Financing in an unusual situation

[CastAStone]

Hi all,

I know the standard advice is don't buy if you have to finance, but I have a bit of an unusual situation and I'm curious as to thoughts:

• My wife is graduating Veterinary school in 4 weeks and has a job lined up. As a result, we will be seeing a substantial income increase soon
• While we don't have the cash to buy now (we do for a down payment), our new budget with her employed indicates that we will be able to comfortably pay off a DVC loan in 9-12 months.
• Resale prices are falling for the first time in years, so I'd like to buy on the dip.

Our specific plan at this point is to buy about 200 points resale at OKW, a resort we'd be thrilled to stay at. We are interested in 1 week stays in 1BRs during the late May/early June period where Ohio is out of school but the NE isn't, or in the fall. In the fall we may attempt to trade to a 1BR at BWV some years but as I said we'd be genuinely thrilled to stay at OKW.

Thanks!

 

[Noodlez]

Do you want to be talked into it or talked out of it?
If you could pay off the loan in 9 months then you should be able to save up the money in even less time? You've got over a year until you're next planning to go so there's no hurry right now. I would wait to see how the current situation affects the prices. Some are predicting they may drop, in which case you could afford it even sooner.

 

[CastAStone]

Do you want to be talked into it or talked out of it?

Honest advice!! Mostly I'm trying to make sure I'm not about to do something stupid. Thank you!

 

[GinnyBear's_mom]

Since you asked for thoughts...

Trading into BWV in the fall in any room category is nearly impossible at the 7 month mark so don't ever expect it.

Financing a luxury purchase is never advised. If you will have the money in 9-12 months buy it then when you can pay cash, nothing is guaranteed. Our vet's office has fewer staff working since they are only taking emergency cases and only allow 1 scheduled patient in the office at a time. No future employment is guaranteed, especially right now.

Resale prices will most likely continue to fall a little and it will be a buyer's market for awhile so I don't see the rush to buy now. Plus, who knows when the parks and resorts will open? You may be purchasing points (if there are any left on the contract from 2019) that you can't even use at Disney. You are planning to purchase at OKW so it isn't like you can't easily book a last minute vacation there when you do finally purchase your points, no need to buy the points very far in advance to make sure you get in at the 11 month mark.

When you do purchase, maybe consider 150 at OKW and 50 at BWV so you can still vacation in the fall in a 1BR at BWV every 3 years.

 

[CastAStone]

Since you asked for thoughts...

Trading into BWV in the fall in any room category is nearly impossible at the 7 month mark so don't ever expect it.

Financing a luxury purchase is never advised. If you will have the money in 9-12 months buy it then when you can pay cash, nothing is guaranteed. Our vet's office has fewer staff working since they are only taking emergency cases and only allow 1 scheduled patient in the office at a time. No future employment is guaranteed, especially right now.

Resale prices will most likely continue to fall a little and it will be a buyer's market for awhile so I don't see the rush to buy now. Plus, who knows when the parks and resorts will open? You may be purchasing points (if there are any left on the contract from 2019) that you can't even use at Disney. You are planning to purchase at OKW so it isn't like you can't easily book a last minute vacation there when you do finally purchase your points, no need to buy the points very far in advance to make sure you get in at the 11 month mark.

When you do purchase, maybe consider 150 at OKW and 50 at BWV so you can still vacation in the fall in a 1BR at BWV every 3 years.

Thank you. Skier Pete's chart indicated decent 7 month availability for 1BR Garden Rooms in Sept/Oct, but you are not the first person I have seen indicate that may not be the case. I have wondered if buying BWV and trading to OKW as desired makes more sense; the present value of the 22 year cost of ownership for the two winds up pretty similar with the difference in MFs.

 

[GinnyBear's_mom]

Thank you. Skier Pete's chart indicated decent 7 month availability for 1BR Garden Rooms in Sept/Oct, but you are not the first person I have seen indicate that may not be the case. I have wondered if buying BWV and trading to OKW as desired makes more sense; the present value of the 22 year cost of ownership for the two winds up pretty similar with the difference in MFs.

Were you looking at fall availability? Standard view was generally "Spotty" or "None" which means you would have trouble booking an entire week long stay- there may be 2 days here or 3 days there so you would have to plan on a split stay. Boardwalk/Pool view has better availability but again with a lot of "Spotty" areas.

Paying a higher BWV price per point to routinely trade into OKW rooms doesn't make a lot of financial sense but you may find that just like many DVC owners you want to explore more resorts than just OKW.

 

[CastAStone]

Were you looking at fall availability? Standard view was generally "Spotty" or "None" which means you would have trouble booking an entire week long stay- there may be 2 days here or 3 days there so you would have to plan on a split stay. Boardwalk/Pool view has better availability but again with a lot of "Spotty" areas.

Paying a higher BWV price per point to routinely trade into OKW rooms doesn't make a lot of financial sense but you may find that just like many DVC owners you want to explore more resorts than just OKW.

Thank you again. At the end of the day if we only ever get to stay at OKW that's fine, that place is totally my vibe.

 

[ABE4DISNEY]

My 2 cents:

We own at BWV and SSR, and if you are flexible in Sept/Oct. you will occasionally get something at BWV--my guess would be 1 out of 3 years, maybe 1 to 2?

If you already love OKW, I would just go for MORE points at an affordable price. We also love OKW and have found over the years that we actually prefer it over BWV.

Factors:
1. We didn't really like the last renovation at BWV--it seemed cheap to us and poor workmanship. On the other hand, OKW's latest renovation albeit a bit boring has nicer materials and seems fresher.
2. We haven't had the best mousekeeping at BWV.
3. Space! As our kids have grown, we now need that extra chair bed.
4. We love the laid back ambiance of OKW now and are tired of the louder bar crowds at BWV.

Again, just our two cents.

I also favor waiting a few months before purchasing. I think the fall/winter will be the time to buy. We are also considering adding on and guess where? OKW!

 

[ABE4DISNEY]

Also, I am assuming you are younger, so if you do purchase OKW, look for an extended contract with a later expiration date so you can maximize your Disney time!

 

[TraderSamWDW]

I think Skier Pete's hard work is about to get skewed by the current situation, and availability is going to change - at least over the next 2 years or so.
I get why people say not to finance, but it is an individual decision based on individual circumstances. It is about money management.

I financed both purchases I made (albeit not for 10 years or anything like that - 3 or less - and at single digit interest rates) because the interest I paid was less than the tax hit I would have taken, as well as the additional ROI on the asset I would have liquidated. You can also throw in the fact that in both cases, had I not financed, saved the money for those 3 years, and then bought, I would have paid more for the contracts when I was able to afford them then I did pay including interest. Now that last point is certainly not something you should bank on. PARTICULARLY right now.

I know many people who would just take that money that did not go to the finance/mortgage payment, and if they did have it, go spend it on a bunch of **** they didn't need, so they just "wasted" it another way.

Finance wisely. Do not over extend yourself.

Right now I think the bigger question is is now the time to buy period. You may be able to get 200 points at OWK in the near future, finance a portion of it, and still end up paying less than you would buying now without financing. OWK is about 90-100 right now in general for that many points. That COULD be in the 60-70 range in the near future. That is the big mystery

 

[GinnyBear's_mom]

One last thought- we purchased DVC in the fall of 2014. About 4 months later I was in a bad car accident (rear ended by someone going 40mph while I was stopped). I was unable to work for about 6 months afterwards. Crazy things happen that you just can't predict.

As another poster mentioned this will probably cause lower prives into fall/winter, especially when people who have been out of work and dipped into their savings get that maintenance fee bill in the winter.

 

[CarolMN]

IMO, now is a very risky time to take on debt for non-essentials.

My advice is to wait & save. FWIW, I don't think we've reached the bottom of the "dip", so that's another factor in favor of waiting.

 

[Matty B13]

Also, your wife's job could evaporate in 4 weeks, since it is easier to not hire someone than to layoff/furlough someone. Right now I would wait and see how low OKW resale prices drop and save up the money.

 

[sethschroeder]

Resale prices are falling for the first time in years, so I'd like to buy on the dip.

Any real dip is likely going to months from now not days from now. So I would wait regardless of situation at the current time unless you have a very very specific small contract in mind (which for a first time buyer is not a thing because you likely do not need a specific UY).

Also, your wife's job could evaporate in 4 weeks, since it is easier to not hire someone than to layoff/furlough someone. Right now I would wait and see how low OKW resale prices drop and save up the money.

I will just say being a Vet is not too bad as they are essential workers and there is a shortage of Vets in many places. Now people could stop taking their pets to the Vet which could cause an impact but if you are not locked to one location (which is likely the case having just graduated) then there likely are jobs.

An interesting fact is that getting in to Vet school is actually more difficult than getting in to medical school as there is only 30 schools in the whole of the US. (Wife had thought and applied to Vet school, decided not to pursue it after working in Vet clinics for 3 years)

 

[Matty B13]

Most of the better prices happen in the fall, most years, and DVC usually doesn't ROFR as many contracts.

 

[CastAStone]

Any real dip is likely going to months from now not days from now. So I would wait regardless of situation at the current time unless you have a very very specific small contract in mind (which for a first time buyer is not a thing because you likely do not need a specific UY).



I will just say being a Vet is not too bad as they are essential workers and there is a shortage of Vets in many places. Now people could stop taking their pets to the Vet which could cause an impact but if you are not locked to one location (which is likely the case having just graduated) then there likely are jobs.

An interesting fact is that getting in to Vet school is actually more difficult than getting in to medical school as there is only 30 schools in the whole of the US. (Wife had thought and applied to Vet school, decided not to pursue it after working in Vet clinics for 3 years)

Thank you. My wife has been in constant contact with her clinic and I have zero concern about them not following through with the hire. They actually offered her a sign on bonus in the last 10 days to make sure she wouldn’t walk away and take another offer. For a variety of clinic-specific reasons, their visits are up significantly in the last 3 weeks and will likely continue to be.

I guess the thing I’m really trying to gauge is if contracts start popping in the 70s in the next few weeks/months (and there’s a contract I see out there right now that would be perfect at $85 today so we may be headed there), should I jump knowing I may have to finance some of it. I really appreciate the answers so far.

 

[CastAStone]

Most of the better prices happen in the fall, most years, and DVC usually doesn't ROFR as many contracts.

By late fall we would be in a position where we’d only be financing ~30% of it. So good to know. Thanks.

 

[ABE4DISNEY]

Jumping on to what TraderSam said, patience is key to purchasing.

Right now you are happy with OKW in the $70’s, but what if in 5-6 months it is in the $60 range? It doesn’t look like the parks are opening any time soon so what’s to lose for waiting a bit more time to see where these prices drop?

FYI—we purchased in the 2009 crisis and our prices were $72 for BWV and SSR for $60 per point. But in hindsight I saw a good number of OKW’s go through in the 50’s with more points; I wish we had bought one of those contracts.

 

[Matty B13]

You could always throw a low ball offer at a contract, you never know what an owner might take. But I would still wait awhile to see how things start to drop.

 

[TraderSamWDW]

You could always throw a low ball offer at a contract, you never know what an owner might take. But I would still wait awhile to see how things start to drop.

Agreed.
1. Prices may drop - A LOT - even if people do not need the money, some people may not be travelling to WDW for a few years. (Wells Fargo Analyst predicted 2 + years before attendance back to what it was) and that might add to the supply of resale contracts, and lower demand. While that is a lot of speculation, and I certainly could be wrong, but I do not see prices going UP, so I do not see the harm in weighting.
2. There is certainly a chance that the parks may not even open this year, so unless you want OKW just to stay at the resort (nothing wrong with that) its kind of something you cant use right away anyway.