Followup - "Sell me on DVC"

[CanadaDisney05]

I just wanted to create a new followup post to my recent post asking for people to sell me on DVC. I want to thank those who responded for their thoughtful insights. I had a few followup thoughts and questions.

1) Several people seemed to indicate that DVC is not about the numbers. It's not an investment. Think of it as an expense rather than an asset. I was hoping for more elaboration on this. Perhaps I am missing out on a major benefit. From what I understand, buying into DVC doesn't really enhance your experience in anyway. It's the same product as if you were to buy a hotel room from Disney directly for cash each trip. Buying into DVC is basically paying upfront (and some small annual dues) for a series of discounts on future hotel rooms. Am I wrong? If I am not wrong, this would indicate that purchasing DVC is an investment, and the numbers are the whole purpose behind it.

2) In my original post, I used Boardwalk as an example. Several people mentioned that Boardwalk is a bad value and that my numbers may look better with a resort like Saratoga. This proved to be true. What are people's thoughts on the transportation from Saratoga to the parks?

3) After doing a bit more number crunching, I came up with the thought that instead of buying a small contract, maybe the best way to go is to buy a larger contract and rent out the excess points. David's uses the value of $13.50 per point goes to the owner of rental points. Even if I were to lowball this at $12, I figure on a 140 point contract, and visiting every two years for 7 nights, I can roughly rent out any excess points and break even on my annual dues. This would mean that the only out of pocket cost would be the upfront cost.

Has anyone here implemented a strategy like this? How easy is it to rent off your points.

4) If I were to purchase at Saratoga, how likely would it be to be able to piece together split stays at other resorts in July? Keep in mind, if I didn't purchase into DVC, I would likely be staying off property or at the Allstars, so Saratoga as a backup wouldn't be a big deal. However, I think the major appeal of DVC to us would be to try the different deluxe resorts that would normally be well out of our price range.

5) What happens at the end of a resorts contract to the resort itself? I understand, that from the owner of those contracts, the contract simply expires. But what will happen to DVC holders of longer-term contracts after 2042 when a good chunk of resorts contracts are up. Will DVC owners still be able to book at those resorts with points?

 

[KAT4DISNEY]

1)The expense vs asset is that it is pre paying for your hotel room. DVC is a bit of an anomaly on the timeshare world in that it's held its value but its being cautious to assume that may not continue. Ie, it could go to a zero value and not be an asset but be your hotel room expense. The reason to do that is for savings over cash hotel rooms or to upgrade accommodations such as SSR over AoA.

2) Best DS access and SSR is a very central location to all of WDW. It is buses only but has the same standards as all of WDW. Ie, it's no better and no worse compared to any other bus service.

4) July is not the busiest DVC time and you would likely have good opportunity to switch at 7 months.

5) when a resort expires its done and removed from the system. The longer expiration resorts will still be available but the 2042s will not be.

 

[kniquy]

What are people's thoughts on the transportation from Saratoga to the parks?

Transportion is about the same at all resorts, some resorts have a little added benefit of a monorail, boat or walking BUT if you want to visit every park from your resort at some point you will have to take a bus. Some people complain that AK lodge is far -- the only long trip for us it going from AKL to MK - it is about 25 minutes, but on the same hand someone staying at Poly will have a 25 minute ride to AK park. It helps that the apps now tell you when a bus to a particular park will arrive, so if you just missed it you could just hang in the gift shop and then head to the bus stop. So it helps to minimize the unknown wait time.

How easy is it to rent off your points.

It is easy to rent points, people will do it on this forum under the rent/transfer forum and get more per point but might be more of a hassle, where as davids is a reputable company. The only caveat is that there is usually a minimum # of points for renting.

split stays at other resorts in July?

July is a higher point slower DVC time so you could get pretty much any resort -- the only issue might be if you are only looking for studio - you might have less options. But if you are flexible with your dates you should be able to find something. What many people will do is book their home resort at 11 months, then at the 7 month window will see what is open. With this you at least have a room on property. If nothing seems available at 7 months you set up a waitlist because people always move to other resorts or have to cancel so something should open up. The only time this likely won't happen would be between Oct and early Jan

What happens at the end of a resorts contract to the resort itself?

No one knows. It is theorized that the land reverts back to disney. Then at that point they could tear down, referb and resell as new contracts. We avoided 2042 contracts when we were first looking and ended up with AK so by the time that expires ill be in my 80s or I would have sold it before then. It is also assumed that the 2042 contracts will eventually hit a tipping point where their value will start to decrease as it gets older. Right now they have been all increasing but they still have 23 years left. Possibly when it hits under the 20 year mark we might see a down tick in price per point. So if you are looking for a resort that will hold some value then choosing one of the later expirations is a good option.

 

[CanadaDisney05]

No one knows. It is theorized that the land reverts back to disney. Then at that point they could tear down, referb and resell as new contracts. We avoided 2042 contracts when we were first looking and ended up with AK so by the time that expires ill be in my 80s or I would have sold it before then. It is also assumed that the 2042 contracts will eventually hit a tipping point where their value will start to decrease as it gets older. Right now they have been all increasing but they still have 23 years left. Possibly when it hits under the 20 year mark we might see a down tick in price per point. So if you are looking for a resort that will hold some value then choosing one of the later expirations is a good option.

If I were to purchase at Saratoga Springs which I believe expires in 2054, would I be able to book using points at the Boardwalk in 2043? I assume this is the unknown? If not, I would expect the later expiring resorts to decrease in value rapidly and possibly become a liability as we approach these dates. You may not be able to sell in 2043 without incentive's a proposed buyer because of the lack of resort booking options at that point.

 

[_auroraborealis_]

It is theorized that the land reverts back to disney.

NOT A THEORY! It does. All theory is what Disney then does with it all.

If I were to purchase at Saratoga Springs which I believe expires in 2054, would I be able to book using points at the Boardwalk in 2043?

Assume no. If, and it's a big if, Disney were to redeclare and re-sell Boardwalk, it might be under different rules, and with new point charts.

If not, I would expect the later expiring resorts to decrease in value rapidly and possibly become a liability as we approach these dates. You may not be able to sell in 2043 without incentive's a proposed buyer because of the lack of resort booking options at that point.

You need to assume any resort approaching expiration is going to rapidly decline in value recapture via resale. This isn't unique to the longer resorts. It is equally true of 2042 resorts. The best approach is to view buy-in as a sunk cost, especially with various rules changes over time.

 

[chalee94]

If I were to purchase at Saratoga Springs which I believe expires in 2054, would I be able to book using points at the Boardwalk in 2043? I assume this is the unknown?

You would not be able to book at the current Boardwalk resort based on current point charts when it is removed from the system at expiration.

Most likely it will be refurbished within a year or so and the new resort (whether Boardwalk themed or based on Asian Samurai or whatever) will be resold as DVC with new point charts, assuming that the timeshare business continues to be profitable. But there is some risk there, sure.

 

[CraigInPA]

Regarding question #3, whether it is easy to rent out points... Yes, it is currently easy to rent points. At the current rental price, you'll get about 2 years of annual maintenance fees for every year of points you rent.

Beware, however, that this is considered income in the eyes of the IRS, so you should declare it and pay taxes on it. You'll be able to deduct the current maintenance fees from the income, so you may be paying taxes on about half.

Another caveat is that the rental prices paid by the brokers tends to lag behind increases in maintenance fees paid by owners. So, don't count on always getting twice your maintenance fees back on each rental if renting through a broker. Renting them yourself directly is a bit more of a time commitment, but you'd net more than renting through a broker. I've done both, renting direct through the rent/trade board here on disboards, and through David's. David's was a LOT easier, but I got $2.50 less per point, which added up when I was renting 320 points.

 

[KAT4DISNEY]

If I were to purchase at Saratoga Springs which I believe expires in 2054, would I be able to book using points at the Boardwalk in 2043? I assume this is the unknown? If not, I would expect the later expiring resorts to decrease in value rapidly and possibly become a liability as we approach these dates. You may not be able to sell in 2043 without incentive's a proposed buyer because of the lack of resort booking options at that point.

No.

As I said above the resorts that expire in 2042 are removed from the system. They revert back to Disney. The is no theory about that.

Any theories lie on the thought of extensions being offered for those resorts or if Disney might refurb them and offer them for new sales.

I do not expect that to have any sudden impact on the resorts that still exist. You should always have some thought that you will have to stay where you purchase but there will still be more than 1/2 of the resorts remaining. When DVC started there was 1 resort and it grew from there.

 

[skippytx]

1) Several people seemed to indicate that DVC is not about the numbers. It's not an investment. Think of it as an expense rather than an asset. I was hoping for more elaboration on this. Perhaps I am missing out on a major benefit. From what I understand, buying into DVC doesn't really enhance your experience in anyway. It's the same product as if you were to buy a hotel room from Disney directly for cash each trip. Buying into DVC is basically paying upfront (and some small annual dues) for a series of discounts on future hotel rooms. Am I wrong? If I am not wrong, this would indicate that purchasing DVC is an investment, and the numbers are the whole purpose behind it.

I don't think of DVC as an asset. Yes my ownership interest has some value (at this point in time anyway), but it's not something I consider an asset. Between the dues and the other costs associated with a WDW vacation it's expensive to use. Renting the points instead of using them offers a small return but not enough to really think about.

The way I think of DVC, and someone else on the board said this and I agree with them, is it's basically a hedge against the inflation of WDW room costs in the future. It's also a way to stay in "deluxe" accommodations for roughly the price of a moderate hotel room. My buy in price for the points was about $3.40 a point. (cost / total points on contract). My next trip is 150 points so my acquisition price per point is fixed at 3.40, but the dues will obviously keep going up. Together I'm at about 10 dollars a point my cost (1500) for the trip. Renting would have been 17 bucks a point (2550) and rack rate from Disney would have been $7,165 (though few people pay rack rate). So for roughly what it would cost me to stay at Pop or All Stars, I can stay in a studio at BLT instead.

WDW room costs have gone up significantly over the last few years, which is what made DVC attractive to me. We knew we were going to keep visiting WDW for the foreseeable future at least every other year so it made sense for us to buy in. I don't get into the what ifs of investing the money instead of spending it on DVC and all those financial projections. The money we spent on DVC would have been spent in 4 to 5 years on vacations anyway.

Ultimately WDW trips are a luxury and trying to feel good about the investment or numbers doesn't make sense to me. People spend their money on different things. Some people like fancy cars, some folks drink expensive wine, some folks like WDW.

 

[kniquy]

It's not an investment.

I think this is a concept that you have to get out of your mind. Dvc is not an "investment" where you will make money. You are purchasing something that over time will depreciate (just like a car), but compared to other timeshares has managed to hold pretty good value. This point does provide some opportunity that if you needed to sell you could and would recoup some of your initial buy in. Compared to 3 years ago when I bought my AK contract (@ $80 per point) I could sell today for a little profit (@ ~$110 per point), but I never bought in expecting this. I bought to use it for our vacations.

Other timeshares are typically worth pennies on the dollar if someone were to sell. DVC right now is different. I didn't own back in the 2007-08 recession, but have read stories of people scooping up contracts cheap because people were in distress and need to sell. Could this happen again, most certainly, but no one has a crystal ball. This is generally why it is best not to finance this type of purchase because you could put yourself upside down if you needed to sell a few years in.

 

[CanadaDisney05]

I think this is a concept that you have to get out of your mind. Dvc is not an "investment" where you will make money. You are purchasing something that over time will depreciate (just like a car), but compared to other timeshares has managed to hold pretty good value.

Just to clarify, when I mentioned that it is an investment, I don't mean that I expect it to appreciate. The investment in DVC is that you pay an upfront cost in exchange for an exclusive "discount" (cash price less maintenance fees) on your future hotel stays over the duration of the contract. If you were going to go and pay the cash price anyways, the "discount" of DVC is a monetary gain.

 

[ljmiii]

4) If I were to purchase at Saratoga, how likely would it be to be able to piece together split stays at other resorts in July? Keep in mind, if I didn't purchase into DVC, I would likely be staying off property or at the Allstars, so Saratoga as a backup wouldn't be a big deal. However, I think the major appeal of DVC to us would be to try the different deluxe resorts that would normally be well out of our price range.

As crvetter said (and I agree), summer is actually a good time to find availability at different, 'better' resorts at 7 months. Particularly if you are willing to split stay. And since you are happy with SSR you'll always have a good backup.

5) What happens at the end of a resorts contract to the resort itself? I understand, that from the owner of those contracts, the contract simply expires. But what will happen to DVC holders of longer-term contracts after 2042 when a good chunk of resorts contracts are up. Will DVC owners still be able to book at those resorts with points?

What we know for certain is that in the absence of activity on DVD's part, the properties currently leased by DVD will revert to The Walt Disney Company (TWDC). Beyond that everything is conjecture. But I am 99 44/100s percent certain that as a post 01/19/19 buyer you won't be able to book at a 2042 resort after 2042. Even if a lawsuit against DVD/DVCM/BTVC's handling of Riviera's introduction into DVC succeeds by then they will have figured out a legal way to keep resale owners out.

 

[ljmiii]

Just to clarify, when I mentioned that it is an investment, I don't mean that I expect it to appreciate. The investment in DVC is that you pay an upfront cost in exchange for an exclusive "discount" (cash price less maintenance fees) on your future hotel stays over the duration of the contract. If you were going to go and pay the cash price anyways, the "discount" of DVC is a monetary gain.

On one side you have the cost of your initial purchase of DVC which could be invested and appreciate at whatever % you choose. Add to that side the price of a renting a room (either directly from Disney or a service like David's) which will increase at whatever % per year. On the other side you have the cost of MFs which will increase by whatever % you choose. As you can probably guess, the financial benefit of buying DVC depends on what numbers you choose to plug into the equation.

There are non financial considerations as well. If you ever choose to visit during times of peak DVC demand (e.g. early December or Xmas/New Years) owning points is more reliable than depending on renting from another owner. But if you are willing to pay Disney (not DVC) for a cash room somewhere on property then there is more availability. And so it goes...

 

[chicagoshannon]

Be careful with counting on renting out points. If/when the economy takes a downturn less people will be renting points. That plan might work currently but isn't a long term given.

Take a look at the point charts for the resorts. The seasons that cost the least amount of points will be the busiest/hardest to get into other resorts.

 

[anomamatt]

If/when the economy takes a downturn less people will be renting points.

And more people will want to skip their vacation and rent their points (as Disney vacations cost a good amount of $$$ outside of the hotel/DVC room).

I have never thought buying more and renting was a good strategy. Mostly because MFs will continue to rise at rates that far exceed rental price increases.

 

[crvetter]

And more people will want to skip their vacation and rent their points (as Disney vacations cost a good amount of $$$ outside of the hotel/DVC room).

I have never thought buying more and renting was a good strategy. Mostly because MFs will continue to rise at rates that far exceed rental price increases.

I definitely want to say I agree with this. I've only bought to use and ignored the rental aspect because of the high risks associated with it. So if I have to rent and am successful in doing so I'll be happy with whatever I cover in MFs. Now when I bought one contract resale I went after a loaded one knowing that today I can rent easily so I did that to cover some of the purchase cost. I think in that regard it is a good idea to consider renting.

 

[lovin'fl]

I just wanted to create a new followup post to my recent post asking for people to sell me on DVC. I want to thank those who responded for their thoughtful insights. I had a few followup thoughts and questions.

1) Several people seemed to indicate that DVC is not about the numbers. It's not an investment. Think of it as an expense rather than an asset. I was hoping for more elaboration on this. Perhaps I am missing out on a major benefit. From what I understand, buying into DVC doesn't really enhance your experience in anyway. It's the same product as if you were to buy a hotel room from Disney directly for cash each trip. Buying into DVC is basically paying upfront (and some small annual dues) for a series of discounts on future hotel rooms. Am I wrong? If I am not wrong, this would indicate that purchasing DVC is an investment, and the numbers are the whole purpose behind it.

2) In my original post, I used Boardwalk as an example. Several people mentioned that Boardwalk is a bad value and that my numbers may look better with a resort like Saratoga. This proved to be true. What are people's thoughts on the transportation from Saratoga to the parks?

3) After doing a bit more number crunching, I came up with the thought that instead of buying a small contract, maybe the best way to go is to buy a larger contract and rent out the excess points. David's uses the value of $13.50 per point goes to the owner of rental points. Even if I were to lowball this at $12, I figure on a 140 point contract, and visiting every two years for 7 nights, I can roughly rent out any excess points and break even on my annual dues. This would mean that the only out of pocket cost would be the upfront cost.

Has anyone here implemented a strategy like this? How easy is it to rent off your points.

4) If I were to purchase at Saratoga, how likely would it be to be able to piece together split stays at other resorts in July? Keep in mind, if I didn't purchase into DVC, I would likely be staying off property or at the Allstars, so Saratoga as a backup wouldn't be a big deal. However, I think the major appeal of DVC to us would be to try the different deluxe resorts that would normally be well out of our price range.

5) What happens at the end of a resorts contract to the resort itself? I understand, that from the owner of those contracts, the contract simply expires. But what will happen to DVC holders of longer-term contracts after 2042 when a good chunk of resorts contracts are up. Will DVC owners still be able to book at those resorts with points?

1) we bought for the 1BR villa with door to master bedroom for separate sleeping spaces from our kids and other bonus is W/D in unit. So for us DVC is a different way to do Disney. We are family of 5 and would not have gone very many times if we had to cram into regular hotel room with 3 kids. We would have gone maybe 2-3 times total and instead, with DVC, we have gone 20+ times. Our kids are now all in their 20s and we still go.

2) SSR busing sucks. I will not lie. But for a good deal, OKW has low buy in and great busing (if you stay in HH section). However, SSR is nice for visiting DS which is big for us at this stage in our lives (with 20-something kids...plenty of bars, shopping and food).

3) Renting points...I basically figure if you rent 1/2 of points it covers almost (if not) all of the annual dues. Even for the half of the points you use. BUT you have to file something to claim on taxes. Might be an added pain to doing your taxes each year.

4) We have used our OKW to stay at EVERY east coast DVC resort except VGF. It isn't always easy. You have to be flexible or do split stays and waitlist or stalk the availability tracker. AND studios are tough tough tough (tougher every year) to book. If you want only studios...don't count on getting much at 7 months. Then it would be best to buy where you want to stay.

5) Nobody knows. Many guess they will gut those resorts to make a new DVC and sell points as new 50 year contracts. I will be 69 in 2042 so I don't put too much in expiration. Our parents, who go to WDW with us often, slowed down around that same age. My mom doesn't care to ever go again and I had to drag her, kicking and screaming, last time in May 2017 (she was 69 that year). My in laws are going with us twice this year but haven't been in about 2.5 years and have hinted they may be done going. They are 74. If we still want to go though, our kids can buy new points and treat us...one would hope. LOL. (or we can buy new ourselves...we did add small CCV contract and would likely add to that if we wanted to keep the magic going)

 

[ELMC]

I definitely want to say I agree with this. I've only bought to use and ignored the rental aspect because of the high risks associated with it. So if I have to rent and am successful in doing so I'll be happy with whatever I cover in MFs. Now when I bought one contract resale I went after a loaded one knowing that today I can rent easily so I did that to cover some of the purchase cost. I think in that regard it is a good idea to consider renting.

I'm curious why you think the risks associated with the rental aspects are high.

I will say that they are a lot higher now than they once were, but mostly because the cost of points is so much higher that it extends out the payback timeline. Like you said, I think that having rental as an outlet for times where you have points you might not use (whether from a new contract or a skipped vacation) is probably the middle ground of rental engagement. The far ends of the spectrum are complete avoidance and doing it for a living, so to speak.

I have never thought buying more and renting was a good strategy. Mostly because MFs will continue to rise at rates that far exceed rental price increases.

I respectfully disagree. When I bought BWV in 2012 I was getting about $10-11 per point in rental income vs. $5.61 per point in dues. Fast forward to today and I can easily get $15-17 per point in rental income vs. $7.17 in dues. Other resorts mirror this pattern as well. In that time span point rental prices have actually increased at a rate greater than maintenance fees.

To be bit predictive, if the number of unfilled reservations out there on the point rental websites is any indication, we are poised for an increase in rental prices pretty soon.

 

[DougEMG]

In my view owning DVC is all about the numbers. The only point to owing DVC is to save money on the cost of the room over the long term. The exact same room can be booked with cash from Disney or rented from an owner. Each of those other options has advantages and disadvantages over owning.

Boardwalk is only a bad value because of the high purchase price and shorter contract length as compared to owning at some other resorts like SSR. But if you want to stay at BWV in a standard room between Sept-Jan, you had better own at BWV. I own both BWV and SSR. My BWV points I use only to stay at BWV, whereas my SSR points I use at both SSR and other resorts. I don’t mind the buses from SSR and like that I can walk to DS.

I bought enough points to rent out the extra to pay for MF. Right now it is easy to rent out points, but when a recession hits it will get a lot harder. Rental rates are roughly 50% of the cash rates from Disney. So if Disney starts offering big discounts, watch rental rated fall. Renting privately you can get between $15-$18 per point depending on the resort.

Switching resorts at 7 months all depends on things like room size (studios are harder than 1 bedrooms), time of year (summer is easier than Sep-Dec), length of stay (short trips are easier) and how many rooms are in the resort (SSR is huge, while BCV and VGF are fairly small). In the last few years studios have been getting harder and harder to book.

When the contract expires, it reverts back to Disney and they can do whatever they want. So for example with BWV the expectation is that they will remodel, redo the point chart and sell as a new resort. Will people be able to trade into the new resort, who knows, all depends on what rules Disney sets up. They just set up a new rule restricting what resorts resale owners could book at with the Riviera. If they keep that rule, then new resale owners would not be able to book a new BWV.

 

[Deb & Bill]

The issue with renting is that some day DVC will find a way to stop it. Or at least rein it in, like limit the number of rentals per year to a lot less than 20 per year. Or they will find a way to shut down all the brokers. There have been owners whose reservations made for renters were cancelled and were told to stop renting and made to sell their points. Not many, but a few. I'd only buy as many points as I could use personally.