Thinking about a small direct add-on

[LAX]

I have been debating whether I should buy a small direct contract to get the Membership Extras that are no longer available to resale purchasers ever since mine closed back in June. At first, I didn’t give it much thought as I don’t see myself purchasing APs in the near future. Plus, I most likely won’t be able to take part in many member exclusive events. That pretty much leaves member discounts on merchandise/some restaurants/resort rentals as the only benefits that I can really use. Well, these discounts alone would be difficult to justify the difference in costs (more on this later), I thought.

However, with DVC’s recent decision to increase some of these discounts for its members, it prompted me to start pondering if DVC management would further enhance member benefits to steer more potential buyers to purchase directly from Disney (long shot, but humor me for a minute).

Now, I have read the disclaimer that all Membership Extras can change at any time without any advance notice, so even if DVC decides to roll out benefits that I can take full advantage of in the future, it may only be for a year or two. Thus, the extra costs of buying a small contract directly to me are, in essence, a hedge for benefits I may potentially use during the life of the contract.

I realize I would be the only who can determine whether the “hedge” is worth it, but I need your expert opinions on whether I am calculating the cost of this hedge correctly in order for me to make an informed decision.

If I were to purchase a contract direct, it would be VGF for a number of reasons, one of which is the relatively small spread between typical resale price and current direct price. I believe VGF on average costs $140/point. With direct cost at $180/point, that’s $40/point difference. At 40 points, it’s about $1,600 difference in total costs (I am assuming closing costs will be similar). With a contract life of 42 years, that’s less than $40/year. While I admittedly won’t go to Disney (WDW/DL/non-theme park resorts) on an annual basis, an extra $80/trip (every two years) isn’t too bad for insurance.

What do you guys think? Did I miss something obvious along the way? Thanks in advance.


LAX

 

[Popouri DVC]

I do not believe you can purchase VGF direct at this time. The resort is sold out and Disney has closed its wait list. My understanding is that this is also true for BCV and VGC.

My understanding is the only way to buy VGF at this time is via resale, which would not effectively accomplish your goals.

 

[mustinjourney]

Closing costs are way cheaper direct. My 25 point BCV was $105. And you can charge it on a credit card too if you want miles/rewards.

To answer your question, you're completely ignoring the time value of money. You're laying down $7200 today for 40 points. If you don't already own VGF, those 40 points are somewhat useless as they'd only get you a few days each. So that means you're future trips are all split stays or you're going to take a separate trip to VGF for just 2 or 3 days.

If you were planning on buying there already, then that is a different story.

Unless you're getting APs, the extra you're paying for member benefits can't be made up easily.

 

[kapicka]

You can always try to call DVC and ask about waitlists for specific resorts. I would hesitate to just say "what's available?" because you know they'll push you back to Aulani.

 

[LAX]

Closing costs are way cheaper direct. My 25 point BCV was $105. And you can charge it on a credit card too if you want miles/rewards.

To answer your question, you're completely ignoring the time value of money. You're laying down $7200 today for 40 points. If you don't already own VGF, those 40 points are somewhat useless as they'd only get you a few days each. So that means you're future trips are all split stays or you're going to take a separate trip to VGF for just 2 or 3 days.

If you were planning on buying there already, then that is a different story.

Unless you're getting APs, the extra you're paying for member benefits can't be made up easily.

I agree with your points. Factoring in time value of money would really complicate things unnecessarily for me as I am more the conservative type. Thus, investing the $7K instead of plopping it down for a DVC contract likely won't yield me much financially!

Well, the plan is to start with a few nights every other year or every 3 years to see if the family and I like it enough to add more points through resale. As far as making up the difference, I know it will be tough unless DVC rolls out something in future. Thus, I call this potential purchase more or less a hedge.

LAX

 

[Dean]

I have been debating whether I should buy a small direct contract to get the Membership Extras that are no longer available to resale purchasers ever since mine closed back in June. At first, I didn’t give it much thought as I don’t see myself purchasing APs in the near future. Plus, I most likely won’t be able to take part in many member exclusive events. That pretty much leaves member discounts on merchandise/some restaurants/resort rentals as the only benefits that I can really use. Well, these discounts alone would be difficult to justify the difference in costs (more on this later), I thought.

However, with DVC’s recent decision to increase some of these discounts for its members, it prompted me to start pondering if DVC management would further enhance member benefits to steer more potential buyers to purchase directly from Disney (long shot, but humor me for a minute).

Now, I have read the disclaimer that all Membership Extras can change at any time without any advance notice, so even if DVC decides to roll out benefits that I can take full advantage of in the future, it may only be for a year or two. Thus, the extra costs of buying a small contract directly to me are, in essence, a hedge for benefits I may potentially use during the life of the contract.

I realize I would be the only who can determine whether the “hedge” is worth it, but I need your expert opinions on whether I am calculating the cost of this hedge correctly in order for me to make an informed decision.

If I were to purchase a contract direct, it would be VGF for a number of reasons, one of which is the relatively small spread between typical resale price and current direct price. I believe VGF on average costs $140/point. With direct cost at $180/point, that’s $40/point difference. At 40 points, it’s about $1,600 difference in total costs (I am assuming closing costs will be similar). With a contract life of 42 years, that’s less than $40/year. While I admittedly won’t go to Disney (WDW/DL/non-theme park resorts) on an annual basis, an extra $80/trip (every two years) isn’t too bad for insurance.

What do you guys think? Did I miss something obvious along the way? Thanks in advance.


LAX

I would to give yourself options going forward. Ideally one would make this decision upfront and take it into account on the front in while making the resale purchase. You may not be able to get the VGF points though as noted but if you can, that's a good choice if you can make that number of points work for you there. Even if you have to go for a few more points to make it work, it's likely worth it for that choice if you'll use them there at VGF almost all of the time.

 

[Matty B13]

In early April 2016 we called about buying VGF direct and was told that there weren't any points available and there was no official waitlist but the DVC salesman said he would keep us in mind. So we looked for a resale contracts that we liked and started the resale purchase on a 150 point VGF contract. About 1/2 way through I got a call from the salesman that they had points available but I only had an hour to decide. (I wasn't to happy about this high pressure sales tactic). So I'm sure if you let them know you are interested they will come up with points pretty quickly.

 

[davedmaine]

I'd be careful basing any purchase decision on current or potential future member discounts/perks as they'd likely change before your closing.

 

[disneynutz]

Disney deliberately created a two class system to sell more direct contracts, shows us how they feel about their "members". Discounts on dining and AP's are something that DVC has to ask for so it changes from time to time. Other events like membership magic offers many events that attendees can pay for or not attend, question is do you really want to attend the events, will you be at WDW during the offered times, how important is being included to you?

Bill

 

[mustinjourney]

direct membership does get a nice tote bag -- so that is something else to consider.

 

[disneynutz]

direct membership does get a nice tote bag -- so that is something else to consider.

We did a 300 point direct buy add on a couple of years ago and we were told that tote bags were for new members only. We complained enough that they found DW a bag.

Bill

 

[JHank44]

We did a direct add-on purchase of 25 points in order to be full members. I know it's probably not worth the additional cost but figured if you spread out the marginal cost over all the points you buy that the additional cost is only like $5 a point. There is an official waitlist when I purchased at BLT. I had to wait a month on the waitlist to get Dec UY points. As for benefits, the AP discount and the tote bag are nice!

 

[kniquy]

I would consider an add on for same UY and resort that you currently have. You could just add 25 points to get the benefits and if you really do want VGF then you can buy a resale down the road. If you really want to stay at VGF then try and plan towards the earlier part of the year -end of Jan - August - you should be able to book a couple days there and then the rest of the time at your home resort. You would probably save a bit by only needing to purchase the minimum to get the benefits.

 

[lovin'fl]

We bought 200 OKW June UY in 2006 via resale and then added 125 HHI Aug UY also via resale. In 2013 we went to our first F&W and enjoyed it so much that we decided to make it an annual thing. And we desired the convenience of staying at BWV or BCV so we bought 55 BWV points direct. We figured we could get 4 nights in a standard view studio for F&W. We had to go on waitlist and since we have 2 UY we went on waitlist for both. June came through in like 2 weeks. We paid with Disney Chase Visa and got rewards points for that. A month or so later our guide called back and said that she forgot to take us off Aug UY waitlist and those points were now available...did we want them? Um, too hard to resist so we grabbed 25 of the 55 of those. Then this year, after seeing how hard it is to get standard view studios especially for F&W, we decided we could use 25 more of our Aug UY. It was a few days before our 20th Anniversary so DH told me to call and see if any were available without going on waitlist. Low and behold they were. Used the Chase Visa again and the rewards dollars more than paid the small closing costs they charge. We got current points where with a resale you tend to get stripped contracts. I suggest calling to see what they have available in your UY but make clear you want WDW resort or, as mentioned above, they will push Aulani. My guide, though, never pushes a resort and seems to get that we know what we want/need.

Another thing, if you go with 25-50 points, you can bank and borrow to have enough for a nice stay maybe.

 

[Dean]

I'd be careful basing any purchase decision on current or potential future member discounts/perks as they'd likely change before your closing.

Certainly one should have a healthy dose of skepticism but personally I think the risk and cost worth it for this situation but not for a full direct purchase with extremely rare exceptions. Since the underlying points have value, the real cost is significantly less than the full cost of the direct purchase. Likely the best comparison is the full cost minus the cost of the same purchase resale or some similar adjustment. One limitation on doing this at a different home resort is it will be more difficult to rent such a small amount if that's the plan and it does make getting the add on at a resort one will actually use or has other points at, a big draw.

 

[KAT4DISNEY]

.....

However, with DVC’s recent decision to increase some of these discounts for its members, it prompted me to start pondering if DVC management would further enhance member benefits to steer more potential buyers to purchase directly from Disney (long shot, but humor me for a minute)....

LAX

I'd keep in mind that these increases correlate to the decision by WDW to increase discounts for AP holders for the 45th. I expect they will drop again when the AP discounts drop. We did not see anything like this for the 25th Anniversary - it took a decision by the parks division itself to get this.

IMO, the AP discount is still the one that would be worthwhile enough to drive a small direct add-on. Only buy VGF if it's where you want to stay.

 

[LAX]

Thanks for all of your valuable inputs. I have certainly considered many of the very valid concerns/caveats raised in regards to Membership Extras. I do realize I may never recoup the extra costs associated with a direct purchase if those benefits remain the same or further deteriorate. However, I am playing this more or less as an insurance policy for some potential benefits that I might get to use down the road and would otherwise be excluded. Perhaps I might end up getting an AP or two in the distant future (when I get more time to get down to FL)!

With regards to purchasing the absolute minimum of 25 points to save on costs, I actually had originally intended to do that, but after some research, I realized I would only get about 3/4 nights in a standard studio during the lowest point season even with banking and borrowing. That to me is a setup for lots of frustration knowing how difficult those standard studios are to book pretty much year round. Thus, I decided on 40 points, which would allow me to get at least 4 nights in a lake view studio during the Magic season (the most likely time frame I can visit WDW). Perhaps I might be underestimating the difficulty of getting a lake view studio, but getting 40 points should give me some flexibility in using those points until/when I decide to add on via resale.

LAX

 

[Dean]

Thanks for all of your valuable inputs. I have certainly considered many of the very valid concerns/caveats raised in regards to Membership Extras. I do realize I may never recoup the extra costs associated with a direct purchase if those benefits remain the same or further deteriorate. However, I am playing this more or less as an insurance policy for some potential benefits that I might get to use down the road and would otherwise be excluded. Perhaps I might end up getting an AP or two in the distant future (when I get more time to get down to FL)!

With regards to purchasing the absolute minimum of 25 points to save on costs, I actually had originally intended to do that, but after some research, I realized I would only get about 3/4 nights in a standard studio during the lowest point season even with banking and borrowing. That to me is a setup for lots of frustration knowing how difficult those standard studios are to book pretty much year round. Thus, I decided on 40 points, which would allow me to get at least 4 nights in a lake view studio during the Magic season (the most likely time frame I can visit WDW). Perhaps I might be underestimating the difficulty of getting a lake view studio, but getting 40 points should give me some flexibility in using those points until/when I decide to add on via resale.

LAX

I would do that IF you can get the points OR get a different resort where the 25 actually works (? match your home resort).

 

[mustinjourney]

We did a 300 point direct buy add on a couple of years ago and we were told that tote bags were for new members only. We complained enough that they found DW a bag.

Bill

I would think they could scrounge one up for someone dropping over $45000.

 

[LAX]

I would do that IF you can get the points OR get a different resort where the 25 actually works (? match your home resort).

I will call DVC to find out about availability at VGF. I did think about getting 25 points at less point-intensive resorts (ie: BWV or BCV), but when I crunched the numbers, the actual cost per point ends up being nearly double that of VGF! As for other resorts, the spread between direct & resale prices is much greater (except for VGC) where the overall extra cost would end up not being much different from getting 40 points at VGF.

For example, if I were to get 25 points at BLT, where the spread is probably about $65/point (with average resale cost at $115/point & direct cost at $180/point), the difference in extra cost for even 25 points is $1,650. That's more than the extra $1,600 I would have to cough up for 40 points for VGF (I do realize the overall total outlay is more for 40 points at VGF than 25 points at BLT).

LAX