OKW $15 option analysis

[Caskbill]

- if you had a choice of buying a 240 non-extended OKW contract and an extended 200 pt OKW contract at the same price, which would you choose?

That's an excellent question. It doesn't try to evaluate the financial analysis being considered, but rather it questions what consumers will consider as the best 'value'.

I think most people would see greater 'value' in owning the 240 non-extended contract. If I were a new buyer, that's what would appeal most to me.

Of course everyone has different personal situations. At my age, the extension means nothing (I'll be 6-feet under way before 2057).

And while it might seem that someone with young children might want the longer contract, I would think even they would see more value to having more points now, rather than a contract that doesn't expire in the year 2042, when their children are in their 40's.

 

[Granny]

Even aside from the financial considerations of paying now for something that we couldn't use for 34 years, I think there is the inherent risk of what will WDW be like in 3+ decades?

There's no guarantee they'll keep pumping money into the parks. There's no guarantee that Disney won't be spun off or sold to another conglomerate that might not care for theme park business.

Do I think these are likely? Not now, but honestly who knows what the world will look like in 2042? On the other hand, I have a lot better comfort level about what my WDW experiences will be like for the next 10 years or so.

So the analysis for me comes down to paying now for a future benefit that I can't be certain will be at least as good as what the current benefit is.

If I had the $3,000 burning a hole in my pocket I'd be adding on before extending. Of course, I don't really care about the resale value of my DVC ownership so that comes into play as well.

 

[chalee94]

That's why he is the nationally respected economist. People buying a 2042 contract today are paying over $2/point/year - close to $3/point/year buying direct from DVC. Some of those points are no good for the next 30 years. Your are now being offered points for $1/point/year. It is a bargain.

it's only a bargain if current pts are exactly comparable to a promise of pts in 35 years. so it's partially a time-value-of-money-type question and would depend on what discount rate you are using.

it's also a matter of economic utility: would you rather have 200 pts in 2007 at $10 a pt or a promise of 2,000 pts in 2050 at $1 a pt? is $1 still a bargain once you have factored in the risk that wdw might be significantly changed for the worse in 40 years...or that gas shortages may make transportation unbelievably expensive...or that you will be too old to enjoy it...? (in the words of another respected economist, john maynard keynes: "in the long run, we are all dead...")

so to answer gblast's most recent question: i'd take the 40 extra pts over the period i could use (5 extra nights in a studio in nov-early dec!) over the opportunity to leave DVC to my estate. no question.

 

[spruce]

We'd buy 40 points now rather then extend for 15 years but we have enough points so that option is out.
In 2042, I'm 82, wife is 78, son is 55 and grandkids will be in their 20's if born within 15 years. Son says don't extend for his benefit.
I guess the only risk is that I pay cash for WDW trips if I survive past 82.

 

[gblast123]

Interesting that there do not seem to be any people who are interested in extending.

Recently spoke with some people in QA and they didn't have too much business in the opting in end.

Unofficially, it is much less then 50 percent.

 

[Pootle]

I think I've just about read every post on this subject both here and on TUG. I want to be convinced that it's a good idea . Alas, I'm another one who won't be taking up the offer but thinks it's a great idea for Disney. OTOH, I also can't ever see me wanting to sell my points either.

 

[gblast123]

I just spoke to a timeshare reseller late yesterday who indicated that in her opinion, an extended OKW contract would sell for less than a current BWV, BCV or VWL.

It would definately sell for more than an unextended OKW but she would not venture to guess right now by how much. She was pretty sure that it would NOT sell for $15 more than an unextended OKW.

The same would go for a SSR vs. OKW extended although she thought that it would be in the same ballpark and would have a similar asking price.

 

[SB in KY]

Then there are those of us that will be too old to benefit from the extension years, so it has no appeal and we really don't care much about the resale value...because we have no intention of selling....we may be in the minority, but we just plan to keep what we have and have fun with it for the next 30+ years!!!

 

[simzac]

Then there are those of us that will be too old to benefit from the extension years, so it has no appeal and we really don't care much about the resale value...because we have no intention of selling....we may be in the minority, but we just plan to keep what we have and have fun with it for the next 30+ years!!!

Couldn't have said it any better myself. I'll wave at you SB each time I fly from Indy to WDW

 

[gblast123]

Just a slight update. It seems that there will be a "special assessment" of $25 to those people who do nothing by the deadline.

I suspect that there will be a few people who will do just that, nothing, and if they are hit with this $25 per point, they will be in a difficult financial situation, especially if they have financed the purchase of the points.

They will face a hard decision, if they don't pay the $25, Disney will get the whole thing back...if they choose to foreclose. Otherwise the hapless procrastinator will have to sell at whatever they can get, just to get something.

I intend on fully sending back the resounding NO but I would send it by certified or some other tracking to make sure that I don't pay $25 later.

Does anyone know Disney's rationale for doing this? No one can seem to figure out why.

 

[Cruelladeville]

I am also firmly in the NO camp, as I will be 90 when the extended years come into play. I am sure that my children would prefer the $5000 in cash, rather than a contract with 12 years on it that they must pay dues on if they want to use it. Dues will probably be way over $2000 by then. I think it's a good value now, but who knows the financial condition/vacation habits of offspring in another 35 years??

 

[plamp]

Until I started reading here I was leaning towards going for the extension. Reason being, say I want to sell when I'm around 70 (2032). I figure then those extra 15 years (2042 v. 2057) would make a big difference in resale value.

 

[dvc at last !]

subscribing...........

 

[gblast123]

Until I started reading here I was leaning towards going for the extension. Reason being, say I want to sell when I'm around 70 (2032). I figure then those extra 15 years (2042 v. 2057) would make a big difference in resale value.

I think that if you had 200 points and bought 40 points more, you could rent out the 40 points. At an average price of $10 minus $4 maintanence, that would be $240 per year extra. Put that away for 35 years, that is $8400 in principal.

If you add about 5% per year in interest and don't spend the $240 every year, you will come out (being very conservative) with a total in excess of $16000.00 over a 35 year period.

Over a 25 year period, you would conservatively be ahead by $8000.00 at least. On a 200 point contract, that would mean an extra $40 per point difference between an extended versus non-extended contract.

While I expect that there would be some difference between the two contracts, ie one with 10 years left, vs. one with 25, I don't think that it will be a $40 per point difference.

Since Disney is charging about $2 per year per point, $2 X 200pts = $400 X 15 years = $6000.00.
Resales tend to go for far less than what Disney charges.

Even without adding interest, you will be doing far better, financially by adding 40 points.

 

[JimC]

...Question to all - if you had a choice of buying a 240 non-extended OKW contract and an extended 200 pt OKW contract at the same price, which would you choose?

That would depend on which was more important to me -- the extra 40 points or the extended use period.

Having 40 points that you can not use is a bit silly, since I can add on at any time and why incur the far more substantial cost of dues over the years unnecessarily. And before you say but you could rent out the points -- in my view that would constitute commercial renting and even if it did not I have no time to waste on being a landlord (been there, done that and have the T-shirt to prove it!).

Same on the extended use -- if I am going to be too old to enjoy it why would I seek an extended contract -- possibly to protect resale option (which may or may not be a material factor) or to provide a better contract to gift or bequeath to others (while very viable, I have begun to question the rationale of buying a timeshare for that purpose, but that is a very lengthy discussion for another day).

So my sense is that it comes down to how old you are and how many points you need to take current vacations. Whether you want a contract as large as 240 points (while I have a 300 point contract, it is not something I would likely do over again -- two 150 contracts seems a smarter move).

Just my 2 cents added to the mix.

 

[Stinson]

Thank you for the great analysis.

When we purchased points in OKW and BWV ten years ago at $52 per point, we questioned whether the character of Disney would remain long enough for us to get our money's worth from the DVC purchase. Well, we've now visited Disney on 26 occasions and, thank God, even if we didn't visit again or sell our points, we've still gotten our money's worth from the purchases. (Who remembers that in the 90's, length of stay park passes were included free with our DVC points.) But we're not going to sign on for the extended period because we are now seeing significant changes in the character of both Disney and DVC and do not want to take a chance on the future. Thirty-five additional years is really enough for us. But if we were thinking of spending the money for the extended period, we would instead purchase additional points, probably at another resort. Maybe a young family might like the idea of a fifty year contract, but from the perspective of our past ten years of experience with Disney, I would advise that thirty-five years is definitely enough!

 

[gblast123]

Thank you for the great analysis.

When we purchased points in OKW and BWV ten years ago at $52 per point, we questioned whether the character of Disney would remain long enough for us to get our money's worth from the DVC purchase. Well, we've now visited Disney on 26 occasions and, thank God, even if we didn't visit again or sell our points, we've still gotten our money's worth from the purchases. (Who remembers that in the 90's, length of stay park passes were included free with our DVC points.) But we're not going to sign on for the extended period because we are now seeing significant changes in the character of both Disney and DVC and do not want to take a chance on the future. Thirty-five additional years is really enough for us. But if we were thinking of spending the money for the extended period, we would instead purchase additional points, probably at another resort. Maybe a young family might like the idea of a fifty year contract, but from the perspective of our past ten years of experience with Disney, I would advise that thirty-five years is definitely enough!

Unfortunately, I would have to agree with you. Especially in the last few years, things have not proceeded as in prior years and Disney is going down the wrong road.