Deed Expiration

[Gordon Gekko]

Hello all! Potentially looking to purchase a resale contract. When comparing home resorts how much weight should be given to the deed expiration year? Example: comparing Saratoga vs. Poly. Let's just say roughly $50 more per point but 12 years longer on the contract. If it matters we are looking to purchase around 250-300 points. TIA!

 

[Sandisw]

Choosing a home resort that you will be happy staying if you can’t trade out is most important in my opinion,

Then, if you are torn between a few, expiration can play a role. I would not buy Poly over SSR because you are getting 12 more years if dont Think you’d ever want to stay there.

i did sell BWV last year to buy RIV with my adult kids because of expiration but also because they really like that new resort so it made sense..not to mention I sold for more than $50/point over what I paid!

 

[3 DD love princesses]

Hello all! Potentially looking to purchase a resale contract. When comparing home resorts how much weight should be given to the deed expiration year? Example: comparing Saratoga vs. Poly. Let's just say roughly $50 more per point but 12 years longer on the contract. If it matters we are looking to purchase around 250-300 points. TIA!

I’d look at where you want to stay, where you are okay staying if there’s no availability to move at 7 mo, where you don’t want to stay.
Also poly only has studios no 1 and 2 bedrooms.
Something to also look at is purchasing two contracts same use year but different home resorts. This would give you the 11 mo home advantages. Plus if you decide you need to sell some later you can sell one contract if needed.

 

[RoseGold]

I found this chart helpful:

https://www.dvcresalemarket.com/blog/best-economical-dvc-resort-to-purchase-spring-2020/
Within the top few, the differences are minor, so it's considerations like how much you want to pay upfront and what 11 month priority you want.

 

[davidl81]

I wouldn’t put a ton of difference in SSR and PBV right now. It’s 34 years versus 46 I think. So a long time on both. The only resorts I’d have concern over is the 2042 resorts since 22 years is fairly close. But overall the resale market is not really hurting those 2042 resorts yet. OKW and SSR sell for just about the same price and OKW has 12 less years on the contract. And although there are pros and cons of both resorts, they’re about on par with each other quality wise. You would expect SSR to have higher prices because of the contract length, but it’s not the case.

 

[Ruttangel]

At 300 points you could get PVB at around $125 and under, there are bargains out there if you check all the main sites
Good luck

 

[CastAStone]

The mathematical formula to value the out years is a geometric progression. X=((1-r)^n)/(0-r) where n is the number of years left and r is the deflation rate. I’d suggest taking what you’re making on average in your retirement accounts over the last several years, and subtract either 3.5% (DVC inflation rate) if you think you would rebuy when the contract expires, or 2% If you think you wouldn’t. So if you’re average is 8% then r in your equation would be 0.055.

X is the the equivilized number of years left for The various resorts represented in today’s dollars. So BCV/BRV/BWV in this example would be 12.3 current years, SSR 15.4, Riviera 17.1. Divide purchase price by equivilized years and add dues to get an apples to apples comparison to cash prices, points renting, or to compare resorts.

 

[The Jackal]

It also depends what size room your looking for. Poly has a lot of studios and a few point hungry bungalows. SSR has studios, 1 bedrooms, 2 bedrooms, 3 bedroom Grand Villas and 3 bedroom treehouses. The lack of one and 2 bedrooms at Poly can be a disadvantage to a larger family.

 

[Gordon Gekko]

The mathematical formula to value the out years is a geometric progression. X=((1-r)^n)/(0-r) where n is the number of years left and r is the deflation rate. I’d suggest taking what you’re making on average in your retirement accounts over the last several years, and subtract either 3.5% (DVC inflation rate) if you think you would rebuy when the contract expires, or 2% If you think you wouldn’t. So if you’re average is 8% then r in your equation would be 0.055.

X is the the equivilized number of years left for The various resorts represented in today’s dollars. So BCV/BRV/BWV in this example would be 12.3 current years, SSR 15.4, Riviera 17.1. Divide purchase price by equivilized years and add dues to get an apples to apples comparison to cash prices, points renting, or to compare resorts.

I do follow you. If you were going to take a chunk of money with the thought of using some points and renting the rest to cover dues each year. (Ex: Buy 250 Poly points. If I used 100 personally and rented 150 at a normal going rate I should cover dues every year.) Then I believe it swings more in favor of buying resale because I would be paying $679.35/year for 46 years to use 100 points/year.

 

[CastAStone]

I do follow you. If you were going to take a chunk of money with the thought of using some points and renting the rest to cover dues each year. (Ex: Buy 250 Poly points. If I used 100 personally and rented 150 at a normal going rate I should cover dues every year.) Then I believe it swings more in favor of buying resale because I would be paying $679.35/year for 46 years to use 100 points/year.

I don’t think the math is currently favorable on buying points with the explicit intent of renting them out to cover dues; I’ve run the math before - maybe if the overall resale market shifts downward that would work.

 

[davidl81]

I don’t think the math is currently favorable on buying points with the explicit intent of renting them out to cover dues; I’ve run the math before - maybe if the overall resale market shifts downward that would work.

Yeah, you can make it work out but it has to be the right deal. I looked at a big 450 point SSR contract that was super loaded the other day (450 points that needed to be used by Feb, 900 coming in Feb etc) and at $90 a point it worked out, although that contract has about a 10% chance of passing ROFR right now. I figured renting at $15 a point and dues of 6.76. So "profit" would be $8.24 a point or $3708 a year. Initial investment would be $40k so "break even" would be 11 years (before even considering time value of money). But the loaded part has a lot of value since the 450 that expire in feb could have made maybe $4000 if rented for $9 a point, and the 450 banked points did not have fees so that's a pure profit of $6750. So assuming you could rent those banked points out it takes about 10k off of your upfront capital (in a way) which brings break even to 8 years. But i took too long looking at the math and in the few hours I thought about it another buyer put a deposit down on it.
I don't think you can make the math work out on a $130+ per point contract since you really can't get enough of a premium on rental points at those resorts to make up the delta on the upfront cost and the dues (on the resorts with higher dues).

 

[CastAStone]

Yeah, you can make it work out but it has to be the right deal. I looked at a big 450 point SSR contract that was super loaded the other day (450 points that needed to be used by Feb, 900 coming in Feb etc) and at $90 a point it worked out, although that contract has about a 10% chance of passing ROFR right now. I figured renting at $15 a point and dues of 6.76. So "profit" would be $8.24 a point or $3708 a year. Initial investment would be $40k so "break even" would be 11 years (before even considering time value of money). But the loaded part has a lot of value since the 450 that expire in feb could have made maybe $4000 if rented for $9 a point, and the 450 banked points did not have fees so that's a pure profit of $6750. So assuming you could rent those banked points out it takes about 10k off of your upfront capital (in a way) which brings break even to 8 years. But i took too long looking at the math and in the few hours I thought about it another buyer put a deposit down on it.
I don't think you can make the math work out on a $130+ per point contract since you really can't get enough of a premium on rental points at those resorts to make up the delta on the upfront cost and the dues (on the resorts with higher dues).

Time value of Money makes the calculation worse not better. I agree I saw on SSR and OKW it is possible to run ahead with the right contract even when considering TVM/opportunity cost, however, I think there’s a lot more risk that the rental market will correct or collapse than there is that the resale market will correct or collapse, not to mention the risk of a sharp dues increase turning the math on its head (it’s happened, rarely, but it has) or a natural disaster leading to an assessment which breaks the math. So I’d prefer to lessen my exposure and pay the dues in cash. Not that you are necessarily wrong to do differently, just a different comfort level with risk.

 

[Jimmynguyen77]

I get teh opportunity cost till the deed expires. I haven't figured out what happens when the deed expires.

 

[Sandisw]

I get teh opportunity cost till the deed expires. I haven't figured out what happens when the deed expires.

No more MFs and a contract worth $0 as the timeshare is over.

 

[BillPA]

Kind of like when you draw your last breath...it's over!!!

 

[Yankee626]

Deed expiration matters even if you don't intend on using it. In 20 years you will have no value left on a 2042 resort . If you buy a 2062 resort you can probably expect to sell it in 2042 for at least what you paid for it today. I don't understand why anyone would pay $150 a point for BCV when it is gone in 21 years. There has to be a tipping point here somewhere.

 

[Rileygirl]

Deed expiration matters even if you don't intend on using it. In 20 years you will have no value left on a 2042 resort . If you buy a 2062 resort you can probably expect to sell it in 2042 for at least what you paid for it today. I don't understand why anyone would pay $150 a point for BCV when it is gone in 21 years. There has to be a tipping point here somewhere.

I agree. Unless you are planning to ride that DVC into the sunset, I’m not sure I would buy into any 2042 DVC right now. You are paying max price for it. Five years from now? I don’t think it will hold half that value (like I really have a magic ball- I don’t!) Prices will tank if there are no extensions (and after OKW fiasco, I don’t think they will be offering that) and Disney won’t exercise ROFR I would not think, except for BW, which it looks like they have a master plan for.....

 

[fordchevyguy]

I’m not sure I would buy into any 2042 DVC right now. You are paying max price for it. Five years from now? I don’t think it will hold half that value (like

I kind of disagree; I own 250 points at boardwalk and I think I for one would buy another 250 points at half of price today In 5 years... that would be $60 ish. there are a lot of unknowns but I would think with 15 years left I might think it is worth $80 or $90. Just my opinion.

 

[Rileygirl]

I’m far from being an expert. But I figure I will enjoy Disney with grandkids and girlfriends for the next 20 years or so. At that point, I may likely to be able to sell my Disney contracts for approximately the price I paid for them, or, I can gift them to my three adult children for them to enjoy for another 20 years. So for a purchase price of 140,-175, I can enjoy Disney stays for the price of MFs, and sell, or let my kids have them. That same 140 only buys 21 years at BCV or boardwalk. I’m getting double bang for my buck, in my opinion.
Not knocking BCV, I was an owner there for 6 years, sold my contract, and made money on that, even after paying closing fees and brokerage fees.

now, in 5-6 years, if I wanted to buy BCV for the end of contract, paying 60 or 70 pp might be more palatable. I just don’t want to be the owner that buys at 145 and sells at 60.
Just my opinion, and I always have plenty of them....

 

[gharter]

I don’t think the math is currently favorable on buying points with the explicit intent of renting them out to cover dues; I’ve run the math before - maybe if the overall resale market shifts downward that would work.

Would agree. We just rented out last years points as we couldn't use them. The price we got was enough to cover dues plus about 20%. At that rate, I'm not sure you could get back what you paid before the deed expires. Almost certainly you could do better investing that money.