BCV and BWV may have reached peak value

[Madame]

I fell like a broken record, but it is *not* easy to secure an 11 month BCV studio Sept-April via rental. Heck at 10.5 months out for mid-march I had to stalk/WL a missing day. Have a look at the Jan-end of April studio calendar…. Littered with unavailable dates. If you want May-Aug, much easier.

 

[CarolMN]

I fell like a broken record, but it is *not* easy to secure an 11 month BCV studio Sept-April via rental. Heck at 10.5 months out for mid-march I had to stalk/WL a missing day. Have a look at the Jan-end of April studio calendar…. Littered with unavailable dates. If you want May-Aug, much easier.

Agree with you regarding BCV & BWV standard. But if one will take a Pool/Garden studio, there should be availability into the 9 & 10th months. The exception is the first half of December. The challenge is finding an owner with BWV points willing to rent them. That's becoming more difficult, especially if one is using a broker.

 

[Madame]

Agree with you regarding BCV & BWV standard. But if one will take a Pool/Garden studio, there should be availability into the 9 & 10th months. The exception is the first half of December. The challenge is finding an owner with BWV points willing to rent them. That's becoming more difficult, especially if one is using a broker.

That too. Even if there is a room, you need someone with points and it’s not abnormal to pay $24 pp for bcv via private rental.

 

[supersnoop]

What's the purchasing power of a point today? I'm seeing $20/point on the rental board; is that reasonable?

Using a present-value calculator, the NPV of 19 future $20 payments, assuming a 6% return, is $223. It seems like there's still value in there to me.

 

[havoc315]

Many owners report “breaking even” after 6-7 years.

They report it -- based on incorrectly calculated math. (generally comparing it to rack rate, often forgetting to include dues, failing to discount for lost opportunity).
The most direct comparison is compared to renting points, at between $16 and $21 per point. Even a real "deal" of a re-sale contract will take 12-18 years to break even. A incentivized direct contract can break even in about 15-22 years.... A sold-out direct contract will take 25+ years to break even.

Now, this does NOT include the possibility of re-selling the contract. You can break even by using a contract for 6-10 years and then re-selling it, assuming it has increased in value over that time period. (so this may not work with the 2042 contracts).

2042 contracts would still provide 12 years of discounts.

I've broken down the math elsewhere, but no..... you get almost no discounts on 2042 contracts.

Let's say you by 100 points of BWV for $150... Add closing costs, about $16,000. Currently $8.08 dues. That's $15,352 in dues over 19 years.
Adjust the immediate costs for lost opportunity (in other words, paying $16,000 at once is actually more costly than paying $800 per year for 20 years, they are not the same) -- With an annualized discount rate of 3.5%, you get a present cost of approximately $22,200, add in the dues, you're at about $37,500 -- Spread over the 19 years of the contract, you're paying: $19.70 per point per year. That's about the same as renting -- it might even be a little more than renting.

Is this a different type of math or do you mean you see more value elsewhere?
Seems like if someone loves a 2042 resort there is still financial benefit.

Unless you can get a fully loaded contract for under $125 per point, you're not seeing any real financial benefit.

 

[havoc315]

What's the purchasing power of a point today? I'm seeing $20/point on the rental board; is that reasonable?

Using a present-value calculator, the NPV of 19 future $20 payments, assuming a 6% return, is $223. It seems like there's still value in there to me.

But you failed to discount the lost opportunity --- If you put $223 in the bank, and then rented points at $20 per point, assuming your 6% return, that would be break even. But then you're paying dues on top of that, of $8.08 per point per year.
So you really are looking at a future comparison value of:
Renting: $20 per year. Owning: Dues of $8.08 per year, PLUS the lost opportunity of your down payment.
Using your 6% rate, you are looking at a break even price of $134 per point.
Anything under $134 per point, would be a savings. Anything over $134 per point would be a loss.

 

[BeachClub2014]

They report it -- based on incorrectly calculated math. (generally comparing it to rack rate, often forgetting to include dues, failing to discount for lost opportunity).
The most direct comparison is compared to renting points, at between $16 and $21 per point. Even a real "deal" of a re-sale contract will take 12-18 years to break even. A incentivized direct contract can break even in about 15-22 years.... A sold-out direct contract will take 25+ years to break even.

I would argue that there is more than one way to "do the math" in making a decision on purchasing points, whether they be direct or resale points. The manner in which you've suggested works for you is great, but that doesn't mean that others have done it incorrectly from their perspective.

For instance, many people use a comparison of renting points as the metric for which is a better value. That comparison only works if you're actually willing to rent points, which I would never do in a million years. Given my aversion to handing over money to a total stranger on nothing more than a handshake and trust, using the rental market comparison doesn't compute in my math.

 

[supersnoop]

But you failed to discount the lost opportunity

An NPV calculation takes opportunity into account. You make a good point on the dues, though.

 

[havoc315]

I would argue that there is more than one way to "do the math" in making a decision on purchasing points, whether they be direct or resale points. The manner in which you've suggested works for you is great, but that doesn't mean that others have done it incorrectly from their perspective.

Alternative math like alternative facts?

Math is math in terms of dollars and cents. There may be subjective value that it can't account for.
But $100 is more than $90 that's basic math. Maybe subjectively, a person can believe a $100 product is well worth the difference in price over the $90 product.

And there are some unknowns when calculating present value discounts, future dues variability, future rental rates. So there are some assumptions that go into the calculations. Depending on those assumptions, there can be some variability.
But that variability won't be massive.

For instance, many people use a comparison of renting points as the metric for which is a better value. That comparison only works if you're actually willing to rent points, which I would never do in a million years. Given my aversion to handing over money to a total stranger on nothing more than a handshake and trust, using the rental market comparison doesn't compute in my math.

That's subjective. Subjectively, it's WORTH paying more for owning the points than renting the points.

And everyone is entitled to their own subjective evaluations. So it may be WORTH it for you to pay an extra 20-40% over cash rooms and/or renting points, because you subjectively value the ownership and point control.

 

[BeachClub2014]

Alternative math like alternative facts?

No. Didn't say that nor imply it.

Math is math in terms of dollars and cents. There may be subjective value that it can't account for.
But $100 is more than $90 that's basic math. Maybe subjectively, a person can believe a $100 product is well worth the difference in price over the $90 product.

Yes, math is math. But what variables an individual decides to include in the formula, and what weighting they may have, is totally up to them. The question is ultimately one of value and whether an individual finds value in paying what they've paid for the product that they've purchased. Whether anyone else approves or disapproves of the "math" the purchaser uses in determining the valuation.

 

[Mexacajun]

Alternative math like alternative facts?

Math is math in terms of dollars and cents. There may be subjective value that it can't account for.
But $100 is more than $90 that's basic math. Maybe subjectively, a person can believe a $100 product is well worth the difference in price over the $90 product.

And there are some unknowns when calculating present value discounts, future dues variability, future rental rates. So there are some assumptions that go into the calculations. Depending on those assumptions, there can be some variability.
But that variability won't be massive.



That's subjective. Subjectively, it's WORTH paying more for owning the points than renting the points.

And everyone is entitled to their own subjective evaluations. So it may be WORTH it for you to pay an extra 20-40% over cash rooms and/or renting points, because you subjectively value the ownership and point control.

We have seen the price per point to rent far outstretch the precent increase in dues in recent years. Even at a full contract price of 19per point per year to own, it could far outstretch what it would cost to rent in 15 years.

 

[Sandisw]

Alternative math like alternative facts?

Math is math in terms of dollars and cents. There may be subjective value that it can't account for.
But $100 is more than $90 that's basic math. Maybe subjectively, a person can believe a $100 product is well worth the difference in price over the $90 product.

And there are some unknowns when calculating present value discounts, future dues variability, future rental rates. So there are some assumptions that go into the calculations. Depending on those assumptions, there can be some variability.
But that variability won't be massive.



That's subjective. Subjectively, it's WORTH paying more for owning the points than renting the points.

And everyone is entitled to their own subjective evaluations. So it may be WORTH it for you to pay an extra 20-40% over cash rooms and/or renting points, because you subjectively value the ownership and point control.

Except one assumes the money being spent upfront on DVC would not be used for other things and stay invested. For us, that wasn't the case...our vacation dollars got spent every year, and the money I have used to pay for DVC would have been used for something else instead.

So, lost value was simply not part of the equation. We saved money and when we had a big chunk it was buy more DVC or buy a boat, upgrade the kitchen, etc. It would not have just stayed there. The money I just spent for VGF means I don't get to upgrade my kitchen until 2024....

 

[havoc315]

Except one assumes the money being spent upfront on DVC would not be used for other things and stay invested. For us, that wasn't the case...our vacation dollars got spent every year, and the money I have used to pay for DVC would have been used for something else instead.

But the other things you spent it on also had value to you. So mathematically, that value is calculated as if it is saved. But the effect is the same as if it is spent. Because you purchased DVC, you have $xxxx less in savings... or you don't have that new kitchen.. or have a cheaper car..
You lost the chance to upgrade your kitchen until 2024... Lost opportunity of having spent that lump sum.
Mathematically, we calculate that by adjusting for present value. Lost opportunity, whether saved or spent.

 

[havoc315]

We have seen the price per point to rent far outstretch the precent increase in dues in recent years. Even at a full contract price of 19per point per year to own, it could far outstretch what it would cost to rent in 15 years.

Because the rental price is not tied to dues -- It's tied to cash rooms. (Vacationers rent points in order to save money compared to a cash room... so as cash rooms increase, rental rates can increase, keeping the discount semi constant). When cash rooms were increased 8-10% per year, the rental rate was increasing 8-10% per year.
Despite massive inflation, WDW has hit a wall with cash room increases -- Cash rooms have only been increasing by 2-3% in the last 2-3 years... And the rental rates have behaved similarly in the last 2-3 years.

In fact, as the supply of DVC points ever-increase... If there isn't an increase in demand, the rental rates could actually start to drop even with dues increasing.

 

[RoseGold]

https://www.dvcresalemarket.com/blog/best-economical-dvc-resorts-to-purchase-spring-2022/

Using the board sponsor math and BCV 7.54 dues, I'm trying to put BCV in the middle of the pack at $12. That would require $4.46/year in buy in, or 84.74/point. There's just no way that will happen. Heck I would buy right now at that value.

Of course, they expire in 2042, so mathematically they have to go down at some point. But I think BC/BW will hold for several years before some kind of nosedive -- and I bet they stay overvalued until the bitter end.

Of course, this would mean the best plan is to waitlist using your cheap SSR points, haha.

 

[havoc315]

No. Didn't say that nor imply it.


Yes, math is math. But what variables an individual decides to include in the formula, and what weighting they may have, is totally up to them. The question is ultimately one of value and whether an individual finds value in paying what they've paid for the product that they've purchased. Whether anyone else approves or disapproves of the "math" the purchaser uses in determining the valuation.

As I said, we are talking about different things.
Objective value -- Which is the math that I computed.
Subjective valuation -- Things that can't be quantified. And this is totally personal. Yes, different people can place different subjective value.
Objectively, you can't just say, "I'm not going to include the dues in my math."
Subjectively, you CAN say, "I'm going to compare to rack rate cash rooms because if I didn't book a DVC 11 months in advance, I would pay full rack rate for the room and I would never try to take advantage of a discounted room." -- That's a subjective choice to make that comparison. It's not right or wrong.
My comparison to rentals is a subjective choice -- As rentals are the closest equivalent to buying points.
But when I say, "compared to renting points, it takes 25 years to break even" -- that's a mathematical objective analysis.
And there really is no reasonable objective analysis under which one can break even in 6-8 years (unless they are re-selling it after those 6-8 years).

 

[808blessing]

The number of nights I can get with 100 Boardwalk vs Beach Club (or other desirables) are different and definitely do add up. That is how I make sense. That plus multiple options to rent by night & resell value.

 

[BeachClub2014]

As I said, we are talking about different things.
Objective value -- Which is the math that I computed.
Subjective valuation -- Things that can't be quantified. And this is totally personal. Yes, different people can place different subjective value.
Objectively, you can't just say, "I'm not going to include the dues in my math."
Subjectively, you CAN say, "I'm going to compare to rack rate cash rooms because if I didn't book a DVC 11 months in advance, I would pay full rack rate for the room and I would never try to take advantage of a discounted room." -- That's a subjective choice to make that comparison. It's not right or wrong.
My comparison to rentals is a subjective choice -- As rentals are the closest equivalent to buying points.
But when I say, "compared to renting points, it takes 25 years to break even" -- that's a mathematical objective analysis.
And there really is no reasonable objective analysis under which one can break even in 6-8 years (unless they are re-selling it after those 6-8 years).

Objectively, I can say whatever I choose to say, and have done so

I get it, a rigid, straightforward "math equation" is what you embrace. Awesome. I would point out that your "objective" math also includes "subjective" guesses about future returns on potential savings, future rates for dues, future rental costs, etc. So the very foundation of the "objective" math has a foundation in subjectivity. But hey, if it works for you, lovely.

My whole point is that some folks get really hung up on justifying their preferred approach to DVC based on some mathematical formula that may not work, or even be of interest, to others.

 

[Madame]

You’re underestimating the rental cost for BCV (it’s why brokers rarely have any) and you’re vastly overstating the supposed ease and ability to rent (essentially equating it with booking availability for BCV owners). The math might be right but it’s not realistic.

 

[havoc315]

Objectively, I can say whatever I choose to say, and have done so

I get it, a rigid, straightforward "math equation" is what you embrace. Awesome. I would point out that your "objective" math also includes "subjective" guesses about future returns on potential savings, future rates for dues, future rental costs, etc. So the very foundation of the "objective" math has a foundation in subjectivity.

Not subjective, just "uncertain" - Which I acknowledged right up front. That uncertainty creates some variability. (So break even might be 23.6 years, or 24 years, or 24.27 years, etc).

But hey, if it works for you, lovely.

My whole point is that some folks get really hung up on justifying their preferred approach to DVC based on some mathematical formula that may not work, or even be of interest, to others.

I agree with you that I would not get hung up on any math certainty. Not hung up on, "oh... this resort is 9 cents less per point in the long term..." -- You just can't calculate it with that much certainty.

It is wise to use the math for a rough approximation and then toss in our own subjective evaluations.

For example, you said that you don't like renting points. So you subjectively value rented points less. That's totally your right. So if I said, "the math shows buying DVC costs about the same as renting points" -- You very reasonably might conclude, "if they cost the same, I would rather own the points than rent them."
Now, what if buying the points was twice as expensive as renting? If you could rent the points for $20 per year, but buying them was $40 per year? Or $60 per year? At some point, you'd say, "I prefer owning the points.. but it's not worth paying triple the price."

So the objective math provides a baseline. Then you subjectively weigh the comparisons yourself, come to your own personal conclusion.

But too often I see people just trying to rationalize their purchase. "I broke even after just 6 years!" (by comparing to rack rate, and by totally excluding dues payments, etc). That's not objective, it's just wishful thinking.