I know I should buy where I want to stay, but.....

[bumbershoot]

When comparing 2042 resorts to VB and HHI, I actually don't think it makes that big of a difference at all. With only 20 years remaining, and a roughly $3 per point maintenance fee difference, the ballpark breakeven is roughly $60 per point. Taking a quick look at DVC resale markets average selling price, the difference between VB and other WDW 2042 resorts is about $40-$83 per point.

But if they are buying double the points at a $10 per point resort, the math changes.

 

[CanadaDisney05]

But if they are buying double the points at a $10 per point resort, the math changes.

C) doubling up points also doubles your annual dues (which over time amounts to much more than the purchase price).

VB dues are already 40% higher than AKL. If you buy 2x the points, your dues will be 180% higher.

From the same post.....

 

[Jimmy Geppetto]

You guys are making great points- all of which I considered but now I am 90% sure that I will buy AKV or if the price is right BWV. Not really concerned on the 2042 exp. because I will be almost 80 and may not be able to visit as much as we do now.

thanks!

Disney announced some incredible incentives today for BWV if you buy direct.

 

[sethschroeder]

1. What happens when you go to book at 7 months and all the rooms are taken? Have a plan?
2. Are you okay only ever staying in SSR at WDW moving forward?

I wouldn't buy outside of WDW unless I planned at being at that other resort most of the time. The MFs add up so in the long run you won't save as much, your resale value will devalue more quickly because of expiration, and AKV specifically has a longer contract window offsetting any upfront different.

Remember the main price factor in DVC is the MFs as long term DVC upfront value has done fairly well so really that is a deposit more so than something you paid. I look at it like Upfront = Home Value where as MFs = Taxes. I can never get my taxes back but the hope is that long term I get the home value + appreciation out of what I bought (I don't count on appreciation with DVC).

 

[sethschroeder]

You guys are making great points- all of which I considered but now I am 90% sure that I will buy AKV or if the price is right BWV. Not really concerned on the 2042 exp. because I will be almost 80 and may not be able to visit as much as we do now.

thanks!

Except when you are 80 do you want DVC to just go away? Or would you rather be able to contact a reseller, sell the contract, and get a nice little influx of cash in retirement?

 

[MICKIMINI]

We have a 50 point VBR that was $65 and loaded. It is just an add on to our other contracts with our Oct UY (we also have Sept). For that price and about $100 more per year for MF's, it has turned into a gem for 7 month bookings for us. Our son and DIL are using 100 points for Aulani in March and we used another contract for 50 more points and DVC have "linked" them so they don't have to move rooms. Four nights at Aulani is probably as much as we paid for the contract...

Personally, I wouldn't buy more than a 50 point as it should be easy to flip and get my money back if we decide to cash it in.

After two weeks together (got home yesterday) we will pick up more OKWE if we come across a good buy. Though DVC isn't extending, in chatting with our guide today, we're hoping for a BWV like deal...he didn't say deals weren't coming and will keep us up to date on any OKW or SSR!

 

[Paul Stupin]

Except when you are 80 do you want DVC to just go away? Or would you rather be able to contact a reseller, sell the contract, and get a nice little influx of cash in retirement?

I have never understood the reasoning that being too old by the time 2042 roles around, and not caring about WDW anymore, justifies a willingness to completely lose every dime put into DVC. As you’ve said, if it were a resort with a later expiration date, one could sell it and get a nice chunk of money back.

 

[crisi]

I have never understood the reasoning that being too old by the time 2042 roles around, and not caring about WDW anymore, justifies a willingness to completely lose every dime put into DVC. As you’ve said, if it were a resort with a later expiration date, one could sell it and get a nice chunk of money back.

I believe in anticipating zero salvage value from DVC. I don't know if the buildings will burn down or be hit by a terrorist attack during my ownership. I don't know if Disney will overbuild, stop exercising ROFR and my points will be worthless I don't know if the market will crash, I will lose my job, and I will need to sell DVC at a loss. I bought with the ROI projections for about ten years out - because ten years is as far in the future as I can see for this sort of thing with any amount of clarity.

Its not wise, IMHO to depend on salvage value. If you need salvage value to make DVC work, you can't afford it. Its also not wise, IMHO to spend this sort of money on a luxury purchase, and then wish you were spending your vacations at a different resort - because we have already established you don't NEED to make money selling it - why would you spend your vacations staying where you don't want to stay if you can afford to stay where you do? If you are happy staying anywhere, buy the best possible deal, and if you want to factor salvage into that, go for it. I've come to believe financial calculations are an emotional crutch and not really useful in most cases (I'm an accountant), but you be you.

DVC isn't an investment. The few thousand dollars I'd get out of it is not significant in my retirement planning. If it was, I need to stop going on vacation RIGHT NOW.

 

[bakerworld]

If it wasn't for our Fall vacations, I would say purchase the Home that makes the most economical sense. For us the biggest issue of purchasing the less expensive Home is our ability to use the points at WDW BC in the Fall. We like to vacation in October and be in walking distance or monorail access to Epcot. When we initially joined DVC transferring into the Beach Club, or Boardwalk, was not an issue until 2012 and it's been an issue ever since.

Now our second preference is March and we've found it very easy to stay in March using transferred points even 5 to 7 months out.

 

[Paul Stupin]

I believe in anticipating zero salvage value from DVC. I don't know if the buildings will burn down or be hit by a terrorist attack during my ownership. I don't know if Disney will overbuild, stop exercising ROFR and my points will be worthless I don't know if the market will crash, I will lose my job, and I will need to sell DVC at a loss. I bought with the ROI projections for about ten years out - because ten years is as far in the future as I can see for this sort of thing with any amount of clarity.

Its not wise, IMHO to depend on salvage value. If you need salvage value to make DVC work, you can't afford it. Its also not wise, IMHO to spend this sort of money on a luxury purchase, and then wish you were spending your vacations at a different resort - because we have already established you don't NEED to make money selling it - why would you spend your vacations staying where you don't want to stay if you can afford to stay where you do? If you are happy staying anywhere, buy the best possible deal, and if you want to factor salvage into that, go for it. I've come to believe financial calculations are an emotional crutch and not really useful in most cases (I'm an accountant), but you be you.

DVC isn't an investment. The few thousand dollars I'd get out of it is not significant in my retirement planning. If it was, I need to stop going on vacation RIGHT NOW.

I totally agree with you…DVC is definitely not an investment, “salvage value” is very far from guaranteed, unexpected occurrences might force one to sell at a loss, any manner of unanticipated occurrences could diminish or eliminate value, it’s totally a luxury purchase, and if one isn’t prepared for any of those things DVC is probably not a product one should buy. On all that you’re absolutely right.

That said, before purchasing, I think most people do in fact make financial calculations, not because it’s an “emotional crutch” but because it’s an expensive acquisition. It does in fact seem curious that as an accountant you’d suggest otherwise, but of course everyone has a different strategy. Personally, I’d suggest that everyone “crunch the numbers” if they’re considering a DVC purchase, even if they're based on assumptions with which you might not agree.

And one assumption that I don’t think is unreasonable, though definitely not a certainty, is that contracts for resorts beyond 2042 will have some degree of resale value in 20 years. Who knows how much, but historically (again, no guarantees!) they’ve held their value, whereas it is an absolute certainty that contracts for resorts that expire in 2042 will be worthless. But I also believe that one should buy where they want to stay, even if it’s a 2042 resort (I LOVE BCV and BWV). But before anyone buys DVC, I’d suggest reading these boards and doing a fair amount of research, actually a lot of research, so they know all the different points of view and exactly what they’re buying. To suggest otherwise is not good advice.

Wouldn't you agree on that?

 

[crisi]

I suggest people don't crunch numbers because as an accountant, I know you can make them come out the way you want - especially with two tricks - your TVM assumption and your salvage value assumption. And that isn't helpful. I've watched a LOT of number crunching on this board with some INSANE assumptions over the year - including salvage or resale value - often just done plain old wrong - in order to make a purchase sensible that isn't remotely sensible. I've watched people with real skill with numbers figure out the numbers game - doing an admirable job - and watched it be misinterpreted by people who don't understand time value of money - who frankly seem to be "but I have checks left!" financiers. I believe its a binary thing based on two yes no questions - can you afford to spend $$$$ to buy DVC, knowing tomorrow it might be bombed and after a few years you might get an insurance payout? Yes. Does it fit your needs? Yes? Buy it. If you can't afford to lose the dollars - and I mean lose every penny, don't buy it. If it doesn't fit your needs, don't buy it. Binary. And because there is no "I can just afford it" (if you are there then no, you can't), you don't need the numbers - you know if there are extra $$$$$ sitting in the stock market that you can pull out for DVC and if the dues bill will be "oh, time to pay that."

Maybe they will have resale value, maybe they won't - we are in the middle of the old Chinese curse - we live in interesting times. The one thing I would state is that if your partner has their heart set on BCV and you talk them into Riviera for the extra years, any value there when you sell it may not be worth the years of "gee, I really wish I wouldn't have let you talk me into this." "I'd really like to be at BCV right now" "Wouldn't this be a great time for our kids to be at Storm Along Bay" or the worse "you never listened to me, you always discounted my feelings" - divorce is much more expensive than a BWV contract. So is what some people here have done - bought the cheaper contract because "it won't make that much difference" and then pay the commission and closing cost to sell that one and buy where their heart was in the first place. I have learned over my years that spending more to get what you want if you are going to have to live with it - when the dollars aren't critical - is a much better idea than making a financial decision and spending a decade saying "the other couch was really much more comfortable."

Now, if you don't care where you end up, then you can think about getting the most bang for your buck.

The other thing to realize is that a lot of the current owners who are saying "I will be 80 when my contract expires, I don't care" have owned since before the end dates started getting pushed - back when all the contracts ended in 2042. That's the case for me. I will be 80 and don't care. But I also had no choice in contract end date when I bought. I will have gotten 40 years of value out of DVC (or have sold it for SOMETHING before then). If I do play a numbers game, we've gotten a ton of room value out of our DVC purchase and more than made up the dues and purchase price - even with TMV over rack rate. If I'm honest with the numbers game - we would have never taken guests with DVC and would have taken far fewer trips, staying in moderate studios rather than two bedroom units. We got value - we didn't save any money.

 

[Paul Stupin]

I suggest people don't crunch numbers because as an accountant, I know you can make them come out the way you want - especially with two tricks - your TVM assumption and your salvage value assumption. And that isn't helpful. I've watched a LOT of number crunching on this board with some INSANE assumptions over the year - including salvage or resale value - often just done plain old wrong - in order to make a purchase sensible that isn't remotely sensible. I've watched people with real skill with numbers figure out the numbers game - doing an admirable job - and watched it be misinterpreted by people who don't understand time value of money - who frankly seem to be "but I have checks left!" financiers. I believe its a binary thing based on two yes no questions - can you afford to spend $$$$ to buy DVC, knowing tomorrow it might be bombed and after a few years you might get an insurance payout? Yes. Does it fit your needs? Yes? Buy it. If you can't afford to lose the dollars - and I mean lose every penny, don't buy it. If it doesn't fit your needs, don't buy it. Binary. And because there is no "I can just afford it" (if you are there then no, you can't), you don't need the numbers - you know if there are extra $$$$$ sitting in the stock market that you can pull out for DVC and if the dues bill will be "oh, time to pay that."

Maybe they will have resale value, maybe they won't - we are in the middle of the old Chinese curse - we live in interesting times. The one thing I would state is that if your partner has their heart set on BCV and you talk them into Riviera for the extra years, any value there when you sell it may not be worth the years of "gee, I really wish I wouldn't have let you talk me into this." "I'd really like to be at BCV right now" "Wouldn't this be a great time for our kids to be at Storm Along Bay" or the worse "you never listened to me, you always discounted my feelings" - divorce is much more expensive than a BWV contract. So is what some people here have done - bought the cheaper contract because "it won't make that much difference" and then pay the commission and closing cost to sell that one and buy where their heart was in the first place. I have learned over my years that spending more to get what you want if you are going to have to live with it - when the dollars aren't critical - is a much better idea than making a financial decision and spending a decade saying "the other couch was really much more comfortable."

Now, if you don't care where you end up, then you can think about getting the most bang for your buck.

The other thing to realize is that a lot of the current owners who are saying "I will be 80 when my contract expires, I don't care" have owned since before the end dates started getting pushed - back when all the contracts ended in 2042. That's the case for me. I will be 80 and don't care. But I also had no choice in contract end date when I bought. I will have gotten 40 years of value out of DVC (or have sold it for SOMETHING before then). If I do play a numbers game, we've gotten a ton of room value out of our DVC purchase and more than made up the dues and purchase price - even with TMV over rack rate. If I'm honest with the numbers game - we would have never taken guests with DVC and would have taken far fewer trips, staying in moderate studios rather than two bedroom units. We got value - we didn't save any money.

Not sure I agree with everything you said, but I appreciate the different perspective!

 

[Brian Noble]

I know you can make them come out the way you want - especially with two tricks - your TVM assumption and your salvage value assumption. And that isn't helpful. I've watched a LOT of number crunching on this board with some INSANE assumptions over the year - including salvage or resale value - often just done plain old wrong - in order to make a purchase sensible that isn't remotely sensible. I've watched people with real skill with numbers figure out the numbers game - doing an admirable job - and watched it be misinterpreted by people who don't understand time value of money

I agree with all of this, but I also know that I'm in the (small) minority of DISboarders on at least some of it.

 

[CanadaDisney05]

I suggest people don't crunch numbers because as an accountant, I know you can make them come out the way you want - especially with two tricks - your TVM assumption and your salvage value assumption. And that isn't helpful. I've watched a LOT of number crunching on this board with some INSANE assumptions over the year - including salvage or resale value - often just done plain old wrong - in order to make a purchase sensible that isn't remotely sensible. I've watched people with real skill with numbers figure out the numbers game - doing an admirable job - and watched it be misinterpreted by people who don't understand time value of money - who frankly seem to be "but I have checks left!" financiers. I believe its a binary thing based on two yes no questions - can you afford to spend $$$$ to buy DVC, knowing tomorrow it might be bombed and after a few years you might get an insurance payout? Yes. Does it fit your needs? Yes? Buy it. If you can't afford to lose the dollars - and I mean lose every penny, don't buy it. If it doesn't fit your needs, don't buy it. Binary. And because there is no "I can just afford it" (if you are there then no, you can't), you don't need the numbers - you know if there are extra $$$$$ sitting in the stock market that you can pull out for DVC and if the dues bill will be "oh, time to pay that."

Maybe they will have resale value, maybe they won't - we are in the middle of the old Chinese curse - we live in interesting times. The one thing I would state is that if your partner has their heart set on BCV and you talk them into Riviera for the extra years, any value there when you sell it may not be worth the years of "gee, I really wish I wouldn't have let you talk me into this." "I'd really like to be at BCV right now" "Wouldn't this be a great time for our kids to be at Storm Along Bay" or the worse "you never listened to me, you always discounted my feelings" - divorce is much more expensive than a BWV contract. So is what some people here have done - bought the cheaper contract because "it won't make that much difference" and then pay the commission and closing cost to sell that one and buy where their heart was in the first place. I have learned over my years that spending more to get what you want if you are going to have to live with it - when the dollars aren't critical - is a much better idea than making a financial decision and spending a decade saying "the other couch was really much more comfortable."

Now, if you don't care where you end up, then you can think about getting the most bang for your buck.

The other thing to realize is that a lot of the current owners who are saying "I will be 80 when my contract expires, I don't care" have owned since before the end dates started getting pushed - back when all the contracts ended in 2042. That's the case for me. I will be 80 and don't care. But I also had no choice in contract end date when I bought. I will have gotten 40 years of value out of DVC (or have sold it for SOMETHING before then). If I do play a numbers game, we've gotten a ton of room value out of our DVC purchase and more than made up the dues and purchase price - even with TMV over rack rate. If I'm honest with the numbers game - we would have never taken guests with DVC and would have taken far fewer trips, staying in moderate studios rather than two bedroom units. We got value - we didn't save any money.

I remember being taught in my CPA courses, whenever you are doing a quantitative analysis as part of your case study, do a Best case, Worst case, and Most Likely scenario.

The worst case will make sure that if all hell breaks lose, you won't be financially crippled. The most likely and best case scenarios help with proper decision making.

Let's adapt to DVC purchasing. Let's say you plan on buying Saratoga, own for 10 years, and dump it. If you run your calculations assuming the worst case scenario, your assumption might be that DVC will turn into your typical timeshare where you have to pay someone to take it off your plate. This calculation is important to do because it prevents you from getting in over your head. Nobody should be forced into financial ruin because of DVC.

Having said that, if you only run the worst case scenario, your conclusion will be based on the unlikely scenario that you get no salvage value back. If you get no salvage value, your calculations may indicate that you are better off just booking through Disney for those 10 years. Given that it is highly likely that you will get significant salvage value for your contract, buying and flipping DVC after 10 years probably has much higher likelihood of coming out ahead vs paying rack rate.

As long as the worst case scenario won't cripple you, you should run your calculations off of the most likely scenario. Otherwise your skewing your conclusion into one that has a higher probability of an unfavorable outcome.

 

[Brian Noble]

As long as the worst case scenario won't cripple you, you should run your calculations off of the most likely scenario.

The problem is that folks are awfully ambitious about what they consider "most likely," based mostly on what they want the ultimate answer to be. I think few of us really know how to quantify the risk of future DVC values...especially given the current context where it seems that resale prices can only go up. Those of us who were around during the Great Recession know that that's simply not true, and it can be "not true" in meaningful ways for an extended period of time.

Maybe a different way of getting after this: Assume worst case and if it doesn't make you think twice, then ask yourself if there is something else you'd rather use this particular money for in that time. That captures the "what I want the answer to be" factor without dressing it up in the guise of a quantitative analysis.

 

[crisi]

I agree with all of this, but I also know that I'm in the (small) minority of DISboarders on at least some of it.

You are part of the group whose numbers tend to be solid - and I think you and I agree that playing with the numbers is fun (I became an accountant for a reason after all) - but we both recognize how far those numbers have been misused over the years. I have come down to running DVC numbers publicly is dangerous (I'll still run numbers at home) - its a little like ski jumping - its a lot of fun for the trained jumper - and when someone slaps skis on after watching some YouTube videos - there is a LOT of risk.

And it was the Great Recession that opened my eyes. Far too many of our co-board members not only lost their shirts on DVC, but ended up losing their homes, their savings......I have friends who lost jobs back in 2001 and haven't - 20 years later - managed to claw their way back to the standard of living they had then.

 

[crisi]

I remember being taught in my CPA courses, whenever you are doing a quantitative analysis as part of your case study, do a Best case, Worst case, and Most Likely scenario.

The worst case will make sure that if all hell breaks lose, you won't be financially crippled. The most likely and best case scenarios help with proper decision making.

Let's adapt to DVC purchasing. Let's say you plan on buying Saratoga, own for 10 years, and dump it. If you run your calculations assuming the worst case scenario, your assumption might be that DVC will turn into your typical timeshare where you have to pay someone to take it off your plate. This calculation is important to do because it prevents you from getting in over your head. Nobody should be forced into financial ruin because of DVC.

Having said that, if you only run the worst case scenario, your conclusion will be based on the unlikely scenario that you get no salvage value back. If you get no salvage value, your calculations may indicate that you are better off just booking through Disney for those 10 years. Given that it is highly likely that you will get significant salvage value for your contract, buying and flipping DVC after 10 years probably has much higher likelihood of coming out ahead vs paying rack rate.

As long as the worst case scenario won't cripple you, you should run your calculations off of the most likely scenario. Otherwise your skewing your conclusion into one that has a higher probability of an unfavorable outcome.

I think a problem is that most people don't understand how crippling a $20k loss would be for them. This sort of thing seldoms happens in a vaccuum. There tends to be a bunch of "we can afford it" decisions being made independently - and when hell breaks loose, all your finances are dependent.

 

[E2ME2]

I remember being taught in my CPA courses, whenever you are doing a quantitative analysis as part of your case study, do a Best case, Worst case, and Most Likely scenario.

The worst case will make sure that if all hell breaks lose, you won't be financially crippled. The most likely and best case scenarios help with proper decision making.

Let's adapt to DVC purchasing. Let's say you plan on buying Saratoga, own for 10 years, and dump it. If you run your calculations assuming the worst case scenario, your assumption might be that DVC will turn into your typical timeshare where you have to pay someone to take it off your plate. This calculation is important to do because it prevents you from getting in over your head. Nobody should be forced into financial ruin because of DVC.

Having said that, if you only run the worst case scenario, your conclusion will be based on the unlikely scenario that you get no salvage value back. If you get no salvage value, your calculations may indicate that you are better off just booking through Disney for those 10 years. Given that it is highly likely that you will get significant salvage value for your contract, buying and flipping DVC after 10 years probably has much higher likelihood of coming out ahead vs paying rack rate.

As long as the worst case scenario won't cripple you, you should run your calculations off of the most likely scenario. Otherwise your skewing your conclusion into one that has a higher probability of an unfavorable outcome.

Did you then put these Best Case/Worst Case/Most Likely numbers into a DVC-PERT Estimate ?? (BC+4(ML)+WC)/6

 

[CanadaDisney05]

The problem is that folks are awfully ambitious about what they consider "most likely," based mostly on what they want the ultimate answer to be. I think few of us really know how to quantify the risk of future DVC values...especially given the current context where it seems that resale prices can only go up. Those of us who were around during the Great Recession know that that's simply not true, and it can be "not true" in meaningful ways for an extended period of time.

Maybe a different way of getting after this: Assume worst case and if it doesn't make you think twice, then ask yourself if there is something else you'd rather use this particular money for in that time. That captures the "what I want the answer to be" factor without dressing it up in the guise of a quantitative analysis.

That's why I think you need to do both calculations. Step 1 is determine if the worst case scenario came true, would it cripple you financially. Step 2 is make reasonable assumptions in your most likely scenario.

Remember, their is major financial risk in being too cautious. Let's assume the two options are a) dvc or b) rack rate. If you are too cautious in your assumptions, your math will tell you to go rack rate. When everything is said and done, rack rate may have costed you an extra 40 to 50k over a lifetime.

I think a problem is that most people don't understand how crippling a $20k loss would be for them. This sort of thing seldoms happens in a vaccuum. There tends to be a bunch of "we can afford it" decisions being made independently - and when hell breaks loose, all your finances are dependent.

Again, this is why I think you have to run both calculations. If the worst case scenario looks really bad, then don't buy. Hard stop.

If someone doesn't understand how crippling that 20k loss will be, no analysis will help them. And in reality, WDW vacations I'm general are probably too expensive for them in general.

 

[crisi]

That's why I think you need to do both calculations. Step 1 is determine if the worst case scenario came true, would it cripple you financially. Step 2 is make reasonable assumptions in your most likely scenario.

Remember, their is major financial risk in being too cautious. Let's assume the two options are a) dvc or b) rack rate. If you are too cautious in your assumptions, your math will tell you to go rack rate. When everything is said and done, rack rate may have costed you an extra 40 to 50k over a lifetime.




Again, this is why I think you have to run both calculations. If the worst case scenario looks really bad, then don't buy. Hard stop.

If someone doesn't understand how crippling that 20k loss will be, no analysis will help them. And in reality, WDW vacations I'm general are probably too expensive for them in general.

Yep. But I don't need to participate by giving them any sort of lifeline - like encouraging them to consider salvage value.