My Logic into buying DVC...

[Kylie_1504]

I wanted to run my ‘logic’ past you all to see if I’m making sense. It’s sort of my way to ensure I’m going to be able to put DVC to good use for many years to come with the added benefit of a lower cost holiday for my family. Please be kind LOL I’m new to this.
Originally we had our eyes on AKL for best value and we do like the resort. However, looking into the resorts that have longer contracts (Copper Creek & Poly) I see an opportunity to get a better 'return' when we plan to sell our contract, and we LOVE Wilderness Lodge.
My ‘logic’ has us keeping the contract for approx. 20 years. (in 20yrs time we will be financially free and can re-assess our desires and travel destinations- Prob end up back at Disney but please hear me out)

So my example below is based off buying 160 points at Copper Creek RESALE looking at the ROFR thread I have this at approx. $135.00pp

$135.00x160=$21,600+ closing (call it $22k upfront)
Maintenance Fee’s for 20yrs: $7.45x160x20yrs= $23,840 (yes I know they will rise, but so will my wage so I’m calling it a white wash and just doing the simple maths LOL)
$22,000(upfront) + $23,840 (MF) = $45,840 total cost.
$45,840/20 years= $2,292 per year.

BUT if we sell in 20 years, now I know no-one has a crystal ball but a contract with sustainable length left on it like Copper Creek I would hope/expect it to hold a decent amount. I have estimated it to be worth around $120pp (this is really a stab in the dark, looking at prices today, expecting the general cost of living to rise to come up with the guess as well)
If I sold my points at a $120pp after 20 years I would get $19,200 (I know I will have to pay to sell it)
If I was to take my total cost of $45,840 and credit myself the $19,200 sale I am then left with it being $26,640 or $1332 per year.

To me that is a no brainer… $1332 per year for 2 week trip every 2 out of 3 years.

Background
Family of 4- 34(m), 35(f), 8(m) & 5(f) and we are from Australia. We plan to go to Disney 2 years in a row then have a year off, with the year we don’t go we plan on splitting those points 50/50 to bank and borrow. We are in the market of around 160 points and each trip we hope to spend 2 weeks in studios. Up until now we have only stayed in value resorts, but have visited deluxe resorts.
(we know the kids will get older and want their own space- we will look into reducing trip duration to upgrade to 1 bedroom as they get older- or buy more points LOL)

Thank you for reading this far, I would appreciate any feedback on the above, I know it’s all very uncertain (now of all times can tell us that) I feel DVC is a solid plan, it works for many people, and it also doesn’t work for others, if we are going to Disney every other year already, then instead of paying $3-5k per trip (and have nothing to show for it- besides the amazing memories) I could do the same/better trip for less and have a contract worth something as well.
We don’t plan on buying for at least another 6 months, hoping our dollar improves a bit and financially will be ready to buy upfront then.

 

[mamaofsix]

That sounds like a good plan. I might also consider pricing out a direct buy, if I were you. You mentioned going 2 years in a row, then a year off. You also mention going for 2 weeks each time. With the cost of tickets, this is a great vacation pattern for buying an annual pass every 3 years, and making those 2 trips 11.5 months apart and use your annual pass for both trips. You'd have to calculate out how much you'd save on 4 annual passes throughout the years vs. the extra cost of direct buy in.

Also consider the discounts you'd be getting on food costs with a direct buy - 2 weeks of discounted food would be a good savings!

 

[Lorana]

This sounds like a great plan! And I also love the Wilderness Lodge.

The only potential problem is that I hear that Copper Creek is VERY hard to get Studios at, even at 11 months. Unfortunately SkierPete’s DVC Availability Charts don’t cover CCV yet so it’s hard to know. What time of year do you plan to travel?

Another possibility if you only plan to own for 20 years is to buy Boulder Ridge instead. It’s ownership is through 2042. You wouldn’t have to worry about selling and the associated costs: commission, taxes, etc.

Further the studios have 3 beds: Queen, pullout sofa and a Murphy bed. With two kids, especially of opposite genders, this could be very important in a few years. I have two boys who absolutely will not share a bed which is why we initially bought into BRV

Your actual sale profit based on today’s dollars is going to be around $14,184 after commission and FIRPTA/US tax. This would make your net cost $31,656 or $1582.80.

For Boulder Ridge, you could get a 160-point contract for $90/point or $14,400. MF are $7.78 per point, so $1244.80 x 20 years = $24,896. Total is $14,400 + $24,896 = $39296 / 20 years = $1,964.80.

Yes, this is more than CCV over time, but the difference is:
- lower upfront buy-in cost
- don’t have to deal with selling in 20 years (and who knows what the market will be like then) as contract ends in 22 years
- slightly larger villas
- studios have 3 beds: Queen, Sofa Bed and Murphy Bed.
- studio availability better than CCV
- no 3 BR Villas if that matters in the future

 

[Sandisw]

Here is my $.02. Buy the one that fits your needs the best and keep the resale value out of the equation,

In 20 years, BWV, BCV, and BRV..along with HH and VB..will no longer be places to trade into because they expire.

With the resale restrictions, that takes some very popular resorts out of the mix, Since we have no idea what they will be doing..though I’d bet a lot they will revamp and market as new, with new point charts, and restrict them to resale points.

Good luck!

 

[ldo]

In 20 years, BWV, BCV, and BRV..along with HH and VB..will no longer be places to trade into because they expire.

With the resale restrictions, that takes some very popular resorts out of the mix, Since we have no idea what they will be doing..though I’d bet a lot they will revamp and market as new, with new point charts, and restrict them to resale points.

concur. but with VGF, Poly, BLT, and AKV, all very popular resorts, still available to trade into, I don't think it'll matter much for resale value IMHO esp. if the spread is between resale and direct is large.

 

[Sandisw]

concur. but with VGF, Poly, BLT, and AKV, all very popular resorts, still available to trade into, I don't think it'll matter much for resale value IMHO esp. if the spread is between resale and direct is large.

Sure, but the resale value of a contract that has lost trading power in 20 years may not command the selling price that was used.

We have no idea if DVC contracts continue to hold resale 20 years from now That’s why I always say, keep that out of the equation and this way, when you go to sell, any value it still has is a bonus.

 

[Kylie_1504]

That sounds like a good plan. I might also consider pricing out a direct buy, if I were you. You mentioned going 2 years in a row, then a year off. You also mention going for 2 weeks each time. With the cost of tickets, this is a great vacation pattern for buying an annual pass every 3 years, and making those 2 trips 11.5 months apart and use your annual pass for both trips. You'd have to calculate out how much you'd save on 4 annual passes throughout the years vs. the extra cost of direct buy in.

Also consider the discounts you'd be getting on food costs with a direct buy - 2 weeks of discounted food would be a good savings!

This was my initial logic into our trip patterns and have looked into a fair bit, but originally dismissed buying direct as the 'break even' point was somewhere around 19yrs but I have just done some more calculations and have come up with the following:

Buying 160 points direct at Copper Creek= $33,600 up front + 20yrs MF = $23,840 total $57,440
Buying 160 points resale at Copper Creek= $19,800 up front + 20yrs MF = $23,840 total $43,640

Selling after 20yrs at $120pp would give us $19,200 back

crediting the sale back into out 20 years:
Direct: 57,440- 19,200 = 38,240 / 20yrs= 1,912 per year
Resale: 43,640- 19,200 = 24,440 / 20yrs= $1,222 per year

Tickets (per 3 years)
Direct: Gold Passes: $2,876 (buying once and using within 11.5months)
Resale: UK tickets: $4,464 (buying the 14 day passes twice)

Packaged together for final costs it is:
Direct: 1,912*3+2,876= $8,612 every 3 yrs or $2,870 per year
Resale: 1,222*3+4,464= $8,130 every 3 years or $2,710 per year


SOOOOO it would cost an extra $160 per year to buy direct but with that you will get the perks of buying direct and for 2 week stays at a time would get that back with food and merch discounts IMO. The only thing I would be worried about is having to be restricted to the 11.5months to ensure we get to use the AP twice, the other way gives us more flexibility.

*I know the above prices are all subject to Taxes and buying and selling fee's and also having a crystal ball on what resale prices will look like in 20yrs time but yeah something to think about.

 

[fumanchu2488]

Sure, but the resale value of a contract that has lost trading power in 20 years may not command the selling price that was used.

We have no idea if DVC contracts continue to hold resale 20 years from now That’s why I always say, keep that out of the equation and this way, when you go to sell, any value it still has is a bonus.

I think this is such an important thing to consider and one reason we bought direct.

My wife and I have an infant and 2 YO. We bought last year. We live much closer than Australia and do not plan on selling. The resale restrictions at RR are not great but IMO Disney is trying to drive resale prices lower at all resorts by not allowing them to be used at newer resorts. In 15 or 20 years there will be even more new resorts and imminent loss of some of the most popular resorts. I think L14 resorts resale goes way down 20 years from now.

If 20 years is your timeline than it may be worth just buying at one of the expiring resorts (BR, BWV or BCV). If you are unsure then I would look direct. The last thing you want to do is own a timeshare and pay maintenance fees and not use it if you can’t sell in the future.