Advice wanted ...

[labst60]

I am considering selling the DVC contract we purchased last year. Since we purchased it, we ended up buying a house in a different city (higher cost of living) and having our first baby. Both happy, happy events (but chronologically, a bit sooner than planned) and I'm thinking the extra cash would be nice to pay off the new furniture (we paid cash for the contract).

I've considered just a small Disney trip for the next few years and renting the remainder of the points. When I was pregnant, we rented/transferred our points ($10/pp). Both times we did it, the transactions were pretty easy, but I hardly felt that $10-maintenence fees was a good "return" on my initial investment.

HOWEVER.... part of me is hesitant to sell- so I came up with this "plan" and would like some input.

I'm thinking of doing a small add-on (25-50 points), and then selling my original contract. My theory behind this is that by keeping a very small contract I have (almost) the best of both worlds. In the short run, I can buy points from others at approx. $10-11 per point to be transferred into my account when we decide to vacation. The incremental cost would be about $5-6 per point (again, $11-maintenance fee - which I would pay on my own contract), but it would take about 13 years for me to recoup my initial investment. I would still retain control of my reservations (as opposed to selling completely and then renting), and would only be at a financial disadvantage after about 12-13 years (or a major change to the rental market - a chance I think I am willing to take).

Our short-term vacation plans would be 1-2 5 night stays at WDW. Probably a studio for the next year or so (baby still sleeps with us and probably will for at least the rest of the year... it would probably be a couple of years before I would be comfortable with her sleeping in the main room of a 1br - so studios for the next 2-3 years at least - after that, probably 1 BRs).

The other pro of my plan is that we may be able to be a bit more impromptu with our trips (instead of long term banking/renting plans). Based on resort availability, we could plan a few months in advance and just have points transferred in when we need them. With such a small contract, I don't think we'd ever need to bank.

One question though.... hypothetical... if I borrowed from my 06 UY into 05 - could I later have points from another member transferred into 06 - or would it be easier/only permitted to keep all my points in their original UY??

Anyway....some input would be appreciated. What haven't I thought of in the scenario?? Any other pros/cons? Thanks in advance!!!

 

[J and R's mom]

It sounds like a very creative and well thought out plan to me, but I don't have much experience with DVC yet.

I know that there are restrictions on transferred points, but I'm not sure what they are.

I am interested in what some of the DVC pro's out there have to say, though.

Congrats on the new additions!

 

[winjos]

We've traveled with young kids and we've stayed in a studio and 1 br. JMO that having the kitchen with an infant/toddler/preschooler is such a benefit!! We only rent 1bd or 2 bd now. Even with a 1bd, my children sleep in the master bedroom with us. The convenience of the kitchen is priceless when it comes to kids (plus keeping up the routine of eating at the table, putting dishes in the sink, etc.). Also, the w/d is very helpful.

I know that your situation is overwhelming right now. Definitely think it through and see how DVC fits in. Babies and houses are expensive, so a smaller contract that still allows you to have vacations may be the answer. If your situation changes (salaries increase, refi house for lower payments, etc.) and you can add-on, that option is always there!!

The trading thing gives me a headache--- too many considerations, rules, etc. for this brain of mine!!

Good luck!

 

[NJOYURLIFE]

I am not a DVC pro, but it does sound like you have thought this through. By getting the small add on before you sell it, you'll keep your foot in DVC and also have the option to add on in small increments later also.

I also agree that even with a one bedroom, most of my children still slept in the master bedroom with us. The full kitchen and washer/dryer were very handy. The jacuzzi tub wasn't too bad either

I don't know the current resale values, will you be taking a loss when you sell considering commisions and fees and such?

 

[snowbunny]

I think your plan is a good one. Originally I wanted only a tiny contract, to do as you describe, but they are difficult to find.

 

[Dean]

Actually it's very similar to one of the options I'm thinking about. I have two contracts and am either going to sell one and keep the other OR buy a smaller contract add on size and sell both. Then I'll trade in through II for full week visits certain times of the year. Since we can now go in Sept, May and Jan; we can make out well. By owning a small contract, I'll get all the member perks that are not stay specific, have the option of short non weekend stays (never use points for weekends anyway) and can have points transferred in if the need arises.

I would caution against getting in the situation of needing to routinely be renting points for transfer though, I don't think it's a wise plan to do so. Ultimately whether your plan is reasonable or not is up to you. IMO, if you have smaller contract of say 170 or less, I would think not. OTOH, if you have a larger contract, esp if you prefer a different home resort, the options is a valid one. Remember that you will have to pay more for the points you add on that you will sll the points for. And that you will also likely end up paying a commission on the sale that will erode your value. For sake of discussion I'll assume you have 200 points. If you add on 50 at the same resort at say $90 pp and sell at $80 pp and pay commission etc of $2000, you would be better off just keeping the contract and renting out what you don't use since you just lost $2500 in the deal. But every scenario is different.
As for renting and the return therein, it depends on what you paid, your home resort (and dues associated) and what you actually rent for. One should be able to generate a return of 6-8% even figuring return of principal and the dues. Not enough to justify buying for the purpose of renting of even enough to justify keeping a contract for the sake of renting. But, IMO, enough to justify keeping a contract rather than downsizing in many situations. In the end it will depend on the spread of points involved. 25 new vs 500 old points is much different than 50 vs 150. Let us know what happens.

 

[Canadian Tom]

Hello: Dean has said it to a "tee". It really depends on the spread(size of your existing contract and the size of the downsized contract). The closer the spread the less wise the change. Your approx. cost per point over the life of the contract is about $5.85(depending on you home resort) if you rent the points for $10 the return on investment is approx. 5%. There are very few secure investments paying 5%.

A major factor in your decision is whether you have a current loan payment on the points. If not, keep them, rent them and use the profit to pay dowm other debt. If there is a loan on the points the decision is much more difficult and only you can determine whether you could be in a cash flow crunch. All the best. Canadian Tom

 

[joepoe]

Actually it's very similar to one of the options I'm thinking about. I have two contracts and am either going to sell one and keep the other OR buy a smaller contract add on size and sell both. Then I'll trade in through II for full week visits certain times of the year. Since we can now go in Sept, May and Jan; we can make out well. By owning a small contract, I'll get all the member perks that are not stay specific, have the option of short non weekend stays (never use points for weekends anyway) and can have points transferred in if the need arises. Let us know what happens.

Dean, not to be nosy or anything, but what was your buy-in price on your two contracts that you are thinking about selling?

 

[Dean]

Dean, not to be nosy or anything, but what was your buy-in price on your two contracts that you are thinking about selling?

I think the prices were about $40 pp for one and $54 for the other though I think the only way it'd color my decision would be if I paid more than I could sell them for. The real question is what is the price of what I can trade in with. All very low with yearly fees between $321 and $360 a year plus the exchange fee of $129 and the extra $95 resort services fee. Of minimal to moderate benefit for an off season studio but a great deal for some of the higher resorts and larger unit sizes.