What happens when a DVC Property becomes “worthless”?

[Cfabar1]

in another thread, a poster pointed out something quite interesting….

From AnnaKristoff2013

The x-factor you are forgetting about is dues prices though. Vero Beach, for example, appears to be on a path to become effectively worthless well before the contract expires. And by “worthless” I mean you won’t be able to sell it, you’ll have to try to give it away like all fo the other “worthless” timeshares out there that have very high dues. If the annual dues start to far exceed the rental rate of the points, and especially if the annual dues start to exceed the rack rates, then it goes to zero.

This got me wondering…. What happens when this occurs… I kind of agree with the assessment, that this may only be a matter of time… but what happens at that point… and does it stay contained only to VB? Or does it affect resale and interest in all the other DVC’s? How will this impact DVC’s post 2042 plan for Vero? Would an extension help them out? I wonder how many VB owners would turn back the keys to the dealership right now if they could….

 

[Sandisw]

Well, it goes back to the premise that one should not buy DVC expecting to be able to sell it and get your money back. If you go in with that mindset, it doesn't matter.

As long as the resort exists, and you can use it, that is the value...not what you can unload it for to someone else. The best one can hope for is that someone is willing to take it from you for the remainder of time so you are out from under MF's because you have no desire to even use it.

I do think that VB and HH may suffer things worse than the other 2042 resorts, but also think that all of them will face this at some point, because, as I have shared before, the buyer pool will be much smaller in terms of who might want to buy something with such a short life span.

OKW's extension experiment failed and DVD is now faced with a resort that officially expires in 2057...ground lease extended...but plenty of owners out there who own original contracts who did not pay for the additional 15 years and also did not quit claim it back to DVD in 2042...

So, I don't think you will see that tried again...plus, my gut is that both VB and HH leave the DVC world behind and that they are sold off or simply become cash resorts for TWDC.

 

[DonMacGregor]

I do think that VB and HH may suffer things worse than the other 2042 resorts, but also think that all of them will face this at some point, because, as I have shared before, the buyer pool will be much smaller in terms of who might want to buy something with such a short life span.

As others have said, the added uncertainty regarding the two beach resorts is whether the MF's will, at some point, become more costly than a cash stay (or at least become too close to diminish the advantage). They already have higher MF's than any WDW resorts, and with another 18 years to get hit by a hurricane (or more likely multiple less strong but still serious weather events), there is ample possibility that you could see a couple of decent fee increases between now and then.

It's a long shot, but you never know.

 

[thanxfornoticin]

If we never get a pennie back from our 2042 points, the contracts at this point will always be priceless to us - never worthless. We never bought with resale concerns, we bought for the vacations and memories. We've been very fortunate to have enjoyed it for 30 years, and still have almost 20 more to go! FYI - we do not have any of the resorts on the coast.....

 

[hhisc16]

Well, it goes back to the premise that one should not buy DVC expecting to be able to sell it and get your money back. If you go in with that mindset, it doesn't matter.

As long as the resort exists, and you can use it, that is the value...not what you can unload it for to someone else. The best one can hope for is that someone is willing to take it from you for the remainder of time so you are out from under MF's because you have no desire to even use it.

I do think that VB and HH may suffer things worse than the other 2042 resorts, but also think that all of them will face this at some point, because, as I have shared before, the buyer pool will be much smaller in terms of who might want to buy something with such a short life span.

OKW's extension experiment failed and DVD is now faced with a resort that officially expires in 2057...ground lease extended...but plenty of owners out there who own original contracts who did not pay for the additional 15 years and also did not quit claim it back to DVD in 2042...

So, I don't think you will see that tried again...plus, my gut is that both VB and HH leave the DVC world behind and that they are sold off or simply become cash resorts for TWDC.

In 2042, I think TWDC may keep VB and HHI as cash resorts. DVC is locked in with both resorts until 2042 from what I can understand from my HHI contract. Since covid, both resorts are tracking towards higher occupancy year round.

 

[AnnaKristoff2013]

In 2042, I think TWDC may keep VB and HHI as cash resorts. DVC is locked in with both resorts until 2042 from what I can understand from my HHI contract. Since covid, both resorts are tracking towards higher occupancy year round.

I don’t know, they’re going to be **old** buildings at that point in need of a lot of capital to keep maintained. I can’t imagine Disney wants to take that cost on themselves. I agree they get sold off.

 

[TinkAgainU]

If we never get a pennie back from our 2042 points, the contracts at this point will always be priceless to us - never worthless. We never bought with resale concerns, we bought for the vacations and memories. We've been very fortunate to have enjoyed it for 30 years, and still have almost 20 more to go! FYI - we do not have any of the resorts on the coast.....

Ditto. Although a Much newer DVC member. Our plan is to happily run our two out to the end. We would probably not be too concerned with coastal locations, and always wanted to add Aulani - I'm guessing WDW has adequate insurance plans but that might be something to check before buying in there. But absolute worst case, we purchased low enough points contracts, I'm reasonably sure the monthly fees might make us sad, but would not bankrupt us

 

[AnnaKristoff2013]

I think there’s “worthless” and then there’s “so worthless it’s a liability and you can’t get rid of it.” For most of the DVC resorts I don’t think we get to the latter. But Vero Beach (and maybe Hilton Head) are special cases. VB already has the highest dues of any DVC resort at $12.85 per point. The dues increased 7.6 percent YOY. As an older beach resort, even if there are no hurricanes, there’s no reason to expect those increases to moderate much, if at all. At that pace, the dues hit $20 per point by 2029. They hit $25 per point by 2033. I do think we will likely hit a point where they are not only worthless, but there are people who will no longer be able to pay the dues and will not be able to get rid of the contracts short of foreclosure. Maybe Disney will let you surrender the contract in that circumstance, maybe not. Personally, I would not want to buy VB right now at any price, and if I were an owner, I’d actively consider selling. You can still sell right now and buy a different DVC property with the proceeds, but owning at VB seems risky.

 

[Cfabar1]

I think there’s “worthless” and then there’s “so worthless it’s a liability and you can’t get rid of it.” For most of the DVC resorts I don’t think we get to the latter. But Vero Beach (and maybe Hilton Head) are special cases. VB already has the highest dues of any DVC resort at $12.85 per point. The dues increased 7.6 percent YOY. As an older beach resort, even if there are no hurricanes, there’s no reason to expect those increases to moderate much, if at all. At that pace, the dues hit $20 per point by 2029. They hit $25 per point by 2033. I do think we will likely hit a point where they are not only worthless, but there are people who will no longer be able to pay the dues and will not be able to get rid of the contracts short of foreclosure. Maybe Disney will let you surrender the contract in that circumstance, maybe not. Personally, I would not want to buy VB right now at any price, and if I were an owner, I’d actively consider selling. You can still sell right now and buy a different DVC property with the proceeds, but owning at VB seems risky.

Hmm… I have a deposit in on a small vero beach contract… reading this has me consider pulling out and forfeiting the deposit… much to consider…

 

[beldred]

Hmm… I have a deposit in on a small vero beach contract… reading this has me consider pulling out and forfeiting the deposit… much to consider…

Are you buying the contract to stay at VB or to use at WDW? Cause that's a HUGE difference.

 

[Cfabar1]

Are you buying the contract to stay at VB or to use at WDW? Cause that's a HUGE difference.

For VB…. VGF is our WDW resort…

 

[TinkAgainU]

How many points? I have a quick excel sheet I use for our points to guestimate the monthly dues at a 5% increase every year, I can give you yours at 5% or 7% or whatever, if you'd like? That was actually the Benefit of having one contract ending earlier, made having two contracts less intimidating if dues ended for us on one of them in 2042.

 

[mz-s]

A bit of a double whammy coming up for VB and HHI - not much time left on the deed plus the high fees certainly limits the market. But the low points charts makes them a great option for owners of other resorts to stay there.

 

[Cfabar1]

How many points? I have a quick excel sheet I use for our points to guestimate the monthly dues at a 5% increase every year, I can give you yours at 5% or 7% or whatever, if you'd like? That was actually the Benefit of having one contract ending earlier, made having two contracts less intimidating if dues ended for us on one of them in 2042.

Yeah, it’s just 25 points. That would be awesome!

 

[TinkAgainU]

Year	Start Fee	Est/Fee*	# Points	Annual	Monthly
2023​	12.85​	12.85​	25​	321​	$27​
2024​		13.75​	25​	344​	$29​
2025​		14.71​	25​	368​	$31​
2026​		15.74​	25​	394​	$33​
2027​		16.84​	25​	421​	$35​
2028​		18.02​	25​	451​	$38​
2029​		19.28​	25​	482​	$40​
2030​		20.63​	25​	516​	$43​
2031​		22.08​	25​	552​	$46​
2032​		23.62​	25​	591​	$49​
2033​		25.28​	25​	632​	$53​
2034​		27.05​	25​	676​	$56​
2035​		28.94​	25​	724​	$60​
2036​		30.97​	25​	774​	$65​
2037​		33.13​	25​	828​	$69​
2038​		35.45​	25​	886​	$74​
2039​		37.94​	25​	948​	$79​
2040​		40.59​	25​	1,015​	$85​
2041​		43.43​	25​	1,086​	$90​
2042​		46.47​	25​	1,162​	$97​

 

[TinkAgainU]

The above is assuming a 7% escalation every year. Hopefully, that helps put it in perspective. Let me know if you want a different number plugged in Many would say it's useless without also plugging in an inflation factor for the rest of your finances. But I found it helpful for keeping my focus on smaller contracts lol.

 

[AnnaKristoff2013]

Hmm… I have a deposit in on a small vero beach contract… reading this has me consider pulling out and forfeiting the deposit… much to consider…

I mean if it's just a 25 point contract I wouldn't lose sleep over it. Even if the dues blow up that's not going to kill you. My post was more a cautionary tale for people who own 100, 200 or more. People who bought it as SAP for WDW.

Edit: I guess one other saving grace is the contract expiration. Unlike normal timeshares where you can get sucked into a black hole of neverending dues increases, at least here you know you will stop paying dues in 2042.

 

[mz-s]

Well and that's assuming the dues increase 7% per year every year from now until 2042, which they may or may not. The only thing guaranteed is your obligation expires on Jan 31 2042 if you own points there.

 

[Mrs p]

Hi all

I thought the dues were a direct reflection of the costs of running the resort - if dues exceed the cash price then the operation is insolvent ?

 

[Travel60]

If we never get a pennie back from our 2042 points, the contracts at this point will always be priceless to us - never worthless. We never bought with resale concerns, we bought for the vacations and memories. We've been very fortunate to have enjoyed it for 30 years, and still have almost 20 more to go! FYI - we do not have any of the resorts on the coast.....

Yes, this.

We own at HHI and the memories we've made there with kids and friends - and expect to make in the next 19 years with grandkids are priceless. We bought very early (so cheaper), have used ~50% of our points for WDW, Concierge, DCL (yes, we know not good "value"). We will be approaching 90 when points expire, kids near 60 - so their problem .