How Important Are Those Twelve Extra Years?

[MrShiny]

In 2054, I'll be 88, my wife 90, my kids 60 and 56. They might be able to use it for ther grand kids. Even if they decide they no longer want it when they are say 50 or so, it'll be easier to sell a contract with 10 years on it rather than one with nothing. Sure there might be ones by then with 50 more years, but that will make ours a very attractive price. Let's say then a new 50 year contract (if they exist) is $1,000/point (that would only be about the same as a 5% annual increase). If we could sell our contract for 1/5th of that, it would still be a profit of about 100%. Even adjusting for inflation and maybe we still end up basically getting those 40 years for "free."

That all hinges on WDW being about as nice a destination as it is now, so of course there is risk.

 

[wiltonken]

Could Disney Vacation Club Nursing Homes be far off?

 

[FLYNZ4]

I am really surprised that the vast majority of you are making this decision on the full term of the contracts... ie: 38 or 50 years. I think the key learning for me is that "most" of you are thinking about DVC as a lifelong purchase.

However, if you considered DVC as a more temporary purchase... such as buying a car.... with a plan to replace it occasionally... then I think the economics have the potential to change dramatically. When I buy a car... I buy one that meets my needs, but I also try to estimate what its residual value would be at the end of its useful (to me) life. So if I wanted to buy a new car to last 7 years... and one had an expectation to depreciate significantly in that time... and another model had a history of appreciating over that same time period.... I would be more inclined to buy the 2nd car, assuming that it met my other needs.

Note that the above example does not mean that I plan to quit driving in 7 years... it only represents how long I would plan to own that particular car.

I have no idea how many years I will still want to visit WDW. I suspect that it will be more than 10... but I know that it will be less than 50. My strong preference for a 50 year contact has "nothing" to do with how long I plan to use DVC... it has "everything" to do with the economics of buying and replacing it during the timeframe that DVC remains apealling to me.

/Jim

 

[Zurg]

You are absolutely right on this Rinkwide. And despite knowing this and being a finance wonk by profession, the extra 12 years still apealed to us! I think on my spreadsheet, the extra 12 yrs came out to less than $2 a point on a present value basis.

LOL I was amazed to see a real time value of money formula here too, even more so that there is a big vote for it. There is some real interesting number crunching here from time to time, most of it isn't real sound finance but it sounds like finance.

Two bucks NVP differance is a lot less than the price differance between New SSR and secondary market old resorts and depending on the points may eat up the AP value too.

The real issue isn't money any way - It is what works for your family, and where fits your needs best, well that and loooooong hallways.

 

[kathleena]

LOL I was amazed to see a real time value of money formula here too, even more so that there is a big vote for it.

Ummm well, if you must know, I voted for it because I just really didn't know what it meant and I didn't want any of the other answers. I just can't let my brain work that hard to figure it out - I do that at work. At home, I vacation.

The real issue isn't money any way - It is what works for your family, and where fits your needs best, well that and loooooong hallways.

Personally, I love those hallways as it means I'm HOME!

 

[DrTomorrow]

I am really surprised that the vast majority of you are making this decision on the full term of the contracts... ie: 38 or 50 years. I think the key learning for me is that "most" of you are thinking about DVC as a lifelong purchase.

[...]
/Jim

Well, I can turn that around and say that I'm surprised that anyone treats a time share as anything but resort lodging. That's why we all say "Buy where you want to stay", not "Buy where you think the net depreciated value in 10 years will be maximized" . IMHO, this is the right time to remind people that "Past results do not guarantee future performance"; I'll defer to Dean if he has any comments, but timeshares do not seem to be a sound vehicle if one is looking for increased value in the future. Plus, it's an awful big leap of faith to rely on Disney; all they have to do is turn off the "ROFR" light and DVC prices will plummet....

IMHO - YMMV.

PS. If I was offered two cars, and one cost a little bit more than the other but would last 25% longer, as long as I liked that car, I'd buy it.

 

[FLYNZ4]

Clearly I am not counting on DVC as an investment... and my post was very deliberate in pointing out which options had the best probablility of holding value... not absolutes. Clearly if DVC stops their ROFR, then prices will plummet... but as I said in several other posts... I think they will offer contract extensions first. This would allow DVC the option of maintaining value for properties with long contracts... and then letting the others drop in value with less impact on new sales.

I am fairly certain as time goes by... the longer contracts will increase in end user perceived value... It will be interesting to repeat this poll 5 or 10 years from now.

/Jim

 

[bongo59]

but the astute investor will know that disney has too much capital at risk to let the price plummet so the ROFR will not collaspe until the last 7 yrs before the first contracts end.............and my bet is they already have estimated a rolling renovation with point reissuing..........do gut the value of original contracts and resale it high............disney always seeks to buy low and sell high...........the people who will benefit the most will be those who use their points for the first 15 yrs and then sell out. people who bought like me in 91 have already saved huge dollars and infact have made a substantial amount of money if they chose to sell right now at the given rates

 

[NMW]

In 38 years DH and I will be 73 and 71. Our children will be in their early to mid 40's. The 12 extra years means nothing to us. We bought BWV resale because that is our favorite resort and the place we want to go most. We may add on to it in a few years. I would never think 50 years long term about something like this. A million things can happen in 50 years. There are wars, natural disasters, terrorist attacks, global warming and probably lots of stuff we haven't even heard of yet! The very MOST far into the future I think about going to Disney is probably about 10 years. Anything after that boggles my mind to even think of it! I guess we don't consider DVC an investment, we just consider it a way to go on family vacations.

 

[DrTomorrow]

but the astute investor will know that disney has too much capital at risk to let the price plummet so the ROFR will not collaspe until the last 7 yrs before the first contracts end [...]

In 10 or 20 years, it is quite possible that Disney may decide to leave the timeshare business - they might also stop managing the DVC resorts. If they do stop selling new contracts, what interest do they have in resale prices?

 

[sjdisneywedding]

this thread is getting amusing,

actaully I guess I change my mind the 12 years arent worth it, apparently there will be no current members living past 2042 anyway and there doesnt seem to be any of their family members willing to take on the burden of having to pay dues to go to a run down Walt Disney World

I think Ill just call my guide and see if he will take those extra 12 years back. Come to think of it they should of probably given us the option of just taking SSR until 2042 so we dont have to pay those crazy dues longer than everyone else has to. I hope they are still in the business by tom morning

 

[sjdisneywedding]

PS. If I was offered two cars, and one cost a little bit more than the other but would last 25% longer, as long as I liked that car, I'd buy it.

thats a very valid arguement you have there, the problem is most of the posts arent coming from that point of view.

They are saying if I have the choice between 2 cars, Ill take the one that wont last as long because I might not be around to use it till its end. They are saying dont give me the car that lasts longer because someone will have to pay to put gas in it and to change the oil and I cant burden someone with that.

the majority are saying flat out that the 12 years dont matter because they will not be here to use those years. They arent saying they'd rather have 12 less years at a resort they love more.

 

[First Wave]

Just can't see the value of 12 extra years when the only place you can stay after 2042 will be SSR. SSR is so big, it will take five years to sell it out. No one is talking about new resorts. What happened to Eagle Pines?

SSR points won't be good at the most popular resorts like BC and BW after 2042. And like so many before me have said, I can sell OKW or BW in ten years and buy something new IF I can see the value at that time.

I bought a 250 point resale from The Timeshare Store in 2003 and will do it again when I have a few extra bucks.

 

[First Wave]

Just can't see the value of 12 extra years when the only place you can stay after 2042 will be SSR. SSR is so big, it will take five years to sell it out. No one is talking about new resorts. What happened to Eagle Pines?

SSR points won't be good at the most popular resorts like BC and BW after 2042. And like so many before me have said, I can sell OKW or BW in ten years and buy something new IF I can see the value at that time.

I bought a 250 point resale from The Timeshare Store in 2003 and will do it again when I have a few extra bucks.

 

[sjdisneywedding]

Just can't see the value of 12 extra years when the only place you can stay after 2042 will be SSR. SSR is so big, it will take five years to sell it out. No one is talking about new resorts. What happened to Eagle Pines?

SSR points won't be good at the most popular resorts like BC and BW after 2042. And like so many before me have said, I can sell OKW or BW in ten years and buy something new IF I can see the value at that time.

I bought a 250 point resale from The Timeshare Store in 2003 and will do it again when I have a few extra bucks.

Welp if ater 2042 SSR is all thats left for dvcs then i guess theres a problem, but its still slightly better than having no dvc at all, and i personally doubt that SSr will be the last dvc resort

 

[bongo59]

In 10 or 20 years, it is quite possible that Disney may decide to leave the timeshare business - they might also stop managing the DVC resorts. If they do stop selling new contracts, what interest do they have in resale prices?

sir even if they ran away from the timeshare business there is little chance they will runaway from these resorts on Disney property surrounding all this valuable real estate..........i am just sorry.........to suggest that is as close to ludicrous as it gets.........i do think your arguement may wash for HH or VB because they are offsite...........but the places on WDW property will never be let go to a secondary owner

 

[First Wave]

I agree. No problem. But most everyone I've spoken with prefers the older resorts...closer to the action.

And the other thing I think about is...how many of us vaca like our parents did? Will we be doing the same things in 25 years. Gee, I hope not.

 

[bongo59]

the land that the DVC resorts are built on will never drop in value one bit..........infact the land will likely be worth more to disney when the DVC contracts all end...............a total teardown and rebuild will still be very very profitable for them...........and i dont see them even doing that.

 

[First Wave]

Shoot! Right now, DVC is the best thing Disney has going. Their hotels are not all that profitable. The DVC members are PREPAYING for their rooms for the next 50 years (at SSR). AND...they pay MFs each year. Why would Marriott be in the timeshare buisiness if pre-selling rooms wasn't profitable? If WDW tanks, everyone that owns DVC will still be going to Orlando until 2042. Or am I missing something?

 

[profdsny]

Could Disney Vacation Club Nursing Homes be far off?

Hey, I like that idea! I'd buy points for that.