Stripped contract

[Brian Noble]

I didn't say everyone would find that reason compelling. But it is a reason.

 

[PlutoNotPlanet]

Fair. Instead, it's a reason to avoid them entirely.

maybe an exception for BCV? please?

 

[Girlstar30]

This is my feeling as well.

I don't know that what was described in the original post is a "stripped" contract if it still has some 2025 points and all 2026 points. At minimum I wouldn't consider a contract "stripped" unless all current year (and previous year) points were gone.

Here is my thinking (and why I avoid stripped contracts)....

1) I value each current year or future year point that is missing (stripped) at $6-10 depending on the resort (as if you had those points and were not going to use them, you should be easily able to clear $6-10 in profit over the annual dues by renting them). As noted above, the market generally doesn't let you realise this much value from missing points (i.e. it's not common to get this much of a discount per point on stripped contracts vs. contracts with all their current and future year points);

2) With a stripped contract you are taking on DVC market risk - let's consider a contract stripped only of it's 2025 points. The earliest usage you have is 2026. You're taking on 12 months of market risk to buy that contract now. While there are ebbs and flows, the general trend is for reslae prices to go down over time. Why take on this risk for which you're not getting a (sufficient) discount? Why not just wait 12 months and buy a contract next year with full 2026 points? This risk is even greater for "fully stripped" contracts with no points for 2 years or more (this is part of the reason I have no idea why ANYONE would buy one of those atrocious Aulani contracts that have been on the market....some of which seem to have sold). Aside from general "market" risk, you're also taking on your own "personal" risk as anyone's financial/health/travel situation could change in a year.

3) Time value of money. Let's take a 100 point contract at AKV for a price of $100. That's 10k (plus the transaction costs). You can easily get 4% in a risk free 12 month CD - that's $400 or $4/point. Are you getting a $4/point discount for purchasing a contract today with no 2025 points? Are you getting a discount of $8+/point for a contract with no 2025 or 2026 points? Doubtful....and this is on top of the discounts you should be getting for points 1 and 2 above.

Yes, there are some arguments for jumping on a stripped contract now....but they usually aren't persuasive enough for me to overcome the economics above. Here are some of the most common I see:

a) this is the "perfect" contract for us (e.g. just the right amount of points, right use year, right resort....etc). I get it, but I also think people are hung up on what they think is "perfect". Between banking and borrowing you can often make a slightly smaller contract (than you "need") work....or, based on the economics above, consider buying a slightly larger contract based on what you'd save for waiting. In most cases, the market is sufficiently liquid to have a wide variety of contracts on offer at any given time.

b) I can alwasy borrow future years points for my next vacation (within the borrowing time limits). Yes, this can help you get quicker access to a vacation....but it doesn't change the economics above. At some point you're sacrificing any "stripped" points...delaying that sacrifice to tomorrow by borrowing today, doesn't measurably change the economics.

c) we need to buy NOW to get the purchase closed so we're all set for the 11-month reservation window. Ok, this one is the most persuasive to me depending on when you're buying compared to when the use year is (and effectively when you get access to your "first" set of points). I could understand the desire to purchase 60-90 days ahead of when you want to make a reservation with the 11-month priority window IF you will get access to points usable in that window shortly after closing (e.g. sitting here in Feb 2025 if you were to buy a April use year contract with no points until 2026 there is some valid consideration to be had for buying "now" so that as soon as you close you could make an April/May 2026 reservation). However, this doesn't change the economics above (meaning a contract with 2025 points should still be more valuable) AND this doesn't apply to fully stripped contracts without 2026 points....

I considered it stripped cuz they gobbled up 64 of my points for this year, but if that's incorrect thinking, even better!

 

[Girlstar30]

You can also do October, becuase to avoid holding you have to cancel at least 31 days prior to check-in, and that means you are cancelling sometime in September, which is still within February's banking period.

If you cancelled an October stay in October, then it doesn't matter what UY the points are, because they go into Holding and expire at the end of the year.*

-----
*: Yes, I know there is a loophole to swap Holding points. However, I suspect that will be fixed sooner or later, so I am not personally counting on it.

This is why I love this group because the way I was thinking I would have never booked October because in my brain must bank by September. I need more knowledgeable people like yourself to set me straight lol

 

[Mle8308]

If you can afford it and you are happy with your purchase, that's all that counts! Congratulations!

 

[VandVsmama]

I know this is kind of pointless to ask now because I already pulled the trigger with no regrets, but how do you guys feel about stripped contracts? Would you purchase one if the price was right? Anyone know how to calculate or can point me to a calculator that calculates how much points are worth in a year? I am buying a stripped contract for BLT for $124 pp with 96 points left for 2025 and full points in 2026 and wondering if it was a good deal or not

I totally would buy a stripped contract. Did so last December. Totally worth it!

 

[AstroBlasters]

Fair. Instead, it's a reason to avoid them entirely.

Your opinion. Not settled fact.

 

[Girlstar30]

Partially used is not bad to me at all. Fully stripped down have opportunity cost.
However, to some people, stripped ones have lower upfront cost while you can still use by borrowing.
If it’s a contract hard to find, I personally will still go with it. Maybe ask if the seller can credit the prorated MF.
Trigger pulled so just a looking forward statement…

For sure, I appreciate it! At least they still left me almost 100 points that I'll be using this year

 

[PlutoNotPlanet]

I considered it stripped cuz they gobbled up 64 of my points for this year, but if that's incorrect thinking, even better!

Even if you take that into consideration, it's still below 130pp.

 

[Brian Noble]

maybe an exception for BCV? please?

If you want to buy it, you can! Just go in eyes wide open, knowing it will be (a) worth zero and (b) not part of DVC come early '42.

Your opinion. Not settled fact.

"A reason to avoid them" is not the same as "no one should buy them." It's one reason, and only one. There are other reasons why one might prefer them. Those reasons must be considered and a decision reached.

I did not think this was that hard, but apparently it is.

 

[Girlstar30]

We purchased partially stripped at BLT (26/25, 160/26). Common contract at 160... Feb use year we wanted... I thought the price was good (10% under a healthy list). Definitely taking on market and personal risk getting on the contract early. BUT! We are adding to our family and are taking 2025 off from WDW... There is also added value that I won't be spending a few hours a day rummaging through resale listings... and I'll keep my life for not doing so while my wife tends to a newborn!

I feel the same, I really wanted it and the process takes a longgg time, i didn't want to wait any longer. I figure I'll just buy more points to make up for it We are only two people so we don't need that many, although we would love to go with family in the near future. I stopped thinking about it cuz I know my next round of points is going to be a major ripoff, direct

 

[Girlstar30]

If you can afford it and you are happy with your purchase, that's all that counts! Congratulations!

Thank you, we are over the moon excited

 

[Girlstar30]

Even if you take that into consideration, it's still below 130pp.

True!

 

[AstroBlasters]

If you want to buy it, you can! Just go in eyes wide open, knowing it will be (a) worth zero and (b) not part of DVC come early '42.


"A reason to avoid them" is not the same as "no one should buy them." It's one reason, and only one. There are other reasons why one might prefer them. Those reasons must be considered and a decision reached.

I did not think this was that hard, but apparently it is.

Your statement was “a reason to avoid them entirely”…. it’s reasonable to assume that many people would read that as “no one should buy them”.

But, yes, it’s important to understand that a buyer would only have what many consider the best location and fantastic point charts until January of 2042. That time horizon may be perfect for some and not worth it for others.

 

[D-Trick]

I considered it stripped cuz they gobbled up 64 of my points for this year, but if that's incorrect thinking, even better!

"Stripped" contracts is intentially exhausting some or all of the next UY's points before selling. Remember, using current UY points is just the normal practice. Your contract still has partial current UY points and a full allotment of next year's, so I definitely would not give it a stripped description.

 

[AstroBlasters]

"Stripped" contracts is intentially exhausting some or all of the next UY's points before selling. Remember, using current UY points is just the normal practice. Your contract still has partial current UY points and a full allotment of next year's, so I definitely would not give it a stripped description.

Oh…. if it doesn’t have 100% of this year’s points then I consider it partially stripped.

 

[PlutoNotPlanet]

Oh…. if it doesn’t have 100% of this year’s points then I consider it partially stripped.

If it's stripped until the next year, shall we call it double-stripped

 

[Ruttangel]

Only in DVC land do we use a thought process of “only 15” years…..

Well I hope I have more than that at Disney

 

[Girlstar30]

If it's stripped until the next year, shall we call it double-stripped

Raped

 

[Chili327]

"Stripped" contracts is intentially exhausting some or all of the next UY's points before selling. Remember, using current UY points is just the normal practice. Your contract still has partial current UY points and a full allotment of next year's, so I definitely would not give it a stripped description.

Or transferring them out, & into another for later use.