Does purchasing direct (almost) make sense in this scenario?

[MamaBear12]

Thinking about purchasing a 100 point contract for AKV... I anticipate doing WDW every year for the first few years (while our kids are younger), so if we bought direct we could take advantage of the annual passes every-other-year and time our trips 350-something days apart. But, once the kids are older, we probably will only go every couple years (alternating with Universal) and upgrade from studios to 1-bedrooms (or a 2-bedroom and bring the grandparents), at which point, annual passes won't really make sense. Even with the initial annual pass savings, I really don't see purchasing direct making sense financially, but thought I would throw it out there and see what others thought.

Direct:
$16,000 purchase price (100 points x $160/pp)
+ $400(?) closing costs
- $240 credit card rewards (1.5%)
- $1600 annual pass savings ($200 DVC savings for gold pass over non-dvc platinum pass price x 4 passes x 2 times)
-$2,000 for fully loaded contract ($20/point value...I've seen this number thrown out there a few times but not sure if it should be less)
=$12,560 ($125/per point)

Resale (assuming $90/point, contract not loaded)
$9,000
+$600(?) closing costs
=$9,600 ($96/per point)

So, $2,960 difference in cost. Other pros of purchasing direct: not having to wait for perfect UY contract to come along; faster timeline. (Probably not worth $3,000 difference though, and I know the AP discount is not guaranteed).

Looking at the numbers for SSR ($140/per point direct purchase price and roughly $80/pp resale) and BLT ($180/pp direct and $115 resale) the difference would be less ($2500 give or take depending on closing costs). Am I missing anything that would make direct more worth it? Or am I underestimating the cost of purchasing direct? Looks like resale still wins (for us at least).

 

[pangyal]

My question in this scenario would be why you wouldn't be buying a loaded contract through resale? They are not at all rare, and if you time your buy correctly you might even get the seller to cover current MFs. If you buy direct, you are getting only current year points, nothing extra. Any current 2016 use year points you receive will have pro-rated MFs due on them as well, plus of course the MFs for the 2017 points.

I think the spread is actually larger than what you've calculated, if you were to factor in waiting for a resale contract with banked points and valuing the banked points at the average rental rates.

Rentals through a broker will get you between $11.30-$13/ point, depending on your home resort. If you are feeling up to renting them yourself, you could likely get $13-$16/point, depending on the resort and season. I'm not sure where $20/point came from, but that definitely doesn't sound likely!

 

[miTnosnhoJ]

There is another option that is frequently mentioned that you could consider. Buy 75 points resale. Once you are a member, you can add on points Direct in increments of 25. So get 75 resale, 25 direct, and you get the annual pass benefits.

 

[_auroraborealis_]

^^ that

So, call 100 points resale $85/point. That's $8500+closing. Add 25 points at direct price of $160/point, that's another $4000, for 125 points for $12,500, plus, probably about $900 closing costs. You're still coming in under your cost for 100 points direct.

AKV is not considered a "premium" resort, so brokers will pay $11.30, whether it's an 11 month booking or not.

 

[MamaBear12]

My question in this scenario would be why you wouldn't be buying a loaded contract through resale?

I think the spread is actually larger than what you've calculated.

I'm not sure where $20/point came from, but that definitely doesn't sound likely!

1) Some recent threads made it sound like loaded contracts were becoming less common, but maybe that's not the case.

2) Great! We're planning to go resale but wanted to understand all the options and under what circumstances direct *might* make sense (if at all). In our case, it definitely doesn't.

3) Not referring to renting. I've seen a few commenters (when discussing what the value of a loaded contract is vs. stripped) throw out that the price differential should be $15-25/point between a loaded and stripped contract (but in fact the difference in resale price typically paid for a stripped vs. loaded contract is only a few dollars).

 

[dsnydaddy]

While I agree that a loaded vs stripped contract should be priced differently, I've rarely seen them priced as such. The difference seems to be little if any. My guess would be that those who want a particular UY are willing to pay the going rate for resale in order to get what they want. Now, It may be possible to chew down a price based upon the lack of points and that would be worth some, but that probably depends greatly upon the motivation of the seller.

In my case, we looked in on a contract that was priced where I wanted it with banked points. When I called about it, it turned out that there was no banked points and some of the current year points were used. We then looked about for another contract and settled upon one that was $2 more per point but had all of it's points. I wouldn't even looked at any other contracts.

 

[supersnoop]

-$2,000 for fully loaded contract ($20/point value...I've seen this number thrown out there a few times but not sure if it should be less)

I'm not sure where you've seen that number. Loaded points are, at most, worth $14. But the resale market doesn't value them that way, and a loaded contract is more likely $5/point premium.

 

[Dean]

Thinking about purchasing a 100 point contract for AKV... I anticipate doing WDW every year for the first few years (while our kids are younger), so if we bought direct we could take advantage of the annual passes every-other-year and time our trips 350-something days apart. But, once the kids are older, we probably will only go every couple years (alternating with Universal) and upgrade from studios to 1-bedrooms (or a 2-bedroom and bring the grandparents), at which point, annual passes won't really make sense. Even with the initial annual pass savings, I really don't see purchasing direct making sense financially, but thought I would throw it out there and see what others thought.

Direct:
$16,000 purchase price (100 points x $160/pp)
+ $400(?) closing costs
- $240 credit card rewards (1.5%)
- $1600 annual pass savings ($200 DVC savings for gold pass over non-dvc platinum pass price x 4 passes x 2 times)
-$2,000 for fully loaded contract ($20/point value...I've seen this number thrown out there a few times but not sure if it should be less)
=$12,560 ($125/per point)

Resale (assuming $90/point, contract not loaded)
$9,000
+$600(?) closing costs
=$9,600 ($96/per point)

So, $2,960 difference in cost. Other pros of purchasing direct: not having to wait for perfect UY contract to come along; faster timeline. (Probably not worth $3,000 difference though, and I know the AP discount is not guaranteed).

Looking at the numbers for SSR ($140/per point direct purchase price and roughly $80/pp resale) and BLT ($180/pp direct and $115 resale) the difference would be less ($2500 give or take depending on closing costs). Am I missing anything that would make direct more worth it? Or am I underestimating the cost of purchasing direct? Looks like resale still wins (for us at least).

IMO retail is not fully loaded. To me, fully loaded is last UY points banked so double this UY plus all next years UY points. For DVC you don't get last years points just this UY though you can bank them late in the UY. And it shouldn't be difficult to find a good contract for AKV, BLT or SSR that is at least not completely stripped and not too difficult to find one at least comparable to retail. I think you're slightly over valuing the difference in loaded vs stripped because you'll owe dues on those points normally though the concept is one I agree with. That figure should include any dues paid on the extra points. Fully loaded vs fully stripped (3 years difference) is probably $30 difference pp minus dues paid so normally around $18 pp difference on on a 100 points, $1800. But it doesn't change the principle that there is a difference.

I'd plan for what you'd need between 5 & 10 years from now as well as what you'd need the next few years. As written (studio every year then a 1 BR EOY then ? 2BR for a week) that feels suspiciously like 150 points or possibly slightly more for AKV, maybe slightly different for other resorts with slightly more for BLT. You need a cushion, likely at least 10% and possibly as much as 20% over what you calculate in this situation. I'd plan for weekends going up a little in the future and if looking at lower seasons, I'd want the cushion to be on the high side. I get the sense you're trying to justify a retail purchase rather than just analyze it.

Making what I see are the appropriate assumptions (AKV $80/SSR $75 pp, comparable contracts) I see the differences more in the $7-8K range. I also think you need more points as posted. I'd go through your process and decide what best fits for you in terms of # of points and home resort, then I'd look back at the financials. But IF DVC is a good choice for you and you can afford it (to me that's pay cash, no consumer debt) I'd buy resale then do a 25 point add on. You save money and get everything you want, it'll just take a couple extra months. I'd do the resale first. I wouldn't go retail first or completely just to get it done quickly trying to justify it based on the savings of that next trip like some do. Don't forget UY is often important, if so, get the best one even if it's not currently the best financial choice. So if I'm right and 150 is a better number for you to end up with you might go out and start looking at contracts in the 120 to 150 pt range then once you find the right one, do a 25 point add on same home resort and UY.

 

[MrInfinity]

100 pts would not be enough for us... but it might work for you while you're in the studio-range... 160 was our base, but also the smallest room we'll ever want is a 2B.

Dream Season 1 week Standard View Studio will run 95/wk, or 1 trip per year.
Dream Season 1 week Standard View 1B will run 200/wk, or 1 trip per 2 years.

After that it breaks down:
Dream Season 1 week Standard View 2B will run 255/wk. That's 1 trip per 2.5 years. And if you go in Magic Season (Summer) then it gets worse. Do you see yourself forever hitting off-season? When our kids were little we thought we'd do Sep-Dec and May forever. That changes when they become teens.

If you are good with 100 pts, then direct is fine -- you're not talking about a lot of money. It's a little more but you'll be done quick, get any first booking you want, get your credit card points and the direct perks. When you're planning a first trip on these matters too. For example our first trip (404 pts) would have run $5,656 if we paid $14pp to rent. That is 1/3 of our purchase price offset by one trip.

Note splitting into 2 purchases you'll have closing costs on each purchase. Figure that in if you do a 75/25, also an option.

Again 100 pts is really small. I look at that as an add-on. I would anticipate you adding on to this in 5 years. Nothing wrong w that of course to get 100 now and add 50 or 100 later!

Regarding your numbers...
$20 rental is high. Estimate $14.
$90 resale stripped is high. Stripped will be closer to $80. $90 will be loaded.

I think you'll use the AP benefit more than twice. For us it worked out that a Gold AP is only marginally more than an 8-day hopper. So the AP gets us 2 trips for around the cost of one. If you wouldn't buy hoppers then individual tickets become more attractive.

 

[gharter]

I would agree with many above posts. It would seem the smartest approach would be to buy a resale contract with the points you need and then add a 25 point direct contract to get the added benefits like AP passes, etc.

I would question if 100 points will truly be enough. We just booked a studio (Savana view) at AKL for a week in May, needed 123 points. If you go to a 1 bedroom, you will be close to 30-40 points per night depending on season.

Good luck with your decision.

 

[ELMC]

Thinking about purchasing a 100 point contract for AKV... I anticipate doing WDW every year for the first few years (while our kids are younger), so if we bought direct we could take advantage of the annual passes every-other-year and time our trips 350-something days apart. But, once the kids are older, we probably will only go every couple years (alternating with Universal) and upgrade from studios to 1-bedrooms (or a 2-bedroom and bring the grandparents), at which point, annual passes won't really make sense. Even with the initial annual pass savings, I really don't see purchasing direct making sense financially, but thought I would throw it out there and see what others thought.

Direct:
$16,000 purchase price (100 points x $160/pp)
+ $400(?) closing costs
- $240 credit card rewards (1.5%)
- $1600 annual pass savings ($200 DVC savings for gold pass over non-dvc platinum pass price x 4 passes x 2 times)
-$2,000 for fully loaded contract ($20/point value...I've seen this number thrown out there a few times but not sure if it should be less)
=$12,560 ($125/per point)

Resale (assuming $90/point, contract not loaded)
$9,000
+$600(?) closing costs
=$9,600 ($96/per point)

So, $2,960 difference in cost. Other pros of purchasing direct: not having to wait for perfect UY contract to come along; faster timeline. (Probably not worth $3,000 difference though, and I know the AP discount is not guaranteed).

Looking at the numbers for SSR ($140/per point direct purchase price and roughly $80/pp resale) and BLT ($180/pp direct and $115 resale) the difference would be less ($2500 give or take depending on closing costs). Am I missing anything that would make direct more worth it? Or am I underestimating the cost of purchasing direct? Looks like resale still wins (for us at least).

Looking at this analysis from the outside, it seems a bit off to me in a few places, but mostly in favor of the direct purchase as Dean said. The one element where you actually sell the direct purchase short is the annual pass savings because that will continue for more than 2 years. However, as was said above I think that variable should be removed from the equation because it can also be accomplished by purchasing a 25 point contract direct. The $20/point number is a bit off as well, as was mentioned.

With regards to the resale purchase, I would like to add that even if the contract isn't loaded, most times it will include at least current use year points, which have a net value of about $6 per point ($12ish rental - $6ish maintenance fees). So your net cost on that resale purchase would be less. That being said, I am not sure that $90 per point is the number you should be using for this analysis. Looking at the AKV listings from this site's sponsor, http://www.dvc-resales.com/dvclisting-animal-kingdom.cfm AKV listings are averaging around $82 a point. And that's just asking price, you are more than welcome to offer lower. I recently offered $91pp on a BWV contract where the asking price was $96 and the seller straight up accepted. So in essence you could get an AKV contract for $78 a point and with the value of current points washing out with the closing costs, your cost would be closer to $7,800 which is a $5,000+ savings.

Bottom line, as was said above, I think the most economical way to proceed moving forward is a resale purchase for those not concerned about the lost perks and a resale purchase combined with a minimum 25 point direct purchase for those who are. Good luck with the process!

 

[MamaBear12]

Looking at this analysis from the outside, it seems a bit off to me in a few places, but mostly in favor of the direct purchase as Dean said. The one element where you actually sell the direct purchase short is the annual pass savings because that will continue for more than 2 years. However, as was said above I think that variable should be removed from the equation because it can also be accomplished by purchasing a 25 point contract direct. The $20/point number is a bit off as well, as was mentioned.

With regards to the resale purchase, I would like to add that even if the contract isn't loaded, most times it will include at least current use year points, which have a net value of about $6 per point ($12ish rental - $6ish maintenance fees). So your net cost on that resale purchase would be less. That being said, I am not sure that $90 per point is the number you should be using for this analysis. Looking at the AKV listings from this site's sponsor, http://www.dvc-resales.com/dvclisting-animal-kingdom.cfm AKV listings are averaging around $82 a point. And that's just asking price, you are more than welcome to offer lower. I recently offered $91pp on a BWV contract where the asking price was $96 and the seller straight up accepted. So in essence you could get an AKV contract for $78 a point and with the value of current points washing out with the closing costs, your cost would be closer to $7,800 which is a $5,000+ savings.

Bottom line, as was said above, I think the most economical way to proceed moving forward is a resale purchase for those not concerned about the lost perks and a resale purchase combined with a minimum 25 point direct purchase for those who are. Good luck with the process!

Thanks. I realize my numbers were pretty rough. I'm sold on resale, so if we do take the plunge, it will definitely be for a resale contract...and we'll *think* about adding on a small direct contract if we're sure we'll use the APs.

 

[ELMC]

Thanks. I realize my numbers were pretty rough. I'm sold on resale, so if we do take the plunge, it will definitely be for a resale contract...and we'll *think* about adding on a small direct contract if we're sure we'll use the APs.

Good luck finding a great contract. I remember before we bought DVC we took one trip a year with 5 or 6 day park tickets. Then we started to compare the cost of a 6 day ticket with an Annual Pass with the DVC discount and the price was so close we figured that if we could take two trips in the same year we would save so much money on tickets. And that's where it all started...

 

[MamaBear12]

Good luck finding a great contract. I remember before we bought DVC we took one trip a year with 5 or 6 day park tickets. Then we started to compare the cost of a 6 day ticket with an Annual Pass with the DVC discount and the price was so close we figured that if we could take two trips in the same year we would save so much money on tickets. And that's where it all started...

Hahaha...yeah, I would want to get my money's worth too ;-) If we do go the AP route, my plan would be to only get the pass every other year and take the consecutive trip like 355 days after the first so we would still technically only go once a year but get two trips out of each pass... We'll see if that happens though. I can definitely see it being a slippery slope!