AurorasDad said:
I'm looking at
DVC from an investment perspective, and I need some insight.
First, if you really meant to use the word "investment"--as in you're considering buying just to rent the points and eventually sell at a profit--I'd walk away now. Timeshares do NOT make good investments--particularly those with contract ending dates that will inevitably cause their value to decline.
The only way I could see this making ANY sense (and even then it's debatable) is if you got a great resale contract priced in the mid-60s, preferrably with a full year's worth of banked points. And you'd need to be able to pay cash since the financing will kill you.
Are the following statements true?
Based on what I've read:
1. Disney appreciates the value of points using their ROFR when sold independantly.
About how much do the points appreciate year over year?
DVC has never published hard and fast figures on their ROFR thresholds, and I've never seen anyone try to track the history here independently. You could probably search the boards and try to find some recent trends. However, ROFR thresholds vary greatly depending upon the exact terms of the offer (who pays what), number of points in the contract and the current point status of the contract (banked, borrowed, etc.)
There's no guarantee DVC will continue to exercise ROFR indefinitely. As recently as a year ago, DVC changed its policies and was not even maintaining a waiting list of folks who wanted points at the sold out resorts. After a few months they relented and got more actively involved in resales. Buy-back policies can and do change.
Also, since DVC contracts all have ending dates, it's inevitable that values will begin to decline. All of the current resorts, except SSR, have contracts that end in 2042. While the topic is entirely debatable, I think an pricing increases will begin to noticably flatten toward the end of the decade as those contracts only have about 30 years left.
2. Points typically rent for about $10 per point, and maintenance is currently between $3 and $5 per point, so renting nets $5-$7 per point of cash flow. What are the risks for lessors and lessees?
The main risk for both parties is simply tied to the point usage limitations that are part of the program. Smart lessors will have non-cancellation policies because the points must be committed at the time of the reservation.
Renting can also take a bit of time and energy. I've read countless reports of lessees trying to change the terms of the deal at the 11th hour (lower price), wanting to have dozens of date/resort combinations researched, not sending funds timely, needing a lot of hand-holding, etc.
3. Minimum investments through Disney are about $15,000, but can be cheaper through outside resellers. Does anyone currently know the rates/deals from Disney's financing plans?
DVC will finance for 10 years at about 9.75% with 20% down. Prices start at $98 per point, with the promotional discount deducting about $8 off per point (which is put toward the down payment.)
That's for SSR. For all other resorts through DVC, the price is a flat $92 per point with no promotional discounts. If you try to buy resale at BCV, BWV or VWL, you'll probably find resale and direct prices fairly comparable these days. But, buying points at OKW, HHI or VB on the resale market can save quite a bit of money.
(nothing against financial advisors
) should advise against you wanting to buy a timeshare as an investment.
