Thoughts on purchasing strategy

[qv09vvp]

hi all. What pitfalls and benefits are there to buying several smaller contracts as opposed to one larger one? Thoughts?

 

[lovin'fl]

I prefer smaller contracts. We initially bought 200 pointer in 2006. We lived a 9 hour drive from WDW and our three kids were in a year round elementary. The plan was to go every Sept and drive. But then, in 2007, we moved 5 more hours farther away and the kids then went to traditional school. So we thought we'd have to fly and would only afford every two or three years. We came on here and asked if it possible to break our contract in half and sell 100 points off. Nope!

So we kept the contract. Turns out we would go to WDW more often than we thought and even found we loved DVC at HHI. So we added on points there and did 50, 50 and 25 pointers in case we ever wanted to downsize. Then our kids became teens and we needed to stay in 2BR villas so we added on 100 pointer at AKV (which we would resell in 2016, when we realized we could use OKW to book AKV at 7 month window). Then, DH and I did a sans kids trip at F&W and wanted BWV to make it an annual thing. We added 55, 25, 25 BWV. And we just today, finalized another add on...150 BWV resale that just loaded into our account today. Another thing about buying a bunch of small contracts is that it's easier to come up with the cash. When you have the money together, add on. Every year or so. We used DH bonus money.

The two negatives...you pay closing costs each time. But larger contracts are more CC. Still you will likely pay more in total. Direct CC are less than resale...our three small BWV contracts were direct. Another downside is smaller contracts cost more...resale. But if you resell, you will also get a higher price back.

 

[Marionnette]

hi all. What pitfalls and benefits are there to buying several smaller contracts as opposed to one larger one? Thoughts?

The pitfall would be managing them, especially if they are titled differently or if they have different UYs. You will pay more per point for small contracts than you will for a single large contract. And you will pay settlement costs for each of those small contacts that will exceed what you would pay for one large contract. That contributes to the overall cost per point in the long run.

On the plus side, it's easier to sell a small contract. They command a higher resale price per point. You can spread your points across multiple home resorts. If they have the same UY, it's easy to combine points at the 7-month mark to book non-home resorts.

 

[sndral]

If your plan is to buy more than one contract and have them all in one membership then spend some time looking at % of contracts in each use year month for the resorts you're interested in. The contracts weren't sold evenly by DVC w/ the same % each month, they range from 3-20%, thus it will be easier to match some use year months than others.
It's relatively easy to find that first contract because you aren't yet tied to any particular use year. Wanting to match that use year month after that, though, limits your options, depending on where you want to buy. A resort w/ lots of resale contracts on the market like SSR won't be a problem, but a smaller resort will. For example I wanted to match my existing Dec. AKV contract with a Dec. VGF contract and it took me over a year to find a Dec. VGF contract that was the right size and price.

 

[lovin'fl]

Here is the chart for distribution of points by UY...from 2015 and I can't find a more recent one...
http://dvcnews.com/index.php/dvc-pr...ar-distribution-charts-updated-september-2015

 

[Dean]

hi all. What pitfalls and benefits are there to buying several smaller contracts as opposed to one larger one? Thoughts?

What resort, how many points total are you looking at and how small are you thinking? The reality is that small contracts sell for more and have more overall ancillary costs than larger ones. For purity of discussion, let's assume a single resort. IMO paying more for smaller just to get insurance to possibly sell part later is a poor choice. IMO one should become educated enough that they can make a good informed decision up front and be stable enough to buy something they can actually afford (to me that's pay cash). So buying 3*50 at an additional $2500 cost compared to 150 as a single really makes no sense just to have the exit strategy later. The cost of "insurance" is far too high in that situation. I do believe one should start to limit it for most situations once you get to enough points where they can have more than one stand alone contract, say 300 or more total. Now there are other reasons to own smaller contracts such as multiple home resorts. And sometimes one gets the opportunity to do so without the additional costs such as someone who's selling multiple you can buy as a unit. And there's no guarantee they'll continue to be desirable, IMO 10 yrs or more from now the chances are about even money that they will not be in demand IMO.

 

[CraigInPA]

There's clearly a sweet spot where the bundling of multiple "smaller" (not "small") contracts makes sense for some people.

The principal reasons to buy "smaller" contracts are:
1. I can't find a contract big enough to meet my needs
2. I anticipate needing less points in the future and don't want the hassle of renting points, so I'll be selling some points in the foreseeable future.

The downsides to buying multiple contracts:
1. small (75 or fewer points) contracts go for a premium price per point
2. Multiple closing costs
3. Difficulty of finding the same use year/resort

The upside to buying multiple contacts:
1. Easier to sell smaller contracts than larger ones
2. Higher price per point for smaller contracts

 

[TexasChick123]

Buying a bunch of smaller contracts is a much safer decision in that you can unload them easier in the event that you need to sell. However, you will have to pay closing costs every time that you purchase one which adds to their cost which is already higher per point because they sell at a premium. I have seen many say that buying small add-ons via resale isn't a good enough deal versus direct, but I cannot comment on that as I have not done it as a standalone small add-on. I did just add 160 points at VGF split between two contracts (100pt and 60pt) that were from the same seller. That may be a good strategy for you as well. Look for someone selling multiple contracts with one broker, and you will only have to pay closing costs one time.

 

[Dean]

There's clearly a sweet spot where the bundling of multiple "smaller" (not "small") contracts makes sense for some people.

The principal reasons to buy "smaller" contracts are:
1. I can't find a contract big enough to meet my needs
2. I anticipate needing less points in the future and don't want the hassle of renting points, so I'll be selling some points in the foreseeable future.

The downsides to buying multiple contracts:
1. small (75 or fewer points) contracts go for a premium price per point
2. Multiple closing costs
3. Difficulty of finding the same use year/resort

The upside to buying multiple contacts:
1. Easier to sell smaller contracts than larger ones
2. Higher price per point for smaller contracts

Buying a bunch of smaller contracts is a much safer decision in that you can unload them easier in the event that you need to sell. However, you will have to pay closing costs every time that you purchase one which adds to their cost which is already higher per point because they sell at a premium. I have seen many say that buying small add-ons via resale isn't a good enough deal versus direct, but I cannot comment on that as I have not done it as a standalone small add-on. I did just add 160 points at VGF split between two contracts (100pt and 60pt) that were from the same seller. That may be a good strategy for you as well. Look for someone selling multiple contracts with one broker, and you will only have to pay closing costs one time.

Anything 100 or under is likely to be more pp than lager contracts plus the additional closing costs. I don't believe in buying planning to sell later or stretching oneself to do so. IMO just for the insurance, I don't think it reasonable until one gets to where all contracts are stand alone of around 150 or more UNLESS one has a specific plan for the additional points such as a different home resort. And I don't believe in the common assumptions that they will be worth more long term, they may or may not. My view is to get educated enough that you can make a good decision up front, or at least as good as one can without actual ownership usage. This normally takes around 6 months of active investigation. There are other better strategies if one truly needs more now and less later which I think is fairly unusual anyway.

 

[CraigInPA]

@Dean,

I was referring to "smaller" contracts, not "small" contracts. For example, I'd like 450 points at BLT. Contracts over 300 aren't that common, but there are lots of 150's and 160's out there. So, I'd try to buy a 300 and a 150, or a 200 and a 250, to get my required number of points. Likewise, if I was planning on needing 600 points for the next 15 years, and then, after the kids are in college, needing only 300 points, I'd try to find 2 300 point contracts, or some combination of contracts that would give me a clean split near 300 points when I may sell in 15 years.

 

[Dean]

@Dean,

I was referring to "smaller" contracts, not "small" contracts. For example, I'd like 450 points at BLT. Contracts over 300 aren't that common, but there are lots of 150's and 160's out there. So, I'd try to buy a 300 and a 150, or a 200 and a 250, to get my required number of points. Likewise, if I was planning on needing 600 points for the next 15 years, and then, after the kids are in college, needing only 300 points, I'd try to find 2 300 point contracts, or some combination of contracts that would give me a clean split near 300 points when I may sell in 15 years.

That's the issue then. Anything with small in the name I immediately think under 150 and 150 or above as full sized I'm on record as saying once you get to a certain size, go for 2 or more depending. For sure by 350-400, but start thinking about it around 300. I would not buy planning to sell later but it is good to have options just in case. I'd go in between in size so I didn't have to sell later if I felt I would need less down the road even if that meant some on cash in the interim. For 450 at one resort I'd do 2 min 150 but realistically I'd likely do 2 resorts for most situations at 450 or above.

 

[crisi]

hi all. What pitfalls and benefits are there to buying several smaller contracts as opposed to one larger one? Thoughts?

One thing to know is that you are still stuck with the seven month window for points. So say you buy 50 BWV points for F&W and then buy 100 points at SSR (to keep the example easy). At 11 months to book that BWV room, you can only use the BWV points. You can bank and borrow to get a maximum of 150 BWV points, but you won't be able to use those SSR points until 7 months - at which point you'd need to be really lucky to get a BWV room over F&W. Multiple small (and small I mean less than 100) point contracts work for people who are going to take a lot of trips, use bank and borrow, utilizing the home resort window for those points, and really understand the system and are going to do the point management required. It works for some people, it doesn't work for most people.