Finding the unicorn- Subsidized Aulani

[Budzooka]

I'm under contract for a Feb UY subsidized contract for 160 points, I'm so excited!!!

Congrats! Is it with a sponsored business? If not, you can’t talk about it.

 

[limace]

Congrats! Is it with a sponsored business? If not, you can’t talk about it.

You can talk about other brokers-not just the board sponsor-just enter their url and the filters will block if not allowed. However, you can definitely discuss a pending purchase, enter it in the ROFR thread etc, regardless of where you found it!

 

[Sandisw]

Congrats! Is it with a sponsored business? If not, you can’t talk about it.

You can talk about your personal purchases without linking to the business. If someone asked where you bought, then the link is posted.

What you are not allowed to do is ask questions about a business or post content that is found on that businesses website without posting the link.

If the link is filtered, then you are not allowed to post other info as a way to get around that…ie: Google xyz. Or say it’s one of the blocked sites that is run by Xxxx.

Nothing against the rules to say that you have purchased or are purchasing. Our ROFar and closing thread are full of those.

 

[The_MT]

Congrats! Is it with a sponsored business? If not, you can’t talk about it.

It is with www.dvcsales.com

 

[neverBOARDWALKINGdisney]

Someone on the (removed details) has 7 subsidized dues contracts right now

 

[CCV]

DVC Resale Market has some new subsidized dues listings that hit this morning

 

[Jimmy Geppetto]

DVC Resale Market has some new subsidized dues listings that hit this morning

Stripped and overpriced IMO.

 

[ehh]

Stripped and overpriced IMO.

Definitely stripped but are/were they actually overpriced? Looked like they are/were listed for $119-124/pt with no 2022/2023 points but full 2024. Contracts between 150 and 300 points with Feb/Mar UY. Seller is providing a credit for 2023 dues. Based on how quickly they went, it's safe to assume the accepted offers were close to list.

Non-stripped contracts of similar size seem to be listed for about the same as these stripped, subsidized contracts. Looks like another stripped but non-subsidized 160pt contract with a Feb UY (same as some of these) was listed for $111/pt.

Let's say that $111/pt was accepted at $106/pt, $2/pt lower than anything in the current ROFR thread. That makes subsidized dues $18/pt higher upfront and that breaks even in 7 years assuming an unrealistically modest 3% annual increase in dues and a sustained 25% discount for subsidized dues.



In just 10 additional years subsidized has saved 2x the upfront difference. By the end of the contract it's saving the difference every other year and the cumulative savings is 10x the upfront difference. All assuming zero cost of debt and cost of capital. Numbers increase further if we assume >3% annual increase in dues.

Considering the general 'breakeven for DVC' is generally in 5-7 years, these seem reasonably priced? Especially if you want/need to get out, you will likely be able to resell at the premium pricing as well.

EDIT: I don't know how to upload the image better...any tips?

 

[Jimmy Geppetto]

Definitely stripped but are/were they actually overpriced? Looked like they are/were listed for $119-124/pt with no 2022/2023 points but full 2024. Contracts between 150 and 300 points with Feb/Mar UY. Seller is providing a credit for 2023 dues. Based on how quickly they went, it's safe to assume the accepted offers were close to list.

Non-stripped contracts of similar size seem to be listed for about the same as these stripped, subsidized contracts. Looks like another stripped but non-subsidized 160pt contract with a Feb UY (same as some of these) was listed for $111/pt.

Let's say that $111/pt was accepted at $106/pt, $2/pt lower than anything in the current ROFR thread. That makes subsidized dues $18/pt higher upfront and that breaks even in 7 years assuming an unrealistically modest 3% annual increase in dues and a sustained 25% discount for subsidized dues.
View attachment 697659


In just 10 additional years subsidized has saved 2x the upfront difference. By the end of the contract it's saving the difference every other year and the cumulative savings is 10x the upfront difference. All assuming zero cost of debt and cost of capital. Numbers increase further if we assume >3% annual increase in dues.

Considering the general 'breakeven for DVC' is generally in 5-7 years, these seem reasonably priced? Especially if you want/need to get out, you will likely be able to resell at the premium pricing as well.

EDIT: I don't know how to upload the image better...any tips?

A lot of assumptions in your analysis. You also don’t mention how the seller likely inflation proofed their 2023 dues by “giving a credit” based on 2022 MF values.

All I can tell you is that there is data out there which shows fully loaded (and double points) subsidized contracts consistently selling for $125 to $135 per point. When you take the value of those loaded points and their rental potential, the stripped contract at $120 is over priced.

But subsidized contracts are very rare so when they pop up people do typically jump on them and are willing to over pay IMO because of the scarcity of them.

 

[NorCalDisFan]

DVC Resale Market has some new subsidized dues listings that hit this morning

Thanks for the information. It seems like most of them has already gone.
Given that there're still other subsidized listings out there in the market, the board sponsor is the most famous site or your posting may help their promotion.

 

[disneydoc2007]

Not worth it for the price they’re asking, or even $10 less, when non subsidized contracts are going for a great deal less money.

What would a good deal per point look like?

 

[Paul Stupin]

What would a good deal per point look like?

A good deal for non subsidized? A good deal for a 100-150 point contract would be $100-$105 per point...a great deal would be less than $100. I wouldn't buy any contract of 300 points or greater, though they can be offered at such prices. I think they're next to impossible to get rid of...and if you're fortunate enough to ever find a buyer, you'd be lucky to break even.

 

[disneydoc2007]

A good deal for non subsidized? A good deal for a 100-150 point contract would be $100-$105 per point...a great deal would be less than $100. I wouldn't buy any contract of 300 points or greater, though they can be offered at such prices. I think they're next to impossible to get rid of...and if you're fortunate enough to ever find a buyer, you'd be lucky to break even.

I agree! I love to hear more experienced folks than myself! How about a good deal for subsidized?

 

[Paul Stupin]

I agree! I love to hear more experienced folks than myself! How about a good deal for subsidized?

Well, a great deal would be in the same price range, a good deal a bit higher, maybe $115-$120, but I wouldn't want it lacking current or the next year's points.

 

[disneydoc2007]

Well, a great deal would be in the same price range, a good deal a bit higher, maybe $115-$120, but I wouldn't want it lacking current or the next year's points.

Gotcha! Why not stripped if it’s large and you can borrow, or price adjusted to reflect this?

 

[Paul Stupin]

Gotcha! Why not stripped if it’s large and you can borrow, or price adjusted to reflect this?

Well, I wouldn't get a large contract because, even if its cheap, you'll have to sell it cheaply as well, because the number of potential buyers is so limited. Every once in a while someone will boast about a 1000 point Aulani contract they bought for $100 or less, but good luck ever trying to get rid of it. So I think large point contracts have the appearance of a good deal, but its just an illusion. Also, I don't really like stripped contracts because I don't like to borrow, so you're paying money for a product you can't use for 2 years.

 

[disneydoc2007]

Well, I wouldn't get a large contract because, even if its cheap, you'll have to sell it cheaply as well, because the number of potential buyers is so limited. Every once in a while someone will boast about a 1000 point Aulani contract they bought for $100 or less, but good luck ever trying to get rid of it. So I think large point contracts have the appearance of a good deal, but its just an illusion. Also, I don't really like stripped contracts because I don't like to borrow, so you're paying money for a product you can't use for 2 years.

Appreciate all the expertise so much! I'm eyeing a 300-point subsidized contract at a good price, so I want to make sure I've covered all my bases! I think this is not so big that its cumbersome, but future resale is not a current consideration for me.

 

[Paul Stupin]

Appreciate all the expertise so much! I'm eyeing a 300-point subsidized contract at a good price, so I want to make sure I've covered all my bases! I think this is not so big that its cumbersome, but future resale is not a current consideration for me.

Future resale should be a consideration. The average DVC term of ownership is about 7 years, and resale wasn’t initially a consideration for those sellers either. But they‘re still selling. We all know DVC is not an investment, but it is an asset, and you’ll be able to get more for that asset if the contract is in the 100-150 point range.

A three hundred point contract is still a behemoth that will be more difficult to sell. It could sit on the market for months, and you’d still have to deeply discount it, potentially at a price less than what you paid. There’s a reason it’s so cheap now. In the long run, you’d be better off getting two 150 pointers and paying a little more. And if you’re not going to use the contracts at Aulani, you’re totally being penny wise and dollar foolish.

 

[Stingberg]

Appreciate all the expertise so much! I'm eyeing a 300-point subsidized contract at a good price, so I want to make sure I've covered all my bases! I think this is not so big that its cumbersome, but future resale is not a current consideration for me.

Good to gather feedback but also be careful not to confuse certainty with expertise.

 

[jkips]

A discounted large point contract that is bought at a discount can be a much better deal than buying 2 smaller contracts for the same amount of points. Yes, liquidity on the way out might be more difficult, but if you’ve bought at the right price you can afford to give a similar discount and still make out better. You will have put less money in initially and still been able to enjoy all the points.