Selling my DVC. What do you think of my logic?

[Poly1974]

I just listed our BCV contract for resale for a multitude of reasons; change in the way we vacation, kids approaching college and rising annual dues, key among them. My thinking is that my contract is near it's peak in value. I wanted to see if anybody agrees with me on the future value of these points.

The way I see it, with the GF and Poly price per point up at $160+, the price of resales have been rising, especially at BCV and I don't think this can continue for much longer. The BVC points have 27 years left. I think that in the next 5 years or so, the price for the older contracts (2042 expiration) will start to decline. There is only so much Disney can do with ROFR to maintain the value as the contracts age. It's going to get harder and harder to convince someone to buy contracts with 22 years left or 18 years left, ect.

If my logic is correct, in 8 years or so, when we've got the kids through school, if we miss our DVC bad enough, we can buy back in cheap.

I know there is the argument that right now we are locked in at our original purchase price, but with the annual dues continuing to rise and the quality of the product at WDW declining (in my opinion), I feel like the time is right for us to jump ship.

I look forward to your thoughts on this.

Mike

 

[Tom]

Your current contract is obviously paid off, so all you're paying is annual maintenance dues right now. If you think, even for a minute, that you'd want to own DVC again in the future (especially if it's only 8 years), you'd be setting yourself WAY back.

If you're sure you never want to own DVC again, then sell and be done with it. But if you want back in someday, it would be like buying stock at $50 and being free and clear of the debt.....selling it for $50 (since you're not going to get what you invested, simply because it's depreciated significantly).....then buying the same stock for $100 a few years later.

 

[DVC Mike]

Your current contract is obviously paid off, so all you're paying is annual maintenance dues right now. If you think, even for a minute, that you'd want to own DVC again in the future (especially if it's only 8 years), you'd be setting yourself WAY back.

I agree. Mike, maybe you should rent your points out, which will cover your annual dues.

 

[Poly1974]

Your current contract is obviously paid off, so all you're paying is annual maintenance dues right now. If you think, even for a minute, that you'd want to own DVC again in the future (especially if it's only 8 years), you'd be setting yourself WAY back.

If you're sure you never want to own DVC again, then sell and be done with it. But if you want back in someday, it would be like buying stock at $50 and being free and clear of the debt.....selling it for $50 (since you're not going to get what you invested, simply because it's depreciated significantly).....then buying the same stock for $100 a few years later.

So you are saying that you think BCV points will be selling for $95 or $100/point in 8 or 10 years?

Also, during that time, I would have saved $8,000.00 - $10,000.00 in annual dues. I thought about the renting option, but that basically leaves about $18,000 (what I can sell for now) sitting there when it could be working for me in a mutual fund or something.

Don't read this wrong, I'm not arguing. I just want to make sure I understand your opinion on the future value. I appreciate the feedback.

 

[GoofGoof]

Good question. Here's my take:

If all external market influences are held constant the value of your DVC contract should in theory decline at a pretty steady rate eventually hitting $0. In reality the movement isn't a straight line, but a series of ups and downs. The recent increase in resale DVC prices has been primarily driven by an improvement in the economy combined with the dramatic increase in direct from Disney pricing. Your guess is as good as mine on what the economy will do long term, but I don't see Disney pulling back from price increases. The more they increase direct pricing the more actractive resale looks.

I still think the sharp decrease in value is gonna happen around the 10 years left mark. If you pay $80/pt with 10 years left on the contract that's $8/pt per year. Tack on the $6 of MFs and you get to $14/pt which is about the going rate to rent points. If a studio goes for about 120 points for a week that's roughly $1,700 or less than $250 a night. Still a nice deal for a deluxe. By 2032 MFs will be much higher than $6 but so will point rentals and cash room rates. If they all roughly go up at the same rate using 2015 dollars is a good approximation. I think with 27 or even 20 years left the value really isn't going to drop off a cliff. There is still plenty of time for someone to make up their initial buy in price.

If you sell and rebuy later you will probably make out OK. You will lose the commission for selling (probably 10%) and closing costs. If you take the money and invest it well you might even come out ahead as compared to renting, but you never know. The stock market could drop too.

Selling and rebuying later vs renting your points out is an interesting debate. Let's assume the price will remain constant for the next 8 years. Right now you can probably get about $5/pt above the MFs if you rent the points. Compare that to selling for $80/pt now and investing that money for 8 years before rebuying. Your return on renting the points is 6.25% ($5/$80). If you think you can earn significantly more than that investing the money it probably makes sense. There's also paperwork and some risk associated with renting points. Now if you assume prices will drop significantly in the next 8 to 10 years then it's a no brainer.

 

[LuvtheGoof]

So my opinion on this. Did you buy into DVC thinking that this was an investment that would pay dividends or a return on your money? If so, then you never should have bought in the first place. Since you've been a member for awhile, you know that the ONLY reason to buy DVC is to save money on FUTURE resort room costs. Nothing more, nothing less. Several years from now, when you are only paying dues, you will be saving 70-80% on your resort room. You simply can't beat that.

It sounds like you and your wife have decided that taking a Disney vacation at least every other year is no longer in the cards. If so, then yes, sell away. Someone will be happy to buy your points. If you are still looking to vacation there, then selling would be a huge mistake, since you will be paying a lot more for your deluxe accommodations, even with a 30% discount (if you can get one for the time that you are traveling). Now, if you are willing to stay value for your Disney trips, well, then go ahead and sell. You can save some money that way.

I agree that renting your points might be a good first step instead of outright sale. That way, you have some time to gauge whether you really have decided not to vacation at WDW.

Of course, all of this is JMHO. We bought many years ago when the price was in the low 90's, and technically, we could make some money by selling our points right now. However, we could not afford to go to WDW 2 or 3 times a year if we had to pay the increased costs for the resort. We are NEVER willing to stay value, and infrequently stay moderate, so it simply would not work for us.

Good luck!

 

[Phonedave]

That is a tough question because there are a lot of variable that come into play in the decision - not of which you know with enough certainty.

What will the resale value be in the future
What is the resale value now
What will dues be in the future
What will you vacation plans look like in the future
What will the rental market look like in the future
What sort of interest could you make on the money you would receive from the sale, and any dues you save.

Couple that with the less tangible questions about your room preferences, potential other vacations, etc and it becomes a very complex decision.

There is one other aspect too look at as well. If you hang on to your contract, 8 years from now, when you kids are out of school, you may still want to sell it. Now it will be worth much less than the $18,000 you could get for it today (maybe)

-dave

 

[LuvtheGoof]

There is one other aspect too look at as well. If you hang on to your contract, 8 years from now, when you kids are out of school, you may still want to sell it. Now it will be worth much less than the $18,000 you could get for it today (maybe)

-dave

True, but if they go to WDW over those 8 years, they will have saved a ton of money on their resort costs, not to mention the possible savings on an AP or dining with the TIW.

 

[GoofGoof]

True, but if they go to WDW over those 8 years, they will have saved a ton of money on their resort costs, not to mention the possible savings on an AP or dining with the TIW.

Or even if they don't go they would get cash for renting the points. If the rental market and MFs go up about at about the same rate and the $5 spread holds after 8 years you will earned $40 per point (not even including interest on reinvesting that money). It's highly unlikely the resale price for BCV drops from $80 to $40 in 8 years. Even if the MFs go up faster than rental prices the worst case scenario is probably earning $20 per point. I don't see the resale prices dropping more than $20 in the next 8 years.

 

[LuvtheGoof]

Excellent point. I agree that I just don't see it dropping that much either, given the prime location.

 

[JohnWD]

I think the OP should sell, sell, sell! Buying & owning DVC is for people who love Disney, who want and can afford magical vacations. Once the OP started going down the dollar and cents analysis, it makes no point to own points (ouch!). There are always discounts for the once in a while Disney vacation, so the OP should sell, and if Disney looks good again, then just book, and enjoy your savings.

 

[LAKid53]

My questions are:

(1) What can you get through the market for your contract vs. what Disney will pay for it? Knowing that Disney wants to maintain the purchase value of points at your resort.
(2) If you decide to buy back in down the road, will your preferred resort be available? And at what $$/point? When the GF Villas went on sale, they were $150/point. Now they are $160/point. I bought WL Villas at a $5/point discount from the selling price and the 2nd contract to get the total # of points I wanted was an additional $2/point discount.
(3) Remember, as that DVC property ages, the annual dues increase to cover the additional maintenance and renovation costs. So, unless you buy one of the newer properties, like GF & Poly, you are going to experience those higher annual dues.

I bought because we visit frequently and we, like Luv, don't like staying at Values. For this use year, including banked points, we've got 3 trips and the DVC members cruise (okay, I had to borrow points from 2016). Granted, the trips are short ones, mainly due to my daughter's work schedule, but all three are at Deluxe resorts and one is a two bedroom at WL.

And in a few years, our trip frequency will change due to various factors, including moving out of state. So having that DVC membership is even more attractive, since a 1 or 2 bedroom villa will the type of resort room we want.

In the end, if you don't think you will be visiting at least every 2 years, even just you and your spouse, and you really think the World has declined significantly in quality, sell. Just know that you have to deal with DVC first. Or rent your points. Companies like Dave's are always begging for points to purchase or see if you can rent them directly yourself.

 

[Lensman]

I come down on the side of renting over selling if you think there's a possibility you might want to buy back in later. Also, don't be fooled by your feeling that the price has peaked and will be going down in the future. Efficient market theory says that today's market price is the correct price. In the next 8 years, the price could go up or down with mostly equal probability.

 

[Poly1974]

All,

Thanks for your replies. As I said in my original post, there are a lot of factors going into the decision to sell our points. Quite honestly, one of the main reasons is the decline in quality of the WDW resort in general. It seems that everything is done on the cheap these days and I don't see that ending anytime soon. I've been going to WDW since 1974 and I have really seen the quality of the attractions and the level of customer service decline in the last 10 years. Because of this, I have come to realize that WDW will never be the amazing place it once was.

Also, while our DVC purchase worked out great for our family for the last 13 years, the price of everything else at WDW has just gotten ridiculous (tickets, food). Also, factoring into our decision is that we are planning to move to Florida in the next 8 - 10 years, at which point we would really not have a need for our points, or could look to pick up a smaller contract to cover the occasional 1 or 2 night stay. (In hind sight, I wish we had bought 2 contracts, which would give us the option to sell the larger one and hold onto the small one.)

Anyway, thank you all for your input. there were a lot of interesting takes on my question about the future value of the points.

Mike

 

[Tom]

All,

Thanks for your replies. As I said in my original post, there are a lot of factors going into the decision to sell our points. Quite honestly, one of the main reasons is the decline in quality of the WDW resort in general. It seems that everything is done on the cheap these days and I don't see that ending anytime soon. I've been going to WDW since 1974 and I have really seen the quality of the attractions and the level of customer service decline in the last 10 years. Because of this, I have come to realize that WDW will never be the amazing place it once was.

Also, while our DVC purchase worked out great for our family for the last 13 years, the price of everything else at WDW has just gotten ridiculous (tickets, food). Also, factoring into our decision is that we are planning to move to Florida in the next 8 - 10 years, at which point we would really not have a need for our points, or could look to pick up a smaller contract to cover the occasional 1 or 2 night stay. (In hind sight, I wish we had bought 2 contracts, which would give us the option to sell the larger one and hold onto the small one.)

Anyway, thank you all for your input. there were a lot of interesting takes on my question about the future value of the points.

Mike

Given this information, it certainly seems as though it would be in your best interest to sell your contract. A key to staying a DVC member is knowing that you will continue to have a strong attraction to WDW and that you will continue to vacation there, in deluxe accommodations.

Given your sentiments, and upcoming relocation plans, it seems as though you will likely not be vacationing there as often as you have in the past.

It's good that you've looked at it from a logical, and personal, perspective....because that's what makes it worth it, or not, to you.