Help Aulani Subsidized owners

[Sandisw]

Just a gentle reminder…we do not allow people to post details of contracts for sale, even with a broker,

Since the board forbids For Sale posts, there is no way for us to know if the person sharing details is the actual owner selling it.

Thank you.

 

[emchen]

Just a gentle reminder…we do not allow people to post details of contracts for sale, even with a broker,

Since the board forbids For Sale posts, there is no way for us to know if the person sharing details is the actual owner selling it.

Thank you.

@Sandisw would it be possible to move @AstroBlasters and @DanCali 's convo to the https://www.disboards.com/threads/finding-the-unicorn-subsidized-aulani.3874970/ thread? It is not "my" thread...but it is one of my favorite threads and think people who go there will also appreciate this discussion. It is slightly off-topic here.

 

[Sandisw]

@Sandisw would it be possible to move @AstroBlasters and @DanCali 's convo to the https://www.disboards.com/threads/finding-the-unicorn-subsidized-aulani.3874970/ thread? It is not "my" thread...but it is one of my favorite threads and think people who go there will also appreciate this discussion. It is slightly off-topic here.

I think we can leave as I decided there was enough other info in addition to the conteact for sale.

But, even in the Unicorn thread, sharing detials of contracts for sale won’t be allowed!

 

[AstroBlasters]

For us Aulani are SAPs, although we're planning to go there next summer as part of a graduation trip for our daughter.

I agree it's tempting, but don't need more points, let alone a third use year. I feel like we have a good mix now with two use years and ~50% of our points at Aulani and ~50% at WDW at 3 resorts. If I add anything, it may be a couple of 50-75 point contracts at WDW at some of the resorts that are harder to get at 7 months. Our WDW trips are short and we can go for weekends on short notice (2 hour drive) so this mix works well for us. It may not work as well for others.

I think part of the difference in our viewpoints is that I value the points I plan to use in the next 15 years more highly than the points I could use in years 16 - 25 and significantly more highly than years 26-38.

I hope I will keep coming back after that, but some of that depends on the health of me and my wife and if our kids end up having kids.

That is why I am looking at the number of years to breakeven between the two.

Is it fair to say that your analysis puts equal value weighting on each of the remaining 38 years?

 

[DanCali]

I think part of the difference in our viewpoints is that I value the points I plan to use in the next 15 years more highly than the points I could use in years 16 - 25 and significantly more highly than years 26-38.

I hope I will keep coming back after that, but some of that depends on the health of me and my wife and if our kids end up having kids.

That is why I am looking at the number of years to breakeven between the two.

Is it fair to say that your analysis puts equal value weighting on each of the remaining 38 years?

In my analysis, the value you place on future dues savings is accounted for by the opportunity cost (used to discount the cash flows). I actually place less weight on each future year because I started with the dues growing at 3% and an opportunity cost of 5%. If the opportunity cost is bigger than the dues growth, the present value of each dues cash flow will be lower than the previous one. For 100 points, the first would be $227, the second 222, the third $218 with the last one in 2061 having a present value of just $109 (that all summed up to $62.88 per point). You can always increase the opportunity cost to increase that effect, of use 5% in the first 10 years and a higher number later on. Here is what that looks like for the first ~7 years for 5% and 8% opportunity cost and 3% dues growth:



If people are valuing these things rationally, it really doesn't matter how long you hold the contract. In the future, the unsubsidized contract will have whatever market price it has, and the value of the subsidy per point can be computed similarly at that point in time, which should determine the approximate premium over the unsubsidized contract. The values of the subsidized and unsubsidized will converge over time (smaller NPV from dues savings) because there are fewer years and dues savings remaining. But whether you hold it till 2062 or sell it in 10 years with a residual value, you should get a similar conclusion.

 

[Chili327]

For us Aulani are SAPs, although we're planning to go there next summer as part of a graduation trip for our daughter.

I agree it's tempting, but don't need more points, let alone a third use year. I feel like we have a good mix now with two use years and ~50% of our points at Aulani and ~50% at WDW at 3 resorts. If I add anything, it may be a couple of 50-75 point contracts at WDW at some of the resorts that are harder to get at 7 months. Our WDW trips are short and we can go for weekends on short notice (2 hour drive) so this mix works well for us. It may not work as well for others.

Thats where subsidized makes the most sense to me… cheap points, & cheaper dues sounds like perfect SAP, with an amazing last resort.

 

[AstroBlasters]

In my analysis, the value you place on future dues savings is accounted for by the opportunity cost (used to discount the cash flows). I actually place less weight on each future year because I started with the dues growing at 3% and an opportunity cost of 5%. If the opportunity cost is bigger than the dues growth, the present value of each dues cash flow will be lower than the previous one. For 100 points, the first would be $227, the second 222, the third $218 with the last one in 2061 having a present value of just $109 (that all summed up to $62.88 per point). You can always increase the opportunity cost to increase that effect, of use 5% in the first 10 years and a higher number later on. Here is what that looks like for the first ~7 years for 5% and 8% opportunity cost and 3% dues growth:

View attachment 786480

If people are valuing these things rationally, it really doesn't matter how long you hold the contract. In the future, the unsubsidized contract will have whatever market price it has, and the value of the subsidy per point can be computed similarly at that point in time, which should determine the approximate premium over the unsubsidized contract. The values of the subsidized and unsubsidized will converge over time (smaller NPV from dues savings) because there are fewer years and dues savings remaining. But whether you hold it till 2062 or sell it in 10 years with a residual value, you should get a similar conclusion.

I just don’t see how you calculations add up if you run an actual year by year cash flow analysis, which I have done and posted in a different thread. No need to discs further as I think we’ve exhausted the subject and made our thought process clear for others to consider.

 

[jkips]

I’m with you @DanCali and agree with you that subsidized contracts are worth well more than where they currently trade in the market and well north of $30/pt.

Another way to think about it is if you are going to own Aulani points in one form or another (subsidized or not) you are effectively earning (via savings) the subsidized amount each year you own the contract. It’s a cash flow paying ~$2.27/year per point growing at ~3 to 6% a year for the next 39 years. You can discount that cash flow stream back to whatever discount rate you want. To @DanCali’s point, at a 5% discount rate it’s north of $60 present value assuming 3% dues inflation per year. At a 4% annual dues increase at the 5% discount rate the present value increases to north of $70.

At the current ~$30 premium for subsidized vs non-subsidized points it’s north of an 11% Internal Rate of Return assuming 4% annual increases. If you are going to own Aulani in some form, paying up for the subsidized contracts is a high IRR investment with minimal risk and extremely tax efficient. I say tax efficient because you’re not having to pay taxes on any of your savings like you would on a regular dividend paying cash flow and it’s after tax money you are saving.

Of course, that doesn’t mean every subsidized contract out there is a steal and people still need to shop around and wait for the right contract to become available.

As a side note I’m currently in contract to sell my last Aulani non-subsidized contract while also in contract to buy yet another subsidized one. The one I’m selling is stripped and the one I’m buying is 2x current use year points with the 2022 points having been banked. The market also gets the value of stripped vs fully loaded contracts wrong but that’s a post for another time.

 

[HeightRequirement]

I'm not sure why Hawaii can't buy a better scanner. Those recorded docs are very hard to read. If you see a purchase date of 6/5/11, then you are good. The purchase date is what matters (not the recorded date). Additionally, if estoppel is showing the dues calculation at a lower rate then you for sure have a subsidized dues contract.

They definitely want you to pay to view the docs.

 

[VGCgroupie]

They definitely want you to pay to view the docs.

Yep, I thought the same, wow that scanner is so bad. Then realized I had to pay. I have a love/hate with it, love that someone has to pay to see my info, but sucks when I have to pay to view someone else's

 

[emchen]

I’m with you @DanCali and agree with you that subsidized contracts are worth well more than where they currently trade in the market and well north of $30/pt.

Another way to think about it is if you are going to own Aulani points in one form or another (subsidized or not) you are effectively earning (via savings) the subsidized amount each year you own the contract. It’s a cash flow paying ~$2.27/year per point growing at ~3 to 6% a year for the next 39 years. You can discount that cash flow stream back to whatever discount rate you want. To @DanCali’s point, at a 5% discount rate it’s north of $60 present value assuming 3% dues inflation per year. At a 4% annual dues increase at the 5% discount rate the present value increases to north of $70.

At the current ~$30 premium for subsidized vs non-subsidized points it’s north of an 11% Internal Rate of Return assuming 4% annual increases. If you are going to own Aulani in some form, paying up for the subsidized contracts is a high IRR investment with minimal risk and extremely tax efficient. I say tax efficient because you’re not having to pay taxes on any of your savings like you would on a regular dividend paying cash flow and it’s after tax money you are saving.

Of course, that doesn’t mean every subsidized contract out there is a steal and people still need to shop around and wait for the right contract to become available.

As a side note I’m currently in contract to sell my last Aulani non-subsidized contract while also in contract to buy yet another subsidized one. The one I’m selling is stripped and the one I’m buying is 2x current use year points with the 2022 points having been banked. The market also gets the value of stripped vs fully loaded contracts wrong but that’s a post for another time.

Re-reading your post, and I was curious about your last paragraph. Looked you up on dvcrofr.com and saw your 2020 purchase (wish you did the same for referenced 2023 contract)…

You have clearly won the AUL(S) Game! All hail!!

(wow on that PVB contract too! Well done!!)

 

[lilsonicfan]

I went to try to find my own deed on the Hawaii Bureau of Conveyances website and the deed of the original purchaser. Boy, it's blurry, but in Exhibit A to the deed it says "The Use Year for the Unit begins on the first day of March 2011 and every year thereafter." Apparently for all UYs before June 2011, dues are subsidized. I only mention this because I could not find the "purchase date" for the life of me.

 

[DanCali]

I went to try to find my own deed on the Hawaii Bureau of Conveyances website and the deed of the original purchaser. Boy, it's blurry, but in Exhibit A to the deed it says "The Use Year for the Unit begins on the first day of March 2011 and every year thereafter." Apparently for all UYs before June 2011, dues are subsidized. I only mention this because I could not find the "purchase date" for the life of me.

In the original DVC deeds, the purchase date should be in the very first sentence on page 1:

THIS DEED is dated as of [Date].


Here is an example:



The date may have the format "MMDDYY" (e.g. 121510 or 012511) or, for deeds post-Spring 2011 it's more like "[Month] [Day], [Year]" (e.g., June 1, 2011)

For those considering a subsidized contract, I recommend spending the $10-$15 to get the full resolution original deed from 2010/2011 for your records, as well as any subsequent deeds if the seller you're buying from is not the original owner. You're already spending a 5-figure amount, so another $10-$20 is pretty immaterial for extra peace of mind.

 

[lilsonicfan]

In the original DVC deeds, the purchase date should be in the very first sentence on page 1:

THIS DEED is dated [Date].


Here is an example:

View attachment 907659

The date may have the format "MMDDYY" or, for deeds post-Spring 2011 it's more like "[Month] [Day], [Year]" (e.g., June 1, 2011)

For those considering a subsidized contract, I recommend spending the $10-$15 to get the full resolution original deed from 2010/2011 for your records, as well as any subsequent deeds if the seller you're buying from is not the original owner. You're already spending a 5-figure amount, so another $10-$20 is pretty immaterial for extra peace of mind.

Ah, thanks. On mine, the deed date is Dec 2011. But, still subsidized dues.

 

[VGCgroupie]

I’ve paid to get a few of them. I will take a look and see if I see where a purchase date is on it

 

[VGCgroupie]

Ah, thanks. On mine, the deed date is Dec 2011. But, still subsidized dues.

The ones I have have a deed date and the a recording date. Recording date is after deed date by 6 weeks

 

[lilsonicfan]

The ones I have have a deed date and the a recording date. Recording date is after deed date by 6 weeks

Yeah, Dec 2011 was the deed date and recording was I think Feb 2012.