Math on DVC Resales

[HansGruber]

IMO one should never look at DVC as an investment property anyway. That is quite a dangerous thing to do. While there is going to be a time that it will increase in value, it has a limited shelf life so to speak, and it will devalue as time goes on. I think if investing, one is wise to go anywhere else other than a timeshare - because that is not a smart move.

Just tossing that out there in case others are reading (just like I 100% clarified where I got certain text from so someone doesn't misunderstand). I'm kind of big on reading and seeing all appropriate information if considering buying.

I agree, which is why I'm using real-time prices to justify my points. No one else really seems to be doing that.

 

[correcaminos]

I agree, which is why I'm using real-time prices to justify my points. No one else really seems to be doing that.

I did in every personal example I gave. Excuse me if I don't always give exact numbers as sometimes I don't feel the need to divulge exact finances. Rounding up or down to the nearest dollar works for me.

Unfortunately with resales, unlike direct, one needs to do approximate costs as no two resale sells for the same. At least with direct, that number is known. Even when Disney releases increases (again they release to the public current and even future prices) we have a known number. Only if financing do we not know closing and interest rates. Direct they can give that closing cost easily.

Also with resale contract size will make a difference in price per point as do many variables.

Again my recent purchase I had a total budget limit. I only had a certain amount I was willing to spend. I was looking for 25-30 points and absolutely zero came up in a year. 50 points would have been about $2-3k more than I wanted to spend in resale. I needed a specific resort too. So buying any resort or at more than a specific budget is not okay.

But to help out, I literally just saw a 25 pointer come up an hour ago. It is stripped of 2018 points. Total sale price is $4900 estimated (due to estimated closing costs). Under $500 for closing costs which is low. DVC direct with closing costs $5624.70. Price difference of $724.70. We need to subtract the 2018 points to make this fair. I will value at $17 each as that is the fee for one time use points from Disney. We're at $299.70. I cannot see about maintenance fees so I will leave that alone, but keep in mind I got prorated for the calendar year. My credit card will give me about $230 in rewards which again is not something I get with resale (this is based on a purchase last year where I got $300 doing slightly more points). We're now at $69.70 give or take a tiny bit. Not to mention an interest free offer if I chose to take it, but that math isn't worth my effort to include. Also this is an August UY so if you bought direct now you'd get 2017 points add well (which they will bank for you) Not adding that in either.

So maybe it's me, but that's not worth it. Especially since I get to keep the same UY and membership for all. My contract just closed 2 days ago so these are as current as most could give.

I can re-give my my numbers for the last direct and that one was overwhelmingly in favor of direct. But that was over a year ago and had a reallocation too which worked so in my favor.

Not all are and really this phenomenon only happens with small contracts. I always tell people to do math if going for small contracts. Larger contracts are no brainers though.

 

[Lensman]

I agree, which is why I'm using real-time prices to justify my points. No one else really seems to be doing that.

No one, really?

That says all I need to know.

 

[correcaminos]

Oh I forgot. You get that spiffy tote. That's gotta be worth that $70 or so right?

 

[ScoutN]

IMO one should never look at DVC as an investment property anyway.

I agree. The fact that 7 years after purchase, 14 after the resort initally went on sale (SSR during the Treehouse addition), and the resale is around $30/p higher than I bought in is pure dumb luck.

 

[eliza61nyc]

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.

That was us, I purchased direct in 2001 for the beach club villas before they had officially opened. lol, I think I paid some thing ridiculous like 75 bucks a point lol and I got free lenght of stay pass and a couple of free back packs.

 

[eliza61nyc]

I

Regardless, we’ve tried to be helpful. And you are still arguing the toss, and seemingly disbelieving us. I’m out, and I wouldn’t be surprised to see @helenabear and @Lensman bow out too. I’m still perplexed as to why someone who seemed to want information would dismiss it so vehemently when it’s given. Disagreeing with decisions people make is one thing, to respond in the way you have is unusual and has left me feeling despondent. Thee is no point in continuing this discussion.

LOL, it's what he does. He reminds me of my brother who is a retired Marine, pretty much argues just for the sake of arguing. go figure.

 

[HansGruber]

LOL, it's what he does. He reminds me of my brother who is a retired Marine, pretty much argues just for the sake of arguing. go figure.

I'm not arguing anything here...the numbers speak for themselves.

 

[HansGruber]

I did in every personal example I gave. Excuse me if I don't always give exact numbers as sometimes I don't feel the need to divulge exact finances. Rounding up or down to the nearest dollar works for me.

Unfortunately with resales, unlike direct, one needs to do approximate costs as no two resale sells for the same. At least with direct, that number is known. Even when Disney releases increases (again they release to the public current and even future prices) we have a known number. Only if financing do we not know closing and interest rates. Direct they can give that closing cost easily.

Also with resale contract size will make a difference in price per point as do many variables.

Again my recent purchase I had a total budget limit. I only had a certain amount I was willing to spend. I was looking for 25-30 points and absolutely zero came up in a year. 50 points would have been about $2-3k more than I wanted to spend in resale. I needed a specific resort too. So buying any resort or at more than a specific budget is not okay.

But to help out, I literally just saw a 25 pointer come up an hour ago. It is stripped of 2018 points. Total sale price is $4900 estimated (due to estimated closing costs). Under $500 for closing costs which is low. DVC direct with closing costs $5624.70. Price difference of $724.70. We need to subtract the 2018 points to make this fair. I will value at $17 each as that is the fee for one time use points from Disney. We're at $299.70. I cannot see about maintenance fees so I will leave that alone, but keep in mind I got prorated for the calendar year. My credit card will give me about $230 in rewards which again is not something I get with resale (this is based on a purchase last year where I got $300 doing slightly more points). We're now at $69.70 give or take a tiny bit. Not to mention an interest free offer if I chose to take it, but that math isn't worth my effort to include. Also this is an August UY so if you bought direct now you'd get 2017 points add well (which they will bank for you) Not adding that in either.

So maybe it's me, but that's not worth it. Especially since I get to keep the same UY and membership for all. My contract just closed 2 days ago so these are as current as most could give.

I can re-give my my numbers for the last direct and that one was overwhelmingly in favor of direct. But that was over a year ago and had a reallocation too which worked so in my favor.

Not all are and really this phenomenon only happens with small contracts. I always tell people to do math if going for small contracts. Larger contracts are no brainers though.

I don't believe credit card rewards points are a fair metric.
Nor are contract points the same cost as one time use points directly from Disney.

What resort is this for?

 

[HansGruber]

No one, really?

That says all I need to know.

Perhaps I missed it.

Show me the post where a 2042 resort contract, purchased today, is a better value than a 2050+ resort contract purchased today.

 

[Lensman]

Perhaps I missed it.

Show me the post where a 2042 resort contract, purchased today, is a better value than a 2050+ resort contract purchased today.

I already have and you already claim to have refuted it because:
1. You don't believe in discounted present value or discounted utility.
2. You reject the use of proven econometric methods for evaluating the value of a stream of future benefits.
3. You ignored the market value approach as having any validity.

By rejecting anyone's methodological approach but your own and ridiculing everyone's else's assumptions in favor of your own, you have created an environment where comparison using different approaches is a waste of time. We have to agree to disagree. My methodology, which you reject, says that 2057 contracts are worth $25 more than 2042 contracts. The market says that 2057 contracts are worth $6-$9 more than 2042 contracts. You say that 2057 contracts are worth $40 more than 2042 contracts. In earlier posts you've rejected my analysis by saying that the concepts are beyond understanding and, thus, forfeit.

And somehow I've been lured into wasting another 15 minutes of my life posting another useless response that you will reject. And I don't think anyone the OP is reading this anymore because you've derailed the whole thread and made it a fight between you and everyone with an opinion that you don't agree with.

Edit: You've fooled me again. I said you've ignored the posts where I used numbers from actual resale contracts and then you ordered/challenged me to something else entirely. What a fool I was to have been taken in by your shenanigans!

Anyway, let me quote myself:

I think BWV is the one to look at. HHI and VBR are in a different class, as is SSR to a certain extent. BTW, where are you seeing $182 a point? I think Boardwalk direct is $171 a point after the January 2018 price increases, or $16 a point more than the contract above. For a 50 point contract that is $800 more but with $500 less in closing costs so a net $300 more. For the smallest 25-point addon, buying direct is actually $100 cheaper.

This analysis uses your actual quoted Boardwalk 50 point contract @ $155 a point with "50 points currently available and 50 points coming on 4/1/19. Priced at $155 per point."

I see BLT resale @ $160/pt. Direct price @ $191/pt
That's a $1,550 difference for 50 points.
I'll give you a $500 closing cost credit for a $1,050 difference.
I understand this is completely subjective, but $1,050 can be a substantial amount of money. It's roughly a 10-15% surcharge on the overall price.

I think I see those listings on one of the DVC resale sites. All the ones on the site I'm looking at are stripped and won't have points coming until 2019. This means that in the comparison against direct pricing you have to account for the value of the 2018 points that you'd get from buying direct. For that I like using the pricing of renting those points through a DVC point rental site. That's $17 a point. So on a 50 point contract that's $850, closing the difference to $200. Note that the listing price doesn't equate to the price the seller will accept, so I could see this contract sitting for a bit.

Here I am using your example BLT resale. I see three contracts at one DVC resale broker, all with August use years and between $167-$169 a point, all stripped of current year's points. I admit I ignored the $7-$9 difference even though that would push the prices for these contracts $350-$450 more in favor of direct.

Of course, it may be that you don't think me using your exact example contracts as "using real-time pricing to justify my points".

This is why I think your rhetoric is just that.

 

[correcaminos]

I don't believe credit card rewards points are a fair metric.
Nor are contract points the same cost as one time use points directly from Disney.

What resort is this for?

Then you cannot look at like for like savings. I cannot find a PVB contract at 25 point at all. I mean not for over a year for even that amount, let alone a fully loaded one. The average difference in price from 25 to 50 points was about $15 per point so I'm okay with adding the points in the way I did because it does average the same amounts per what I've seen. It is a value you do need to consider to make it like for like though. I won't compare fresh apples to ones with bites out of it.

Sorry but I won't remove the effective rebate from my credit card because it does bring it down. It's a direct only perk as is the interest free. For someone who is supposedly all about numbers you are seemingly wanting to skip enough numbers that all others I talk to do not ignore. But hey you do you.

Still only $700 is worth it to me to get the same UY and a fully loaded contract. YMMV, but you cannot say I haven't been patient. An Aug UY is not one I'd want anyway as we travel often in June.

You don't have to want to do this, but to say the numbers aren't valid isn't right either. I do not ever recommend buying direct unless you look at small contracts and go from there. Small contract routinely go for $30+ per point to comparative 200 point contracts. 500 point contracts go for even less per point. Knowing this even big DVC gurus often agree with that statement and also why if buying direct they suggest making 50 point or less contracts. More per point easily.

However you are anti direct purchase and truthfully I don't care that you are. Just don't ask for numbers and then poo poo them when you are given them.

Lastly I'm on a tablet so forgive any typos or weird words.

 

[correcaminos]

I agree. The fact that 7 years after purchase, 14 after the resort initally went on sale (SSR during the Treehouse addition), and the resale is around $30/p higher than I bought in is pure dumb luck.

I've owned long enough that I've seen the resale market come and go. I plan my next bigger purchase when we hit a low. The direct purchases I've done are miniscule and intentional for a resort I want the security of staying in at 11 months. The bulk of my points were at $60 per point or so and oes I plan to hold onto till they expire though.

 

[HansGruber]

Just don't ask for numbers and then poo poo them when you are given them.

If you can sell your points, at will, for $17/ point, then that's great for you. Most can't.
If you have a credit card that pays roughly 4% (eyeballing) cash back, again, great for you. Most don't have this luxury.
I'm simply trying to get on an even and level playing field here.

I don't know what 'interest free' means. You'll have to elaborate.

 

[correcaminos]

If you can sell your points, at will, for $17/ point, then that's great for you. Most can't.
If you have a credit card that pays roughly 4% (eyeballing) cash back, again, great for you. Most don't have this luxury.
I'm simply trying to get on an even and level playing field here.

I don't know what 'interest free' means. You'll have to elaborate.

Seriously? Rentals start at $17 now. For PVB $18-20 is the norm. So yes, I'm more than good with Disney's lowly $17.

The credit card is my reasoning for helping to go direct. Never said all have it. You could simply say, yes in this case, your numbers make a lot of sense and be done with it. With a namesake like yours though, I do wonder if you are a troll. In fact that's my husband's initial thoughts after reading this and knowing that I go for the best value. Not always cheapest, but best value and I work to get the best deal I can out there for what I want.

Goodnight and have fun arguing.

 

[Disstevefan1]

I have been strongly considering purchasing a DVC resale contract for the past several years and if my final math is correct I believe it may be in my best interest to simply continue to book Disney hotel rooms for my future trips.

Here’s my logic:
I was considering a BCV contract for $135 per point at 200 points for a total cost of $27000. The contract expires in 2042 so it has roughly 22 years of useful life. The annual dues are roughly $1400 per year. So here’s where I started to analyze the cost per year of the contract.... $27000 divided by 22 years is $1227 per year plus the annual dues of $1400 comes to a total of $2627 per year of cost. At that cost I could just as easily book a deluxe hotel every year for 5-7 nights at either equal or lesser cost than the DVC contract. Oh and that’s assuming the dues don’t rise (which they will).

It’s tricky because now that some of these contracts are beginning to go past the halfway point of useful life their value is also degrading and it’s making the DVC resale market far less appealing IMO.

I have stopped watching the DVC resale market for a while and wow $135 pp resale seems too high to me. I agree, don't buy and lock yourself in. You did not even factor in if you invested that $2627 instead of handing it to the mouse.

And remember you can also rent DVC points and stay at DVC resorts on vacation at WDW.

 

[Phonedave]

I highly dispute this fact. The seller is providing their own price.
Why would any reputable agent allow the seller to waste their time and buyers time?
If I offer your asking price, you accept. Otherwise, we're just wasting our collective time.

It's not like buying groceries. It is a real estate transaction. Just like buying a house. If I am asking $500,000 and the market is cold, I may get offers for $480,000. If it is a hot market and there are multiple offers, some may very well be over the asking.

I bought a 50 point add on to my SSR contract and I paid $1.50 per point over asking. I called the agent and she said she already had 5 offers on the contract, and that she would stop taking offers in approximately 3 more hours. She advised potential buyers to make their last, best, final offer. After assigning a value to the contract (based on the fact it is was the 50 points I wanted and matched my use year) given the asking price compared to the direct price, and factoring in closing costs, I decided that $1.50 per point above asking was still a good deal for me. That's what I ended up paying for it.

-dave

 

[CLEtoWDW]

It's not like buying groceries. It is a real estate transaction. Just like buying a house. If I am asking $500,000 and the market is cold, I may get offers for $480,000. If it is a hot market and there are multiple offers, some may very well be over the asking.
-dave

I agree... with one major caveat. The points expire so it’s really not like a real estate transaction because your “investment” eventually becomes worthless.

 

[slappy magoo]

I agree... with one major caveat. The points expire so it’s really not like a real estate transaction because your “investment” eventually becomes worthless.

But there is a silver lining to that cloud - go on ebay and look up timeshares and you'll find people essentially giving some units (not at DVC) away. Maybe they inherited the timeshare from family or friends, or they're getting old and travel isn't as easy, they just can't afford to keep it anymore, and they're basically saying "here, take it off my hands, assume the deed, pay the maintenance fees, it's yours."

It does stink that you never truly own DVC in perpetuity. But you also never have to worry about what to do with it after a certain point, either.

 

[eliza61nyc]

I never looked at my dvc as real estate or an investment. for me it was simply prepaid vacations at a discounted price. I have a will and trust, it includes my other assets. my dvc?? not an issue, sell, keep, give back.