Does anyone else think the OKW 15 year extension will add value?

[JimMIA]

again you dont have to get the whole 15 dollars back resale for this to have an added value

This is where we disagree, and there is nothing I can say that will convince you.

I think there are really two issues. One is the question of whether the extension adds any value at all, and I'm quite sure none of us know the answer to that. We're all speculating.

To me, if you spend $15 to get back $6, you've lost $9. That's not added value. Added value would be the total value being more than $15...however you measure value.

I see three possibilities for truly adding value. If you spend $15, and you get back vacations 35 years from now which you value at more than $15, you have added value. If your resale price exceeds the resale prices of non-extended contracts by more than $15, you have added value. OR, if the combination of the above exceeds $15, you have added value.

The more important question, IMHO, is not whether there is any value to the extension offer, but whether it is the best option for that money.

In our situation, extending our OKW contract would cost $4,650. Assuming I wanted to invest $4,650 more in DVC (which I don't), the question then becomes "where do I get the most value?" The extension is certainly not the only option, although Disney would like you to put on blinders and believe it is.

ONE other option (and there are many) would be to spend that money on a small add-on that we could use now. To me, that option offers guaranteed added value, not potential. And it would offer a lot more value than the extension.

(Truthfully, though, if I was going to put $4,650 more into prepaid vacations, I'd buy a non-DVC timeshare resale because it would give me many more options I don't have now.)

 

[goldilocks_63]

I also thought the OKW+15 would go thru ROFR, whereas the OKW-2042 may not. I think DVC may have an interests in ROFRing the OKW-2042 contracts, and extending them so they go to 2057, for their own convenience.

The OKW+15 they won't need to do so... So it's not that you would necessarily get the $15 pp back, the extension is a hedge to protect your gain so you'll be able to sell later...

If buyers see DVC always ROFRs the OKW-2042, why bother to bid. May make it more difficult to sell the originals.

Of course, if you have no plan to sell then this line of thinking doesn't apply.

GOldi

 

[DVC Mike]

While the 15 year extension certainly adds more years on to your contract, I'm not so sure it is worth the $15 per point. From a purely financial standpoint, it probably doesn't make sense (at least based upon what we know today and our forecast of the future based upon what has gone on so far). Maybe our forecast is incorrect and it could possibly turn out to be a good deal financially -- but that doesn't seem too likely.

However, if I was an OKW owner and I really loved OKW, and it was my favorite DVC resort, and I really wasn't interested in adding on at SSR or AKV, then to that person, the offer does add "value". They will get 15 more years at their favorite resort (assuming they are young enough to enjoy it).

So, this offer may add "value" (of a non-financial nature) to some people. I mean, we all bought into DVC, not just because it may have made financial sense to us, but because it offered us up 35-50 years of guaranteed vacations.

I've seen some postings where people who had decided to purchase the extension were making a mistake. I think we can each decide whether it is a mistake for us, but we should leave everyone to make their own choice and decide if the extension adds value to them or not.

In either case, I have enjoyed the discussion of this topic, even though I am not an OKW owner.

 

[sjdisneywedding]

I see three possibilities for truly adding value. If you spend $15, and you get back vacations 35 years from now which you value at more than $15, you have added value. If your resale price exceeds the resale prices of non-extended contracts by more than $15, you have added value. OR, if the combination of the above exceeds $15, you have added value..

argreement reached
thats all Im saying, is that the dollar value alone does not determine the added value

The more important question, IMHO, is not whether there is any value to the extension offer, but whether it is the best option for that money.

In our situation, extending our OKW contract would cost $4,650. Assuming I wanted to invest $4,650 more in DVC (which I don't), the question then becomes "where do I get the most value?" The extension is certainly not the only option, although Disney would like you to put on blinders and believe it is.

ONE other option (and there are many) would be to spend that money on a small add-on that we could use now. To me, that option offers guaranteed added value, not potential. And it would offer a lot more value than the extension.

(Truthfully, though, if I was going to put $4,650 more into prepaid vacations, I'd buy a non-DVC timeshare resale because it would give me many more options I don't have now.)

right and then its down to personal choice and situations, pretty much like everything else

but just to continue on that point of value--your 310 point extension would cost $4650, but would give you 4650 points to use over your final 15 years

alternativley, that same $4650 would get you about 50 points per year or 2500 points over the 49-50 years(provided you bought AKV)

so value is truly in the hands of the user

4650 points over 15 years
or
2500 points over 50(plus 35 years of extra MF's)

its all how you can use the points

 

[Jeremy&Susan]

After reading these posts and seeing how some opinions are set in stone where common sense mixed with a bit of math wont alter them, I am reminded of a comment by a man well beyond his time.

What was it PT Barnum said ? ............

 

[sjdisneywedding]

After reading these posts and seeing how some opinions are set in stone where common sense mixed with a bit of math wont alter them, I am reminded of a comment by a man well beyond his time.

What was it PT Barnum said ? ............

if you have truly read the posts you would see it comes down to personal choice

it has nothing to do with set in stone, common sense, or math

its personal opinion

 

[rinkwide]

...I've seen some postings where people who had decided to purchase the extension were making a mistake...

Every one that I've read, in fact.

 

[dianeschlicht]

This is where we disagree, and there is nothing I can say that will convince you.

I think there are really two issues. One is the question of whether the extension adds any value at all, and I'm quite sure none of us know the answer to that. We're all speculating.

To me, if you spend $15 to get back $6, you've lost $9. That's not added value. Added value would be the total value being more than $15...however you measure value.

I see three possibilities for truly adding value. If you spend $15, and you get back vacations 35 years from now which you value at more than $15, you have added value. If your resale price exceeds the resale prices of non-extended contracts by more than $15, you have added value. OR, if the combination of the above exceeds $15, you have added value.

The more important question, IMHO, is not whether there is any value to the extension offer, but whether it is the best option for that money.

In our situation, extending our OKW contract would cost $4,650. Assuming I wanted to invest $4,650 more in DVC (which I don't), the question then becomes "where do I get the most value?" The extension is certainly not the only option, although Disney would like you to put on blinders and believe it is.

ONE other option (and there are many) would be to spend that money on a small add-on that we could use now. To me, that option offers guaranteed added value, not potential. And it would offer a lot more value than the extension.

(Truthfully, though, if I was going to put $4,650 more into prepaid vacations, I'd buy a non-DVC timeshare resale because it would give me many more options I don't have now.)

Well said, and exactly the reason we are not adding the 15 years.

 

[eva]

I was responding to the original post. The OP was wondering if investing $15/pt would return addtional value to your points on resale. I answered that question.

As far as my opinion on investing in DVC
We own a good deal of points and love the investment.

Dont flame me for answering the question that was asked.

I apologize. You are absolutely correct. Since the person is looking for the best monetary return, then your answer is accurate.

 

[rsinj]

.

 

[sjdisneywedding]

I apologize. You are absolutely correct. Since the person is looking for the best monetary return, then your answer is accurate.

Eva,

I dont know I kinda agree with your first thought

value is not necessarily in dollars earned after a resale, it could also be in dollars saved by already having a room paid for

so if someone is using those 15 extra years that were purchased at $15 today then I believe thats added value

all these posts about investing it here and rate of return there are all well and good, but as usual they dont factor all the equations in.

I have said a million times you can use the math to come to any answer you want, yes you MIGHT get somewhere between a 5-10% rate of return on your $15 then again you MIGHT get NOTHING!! or better yet you MIGHT have a negative return

and where are all the calculations of what a room at WDW might cost in 35 years

obviously everyone should be putting money away for future use and retirement, but that doesnt mean you put everything away for the future
in hopes to have a larger return then

 

[sjdisneywedding]

Then, why in the world did you buy in the first place?



That's great that you have an opinion! Others have other opinions. Folks who may not be as old as you, may have no reason to purchase additional current usable points today, or may have an alternative basis for valuation probably have a different opinion.

Depending on the individual situation and how you value the points, there are other reasons to extend.

Since you have absolutely no idea what the cost of staying at Disney/DVC will be in the future, nor others circumstances, your opinion may be totally irrelevant and completely wrong.

it sounds as though that poster was a bit sour on DVC for whatever reason

"cant beat the house" ???? lol

 

[rsinj]

.

 

[shellbelle1971]

IMHO, I think this is going to depend on where Dis sets the ROFR floor. People are going to pay what Dis requires them to pay. I can't imagine that they wouldn't, but if Dis does not differentiate between contracts expiring in 2057 versus 2042, people may get a little more in resale, but sellers are going to know what is passing ROFR and make offers accordingly. Those contracts could act similar to low point or loaded contracts in the market today. They will sell for more, but how much more??? However, if Dis ups the 2057 ROFR floor, then it's going to force people to pay whatever minimum they set. I thought someone said OKW with the extension is selling for $98 through Dis? So you would think it would be lower than $98.

Only time will tell on this one. It's interesting to me. As a buyer a year ago, I would have purchased an OKW 2057 contract in a heartbeat and would have paid extra for the 2057 expiration date. However, we went with SSR solely because of the 2054 expiration. AKV wasn't available yet. As an owner, would I extend the contract to 2057 or use the $$$ towards points I could use now? Well, I'm 37, so I think I would lean towards something I could use now, which is what you're seeing others say. As a seller, it's a total gamble.

BuckeyeFan, you think like my long-lost twin! This is how I think about the extension, as an OKWnon-owner, but potential future purchaser:

Our family is reasonably young, and would prefer to own the later-expiration contract. If we bought OKW direct from DVC, that's what we'd get, currently at about $98 per point and no closing costs.

If we bought resale the earlier-expiration OKW contracts seem to be going for about $80 per point (by the time you count in closing costs, etc.) but we would probably have to pay something like $30 per point if we wanted to extend their expiration, making our total cost per point for the apples-to-apples deal more like $110 pp for a resale OKW contract. Who would pay that? To compete with DVC, you'd have to sell your 2042-expiring contract for something like $65 pp, even without discounting anything because of the whole headache of ROFR. (Not that a contract at $65pp would pass ROFR anyway!) This makes purchasing a resale OKW contract a most-unappealing option to buyers who care about the later expiration date!

So, in my opinion, all the extension does is cap the potential sales price at OKW AND make it harder to move the contract.

 

[sjdisneywedding]

BuckeyeFan, you think like my long-lost twin! This is how I think about the extension, as an OKWnon-owner, but potential future purchaser:

Our family is reasonably young, and would prefer to own the later-expiration contract. If we bought OKW direct from DVC, that's what we'd get, currently at about $98 per point and no closing costs.

If we bought resale the earlier-expiration OKW contracts seem to be going for about $80 per point (by the time you count in closing costs, etc.) but we would probably have to pay something like $30 per point if we wanted to extend their expiration, making our total cost per point for the apples-to-apples deal more like $110 pp for a resale OKW contract. Who would pay that? To compete with DVC, you'd have to sell your 2042-expiring contract for something like $65 pp, even without discounting anything because of the whole headache of ROFR. (Not that a contract at $65pp would pass ROFR anyway!) This makes purchasing a resale OKW contract a most-unappealing option to buyers who care about the later expiration date!

So, in my opinion, all the extension does is cap the potential sales price at OKW AND make it harder to move the contract.

wow thats some fun yet odd math

where are you getting:

"something like $30 for the extension" from?

 

[Mtnman44]

Not exactly. That $2250 is for a contract that starts in 35 years. This is not the same as an ordinary DVC purchase. Yes, DVC is a prepaid vacation thing and no it is not a financial investment per se. However, with a normal purchase you start using the purchase right away and the value you get (vacations, savings, joy, whatever) begins at the time of purchase. There is some kind of benefit or return to your purchase (investment). Investment here is only meant in the sense of the placing of your resources (cash), and does not refer to a for profit, expected net return investment.

Now, with the extention you get no "return" until year 35. So, your actual cost of that $2,250 is actually much, much more. $2,250 would equal $16,300 before taxes in year 35, and that is only compounded annually at a relatively risk-free rate of 6%. Yes, a normal DVC purchase also ties up your money over the life of the DVC contract but you start getting returns (vacations, savings, etc) in year one. You start saving every year that you own it! With the extention you pay for 35 years and then "save" for 15 years. Would you buy a Dodge Viper today for only $15,000 with the caveat that Dodge will give you the first new one off the line in 2042? Have you "added value" to your personal fleet? Once 2042 rolls around and you have a free car, it might feel pretty good. You can tell everybody, "this thing only cost me $15,000!" but was it really a good deal?

As you mention, and this is something I've always said, is that the extention MIGHT be OK for those who actually WANT the contract for those years to use it. My critisims are mainly directed toward the logic of extending for the purpose of resale value.

Exactly. The same reason folks paid for DVC to begin with is that they were locking in the price of their future vacation stays - no? This is no different - you are prepaying those 15 years of vacations today. Will it be worth the $2250 for a plain old 150 point contract? Nobody knows or can say for certain today - nobody.

To me, just like when we made our original DVC purchase, the initial price wasn't where the majority of costs were - it was in the annual maintenance, and here, again, it is no different. We paid $67/point for 42 years of stays (that's more than $1.50/pt/year). Yes, we're now paying $1/pt/year and that doesn't consider the inflation/interest rates over the next 35 years, but, hotel/resort rates are most likely to also go up over the next 35 years as well. That is what prepayment is all about - your cost is fixed today regardless of what happens to prices in the future. You want to take your chances and roll the dice as to what DVC prices will be 35 years from now, or what you can pay in cash for the rooms 35 years from now, or how much you can make investing the money now, or any other way of making a case, go for it.

As far as resale value - I couldn't care less - we have no plans of selling. If we get into a situation where we are forced to sell (which we won't), then whether or not we get the value of the full $15 back and make/lose money is of no concern. It is quite ironic how many people give advice to the newcomers to not look at DVC as an investment, and yet every last person who is making monetary and value calculations here as to why it isn't worth the $15/pt is doing just that. Hypocritical is the only word which comes to mind.

 

[rsinj]

.

 

[JimMIA]

Oh yeah - we've also prepaid for our daughter's college tuition - all 4 years of it. She won't be attending college for another 8 years, but it is all paid for - GUARANTEED.

If that's the Florida Prepaid College Plan, you'd better keep your fingers crossed and keep a close eye on the Legislature. The Florida University System is trying everything they can think of to wiggle out of that "guarantee." "Tuition" might be guaranteed, but they'll think of another term to call the increased fees. The Legislature shot them down last year, but they'll be back next year.

We have the Florida program for DD5-going-on-25, and we're hoping it holds up for another 13 years or so.

 

[pilferk]

Hey All - Let Compound interest calculation show you your answer.

Take the $15 bucks you would have invested today in extending your OKW vacation points life.

Invest this $15 in a CD (being conservative) at 4.5%.
After 25 years you would now have ................. $45
That is a $30 return on your investment.

Invest this same $15 in a the stock market with a traditional rate of return of 10%.
After 25 years you would now have ................. $162.52
That is a $147 return on your investment. WOW


I am thinking that extending the life of this contract wont return either the low 4% rate of return or the 10% rate of return.

I vote for not extending your contract, but that is from the head not the heart. If you really love OKW and want to leave your great grandkids and great great gradkids something, go for it.

Merry Christmas .....

To expound (a little late in the game) a bit:

If you're carrying out the scenario above, that means that in 2032 (in 25 years) you'd want your 2057 points to be worth at LEAST $45 per point MORE than your 2042 points, in order to outpace the CD.

I think it's probably even money that will be the case....maybe a LITTLE bit better. Not great odds, if you're looking at it from an investment perspective, probably.

 

[BWV Dreamin]

If that's the Florida Prepaid College Plan, you'd better keep your fingers crossed and keep a close eye on the Legislature. The Florida University System is trying everything they can think of to wiggle out of that "guarantee." "Tuition" might be guaranteed, but they'll think of another term to call the increased fees. The Legislature shot them down last year, but they'll be back next year.

We have the Florida program for DD5-going-on-25, and we're hoping it holds up for another 13 years or so.

Not to get OT , but Maryland's PP Tuition fund is running in the red right now. After all the hype to participate, there may now be no GUARANTEE that the fund will even be around by the time one needs to use it!! The only GUARANTEE I can forsee is death and taxes!! Back on topic, there are no guarantees that this extension will increase the value. But again, the real question is whether there will be a CHOICE to extend or not in the future. Still have that gut feeling it will be imposed, one way or another.