When is it worth getting a DVC contract with a 2042 expiration?

[Brian Noble]

As an owner, the risk isn't huge. As an owner, you'd need Disney or Florida as a whole to suffer, or some other large risk, like covid.

The risk isn't that Disney or Florida changes. The risk is that I do.

For example: when I bought my first timeshare, my kids were 5 and 7. I hoped we would go to WDW for one week every year for at least the next dozen years in a 2BR during their Ann Arbor public school district's mid-winter break (which typically happened in the week spanning the end of February/beginning of March), because that break happened to overlap with U. Michigan's "spring" break, where I teach. We would also take one summer trip to the OBX every year with extended family. With luck, the pattern would be extended if they both attended U-M.

That plan lasted I think all of two years. In the third, the school district changed their break to no longer align with Michigan's. That shifted things, reducing both our WDW trip frequency and in some cases unit size. A few years farther down the road, our vacation habits also increased and we wanted to go more places than just WDW and OBX. At the same time the kids' activity schedules got busy enough that taking more than a vacation or two each year was difficult.

Those aren't the biggest ones, because at the tail end of that dozen years we also had a multi-year separation and nearly divorced.

We didn't buy DVC with that first purchase, because we weren't sure the kids wouldn't "age out" of Disney before the payoff window (which I figured was about 5-7 years). Turns out that one never aged out, the other didn't for much longer, and they did both go to UM. We got that part right.

We got nearly everything else wrong.

 

[RoseGold]

What’s interesting… 2 years ago, pre-covid, Sept 2019 resale report, average price at BWV was $134.

So if you bought in 2019 at BWV, you have since lost about $10 per point.

Sometimes those averages are weird with smaller resorts. This broker can skew with a few small point contracts or loaded contracts. You can see it was $129 just a month later, November 2019. I love this data, but I don't think it's accurate to this level of analysis.

 

[perchy]

If I were in the market for a 2042 resort, I'd be inclined to do the following:

I would take the purchase price, and put it into an index fund. Each year, I'd add to that index fund what an owner pays for Dues. Also each year, I'd rent the stay that I would have used those points for, paying for it out of that index fund.

If my math and assumptions are correct, I will have money left over in that index fund 20 years from now, while a person who owned the resort has an expired deed. We both have the same memories though.

Yeah but, if I had that money to buy 2042 and put the same amount in an index fund, I'd probably definitely buy another contract instead. I'm buying 2042 because I can afford to. heh.

 

[perchy]

In the end, renting is risky and a lot more hassle than owning, no way around that.

No way to put a financial value on that. So all those numbers for investment etc are great if one wants to be that hyper focused on those details.

IMO, it all comes down to what does it cost you to buy now and pay MFs for 20 years. Divide by trips you think you will take. If it seems like a good deal, then it is. If not, then you don’t and look at other options to stay at those resorts.

There's the taxes you have to pay on the rental income too....

 

[havoc315]

Sometimes those averages are weird with smaller resorts. This broker can skew with a few small point contracts or loaded contracts. You can see it was $129 just a month later, November 2019. I love this data, but I don't think it's accurate to this level of analysis.

There is monthly fluctuation, because you are talking about relatively small numbers of contracts being sold. A small loaded contract will sell for much more than a large stripped contract. So you can't take just 1 month or 1 data point.
In this discussion, I decided to go back through the reports through 2018 for BWV.
There have been some ups and downs... But overall, you see prices for BWV have been relatively flat, maybe a very modest increase, over the last 3 years. Real selling prices in the $105-120 range for medium to large sized contracts in 2018, $120-$130 now.

On these boards, I see a rationalization affect.... People grabbing the highest re-sale listing price they see and proclaiming, "my purchase is now worth xxx!!!"

Given the remaining duration on the 2042 contracts, it seems totally natural that the prices should be starting to flatten out. And in a few years, we will see them start to decline.

 

[DaveNan]

Think you just proved my point. Said I’m guessing average around $130. Smaller contracts always sell higher than the average, larger contracts below that average.
so if a small contract is only selling for $137… suggests the average resale is actually under $130.

From DVC shop… CURRENT:
View attachment 617453
So actual selling prices of $120-$125 per point, listing prices of $135-144 for larger contracts.

What’s interesting… 2 years ago, pre-covid, Sept 2019 resale report, average price at BWV was $134.

So if you bought in 2019 at BWV, you have since lost about $10 per point.View attachment 617456

Resort	Resale (Based on Sept. ’21 Sales Data)	Direct* (Disney Vacation Development)	Difference Per Point (Direct – Resale)	Percentage Savings with Resale
Animal Kingdom	$136	$186	$50	27%
Aulani	$126	$201	$75	37%
Bay Lake Tower	$173	$245	$72	29%
Beach Club	$161	$245	$84	34%
Boardwalk	$143	$210	$67	32%

From DVC Resale site today.

Beach club and Boardwalk are up, but not as much as the other resorts. Maybe the 2042 impact is being seen a little.

 

[Sandisw]

There's the taxes you have to pay on the rental income too....

I am talking about someone who wants to buy vs renting a reservation instead. So no taxes involved.

 

[DougEMG]

It is worth getting a 2042 resort when the resort is one you absolutely want to stay at, you don't want the hassle of finding someone to rent from (there are a lot of people that refuse to rent especially after what happened to some losing their entire rental payment), you don't care about the end date (I'll be 82) and the money savings between owning and paying cash isn't that important to you.

So saving money by renting is only going to be one factor in people's decisions and everyone is going to place a different value on that.

 

[bakerworld]

We have 2 contracts that will last until our progeny are in their 70's. The middle child is uninterested and the other two don't think they'd have the same need to re-visit. So, if you think if it that way the 2042 year DVC's should be the focus.

 

[kdm31091]

Disney's pricing on the 2042 resorts is really expensive, especially with Beach Club. They charge $245 a point which is on par with Bay Lake for 20+ fewer years than Bay Lake. Boardwalk is a little lower but still more expensive than Riviera which has 30+ additional years. Boulder Ridge is slightly cheaper, but not much. HHI and VB are inexpensive to buy in (in comparison, anyway) but give you an 11 month advantage off property, which for many is not helpful. Economically, it may be hard for a 2042 resort to make sense. My guess is Disney makes the prices on Beach Club/Boardwalk/Boulder unattractive on purpose so people will buy the newer and longer commitment resorts.

But, the shorter contract goes both ways - it's a benefit and a detriment. Your vacation habits will almost certainly change over time and ~50 years is a very long time to assume you will still be into Disney, especially if you have no one interested in inheriting the contract from you. But 20 years at least is a more reasonable timeframe in that sense. No guarantees in life, but at least 20 years is smaller time commitment. Financially, it may be harder to make the 2042 resorts make sense, but that's definitely only one of many considerations with DVC. I would say for myself personally, and probably for many, DVC has not "saved" me any money, because I go more often than I used to. But it still makes me happy which is what matters.

 

[Leight19]

I feel the math for 2042 resorts works much better when you include total cost including time cost of money. As example let’s compare boardwalk to bay lake tower. From post above bwv is average of $143 and blt is $173.

If you just look at cost per year that works out to $143/21= $6.80 vs $173/39=$4.40 which is 1.54x difference (54% extra cost). However if you include dues of $7.81 and $6.90 this gives results of $14.61 and $11.30 which narrows to 1.29x. These are direct costs eveyone can agree on.

We also need to include the time cost of money and this is where you need to make an assumption. For me, I assume 4% since I can use money to buy dvc or pay down my mortgsge which is 4% rate. This means I need to add $143x.04= $5.72 and $173x.04= $6.92 to each for total of $20.33 and $18.22 which is 1.12x difference. This essentially means theres a 12% premium to buy the 2042 bw contract vs the 2060 blt contract.

Now there could be argument renting is cheaper but that would hold for both resorts here when you include all costs (rental market is set fairly well to actual cost of ownership with moderate roi). I easily could look to bwv point charts and justify buying there as cheaper then BLT if I use 11 mons for standard view at each. As an example dec is 78pts for week in bwv studio vs 109 pts for week in blt studio for 1.39x cost difference (more then offsetting premium to buy bwv).

This wouldn’t be true for all 2042 resorts vs all longer date resorts but it shows how the added costs beyond direct $ per year shrinks differences between resorts and trade off really becomes where you want to own/stay.

 

[E2ME2]

I feel the math for 2042 resorts works much better when you include total cost including time cost of money. As example let’s compare boardwalk to bay lake tower. From post above bwv is average of $143 and blt is $173.

If you just look at cost per year that works out to $143/21= $6.80 vs $173/39=$4.40 which is 1.54x difference (54% extra cost). However if you include dues of $7.81 and $6.90 this gives results of $14.61 and $11.30 which narrows to 1.29x. These are direct costs eveyone can agree on.

We also need to include the time cost of money and this is where you need to make an assumption. For me, I assume 4% since I can use money to buy dvc or pay down my mortgsge which is 4% rate. This means I need to add $143x.04= $5.72 and $173x.04= $6.92 to each for total of $20.33 and $18.22 which is 1.12x difference. This essentially means theres a 12% premium to buy the 2042 bw contract vs the 2060 blt contract.

Now there could be argument renting is cheaper but that would hold for both resorts here when you include all costs (rental market is set fairly well to actual cost of ownership with moderate roi). I easily could look to bwv point charts and justify buying there as cheaper then BLT if I use 11 mons for standard view at each. As an example dec is 78pts for week in bwv studio vs 109 pts for week in blt studio for 1.39x cost difference (more then offsetting premium to buy bwv).

This wouldn’t be true for all 2042 resorts vs all longer date resorts but it shows how the added costs beyond direct $ per year shrinks differences between resorts and trade off really becomes where you want to own/stay.

I like your comparison, and have come to a similar conclusion.
The points needed at BWV for a standard view are considerably lower than BLT and for most, if not all of the other DVC resorts.
This means you can get by with less points, and that has a big impact on the life cycle costs/total cost of ownership.
We don't own at BWV, but have occasionally lucked out and snagged a Std-Studio for 73Points/Week in January, at the 7-Month mark.
Once I got it by stalking the RAT, and once I got it via wait-list.

 

[Unclelude]

Great thread.

2042 contracts are interesting. It will be interesting to see what disney does as expiration approaches.

The 'math' will always work out it's better to rent vs buy. Future rental prices may change that, contract prices will likely rise... Blah blah, time value... Etc... (Sorry, I didn't want to rehash all that... Hehe)

Personally, I know I would not be able to handle the mental headache of paying even rental $$ for a disney stay... DVC was the only way I knew at least for the short term I'd go back. And we want to.

Now that I've committed, I can apply my frugality to the point system... So, I can track real time my 'investment'... ( Renting is not amiable to 'fiddle faddle'- ing the system,... My real baseline is somewhere between rental and cash)

Our tracking example:

SSR 100 pt contract
Used pts: 164
Remaining: 3236
Estimated resale net: $11,500

In using just 164 points here's my net value:

Against rental:-$200
Against cash: +2k
Against Rack: +4k

These numbers will only improve with every stay, inclusive of dues ...

Given *current* ability to resell, even with 2042 contract... Probably not a huge short term risk.

Good luck!

 

[Aussie RJ]

Am I the only one who looks at cost per night in the calculations? Where else in the world can you get a fireworks view on NYE for $367 (BWV Studio, BW view 29 points). I know the points cost is dependant on when you buy in but.. 2042 value is in the eye of the beholder. Where I'm from, I'm looking at $1300 a night (at best) for fireworks views during NYE.

 

[DisDad-]

I think Disney will offer extensions on the 2042 resorts. Especially at popular resorts such as BCV, BWV, BRV.
As 2042 approaches the direct points will have to come down and Disney has never reduced a price. Also, they’d go several years without making a dime on these resorts unless direct prices come down significantly. A 15 year extension offer would maintain direct pricing in the mid-200s and they could charge $50 pp for s 15 year extension to current owners and my guess is that many would exercise that option. Especially as we draw closer to 2042.

 

[fgaini]

Hope they will offer extension... I will be a buyer

 

[Westerlin]

DVC is not an investment, Don’t think of it that way. If you want to stay at a 2042 resort or can find some dirt cheap points look to 2042. We purchased a 2042 dirt cheap a year or so ago and are using them to stay at Aulani in a couple months.

It’s a prepaid vacation program, deals are to be had in the 2042 contracts.

 

[Kjdisney]

DVC is not an investment, Don’t think of it that way. If you want to stay at a 2042 resort or can find some dirt cheap points look to 2042. We purchased a 2042 dirt cheap a year or so ago and are using them to stay at Aulani in a couple months.

It’s a prepaid vacation program, deals are to be had in the 2042 contracts.

This is the way I want to look at it! I like having control of a reservation and an option to change or cancel if need be. Also I’ve seen more $20 pp than $16 pp, rental lately which is making the math look better.
So, since I love BW point chart and location, when I had to cancel our cruise in the Spring,AGAIN, I took the money and snapped up a small BW contract. Hopefully will make it through ROFR, should as it is higher point cost than most, but fully loaded with points so hopefully will offset that. I look at it as if I got a 100 days of vacation for less than the cost of 10! Makes it sound like a really great deal

Really appreciated this thread, it came along at the right time, because I had almost talked myself out of 2042 contracts.

 

[DVCjj]

It’s worth it when you can literally walk to two parks, 7 deluxe resorts and a skyliner at your door. BCV/BWV

 

[DduzDis]

We own at BLT, BWV and PVB. We figure the 2042 end date with BWV is about the time we would decide to downsize anyway...just natural attrition for us. We still have BLT and PVB to use if we are still able and interested. It's hard to look beyond the 20 year mark for us anyway given the way things can change.