continuing effort to maximize Members' personal enjoyment of their Membership, Disney Vacation Club would like to remind Members about several related policies outlined in the Public Offering Statement and other Member documents.

As a reminder, published policies limit the use of accommodations and recreational facilities solely to the personal use and enjoyment of Owners, their lessees, Guests, exchangers and invitees and for recreational uses by corporations and other entities owning Ownership Interests in a Unit.

To maximize the availability of reservations for these permitted purposes, Disney Vacation Club closely monitors reservations and may cancel reserved accommodations if a pattern of rental activity for profit is discovered.

Additionally, current policies limit Vacation Point-transfer transactions to one transfer per Member or Membership, either as transferee or transferor, during a given Use Year.

(Emphasis done by me.)
So, who knows? I interpret this as a crackdown on rentals AND transfers. Of course, the OCCASIONAL renter need not worry. I think it's targeted at those who rent every year, but that may be enough to limit the rental market.

 

[Steamboat Bill]

To maximize the availability of reservations for these permitted purposes, Disney Vacation Club closely monitors reservations and may cancel reserved accommodations if a pattern of rental activity for profit is discovered.

It sounds like Big Mouse (Brother) is watching us!!!!

This is a slippery slope....does any other TS have policies like this?

 

[Time2Ponder]

So, who knows? I interpret this as a crackdown on rentals AND transfers. Of course, the OCCASIONAL renter need not worry. I think it's targeted at those who rent every year, but that may be enough to limit the rental market.

I've been told by three people in the know that they have a list of obvious commercial renters and they are starting with those renters, then working their way down. "Pattern of rental activity" is the key here, and because Disney gets to decide what, exactly, is a "pattern of rental activity," that may leave some owners (even non-commercial ones) as well as renters in the lurch. Disney developed a "you can't do this" letter that is in the process of passing muster with its legal dpeartment (may already have done this, actually).

My feeling is that this will begin a cool-down in the rental market. How will renters know that the owner(s) from whom they are renting the points isn't one of those targeted by Disney (and thus know that their reservation is secure)?

Kim

 

[Time2Ponder]

It sounds like Big Mouse (Brother) is watching us!!!!

This is a slippery slope....does any other TS have policies like this?

I don't know, but Disney's POS states that renting for commercial purposes is prohibited. So they have legal and contractual backing on this. The "shade of grey" is in deciding what consitutes a "pattern of rental activity" that is deemed to be commercial, IMO.

Btw, we only have 430 pts, but we'll be selling at least 200 of those (we have 4 contracts altogether). Even though we've never rented out our points, we don't want to risk being saddled with extra points we won't be able to use. Better to sell and spend a few of those extra days at US/IOA that get ripped off by Disney.

Kim

 

[Dean]

I've been told by three people in the know that they have a list of obvious commercial renters and they are starting with those renters, then working their way down. "Pattern of rental activity" is the key here, and because Disney gets to decide what, exactly, is a "pattern of rental activity," that may leave some owners (even non-commercial ones) as well as renters in the lurch. Disney developed a "you can't do this" letter that is in the process of passing muster with its legal dpeartment (may already have done this, actually).

My feeling is that this will begin a cool-down in the rental market. How will renters know that the owner(s) from whom they are renting the points isn't one of those targeted by Disney (and thus know that their reservation is secure)?

Kim

The last I heard they were waiting on a position and definition on commercial renters from the legal department. My feeling is it will drive two groups mostly out of the rental market, those that only felt comfortable with transfers to other members and those that were somewhat timid about doing renting out in the first place. And it will make those that are still willing to do so, less likely to transfer smaller amounts. I feel the pool of points for rental will shrink more than the demand and the prices will actually go up. Regardless it will be almost impossible for the member who just needs a few points to round out a reservation.