Do any DVC members only hold 50 points?

[dianeschlicht]

OK. I keep seeing this statement, and I have to disagree (somewhat). It simply is not always true. For someone that does not stay in value resorts, plans to visit Disney on a regular basis for a number of years (the # depends on the particulars, but we're not talking 3-5 yrs here), purchasing a properly-sized contract may well result in measurable savings, even after figuring in financing costs. Run some numbers using some historical data posted on these boards - how many people say they wished they had bought even just several years ago? These people paid OOP for accommodations each year, while the cost of points has risen as much as 20% for some resorts. (seems to me OKW has risen 8-10% in the last few months!). Assuming these potential buyers had the funds to purchase a few years ago, they would have earned a rate of return on their money (the net diff of a DVC investment then minus $$ spent for rooms during that same time period) of what - 1-2% on avg?

The key - once again - is to be honest with yourselves. If you know you are going to WDW every yr (for some, more than once a yr) and you know you are not booking in a value resort, the truth is you will be spending $$. If DVC vacationing fits your family style, there is a chance a purchase now makes more financial sense than waiting several years and paying OOP in the meanwhile.

Please understand I am NOT advocating people take on a longer term commitment for more $$ than they can afford - I am saying there are times when that $$ might go further if applied differently. I know we recently returned from a trip where we stayed at CR (garden view) for 9 days. That $3,000 or so alone would have paid for maintenance fees and loan payment interest for several years! If we finance through our home equity (4.98%) or a credit card offer (3.99% until paid in full) the interest would be even less. Now, we paid rack rate because of free dining, but back that out and we still would have spent less in int and maintenance for an SSR contract. We stayed in value season, besides - now, use a similar example for someone that must travel outside of school schedules, and the cost difference widens.

Please note that I am not comparing buying vs renting, but rather explaining that "as long as you don't finance" is not always a true statement.

You make some very good points here! YOu are very correct that having the right number of points for YOU is the best approach. We purchased 230 points up front in 1997. After one trip, we KNEW we would be going more than those 230 points would allow, so we added on another 150. We couldn't afford to pay cash for the 150 up front, but we put it on a mortgage refinance, and it was a better fiscal decision than a seperate loan for the added 150 points. The cost of DVC is much like the cost of a new car. If ou look at the loan in those terms, you only need to justify the luxury expense versus the necessary one.

 

[salmoneous]

OK. I keep seeing this statement, and I have to disagree (somewhat).

I'll go a bit stronger - I see nothing wrong with financing in the vast majority of cases. If someone is going to use an asset over a long period of time, and the asset can be financed without ever going "under water", it makes perfect sense to finance the purchase of the asset.

 

[CarnotaurDad]

My sister has 50 points at BCV. They are planning to buy into AKLV when it starts selling, but they have been very happy with their 50 points.

 

[mydogdrew]

I'll go a bit stronger - I see nothing wrong with financing in the vast majority of cases. If someone is going to use an asset over a long period of time, and the asset can be financed without ever going "under water", it makes perfect sense to finance the purchase of the asset.

You're kidding right?
Financing a prepaid vacation is a good thing in the vast majority of cases?
Unless your assumption is that the DVC resale market will appreciate dramatically in the near term, financing makes no sense at all.

Dues of ~$4.50 pp plus interest of ~$8.50 pp exceeds rental rate of $10-$12. Wait, save and live within your means.

 

[salmoneous]

You're kidding right? Financing a prepaid vacation is a good thing in the vast majority of cases?

Actually, I'm dead serious. (Note that I am not saying that financing is the preferred option in the vast majority of cases, just that it is a good and acceptable option.)

Perhaps it is my background as a finance analyst, but I'm a big believer in the "matching principle". If possible, costs should be "paid for" as they are used. So if somebody is going to take vacations over the next 15 years, a cashflow of $1000, $1060, $1125, etc for 15 years makes more sense than a cashflow of $15,000, $0, $0, $0, $0, etc. (Note that this is strictly from a financial standpoint. Avoiding debt can give personal satisfaction that cannot be quantified here.)

Unless your assumption is that the DVC resale market will appreciate dramatically in the near term

I am not assuming DVC will appreciate dramatically in the near term. All I am assuming is that DVC will not depreciate faster than the financing can be paid off.

I do believe that people should not take on a financial obligation to join a timeshare. That is, they should be able to walk away from the timeshare at any time for no additional out of pocket cash. With DVC, I believe it extremely likely the timeshare can be easily sold for at least enough to pay off any financing.

Dues of ~$4.50 pp plus interest of ~$8.50 pp exceeds rental rate of $10-$12.

I think are overstating the interest costs in financing. Most people who can afford DVC (i.e. can afford to go on nice vacations every year for the next 10-20 years) have access to financing cheaper than what Disney charges. And once you throw in tax savings and declining loan amounts, the actual interest cost is much less than $8.50 a point.

But then you have to look at the alternative. If you pay with cash, you *lose* the interest you would earn on that money if invested elsewhere. For most people (again, looking at the universe of people who can afford DVC) it's a wash. The interest paid on financing will be offset by the interest gained investing the money you would have used to buy DVC.

I strongly agree with your statement that people should live within their means. I just don't believe that living within your means implies you can't finance things. Taking a vacation each year, and making a payment each year is living within your mean in my book. It's the folks that want to take a vacation this year, and pay for it next year that aren't living within their means.

 

[Shawn]

We have a single 100 pt contract for our needs. We chose the smaller contract for a few reasons, one being that we live on the West Coast and will not be able to get to WDW every year. Thus, we bank and borrow and plan on visiting every 2 or 3 years with this smaller contract. I see no reason why a 50 pt contract couldn't be used the same way.

 

[Mickey'sApprentice]

DH and I bought our 100 point contract in January, and immediately started planning a nice vacation (BWV 2 BDRM) with my sisters and their families.

Since family ALWAYS seems wishy-washy about whether or not they will actually go, I asked the DIS boards, "What should I do if they decide not to go and I only need a studio or 1 bedroom?"

The response was, "Can you make another reservation at the same time, just in case?"

Well no, I only have 100 points. (I had to borrow just to have enough points for THIS vacation.

Anyway, turning a 2 bedroom into a studio is a NEW RESERVATION, and if your just a few months out, you get to go to the back of the line.

Bottom line, my sisters know they are in big trouble with me if they cancel, but having more points would have given me an insurance policy in this situation.

 

[Uberweasle]

I also purchased a small contract through resale as a non-owner. 60Pts at BWV at $92, all 05' banked, all 06' available.

You may pay a premium for a smaller contract, but I took two things into consideration for that cost. 1) The cost of this "premium" is virtually nothing over the life of the contract. 2) If you get ROFR'd, you're still on the outside looking in.

Now that I am in, I can add on in as small as 25 Pt. increments as my needs change. Do you best to define your needs ahead of time, and just buy what you need.

 

[mom22boys]

Thanks for all of the different perspectives everyone!

 

[mydogdrew]

Actually, I'm dead serious. (Note that I am not saying that financing is the preferred option in the vast majority of cases, just that it is a good and acceptable option.)

Actually you did say that very thing.

 

[salmoneous]

Actually, I'm dead serious. (Note that I am not saying that financing is the preferred option in the vast majority of cases, just that it is a good and acceptable option.)

Actually you did say that very thing.

Didn't mean for this to get nasty. Just giving my 2 cents worth (which is probably worth about half that). I don't think it does any good for us to discuss what I did and didn't say in this thread. If anyone is interested, my words are right there for all to see.

 

[Donna]

Thank you for your perspectives. Do you have better luck with ROFR with a 100 point or 150 point contract? Is ROFR such a challenge that it is better to just buy 150 points through DVC?

I am sure I am asking questions that have already been asked. I promise once we make it through Halloween I will use the search option on the boards to learn more!!

I just sold a 52 pt contract and also a 50 point contract and both passed ROFR. while my larger 250 contract, did not pass. go figure!

 

[veenstra56]

We were thinking of buying DVC resale and only buying 50 points? Is this crazy? We would love to own a part of the "magic," but can's see financing it or investing too much in it yet (we have those college funds to worry about ). We are just too conservative! We just thought it might be nice to be members. We know we would have to get creative in order to enjoy our 50 points. We would probably do a lot of banking and borrowing with visits only every other year or every three years. We also figured once we were members we could always use the rent/trade board to purchase extra points through transfer. So... what is the flaw in our plan? That we will love DVC so much that we will end up buying those extra points anyway! For those of you with experience what do you think?

Much thanks!

I love your thinking. After MUCH investigation into all the ins and outs I too employed this same exact logic and purchased a small contract. I didn't want to finance, but also did not want to spend all my savings on a traditional-sized contract (150-250 points). And on top of that, I was not sure that I even wanted to take a Disney trip every year.

Buying a small contract worked well for us because:
a) through banking/borrowing we can still experience everything DVC every other year
b) our annual dues are very small
c) we were able to pay cash initially, and will pay cash for small add ons in the future when we want the extra points AND have the cash to pay for them
d) we are officially members, which entitles us to the same member perks as any other member
e) we have complete control on EXACTLY how many points we will ultimately need (What I mean is: what if our needs dictate that we need 127 points? Now that we are members, we can buy exactly that amount. Obviously you cannot do this buying though Disney initially)
f) If I want to (though I doubt I ever will), I can sell my small contract very easily, as small contracts are very popular

Please understand that I am far from an expert on the subject. I am sure that there are those that would love to poke holes in my theories, but the important thing is that my system works for my family and, ultimately, that's all that matters. And what works for you is all that matters, too.

By the way, I too thought that my contract wouldn't pass ROFR, but luckily it did; so it's not impossible.

Best of luck to you.

 

[mom22boys]

I love your thinking. After MUCH investigation into all the ins and outs I too employed this same exact logic and purchased a small contract. I didn't want to finance, but also did not want to spend all my savings on a traditional-sized contract (150-250 points). And on top of that, I was not sure that I even wanted to take a Disney trip every year.

Buying a small contract worked well for us because:
a) through banking/borrowing we can still experience everything DVC every other year
b) our annual dues are very small
c) we were able to pay cash initially, and will pay cash for small add ons in the future when we want the extra points AND have the cash to pay for them
d) we are officially members, which entitles us to the same member perks as any other member
e) we have complete control on EXACTLY how many points we will ultimately need (What I mean is: what if our needs dictate that we need 127 points? Now that we are members, we can buy exactly that amount. Obviously you cannot do this buying though Disney initially)
f) If I want to (though I doubt I ever will), I can sell my small contract very easily, as small contracts are very popular

Please understand that I am far from an expert on the subject. I am sure that there are those that would love to poke holes in my theories, but the important thing is that my system works for my family and, ultimately, that's all that matters. And what works for you is all that matters, too.

By the way, I too thought that my contract wouldn't pass ROFR, but luckily it did; so it's not impossible.

Best of luck to you.

We think alike!