Resale or direct

[vnovabri]

The easiest way to look at what it is costing you is assume the spread between direct and resale (~$75 for AKV) is invested at some rate of return and discounted at inflation. No need to consider the Dues since that is the exact same on each side of the analysis so would cancel out. You need to consider the reinvestment of that savings by going resale because that wasn't locked up in the DVC contract (so to make it apples to apples you need to lock that cash up in something). So lets assume 5% rate of return and 2% inflation (both conservative) tells me the cost of the $75 spread is equal to $75 * 1.05^37 / 1.02^37 = $219.21 per point (in 2020 dollars) over the entire length of the contract. If you want to average that over the entire contract life you get ~$5.92 a point bought. So that 100 point contract is really costing you ~$600 a year more (again in 2020 dollars). Though it really is less than $600 a year cause that averaging it out ignores again the investment income but for the sake of simplicity I'm ignoring it here.

Now you can start factoring in the benefits (DVC AP discounts, etc) to see if that ~$600 a year is worth it. But that $150 a year you determined ignored the opportunity value of that $75 spread that assuming you are paying cash for direct meant you had that $ to invest in long term appreciating assets to realize a return at the end of the 37 years.

I'm also someone that bought direct and resale so I'm not opposed to either but it is important to know the differences.

I don't really think the return on investment argument is a great one. With that logic you should skip DVC all together, wisely invest all that money and use your profits to book cash rooms.

 

[Soap_1984]

I don't really think the return on investment argument is a great one. With that logic you should skip DVC all together, wisely invest all that money and use your profits to book cash rooms.

That is not true. With buying direct yes that is the result now; that is not the result if you're looking at certain resale properties.

 

[crvetter]

I don't really think the return on investment argument is a great one. With that logic you should skip DVC all together, wisely invest all that money and use your profits to book cash rooms.

My argument is that on resale you putting out ~$111 a point and direct $186 a point for AKV (the post I referenced was using AKV as an example). So that poster ignored the value of the ~$75 a point that could be invested. This isn't a case of should you or shouldn't you buy DVC (which is what you are suggesting), this is a case of is Direct worth the extra cost. That true extra cost isn't just the $75 a point (in their example) but really you need to consider locking up that $75 a point in a long term investment (appreciating asset such as a mutual fund) to keep the cash outflow at time 0 the same in each case (direct or resale).

If you keep the cash outflow inconsistent (and how that cash is utilized) then it isn't a fair comparison and favors the direct purchase. And if you can't afford to put that $75 in a long term investment to see the true cost then you couldn't truly afford the direct purchase to begin with (so now financing costs need to come into play). Now someone might by resale because they can't afford direct or don't want that $75 locked up but that is a different analysis and comparison. But for the question "How much does resale save over direct?" needs to consider some investment of the spread where the money isn't touched until termination of the contract (replicates the direct purchase but with the payout of the spread appreciation at the end).

I will say mostly on this board "investing" is misunderstood to exclusively mean an appreciating asset class. But that is another argument all together. DVC mostly comes out ahead for Deluxe Rooms over its lifetime vs investing in the stock market or an appreciating asset (what I assume you interpret "invest" to mean) to draw upon for cash rooms. It's about tied for moderate rooms and DVC doesn't work against Value really. I've done plenty of analysis here and if DVC wasn't a savings over the Deluxe Rooms (including their discounts) the market would act rationally and simply not purchase DVC and drive resale (and direct) prices down. Now Disney gets to have fun a bit in setting what the rooms cost, but again that is dictated by other variables outside their control (economy, outside hotels, and ultimately the consumers). The simplest analogy to DVC in the financial world I always come back to is an annuity product, where you give a lump sum of cash up front and for X years (or your remaining life) they promise to pay Y dollars a year to you (upfront cash to DVC and promised Y points to reserve a room each year for X years). That annuity is absolutely thought of as an investment.

 

[CraigInPA]

I look at it this way:
DIRECT PURCHASE (AKL for example)
[this is NOT considering inflation]

• 100 points x 186$/pt = 18,600
• Annual dues = 767$
• Factor in a 1% increase each year (again without inflation)
• Contract goes to 2057 which is about 37 years
• TOTAL PRICE OVER THE 37 years = 85,306$
• Divide the total by 37 years, and it’s about 1,895$/year cost for 37 years of vacation
  • Resale calculations resulted in 1,720$/year

WHAT DOES THIS ALL MEAN? is saving 150$/year worth all that you’re going to lose? For us, no- we can spare the 150$/year difference and get things like all Disney resorts, cruises, RCI exchange and all new resorts.
Your needs may be different

You're ignoring the fact that it is unlikely one will hold the contract to the end. For my wife and I, we are looking at 15 years more, maximum, to use our DVC contracts before we are too old to continue going. For us, we made a guess when we were considering purchasing what the residual value would be in 2035 for our BLT contracts and used that instead of zero (which if kept to expiration would be the residual value). As a result of DVC's continued inflation of direct pricing, resale is also going up. That is making our residual value guess look very conservative now. But, we will see on 2035...

 

[Sandisw]

I don't really think the return on investment argument is a great one. With that logic you should skip DVC all together, wisely invest all that money and use your profits to book cash rooms.

I tend to agree with you, unless one would actually will be putting the money saved in an account and not using it for other things,

For me, I didn’t consider it because I purposely had money...still do...that was strictly to waste,,vacations, gambling, new cars every few years, etc.

i know....not all agree..but we all handle our finances differently. If someone wants to consider the loss of investment as part of the numbers, more power to them.

 

[_auroraborealis_]

WHAT DOES THIS ALL MEAN? is saving 150$/year worth all that you’re going to lose? For us, no- we can spare the 150$/year difference and get things like all Disney resorts, cruises, RCI exchange and all new resorts.

Resale gets RCI exchange. So long as Disney is contracted with RCI, resale will get RCI. Even RIV resale gets RCI.

 

[eandt]

This is not a good way to look at it. You are going to save $7-8k today that's the comparison. If you're financing it's even greater.

With 100 points you get no benefit from the AP discount unless you are buying more points.

Why would you get no benefit from an AP? Might not get maximum benefit with only 100 points but to say no benefit would not be accurate. 100 points is the minimum to get all blue card benefits including discount AP's.

 

[Spark65]

You're ignoring the fact that it is unlikely one will hold the contract to the end. For my wife and I, we are looking at 15 years more, maximum, to use our DVC contracts before we are too old to continue going.

Don't let getting old get in your way of life when you do you will just die live a little.

 

[kboo]

Why would you get no benefit from an AP? Might not get maximum benefit with only 100 points but to say no benefit would not be accurate. 100 points is the minimum to get all blue card benefits including discount AP's.

I think it's because 100 points won't get you enough nights in <12 months to make an AP worth it:

100 points at Poly gets you, at best, 6 nights in a standard studio during adventure season, and less than a long weekend (or 3 midweek days) during Premier season (Christmas or Easter)

Suppose you did an 11-mo spacing alternating with a 13 mo spacing. The best case scenario is if you had an Aug UY and did 6 nights in a standard studio in September (adventure season) took another trip in late August the following year - Dream season , 4 nights.

You could use a Gold Pass for that, at $699 pp (but never get the renewal price because you'd be waiting 13 months to go next).
A 6-day PH in September 2020 is $510pp (adult)
A midweek 4 day PH in late August 2020 $485.75

So it's true you could save $300 per adult with the gold AP if you used it in the summers or January/September. But you'd have to be able to go on those particular weeks all the time, thus losing the flexibility that's touted across these boards.

Poly direct at $245 pp = 100 points is $24,500 while if you got a resale at $140pp - a savings of $10,500. That's 35 annual passes you'd have to buy just to "break even" on the AP discount. And remember, you'd be getting that AP every other year, not every year, so for 2 adults, that would still take 34-35 years.

 

[eandt]

I think it's because 100 points won't get you enough nights in <12 months to make an AP worth it:

100 points at Poly gets you, at best, 6 nights in a standard studio during adventure season, and less than a long weekend (or 3 midweek days) during Premier season (Christmas or Easter)

Suppose you did an 11-mo spacing alternating with a 13 mo spacing. The best case scenario is if you had an Aug UY and did 6 nights in a standard studio in September (adventure season) took another trip in late August the following year - Dream season , 4 nights.

You could use a Gold Pass for that, at $699 pp (but never get the renewal price because you'd be waiting 13 months to go next).
A 6-day PH in September 2020 is $510pp (adult)
A midweek 4 day PH in late August 2020 $485.75

So it's true you could save $300 per adult with the gold AP if you used it in the summers or January/September. But you'd have to be able to go on those particular weeks all the time, thus losing the flexibility that's touted across these boards.

Poly direct at $245 pp = 100 points is $24,500 while if you got a resale at $140pp - a savings of $10,500. That's 35 annual passes you'd have to buy just to "break even" on the AP discount. And remember, you'd be getting that AP every other year, not every year, so for 2 adults, that would still take 34-35 years.

Yeah I get that but if we choose to buy the 100 direct it would not be at one of the higher cost resorts though we do love the Polynesian. We have stayed at Poly on rented points the past 2 trips and the owner did not own Poly points. I would think the above math would be a bit better on a less expensive direct resort. Also there is value to being able to stay at the new resorts that come online if not for ourselves perhaps with any potential point renters. What I have discovered is there is no "right" answer to the direct/resale question.

 

[DianaMB333]

Here it what I did and the logic behind it..
I bought resale the resort I love (Poly) and the larger number of points -still in the contract process; then made a direct purchase of 100 pts at Animal Kingdom.

the direct points have March as UY so they come with 2019 points that allows me to have right away double points for this year. My understanding is that direct gives you 2019 points of the UY is March onwards (as we are in Feb).

The direct ones allows me to do the booking right away (entire process take 2-3 days vs the 60 in resale.. which keeps me awake because I am very impatient hehehe), gives me the benefits associated and most importantly the sense of belonging (blue card) that is valuable for me. Also I got a resort that gives me a good home advantage, even if I will always try to convert it into a Poly trip at 7 months, if I can’t the AK is solid.

Financially the resale is hard to beat, and that is why I put the larger amount there. If for whatever reason I need to sale something I would have options to evaluate what is more convenient to sale (resale kind of assures you a return for at least the same capital invested). Also the AK has a good demand in the market for renting points if I need to give them such use.

Most importantly I am enjoying myself in this process of ensuring lifetime of magical memories for my family!

hope that you find the best for you too..

 

[jwinky]

I'm in the same boat about purchasing resale or direct for my second contract. I crunched the same types of calculations and resale always win. The emotional factor to get the blue card throws a wild card for me. I am starting with my first contract as resale, so at least I have something to start with. It great to see the replies and everyone's take on it.

 

[RoseGold]

For us, no- we can spare the 150$/year difference and get things like all Disney resorts, cruises, RCI exchange and all new resorts.
Your needs may be different

There's no guarantee you will get access to all future resorts. With the way Disney is going, I would expect them to keep creating new classes of members. They could make a new resort that doesn't play nicely with the other ones, especially if they make a fancy new resort, like California has the demand for. At this point, a DVC+ wouldn't surprise me at all.

 

[eandt]

I'm in the same boat about purchasing resale or direct for my second contract. I crunched the same types of calculations and resale always win. The emotional factor to get the blue card throws a wild card for me. I am starting with my first contract as resale, so at least I have something to start with. It great to see the replies and everyone's take on it.

After weeks of unresponsiveness of my guide (and DVC chat guides) of answering my questions they have lost me. and we really did want to buy direct for many of the same reasons as most did. The customer service of our guide has not only soured me on DVC direct but it leaves a bad taste for Disney in general after 26 years of mostly great experiences. As it stands now IF we purchase at all we will look at resale. DVC sales department really needs to pick it's game up.

 

[Spark65]

After weeks of unresponsiveness of my guide (and DVC chat guides) of answering my questions they have lost me. and we really did want to buy direct for many of the same reasons as most did. The customer service of our guide has not only soured me on DVC direct but it leaves a bad taste for Disney in general after 26 years of mostly great experiences. As it stands now IF we purchase at all we will look at resale. DVC sales department really needs to pick it's game up.

Not all guides are created equal plenty of people here can recommend you a guide who will be very pro-active.

 

[eandt]

Not all guides are created equal plenty of people here can recommend you a guide who will be very pro-active.

Feel free to shoot me the name of a pro-active guide along with email contact info ..........In addition to the guide who we toured with I have tried 2 others via the DVC chat we have hit the trifecta in unresponsiveness. I never thought trying to spend thousands of dollars with a company would be so difficult.

 

[sethschroeder]

Buying direct gives you a fully loaded contract which can be worth 1000's.

I mean on resale you can get a fully loaded contract with a full year of previous points banked as well. So it could go the other way if you wanted. There is no 2018 points for RIV but there is on some resale contracts if you really wanted it.

Also paying cash to stay at the new resorts would significantly cut in to that savings especially if you factor in the work it takes to maximize any rental income

I think they were saying rent out their Poly points and then rent from someone else.

Personally I would likely just look to find a point transfer at that new resort and pay the $17-$20/point that would require and rent my points out for $15-$18.

 

[eandt]

I mean on resale you can get a fully loaded contract with a full year of previous points banked as well. So it could go the other way if you wanted. There is no 2018 points for RIV but there is on some resale contracts if you really wanted it.



I think they were saying rent out their Poly points and then rent from someone else.

Personally I would likely just look to find a point transfer at that new resort and pay the $17-$20/point that would require and rent my points out for $15-$18.

 

[sethschroeder]

I look at it this way:
DIRECT PURCHASE (AKL for example)
[this is NOT considering inflation]

• 100 points x 186$/pt = 18,600
• Annual dues = 767$
• Factor in a 1% increase each year (again without inflation)
• Contract goes to 2057 which is about 37 years
• TOTAL PRICE OVER THE 37 years = 85,306$
• Divide the total by 37 years, and it’s about 1,895$/year cost for 37 years of vacation
  • Resale calculations resulted in 1,720$/year

WHAT DOES THIS ALL MEAN? is saving 150$/year worth all that you’re going to lose? For us, no- we can spare the 150$/year difference and get things like all Disney resorts, cruises, RCI exchange and all new resorts.
Your needs may be different

I mean you can look at it however you want but I would rather have the extra cash in my hands now or in an investment account.

By the way your math is wrong $85k/37 is over $2k. Regardless dues will increase dramatically over 1% yearly and personally you don't even need to account for dues because its the same for both.

The only thing that matters is $186 vs $104 per point. Thats $18,600 vs $10,400 in point difference.

Even with closing costs you are looking at roughly 40% savings.

Would I pay $200/yr to have Cruises, RCI, new resorts? No none of that is really worth anything and all the announced resorts have worse location than everything offered and location is a major reason for staying DVC for some of us.

The main things for direct are going to be Annual Pass and Moonlight Magic in my opinion.

 

[Sandisw]

After weeks of unresponsiveness of my guide (and DVC chat guides) of answering my questions they have lost me. and we really did want to buy direct for many of the same reasons as most did. The customer service of our guide has not only soured me on DVC direct but it leaves a bad taste for Disney in general after 26 years of mostly great experiences. As it stands now IF we purchase at all we will look at resale. DVC sales department really needs to pick it's game up.

I am sorry that you didn’t find it acceptable. I will add, though, that what you needed,,,financial information via email...isn’t something that they do. I get you were not comfortable with phone calls but I do believe that you would have gotten more of what you wanted had that type of conversation with a guide had been possible.

Good luck in your endeavor.