Advice for prospective DVC buyers

[mommary]

We are in the process of buying into DVC at the VWL through the timeshare store. When this is all completed will we get information about AP's and dinning discounts from Disney ?
Thanks,
mommary

 

[adrianna_sarah]

Everyone keep saying you lose something in buying resale. What is it that you lose? I am sure it's here in these 42,000 posts, but I am a woman with limited time to sit on the computer. What is lost?

 

[Tina]

12 years.

 

[crisi]

Resale Cons:

With a purchase from Disney, your guide will arrange for you to make reservations the moment he gets your deposit. With a resale, you can't make reservations until about a week after closing, which is usually one to two months after the initial offer. This can be a big one if you want a reservation in the short term.

You may need to be patient to find a contract that is a good deal.

You'll need to be educated about how much a point balance is worth

You'll risk Disney exercising ROFR and buying the contract and putting you back on square one.

You'll also risk the seller pulls out before closing, putting you back on square one.

Resale pros:

If you are patient, you can find an initial buy in contract for less than 150 points.

You can buy at sold out resorts (sometimes you can do this through Disney as they exercise ROFR).

If you are patient, its still possible to find contracts where you'll save enough money to make the hassle worthwhile.

Once you sign on the dotted line, you are the same to Disney regardless of how you bought. Us resale owners are treated no different, except I never got a lithograph or backpack.

 

[JimMIA]

Hi Neighbor! I grew up in that same neighborhood where you live - "wherever the Army sends you!" Pretty darn good neighborhood, if you ask me...great place to raise kids!

I am sure it's here in these 42,000 posts, but I am a woman with limited time to sit on the computer. What is lost?

Well...the first thing you will lose is a LOT of time! You need to spend a lot of time getting educated about all the nuances of resale, which crisi and others have mentioned. There aren't any shortcuts, and if you don't have the time, I'd think seriously about going down that path. Resale is a long, complex, and often frustrating process even when you understand it.

You should figure on a minimum of two months from initial offer to being able to make reservations - and that is very optimistic. We made our first offer in early February, had the seller back out, made a second offer in mid-February, passed ROFR on March 10, closed on March 30, and were actually "in the system" and able to make reservations on April 10. And that is with wiring the money for closing and paying extra for expedited closing which saved 2-3 weeks. Many people wait for a month just for Disney to make their ROFR decision, so the process can be very S...L...O...W.

On the bright side, you should save a lot of money buying resale. If you're not...what's the point?

Everyone keep saying you lose something in buying resale. What is it that you lose?

There is not really a loss buying resale - there is a loss buying any of the "sold-out" resorts - Old Key West, Beach Club, Boardwalk, Wilderness, Vero, and Hilton Head. You can buy them either through Disney (at $89 per point, with a minimum new contract of 150 points) or through resale, so it is not really a negative exclusive to resale. (We usually associate sold out resorts with resale, and that is why you see those references, but the same applies if you buy them through Disney.) Those contracts expire in 2042, as opposed to 2054 at Saratoga Springs - a difference of 12 years (or about 32%).

A lot of people fixate on what happens in 2041-42, but I think the real issue is the effect of that shorter duration 12-15 years from now when you may want to re-sell your DVC. SSR will have 34-37 years left, but the other resorts will only have 22-25 years left. If I were a buyer, I'd be looking for a longer contract than 25 years, and that has to affect the prices at some point.

In addition to the time consideration (and the backpack and lithograph!), the other thing you lose going resale is Disney financing. That may not be important to you if you can pay cash or use a home-equity line of credit, but if you need financing, it could be the deciding issue. Disney will finance up to ten years; with resale, you have to get your own financing if needed.

 

[RobDoc]

... So, IF I really wanted to sell I would sell my SSR points to someone for $90 a point on paper and give back $10 to $15 a point to the buyer. ...

That's fine as long as you disclose that component of your accepted offer when submitted for ROFR, otherwise, it is fraud and can have other legal consequences. The offer submitted must include all aspects of what the transaction entails.

I woulkd like to think that no one would use this forum to suggest any illegal activity regarding DVC resale.

 

[JimMIA]

That's fine as long as you disclose that component of your accepted offer when submitted for ROFR, otherwise, it is fraud and can have other legal consequences. The offer submitted must include all aspects of what the transaction entails.

Doc is precisely right here. If you fail to disclose the "rebate" to the buyer, that is called a "misrepresentation of a material fact," and would constitute fraud. You would have both civil and criminal exposure.

In addition to the obvious legal consequences, such gymnastics should not be necessary. You should be able to structure your contract well enough without resorting to devices such as that. $83 just passed ROFR for SSR anyway.

 

[teentoddlermom]

Newbie here...pondering DVC. We currently have a MYW package booked for Aug 11- 18, 2005. We always stay a week. If we were to buy we would need at least 318 points to stay in a 2 bedroom, which we want. We wouldn't want to buy that many points. Are you able to connect your DVC reservation to a room only reservation and pay for the remainder of the nights cash? Do people do that? Or do people do split stays between DVC resorts and Disney hotels? Would they just let you borrow the next year's points? I read about buying a start of 150 here and buying more in groups of 50 or so. Why do people do that? This is a great thread and sorry for my ignorance!

 

[JimMIA]

Are you able to connect your DVC reservation to a room only reservation and pay for the remainder of the nights cash? Do people do that? Or do people do split stays between DVC resorts and Disney hotels?

Yes, a lot of people do both because Disney makes no differentiation between weekday and weekend on its cash prices.

Would they just let you borrow the next year's points?

Yes, you can borrow up to 100% of your next years points at any time. Be careful of that if you will be close to the end of your use year, because borrowed points can't be put back if your plans change. You could get in a "use 'em or lose 'em" situation.

I read about buying a start of 150 here and buying more in groups of 50 or so. Why do people do that?

Lots of reasons. Sometimes people can't afford to buy all the points they think they will need, so they buy less and borrow. Others don't know how many they will really use, so they buy the minimum and work up as their needs increase. You can add on in increments of as few as 25. Disney will finance add-ons of 50 points or more.

This is a great thread and sorry for my ignorance!

It's not ignorance when you ask legitimate questions. Ignorance is NOT asking questions. This is a very complex undertaking, so take plenty of time and do a lot of research.

 

[crisi]

Newbie here...pondering DVC. We currently have a MYW package booked for Aug 11- 18, 2005. We always stay a week. If we were to buy we would need at least 318 points to stay in a 2 bedroom, which we want. We wouldn't want to buy that many points. Are you able to connect your DVC reservation to a room only reservation and pay for the remainder of the nights cash? Do people do that? Or do people do split stays between DVC resorts and Disney hotels? Would they just let you borrow the next year's points? I read about buying a start of 150 here and buying more in groups of 50 or so. Why do people do that? This is a great thread and sorry for my ignorance!

You should know that cash rates at DVC resorts aren't always available, aren't always available at reasonable prices, and - while they'll try to keep you in the same room, they won't guarentee it.

A lot of people do, however "suppliment" a smaller contract with cash nights, regular resort stays, weekends at Universal or even renting points from other members. They do let you borrow from the next year (but only one year ahead) and bank from the previous year (but you can only bank once and you have to do it before the end of your use year). We use that scheme to get one vacation averaging 300 points every other year from a 150 point contract.

 

[teentoddlermom]

Thanks so much for your quick replies...for those who have been members for some years, here's another question: If I buy enough points to have a weekly 2 bedroom SSR during dream season 2005, can I assume that if I always book during the same season at that resort, that the points I have now will cover the vacation? In other words, does Disney up the point requirements each year? If that is the case, I'm not sure I like it!

 

[JimMIA]

If I buy enough points to have a weekly 2 bedroom SSR during dream season 2005, can I assume that if I always book during the same season at that resort, that the points I have now will cover the vacation?

You can pretty much count on that, yes. It's not exactly that simple. DVC can change point values around within limits...and they have. The limits are that they have sold an exact number of points for a specific number of units in each resort, and they can't change that number.

They could adjust the point values for weekend/weeknight a little. They could shift a week from one season to another. I think (but am not sure) they could change the point values between types of accommodations a little (like increasing studios while decreasing one-bedrooms). But whatever they do, the overall points must remain the same.

In reality, what you will probably see is a little minor tinkering as they adjust seasons slightly. But for all practical purposes, you can count on the points needed to remain pretty much the same.

 

[teentoddlermom]

OK thanks!

 

[dianeschlicht]

Dream season is not one of those that has moveable dates in it. The moveable seasons are the ones that revolve around spring break and Easter week. You can be pretty assured that those points wont change unless they increase a day or two in that season and decrease a day or two in another season.

 

[JimMIA]

just bumping for new folks

 

[adrianna_sarah]

Hey Jim (or anyone else):

We originally were pondering buying 300 or so points-enough for a one bedroom yearly at either XMas or July-the times of year the Army generally gives leave. We were planning to finance for 10 years through Disney at SSR. Now I am thinking that we should just buy 150 or so and finance for 5 years and wait for Eagle Pines which appeals to the hubby for the other 150 or so points. I think I remember reading somewhere that Disney has a standard 10% interest rate regardless of how long you finance for. Is this the case? Are there any incentives for financing for lesser terms?

Also, being that we are military and will not even own a home or have home equity for many years to come, my banker advised me the best I could to would be to finance the whole thing on a low interest rate credit card at roughly 8% variable. Has anybody without a morgage or home equity found a better option?

Thanks,
Adrianna

 

[JimMIA]

First of all, be thankful that banker is your banker and not your accountant!

We were planning to finance for 10 years through Disney at SSR. Now I am thinking that we should just buy 150 or so and finance for 5 years and wait for Eagle Pines which appeals to the hubby for the other 150 or so points.

Hmmm...well, there is absolutely no guarantee that Disney is going to do ANY DVC after SSR, much less Eagle Pines. All of that is pure speculation. Like any sound business, Disney is always looking at a lot of alternatives, and talking about them to their employees, and doing some preliminary work which we might call "planning." But there are no guarantees.

And the other thing you should remember is that, even if they DO Eagle Pines 5 years from now, your DVC points will still be good there.

If you want to wait because of the high initial cost of getting in, or start small and work up, I think those are sound approaches. But I wouldn't wait for something that may never happen.

I think I remember reading somewhere that Disney has a standard 10% interest rate regardless of how long you finance for. Is this the case? Are there any incentives for financing for lesser terms?

I am pretty sure that is NOT true. In fact, I'm pretty sure the rate is something like 9.75% for 10 years with 20% down, and higher for shorter duration loans and smaller down payments. Instead of incentives, there are disincentives.

Also, being that we are military and will not even own a home or have home equity for many years to come, my banker advised me the best I could to would be to finance the whole thing on a low interest rate credit card at roughly 8% variable. Has anybody without a morgage or home equity found a better option?

I'd check with a tax dude/dudette, but I believe if you financed through Disney, the interest would be deductible. Depending on your tax bracket and whether you can itemize or not, that may be a better deal than buying with a credit card -- especially one with a floating rate. Interest rates are still at very low levels and are pretty much assured of increasing over the next five years. But if you can't itemize, you can't deduct the interest, so that potential benefit goes away.

 

[adrianna_sarah]

Thanks Jim! Ordered the DVC info from Disney a week ago... seems to be taking forever to get here! Agh! Just trying to figure out our best financing options. Good point on the variable interest rate. I will check on the tax write-off part. Thanks!

 

[3kidz4dis]

[
Both methods have their drawbacks. If you look carefully at the current crop of SSR resales, you will find a lot of "stripped" contracts, and a lot of "can't close until's..." To compare apples to apples, you really have to find an SSR resale with all of the '05 points intact. The negatives of the resale process are that it takes a long time, and Disney can jump in and snatch the contract away from you. I doubt they would on any of the SSR contracts I've seen, but you never know.


What is a stripped contract and why can't they close until certain dates... I have seen many of those...

QUOTE]

We just purchased SS at 80 (resale) with all 150 points remaining from 2004. We had been looking for a while and wanted to pay lower than 80 but wanted those points so we bought. We had every resale company call and email before it went public.

 

[Stitch 626]

Hey Jim (or anyone else):

I think I remember reading somewhere that Disney has a standard 10% interest rate regardless of how long you finance for. Is this the case? Are there any incentives for financing for lesser terms?

As JimMIA said, it is a 9.75% financing. When we bought we looked at the table they had for financing, and the only discounted percentage was for a 1 year loan wich was around 5%. The remaining options were all 9.75% so we opted for the 10 year loan with the intent of paying it off sooner as there is no early payment penalty. As our financial situation is steady but always subject to change, we figured that you are not losing anything by taking the 10 year versus the 5 year interest percentage wise so why force higher payments if you can make the same payments without penalty and lessen your payment if things take a turn for the worse?