OKW - Resale (2042) vs. Direct (2057)

[Grumpy by Birth]

I've been doing some research for a possible add-on at OKW. All of the resale contracts I see currently available are with 2042 expiration. It seems that extended (2057) contracts are few and far between on the resale market (plus they would presumably cost more than 2042 contracts).

I realize these are "apples and oranges" but stick with me through the math.

A "typical" OKW resale contract (2042 expiration) goes for around $100/point. I'll use an actual contract on the market right now as an example... 150 points at $102/pt. This particular contract is stripped, with first points coming in 2021 UY.

So that resale contract comes to $15,300 for 3150 lifetime points (150 x 21 years).

A direct OKW contract costs $165/point. A 100 point contract would cost $16,500. But that would come with a 2057 expiration and would include 2019 and 2020 points. So this contract would come with 3800 lifetime points (100 x 38 years).

So, while the direct contract offers 50 points less per year, it has 650 more total points over the lifetime of the contract. The points are just "spread out" over more years. The cost difference is $1200 more for direct... much smaller savings compared to AKV resale vs. direct, for example, which would be about $8000 less for a 100 point resale contract (I saved nearly $18,000 on a 220 point contract). But that $1200 is buying an additional 650 points over the lifetime of the contract, which comes to about $1.85 per point for those extra 650 points (a pretty good price/point).

Also, although I suspect we'd have to be put on a waiting list, we wouldn't have to fool with ROFR. And to find the UY we want via resale, we'd probably have to wait a while anyway until just the right contract shows up.

In this instance, it seems like buying direct would make sense. Not only would it make us "blue card" members with the various perks that comes with (discounts, etc. which could go away at any time), the most significant benefit would be that we'd be able to use those 100 direct points at Riviera, Reflections, and future resorts. That alone might be worth $1200 more, but we'd also be getting more total points (albeit 50 fewer per year) and use of those points until 2057.

Of course, we'd be paying MF for those additional years, but if we wanted to own there until 2057, we'd have to hold out for an extended (2057) resale contract, and the MFs would be a wash. Plus the initial cost for a 2057 resale contract would be higher than a 2042 contract, so there would be even less savings by going resale for an extended OKW contract.

Is my thinking way off on this? It seems that the unique circumstances with the OKW extensions make purchasing direct a good option there.

 

[E2ME2]

I've been doing some research for a possible add-on at OKW. All of the resale contracts I see currently available are with 2042 expiration. It seems that extended (2057) contracts are few and far between on the resale market (plus they would presumably cost more than 2042 contracts).

I realize these are "apples and oranges" but stick with me through the math.

A "typical" OKW resale contract (2042 expiration) goes for around $100/point. I'll use an actual contract on the market right now as an example... 150 points at $102/pt. This particular contract is stripped, with first points coming in 2021 UY.

So that resale contract comes to $15,300 for 3150 lifetime points (150 x 21 years).

A direct OKW contract costs $165/point. A 100 point contract would cost $16,500. But that would come with a 2057 expiration and would include 2019 and 2020 points. So this contract would come with 3800 lifetime points (100 x 38 years).

So, while the direct contract offers 50 points less per year, it has 650 more total points over the lifetime of the contract. The points are just "spread out" over more years. The cost difference is $1200 more for direct... much smaller savings compared to AKV resale vs. direct, for example, which would be about $8000 less for a 100 point resale contract (I saved nearly $18,000 on a 220 point contract). But that $1200 is buying an additional 650 points over the lifetime of the contract, which comes to about $1.85 per point for those extra 650 points (a pretty good price/point).

Also, although I suspect we'd have to be put on a waiting list, we wouldn't have to fool with ROFR. And to find the UY we want via resale, we'd probably have to wait a while anyway until just the right contract shows up.

In this instance, it seems like buying direct would make sense. Not only would it make us "blue card" members with the various perks that comes with (discounts, etc. which could go away at any time), the most significant benefit would be that we'd be able to use those 100 direct points at Riviera, Reflections, and future resorts. That alone might be worth $1200 more, but we'd also be getting more total points (albeit 50 fewer per year) and use of those points until 2057.

Of course, we'd be paying MF for those additional years, but if we wanted to own there until 2057, we'd have to hold out for an extended (2057) resale contract, and the MFs would be a wash. Plus the initial cost for a 2057 resale contract would be higher than a 2042 contract, so there would be even less savings by going resale for an extended OKW contract.

Is my thinking way off on this? It seems that the unique circumstances with the OKW extensions make purchasing direct a good option there.

That's an interesting way to look at it, but the number of points spread over those additional years compared to average points per year may not be "apples-to-apples".
The usability is definitely a plus for future. Why not just put up the additional $8,250 and buy the same 150 points?? That should change the delta to 9,450/1900 or only $4.97 more per point.(??)

 

[_auroraborealis_]

OKW is a bit of a freak in that because so few owners took the extension there are not many 2057 resales. Thus to get 2057 you basically have to buy direct, and the pricing may make sense.

 

[quandrea]

If I wanted OKW (which I do). I’d buy direct. I think it’s worth it in this resort’s case. Now you have me wanting to buy. The wait won’t be long. Last time I was on it (last year), I waited less than a week.

 

[Grumpy by Birth]

Why not just put up the additional $8,250 and buy the same 150 points??

Another $8250 is starting to get out of the price range I want to pay at this time. Plus 100 points (the minimum direct purchase) is enough for us at OKW. My point was that I could get more points via resale for the same (or less) money, but with the earlier expiration date, it's technically fewer overall points, which makes the prices for direct and resale pretty comparable.

 

[jwinky]

If I wanted OKW (which I do). I’d buy direct. I think it’s worth it in this resort’s case. Now you have me wanting to buy. The wait won’t be long. Last time I was on it (last year), I waited less than a week.

I was waitlisted for SSR direct in Feb and only waited a week before they found my 100 points with my requested UY. At the time, they had try to sell me OKW as well since it did offer more years and same $165 direct price. So I don't think you have to wait long if you went direct.

 

[Marv_barr]

We had the same thought process. We purchased 75 points direct last year @OKW just before the minimum point was increased. We were on the waitlist for about 2 weeks.

 

[zavandor]

I can see a fault in your reasoning: points are not all worth the same.
When the extension was offered, the vast majority of owners declined it at $15. They though that points 40 years in the future weren't even worth $1. I haven't seen the current pricing, but until a few years ago, extended contract were sold for just $8-9 more than not extended contracts.
So the trend continues, points more than 20 years in the future aren't valued much. This is confirmed by the high resale cost of contracts like BWV and BCV, the fact they expire in 21 years doesn't bother much the buyers.
So, back to your example, you're giving up 50 points each year in the next 20 years, that are worth $5 each ($100 divided by 20 years for the resale contract), to get more points later when they are worth $1 or less.

The reason points far in the future are worth so little on the resale market is because you don't know what's going to happen, and the longer the prospect, the higher the risks. Will the Coronavirus mutate and trigger a zombie apocalypse? Will WDW end underwater due to climate change? Will your family lose interest in Disney (scariest option!)?

 

[Grumpy by Birth]

I can see a fault in your reasoning: points are not all worth the same.
When the extension was offered, the vast majority of owners declined it at $15. They though that points 40 years in the future weren't even worth $1. I haven't seen the current pricing, but until a few years ago, extended contract were sold for just $8-9 more than not extended contracts.
So the trend continues, points more than 20 years in the future aren't valued much. This is confirmed by the high resale cost of contracts like BWV and BCV, the fact they expire in 21 years doesn't bother much the buyers.
So, back to your example, you're giving up 50 points each year in the next 20 years, that are worth $5 each ($100 divided by 20 years for the resale contract), to get more points later when they are worth $1 or less.

The reason points far in the future are worth so little on the resale market is because you don't know what's going to happen, and the longer the prospect, the higher the risks. Will the Coronavirus mutate and trigger a zombie apocalypse? Will WDW end underwater due to climate change? Will your family lose interest in Disney (scariest option!)?

I'm not sure I agree with your assessment about the value of future points vs. current points. Let's assume that the world hasn't ended due to plagues, global floods, etc. I'm certain we will use the contract until it expires in 2057 and have no desire or need to sell, so I'm not concerned with the resale value.

Further, those stays in the future will almost certainly be more expensive if paying cash. So, by that reasoning the future points have more value, not less. Granted, MF costs will also go up, so it's not 100% "locking in" prices. But if we buy a 2042 contract on the resale market and only save $1200, it will cost us more in the long run if we then end up having to buy another contract in 2042 in order to have points from then until 2057 (which might have to be direct due to availability of extended contracts on the resale market and will cost even more per point for those additional years). In that case, wouldn't it be better to have already purchased them direct decades earlier at a lower price?

 

[zavandor]

I'm not sure I agree with your assessment about the value of future points vs. current points. Let's assume that the world hasn't ended due to plagues, global floods, etc. I'm certain we will use the contract until it expires in 2057 and have no desire or need to sell, so I'm not concerned with the resale value.

Further, those stays in the future will almost certainly be more expensive if paying cash. So, by that reasoning the future points have more value, not less. Granted, MF costs will also go up, so it's not 100% "locking in" prices. But if we buy a 2042 contract on the resale market and only save $1200, it will cost us more in the long run if we then end up having to buy another contract in 2042 in order to have points from then until 2057 (which might have to be direct due to availability of extended contracts on the resale market and will cost even more per point for those additional years). In that case, wouldn't it be better to have already purchased them direct decades earlier at a lower price?

It's much more complicated than I wrote. I have oversimplified for the sake of clarity.
There are people who buy looking at using it for 50 years and people or buy to leave the contracts to their children. I'm not discounting that point of view, which for someone is reasonable.
But it's not the whole story.
Being a long term commitment, DVC presents risks. Once you apply those risks, the value of points received in 40 years is, right now, much lower than point received today or next year or in the next 10 years. If 40 years from now one still has his contract, the last 10 years points are worth exactly like now the next 10 years points are worth
But it's a big if.

And it isn't my opinion, it's the market. Those additional 15 years for OKW are valued 80% less than the next 20 years.

Put it in another way: if DVC starts to sell now (with a discount) points for a renovated BCV, which you'll be able to start using in 2042, would you buy now?

(All of this written by someone who in 2012 bought SSR over BWV also because of the later expiration date)

 

[Sandisw]

It's much more complicated than I wrote. I have oversimplified for the sake of clarity.
There are people who buy looking at using it for 50 years and people or buy to leave the contracts to their children. I'm not discounting that point of view, which for someone is reasonable.
But it's not the whole story.
Being a long term commitment, DVC presents risks. Once you apply those risks, the value of points received in 40 years is, right now, much lower than point received today or next year or in the next 10 years. If 40 years from now one still has his contract, the last 10 years points are worth exactly like now the next 10 years points are worth
But it's a big if.

And it isn't my opinion, it's the market. Those additional 15 years for OKW are valued 80% less than the next 20 years.

Put it in another way: if DVC starts to sell now (with a discount) points for a renovated BCV, which you'll be able to start using in 2042, would you buy now?

(All of this written by someone who in 2012 bought SSR over BWV also because of the later expiration date)

I do understand what you are saying, but value is still something that everyone views differently,

One reason, I bought RIV and sold BWV specifically for the longer expiration date.

So, spending more now for a 2057 vs 2042 makes sense to me. Let’s say in 2042, when one contract is worth zero, that OKW 2057 contract will be worth something, even from a rental stand point,

i think each DVC member has to look at it from their own needs/wants and decide if it makes sense!

 

[Grumpy by Birth]

If 40 years from now one still has his contract, the last 10 years points are worth exactly like now the next 10 years points are worth
But it's a big if.

But, if we've assessed those risks and we're confident that we'll use the contract until expiration, then as you said the points don't "depreciate" in practice even if they are worth less on paper if we wanted to resell. And, again, wouldn't those points have more "spending power" in the future as prices for resort stays increase?

I see a lot of posters here who talk about DVC retaining it's resale value, and that's certainly an added benefit, but I'm not looking to use it for a while and then resell it and hope to get much of my investment back. I view it as a product I purchased to stay in these resorts and if reselling it wasn't even allowed, I'd be ok with that because we'd be purchasing it to use it, not to resell. I understand that life circumstances can change but, for me personally, the risk that I would need to resell is extremely low, so I'm willing to assume that risk.

 

[CraigInPA]

Is it an absolute surety that you will hold onto the contract until 2057, or even 2042? You're basing your calculation on holding the contract to the end. A huge number of people hold their contracts for 10-15 years and then sell them. While a 2057 contract will very likely hold more value than a 2042 contract in 2035 (15 years from now), it's by no means certain than ANY DVC contract will have any future value. I think it's more appropriate to calculate the total number of points in each contract based upon how long you will own it, not when it expires.

You state that you're buying this as an add-on, so I won't go into whether 100 points or 150 points is more appropriate for your needs. I assume you have determined that you don't really need 150, and 100 would do.

 

[zavandor]

i think each DVC member has to look at it from their own needs/wants and decide if it makes sense!

I agree, to the point that I bought SSR also for the extended duration.
But it's something everyone should consider in their evaluations. One might still decide to assign to all points the same value because they consider the risk being very low or mitigated by the resale value of a longer contract. But it must be a conscious decision.

In the OP situation, I would buy 150 resale (but nor stripped) or wait for an extended resale contract. I would not buy 100 direct, because the cost that DVC asks for the additional 15 years is higher than I (and the market) think is fair.

 

[Grumpy by Birth]

Is it an absolute surety that you will hold onto the contract until 2057, or even 2042? You're basing your calculation on holding the contract to the end. A huge number of people hold their contracts for 10-15 years and then sell them. While a 2057 contract will very likely hold more value than a 2042 contract in 2035 (15 years from now), it's by no means certain than ANY DVC contract will have any future value. I think it's more appropriate to calculate the total number of points in each contract based upon how long you will own it, not when it expires.

You state that you're buying this as an add-on, so I won't go into whether 100 points or 150 points is more appropriate for your needs. I assume you have determined that you don't really need 150, and 100 would do.

Absolute surety? I don't think anyone can ever make that claim. But as close to absolute for us as can be that we would use it until expiration.

 

[Grumpy by Birth]

In the OP situation, I would buy 150 resale (but nor stripped) or wait for an extended resale contract. I would not buy 100 direct, because the cost that DVC asks for the additional 15 years is higher than I (and the market) think is fair.

If an extended resale contract were to become available and the price was right, I'd certainly consider that option.

Again, I understand that my "lifetime points" way of comparing a 100 direct and 150 resale contract may be apples and oranges, but $1200 seems reasonable for the additional years PLUS ability to book at future resorts with those points (something we wouldn't be able to do with the bulk of our points, which are resale).

Now, if a resale extended contract was going to save me $5000+ vs. direct, then I might re-assess the value of "blue card" status and whether I'm willing to pay that much more for it. But I think I'd be holding out for a long time waiting for the perfect contract to come up. It would need to not only be an extended contract, but an extended contract with the right amount of points in the correct UY. It could be years before that "unicorn" contract turns up.

 

[Sandisw]

I agree, to the point that I bought SSR also for the extended duration.
But it's something everyone should consider in their evaluations. One might still decide to assign to all points the same value because they consider the risk being very low or mitigated by the resale value of a longer contract. But it must be a conscious decision.

In the OP situation, I would buy 150 resale (but nor stripped) or wait for an extended resale contract. I would not buy 100 direct, because the cost that DVC asks for the additional 15 years is higher than I (and the market) think is fair.

Remember, if 100 is all that is needed, then 150 resale comes with an additional $300 a year in dues for points one doesn’t need or want.

 

[MickyLynn]

Agree, you can't just look at price per point. I'd take the 2057 with lower points for the sake of keeping a tighter lid on dues. In fact, I did just that last year.

 

[Grumpy by Birth]

Maybe this is a more fair comparison... I just found a 2057 resale contract online for 130 points @ $122/point = $15,860.

130 points direct would come to $21,450.

So, in this instance, it IS over $5000 savings for resale (although I believe the 2057 contract I came across was also stripped... first points in 2021, so subtract some of the savings for those two missing years). Still, there's enough price difference to warrant further thought on how much is it worth to have "blue card" benefits? We're unlikely to go the AP route over the next 5 years. After that, it's possible, but still unlikely. So AP discount is probably not going to factor heavily into my decision (this was largely the reason we opted for resale at AKL).

The biggest question for me is ability to book at future resorts with those points. I like the idea of being able to do that. But we aren't counting on staying in those places. We would plan to use the OKW points primarily for OKW stays.

So, in the end, if I can find the "perfect" 2057 resale contract with the right UY and number of points, and save a considerably larger amount on the initial buy-in, I'm certainly open to going that route. For the right price, I might even be tempted to accept the "hassles" of having different UYs, especially if we plan to use our OKW points primarily at OKW.

Worst case, if we opted for a 2042 OKW contract, we'd still have points at AKL until 2057, so most of our points wouldn't be expiring in 2042 anyway.

ETA: And now, after reading a few threads with speculation about what may happen with OKW between 2042-2057, it seems like a contract that expires in 2042 might not be a worst case scenario after all.