DVC Down the road...advice?

[minnienmickey]

I never considered investing in something that will end up costing me $100k (other than my education, woohoo!) So I decided if I buy enough points initially at a discounted rate, rent approximately half of my points throughout the years and sell them back 30 years out, it will only be a minimal cost on my investment minus the cost of tickets, transportation and food.

-I'm planning to buy in 2018 and sell in 2048. The purchase will be contingent on my 5 year plan going smoothly.
-I don't want to spend more than 20k on my initial investment and preferably less.
-I want enough points to be able to cover the cost of annual dues by renting and have enough left over to have a week long vacation every other year.
-Assuming I sell 30 years out, it needs to be at a resort that will have a good number of years left on the contract.

Any advice? Holes in my plan?

Thanks!

 

[BestDadEver]

I don't think it's the best idea as an investment . There are a lot of variables that could change dramatically . It would seem like a big risk if your looking to make money long term on it .

I don't know the calculations that you made regarding inflation and what things are going to cost by 2018 but ill tell you this much current trends say $20k may not get you to much then .

 

[minnienmickey]

I don't think it's the best idea as an investment . There are a lot of variables that could change dramatically . It would seem like a big risk if your looking to make money long term on it .

I don't know the calculations that you made regarding inflation and what things are going to cost by 2018 but ill tell you this much current trends say $20k may not get you to much then .

I am not trying to make a profit on it, but I don't want it to cost me a fortune either. I agree variables could change dramatically. My calculations put my stays at $50-100 per night over 30 years depending on what percentage of points I rent out and how much the maintenance fees actually increase.

 

[BestDadEver]

I am not trying to make a profit on it, but I don't want it to cost me a fortune either. I agree variables could change dramatically. My calculations put my stays at $50-100 per night over 30 years depending on what percentage of points I rent out and how much the maintenance fees actually increase.

That's what I am trying to say what happens if you can't rent cause Disney decides to enforce a no renting policy . Or even just the price of rentals drop dramatically . They haven't been on the rise as much as MF . The MF will surely go up , probably quite a bit .

I also think you are going to have a problem having enough points for a trip and rent enough to cover MF . Did you figure that out with current numbers yet ? To at least see if its doable .

But the prices in general for MF and points has been raising dramatically . The fact you saying 2018 . IMO makes it imposable to plan this now cause who know what the numbers will be then . That would be the biggest issue I see in this plan is the unknown value in 2018 .

 

[Missyrose]

I never considered investing in something that will end up costing me $100k (other than my education, woohoo!) So I decided if I buy enough points initially at a discounted rate, rent approximately half of my points throughout the years and sell them back 30 years out, it will only be a minimal cost on my investment minus the cost of tickets, transportation and food.

-I'm planning to buy in 2018 and sell in 2048. The purchase will be contingent on my 5 year plan going smoothly.
-I don't want to spend more than 20k on my initial investment and preferably less.
-I want enough points to be able to cover the cost of annual dues by renting and have enough left over to have a week long vacation every other year.
-Assuming I sell 30 years out, it needs to be at a resort that will have a good number of years left on the contract.

Any advice? Holes in my plan?

Thanks!

The biggest question to ask yourself is what would happen if Disney changed the rules on renting out your points? I'd buy a smaller number of points (which comes with a smaller MF bill) and use them for your own trips.

If you want to sell at 30 years out, then I guess you're crossing all the older resorts (non-extended OKW, BCV, BWV, VWL) off your list because we're already within 30 years from the end date.

 

[RSWA2]

1. -I'm planning to buy in 2018 and sell in 2048. The purchase will be contingent on my 5 year plan going smoothly.
2. -I don't want to spend more than 20k on my initial investment and preferably less.
3. -I want enough points to be able to cover the cost of annual dues by renting and have enough left over to have a week long vacation every other year.
4. -Assuming I sell 30 years out, it needs to be at a resort that will have a good number of years left on the contract.

Any advice? Holes in my plan?

Thanks!

1. I think this is a good start, some people save for years in order to buy DVC or some other large purchase. I wouldn't be so set on a hard date (2018), rather I would set a financial dollar amount to reach. What happens if you only save $1000 by 2018? Would you borrow? That would not be a good financial move. What if you win the lottery tomorrow, would you still wait until 2018? Similar to buying a house or car or any other large purchase.

2. 20k is your max limit, ok so what would be your minimum limit. See what prices are today for what you want and see what that would change you limit to. This would change #1. as well. Prices will change in 5 years and the market will influence prices as well.

3. From other threads that I've read, if you want to be able to rent your points so cover your MFs and still have enough for a stay, you need double the amount of points of your stay. So you use half and rent the other half. So lets say a week is 150 points, you'll buy 300. I haven't actually gone through the actual calculations myself for this, but it looks approximately correct. Run the numbers for yourself. Someone else can correct me if I'm wrong with this.

4. Current AKV expires in 2057, VGC and BLT expires in 2060 and VGF expires in 2064. I wouldn't look at what you can sell for after 30 years of ownership. No one knows what will happen. What others and myself have done, is that we looked at the break even point of DVC ownership.

You mentioned that you don't want to make a profit and you don't want it to cost you a fortune, then my recommendation is find the break even point vs staying 1 week through CRO and see if that works for you. Most, not all, resale purchases seem have a break even point of about 5-7 years. For my specific case, I break even at around 6 years of ownership, I did not factor in renting. Then if you sell after 30 years, even for $1, you would have come out ahead.

 

[Minniesgal]

Personally I would just buy the points I need for my trips and not buy extra to rent, also rather than buying all my points at nice and saving for ages I'd wait until the market cools down a little then go after smaller contracts and build it up paying cash for each one.

 

[kedkin]

The biggest question to ask yourself is what would happen if Disney changed the rules on renting out your points?

Could Disney change the rules on renting points? Would we be grandfathered in?

 

[cseca]

The biggest hole would be IF DVC ever decides to limit renting policy.
But that's a big unknown.
Other than that if you have the $ and the time/patience to rent (along with all the possible risks that comes with renting your points), this isn't a bad set up.

At 20k and possibly selling 30yrs down the road with time left, you would probably want to go with AKV or BLT resale.

You said 1 week stay but you didn't specify accommodation.
Studio or 1 br?

AKV has value rooms which requires less points.
Your 20k will go further at AKV than BLT.

 

[minnienmickey]

1. I think this is a good start, some people save for years in order to buy DVC or some other large purchase. I wouldn't be so set on a hard date (2018), rather I would set a financial dollar amount to reach. What happens if you only save $1000 by 2018? Would you borrow? That would not be a good financial move. What if you win the lottery tomorrow, would you still wait until 2018? Similar to buying a house or car or any other large purchase.

2. 20k is your max limit, ok so what would be your minimum limit. See what prices are today for what you want and see what that would change you limit to. This would change #1. as well. Prices will change in 5 years and the market will influence prices as well.

3. From other threads that I've read, if you want to be able to rent your points so cover your MFs and still have enough for a stay, you need double the amount of points of your stay. So you use half and rent the other half. So lets say a week is 150 points, you'll buy 300. I haven't actually gone through the actual calculations myself for this, but it looks approximately correct. Run the numbers for yourself. Someone else can correct me if I'm wrong with this.

4. Current AKV expires in 2057, VGC and BLT expires in 2060 and VGF expires in 2064. I wouldn't look at what you can sell for after 30 years of ownership. No one knows what will happen. What others and myself have done, is that we looked at the break even point of DVC ownership.

You mentioned that you don't want to make a profit and you don't want it to cost you a fortune, then my recommendation is find the break even point vs staying 1 week through CRO and see if that works for you. Most, not all, resale purchases seem have a break even point of about 5-7 years. For my specific case, I break even at around 6 years of ownership, I did not factor in renting. Then if you sell after 30 years, even for $1, you would have come out ahead.

I suppose I arbitrarily chose 2018 as a date so I have a goal to work toward at the end of my 5 year plan as something to keep me motivated and on track, but winning the lottery would be great!

A lot of excellent points to consider! Thanks

 

[minnienmickey]

The biggest hole would be IF DVC ever decides to limit renting policy.
But that's a big unknown.
Other than that if you have the $ and the time/patience to rent (along with all the possible risks that comes with renting your points), this isn't a bad set up.

At 20k and possibly selling 30yrs down the road with time left, you would probably want to go with AKV or BLT resale.

You said 1 week stay but you didn't specify accommodation.
Studio or 1 br?

AKV has value rooms which requires less points.
Your 20k will go further at AKV than BLT.

Worst case scenario: Disney doesn't allow me to rent points, I can sell my contract and if I make an offer too low Disney will buy back the points? I'm not exactly sure how that works.

I was thinking studio or 1br depending and AKV unless resale for BLT significantly decreases. Although I think maintenance for AKV will be much higher over time because of the cost of keeping the animals.

 

[minnienmickey]

Thanks all for the advice! A lot of excellent points to consider.

 

[Sandisw]

IMO, going in to DVC as an "investment" with a plan to cover costs and then recoup some of initial buy in isn't the best move.

Yes, DVC has held resale value as a timeshare over the years better than most, but who is to say that will be the case in 30 years.

As already mentioned, the rules for renting could be modified and Disney could put more stricter limits on what they consider a "commercial" renting owner.

And, as an owner, you are responsible for your guests, so if damages happen or they somehow skip out on charges, your DVC account will be suspended until you get them to cover it.

For me, too many if's and potential disappointment. If you only buy what you think you will use, then the costs are directly related to your own enjoyment of DVC vacations.

Good luck!

 

[ELMC]

The best candidates to own DVC are those who have a track record of staying in Deluxes and are looking for ways to get more value for their vacation dollar. In my opinion, if you are going into this looking at it as an investment or if you need DVC to save you money in order for it to work for you, your plan does not have a high probability of success.

 

[minnienmickey]

Personally I would just buy the points I need for my trips and not buy extra to rent, also rather than buying all my points at nice and saving for ages I'd wait until the market cools down a little then go after smaller contracts and build it up paying cash for each one.

I may decide to add on over time and start off with half of my points equalling a week at a studio and building up points to equal a 1 or 2 bedroom or longer or more frequent stays.

 

[iluvthsgam]

I don't think the OP said she wanted to go in on DVC as an investment. Correct me if I am wrong, but what I understand you wanted to do was if you needed 100 points each year, instead buy 200 points and rent half the points out so that the rental money will cover your maintenance fee's each year. So you are "breaking even" on the hotel cost. Then when you sell down the line, you hope to recoup as much as your buy-in as you can. So your overall "cost" was as low as possible. There is nothing wrong with this thinking.

Everyone above has made some good points for you to consider. Disney limiting renting is always something to think about. What you have to do for this analysis is simply run the numbers. If you take that 20k and invest it instead and rent points each time you want to go or reserve room with Disney, what are you left with in the investment after 30 years? If you can cover your MF's each year by renting what is your estimate for how much you can sell your DVC membership for after 30 years? What scenario gives you the most $$ left over? You can, of course, adjust for different scenario's and see which one makes you the most comfortable.

 

[minnienmickey]

I don't think the OP said she wanted to go in on DVC as an investment. Correct me if I am wrong, but what I understand you wanted to do was if you needed 100 points each year, instead buy 200 points and rent half the points out so that the rental money will cover your maintenance fee's each year. So you are "breaking even" on the hotel cost. Then when you sell down the line, you hope to recoup as much as your buy-in as you can. So your overall "cost" was as low as possible. There is nothing wrong with this thinking.

Everyone above has made some good points for you to consider. Disney limiting renting is always something to think about. What you have to do for this analysis is simply run the numbers. If you take that 20k and invest it instead and rent points each time you want to go or reserve room with Disney, what are you left with in the investment after 30 years? If you can cover your MF's each year by renting what is your estimate for how much you can sell your DVC membership for after 30 years? What scenario gives you the most $$ left over? You can, of course, adjust for different scenario's and see which one makes you the most comfortable.

Yes, exactly! I could have worded things a bit differently perhaps.

 

[BestDadEver]

Worst case scenario: Disney doesn't allow me to rent points, I can sell my contract and if I make an offer too low Disney will buy back the points? I'm not exactly sure how that works.

I was thinking studio or 1br depending and AKV unless resale for BLT significantly decreases. Although I think maintenance for AKV will be much higher over time because of the cost of keeping the animals.

I think you need to do more research about DVC in general . The way ROFR works should be something you understand before you buy . Disney will not automatically buy your contract if the price is to low , they have the option to step in and buy it from you once its sold .

You should get a good understanding of the way the UY works too cause that could be quite confusing , plus the banking borrowing rules . Then my suggestion is to crunch some numbers and see if it works for you . I like to base it of the room that I actually stay in . But if you have a history of staying at disney witch I didn't , you could compare those prices to what your paying for DVC and see if its cheaper , and add any value you may or may not perceive for actually staying in a bigger nice accommodations .

Have you taken the DVC tours ? they can be very informative if you ask a lot of questions

I don't think the OP said she wanted to go in on DVC as an investment. Correct me if I am wrong, but what I understand you wanted to do was if you needed 100 points each year, instead buy 200 points and rent half the points out so that the rental money will cover your maintenance fee's each year. So you are "breaking even" on the hotel cost. Then when you sell down the line, you hope to recoup as much as your buy-in as you can. So your overall "cost" was as low as possible. There is nothing wrong with this thinking.

Everyone above has made some good points for you to consider. Disney limiting renting is always something to think about. What you have to do for this analysis is simply run the numbers. If you take that 20k and invest it instead and rent points each time you want to go or reserve room with Disney, what are you left with in the investment after 30 years? If you can cover your MF's each year by renting what is your estimate for how much you can sell your DVC membership for after 30 years? What scenario gives you the most $$ left over? You can, of course, adjust for different scenario's and see which one makes you the most comfortable.

People think that your doing it for investment cause you specifically mentioned making a profit when it was sold .

 

[disneynutz]

The problem with your plan is you need to include the true cost of owning. You will spend the most on dues, transportation, food, admission tickets to the parks and hard ticket events. Don't forget about the cost of all of the Disney stuff that you will buy.

You plan on going every two years but I bet that once you get started, you will go more often. DVC offered a PAP discount last year and because of the discount, owners are taking extra vacations to get the best value from the PAP's. Some even bought add-on contracts because they were short points.

Bill

 

[minnienmickey]

People think that your doing it for investment cause you specifically mentioned making a profit when it was sold .

Hmm, I don't think I mentioned that.

It is quite the learning curve, the boards have become an excellent source of information for me. I don't think I will go on the DVC tours because I'm sure the guides work hard to make sales commission and I plan to buy from a resale.