Calculating the savings with DVC

[crisi]

That's if you don't plan on selling your contract after X amount of years, when there is still value. We plan on owning for ~20-25 years and then selling. I factor in a interest rate of 2.9% annually, with a loss of 10% at time of sale, in comparison to purchase price, minus an additional 8% commission to the broker.

That's one of those assumption that you can make, but might get you in trouble - part of the risk equation. If you sell during a down market, you may end up with significantly less than anticipated. I put all salvage value under "chickens not to count until they hatch" - and consider it gravy. DVC isn't a diversified enough investment to even out the risk.

I suspect we will sell when there is still salvage value in the contract, but my crystal ball isn't that good, so I don't count on it in any financial planning.

Plenty of people have made a bunch of money buying DVC low and then not needing their contracts during peak market time and selling at a gain. Plenty of others were forced to sell at a loss when the economy crashed.

 

[supersnoop]

That's if you don't plan on selling your contract after X amount of years, when there is still value. We plan on owning for ~20-25 years and then selling. I factor in a interest rate of 2.9% annually, with a loss of 10% at time of sale, in comparison to purchase price, minus an additional 8% commission to the broker.

In that case, you should calculate it as a fixed-term inflation-adjusted annuity. Then you can calculate the approximate value at the point you plan to sell. Granted, DVC ownership has some external influences on value and price, but that's probably the best numerical, financial way to evaluate future value.

 

[Dean]

Lawd, some of this is way over my head.Since I can't seem to find where Disney will ever offer any discounts at Hilton Head, I am just going to take their rack rates, after taxes of course and compare them to what I will probably pay with DVC.

It depends, I'd use 10% but certainly discounts are not guaranteed. You may also want to consider other options for HH such as condo rentals or non DVC timeshares.

I wouldn't plan on selling. But you know life, never say never.

IMO no one should ever buy planning to sell and almost never pay more to have exit options, but certainly you never know what happens and at least considering it is important.