please help me justify the money for DVC

[jcodespoti]

I give $11,000 (and loose interest on the money)

You won't lose the interest. The rate of inflation is about 3-4% most banks are paying about 2%.

My wife and I have no kids and we bought 5 years ago.

Joe in CT

 

[mikesmom]

and as for losing interest...

We bought in at $67 at BWV. Checking resale right now BWV is gong for somewhere between $75 and $80 per point. (There's a couple at $85, but no telling if they actaully GET that). I'm not sure what ROFR is right now but assuming those $75-$80 as probable, if we sold right now we'd be making 11- 19% return on that purchase. Sheesh! I wish all my stock investments made that kind of return. I think we sheltered the money by putting it in DVC

 

[ColoradoBelle1]

THere are some excellent and varied ways to look at the purchase of DVC as an INVESTMENT.
I feel other timeshares are more like new cars...you drive em off the lot and you are looking at pennies on the dollar return if you had to sell the car.
Disney is different. People are consistently selling for more than they purchased...even after adding in closing costs and realtor fees.

THis might make it easier too.
What if you bought 100 points a OKW at $70 a point and with a net cost (closing fees) of $75. SInce we are talking INVESTMENT....you NEVER use the points and only rent them at $10 a point. Take away $4.00 per point for yearly maintenance.
So, 7500 invested with a yearly return of 600 or 8%
In 10 year, my guess is that OKW will be reselling at 85 a point if inflation/trends continue...BUT lets say you sell and NET just 75 a point or your original investment back.....You've made 8% a year and my guess is that no one is declaring the rental income on taxes...but I could be wrong.

A pretty good investment.

If you buy 200 points and rent 100 points, I think you might find that your use of 200 points every other year turn out to be free (the 600 net rental income pays for maintenance fees with 200 play money left over.
Again, my guess is that you sell in 10 years and make back the entire investment purchase price....So free vacations every year.

The money you could otherwise invest safely in a bank is only paying 2% and that money is taxed...so NETS less.

The difference in Disney points as opposed to other timeshares is that so far, resales have been at a higher price than purchase price and rental income of 10 a point is so far UNDER what Disney RENTS these properties for that it is guaranteed almost to increase as Disney prices increase.

So....I'm buying because in addditon to being in a place I love to visit...it just seems like a very good investment!

Good luck, whatever you decide!

Colorado Bell

 

[tjkraz]

Timeshares do not make good investments...no, not even DVC.

Resale prices are largely propped-up by DVC's Right of First Refusal. If they ever stop selling new points, ROFR likely ends and the value of contracts may plummet.

All DVC contracts also have ending dates, meaning that their value diminshes with each year that passes. The first set of resorts (ending 2042) still appears to be on the upswing, but that won't last much longer, IMO. I'd guess that values will start to drop in the next 5 years or so, as the remaining life approaches 30 years. There you're starting to get into territory where potential buyers in their early 30s will lose their access to Disney before they reach retirement age.

While there are probably many who have done it, I think buying points with the intent to rent is pretty risky. Rental prices have been in the $10 per point range for years now, as member dues continue to increase. That means that margins get slimmer every year. Rental income is taxable.

There are also a number of external influences that could easily impact the value of a DVC contract...things like the ownership status of Disney (you should have seen the fear around here when Comcast made their bid a year ago), terrorist activity, the economy, etc. Take a look at the rent/trade boards. What do you think will happen to all of those points up for rent if travel levels go back to a post-9/11 level again?

While I'm sure there are worse ways to invest your money, DVC (or any timeshare) doesn't strike me as being among the wisest.

 

[No1HawkFan]

You seem to be talking in circles when saying that the resorts are diminishing products so the value will be going down. Then you say the resorts, however, have been going up in price.

I would say based on the history that there is no reason to believe that the price of the properties are going to diminish. Disney's price since 1991 has always risen even though the product ends in 2042 or 2054 regardless if purchased in 1991, 1996, 2004 or 2012. Why can Disney do this? Simple, the point chart is locked in until 2042 or 2054, however, the room rates continue to rise every year. It continues to make sense to purchase. The product will generally pay itself over say 5 vacations and I believe the product will still do that for someone wanting to buy at Old Key West in 2020 at $105 per point price.

Again renting points does not bring as much money as in the past as their are more people renting, however, through this board it is typically a standard $10 per point even though the annual dues have risen.

I still say it works as ownership or investment.

 

[gjw007]

You seem to be talking in circles when saying that the resorts are diminishing products so the value will be going down. Then you say the resorts, however, have been going up in price.

I would say based on the history that there is no reason to believe that the price of the properties are going to diminish

The value of your DVC ownership is going to go down. If you doubt that, please tell me what your current DVC ownership (non-SSR) is worth is 2043 (2055 for SSR). If you purchased this thinking that it is an investment, you will be truly sorry about the value in 2043 or 2055. Disney may come up with a new timeshare program to replace the existing one but at the end of the contract, the value of that contract is zero. While the resale prices are currently going up, I won't guess how long that will continue but there will be point where it will be going down. Disney's ROFR does help keep the value of the resale up. Look at some of the other timeshares and see what happens to their value compared to the value of timeshares that do exercise ROFR.

 

[No1HawkFan]

The value of your DVC ownership is going to go down. If you doubt that, please tell me what your current DVC ownership (non-SSR) is worth is 2043 (2055 for SSR).

The value is not going to do down. They will obviously be worth nothing in 2043 and 2055. However, again the prices will continue to rise. Of course, my ownership will be sold before 2035 so I will have no fear.


All other timeshares have 50%-60% value of what the resorts sell them at. Marriott Grande Vista Platinum week from Marriott is $20,200 and resale you can buy for $13,000 and Marriott will not act on their ROFR. All other timeshares are the same way except for one, Disney.

 

[tjkraz]

You seem to be talking in circles when saying that the resorts are diminishing products so the value will be going down. Then you say the resorts, however, have been going up in price.

Most of the resorts are still on the upward slope of the bell curve, but that won't last forever. Like I said, resale prices will probably continue to increase for another 5 years, give or take. Then they will flatten out and begin to decline.

It continues to make sense to purchase. The product will generally pay itself over say 5 vacations...

By your numbers, perhaps. But that doesn't mean that everyone calculates "value" in the same manner. The breakeven point varies GREATLY depending upon the season in which you use your points and the days of the week. The same 1B at BCV can go for as few as 22 points per night, to as many as 75 per night.

Other factors include cash discount rates (it's crazy to compare to the published Rack Rates given the discounts available) and a projection of how maintainance fees will increase over the next several decades.

...and I believe the product will still do that for someone wanting to buy at Old Key West in 2020 at $105 per point price.

At that price point you're probably looking at a breakeven period of 7-12 years. I don't see any way that folks would prepay for 22 years' worth of vacations when it will take 1/3 - 1/2 of that time before they even break-even.

However, again the prices will continue to rise. Of course, my ownership will be sold before 2035 so I will have no fear.

Prices of NEW resorts (with much longer contracts) will continue to rise. Older expiring contracts will decline. It's inevitable.

 

[Dean]

The value of your DVC ownership is going to go down. If you doubt that, please tell me what your current DVC ownership (non-SSR) is worth is 2043 (2055 for SSR).

The value is not going to do down. They will obviously be worth nothing in 2043 and 2055. However, again the prices will continue to rise. Of course, my ownership will be sold before 2035 so I will have no fear.


All other timeshares have 50%-60% value of what the resorts sell them at. Marriott Grande Vista Platinum week from Marriott is $20,200 and resale you can buy for $13,000 and Marriott will not act on their ROFR. All other timeshares are the same way except for one, Disney.

If you wait until 2035, you can bet your DVC points will be worth less than they are now no matter what the room prices are for the DVC units. DVC does and will act like any other timeshare, only the curve is shifted somewhat to the right. And once the ROFR stops, the prices will become more variable immediately and the bargains will be there. As the RTU gets much under 30 years it will affect the price though likely not as much as non DVC resorts. You can actually find GV less than $13K, I've seen it for $5K platinum a couple of times.

 

[No1HawkFan]

Prices of NEW resorts (with much longer contracts) will continue to rise. Older expiring contracts will decline. It's inevitable.[/QUOTE][/COLOR][/COLOR]

The price of Saratoga Springs is not rising currently. Disney might be raising the price per point soon, however, resale value is not rising. What is rising? Beach Club points which end when? 2042. Why? Supply and demand.

Beach Club will always bring more money then Saratoga Springs. It is a small resort with few owners and Saratoga Springs is a large resort with many owners. Do me a favor and watch the TSS(sponsor of this site)? I just checked and they have a Beach Club 150 point contract listed(not sure if I can post the price on here) and I am sure it will be "Sale Pending" before next Wednesday. Then look at the listings for Saratoga Springs and follow them as well.

As far as the comment on the Grande Vista(from Dean) for $5K I am pretty sure that is an E-O-Y ownership. If you ever see one listed for every year Platinum Grande Vista 2 bedroom for $5K please e-mail me the link at dmarino61361@aol.com. Thanks in advance.

 

[tjkraz]

The price of Saratoga Springs is not rising currently. Disney might be raising the price per point soon, however, resale value is not rising. What is rising? Beach Club points which end when? 2042. Why? Supply and demand.

Beach Club will always bring more money then Saratoga Springs.

Of course that last statement is completely untrue. Supply and demand are obviously propping-up the resale value of the smaller resorts. But to imply that will always be the case is ludicrous.

Which will have more value...

2040: BCV with 2 years remaining or SSR with 14 years? SSR
2035: BCV 7 yrs or SSR 19 yrs? SSR
2030: BCV 12 yrs or SSR 24 yrs? SSR

As I said, I think that the resale price for BCV and others will continue to increase for (give or take) the next 5 years. We can agree to disagree on when exactly the values will begin to decline, but the fact that it will happen is indisputable.

 

[No1HawkFan]

Of course that last statement is completely untrue. Supply and demand are obviously propping-up the resale value of the smaller resorts. But to imply that will always be the case is ludicrous.

Write it down, take a picture, I don't care. You can print it front page, back page, middle of the page. I believe that in 2020 a 150 point package at the Beach Club will sale(on the resale market--which is true value) at a higher price per point then a 150 point package at Saratoga Springs.

By the way the Beach Club listing on TSS is already "Sale Pending".

I think we should just agree to disagree. You seem to know exactly what is going to happen in the future by saying "but the fact that it will happen is indisputable." I will dispute that by saying it is not a fact.

 

[tjkraz]

Write it down, take a picture, I don't care. You can print it front page, back page, middle of the page. I believe that in 2020 a 150 point package at the Beach Club will sale(on the resale market--which is true value) at a higher price per point then a 150 point package at Saratoga Springs.

I NEVER said that SSR would be selling at a higher resale price than BCV in 2020. Not sure why you are implying that I did say that.

The only comment I've made with regard to BCV resale prices is that prices will begin to fall in about 5 years. In other words, if BCV resale prices happen to be around $100 per point in 2010, I don't see them continuing to climb to $101+ due to the overall declining value (i.e. number of years remaining.)

By the way the Beach Club listing on TSS is already "Sale Pending".

I'm not surprised either. But the number of BCV points changing hands daily pales in comparison to the thousands of SSR points folks are purchasing either on the resale market or direct from DVC. You could never do an apples-to-apples comparison as long as there is more than one outlet for SSR points.

Regardless, it's not really relevant to a discussion of value 20-30 years from now.

I think we should just agree to disagree. You seem to know exactly what is going to happen in the future by saying "but the fact that it will happen is indisputable." I will dispute that by saying it is not a fact.

OK, so let me make sure I understand:

1. You believe that in 2035 points at BCV with only 7 years remaining will have a higher resale market value than those at SSR with 19 years remaining. Yes or no?

2. You believe that resale prices at BCV will continue to climb right up until 2042 with no overall reduction in value (as evidenced by your "the value is not going to do down" comment a few posts ago.) Yes or no?

 

[DVCPAT]

I agree. I actually think the shorter contract life will have greater appeal to the folks that say “you’re planning on vacationing in Disney for how long?”

The future resort rates will dictate the cost of a DVC resale. For example, in 2037 Disney All-star rooms might rent for $350.00 dollars per night (Ten night stay = $ 3500.00) I don’t think it would be difficult to sell a 5 year DVC contract for a price half of the cost of a 5 year value resort vacation. I think a 5-year vacation package that sells for a fraction of a new DVC contract would be easy to sell.

 

[tjkraz]

I agree. I actually think the shorter contract life will have greater appeal to the folks that say “you’re planning on vacationing in Disney for how long?”

...snip...

I think a 5-year vacation package that sells for a fraction of a new DVC contract would be easy to sell.

DVCPAT:

You must have missed the post where No1HawkFan said that the value of his points will never go down. He doesn't intend on selling his contract for a fraction of the new cost with only 5 years left...he wants the whole kit and kaboodle.

I totally agree with your post...as long as WDW is still a viable vacation destination and maintenance fees don't skyrocket over the next 2-3 decades, there will ALWAYS be value in our points. But, as you stated, that value will only be a fraction of what it is today as we get closer to the ending dates of the contract.

 

[Dean]

As far as the comment on the Grande Vista(from Dean) for $5K I am pretty sure that is an E-O-Y ownership. If you ever see one listed for every year Platinum Grande Vista 2 bedroom for $5K please e-mail me the link at dmarino61361@aol.com. Thanks in advance.

Actually both were every year. But they were the exception. I posted them to make the point that it is commonplace to find bargains when there is no active ROFR. Even if 10 sell for $20000, some will sell for $5000 or less. I've bought units for 10% of the offering price and 3% of the original sales price, on several occasions when the resort itself would have bought it directly for several times what I paid. Timeshare are a unique item in some ways like used cars but far worse. Likely more like used motorcycles or motor homes, with a much more limited audience. I've seen Grande Ocean Platinum Ocean side for $12K and Aruba Gold 2 BR ocean side for $7900, etc, etc. The bargains are out there if you look and the same will be true for DVC immediately after the ROFR is stopped. Buying timeshare is like trying to pick up someone in a bar with an explicit come one, you may get your face slapped 100 times but someone will eventually so OK (just an example, I'm married 25 years this summer).

 

[DVCPAT]

DVCPAT:

You must have missed the post where No1HawkFan said that the value of his points will never go down. He doesn't intend on selling his contract for a fraction of the new cost with only 5 years left...he wants the whole kit and kaboodle.

I totally agree with your post...as long as WDW is still a viable vacation destination and maintenance fees don't skyrocket over the next 2-3 decades, there will ALWAYS be value in our points. But, as you stated, that value will only be a fraction of what it is today as we get closer to the ending dates of the contract.

I agree, but I think people will evaluate a DVC purchase in relation to the cost of staying in a comparable Disney resort. What will a Disney vacation cost in 10, 15 or 20 years?

I don’t think the clock will dictate the future DVC resale cost. The price of a Disney vacation in 10, 15 or 20 years will, IMO.

 

[tjkraz]

I don’t think the clock will dictate the future DVC resale cost. The price of a Disney vacation in 10, 15 or 20 years will, IMO.

Oh, I have no doubt it will be a combination of elements, many of which we can't even begin to forsee today.

For instance, what will happen to the "value" of points at BCV, BWV and VWL if DVC takes over the garden wings at the Contemporary?

* Contracts at least 12 years longer.
* The single best location (from an accessibility POV) in the program.
* Hundreds of resort rooms added to the "desirable" category.

That one move could really turn the program on its head.

 

[Dean]

I agree, but I think people will evaluate a DVC purchase in relation to the cost of staying in a comparable Disney resort. What will a Disney vacation cost in 10, 15 or 20 years?

I don’t think the clock will dictate the future DVC resale cost. The price of a Disney vacation in 10, 15 or 20 years will, IMO.

Heck, many people can't even do that now. How many people have we seen post they looked at DVC 5-10 even 13 years ago and didn't buy but have gone every year, many times multiple trips. DVC is a timeshare, plain and simple, and that fact alone will deter many. Plus a lot more will not be willing to tie up their money for a modest savings. IMO, DVC needs to consistently save one 50% min compared to rack rates to even start to think about it. Or if you compare to usual discounts, I'd take 20% below that level. Of course there are other factors like dining costs though I think most people over estimate what they'll save in that area. For some the pass discounts may be enough of a factor to convince them.

Buying DVC has a certain amount of risk and you are giving up flexibility and choices when you buy. Of course you open up other choices and hopefully, savings. But the dues could go up enough to out pace any savings, DVC could sell the maint contract, a resort could be wiped out, and any one of another 20-30 issues that would affect the reasonableness of owning. And that doesn't include the personal life changes that could affect decisions like job loss, illness and the like.