Just Purchased!

[ELMC]

I am not sure you are comparing "apples to apples" when I was talking about the final cost per point across two DVC resorts and you bring in a third party investment that has nothing to do with a timeshare to somehow lower your cost per point.

As far as I know, the person would take the extra money and buy a lifetime of cupcakes, a fancy new depreciating car, or invest in the next Enron. I am not trying to compare a timeshare purchase to a random portfolio investment or other purchase that has its own risk profile not considered in an "apples to apples" comparison.

I am comparing the final "cost per point" paid for two different DVC resorts using the actual purchase price and selling price.

I will use a direct example because I think it will be clear. For instance, buying BWV direct at $135 per point right now, while cheaper then VGF, will most likely result in a much higher final "cost per point" then VGF, simply due to the depreciation of those points in the resale market already. Under your logic (of ignoring depreciation when considering cost per point), the BWV purchase is a "cheaper" price per point, and therefore, a better financial move (I am sure you do not believe this, but this is kinda what you have been asserting with your replies to me - that looking at this crazy thing called depreciation is "folly", etc.). I think you will agree, those BWV points will most likely end up being much more expensive to the buyer then VGF even though the initial price was lower.

If you can see this "direct to direct", the same logic works for everything else. You need to consider depreciation to know your final cost per point. There is a time, in the future, when buying an expiring contract for old resorts, while relatively "cheap" to buy resale, will be far more expensive to actually own given the possible collapse of the resale market for those contracts. Someone will be the "last one holding the bag" on those resale contracts as they approach expiration. Will it happen in 5 years, 10 years, 15 years, who knows? When will the market decide there is not enough time left on the contract to make it worth much?

You do not want to be the last one holding the bag on the resale contract because your depreciation will be 100% (or close to it). Others, who have paid more for new resorts with more time, might have better financial results under that scenario even though they paid more for each point upfront. They are "first in line" with the bag and have the longest time to pass it on to someone else and still get some value back.

I would appreciate your showing me one post where I talked about buying BWV direct. If you're going to refute my arguments, please quote them correctly. We don't need to compare direct to direct, because you made the statement that your method of entry had a lower net cost than mine. I'm sure we can both agree that buying any resort direct right now (besides VGF) is a losing proposition from a sheer cash flow perspective.

The bigger problem is that you are completely missing the point. You just purchased a DVC contract with the highest initial point cost and point requirements in the history of DVC. It's ridiculous for you to suggest that you got a better deal than the options I am suggesting simply because you are speculating that at some arbitrary point in the future you might be able to sell your contract for somewhere in the neighborhood of what you paid for it. The concept of time value of money makes that all but impossible. Even if you get back every cent you put into the contract, the missed income on your extra initial outlay has to be accounted for in this comparison. But for this case I'll accept your thinking and I'll use it to prove my point. In February of last year I bought a BWV contract for roughly $7,000. I sold it in February of this year (before the huge price spike )for $10,500. Had I held onto it for a few more months I would've been able to get $12,500. That doesn't sound like depreciation to me.

Listen, you bought VGF and that's great. You can stay there any time you want and I can't. I'll even agree with you that you very well may have gotten in at the lowest price possible for the next few years until resales come about, and you almost certainly got the lowest direct price possible going forward.. Those are all great things, and you should hang your hat on them. But to suggest that your contract cost less than mine is ridiculous.

 

[Garthilk]

To the OP,

When I purchased DVC I was undoubtedly killed by the down payment. The 10% interest rate was crazy so I took a no interest credit card offer with 1.5% premium instead and used that. Then used a 401k loan to pay off the card after 15 months. Then paid back the loan.

Was it stupid. Yes. However, before my DVC for whatever reason, we didn't vacation as much as we should. My kids were young and I knew Disney was going to be a part of my life for many years.

Now we vacation every year. Maybe it was the wrong choice, undoubtedly the 22k would have been better spent in a 5% dividend earning stock, or something of the sort.

 

[twinsouvenirs]

I find myself saying this a lot lately, but it bears repeating. You've been registered here on the DIS for a month. I don't think you have the perspective to make such sweeping (and insulting) generalizations as the ones you have made above.

I absolutely didn't mean to offend any poster here--but i stand by my comments and an example is contained within the quote above. A long time ago, I was a regular on these boards. So long ago that DVC was fairly new and VWL were the direct sales. I'm not going to get into more details, but suffice it to say I did plenty of bookings back in the day. My DIS profile lapsed, so when we started considering membership (a different we) I renewed my involvement. If you'd prefer that anyone without 1000 posts to their username or that didn't immediately jump on any direct purchaser leaves the boards, I get that. That said, the questions quoted contain a lot of generalizations, assumptions, and a level of condescension that, IMO, could be tempered to the same constructive effect. Maybe I'm wrong, after all, I'm new

 

[ELMC]

I absolutely didn't mean to offend any poster here--but i stand by my comments and an example is contained within the quote above. A long time ago, I was a regular on these boards. So long ago that DVC was fairly new and VWL were the direct sales. I'm not going to get into more details, but suffice it to say I did plenty of bookings back in the day. My DIS profile lapsed, so when we started considering membership (a different we) I renewed my involvement. If you'd prefer that anyone without 1000 posts to their username or that didn't immediately jump on any direct purchaser leaves the boards, I get that. That said, the questions quoted contain a lot of generalizations, assumptions, and a level of condescension that, IMO, could be tempered to the same constructive effect. Maybe I'm wrong, after all, I'm new

So to be clear, first you chastise me for not asking questions. Then when I show you the questions I asked, you chastise me because my questions were general and condescending. I see.

 

[twinsouvenirs]

They weren't really questions. They were incredulous statements. That said...

My DH is laughing at us both right now... have you seen the "someone is wrong on the internet" cartoon?

Honestly, no offense intended. The OP has been given great advice from all sides and can do with it what he will.

 

[nd43]

I would appreciate your showing me one post where I talked about buying BWV direct. If you're going to refute my arguments, please quote them correctly. We don't need to compare direct to direct, because you made the statement that your method of entry had a lower net cost than mine. I'm sure we can both agree that buying any resort direct right now (besides VGF) is a losing proposition from a sheer cash flow perspective.

The bigger problem is that you are completely missing the point. You just purchased a DVC contract with the highest initial point cost and point requirements in the history of DVC. It's ridiculous for you to suggest that you got a better deal than the options I am suggesting simply because you are speculating that at some arbitrary point in the future you might be able to sell your contract for somewhere in the neighborhood of what you paid for it. The concept of time value of money makes that all but impossible. Even if you get back every cent you put into the contract, the missed income on your extra initial outlay has to be accounted for in this comparison. But for this case I'll accept your thinking and I'll use it to prove my point. In February of last year I bought a BWV contract for roughly $7,000. I sold it in February of this year (before the huge price spike )for $10,500. Had I

But to suggest that your contract cost less than mine is ridiculous.

Believe it or not, you made my point. You finally started showing that what you sold your points for materially affected your true cost of ownership. The fact you sold for a profit materially improved your timeshare financials. However, you made everything too personal. There are people out there that purchased your contract, or the people after them, that will not be as lucky. In fact, they could ride that resale contract to almost zero value. Those people (not you, this is not about you), given the almost 100% depreciation, will pay a lot more true cost per point then you did. Don't you think it is worth it to point this out? Given all the financial advice you give, don't you think it is worth it to warn people that they could be the last one holding what could turn into a highly depreciating asset that could materially affect their final cost per point? Those people (again, not you), might be better off paying a higher cost per point resort with the prospect of much lower depreciation and be financially ahead.

My examples were all illustrative to show the potential impact of differing depreciation. The fact you sold something this year has absolutely zero to do with what will happen in 15-20 years for these same contracts. After all, there is still almost 30 years on your contracts today. However, in 10-15 years (which might be what the new buyer is thinking they will use them for), there will be a lot fewer years and the resale market could start treating those contracts very differently then a contract that still has 30 years left at that time. We could see a widening disparity between what old resorts get in resale and what newer resorts are getting.

However, the person that purchased your contract might not have thought of that when considering the true final cost of their points. I think it is worth them knowing about the potential. After all, no one here has seen a resale market that has contracts with only 10-15 years of life, so no one here can predict the full affect this might have on the value of those contracts. However, resales are happening every day to people that might hold these contracts into that period of time and they are going to potentially pay the price for that ommission. The fact that you sold a contract this year, with 30 years on it, has nothing to do with what might happen to the next owner that rides that contract down to 10 years left. That owner very well might end up paying more per point then a new VGF owner even though they paid far less upfront. That has been, and remains, my only point.

 

[pinnocchiosdad]

This thread is going down hill fast!!!!!!

 

[ELMC]

Believe it or not, you made my point. You finally started showing that what you sold your points for materially affected your true cost of ownership. The fact you sold for a profit materially improved your timeshare financials. However, you made everything too personal. There are people out there that purchased your contract, or the people after them, that will not be as lucky. In fact, they could ride that resale contract to almost zero value. Those people (not you, this is not about you), given the almost 100% depreciation, will pay a lot more true cost per point then you did. Don't you think it is worth it to point this out? Given all the financial advice you give, don't you think it is worth it to warn people that they could be the last one holding what could turn into a highly depreciating asset that could materially affect their final cost per point? Those people (again, not you), might be better off paying a higher cost per point resort with the prospect of much lower depreciation and be financially ahead.

My examples were all illustrative to show the potential impact of differing depreciation. The fact you sold something this year has absolutely zero to do with what will happen in 15-20 years for these same contracts. After all, there is still almost 30 years on your contracts today. However, in 10-15 years (which might be what the new buyer is thinking they will use them for), there will be a lot fewer years and the resale market could start treating those contracts very differently then a contract that still has 30 years left at that time. We could see a widening disparity between what old resorts get in resale and what newer resorts are getting.

However, the person that purchased your contract might not have thought of that when considering the true final cost of their points. I think it is worth them knowing about the potential. After all, no one here has seen a resale market that has contracts with only 10-15 years of life, so no one here can predict the full affect this might have on the value of those contracts. However, resales are happening every day to people that might hold these contracts into that period of time and they are going to potentially pay the price for that ommission. The fact that you sold a contract this year, with 30 years on it, has nothing to do with what might happen to the next owner that rides that contract down to 10 years left. That owner very well might end up paying more per point then a new VGF owner even though they paid far less upfront. That has been, and remains, my only point.

This is way more clear than what you were trying to say before, and I actually agree with this much more than with what you were saying before. Although I still disagree with the way you frame it.

Your point about financial advice is a good one, and although I've addressed it in the past I haven't done so recently. My typical advice centers around the idea that one should assume zero resale value in 10-15 years. Now this most likely won't be the case, but if you make your decision based on this potential worse case scenario you'll be in much better shape. It's simply too difficult to predict the depreciation scales for any of the resorts. Although when the first round or resorts gets set to go, it will give us a baseline for what could happen with the second and third rounds.

But beyond that, the biggest thing I preach is exit strategy. Although long term depreciation is a concern, it's a very small one and unlike what you have suggested previously, it's probably not as cut and dry or predictable as you might think. But immediate depreciation is. You buy AKV for $145 direct right now, and you lose half your money. You buy VGF direct right now and you don't. That delta has yet to be determined, but we know it's not going to be half. So on that alone, VGF is a much safer play.

Where we differ is that you would categorize this as a lower cost because of the long term depreciation, and I think that is a bit misleading and banks on too many variables and ignores too many other variables, the most important being cash flow. I will definitely concede that some contracts retain their value better than others, but I wouldn't look at that beyond a five year timeline because anything beyond that is too unknown. So I guess I can say that your point makes sense, but I would phrase it much differently.

 

[ELMC]

This thread is going down hill fast!!!!!!

To be fair, it was transferred to Mousecellaneous from the Purchasing board. It's like the Wild West over there.

 

[nd43]

This is way more clear than what you were trying to say before, and I actually agree with this much more than with what you were saying before. Although I still disagree with the way you frame it.

Thanks ELMC. I thought I would put some actual "work" into my statement so it might be of better value to people. I constructed a worksheet that shows the potential resale value in 20 years of BWV and VGF. It provides for a TVM equation assuming the person invests the difference between the upfront cost of the two contracts in a solid investment that returns (in my assumption case - 4%) every year. It shows the full value of that money (investment + final contract value) after 20 years. As you know, I have issues with people truly investing money in this fashion (most find a different use for the money that is not a good investment), but for financial clarity I put it in so the initial funds are all equal.

These are just my assumptions. Clearly, people can put in their own assumptions and produce different results (which is fine, I am not defending my assumptions, I think people can make their own judgments in these things).

ASSUMPTIONS:
Point Purchased: 200
Return on Investment for difference in contract price (TVM): 4%
Future Value (VGF) 20 years : $185.00
Future Value (BWV) 20 years : $30.00 *due to only 10 years left on contract
RESULTS:
Resale Price Paid (BWV): $60.00
BWV Total Value in 20 Years: $46,006.48
VGF Total Value in 20 Years: $37,000
Net Difference: $9,006.48 (*in favor of BWV)

Resale Price Paid (BWV): $70.00
BWV Value in 20 Years: $41,561.31
VGF Value in 20 Years: $37,000
Net Difference: $4,561.31 (*in favor of BWV)

Resale Price Paid (BWV): $80.00
BWV Value in 20 Years: $37,116.15
VGF Value in 20 Years: $37,000
Net Difference: $116.15

Resale Price Paid (BWV): $90.00
BWV Value in 20 Years: $32,670.99
VGF Value in 20 Years: $37,000
Net Difference: $(4,329.01) (*in favor of VGF)

So, with these assumptions (which are just mine - I know others might have different views), and with people investing 100% of the difference in upfront cost in a reliable, 20 yr. investment with a set return, at $80 per point the true cost of points in 20 years would be the same for BWV and VGF.

Now, people should make their own assumptions and produce their own results. However, it does show that a difference in depreciation, even with an investment of all the difference in upfront funds, can strongly affect your final true cost of ownership.

 

[Andrew015]

I think that you both make valid points, but I have a hard time getting my arms around the assumption of little or no depreciation over the long-term ownership of DVC, especially when buying at the inflated, direct prices. If you are treating a DVC purchase as an investment in the first place, I think its quite the risky proposition. Taking into account the initial investment, on-going (and increasing) annual maintenance fees, and adding into the equation the uncertainty of future market value, this is more of a liability than an asset in my mind, especially if you have to sell unexpectedly. If that is the case, you will be subject to whatever the current market conditions are at that given point. Perhaps you break even, or you lose your tail. To each their own. For me, I bought DVC to enjoy and have not concerned myself with its future value. I plan to use it until expiration, and the value it brings to me is in terms of enjoyment and cost savings over paying cash at deluxe resorts. If you wish to watch the market year in and year out, looking for the optimal time to pull the rip cord, more power to you. Thats not for me.

Once VGF resales begin to hit the market, your short-term value will take a hit (this has been the case with all previous DVC resorts, it will be the same for VGF. Maybe to a lesser extent as the premium resort, but I dont think that will make much difference). Long term, as direct purchase prices continue to rise thus bringing up resale values, I suspect that you will begin to regain value from the initial depreciation hit, much like many of us who own at the older resorts are seeing now (I could easily sell me VWL at 50% profit compared to what I paid in 2011). How long that lasts remains to be seen, but we saw how quickly the market went from being a buyers market to a sellers market. Over the course of a 30, 40 or 50 year ownership, there will be many swings of the pendulum.

Lastly, its really impossible to try and say who will come out ahead, comparing ownership at two different resorts and thus two different expiration years using the same period of time - say 2013 to 2025 - especially not knowing what the market will bear, who got in at what price and when, and finally who got out at what price and when. This is really comparing apples and oranges and is almost impossible to figure out. What I do know is that I paid $50/point for VWL, and even if I were to lose 50% of its value (which I dont foresee happening anytime soon), I only stand to lose $3,750. In order for you to lose more money than me, your value only needs to decrease by 17%. Over the course of a 50 year ownership, I suspect there will be many periods where you are below that, and also many periods above it.

 

[Andrew015]

I think your assumed value of BWV with 10 years left of ownership is quite low. At $30/point and 10 years of ownership remaining, that equates to ten, long annual vacations at a deluxe Disney resort for a mere $6,000 in the years 2033 and beyond? Sign me up TODAY.

Assuming the following:

• A Boardwalk view studio during Magic Season goes for $300/night today cash (this is probably very conservative)

• 20 years from now, that same studio will go for $500/night (assuming 2.5% annual cost increase... at one point, I had a DVC guide tell me that room rates increase around 5% annually... I think this is high, and in reality, it all depends on the strength of the economy)

• Average point requirement per night = 18 (using Boardwalk view in Magic season)

• Total # of nights in a Boardwalk view studio during Magic Season that you would get annually with 200 points = 11

So using these assumptions, 20 years from now, an 11-night stay in a Boardwalk view studio during Magic Season willl cost you $5,500 cash. I think this more than assures us that the value of that 200 point BWV contract with 10 years of use remaining will be higher than $30/point.

 

[DougEMG]

I think that you both make valid points, but I have a hard time getting my arms around the assumption of little or no depreciation over the long-term ownership of DVC. If you are treating a DVC purchase as an investment in the first place, I think its quite the risky proposition. Taking into account the initial investment, on-going (and increasing) annual maintenance fees, and adding into the equation the uncertainty of future market value, this is more of a liability than an asset in my mind, especially if you have to sell unexpectedly. If that is the case, you will be subject to whatever the current market conditions are at that given point. Perhaps you break even, or you lose your tail. To each their own. For me, I bought DVC to enjoy and have not concerned myself with its future value. I plan to use it until expiration, and the value it brings to me is in terms of enjoyment and cost savings over paying cash at deluxe resorts. If you wish to watch the market year in and year out, looking for the optimal time to pull the rip cord, more power to you. Thats not for me.

Once VGF resales begin to hit the market, your short-term value will take a hit (this has been the case with all previous DVC resorts, it will be the same for VGF. Maybe to a lesser extent as the premium resort, but I dont think that will make much difference). Long term, as direct purchase prices continue to rise thus bringing up resale values, I suspect that you will begin to regain value from the initial depreciation hit, much like many of us who own at the older resorts are seeing now (I could easily sell me VWL at 50% profit compared to what I paid in 2011). How long that lasts remains to be seen, but we saw how quickly the market went from being a buyers market to a sellers market. Over the course of a 30, 40 or 50 year ownership, there will be many swings of the pendulum.

Lastly, its really impossible to try and say who will come out ahead, comparing ownership at two different resorts and thus two different expiration years using the same period of time - say 2013 to 2025 - especially not knowing what the market will bear, who got in at what price and when, and finally who got out at what price and when. This is really comparing apples and oranges and is almost impossible to figure out. What I do know is that I paid $50/point for VWL, and even if I were to lose 50% of its value (which I dont foresee happening anytime soon), I only stand to lose $3,750. In order for you to lose more money than me, your value only needs to decrease by 17%. Over the course of a 50 year ownership, I suspect there will be many periods where you are below that, and also many periods above it.

Spending significantly less up front leaves you less vunerable to losing significant amounts in the future.

Spending lots up front leaves you more vunerable to unexpected bad things happening.

I like to minimize my risk, so I personally like to spend as little up front as possible which is why I bought loaded contracts and rented out the points to lower my initial costs even further. Doing this my actual purchase costs worked out to be $33.13/point.

 

[DougEMG]

I think your assumed value of BWV with 10 years left of ownership is quite low. At $30/point and 10 years of ownership remaining, that equates to ten, long annual vacations at a deluxe Disney resort for a mere $6,000 in the years 2033 and beyond? Sign me up TODAY.

Assuming the following:

• A Boardwalk view studio during Magic Season goes for $300/night today cash (this is probably very conservative)

• 20 years from now, that same studio will go for $500/night (assuming 2.5% annual cost increase... at one point, I had a DVC guide tell me that room rates increase around 5% annually... I think this is high, and in reality, it all depends on the strength of the economy)

• Average point requirement per night = 18 (using Boardwalk view in Magic season)

• Total # of nights in a Boardwalk view studio during Magic Season that you would get annually with 200 points = 11

So using these assumptions, 20 years from now, an 11-night stay in a Boardwalk view studio during Magic Season willl cost you $5,500 cash. I think this more than assures us that the value of that 200 point BWV contract with 10 years of use remaining will be higher than $30/point.

I like your posts

As long as rental rates are higher than MF, even a contract with one year left on it has value.

 

[nd43]

So using these assumptions, 20 years from now, an 11-night stay in a Boardwalk view studio during Magic Season willl cost you $5,500 cash. I think this more than assures us that the value of that 200 point BWV contract with 10 years of use remaining will be higher than $30/point.

Completely fair. That is why others should use their own assumptions. Mine were quick (to just build the model) and not perfect I am sure.

However, in spirit, if you agree resorts approaching termination will experience a higher depreciation (ultimately 100% deprecation due to expiration) then resorts with 20+ more years of life (which now exists in the DVC system), it is just tweaking the model to determine the break even price using your personal assumptions.

 

[Missyrose]

Completely fair. That is why others should use their own assumptions. Mine were quick (to just build the model) and not perfect I am sure.

However, in spirit, if you agree resorts approaching termination will experience a higher depreciation (ultimately 100% deprecation due to expiration) then resorts with 20+ more years of life (which now exists in the DVC system), it is just tweaking the model to determine the break even price using your personal assumptions.

Let me preface this by saying that I'm not nearly the math person some of you are. But the flaw in assuming the resorts with later end dates will automatically be worth way more than the classic resorts fails to take into consideration the rising MFs. If VGF is starting in the middle of the pack, and will go 20 years beyond the 2042 resorts, isn't it likely that the MFs could become astronomical enough that people want out?

 

[nd43]

Spending significantly less up front leaves you less vunerable to losing significant amounts in the future.

Spending lots up front leaves you more vunerable to unexpected bad things happening.

I like to minimize my risk, so I personally like to spend as little up front as possible which is why I bought loaded contracts and rented out the points to lower my initial costs even further. Doing this my actual purchase costs worked out to be $33.13/point.

I think this is a great point. I would not want to encourage people to spend more then they could afford in any scenario (especially for a timeshare - which is a complete luxury).

I am assuming you have the money available (and paying cash) in both scenarios. In fact, the extra cash you are not spending on BWV you are placing in an investment for 20 years (therefore, you clearly had to have the extra money in the first place for VGF and you just chose not to spend it on VGF and invested it in something else instead). That is how this model is built.

It never makes sense to spend more then you have just so in 20 years it might work out. On a personal level, I am like ELMC, assume you lose everything and make sure you are still ok. This is just a financial exercise for those that have the cash and just want to consider the different possible purchases.

 

[nd43]

Let me preface this by saying that I'm not nearly the math person some of you are. But the flaw in assuming the resorts with later end dates will automatically be worth way more than the classic resorts fails to take into consideration the rising MFs. If VGF is starting in the middle of the pack, and will go 20 years beyond the 2042 resorts, isn't it likely that the MFs could become astronomical enough that people want out?

To me, the only way MFs would become material here is if BWV and VGF had highly divergent growth in fees (i.e. VGF grew much faster over time vs. BWV or vice versa).

Today, BWV is at $5.84 and VGF at $5.41. Like other new resorts, I would expect VGF to climb faster at first then settle down to a steady growth. Therefore, I think these fees will converge quickly (and VGF will probably pass BWV) and then track similarly and I did not consider that difference in fees in the overall model.

If VGF kept growing at a much higher rate (and became excessive), it could cause more people to sell VGF. That would affect supply, and therefore, I would expect it to reduce resale values. So, if that did happen, yes, VGF would have a reduced performance in resale. If that is what people think might happen, they should reduce the future value of VGF in their model.

I did not in mine simply because I did not see VGF having MFs that grew consistently faster then every other resort after the initial "spike" all the new resorts seem to get. In fact, I am somewhat hopeful they learned their lesson in Aulani and set VGF so it did not experience these initial spikes. However, that is yet to be seen.

 

[Andrew015]

I may be wrong, but I thought the initial dialogue was trying to determine who would "lose" more of their initial investment over the long haul - someone who purchased VGF direct or BWV resale. I think we've determined that this analysis is pretty much impossible to determine with so many variables and differences in terms of dates, possible market conditions and timing.

So now (just so I am clear), we're shifting the dialogue to determine who will break even on their initial investment more quickly? I think the answer there is quite clear - the resale buyer.

However, in spirit, if you agree resorts approaching termination will experience a higher depreciation (ultimately 100% deprecation due to expiration) then resorts with 20+ more years of life (which now exists in the DVC system), it is just tweaking the model to determine the break even price using your personal assumptions.

Surely, if you take the BWV contract out to it's expiration, it will lose all of its value while the VGF contract will have many years left to go and quite a bit of retained value remaining, thus making your arguement accurate. No one is debating this, and I think this is unfair to compare in this light. If this is what you mean by "tweaking the model" to make the Grand Floridian investment appear more favorable than the BWV resale in terms of retained value, then technically you are correct. But the more fair comparison is to look at contract duration (how much value will the BWV re-sale buyer have at year 20 of their contract as compared to the VGF direct buyer at year 20 of their contract, and compare that against their initial buy-in).

Or better yet, how would a VGF direct buyer stack up against a VGF resale buyer 5 years from now over the next 20 years? I think the only way to really keep this "apples to apples" in terms of comparing retained value of a direct purchase vs a resale purchase is to talk about the same resort with the same expiration dates and same time durations.

If you're just looking for confirmation that you think you can sell your VGF stake at some undetermined point in the future for what you paid ($150/pt), then I'll go out on a limb and say that it is likely possible. To say when that will be and if it will happen 100%, I'm not entirely sure.

To say that you will recoup more of your initial investment as opposed to a resale buyer, in my mind, is a tough arguement to make. I think it is possible for both owners to get back what the paid up front if their timing is spot on, but I think it's a safer bet for the resale buyer. The direct buyer will take longer to recoup their initial investment, as the largest depreciation hit occurs early on in ownership, much like buying a new car, and the resale buyer avoids the majority of that hit. What we sacrifice as resale buyers is a handful of years of ownership and some loosely termed "perks", which if you really want to get technical and start throwing values on (i.e. opportunity cost), then this evens the scales. For many of us, those are not important enough to outweigh the heavy buy-in cost of a direct purchase and is the driving force of why we decide to go resale.

 

[disneynutz]

Prior to the resale price increase that no one saw coming we sold 7 contracts, 6 AKV and 1 VWL. They were a mix of resale and direct purchases held for 5 years or so. We lost $10,000 on the bunch including brokerage fees.

IMO dues are controlled by Disney and and the Florida property appraisers and there is no way to guess where they will go.

We don't know how they come up with the numbers or if they are 100% valid. BLT was sold as the lowest dues property and after sell out so far has had 2 years of 6% plus increases.

Aulani had it's dues rate set to low and it cost 3 executives their jobs when the Hawaiian authorities found out.

Bill