Math on DVC Resales

[ryguy]

I am in the process of buying 125 points now on resale. The main reason I decided to buy was the fact I could use my Disney Visa points to pay the yearly fees. Another reason is that even with a AP discount or Florida resident discount the Disney hotel rates are getting absurd, and now paid parking. So I am hedging my bet here kinda sorta locking in a price for the next 40 years.

 

[CLEtoWDW]

I am in the process of buying 125 points now on resale. The main reason I decided to buy was the fact I could use my Disney Visa points to pay the yearly fees. Another reason is that even with a AP discount or Florida resident discount the Disney hotel rates are getting absurd, and now paid parking. So I am hedging my bet here kinda sorta locking in a price for the next 40 years.

If you don’t mind me asking...what’s the home resort?

 

[correcaminos]

I did previously compare a standard room to a studio and the analysis showed a clear advantage to DVC, according to the cost estimates provided by the OP. However, the discussion wandered to how the OP seemed to want to stay at a 1-bedroom and how it didn't seem possible to compare a 1-bedroom villa against a 1-bedroom cash room except by comparing the point-rental value vs. point purchase.

At any rate, what did you think of my analysis of the standard room vs the studio villa?

I was hoping that taking the time to do all the numerical analysis for people might actually be helpful to the OP. I'd be happy for you to help refine the estimates. I think that doing these estimates is more helpful than going with people's gut.

In what way are the 1-bedroom suites not comparable to the 1-bedroom villas? Also, what do you think is a good price for Club Level and daily housekeeping? I used $150 because that's the difference between the price of a same-view room vs a same-view Club Level room. What number do you think would be better? I'm happy to use it, as I don't have a dog in this fight I'm just trying to provide some financial rigor to this instead of the usual qualitative platitudes.


I'm not sure what you mean by your last statement. What do you mean they don't really value their money if they are buying 24 years of stays vs 39? Looking at the value of OKW '42 contracts vs '57, people are only getting $6-$9 more for the extended contract. So it seems to me that it's all a matter of price and people don't put that much value on the extra 15 years of the timeshare contract.

I do agree that buying direct is hard to justify financially. The savings from buying retail for the resorts where there is a resale market is just too great.

The 1 bedroom villas vs suites are more about what they offer and the room size/layouts. The suites are really hotel rooms with a small sitting area. The villas are meant to be like a little apartment. They offer a full kitchen and a washer and dryer. It's more like a home away from home. Disney does show the rack rates for the villas to compare it to. Though I will say 1 bedrooms are often found for significant discounts with APs and such.

While the studios do have a toaster and a microwave, doing a standard room vs a studio works fine for me. That said your example had 200 points a year, and 200 points will get you far more than 7 nights a year.

I encourage you to look at your average travel and then look at point charts to decide what number of points you think would be best. Do buy where you want to stay most though, that's key especially if doing studios. Not so much if doing 1 bedrooms unless you are booking the fall/winter time.

 

[Sirwalterraleigh]

No that’s the secondary market price. But you get the point I’m tryin to make... the useful life of these contracts is starting to evaporate yet sales in the $135-$150 range are still occurring when it comes to BCV.

EDIT: one other point I’m trying to make is the DVC’ers that bought contracts in the 90’s and early 2000’s are absolutely genius. The deal they scored is almost laughable by today’s standards.

DVC struggled to sell for about 10 years...so the prices held somewhat firm...so that’s the context.

90’s and early 00’s () scored a good deal...but it shouldn’t be as good as it looks now...because they’ve crushed the value and now you’re paying way too close to retail.

It’s really just Buy without thought now. Who’s buying wilderness lodge now at that price? And why? You’re paying literally 3x what the room 100 feet away did. No differences.

 

[ryguy]

Grand Flordian

 

[Sirwalterraleigh]

Grand Flordian

Ouch...what’s the resale on that?

 

[Lensman]

No that’s the secondary market price. But you get the point I’m tryin to make... the useful life of these contracts is starting to evaporate yet sales in the $135-$150 range are still occurring when it comes to BCV.

DVC contracts feel a "pull to zero" of $6-$8 per point every year. This represents the year of stays that have been "used up" that year, net of annual dues. Counteracting that is what I call "room rate inflation" where as comparable room rates at the Disney resorts go up, the perceived value of the stream of future annual room stays goes up. Factor in the time value of money where the use of a point 24 years from now is worth half of what the use of a point today is, but as a year passes those future stays end up worth a little more because they're "closer" to today, and you end up with a predicted annual decline of about $2.70 between 2018 and 2019 for a 2042 contract. A 2057 contract has a smaller theoretical decline of about $2.00. It's hard to observe these price declines due to actual room inflation being so large plus the volatility due to market forces in the resale market. Note that actual room rates have increased more than inflation. Between 2003 and 2013, Disney resort hotel room rates increased 60%-80%. Between 2003 and 2014, DVC direct prices for existing resorts should have theoretically gone down by 22%, but instead they went up by 44%. Now on the other hand, I think that resale pricing is a better gauge of DVC value, but I haven't been able to locate the historical price database that I've seen before. At any rate, it is certainly true that prices have gone up, not down as contracts have been used up.

EDIT: one other point I’m trying to make is the DVC’ers that bought contracts in the 90’s and early 2000’s are absolutely genius. The deal they scored is almost laughable by today’s standards.

Don't mistake good outcome with good strategy. Those of us who bought early days were not geniuses, we were just lucky. But we were just "lucky" that Disney resort prices have gone up astronomically. I'd say that we are merely "less unlucky" than people who have to pay the seemingly outrageous room prices of today.

Speaking of lucky, would it be bad manners to mention the free park passes through the end of 1999? Or the free cruise incentive?

The 1 bedroom villas vs suites are more about what they offer and the room size/layouts. The suites are really hotel rooms with a small sitting area. The villas are meant to be like a little apartment. They offer a full kitchen and a washer and dryer. It's more like a home away from home. Disney does show the rack rates for the villas to compare it to. Though I will say 1 bedrooms are often found for significant discounts with APs and such.

Gotcha

While the studios do have a toaster and a microwave, doing a standard room vs a studio works fine for me. That said your example had 200 points a year, and 200 points will get you far more than 7 nights a year.

Did you read my analysis? In it, I said that 200 points would get you 10-13 room nights a year. At $441 a night that's $4410 - $5733 a year.

 

[correcaminos]

DVC contracts feel a "pull to zero" of $6-$8 per point every year. This represents the year of stays that have been "used up" that year, net of annual dues. Counteracting that is what I call "room rate inflation" where as comparable room rates at the Disney resorts go up, the perceived value of the stream of future annual room stays goes up. Factor in the time value of money where the use of a point 24 years from now is worth half of what the use of a point today is, but as a year passes those future stays end up worth a little more because they're "closer" to today, and you end up with a predicted annual decline of about $2.70 between 2018 and 2019 for a 2042 contract. A 2057 contract has a smaller theoretical decline of about $2.00. It's hard to observe these price declines due to actual room inflation being so large plus the volatility due to market forces in the resale market. Note that actual room rates have increased more than inflation. Between 2003 and 2013, Disney resort hotel room rates increased 60%-80%. Between 2003 and 2014, DVC direct prices for existing resorts should have theoretically gone down by 22%, but instead they went up by 44%. Now on the other hand, I think that resale pricing is a better gauge of DVC value, but I haven't been able to locate the historical price database that I've seen before. At any rate, it is certainly true that prices have gone up, not down as contracts have been used up.


Don't mistake good outcome with good strategy. Those of us who bought early days were not geniuses, we were just lucky. But we were just "lucky" that Disney resort prices have gone up astronomically. I'd say that we are merely "less unlucky" than people who have to pay the seemingly outrageous room prices of today.

Speaking of lucky, would it be bad manners to mention the free park passes through the end of 1999? Or the free cruise incentive?


Gotcha


Did you read my analysis? In it, I said that 200 points would get you 10-13 room nights a year. At $441 a night that's $4410 - $5733 a year.

Oops sorry I was scrolling and inadvertently scrolled too far without realizing. Forgive me. With the math I will just say I would look up the actual cost per night per season and include discounts. I actujally did that when I was regularly getting good ones at Swan. Yours is a bit more simplified, but not too bad. I was all about spreadsheets and used certain averages for increases. I was very particular on my math though.

 

[HansGruber]

I'm not sure what you mean by your last statement. What do you mean they don't really value their money if they are buying 24 years of stays vs 39? Looking at the value of OKW '42 contracts vs '57, people are only getting $6-$9 more for the extended contract. So it seems to me that it's all a matter of price and people don't put that much value on the extra 15 years of the timeshare contract.

It's 15 extra years worth of a contract! Why wouldn't someone value that?
Even if you decided to not leverage the last 15 years, you could pay the dues and then turn a profit by renting out the points.

I fully understand that BC is a highly sought after resort, but if someone values the experience over the value, then they shouldn't buy into DVC. DVC is all about saving money; essentially it's pre-paying ahead of time for cheaper vacations in the future.

 

[nickys]

It's 15 extra years worth of a contract! Why wouldn't someone value that?
Even if you decided to not leverage the last 15 years, you could pay the dues and then turn a profit by renting out the points.

I fully understand that BC is a highly sought after resort, but if someone values the experience over the value, then they shouldn't buy into DVC. DVC is all about saving money; essentially it's pre-paying ahead of time for cheaper vacations in the future.

I disagree about your last paragraph. DVC is not all about saving money. For us, it is as much about the experience, possibly more so.

We only come over from the U.K. every three years or so. Initially, like most U.K. visitors we stayed offsite. We then had an onsite stay, and were blown away by it. So much more relaxing for DH not to have to drive every day. We could come and go as we wanted to the parks. But we did the tour and loved the fact we could have our privacy in a 1 bed and have the boys in the living room. The kitchen, washer etc, all onsite. Guess where that onsite stay was - yep the Beach Club! I love it there and really hope we can stay again, managed it once in the summer, but it may now have to wait until I’m not tied to school holidays. There is no way we could afford to stay there each time if paying the resort prices, plus we’d all be in the same room.

Will it pay for us? Yes, assuming we go another three times before circumstances mean we can’t do that transatlantic flight anymore. Our break even point was 5 holidays (2 weeks mainly, sometimes 3). But if we hadn’t bought, we would likely still be staying offsite, and using Uber much more. It’s the experience of DVC that is worth so much to us. We get the condo facilities but get to stay onsite, which means we can all just come and go as we want to, the boys are now old enough to go off on their own if they want to.

We could sell now and make a small profit - that’s with buying direct with a loan (which we paid off early). But that really isn’t that important to us. It’s worth it to is from the holidays we’ve already had, and hopefully continue to have.

 

[Lensman]

It's 15 extra years worth of a contract! Why wouldn't someone value that?
Even if you decided to not leverage the last 15 years, you could pay the dues and then turn a profit by renting out the points.

I fully understand that BC is a highly sought after resort, but if someone values the experience over the value, then they shouldn't buy into DVC. DVC is all about saving money; essentially it's pre-paying ahead of time for cheaper vacations in the future.

I've calculated the extra 15 years of contract as having a present value of $20-$25 per point. This is more than what "the market" values OKW '57 contracts vs OKW '42 contracts, which as I said before is $6-$9 per point.

If you don't think you're going to use the last 15 years of contract, why lock up your capital and pay for it now while only receiving the cash flow 25-40 years from now? Especially when the #1 criterion for deciding which DVC resort to buy is "buy where you want to stay".

It's not all black and white, but it can be all dollars and sense.

 

[Lensman]

Oops sorry I was scrolling and inadvertently scrolled too far without realizing. Forgive me. With the math I will just say I would look up the actual cost per night per season and include discounts. I actujally did that when I was regularly getting good ones at Swan. Yours is a bit more simplified, but not too bad. I was all about spreadsheets and used certain averages for increases. I was very particular on my math though.

There are some great DVC analysis spreadsheets out there. I'm sure yours is also a sight to see!

OP, please feel free to continue to post your thoughts and questions. Also, note that one strategy that people sometimes use is to buy their main contract resale and to buy a small add-on contract direct to get all the perks. This used to get you all the benefits of buying direct except for the ability to use your points for cruises, adventures, and concierge destinations, which aren't a good deal anyway. This strategy isn't as good as it used to be because the minimum add-on contract went up from 25 points to 75 points.

 

[dreamfinder]

BCVs sell for ~$140/pt resale. I don't know if you can talk Disney down on their prices, but it "might" be conceivable to get a retail price somewhere around the $140 mark. If so, then it might make sense to buy directly from Disney.

The direct prices are firm. It's a sellers market as is evident by their continued new buildouts, so they have no need to bring down the prices. I've never heard of anyone paying less than the published prices. Their wiggle room is typically on the number of points for the initial buy in, or them spotting you prior year points at no cost.

 

[correcaminos]

There are some great DVC analysis spreadsheets out there. I'm sure yours is also a sight to see!

OP, please feel free to continue to post your thoughts and questions. Also, note that one strategy that people sometimes use is to buy their main contract resale and to buy a small add-on contract direct to get all the perks. This used to get you all the benefits of buying direct except for the ability to use your points for cruises, adventures, and concierge destinations, which aren't a good deal anyway. This strategy isn't as good as it used to be because the minimum add-on contract went up from 25 points to 75 points.

I think my spreadsheet is long gone as we did it in 2004 LOL. I had my father who loved math and an engineer check it over. We had some pretty interesting additions to the calculations. It really helped us to figure out the buy in and worth of it all. I don't do it now for add ons though, but we've made up our value pretty quickly when we do add on. We're not replacing hotel stays but just adding to our current experience which is a little different mentally for us.

AI agree about the add on if you want to get the full membership. You don't even have to do all 75 at once, you can start with minimum of 25 points. If not financing the current closing costs is about $125. Better even than resale which seems to be about $500 more like for like.

Completely agree on the bad use for cruises and other destinations. Admittedly that is why I got a great deal on my initial resale purchase. Owners had used points for a Disney collection and then cancelled. I just happened to be planning a trip that used that exact number for our stay at GCH. No one wanted a contract with points like that so the amount was much lower than others. Win win in my case, but bad use for most others.

The direct prices are firm. It's a sellers market as is evident by their continued new buildouts, so they have no need to bring down the prices. I've never heard of anyone paying less than the published prices. Their wiggle room is typically on the number of points for the initial buy in, or them spotting you prior year points at no cost.

Firm pricing but if buying larger numbers, you do often get some sort of incentive for the current non-sold out resorts at least.

There is no wiggle room on number of points to buy in though. They are very firm on that over all. 25 is as low as anyone can purchase right now. The spotting you prior year is not something either. Either your purchase prior to the UY in the same calendar year and get current UY points (buy September for example now, it's September's current 2017 UY, so you get 2017 and 2018 even though it is 2018) or you buy current year and UY matching up (like buying now for anything beyond a July UY). I've not heard of them wiggling on that. Same with MFs, they are prorated for calendar year so if you buy halfway through you don't pay for it all. That all is pretty darn standard too.

They are willing to reallocate points and unborrow and such if you are adding on or helping you to book your first stay if brand new even if it is kind of sold out, they often can pull some magic.

 

[dreamfinder]

There is no wiggle room on number of points to buy in though. They are very firm on that over all. 25 is as low as anyone can purchase right now.

Yes, 25 is the smallest add on contract you can get. But typically they would/will tell you a new member needs to buy 150 points. But you could get them to bring that down to 100 point buy in. They may have dropped that charade, but that was the going deal for years.

The spotting you prior year is not something either. Either your purchase prior to the UY in the same calendar year and get current UY points (buy September for example now, it's September's current 2017 UY, so you get 2017 and 2018 even though it is 2018) or you buy current year and UY matching up (like buying now for anything beyond a July UY). I've not heard of them wiggling on that. Same with MFs, they are prorated for calendar year so if you buy halfway through you don't pay for it all. That all is pretty darn standard too.

Some times they have offered new purchase incentives that included a set of free single use points, that were basically the equivalent of the previous years points. While not specifically a the spotting of the prior year points, that is what they were. Points that DVD had been unable to use since the unit was newly declared and they didn't sell it.

 

[nickys]

Some times they have offered new purchase incentives that included a set of free single use points, that were basically the equivalent of the previous years points. While not specifically a the spotting of the prior year points, that is what they were. Points that DVD had been unable to use since the unit was newly declared and they didn't sell it.

I suspect that was during the recession, when people just weren’t buying without significant incentives.

Any reports I’ve seen of people “getting bonus points” turned out to be current use year points, as @helenabear said.

Minimum buy in now is 100 points, although I have seen reports of 75 being offered as a last attempt to get a sale.

 

[HansGruber]

I've calculated the extra 15 years of contract as having a present value of $20-$25 per point. This is more than what "the market" values OKW '57 contracts vs OKW '42 contracts, which as I said before is $6-$9 per point.

If you don't think you're going to use the last 15 years of contract, why lock up your capital and pay for it now while only receiving the cash flow 25-40 years from now?

Because that's what DVC is....pre-paying now for future vacations!

(Forgive me, but I can't find any OKW '57 contract prices. I'll use SS instead)

OKW '42 at ~$90/pt
--vs--
SS '54 at ~$100/pt

33% more years for only a 10% increase in price.
If you are already fronting $90/pt, why wouldn't someone pay the extra $10/pt to get 33% more product?
I'm viewing it as a value proposition.

I'd rather not go down the "locking up your capital" road because one could argue that not buying into DVC makes more financial sense.

Especially when the #1 criterion for deciding which DVC resort to buy is "buy where you want to stay".

I've always hated that stance. It arrogantly ignores the fact that resort prices and expiration dates are NOT the same.
There is a framework in place that allows members to stay in any DVC resort based on availability.
Plus, someone with an expensive home base doesn't get compensated for staying at a cheaper resort.

 

[nickys]

I've always hated that stance. It arrogantly ignores the fact that resort prices and expiration dates are NOT the same.
There is a framework in place that allows members to stay in any DVC resort based on availability.
Plus, someone with an expensive home base doesn't get compensated for staying at a cheaper resort.

Yes, there’s a framework. And it’s getting harder and harder to find availability at 7 months, if you want studios or need to go at popular times (fall to mid Jan, Easter etc).

Take CCV. A million points sold there, most of them because of the cabins. But very, very few people have enough CCV points to be able to stay in the cabins for more than a night or two. With all the 50 point add-ons and 100 point new purchase minimum, there will come a time when CCV owners may find themselves unable to book there unless they book right at 11 months. Just like standard view at BLT, or Boardwalk view at BWV.

Maybe “buy where you wouldn’t mind staying” is a better phrase.

Now if you can be flexible on when to go, then things are fine. But it isn’t arrogant to state this mantra, when you watch what’s happening to availability these days. IMO.

 

[HansGruber]

I disagree about your last paragraph. DVC is not all about saving money. For us, it is as much about the experience, possibly more so.

We only come over from the U.K. every three years or so. Initially, like most U.K. visitors we stayed offsite. We then had an onsite stay, and were blown away by it. So much more relaxing for DH not to have to drive every day. We could come and go as we wanted to the parks. But we did the tour and loved the fact we could have our privacy in a 1 bed and have the boys in the living room. The kitchen, washer etc, all onsite. Guess where that onsite stay was - yep the Beach Club! I love it there and really hope we can stay again, managed it once in the summer, but it may now have to wait until I’m not tied to school holidays. There is no way we could afford to stay there each time if paying the resort prices, plus we’d all be in the same room.

Will it pay for us? Yes, assuming we go another three times before circumstances mean we can’t do that transatlantic flight anymore. Our break even point was 5 holidays (2 weeks mainly, sometimes 3). But if we hadn’t bought, we would likely still be staying offsite, and using Uber much more. It’s the experience of DVC that is worth so much to us. We get the condo facilities but get to stay onsite, which means we can all just come and go as we want to, the boys are now old enough to go off on their own if they want to.

We could sell now and make a small profit - that’s with buying direct with a loan (which we paid off early). But that really isn’t that important to us. It’s worth it to is from the holidays we’ve already had, and hopefully continue to have.

But as you stated, you could never afford retail prices for the resorts. Buying into DVC made it more affordable for you.
Unless I'm misinformed, anyone (non-DVC members) can stay at a DVC resort based on availability so long as they are willing to pay retail prices.
Buying into DVC:

• makes the vacation more affordable
• gives you advances reservation for DVC resorts

I'm still unclear of how DVC makes the experience "unique" in anyway.

 

[nickys]

But as you stated, you could never afford retail prices for the resorts. Buying into DVC made it more affordable for you.
Unless I'm misinformed, anyone (non-DVC members) can stay at a DVC resort based on availability so long as they are willing to pay retail prices.
Buying into DVC:

• makes the vacation more affordable
• gives you advances reservation for DVC resorts

I'm still unclear of how DVC makes the experience "unique" in anyway.

I’m saying buying DVC was a decision that allowed us to experience an onsite stay with offsite facilities every time we came.

If we came every 3or 4 Years, we could just pay to stay at BC. But all in one room. Which is not our idea of a fun time.

Of course, DVC allows us to be able to afford a DVC 1 bed villa each time. But we would not have done so if there were only studios available, for example. There would be no point in committing to a timeshare in those circumstances.