Is this any time to do a large add-on?

[invalid_char]

When we first heard of DVC (and BCV) we had planned on buying atleast 400 points. I suffer from the winter blues and need to get shots of sunshine twice a year and we just LOVE WDW with kids, and the Beach Club in particular.

Anyway, then I left my job to be with our second child and, by the time BCV became available, the outlook for my dh's job did not look great. We had savings and money set aside, so we decided to go ahead with the purchase, but get only 300 points. Well, dh still has a job and I am now regretting that we did not buy more points up front. Since our economic future will be somewhat uncertain, I am again being conservative and thinking of only purchasing a 50 point add-on before the price increase. But this will leave us a good 30 points shy every year of where we want to be. And I don't want to get permanently locked out of the add-on we will eventually need.

Is anyone else just a few points shy of where they want to be? Do you manage it well or do you wish you had thrown caution to the wind and purchased all of your points up front? We have the money I'm just not sure if it's smart to spend savings right now. Then again, if we can easily resell (or rent) the points for what we paid for them if we run into trouble, then maybe we should go ahead and do the larger add-on.

I realize that this is a highly personal decision, but I would still appreciate your thoughts. There are so many DVCers out there who have spent a lot of time doing the financial analysis and I would appreciate those opinions especially. Thanks!

 

[Bottlejet]

It's really not complicated. You will never be able to resell or rent your points for the price you paid. Supply and demand dictate the rates and right now the rates are low and are going lower. Many folks have found themselves in an economic pinch of late due to the general decline in the economy and, of course, a rather high percentage of timeshares don't "stick" very long because of "buyer remorse". That's why so many real estate agents in the greater Orlando area make a good living. Check out the "rent/trade" forum on this board and you'll get a general idea of the low rental rates (although many less expensive DVC rentals can be found). Good luck!

 

[invalid_char]

bottlejet-- I have also been watching the rent/trade board and I have not seen any rates for BCV below $10 (not that I have been watching religiously) I'm not sure if this is a temporary effect because the resort is new or if it is because the pool and location are exceptional.

Also, even if renting were a problem, I could always sell my points. If I split the difference and buy 75 points at $80 per, then I will have purchased my total 375 points for an average of $72 per ( I bought the first 300 at $70 ). Given that Disney can sell these points for $84 per (as of Dec. 1st), I think I would atleast be able to sell my points for $72 per and get my money out. Wouldn't you think?

I do worry sometimes that at some point maintenance costs will become larger than rental rate, in which case there is no incentive to buy and my investment is basically worthless (why own if it costs even less to rent!), but I hope I will get my money's worth out of this before that happens, if ever.

Anyway, thanks for your opinion.

 

[Dean]

Originally posted by Bottlejet
It's really not complicated. You will never be able to resell or rent your points for the price you paid. Supply and demand dictate the rates and right now the rates are low and are going lower. Many folks have found themselves in an economic pinch of late due to the general decline in the economy and, of course, a rather high percentage of timeshares don't "stick" very long because of "buyer remorse". That's why so many real estate agents in the greater Orlando area make a good living. Check out the "rent/trade" forum on this board and you'll get a general idea of the low rental rates (although many less expensive DVC rentals can be found). Good luck!

You must forget 95% of what you know about timeshares when talking about DVC. Most could sell their points for a profit or at least break even right now if they wanted. The going price for rentals is $10 per point which is at least around a break even point for most and a slight profit for some. Sure there are a few (very few) that are renting for less than that but most are distressed and they go very fast. DVC also controls the price of resales through their Right of First Refusal.

 

[CarolA]

While I don't know what to tell you my theory was that I could always sell my DVC at some price. However, I assumed when I bought that I was NOT going to ever make any money if I had to sell.

Due to the price increases I probably could make money, but you are right the economy is not strong right now which could impact the resales. However, if you did an add on of between 50 and 100 points you would have a small contract to resale and my experience has been that these go faster then the large 400 point contracts!

 

[fkj2]

And, while there may be a bit of inconvenience, many of us now purposefully book an off-site or discount accommodation the first night of arrival (or departure or both for that matter) to save on the point requirements. As many have noted, the higher point Fri-Sat nights are a disincentive to begin your stay at DVC if you arrive late Friday or Saturday. I'm not sure I would now stay the first Fri-Sat night of arrival at DVC esp. in high point season; I just pack a bag with things handy for the next day and try and stay at a more cost effective but nearby hotel.

 

[crisi]

Don't assume you can sell and get your money back. There will likely be commissions involved - unless you take on the hassle of the sell it yourself route.

Also, I'm hesitant to think that you will "always" be able to rent your points. If the economy is bad - it is often bad for a lot of people. The more DVC rooms there are, the bigger number of points available to rent. Supply and demand. Disney is increasing the number of points available - but the demand for renting those points in the future is a big question mark. If a lot of us need to rent out points in a year, its going to be a renters market.

How consistant are your twice a year plans? Will you be able to continue to go twice a year when your kids are in school? At the same point rate, or are you going to end up in the higher point school vacation times? Are you convinced that those two vacations will both be DVC rooms, or do you yearn to try out the AKL or Cruise (in which case, you might as well pay cash)? How consistant has your Disney fetish been (so many long timers admit they don't go to the parks much anymore - in which case the sun is just as nice at less expensive destinations that don't involve this sort of investment)?

 

[mikesmom]

If you truly have the money and you truly believe that your DH is secure in the job, it might be the time to jump. The points aren't getting any lower. We bought just barely 3 years ago, and with this latest increase coming it looks like we could sell our contracts in an emergency for the same or very close to what we paid for it. It's certainly done better than the value of our stocks.

I'm not sure "sell it for what you paid for it" is even the issue. Things would have to get a lot worse for us to sell - just too much value in the family time involved for us to let it go. It would be more of a "sell it at all" and I don't think that would be a problem. Will it still be as salable in 20 years? Probably not, but we will more than have our value out of it.

 

[invalid_char]

Thanks for the feedback... I am still undecided.

CarolA, are you allowed to just sell the add-on, apart from the master contract?

 

[Dean]

Originally posted by invalid_char
Thanks for the feedback... I am still undecided.

CarolA, are you allowed to just sell the add-on, apart from the master contract?

Yes, you can sell an add on separately.

 

[Bottlejet]

$10.00 a point is the common asking price for DVC rental points and I have no doubt that some folks do indeed pay that amount. However, today the average rental price comes in at $5.85. I rented 220 DVC points at OKW for $1,290 just 2 months ago. Someone used the term "distressed" points in an earlier post and I don't really think that term applies to the situation of which I speak. I am talking about "use or loose" points. Tourism has declined drastically in recent years and while the average vacation seeker can pass on a trip or change his/her plans, the DVC member is "locked" into using their points. Sure, the points can be banked (for a time), but they must be used, traded, rented, resold or they are lost. During the past 3 years, many DVC members have flooded the market with their points and it has become a buyers market. Actually, it has become a "renters" market. The only point that I wanted to make here is that the supply of DVC points far exceeds the current demand and therefore the DVC is not currently a good buy. I have no doubt that the scale will tilt back in favor of the DVC members one day, however, the foreseeable future does not look good. If I had to guess I'd say the DVC might turn around and become a good buy in 8 to 10 years. Also don't forget that real estate agents get their commission on every resale.

 

[Dean]

Originally posted by Bottlejet
$10.00 a point is the common asking price for DVC rental points and I have no doubt that some folks do indeed pay that amount. However, today the average rental price comes in at $5.85. I rented 220 DVC points at OKW for $1,290 just 2 months ago. Someone used the term "distressed" points in an earlier post and I don't really think that term applies to the situation of which I speak. I am talking about "use or loose" points.

Maybe you meant to say you were NOT talking about use or lose points. To say that the average rental comes in at $5.85 pp is ludicrous. My experience would also not back up your assertion that there are more points to rent than people to rent them and I have rented my points a number of times. You sound like someone trying to convince the masses for whatever reason.

 

[invalid_char]

If DVC is such a bad deal right now, how is it that Disney thinks it can get away with charging $84pp? They have been historically good about anticipating demand. Are they miscalculating this one? Maybe this ties in to the rumor about them trying to prop up the resale market. If what bottlejet says is true and they don't prop up the rental market, I would imagine that informed people would think that DVC was a bad deal. Why fork over a lot of money and pay a $4pp maintenance fee, if you can rent for $5pp. You would be giving your money to Disney and getting basically nothing in return... maybe I should start a new thread.

 

[larry_poppins]

Dean,
Your arguements are right on the money! I couldn't agree with you more. Most DVC rentals are NOT $5.

I would also argue that most DVC members will not rent out there points. Even in hard economic times, it is difficult for many people to rent their points to strangers. I know I did not buy into DVC to rent my points out that way. It is stressful dealing with people you don't know.

I imagine most points that are rented are first offered to family and friends. I would also look at the Concierge Collection for a trip near my home if times were tough. Only if I found I did not want to visit WDW for a couple of years in a row would I consider renting my points to strangers.

Larry

 

[Bottlejet]

Originally posted by Dean
Maybe you meant to say you were NOT talking about use or lose points. To say that the average rental comes in at $5.85 pp is ludicrous. My experience would also not back up your assertion that there are more points to rent than people to rent them and I have rented my points a number of times. You sound like someone trying to convince the masses for whatever reason.

Hi Dean! I am just speaking from my experience as a long time regular visitor to WDW. I live in North Florida and have been a regular at WDW since 1977. Our family visits about 4 to 6 times a year and we always have a great time. I have several friends and relatives that live in the greater Orlando area. As all of us "regulars" know WDW is expensive! Back in 1977 we either stayed with friends or went the Motel 6 route. Of course over the years we learned a lot about accommodations, tickets and in general how to get the best bang for our buck. During the last 15 years or so we have stayed almost exclusively in WDW resorts and have been very pleased with our experience. Please understand that I look at WDW trips from a financial aspect.

Back when the DVC first started (1991?) I was very tempted to join. I had a real estate attorney look over the contract and she thought it was good. For me, the bottom line came down to the "investment" potential for the money and I determined that the DVC was for me a poor investment. Now, before you all come after me with torches, please let me explain. Most responsible "bread winners" buy life insurance to protect their families just in case the grim reaper decides to make an early visit. Some folks purchase "whole life" policies while others buy term insurance. Term insurance is much less expensive for a given amount of coverage, but if you die, it pays. Whole life costs a lot more for the same coverage and if you die, it too pays. The "advantage" to a whole life policy is that you get back all your premium payments and some interest after your policy is paid up. With term insurance, once it's over you have nothing! So which is better? Well, I bought term insurance and invested the rest.

So, in short, that is my same theory with the DVC. The DVC is not an investment any more than a whole life insurance policy is an investment. Also (since the first quarter of 2000) the stock market continues to be a very poor investment. Dean, if you were a stockbroker I would fully expect you to try and sell me Disney stock because it's your job and you must make a commission to feed your family. I also understand your concern about the current low DVC rental rates and your desire to see higher figures. If I were in the timeshare business, I too would be disturbed but also looking for ways to take advantage of the situation and provide my customers with a good deal.

WDW currently has 5,000 excess resort rooms that they really wish would disappear. The Pop Century is still on hold and all other WDW resorts continue to offer massive discounts. The occupancy rate is still less than 50%. Conservative estimates support the conclusion that this problem will persist for many years. Just wanted to bring some facts to the table. I fully understand that you have a vested interest in this matter and I thank you for your input.

 

[DVCajun]

While DVC should not be considered an investment, I could definitely sell my points and make a profit on what I paid. We bought in '99 and utilized the $10 MB program offered then. Our final price was $54 a point. Unbelievable now, but that was the price. Since then there have been occasions that I have rented my points. I always do so reluctantly as I'd much rather use my points myself, but thing happen and I haven't always had that option. The LOWEST price I have gotten is $10 a point. Frankly, I wouldn't rent them for less than that. I manage my points so that I don't have to worry about losing them (I make sure I use them all before the deadline of banking, or I go ahead and bank). Most of my rentals have been about $12.50 a point.

This is not to argue that a potential buyer should count on that. I wouldn't buy if you can't afford it or if you think you can't use the points. But in a normal situation the option is there and the going rate of $10 is a deal for the renter.

If someone is willing to rent their points for $5, give me a call! I'll be happy to snatch them up. Me and the rest of the folks on this board.

but I won't hold my breath.

 

[vernon]

For me, the bottom line came down to the "investment" potential for the money and I determined that the DVC was for me a poor investment

All I can say is either you didn't really look into the potential of DVC in any depth, you don't visit Disney very much or you made a bad choice that you're now trying to justify. At that time Disney was offering free passes up to 2000 which I calculated to be worth at least $10 per point for anyone that visits Disney on a regular basis, I think the free passes saved me about $5,000 for a $12,000 "investment". I didn't look at DVC as an investment to make money but I calculated that it would take me about 8 years to cover the cost of buying into DVC ( the actuality was probably 6 years) , since that time I've had 5 years of accommodation where my Disney rooms has cost me my annual dues ( so about $35 per night) and if I sold my points I'd get back about $16,000. I wish all my bad investments were as financially successful and none of them have given me and my family as much pleasure.

I also think your "experience" in point rental costs are way off the mark. I tend to agree with Dean that you have an agenda in talking down rental rates, points will rent out at a level that make sense for both parties. at $5 per point your looking at the "cost" of renting a OKW room is $40-50 per night. At that price the whole inventory of points is going to be snapped up. The price is going to remain in the $9-10 range for the forseeable future and is likely to rise, IMHO, over 4 or 5 years.

 

[Dean]

Bottlejet, I can't argue with a lot you say but much of it doesn't apply directly to DVC. Even at 50% off rack rates, WDW on property is still a pretty expensive adventure. You make it sound like you can get GF for $49 per night. The best rates I've seen are the budgets for $49 per night, moderates at $84/night and AKL at $149/night as examples, plus either 11% or 12% tax depending on location. Even at $84 per night (plus tax) DVC is pretty much a break even. No tax on DVC. That means if the rates go up or you want better than the moderates, you are set with DVC. I don't believe one could say they didn't save money with DVC over the time you looked at it if they went to WDW at least yearly, stayed on property (other than budgets) and went for a full week or so at a time. It doesn't make sense for long weekends.

DVC is not for everyone and it may not be for you. My suspicion is it was right for you and you just couldn't make the plunge becaue of the up front costs and are still trying to justify your decision. That's OK, it's you decision to buy or not.

You seem to think I'm in the timeshare business and that's not accurate. I occasionally rent my points and also some of the other timeshares I own. I've always made money when I rented but given a fair price to the renter. I've always made money when I sold timeshares and every single one I currently own, I could sell for a profit within one week.

I can tell you that when people post about whether to buy or not, I'm one of the few saying wait a minute, this might not be right for you. It doesn't make sense for everyone for a number of reasons. I'm sure others can confirm that I'm frequently the voice of reason and I suspect some of them occasionally doubt how much I truly like DVC. So if I'm taking issue with you on the finances, you may want to get your best flame suit on.

I obviously have a vested interest in DVC and you obviously have a vested interest in talking down DVC and the rentals for the purpose of cheap rentals. I know there are occasionally points that go as cheaply as you say but it is very unusual unless they are going to expire. When people list this low, they get many, many responses. I'd agree, rent me the points for $5 pp they make sense even for the exchange options at that price.

 

[doubletrouble_vb]

Back to your question.

When I bought I determined that buying resale was the same as buying from Disney if the resale was within $7 of the Disney price (I bought at $72...resales for BWV were in the $65 to $67 range).

So your statements would seem to be reasonable...after all $72 is $12 below Disney if the buyer didn't plan to use MB. But other resales can be had for less than $72. Plus odds are you would be using a broker...so now you will have to pay commissions and your selling price would therefore fall below $72.

I'm at a point where I need to at least consider selling. I'd like to sell for $72 a point (VWL) but it doesn't appear the market would support it.

 

[invalid_char]

Could someone explain to me how Disney can sell BCV for $84pp but I would struggle to get my $70pp initial investment back? We are selling the exact same thing! It's not as though they are selling *new* units and I am selling a slightly *used* unit! And I don't understand why Disney's exorbitant financing is a draw when there are credit cards which offer 0% financing for as long as a year (some with a cash rebate on top of that!) and home equity lines at not much higher a cost than that.

Dean, you're the expert in this, why would a buyer pay $14pp more to go through Disney?