Extending OKW

[jerseyduke]

If you were to purchase an OKW contract via the resale market, and it is a 2042 contract, can you still extend them to 2057?

 

[chalee94]

here is the last time this was discussed, unless someone has new information:

http://www.disboards.com/showthread.php?t=3303742

 

[Dean]

If you were to purchase an OKW contract via the resale market, and it is a 2042 contract, can you still extend them to 2057?

You can ask but only DVD can say for sure. Just because it was done previously doesn't mean they will allow it now but for $25 a point, they'd be foolish not to if they have a mechanism to do so easily. IMO it wasn't worth it at the $15 and certainly isn't at $25. I find owning OKW very scary past the 2042 termination date.

 

[PacoDF]

To pay $25 per point today, for something you can't use for 27 more years doesn't sound like a good decision IMO. The present value of a 27-years-in-the-future-timeshare is close to zero IMHO. (and that's the reason why the difference between extended and non extended OKW resale contracts is very slim, and still bigger that what should be).

If the expiration year is important for you I'd chose a newer resort or try to find an already extended OKW contract, that surely will charge you a lot less than $25 a point for the "extension".

 

[disBOBney]

I spoke with my guide last night, yes you can still extend the OKW at $25 pp. That is a steal at todays per point cost. The 15 year extension comes out to $1.66 per use year point, while everything else is well over $2 resale and now over$3 direct. Even if a person bought a resale contract at $75 pp and then paid the $25 pp extension meaning they paid $100 per point. The "per use point" cost is dramatic. The $75 pp 2042 is $2.88 pup While the $100 2057 is $2.44 pup.

Currently on the resale market either sellers or brokers haven't been adequately separating the two differing contracts. But as we get closer to that magic 2042 number the prices will surely jump. Since, the club acknowledged at the recent meeting they are beginning to look at how they will address the first to expire resorts I expect they will soon be addressing the disparity in per point costs.

What to do now? IMO. If you currently are thinking of buying OKW resale look for the 2057 points they are truly a steal. (Direct purchases are all 2057, at $135). If you own OKW and plan on hanging onto it for another ten years, extend now before DVD raises the price. If you are thinking of liquidating OKW 2042 points do it in the next couple years, before everyone notices that the 2042 points are way over priced in comparison to 2057 points.

 

[PacoDF]

I spoke with my guide last night, yes you can still extend the OKW at $25 pp. That is a steal at todays per point cost. The 15 year extension comes out to $1.66 per use year point, while everything else is well over $2 resale and now over$3 direct. Even if a person bought a resale contract at $75 pp and then paid the $25 pp extension meaning they paid $100 per point. The "per use point" cost is dramatic. The $75 pp 2042 is $2.88 pup While the $100 2057 is $2.44 pup.

Currently on the resale market either sellers or brokers haven't been adequately separating the two differing contracts. But as we get closer to that magic 2042 number the prices will surely jump. Since, the club acknowledged at the recent meeting they are beginning to look at how they will address the first to expire resorts I expect they will soon be addressing the disparity in per point costs.

Respectfully, you can't just make a "per point cost" comparison that way. You are using today money to get 27-years-in-the-future points. Is always incorrect to just divide the today price per point by the years remaining (because you aren't considering the time value of the money), but doing it for points that you can´t start using for 27 years is even worse. Using a rate of 3% yearly (and most will told you to use a higher rate), your today $25 will become $55.5 in 27 years. And using $55.5 your per point cost would be $3.7.

What to do now? IMO. If you currently are thinking of buying OKW resale look for the 2057 points they are truly a steal. (Direct purchases are all 2057, at $135). If you own OKW and plan on hanging onto it for another ten years, extend now before DVD raises the price. If you are thinking of liquidating OKW 2042 points do it in the next couple years, before everyone notices that the 2042 points are way over priced in comparison to 2057 points.

I agree with you, that IF you can get a good price (as close to a non-extended contract price as you can, within a few dollars) it is a good plan to get a resale extended contract now. But I can't disagree more with the idea of paying $25 now just to extend 15 years the expiration date at the end of a current contract.

My two cents!

 

[CMOORE185]

I spoke with my guide last night, yes you can still extend the OKW at $25 pp. That is a steal at todays per point cost. The 15 year extension comes out to $1.66 per use year point, while everything else is well over $2 resale and now over$3 direct. Even if a person bought a resale contract at $75 pp and then paid the $25 pp extension meaning they paid $100 per point. The "per use point" cost is dramatic. The $75 pp 2042 is $2.88 pup While the $100 2057 is $2.44 pup.

Currently on the resale market either sellers or brokers haven't been adequately separating the two differing contracts. But as we get closer to that magic 2042 number the prices will surely jump. Since, the club acknowledged at the recent meeting they are beginning to look at how they will address the first to expire resorts I expect they will soon be addressing the disparity in per point costs.

What to do now? IMO. If you currently are thinking of buying OKW resale look for the 2057 points they are truly a steal. (Direct purchases are all 2057, at $135). If you own OKW and plan on hanging onto it for another ten years, extend now before DVD raises the price. If you are thinking of liquidating OKW 2042 points do it in the next couple years, before everyone notices that the 2042 points are way over priced in comparison to 2057 points.

You can buy a resort like SSR that expires in 2054 in the mid to low 70's, so OKW at $100, not such a good deal.

 

[disBOBney]

You can buy a resort like SSR that expires in 2054 in the mid to low 70's, so OKW at $100, not such a good deal.

I agree that ssr is a better value if a person wants ssr. The OP is asking IF okw is still extendable?

Is always incorrect to just divide the today price per point by the years remaining (because you aren't considering the time value of the money), but doing it for points that you can´t start using for 27 years is even worse.

The future value of money people or opportunity cost people and I are simply not going to agree on this issue. As neither side can state the future facts, we each will make our best guess, and I believe that price increases will match or beat investment returns, therefore I don't have to take the future into consideration. RE buying points that you won't be using until the future, that is the whole point of buying DVC or any timeshare. Regardless which resort(s) you own, the most points that are available to you to use is whatever you have available in the current year and what you have available to borrow from next year. All the other points a person has are useless to them until some future date.

 

[chalee94]

...therefore I don't have to take the future into consideration. RE buying points that you won't be using until the future, that is the whole point of buying DVC or any timeshare. Regardless which resort(s) you own, the most points that are available to you to use is whatever you have available in the current year and what you have available to borrow from next year. All the other points a person has are useless to them until some future date.

so if i really wanted OKW pts, i could just get 1/3 larger contract right now (100 pts instead of 75-ish) and apply that $25 per pt extension fee to a smaller number of pts i could actually use right now and over the next 30 years.

that still sounds like a better deal if OKW is what i want than what might be super cheap pts that can't be used till 2042. (not to mention that there is some risk that 1/3 or more of OKW might be shuttered at that point, significantly altering the feel of the resort and per point cost of maintaining the resort.)

buying SSR resale will work for booking OKW at 7 months out unless you are talking about grand villas, so i agree that is a better plan.

i was there for the first round and still believe that the OKW extension is a sucker's bet. but since you don't believe in the time value of money, can i borrow $10,000 from you if i promise to return the same $10,000 back in 2042?

 

[jerseyduke]

Is always incorrect to just divide the today price per point by the years remaining (because you aren't considering the time value of the money), but doing it for points that you can´t start using for 27 years is even worse.

I would not say its always wrong. It is only wrong if you do not take that money and spend it on something else.

If I buy a DVC and forgo getting a new Harley, the money had no future value either way, If I forgo investing it, then it does.

 

[PacoDF]

I would not say its always wrong. It is only wrong if you do not take that money and spend it on something else.

If I buy a DVC and forgo getting a new Harley, the money had no future value either way, If I forgo investing it, then it does.

The time value of money is a fact. It's always better to have $100 today, than the same $100 in 30 years. Nobody can denied that. Everyone can make their own assumptions, use different rates, or expected returns, but nobody can say it's the same to have $100 today than $100 in 30 years. And that was my point: use whatever rate/inflation/return you want, but you have to adjust the money for those 27 years you will not have it.

 

[jerseyduke]

The time value of money is a fact. It's always better to have $100 today, than the same $100 in 30 years. Nobody can denied that. Everyone can make their own assumptions, use different rates, or expected returns, but nobody can say it's the same to have $100 today than $100 in 30 years. And that was my point: use whatever rate/inflation/return you want, but you have to adjust the money for those 27 years you will not have it.

I know it is a fact, my point was not to assume a person would not spend it on something else. For me it is my discretionary income and it has no future value for me, because I am going to spend it, it is just a question on what. The money I have earmarked for savings/investment, etc certainly has future value.
Think it is really just a matter of semantics, my response was meant to be half humorous.

 

[PacoDF]

I know it is a fact, my point was not to assume a person would not spend it on something else. For me it is my discretionary income and it has no future value for me, because I am going to spend it, it is just a question on what. The money I have earmarked for savings/investment, etc certainly has future value.
Think it is really just a matter of semantics, my response was meant to be half humorous.

 

[Dean]

I agree that ssr is a better value if a person wants ssr. The OP is asking IF okw is still extendable?


The future value of money people or opportunity cost people and I are simply not going to agree on this issue. As neither side can state the future facts, we each will make our best guess, and I believe that price increases will match or beat investment returns, therefore I don't have to take the future into consideration. RE buying points that you won't be using until the future, that is the whole point of buying DVC or any timeshare. Regardless which resort(s) you own, the most points that are available to you to use is whatever you have available in the current year and what you have available to borrow from next year. All the other points a person has are useless to them until some future date.

It's OK not to agree, can I borrow some money and give you the same amount back in 30 yrs? The fact is that the last few years have less value today than the earlier yrs do and they have more risk, esp at OKW which will have to work out a downsize plan AND/OR a rental plan that compete's with other CRO DVC rentals. It is not reasonable to just take the number of years and divide by the cost, not at OKW, SSR, VGF or any other resort. IMO the value at the time of the offer was a max of about $8 per point and the current difference is about that or less. Now as the time grows closer and/or more is known about the transition to the smaller component, the situation may change in either direction. The other issue is that I'm thinking that those who bought resale and extend may convert any resale points to qualified. Not worth a lot in terms of $$$ an may actually be a negative thing if one spent $$$ specifically for that option, but may be helpful for a given person.

 

[disBOBney]

It's OK not to agree, can I borrow some money and give you the same amount back in 30 yrs?

I made no statement, that should be construed that I think a dollar today is the same as a dollar in 26 years. Furthermore, we are not talking about investments, we are talking about purchases. My point was that prices will increase at the same rate or higher than what an invest of $25 will achieve. Today you can buy 15 years of points at 1.66 per year and nothing else can compete with that. In 26 years, I believe prices will increase at least as much or more than what ever your investment today would have generated.

The other issue is that I'm thinking that those who bought resale and extend may convert any resale points to qualified. Not worth a lot in terms of $$$ an may actually be a negative thing if one spent $$$ specifically for that option, but may be helpful for a given person.

I'm sorry I don't understand what you are trying to say. Please help.
If you are talking about the lack of significant price difference on OKW 42 vs OKW 57 on the resale market today, I believe that in 10 years when the extended contracts have 30 years left on them instead of 15 years on the non-extended there will be a well differentiated price in favor of the extended contracts.

On another note:

OKW which will have to work out a downsize plan AND/OR a rental plan that compete's with other CRO DVC rentals. ... Now as the time grows closer and/or more is known about the transition to the smaller component, the situation may change in either direction.

I've seen references to this before, that OKW is going to restructure somehow. Where does this come from? Why is it presumed, or has it been stated as fact somewhere along the way? Sorry for my ignorance in this regard.

 

[Dean]

I made no statement, that should be construed that I think a dollar today is the same as a dollar in 26 years. Furthermore, we are not talking about investments, we are talking about purchases. My point was that prices will increase at the same rate or higher than what an invest of $25 will achieve. Today you can buy 15 years of points at 1.66 per year and nothing else can compete with that. In 26 years, I believe prices will increase at least as much or more than what ever your investment today would have generated.

I don't believe at all that prices will increase, I believe they will decrease over time and at a rate that lags behind any reasonable investment. A dollar in 30 yrs (27) will be worth less than it is today, whether an investment in OKW points at $25 now for 27 yrs from now will be worth it is unknown but VERY unlikely IMO.

I'm sorry I don't understand what you are trying to say. Please help.
If you are talking about the lack of significant price difference on OKW 42 vs OKW 57 on the resale market today, I believe that in 10 years when the extended contracts have 30 years left on them instead of 15 years on the non-extended there will be a well differentiated price in favor of the extended contracts.

My point you quoted was that those who have unqualified points and who do extend may be able to convert those to qualified. I've seen one person say this was so in their case.

I've seen references to this before, that OKW is going to restructure somehow. Where does this come from? Why is it presumed, or has it been stated as fact somewhere along the way? Sorry for my ignorance in this regard.

Roughly 1/3 of the points at OKW have been extended, Disney owns the rest. We simply don't know what will happen but one option is the resort will be downsized, another is they will try to use them for rentals, they could use them for college housing like they did the THV before or they could try to resell them which I feel is a very unlikely option. I'm sure there are many other possibilities. It simply represents unknown and risk for the 2057 owners.

 

[disBOBney]

My point you quoted was that those who have unqualified points and who do extend may be able to convert those to qualified. I've seen one person say this was so in their case.

I might be dense What do you mean qualified/unqualified points?

Roughly 1/3 of the points at OKW have been extended, Disney owns the rest. We simply don't know what will happen but one option is the resort will be downsized, another is they will try to use them for rentals, they could use them for college housing like they did the THV before or they could try to resell them which I feel is a very unlikely option. I'm sure there are many other possibilities. It simply represents unknown and risk for the 2057 owners.

Disney is not sitting on any large stash of OKW points other than what is required of them. When they do have them in stock the are sold as 2057 points (currently $135 pp). While it may be possible that there will still be a large even very large non-extended points pool in 2042, because there will always be those who would much prefer shorter contracts there will still be a market for at least some of them. But even if OKW is downsized I don't see any increased risk. They are still contractually compelled to provide rooms for every owner of record. And for those who use points in the 7 mo window a point is still a point. I know risk is a big concern of yours, but in this regard the risk seems trivial from my viewpoint. (btw, I am a OKW 57 owner)

 

[Dean]

I might be dense What do you mean qualified/unqualified points?

Unqualified would be restricted resale points.

Disney is not sitting on any large stash of OKW points other than what is required of them. When they do have them in stock the are sold as 2057 points (currently $135 pp). While it may be possible that there will still be a large even very large non-extended points pool in 2042, because there will always be those who would much prefer shorter contracts there will still be a market for at least some of them. But even if OKW is downsized I don't see any increased risk. They are still contractually compelled to provide rooms for every owner of record. And for those who use points in the 7 mo window a point is still a point. I know risk is a big concern of yours, but in this regard the risk seems trivial from my viewpoint. (btw, I am a OKW 57 owner)

Disney is sitting on roughly 2/3 of the resort they will get back ownership of in 2042. They can't sell those now other than for the future. And I do believe it's a big risk from a dues standpoint. It WILL be more expensive to run the resort if it's downsized in any way.

 

[disBOBney]

Thanks for clarifying. As you stated dues are always an issue so Disney is not starting to hold back on selling 2042 resorts. They even just raised BCV and BWV (both 2042) to $155. If they ever thought OKW would become a problem they could start taking every 42 contract from resale and convert it, then either sell it direct at $135 (current price) or dump them back out to the resale market as restricted 57 points.

 

[Msmithmd]

Thanks for clarifying. As you stated dues are always an issue so Disney is not starting to hold back on selling 2042 resorts. They even just raised BCV and BWV (both 2042) to $155. If they ever thought OKW would become a problem they could start taking every 42 contract from resale and convert it, then either sell it direct at $135 (current price) or dump them back out to the resale market as restricted 57 points.

Disney does not take back contracts, extend them, and then give them to a reseller, ever. If they want a contract, they take it. If they don't, they don't.

Guides suggesting that DVC participates in the resale market are using "creative phrasing" (they're lying). Sure, DVC resells points every day. They buy them from ROFR or get them from foreclosure and sell them as new. It's good to be the king.