DVC Dilemma for us

[jodifla]

bongo, trust me, I do understand what you are trying to say. All I am saying is that all debt is not bad, too much debt is. Financing a luxery item for 1 year should not be a huge error in a persons financial well being. The person you explained above seems to me they just got in way over there heads....that can happen. But the op that started this thread seems like a very conservative planner and would not over extend to buy into Disney. Unfortunately with out debt people could not buy those large dollar purchases.......so before most people sign on the dotted line I believe they have thought out all the ramifications the debt will cause. Your feelings are just and I commend you on sharing them ......it will make some non owners think before they jump in with two feet and forget about other commitments. Others, as you can agree, can manage their debt properly.
Brownie

Very well put.

 

[Dean]

Frankly, I think Bongo makes sweeping generalizations. His faulty reasoning doesn't apply to me.

Maybe not, but it applies to about 99% of all who buy DVC. More like most chose to make poor choices, that is also their right.

 

[rinkwide]

...More like most chose to make poor choices, that is also their right...

Sadly, the right to make poor decisions seems to be one of our inalienable rights (it also happens to be the foundation that the entire timeshare industry was built on).

 

[bobbiwoz]

Some of us have lots more money than others of us. I read "The Millionaire Next Door" and decided that I didn't want to live like that. I don't believe that there is only one way to live and that way is the "right" way.

Life has to mean more than the sum of the money you have in the bank/stockmarket/tied up in trinkets and gold.

Bobbi

 

[jodifla]

Maybe not, but it applies to about 99% of all who buy DVC. More like most chose to make poor choices, that is also their right.

We reasoned it this way: We were already spending our vacation money at Disney. Why not actually buy something instead of renting all the time?

We had savings, but didn't want to deplete it for the purchase. So we financed, got a great rate, and now the points are being sold for roughly $40 more than we bought them for.

Sorry, I fail to see the downside in this situation.

Most people in the middle class finance purchases of more than 10 grand. If all you have is your house payment and the DVC purchase, it's hardly a ticket to ruin.

L

 

[rinkwide]

...If all you have is your house payment and the DVC purchase, it's hardly a ticket to ruin...

You really should adjust the font size on that "if" to a seven.

 

[Dean]

We reasoned it this way: We were already spending our vacation money at Disney. Why not actually buy something instead of renting all the time?

We had savings, but didn't want to deplete it for the purchase. So we financed, got a great rate, and now the points are being sold for roughly $40 more than we bought them for.

But that is not the situation being discussed. I don't recall off hand any DVC interest rate lower than around 10% in the last few years that was not for just one year and the quote recently was up to 14%. As noted, one can finance if they want. The fact that some can't get it together to skip a year or two and save up the money for a major purchase is exactly the PROBLEM and they are exactly the type of people who should never buy. As I've noted previously, there are special situations. But the fact that one blows a lot of money yearly on a vacation does not making financing a major purchase reasonable. That one wanted it, can afford it, bought it, can easily pay the payments and are enjoying it still does not inherently make it a good decision.

As I've also noted, we all make bad decisions at times, you just never know how certain things are going to turn out. In the timesharing world you could have bought something for $20K that's worth only $2K, it happens all the time. However, the fact that DVC has appreciated in the past has no bearing on the future. Actually quite the contrary, it's unlikely anyone buying now would be able to sell in the future for any profit, even breaking even might be a stretch for all of the current resorts bought now. What might have been a reasonable item to finance 10 years ago may not be now, the situations are simply different. Actually I think many owners that are getting in now and financing will have trouble EVER even breaking even. And to buy DVC to simply break even would be sheer stupidity.

 

[Johnnie Fedora]

It's really a matter of what is important to you. I'm sure many here financed their house/car, and probably purchased more home/transportation than they REALLY needed to get by in life. What a horrible waste, when you could get by with something much more modest and save all that interest money on your mortgage/car loan. Everyone wastes money on whatever floats their boat. Life is filled with these choices.

For us, a DVC purchase is a matter of timing. For many families, the purchase is preferable at a time in life when your kids will enjoy it the most. If that meant financing some of it...so be it....Choices.

FYI, most of our DVC purchase was made with an inheritance I received from a very generous aunt and uncle. I wanted the money spent on something our family could enjoy together for fun. I also hoped it could be something that would remind us of them for years to come. BTW, I purchased DVC at the same time I was borrowing money to add onto our house....Choices.

I can get hit by a bus tomorrow and my kids will have some wonderful memories of me, our family, and our numerous family trips. All the cash saved on interest charges won't give them that...Choices.

I'm all about being frugal, but sometimes when I read these kind of threads, I wonder how many DVCers are the kind of people that bring the plain Jello mold to a pot-luck supper....Choices.

 

[rinkwide]

...the fact that DVC has appreciated in the past has no bearing on the future. Actually quite the contrary, it's unlikely anyone buying now would be able to sell in the future for any profit...

Are you using that same crystal ball that said Beach Club would come back down to the mid-seventies? (I'm still holding off on doing my add-on, by the way.)

While it's pragmatic to assume the market will reach saturation and that demand will ebb, it's hardly possible to accurately predict if and when that will be. That's because Walt Disney World continues to be one of the most visited and desirable pieces of real estate on the planet and there's nothing to suggest that that fact will change anytime soon. And we members actually own a piece of it in the form of a unique timeshare product; the only one that gets all the perks and conveniences associated with staying on property at the Walt Disney World Resort. So, considering those factors, I'd say there's a pretty good chance that, overall, demand for rooms at WDW (and thus DVC) will remain exceptionally high in the long-term future. If that's the case, maintenance fees will rise but not nearly as fast as regular room rates and, once again, members will look pretty smart for buying "way back in 2006".

Now I can see where it would be tempting to look at Disney Vacation Development's recent large-scale effort - which may have temporarily softened demand with overproduction - and project a current market trend forward indefinitely. But I think that would be rather myopic. Instead, look at all of the factors that have helped shape the value of membership since the ground-breaking days of Old Key West (sorry folks, but there's a lot more to it than ROFR). It's quite possible to come to the conclusion that our little "hedge against inflation" may continue to appreciate at a decent rate for many more years.

But if not, at least I'll be able to do that BCV add-on I've been waiting for.

 

[Dean]

Are you using that same crystal ball that said Beach Club would come back down to the mid-seventies? (I'm still holding off on doing my add-on, by the way.)

While it's pragmatic to assume the market will reach saturation and that demand will ebb, it's hardly possible to accurately predict if and when that will be. That's because Walt Disney World continues to be one of the most visited and desirable pieces of real estate on the planet and there's nothing to suggest that that fact will change anytime soon. And we members actually own a piece of it in the form of a unique timeshare product; the only one that gets all the perks and conveniences associated with staying on property at the Walt Disney World Resort. So, considering those factors, I'd say there's a pretty good chance that, overall, demand for rooms at WDW (and thus DVC) will remain exceptionally high in the long-term future. If that's the case, maintenance fees will rise but not nearly as fast as regular room rates and, once again, members will look pretty smart for buying "way back in 2006".

Now I can see where it would be tempting to look at Disney Vacation Development's recent large-scale effort - which may have temporarily softened demand with overproduction - and project a current market trend forward indefinitely. But I think that would be rather myopic. Instead, look at all of the factors that have helped shape the value of membership since the ground-breaking days of Old Key West (sorry folks, but there's a lot more to it than ROFR). It's quite possible to come to the conclusion that our little "hedge against inflation" may continue to appreciate at a decent rate for many more years.

But if not, at least I'll be able to do that BCV add-on I've been waiting for.

No Doubt BCV and BWV will be back in the $70 per point range, the question is when. And when DVC stops ROFR, those willing to look and ask will always find bargains. And I expect the retail cost and likely the resale cost to ease upward still some over the next few years, just likely not enough to make that a justification for buying and doubtful enough that one can buy today and recoup the extra costs. Still, anyone buying should be buying with the intent of keeping it and using for the full term. And there are still circumstances where it makes sense to buy in, it's just a smaller percentage of people now that it was in years past.

 

[bongo59]

As much as i think Dean may have been right about 10 yrs ago in terms of the price falling..........i think the ROFR is not the biggest issue for price stability..............the biggest issue is inflation and the cost of premium hotels in the WDW resort.............and that price shows now sign of dropping.............infact if DVC prices caved completely it would never fall below the going rates for premium rooms because the bare minimum demand would be there for DVC rooms with full kitchens and larger rooms etc..............I think DVC will hold its value but i do see BCV as always being the most valuable asset for a variety of reasons................

 

[rinkwide]

...there are still circumstances where it makes sense to buy in, it's just a smaller percentage of people now that it was in years past.

That may well be true but similar words have likely echoed at every major price-point since sixty.

DVC pricing has always been a delicate balance designed to maximize the developer's return on investment while maintaining saleable value to the customer. Short term errors in pricing will simply be corrected one way or the other.

So what does the future hold? Bongo touched on it, as long as demand for deluxe accommodations at Walt Disney World remains high, membership value will continue to appreciate in a manner proportionate to room rates and the time remaining in the contract.

You're right though, Beach Club will eventually sell for $75 again. But when that time comes I'll probably be too busy hiding my own Easter eggs to care.

 

[Dean]

As much as i think Dean may have been right about 10 yrs ago in terms of the price falling..........i think the ROFR is not the biggest issue for price stability..............the biggest issue is inflation and the cost of premium hotels in the WDW resort.............and that price shows now sign of dropping.............infact if DVC prices caved completely it would never fall below the going rates for premium rooms because the bare minimum demand would be there for DVC rooms with full kitchens and larger rooms etc..............I think DVC will hold its value but i do see BCV as always being the most valuable asset for a variety of reasons................

As for ROFR, I think it is the largest item right now but has not been consistently over the years. But what ROFR also does is prevent the variability that invariably happens when one is willing to look for the bargains. I think you way overestimate the savvy of the majority of people to look at the price of the rooms and equate a timeshare purchase and it's value. Room price will have an effect but I do not believe it will have as much of an effect as you do. And remember there are other costs and risks that will become more and more a player as he term shortens. Heck, we see people on this board all the time that knew they should have bought 10 years ago and didn't. It will be fun to see what happens and I bet this will not be the last thread on this subject.

 

[rinkwide]

As for ROFR, I think it is the largest item right now...

Do we know if DVD buys contracts that they have no realistic chance of reselling? In other words; Are they willing to just sit on points instead of allowing them to sell too low on the open market?

 

[Dean]

Do we know if DVD buys contracts that they have no realistic chance of reselling? In other words; Are they willing to just sit on points instead of allowing them to sell too low on the open market?

Yes and no. What they appear to do is to try to balance the ROFR price, demand and retail price. Remember that Disney's main goal is simply to drive the majority of purchases to retail, period. I doubt there are ANY contracts that DVC has no real chance of selling again. Remember they can break them up and sell them any way they want to.

 

[TinkGirl]

My husband and I feel the same way as you about debt. We love our annual Disney trips and my in-laws live in HH, so DVC seemed a good fit for our family.We bought 225 points last year. We could have paid cash for it, but we really like to have emergency funds available just in case, so we opted to put down 20% and set up financing through Disney. That way we avoided closing costs and had five months until a payment would be due (our "unit" in SSR would not be ready until then). We were planning to set up a home equity loan with a lower interest rate than Disney's. Well, it turned out that we got a credit card with a 0% interest rate for a year, so we put it on that. The year is almost up, so we got another and transferred the remaining balance. We plan to pay it off within the year. In our minds, that is the same as paying cash. It sounds like you probably have very good credit, so you could qualify for a high limit if you chose that route.

 

[NMW]

Eugene, Perhaps you need to look at what you just wrote. Maybe take
a look at Bambi again...."If you can't say something nice, don't say anything at all".

Too bad your EIGTH post makes you such an expert!

I agree. That post by Eugene was filled with sarcastic undertones and just plain rude.

To the OP, congrats on your future DVC purchase. DH had a coworker who was killed on 9/11. Had a wife, 3 kids. One year after she bought a vacation house on Long Beach Island. It was something she and her husband had always talked about doing, but were afraid to do. Some may think I'm frivolous, but I don't think you can put a price on memories. You seem to be in no danger with your finances. I say...DO IT.

 

[shantay1008]

To the OP, congrats on your future DVC purchase. DH had a coworker who was killed on 9/11. Had a wife, 3 kids. One year after she bought a vacation house on Long Beach Island. It was something she and her husband had always talked about doing, but were afraid to do. Some may think I'm frivolous, but I don't think you can put a price on memories. You seem to be in no danger with your finances. I say...DO IT.

That is so incredibly sad, but it is a perfect example of why many of us don't mind financing something like DVC. Whenever people use words like "never" and "always" (as in "never take on debt"), my mind starts to wander. Life is not so black and white.

I guess we all just need to find our own balance between responsibly managing money and enjoying life. Those "Jones" people that Bongo told us about totally did not get the balance thing, which is why they needed to be rescued. And while DVC will be the first thing to go if we ever, heaven forbid, get into financial trouble, I hope it never comes to that because we are loving it.
Shannon

 

[rinkwide]

...I doubt there are ANY contracts that DVC has no real chance of selling again...

I have trouble seeing ROFR as having a tremendous artificial impact on resale prices unless DVD buys contracts that it ultimately doesn't resell. Now, I can see where it would have a stabilizing effect, but as long as Disney is selling all of the points (to buyers who would rather purchase direct) it seems to be just another force in the fair-market equation.

 

[bongo59]

Disney is sitting on an incredible amount of points now already..........but what they have done the last two yrs is drive DVC sales retail by eliminating all the great deals on hotel stays.............I hear they are formulating a plan to try to make renting DVC a no no.............but that will be tough given the amount of folks who bought in under the older rules............i think they may try a poison pill that will effect all DVC folks that rent but i am still pumping senior Disney board memebers on this currently..............