Riviera Resale. Why?

[Noah_t]

Personally I don’t think there’s anything wrong with buying Riviera direct if you intend to use it for 20+ years. My friends who have been were blown away!

I just wouldn’t pay much for it resale.

In all honesty what would you pay for say 100 points at Riviera resale?

 

[Noah_t]

Got it. First off I read too quickly. But now I've typed up this whole damn thing so I'm going to post it anyway.

Yes you can see a gain on your investment, but it's a poor one. The red flags just went off when I saw your post because I ran these numbers a ton and any way you realistically slice it it isn't a good moneymaker.

I do think your assumptions are too generous in favor of DVC.

Concerns/Assumptions:

• Is $10/point premium attainable, every year?
  • I'm going to assume it is. Side note - I inflated both the annual dues and the premium by 3% each year which helps your cause but I thought it was more realistic. Year one you have $2,000 to invest, Year two $2,060 and so on.
• Closing Costs
  • I don't think they're fair to ignore but I've done so for the sake of this equation
• Interest rate
  • This is the big one. 5% over 50 years is super, super bad, assuming we're dumping this into a total market index fund. Yes, future results could be worse than historic averages but if that's the case over 50 years then maybe people aren't spending a ton to rent DVC points either.
  • I used 7%. Still historically a little low, but again, trying to be conservative but realistic here.
• Taxes
  • This is the BIG one I'm not really going to touch. Renting DVC points counts as income. I'm guessing most people dropping 30-35k on points are in at least the 22% marginal bracket, even assuming no state taxes. Yes, investments are taxed, too, but generally at a lower rate and also easier to shield, like if any of this can be put into a retirement account to grow

If you lump $32k into the stock market and see a 7% annual return you'll have $880k in 49 years. If instead you buy these DVC points and rent them out at your premium each year you'll end up with $743k, a difference of $137k. If you include $1,000 worth of closing costs you're up to $177k difference.

When I think of investing I always assume the opportunity cost is a pure index fund investment, because that's what nearly everyone's investments should be with a 50 year time horizon. So again, I read too quickly and was wrong. It does have a NPV, it just isn't a very good one given the risk involved. You'd be much better off investing or, if you were OK with the lower return, then doing it in a much more stable and liquid vehicle.

Yep Taxes was the factor that turned me off of buying a boardwalk contract last week. Not only is it income but as a Canadian i would have to file a tax return in the US. No thank you.

 

[CastAStone]

In all honesty what would you pay for say 100 points at Riviera resale?

Me? I wouldn’t buy 100 points because we want to do longer stays in 1BRs. But I’d pay $50 a point tops for say 250 points, trying for $45.

Now I don’t expect it will ever get anywhere near that low. I wouldn’t pay more than $30K for a new Lexus and so I will never own a Lexus. Others will gladly pay asking. The nice thing about demand is that it’s not the same for everyone, it’s on a curve. I am confident supply will meet demand above what I would be willing to pay.

New, my price would be more like $130? Again it’s just not a good fit for me, but there is a price where I could get over that. I wouldn’t pay anything close to asking for Poly or VGF either. I would for CCV. To each their own.

 

[pineapplepalms]

Nope. Wrong

What exactly is wrong? I was listing things that we value as a family. Just because someone else is different from you doesn't mean they're wrong.

There is no way Riviera can ever come close to the draw of beach club unless they build a lazy river that winds itself all through and around the resort, right up to the Skyliner station.

I much prefer RIV to BCV. I also much prefer BWV to BCV. It's why we own at RIV and BWV but not BCV. However, I'm not going to say that you're wrong. Just that we have different preferences.

 

[rspencer38]

I can respect most everything else you said but this statement, no way. There is no way Riviera can ever come close to the draw of beach club unless they build a lazy river that winds itself all through and around the resort, right up to the Skyliner station.

Are you suggesting that someone can't love a different resort as much as people who love BCV?

I like BCV but there are others that I like even more. People have their absolute favorites for all sorts of reasons. For me I absolutely love Riviera and Animal Kingdom Lodge. What I'm suggesting is like all DVC resorts, there will be dedicated following who have no problem buying resale points.

 

[wreing]

That is a huge assumption to make that you will get 10$/point above maintenance. The majority of renters are struggling right now to get that kind of money. You could get yourself into a lot of trouble with that forecast.

I've been trying to come up with a point value for rented points. $10 per point seems too high. I figured a good starting place is 14.50 (what a found a big site paying) - maintenance. I'm sure you can do better if you try and move them yourself, but as minimum that felt fair.

But I'm wondering if I should adjust for breakage. How often do folks have points expire unused?

 

[nickoley]

I love Riv so I’d buy resale but I’m not paying anywhere near what the few resale prices they’re listed for as. Max I’d pay is $95pp, so I’ll be waiting for them to drop...and they will.

 

[nickoley]

The 100 point on Fidelity got taken off the market. Was listed at $160 and they only got low ball offers it sounds like from the broker. I offered $100 a point...

well yeah...because that’s what it is worth, it’s not lowball if that’s the only offers they got..that means that’s market value lol.

I can ask $4m for my house and then complain when I only got lowball offers for $1m, which in actuality I’m just mixing up market value with lowball value.

 

[Prince John Robin Hood]

well yeah...because that’s what it is worth, it’s not lowball if that’s the only offers they got..that means that’s market value lol.

Agreed

Not a resort I would ever consider buying direct or resale due to restrictions.

 

[chicagoshannon]

I think Riviera is a beautiful resort. I would buy resale if it was super cheap because most of my current points are resale and I can't stay at Riviera with them (well could with BWV but I only own 25 there). What is making me hold off besides the current price is the HIGH point per room cost plus maintenance fees. Just can't stomach paying double or more points for a studio than I do for my BWV studio.

I was considering buying Riviera direct last year before the point chart and fees came out. Went resale AKV instead. Riviera makes AKV fees look like a bargain.