How do you consider a stripped contract?

[glamdring269]

How do you typically value (or devalue) a stripped contract?

Example:
Resort A normal resale market price is $175/pt. Assuming 100 points, this means 100/100 2018, 100/100 2019, etc.

Resort A stripped: 0/100 2018, 0/100 2019, 100/100 2020.

How much do you value the stripped version of resort A if normal market price fully loaded is $175?

Scenario Consideration:

My assumption here is that dues are $5/point and simply renting the points would net at least $15/point.

Rent = $3k
M.F. = $1k
Net Variance = $2k

If 175/pt fully loaded contract = $17500 do you then offer $15500 to offset the obvious loss?

Just curious to see how others view this. Thanks!

 

[Ben E N]

That's about how I see it as well. Now good luck trying to convince the seller of a contract the same thing!
Ballpark, I put points in each use year as being worth $8-10 each.

 

[ray3127]

I agree, that's how I see it too... I was unsuccessful in pursuing such contracts at what I thought were "fair" prices, and with a little patience ended up with a couple contracts with some more points in current use years on them at a much better value.

From a strictly financial standpoint, those current/near-term points are far more valuable as points in the future. Even if you don't want them, you can rent them out to reduce your overall cost per point dramatically. Frankly, unless the price was significantly reduced, I wouldn't bother with a stripped contract.

 

[mustinjourney]

I more or less agree, except I wouldn’t be paying for the 2018 MFs since we are in 2019. So I would deduct $25 per point ($15+$10) in your scenario and pay $15000.

 

[mustinjourney]

How much I value the 2018 would depend on UY. If December, I’d give them high value for missing. If Feb,mar,apr—they’re practically worthless anyways.

 

[Dean]

I'd count each points not available but unrestricted (current and future) as around $13-15 a point minus the dues. For points that can be used but are more short notice, I'd discount them. For banked points that might or might not be able to be used once the contract is closed, I'd not give any value to them at all. That could mean a $25 a point swing between fully loaded and completely stripped (most are in between).

 

[glamdring269]

I think we all seem to look at it pretty much the same. In my case I’m looking at a late month UY so being stripped of 18 and 19 is definitely something that should be take into account.