The free quick service dining plan going extinct?

[jade1]

Like a stock, only matters what you get when you actually sell it.

Can't put it up as collateral.

And I'm not sure you can state that it's solely based on overstated rack rates.

But if that is their end game, not sure how upping the resale value helps Disney. Seems like the opposite. If they can't get $500 for a room because everyone is using DVC, then I don't see how they win.

Oh we have sold some, just like stock correct., only its been far easier.

Hardest part is not just selling more today-but having too much fun with the product-something a stock can't offer.

Disney doesn't up the resale value, but it does do first refusal if they want it more. Values are increasing because people want in.

 

[dlavender]

Oh we have sold some, just like stock correct., only its been far easier.

Hardest part is not just selling more today-but having too much fun with the product-something a stock can't offer.

Disney doesn't up the resale value, but it does do first refusal if they want it more. Values are increasing because people want in.

I'll take your word for it.

Again, don't see how over inflated rack rates make sense. But your purchase 5 yrs ago seems to have worked out. Good to know. I'll be sure to think about it everytime I see a ridiculous price. "Yeah, I know that I won't pay that rack rate, ever, but somebody I know really got a good deal on their DVC 5 years ago."

Do the current DVC resale prices make you want to buy more?

 

[jade1]

I'll take your word for it.

Again, don't see how over inflated rack rates make sense. But your purchase 5 yrs ago seems to have worked out. Good to know. I'll be sure to think about it everytime I see a ridiculous price. "Yeah, I know that I won't pay that rack rate, ever, but somebody I know really got a good deal on their DVC 5 years ago."

Do the current DVC resale prices make you want to buy more?

Interesting, I thought about that since we were talking about it.

Even today, if I had no DVC and still wanted to keep going to WDW.

I would buy more for sure, over paying cash every night yes.

 

[dlavender]

Interesting, I thought about that since we were talking about it.

Even today, if I had no DVC and still wanted to keep going to WDW.

I would buy more for sure, over paying cash every night yes.

I know you mentioned you have overused and have to pay cash sometimes.

Why not buy more now, it's a steal.

I looked into it, but no way am I locking myself in at ~$90-100 pp for 20-40 years. I believe they've already moved the needle too far.

And I think they are doing the same with their rack rates (if those rack rates ever become the discount rate). That's my point.

So far the market seems to have swung in their favor, but it could come swinging the other way, and now people who have paid $90-100 are being undercut at $55. Too much risk.

ETA:

What's the ceiling on resale?

If it doubled in 5 years, one should go ahead and take out a loan and buy as much as they can, since it could double some more.

Or do we know it's at its peak (which I'm contending)? Or do we know there's too much risk? It's not really an investment..........(rhetorical)

 

[jade1]

I know you mentioned you have overused and have to pay cash sometimes.

Why not buy more now, it's a steal.

I looked into it, but no way am I locking myself in at ~$90-100 pp for 20-40 years. I believe they've already moved the needle too far.

And I think they are doing the same with their rack rates (if those rack rates ever become the discount rate). That's my point.

So far the market seems to have swung in their favor, but it could come swinging the other way, and now people who have paid $90-100 are being undercut at $55. Too much risk.

At a minimum (meaning I would buy much better contracts and assume they will hold decent value so I can basically stay on dues or app $100 a night deluxe) I would by the 250 Vero for $13K and just risk it at 7 months. Be about 3 weeks a year at BWV for example. Around a 3 year pay back.

Not flush a thousand to 6 thousand a year (depending how many weeks etc).

 

[jade1]

Bigger question probably for this thread is when does the FREE (no additional cost) DP make the most sense etc. Those are tied to rack rate I thought.

 

[Roxyfire]

As for getting resale now? It's way up, maybe still make a case for some though-esp staying deluxe. All of ours are basically double in value except BLT direct at $95-wanted to be on that fountain and have 11mo window-not sure what that's worth, but likely more than $95.

Just as a point of reference, direct Bay Lake is $185 and resale is going anywhere from $110 to $120 a point. Mine was $118, probably overpaid but I'm not a haggler by nature.

 

[MaryLovesPoohBear]

Bigger question probably for this thread is when does the FREE (no additional cost) DP make the most sense etc. Those are tied to rack rate I thought.

This September, we got quick service dining for $45 a person for 6 nights.

BUT, that is using the AP discount rate, plus ticket cost, plus $45.

So, yes, it is based on rack rate, but that isn't what I based it on.

 

[jade1]

This September, we got quick service dining for $45 a person for 6 nights.

BUT, that is using the AP discount rate, plus ticket cost, plus $45.

So, yes, it is based on rack rate, but that isn't what I based it on.

Agreed. Paying rack rate and getting free dining, means you didn't pay rack rate. But the threshold/starting point has been going up.

 

[dlavender]

Agreed. Paying rack rate and getting free dining, means you didn't pay rack rate. But the threshold/starting point has been going up.

Exactly.

Which is why no one in today's market is taking out loans to buy extra DVC since the chance of current prices doubling is pretty slim. If you were sure they would double, why not buy more?

The threshold/starting point is reaching the pinnacle.

 

[Q-man]

During the Great Recession, I used to argue all the free dining was to compete with cruises and all inclusive resorts. I guess I was wrong that WDW wasn't going to be able to put the smoke back it the bottle and FD would never go away.

 

[dlavender]

During the Great Recession, I used to argue all the free dining was to compete with cruises and all inclusive resorts. I guess I was wrong that WDW wasn't going to be able to put the smoke back it the bottle and FD would never go away.

It has such a loyal following.

It would be interesting to see what would happen if they removed it from values. That would be the true test. We may see next year.

 

[jade1]

Exactly.

Which is why no one in today's market is taking out loans to buy extra DVC since the chance of current prices doubling is pretty slim. If you were sure they would double, why not buy more?

The threshold/starting point is reaching the pinnacle.

Well doubling isn't necessary at all. Doubling is just an amazing result many of us are in because of the run up in resort pricing-goes hand in hand.

Look at it this way. If you go one week a year to the BWI (or BC or CR for example, and I think we agree a ton of guests do that), you are losing about $2,000 a year ($250 plus tax per night) or $10,000 in just 5 years (probably more like $3,000 a year but).

If you bought BWV even today at $100, you would need 76 points for a week in Dec or Jan (not XMAS).

$7,600 then $486 each year in dues.

So in 5 years your $2,000 a year you saved from cash ($10K total), covered the $7,600 investment and the 5 years of dues ($2,432). At that point you have paid the same in either scenario.

But, now you can begin staying at the BWV for $69 a night in dues ($486 / 7) AND you have the asset at whatever value its at. Could still be $7,600, might be $3,500, might be $10,000.

Even if it were worth $0, you can now stay at BWV for $69 a night and no tax. Value of $58 a night plus tax.

 

[dlavender]

Well doubling isn't necessary at all. Doubling is just an amazing result many of us are in because of the run up in resort pricing-goes hand in hand.

Look at it this way. If you go one week a year to the BWI (or BC or CR for example, and I think we agree a ton of guests do that), you are losing about $2,000 a year ($250 plus tax per night) or $10,000 in just 5 years (probably more like $3,000 a year but).

If you bought BWV even today at $100, you would need 76 points for a week in Dec or Jan (not XMAS).

$7,600 then $486 each year in dues.

So in 5 years your $2,000 a year you saved from cash ($10K total), covered the $7,600 investment and the 5 years of dues ($2,432). At that point you have paid the same in either scenario.

But, now you can begin staying at the BWV for $69 a night in dues ($486 / 7) AND you have the asset at whatever value its at. Could still be $7,600, might be $3,500, might be $10,000.

Even if it were worth $0, you can now stay at BWV for $69 a night and no tax. Value of $58 a night plus tax.

Or, if you invested $7600 and received an average of 8% return, in 5 years you would have $10,000.

And your example is valuing the room at $333.33 per night. You'd have to be spending that already. If you were renting points you be paying about $1000 for the week. So it would take about 10 years to break even. You have to commit to WDW for 10 years, and give up the earning potential of your money.
In 10 years your $7600 at 8% return would make you $13k.

So your opportunity cost in your 5 year example is an additional $2400. But those numbers don't really work.

It's more like the 10 year example, with an opportunity cost of an additional $5,400. So your DVC actually costs $13k, not $7600, and maint fees yearly. If you can rent points for $1000, you are better off. You are only paying $500 more per week than the dues are, and you get to invest your money.

ETA: Think of it this way.

The next 5 years you can spend your $7600+$2500= $10100 if you purchase or
$1000*5 = $5,000 if you rent. And if you put that $5000 into an investment account you have $7300 in your account. So 5 years of vacation plus $7300 in your bank or 5 years and no money in your bank?

 

[jade1]

Or, if you invested $7600 and received an average of 8% return, in 5 years you would have $10,000.

And your example is valuing the room at $333.33 per night. You'd have to be spending that already. If you were renting points you be paying about $1000 for the week. So it would take about 10 years to break even. You have to commit to WDW for 10 years, and give up the earning potential of your money.
In 10 years your $7600 at 8% return would make you $13k.

So your opportunity cost in your 5 year example is an additional $2400. But those numbers don't really work.

It's more like the 10 year example, with an opportunity cost of an additional $5,400. So your DVC actually costs $13k, not $7600, and maint fees yearly. If you can rent points for $1000, you are better off. You are only paying $500 more per week than the dues are, and you get to invest your money.

8%? guaranteed? count me in. But why buy a car then either? 8% returns $600 a year-not sure how you would get (make) $10K, you already have the $7,600.

Where is the $333 for the room? $250 a night plus tax? $280 at 7 nights is $1,960.

Why commit to 10 years?

After 5 years you can continue to invest the $2K ($1,500 afte dues) into the market your saving, or sell the asset.

I'm not against renting either by the way. But after year 5 it's still $1,000 a week, not $486 ongoing, and you still have the asset.

 

[dlavender]

8%? guaranteed? count me in. But why buy a car then either? 8% returns $600 a year-not sure how you would get (make) $10K, you already have the $7,600.

Where is the $333 for the room? $250 a night plus tax? $280 at 7 nights is $1,960.

Why commit to 10 years?

After 5 years you can continue to invest the $2K ($1,500 afte dues) into the market your saving, or sell the asset.

I'm not against renting either by the way. But after year 5 it's still $1,000 a week, not $486 ongoing, and you still have the asset.

Compound interest. It will save your life. My 401k is averaging 8%. Yes, if you invest 7600, average 8%, then in 5 years your 7600 becomes 10k. It's like magic, but not.

I'm not sure many people put a vacation and a car on the same plane. At least you shouldn't. I can't ride a vacation to work. Not sure your point there. Why buy food?

I was factoring 6 nights. 7 nights then, so you need to spend $280 per night normally.

Doing a breakeven analysis, it would take 15.2 years to breakeven. (0=7600+500x).

A timeshare is not an asset in the way a house is. I don't know if you can walk into a bank and get a loan against it.

Again, if you buy at $7600, and at the end of 5 years have maint fees of $2500, you've paid $10k for your 5 years of vacation.

If you rented, you've paid $5k. So you would be out 5k, but could have invested that 7600 and have 10k now.

You could go down the breakeven path, and hope to sell in 15 years. But you'd have to go every single year for an entire week for 15 years to truly breakeven.

I'd take my money and invest, then pay out $1000 annually. Best of both worlds. My $7600 would grow to $17k over that time. I'm out an additional $500/wk for 15 years, $7500 versus the DVC dues, but I leave with a net of 17-7500 = $9500.

I'm taking that deal.

ETA: Don't boardwalk contracts expire 2042? At the end of 15 years its the year 2032. So there's only 10 years left. Still think you're getting top dollar with 10 years of points left?

 

[jade1]

Compound interest. It will save your life. My 401k is averaging 8%. Yes, if you invest 7600, average 8%, then in 5 years your 7600 becomes 10k. It's like magic, but not.

I'm not sure many people put a vacation and a car on the same plane. At least you shouldn't. I can't ride a vacation to work. Not sure your point there. Why buy food?

I was factoring 6 nights. 7 nights then, so you need to spend $280 per night normally.

Doing a breakeven analysis, it would take 15.2 years to breakeven. (0=7600+500x).

A timeshare is not an asset in the way a house is. I don't know if you can walk into a bank and get a loan against it.

Again, if you buy at $7600, and at the end of 5 years have maint fees of $2500, you've paid $10k for your 5 years of vacation.

If you rented, you've paid $5k. So you would be out 5k, but could have invested that 7600 and have 10k now.

You could go down the breakeven path, and hope to sell in 15 years. But you'd have to go every single year for an entire week for 15 years to truly breakeven.

I'd take my money and invest, then pay out $1000 annually. Best of both worlds. My $7600 would grow to $17k over that time. I'm out an additional $500/wk for 15 years, $7500 versus the DVC dues, but I leave with a net of 17-7500 = $9500.

I'm taking that deal.

ETA: Don't boardwalk contracts expire 2042? At the end of 15 years its the year 2032. So there's only 10 years left. Still think you're getting top dollar with 10 years of points left?

You make great sense, but remember we (I) are assuming $250 a night (plus tax) for BWI. Not gonna happen esp over 10 years-but I am willing to go with it (its really more likely a mod price).

But you also can't guarantee me 8% for 10 years either, but lets go with it.

Keep in mind this is for DVC purchase today vs cash rent.


If I/we we both invest $7,600 (one a bank 8% and one BWV) the initial payments are quite different.

You still pay $2,000 a week, and I pay $500.

I can invest $1,500 each year ($15,000 over 10 years) I don't need for the cash rent, also compounding 8%. Plus still have the BWV asset-with Star Wars Land in walking distance I am not selling for years.

And if the BWI cash price over 10 years averages $300 (or likely more with Star Wars Land coming) I can invest $25,000, $400 I can invest $35,000, $500 (likely) I can invest $45,000.

There is value to owning over renting, mostly a control thing getting when and where you want, some discounts.

As for renting DVC-heck yea, I triple my money every time I rent to somebody-usually BLT and VWL XMAS week.

 

[dlavender]

You make great sense, but remember we (I) are assuming $250 a night (plus tax) for BWI. Not gonna happen esp over 10 years-but I am willing to go with it (its really more likely a mod price).

But you also can't guarantee me 8% for 10 years either, but lets go with it.

Keep in mind this is for DVC purchase today vs cash rent.


If I/we we both invest $7,600 (one a bank 8% and one BWV) the initial payments are quite different.

You still pay $2,000 a week, and I pay $500.

I can invest $1,500 each year ($15,000 over 10 years) I don't need for the cash rent, also compounding 8%. Plus still have the BWV asset.

And if the BWI cash price over 10 years averages $300 (or likely more with Star Wars Land coming) I can invest $25,000, $400 I can invest $35,000, $500 (likely) I can invest $45,000.

There is value to owning over renting, mostly a control thing getting when and where you want, some discounts.

As for renting DVC-heck yea, I triple my money every time I rent to somebody-usually BLT and VWL XMAS week.

$2000/wk?!

Im going at the average $13/per point x 76 points that you brought up. Thats $988 a week. Not $2000.

So you initially laid out $7600, where a renter hasn't

Yes, you can invest an additional $500/year, not $1500. So after 15 years, you've caught up to that original investment that the renter already put in. Interest on a larger amount trumps interest on a smaller amount, simple math.

Like I said, contracts expire 2042, right? What do you own 2043? How much is it worth in 2032 with 10 years left?

 

[jade1]

$2000/wk?!

Im going at the average $13/per point x 76 points that you brought up. Thats $988 a week. Not $2000

You missed the "keep in mind" this is today DVC compared to cash rent (highly discounted for 10 years at BWI $250 by the way), from WDW sorry. Something many folks do when deciding.

 

[dlavender]

You missed the "keep in mind" this is today DVC compared to cash rent (highly discounted for 10 years at BWI $250 by the way), from WDW sorry. Something many folks do when deciding.

I'm going at $13 per point. Are you telling me that you know its going to be $26 per point to rent?