How has the $15 extension done in the resale market?

[tvwalsh]

I extended my 50 point OKW contract and did not extend my original 230 point OKW contract.

Based only on resale values of 2042 vs 2057 OKW contracts, which of my decisions looks like the better one currently?

 

[Deb & Bill]

I sold an unextended OKW for $85 a point and one for $84 a point. Both smaller contracts.

 

[Mickey'sApprentice]

BUMP!

I'm curious.

 

[RobDoc]

The listing prices for the extended resale contracts have been $5 - 10 higher than the 2042 contracts. I've not seen any that were $15 higher.

 

[lapeter]

I think in the future, say 10-15 years from now, the extended contract will be worth a lot more. The closer you get to 2042, the value of the shorter contract will diminish to eventually zero. If the option came up at BWV, and my contract or a future one closes, I would pay for an extended contract just for future resale value.

 

[tjkraz]

I think in the future, say 10-15 years from now, the extended contract will be worth a lot more. The closer you get to 2042, the value of the shorter contract will diminish to eventually zero. If the option came up at BWV, and my contract or a future one closes, I would pay for an extended contract just for future resale value.

While it's certainly true that contracts will approach $0 value as they end, I'm still not convinced that extending is wise from a financial perspective.

If you took that $15 per point and instead invested it with an average return of just 6%, in 10 years you would have over $26 per point. In 15 years you would have over $35 per point. Will a '57 contract be worth $35 more than a '42 contract 15 years from now? I have my doubts.

If your goal is to make money, I think you're better off investing the dollars elsewhere. IMO, you'd be much more likely to find a traditional investment vehicle with an average return of 7-8% than you will getting a similar return from a DVC contract extension.

 

[BWV Dreamin]

While it's certainly true that contracts will approach $0 value as they end, I'm still not convinced that extending is wise from a financial perspective.

If you took that $15 per point and instead invested it with an average return of just 6%, in 10 years you would have over $26 per point. In 15 years you would have over $35 per point. Will a '57 contract be worth $35 more than a '42 contract 15 years from now? I have my doubts.

If your goal is to make money, I think you're better off investing the dollars elsewhere. IMO, you'd be much more likely to find a traditional investment vehicle with an average return of 7-8% than you will getting a similar return from a DVC contract extension.

In todays economic environment, we really shouldn't speculate the rate of investment based on a random rate of return (6%....what fund is that?) We really should look at the ROFR level disney is going to enforce with the extended 15 yr. contracts. Thats the only constant in relation to value. Everything else is speculative. There is not enough data at this point to say whether the $15yr. extension will have been of value at this time. Five years from now will be a better indicator.

 

[tjkraz]

In todays economic environment, we really shouldn't speculate the rate of investment based on a random rate of return (6%....what fund is that?)

Hope:

2008 rates of return are largely irrelevant when discussing a long-term investment. There are many funds that have demonstrated average rates of return well above a 6% average.

We really should look at the ROFR level disney is going to enforce with the extended 15 yr. contracts. Thats the only constant in relation to value. Everything else is speculative. There is not enough data at this point to say whether the $15yr. extension will have been of value at this time. Five years from now will be a better indicator.

ROFR itself is speculative--not only 10 or 15 years from now but even today.

The other posts here seem to demonstrate that people have not been able to benefit from the $15 extension financially today. Sure it's speculative to discuss what will happen in the future, but even ROFR numbers are going to follow a logical path. Disney isn't going to artificially prop-up the value of dwindling contracts when they have little hope of re-selling them at similar prices.

My only goal was to demonstrate how much could be earned from that money if invested elsewhere. And I do think that my estimates are quite conservative. Whether people think they will get a better return by selling an extended contract down the road is for them to judge. Personally I happen to think that there was not much economic value in the extension. If people want to extend for personal reasons (actually young enough to use the extra years, leave it to kids, etc.), that's their prerogative. But clearly the price was much higher than the present value of those extended years.

Let's look at this another way. Assume that I invested $15 per point at a conservative 6% in the beginning of 2008 instead of extending an OKW contract. My contract would then run out in 2042. At 6% interest, my $15 per point would be worth $108 per point in 2042 when that ownership ends. If I still wanted to visit WDW in 2043 and beyond, I'm going to go out on a limb and propose that I would be able to buy a contract that ends in 2057 (OKW extended or AKV with 15 years left) on the resale market in 2042 for somewhere less than $108 per point.

 

[CarolA]

While it's certainly true that contracts will approach $0 value as they end, I'm still not convinced that extending is wise from a financial perspective.

If you took that $15 per point and instead invested it with an average return of just 6%, in 10 years you would have over $26 per point. In 15 years you would have over $35 per point. Will a '57 contract be worth $35 more than a '42 contract 15 years from now? I have my doubts.

If your goal is to make money, I think you're better off investing the dollars elsewhere. IMO, you'd be much more likely to find a traditional investment vehicle with an average return of 7-8% than you will getting a similar return from a DVC contract extension.

From a financial view point.. we would have all been much smarter NOT to buy a timeshare.

The truth is that this is NOT an investment. So if your goal is to USE the timeshare then you might have wanted the extra years. If, like me, you think that old age might be an issue by then you probably were better off to invest that $15 for your care! (I didn't really consider making an extra investment, since I never considered spending any currently invested funds on this offer!)

 

[Mississippian]

From a financial view point.. we would have all been much smarter NOT to buy a timeshare.

The truth is that this is NOT an investment. So if your goal is to USE the timeshare then you might have wanted the extra years. If, like me, you think that old age might be an issue by then you probably were better off to invest that $15 for your care! (I didn't really consider making an extra investment, since I never considered spending any currently invested funds on this offer!)

I view my ownership as an "investment" in the sense that I know I am going to want to spend a certain number of dollars on leisure, and this allows me a greater return on my investment in terms of value received. When Kraft salad dressing is on sale for a dollar or Campbell's Cream of Mushroom Soup is on sale for 50 cents I stock up because I know I will consume these items. I view this as a great "investment" because of the future savings I will have in not needed to buy these items at a high price.

BUT, the return that one will get on a $15 extension is NOT a good return on investment. They are paying an absolutely HUGE price when you calculate the present value of money. The real value of these years is three to five dollars per point, and I'd say closer to three.

 

[BWV Dreamin]

From a financial view point.. we would have all been much smarter NOT to buy a timeshare.

The truth is that this is NOT an investment.

So true. Another way to extrapolate ( I love that word!) some sense of value would be to compare the cost savings from vacations over time versus the originial purchase price and the sum of MF's to date. While resale value will be depreciated, if you factor back in the cost savings, most will probably be in the positive, even after 20 yrs. Since DVC is only 16 yrs. old, it will be interesting to see how this plays out.

 

[CarolA]

Let me point out that I have NO regrets over my DVC purchase. I view it as an "investment" in me. But I expect that sometime in the next 40 years the bottom will drop out. AT some point Disney will QUIT doing ROFR for big dollars. At some point buyers will go, "you want what for 20 years of vactions" At that point, the value takes a dive... I expect that and don't care.

 

[Brian Noble]

From a financial view point.. we would have all been much smarter NOT to buy a timeshare.

As with all things, it really depends.

If you'd come to Disney at least semi-annually, and the choice is rent vs. own, then for many people owning DVC is more prudent than renting from CRO. Folks who would otherwise rent Deluxe class rooms generally save money by owning. Folks who would otherwise rent Moderate class rooms generally get a better quality room for roughly the same cost. Someone who would normally rent a suite at one of the Deluxes generally does better owning points to cover a 2BR stay.

On the other hand, if someone is content staying in Values, or in one of the many quality off-site locations, then DVC is generally not a good financial value.

 

[CarolA]

As with all things, it really depends.

If you'd come to Disney at least semi-annually, and the choice is rent vs. own, then for many people owning DVC is more prudent than renting from CRO. Folks who would otherwise rent Deluxe class rooms generally save money by owning. Folks who would otherwise rent Moderate class rooms generally get a better quality room for roughly the same cost. Someone who would normally rent a suite at one of the Deluxes generally does better owning points to cover a 2BR stay.

On the other hand, if someone is content staying in Values, or in one of the many quality off-site locations, then DVC is generally not a good financial value.

When I bought several years ago the first paragraph MIGHT have applied.

Now I am actually in the bottom group. If I can't get a DVC room I look at what Disney wants for thier accomdations, compare the service and features to offsite and Then I book offsite. My logic now is that owning DVC allows me to stay on Disney without feeling ripped off by paying over industry standards for 2 and 3 star hotels.

For example, for Veteran's Day weekend.

Disney wants in the $150 range for a moderate around $100 for a value.

Marriott Courtyard was willing to rent me a two room suite with a kitchen for $89, WE HAVE A WINNER! (And for comparison, Marriott Grand Vista was renting a studio for the same dates for $129!)

 

[Dean]

I think in the future, say 10-15 years from now, the extended contract will be worth a lot more. The closer you get to 2042, the value of the shorter contract will diminish to eventually zero. If the option came up at BWV, and my contract or a future one closes, I would pay for an extended contract just for future resale value.

While there will always be a price differential I think it's a certainty that it will never make up for the cost difference on a $$$ basis. Even if it's worth $15 in todays dollars in 204, that would be a significant loss if one is looking at dollars. From an enjoyment standpoint it would depend on how it's used and what the fees are at the time.

From a financial view point.. we would have all been much smarter NOT to buy a timeshare.

The truth is that this is NOT an investment. So if your goal is to USE the timeshare then you might have wanted the extra years. If, like me, you think that old age might be an issue by then you probably were better off to invest that $15 for your care! (I didn't really consider making an extra investment, since I never considered spending any currently invested funds on this offer!)

Not necessarily. Certainly if one looks at it like vacation equals cost and no vacation is a savings, maybe, but if one intends to vacation on property at WDW, go light or neutral on weekends and use the points mainly at DVC resorts, there are scenarios where it makes sense to buy DVC and scenarios where it doesn't. Sun to Fri still works great from a numbers standpoint. If one looks at other timeshare though, there are far more potential savings, esp for Orlando.

 

[CarolA]

Not necessarily. Certainly if one looks at it like vacation equals cost and no vacation is a savings, maybe, but if one intends to vacation on property at WDW, go light or neutral on weekends and use the points mainly at DVC resorts, there are scenarios where it makes sense to buy DVC and scenarios where it doesn't. Sun to Fri still works great from a numbers standpoint. If one looks at other timeshare though, there are far more potential savings, esp for Orlando.

I agree.

Although I do none of the things you suggest....

I waste points on the weekends

I get a 1 bedroom when I am by myself and could EASILY live with a studio.



As far as "money management" applied to my points I SUCK! (And I have a lot of fun! )

 

[Dean]

I agree.

Although I do none of the things you suggest....

I waste points on the weekends

I get a 1 bedroom when I am by myself and could EASILY live with a studio.



As far as "money management" applied to my points I SUCK! (And I have a lot of fun! )

That is certainly your choice, whether it's cost effective to splurge in that way depends on other factors. If you did long weekends (or 9 days 2 weekends) mostly, you'd be throwing money away, but that too would be your choice. We too have outgrown the studio, in lifestyle and tolerance if not always in occupancy. Other than studios as add ons to accommodate additional family, we'll have our first stay in a studio in Dec in over 10 years. But for 3 nights and AKV concierge, I think I can handle it. Still the best value is studios and 2 BR for weekdays.