Hubby finally ready to buy...direct or resale?

[Kingdome8]

I bought 2 direct contracts at RIV in the last year. Just so much easier. And the discounts add up. Have saved a ton on merchandise and dining in just a few trips. Very happy about it. Plus when I walk in the riviera I just feel good. And knowing I have 48 years or so left is huge.

I love the boardwalk area. Just dont like the short amount of time left.

 

[havoc315]

Yes, one can avoid the hassle of renting points if one owns them. Thanks for that acknowledgment.

I have no idea what most people prefer. I do know that there are an awful lot of people who have chosen to "own" their points versus trying to potentially save a few bucks by renting.

Pay $$$$$$ to be locked in to booking with extreme restrictions of having to book 11 months in advance..
Or paying $, to book whenever I want, where ever I want.....
Yes, I will take the extra flexibility and lower price of renting in those situations.

My advice in reference to "buy where you want to stay" is just an opinion,

Actually, the statement I was replying to was "you can't go wrong."
Certainly, some people might like to buy the 2042 resorts. Like I said -- If you have a choice between a cash room for $300, or buying DVC for $400, but you prefer buying DVC because you want the pride of "ownership" -- That's fine.
But saying, "you can't go wrong" is more than just an opinion.

and happily acknowledge that, as is your advice that renting is always better than buying.

But that's not my advice of my opinion. It depends on price, it depends on usage. If you can get a Beach Club contract for $95 per point, it would make great sense to buy it. Purchasing 2060-2070 contracts can make financial sense for many people.


My advice is simply that renting is CHEAPER than buying at current BCV and BWV prices.
And in many cases, it's MUCH cheaper than buying.

The beauty of it all is that we are both entitled to have, and share those opinions.

 

[havoc315]

So I think what I hear most people saying is that the 2042 resorts are not really worth it. Easier to rent. Although I do have to say that I just rented 100 points at BCV next June for $28/pt. Ouch. So $20-$24 is starting to sound not do bad!

That's a pretty high rate. But remember --- You're only renting when you need to, as opposed to locked in every year. And you're renting exactly the number of points you need, not wasting.

Let's say the best re-sale contract you could find was 125 points.. but you really only need 118 points most years.
And imagine that over the next 19 years, you only end up really wanting to go to WDW 16 years... 3 of the years, you choose different things:
So by renting -- $28 per points X 118 points X 16 trips = $52,864
But buying: $24 per point X125 points X 19 pre-paid trips: $57,000

That's what gets missed -- When most people run their calculations, they assume they are going to use EVERY point EVERY year.
And maybe they will -- because they force themselves too. But if you're eating that extra bite of food just because it's there, even though you're already full, it's not really a value.
Fact is, over a period of decades -- You need to assume some wiggle rooms -- that you might not use every point every year, or at least you won't truly want to use every point every year.
Yes, you can rent out your unused points -- Sometimes. But you won't get full value when you rent them out. You won't always find a renter. Especially, if you just have 8 points hanging left over, nobody is going to rent just 8 points.

 

[MamaBear12]

Closing on our direct VGF contract and have a trip booked in a 2-bedroom VGF villa for next October!

-200 points split into two contracts (150 & 50)
-With the new special pricing that came out today and our $1K cruise discount, it brought the price down enough that we felt it worth the extra cost to go direct and have direct benefits.
-Thanks to everyone who shared advice and helped me wade through all the pros and cons of direct vs. resale!

 

[Jimmy Geppetto]

Closing on our direct VGF contract and have a trip booked in a 2-bedroom VGF villa for next October!

-200 points split into two contracts (150 & 50)
-With the new special pricing that came out today and our $1K cruise discount, it brought the price down enough that we felt it worth the extra cost to go direct and have direct benefits.
-Thanks to everyone who shared advice and helped me wade through all the pros and cons of direct vs. resale!

Congrats and welcome home!

 

[Genie+]

With dues, that’s $17-$19 per point, per use year, on some of those contacts. Factor in closing costs and time value of money, it’s more like $20-24 per point, per year.

How does time value of money work out on a longer contract, say GFV?

 

[havoc315]

How does time value of money work out on a longer contract, say GFV?

The lost time value is worse --- But that's corrected by the number of years.

What we are really looking at is lost opportunity cost.. here is a good calculator for it:

https://www.omnicalculator.com/finance/opportunity-cost

Basically, it depends on assumption of inflation, tax rate and investment growth -- But using conservative numbers:
A $30,000 contract for 19 years -- It really is costing you $42,000
So really costing you $2,210 per year + dues
A $30,000 contract over 45 more years -- $76,000 -- But over 45 years, it's just $1688 per year + dues

Ahh, but you can actually say that opportunity cost is a lifetime -- You don't get a refund after 19 years or 45 years..

So assume a lifetime is 50 years from purchase date:
Then opportunity cost of a $30,000 contract is actually about $86,000 ---
Now, if that "investment" only bought you 19 years of use -- Then you're actually paying $4500 per year + dues
If that "investment" is buying you 45 years of use, then you're actually paying $1900 per year + dues.

So to some degree, it's which analysis you provide. But as you can see, the extra years makes a BIG difference either way.

 

[Genie+]

The lost time value is worse --- But that's corrected by the number of years.

What we are really looking at is lost opportunity cost.. here is a good calculator for it:

https://www.omnicalculator.com/finance/opportunity-cost

Basically, it depends on assumption of inflation, tax rate and investment growth -- But using conservative numbers:
A $30,000 contract for 19 years -- It really is costing you $42,000
So really costing you $2,210 per year + dues
A $30,000 contract over 45 more years -- $76,000 -- But over 45 years, it's just $1688 per year + dues

Ahh, but you can actually say that opportunity cost is a lifetime -- You don't get a refund after 19 years or 45 years..

So assume a lifetime is 50 years from purchase date:
Then opportunity cost of a $30,000 contract is actually about $86,000 ---
Now, if that "investment" only bought you 19 years of use -- Then you're actually paying $4500 per year + dues
If that "investment" is buying you 45 years of use, then you're actually paying $1900 per year + dues.

So to some degree, it's which analysis you provide. But as you can see, the extra years makes a BIG difference either way.

Thank you! That’s a great, and concise, explanation.

 

[aka Charles]

The lost time value is worse --- But that's corrected by the number of years.

What we are really looking at is lost opportunity cost.. here is a good calculator for it:

https://www.omnicalculator.com/finance/opportunity-cost

Now I know a reason why your numbers always seem to be way off to me, incorrect comparisons.

The calculator you linked to above is used "to calculate how much money you will earn by investing the money instead of spending it on goods or services," in their own words.

By definition then, this cost of ownership, say for 19 years, can only be compared to the value of that same money invested for 19 years instead of taking any vacations over the same 19 years.

Any money spent on any vacations during those 19 years would have to be fully removed from the beginning of the cost calculations in order for the comparison to remain valid.

I think many of us would prefer to be "locked into" a Disney vacation every year for the next 19 years, rather then to be "locked out of" any vacation for the next 19 years.
But your mileage may vary.
Some people may prefer to take a vacation in a different place each year, and that's ok.
Some people may prefer to invest all of their money and never take a vacation, and that's ok, too.

In any case, however, it is entirely incorrect to use this type of calculation on the cost of ownership and compare it to the cost of paying cash or renting points for any vacation.
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[aka Charles]

Closing on our direct VGF contract and have a trip booked in a 2-bedroom VGF villa for next October!

-200 points split into two contracts (150 & 50)
-With the new special pricing that came out today and our $1K cruise discount, it brought the price down enough that we felt it worth the extra cost to go direct and have direct benefits.
-Thanks to everyone who shared advice and helped me wade through all the pros and cons of direct vs. resale!

Congratulations!

I am so glad you were able to get the extra savings of the new promotional pricing and the cruise discount.

Welcome Home!

 

[havoc315]

Now I know a reason why your numbers always seem to be way off to me, incorrect comparisons.

The calculator you linked to above is used "to calculate how much money you will earn by investing the money instead of spending it on goods or services," in their own words.

By definition then, this cost of ownership, say for 19 years, can only be compared to the value of that same money invested for 19 years instead of taking any vacations over the same 19 years.

No. Not exactly. Time value of money uses investment assumptions in order to come to an objective calculation. But at its core, it’s showing what is “lost” by a huge up-front payment.
So… look at it this way..
It’s either:
Don’t use it for any vacations and have $72,000 in the bank after 19 years OR
Take $72,000 worth of vacations spread over 19 years.

Even if you didn’t lock it in investment for 19 years, you’d still get more value spending it gradually every year. So spending 30,000 at once is like spending $72,000 over the 19 years.

So by locking it all into an upfront payment, you’ve lost $42,000 more than if you had just paid per year.

Any money spent on any vacations during those 19 years would have to be fully removed from the beginning of the cost calculations in order for the comparison to remain valid.

I think many of us would prefer to be "locked into" a Disney vacation every year for the next 19 years, rather then to be "locked out of" any vacation for the next 19 years.
But your mileage may vary.
Some people may prefer to take a vacation in a different place each year, and that's ok.
Some people may prefer to invest all of their money and never take a vacation, and that's ok, too.

In any case, however, it is entirely incorrect to use this type of calculation on the cost of ownership and compare it to the cost of paying cash or renting points for any vacation.
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[aka Charles]

No. Not exactly. Time value of money uses investment assumptions in order to come to an objective calculation. But at its core, it’s showing what is “lost” by a huge up-front payment.

It requires the same exact “huge up-front payment,” but to go into cash investments instead of vacations.

So… look at it this way..
It’s either:
Don’t use it for any vacations and have $42,000 in the bank after 19 years OR
Take $42,000 worth of vacations spread over 19 years.

Yes.

But the actual value of the 19 years of vacations would require a significantly different calculation that would have to include adjustments for inflation and historical price increases in the tourist industry. It may turn out to be worth more in the end.

Even if you didn’t lock it in investment for 19 years, you’d still get more value spending it gradually every year. So spending 30,000 at once is like spending $42,000 over the 19 years.

Again, that comparison would require a significantly different calculation.

So by locking it all into an upfront payment, you’ve lost $42,000 more than if you had just paid per year.

It is just as likely that by locking into an upfront payment of that $30,000 you may get 19 years of vacations that end up being worth $42,000 or more.
Either way, the calculations that you referenced cannot determine that value.

Also, the value of vacations is more than just financial to many people. It has intangible benefits for quality of life, mental health, etc.

I value the ability to plan my vacations and my costs years ahead of time. That alone is worth the upfront costs to me. I still have the ability to make adjustments to the exact dates and resort each year, without adding any additional costs.

In the end, the actual value of vacations to any individual will be a combination of many factors, with the upfront cost being only one.
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[havoc315]

It is just as likely that by locking into an upfront payment of that $30,000 you may get 19 years of vacations that end up being worth $42,000 or more.

We are looking at cost, not the value received. Because we were comparing the cost versus cash rooms or versus renting.

So the cost is $42,000 + dues, not $30,000 + dues. Yes, you may get subjective or objective value greater than $42,000+dues --- Just as you might get enhanced value by renting points versus buying.

As shown, for those most expensive 2042 contracts, renting is cheaper than buying.
Maybe you're getting "$50,000" in cash-room value -- Which is costing you $42,000 by buying the points, but would onyl cost $40,000 by renting the points.

Anyway, as demonstrated -- renting points should be cheaper than buying points on those 2042 contracts. The analysis is the cost, not the value received.

Also, the value of vacations is more than just financial to many people. It has intangible benefits for quality of life, mental health, etc.

Absolutely. Again, take the exact same vacations -- But cheaper by not buying DVC.

I value the ability to plan my vacations and my costs years ahead of time. That alone is worth the upfront costs to me. I still have the ability to make adjustments to the exact dates and resort each year, without adding any additional costs.

Ok... I've just decided I'd like to go to Disney this Christmas, 2022, for 4 nights..... Do I have the flexibility to book a DVC room for this Christmas?

In the end, the actual value of vacations to any individual will be a combination of many factors, with the upfront cost being only one.
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Yes, I'm talking cost, not value. Cost needs to consider lost opportunity cost.
By locking in $30,000 up front, you're depriving yourself of the ability to take about $2750 in vacations per year.
Throw in dues of about $1500--

These 2 things are financially identical:
Spending $30,000 up front + $1500 per year in dues
Spending $4250 on accommodations per year

So for $4250 -- You could rent between 185 and 265 points per year, depending on point rental price.
Or, for $30,000 down payment, you could buy about 174 Beach Club points (at $167 per point + $1,000 in closing costs).

Exact same price -- Would you rather have 174 points, or between 185 and 265 points per year?

 

[aka Charles]

We are looking at cost, not the value received. Because we were comparing the cost versus cash rooms or versus renting.

OK, let's compare purchase cost vs. renting points vs. cash rates.

Let's use your 174 point Beach Club contract example.

You are correct that you can purchase a 170-175 point Beach Club resale contract for $30,000 total cost at current asking prices on dvcresalemarket.com.
So purchase cost is $30,000 + 19 years of dues, but we will use $42,000 + 19 years of dues to use your lost opportunity cost.
Beach Club dues for 2023 will be $8.16/point. Total for 174 points = $1419.84.
Let's take $42000 and divide by the 19 years, and get an annual cost of the initial cost with your lost opportunity cost = $2210.53 per year.
$2210.53 + $1419.84 = $3630.37
Note: The dues will increase in price over the years, but only to cover any increase costs of running the resort (inflation).

For renting points, a previous commenter said he paid $28/point to rent Beach Club points.
I went to the DVC Rental Store website and that is exactly what they are charging for Beach Club rental points.
174 points x $28 = $4872
Note: The rental costs will also increase in price over the years, but they will increase for inflation and profit margin.

For cash rates, I went to the Disney website to price rooms at the Beach Club and then looked at the Beach Club points chart for the same nights.
A deluxe studio averages about $600/night (with no discounts) on nights that DVC charges 15 points/night.
$600 / 15 = $40/point.
$40 x 174 points = $6960
Note: The cash rates will also increase in price over the years, but they will increase for inflation and profit margin.

Results: (cost per year at 2023 prices)
Purchase Cost = $3630
Renting Points = $4872
Cash Rate = $6960

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I ran these calculations using real world numbers as accurate as I could find and verify.
I did this to satisfy my own curiosity as to the actual cost differences.
I used havoc315's example and lost opportunity cost.
The results are a product of the best information I could verify, and while not exactly what I was expecting, they are very interesting.

I have listed my findings here for those who may be interested, and I will leave it at that.

I hope everyone has a magical day!
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[havoc315]

OK, let's compare purchase cost vs. renting points vs. cash rates.

Let's use your 174 point Beach Club contract example.

You are correct that you can purchase a 170-175 point Beach Club resale contract for $30,000 total cost at current asking prices on dvcresalemarket.com.
So purchase cost is $30,000 + 19 years of dues, but we will use $42,000 + 19 years of dues to use your lost opportunity cost.
Beach Club dues for 2023 will be $8.16/point. Total for 174 points = $1419.84.
Let's take $42000 and divide by the 19 years, and get an annual cost of the initial cost with your lost opportunity cost = $2210.53 per year.
$2210.53 + $1419.84 = $3630.37
Note: The dues will increase in price over the years, but only to cover any increase costs of running the resort (inflation).

For renting points, a previous commenter said he paid $28/point to rent Beach Club points.
I went to the DVC Rental Store website and that is exactly what they are charging for Beach Club rental points.
174 points x $28 = $4872
Note: The rental costs will also increase in price over the years, but they will increase for inflation and profit margin.

For cash rates, I went to the Disney website to price rooms at the Beach Club and then looked at the Beach Club points chart for the same nights.
A deluxe studio averages about $600/night (with no discounts) on nights that DVC charges 15 points/night.
$600 / 15 = $40/point.
$40 x 174 points = $6960
Note: The cash rates will also increase in price over the years, but they will increase for inflation and profit margin.

Results: (cost per year at 2023 prices)
Purchase Cost = $3630
Renting Points = $4872
Cash Rate = $6960

------------------------------------------------------------------------------------------------------------------------------------------------

I ran these calculations using real world numbers as accurate as I could find and verify.
I did this to satisfy my own curiosity as to the actual cost differences.
I used havoc315's example and lost opportunity cost.
The results are a product of the best information I could verify, and while not exactly what I was expecting, they are very interesting.

I have listed my findings here for those who may be interested, and I will leave it at that.

I hope everyone has a magical day!
.
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your math is off… by thousands of dollars.

It’s not $42,000 instead of $30,000– it’s $42,000 extra. ($72,000 instead of $30,000)

Basically — $30,000 down payment plus dues is the equivalent of $4250 per year.

Rental rates may go up, but so will dues.

So buying 174 points: costs $4250 per year in total.
So… what can we do with $4250:
Stay about 10 nights in the Swan
Take a week long cruise
I can stay rack rate at the Beach Club, depending on season, for 5-7 nights.
I can rent between 152 and 265 points depending on the price.

So yes… buying 174 BCV resale points is more expensive than 5-7 nights at rack rate ..
(Now, 174 points goes further than 5-7 nights in a studio… but there are also discounts off rack rates. )

So even if you could find points cheaper than $28… and you used every point every year — never wasted a single point, never skipped a year, never ever found points cheaper one year… then rental would cost $4800. Buying: $4250. So under this extreme scenario, buying DVC saved you 11%.

Of course, waste a couple points… skip a year.. if rent on the forum here for $20 per point instead of $28… and suddenly, buying DVC was a lot more than renting points.

 

[aka Charles]

your math is off… by thousands of dollars.

It’s not $42,000 instead of $30,000– it’s $42,000 extra. ($72,000 instead of $30,000)

Basically — $30,000 down payment plus dues is the equivalent of $4250 per year.

If the math is off, it is only because I used your numbers on this part.
The problem appears to be that you have not explained your numbers clearly.
It is likely, then, that I misunderstood something in your explanation.
So lets use your equivalent of $4250 per year.

Now the results will be (in 2023 prices):
Purchase Cost = $4250
Renting Points = $4872
Cash Rate = $6960

Rental rates may go up, but so will dues.

Yes.
I said that, exactly.

So buying 174 points: costs $4250 per year in total.
So… what can we do with $4250:
Stay about 10 nights in the Swan
Take a week long cruise
I can stay rack rate at the Beach Club, depending on season, for 5-7 nights.
I can rent between 152 and 265 points depending on the price.

You can also ask... what can we do with $4872? or $6960?

Now, you mentioned a cruise...
While a comparison with a cruise would be a very different topic, there are some great arguments that would indicate that a one-week cruise on Disney Cruise Lines, while not inexpensive, could be a better overall value than a one-week stay at Walt Disney World.
A worthy option to take into consideration.
Possibly rent out your points one year and use that money for a cruise? Just a thought.

So yes… buying 174 BCV resale points is more expensive than 5-7 nights at rack rate ..
(Now, 174 points goes further than 5-7 nights in a studio… but there are also discounts off rack rates. )

There are enough points in a 174 point BCV contract for 10-12 nights in a deluxe studio.
That can be used for one long stay, or two 5-7 night stays, or however you wish.
If all you want is one 5-7 night stay per year, then you would buy a smaller contract (about 90 points for BCV), greatly lowering your upfront and annual costs, and not be wasting points or money.

Any cost comparisons need to be between equal stays, that are at the same resort, in order to be accurate and valid.

While discounts on rental points and cash rates do happen, they are short term offerings and are very limited, have many qualifiers, and most certainly cannot be planned for in advance.
They are great for a spur of the moment, unplanned, extra side trip.
I highly recommend doing that if you have the spare time and money for quick getaways.
They can be quite enjoyable!

So even if you could find points cheaper than $28… and you used every point every year — never wasted a single point, never skipped a year, never ever found points cheaper one year… then rental would cost $4800. Buying: $4250. So under this extreme scenario, buying DVC saved you 11%.

Of course, waste a couple points… skip a year.. if rent on the forum here for $20 per point instead of $28… and suddenly, buying DVC was a lot more than renting points.

Buy a contract with the correct number of points for your needs, then points will not be wasted.
If you want to skip a year, you can rent your points out through a reliable company.
That will pay you enough to cover the costs of the annual dues for that year and then some.

Yes, there are offers in these and other forums to rent points directly from individuals, and you can save a fare amount of money that way.
But we all have heard the horror stories of people getting scammed this way, losing their money and their vacation.
Just be aware that going this route may be the riskiest option of all.

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Buying a DVC contract is a commitment to vacationing at Disney DVC resorts many times over many years to come.
If that fits your wants and needs, then buying the correct contract(s) can help fulfill those needs in a planned and predictable way.

Properly done, it may save you money over the years.
But getting the wrong contract for your needs and/or mismanaging your points can lead to wasting both time and money.

DVC works the best for those who like to plan ahead.
I do not recommend DVC for those who prefer spur of the moment trips instead.

If you are not comfortable with a long term commitment, that's fine, renting points will probably be your best option, and cash stays will be your easiest option.

So please, Do what is best for you!

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[havoc315]

If the math is off, it is only because I used your numbers on this part.
The problem appears to be that you have not explained your numbers clearly.
It is likely, then, that I misunderstood something in your explanation.
So lets use your equivalent of $4250 per year.

Now the results will be (in 2023 prices):
Purchase Cost = $4250
Renting Points = $4872
Cash Rate = $6960

Correct -- But that assumes you never ever, over 19 years, want to do anything except pay the highest possible rental price for BCV. It assumes you never accidentally waste a few of your purchased points. It assumes you never ever skip a year. It assumes you never ever decide to rent $17 points instead of $28 points.
Under absolute extreme circumstances, you save that 11% or so. It is worth giving up all flexibility for a maximum of 11% savings? That's a subjective question. It might be worthwhile for some people.
With the understanding that if they accidentally miss a year, or waste a few points.. the savings may quickly become 5%, or 0%, or -5%...
But yes, if you are absolutely positive you will use every single point for the next 19 years.. you're positive you will only book BCV, you are positive you are only going to book it at times of year where you have to pay maximum rental rates...
Then yes, if you are sure of all those things, then you can decide whether saving 11% is worth the commitment.

I will note also.. you said you won't waste points if you buy a contract with the right number of points. Not so easy when buying re-sale -- How many resale contracts have exactly 86 points? or exactly 116 points? etc.

 

[PrincessKL]

Closing on our direct VGF contract and have a trip booked in a 2-bedroom VGF villa for next October!

-200 points split into two contracts (150 & 50)
-With the new special pricing that came out today and our $1K cruise discount, it brought the price down enough that we felt it worth the extra cost to go direct and have direct benefits.
-Thanks to everyone who shared advice and helped me wade through all the pros and cons of direct vs. resale!

Congratulations! What is a cruise discount? Do you have to be on a cruise when you buy or do you have a cruise booked? I am thinking about buying as well. And I have a Disney cruise coming up. Thank you!

 

[MamaBear12]

Congratulations! What is a cruise discount? Do you have to be on a cruise when you buy or do you have a cruise booked? I am thinking about buying as well. And I have a Disney cruise coming up. Thank you!

We took a Disney cruise mid -October and received an additional $1K off our 200 point purchase. We had to be under contract within 30 days of the end of the cruise I believe.