Buying Direct Strategy - current vs future?

Mlarkin02

Earning My Ears
Joined
Aug 28, 2019
All, I am seeking advice on potentially buying direct at current costs (and receiving 2019 points to bank) vs the future cost in 2-3 years of buying direct.

Background: we are a family of 5 with 3 young children under the age of 3. We are in the market for our first DVC contract and have an offer pending ROFR at AKL.

Our initial strategy was to buy resale and then add on direct in a few years. However, the new direct point increase to 100 min. for benefits occurred during the time period we were waiting on ROFR so purchasing the 75 points wasn’t an option for us. Because of the increase, my mindset has shifted about whether it is best to go ahead and buy direct at current costs vs what buying direct will cost in 2-3 years. Note: this is a contingency in case our AKL contract is taken back which based on the contract I believe is more likely to happen ($103 ppt for 250 pts. December use year and all 19-no dues, 20 , 21 pts available).

The main factors for wanting to purchase direct are:
1.) AP discounts (especially once all 3 kids require tickets and we do plan on visiting WDW at least once per year for 7ish days)
2.) Dining discounts
3.) Ability and desire to stay at multiple resorts, including Riviera and future resorts.
4.) Concerns about future restrictions on resale contracts.

If we did purchase direct I would only purchase the 100 min for benefits then add on resale.

Again, this all may be a moot point if our AKL contract goes through. But assuming we have to hit reset which strategy would you recommend?

Thanks!
 
All, I am seeking advice on potentially buying direct at current costs (and receiving 2019 points to bank) vs the future cost in 2-3 years of buying direct.

Background: we are a family of 5 with 3 young children under the age of 3. We are in the market for our first DVC contract and have an offer pending ROFR at AKL.

Our initial strategy was to buy resale and then add on direct in a few years. However, the new direct point increase to 100 min. for benefits occurred during the time period we were waiting on ROFR so purchasing the 75 points wasn’t an option for us. Because of the increase, my mindset has shifted about whether it is best to go ahead and buy direct at current costs vs what buying direct will cost in 2-3 years. Note: this is a contingency in case our AKL contract is taken back which based on the contract I believe is more likely to happen ($103 ppt for 250 pts. December use year and all 19-no dues, 20 , 21 pts available).

The main factors for wanting to purchase direct are:
1.) AP discounts (especially once all 3 kids require tickets and we do plan on visiting WDW at least once per year for 7ish days)
2.) Dining discounts
3.) Ability and desire to stay at multiple resorts, including Riviera and future resorts.
4.) Concerns about future restrictions on resale contracts.

If we did purchase direct I would only purchase the 100 min for benefits then add on resale.

Again, this all may be a moot point if our AKL contract goes through. But assuming we have to hit reset which strategy would you recommend?

Thanks!

Since it's already gone to 100, I recommend being patient but watching the boards VERY closely if you don't need the points now. The 100 shift went into effect without much notice. I also have a ROFR myself pending and jumped in and bout 75 points when I learned it was going up. So I recommend a hybrid approach. Buy what you need to get in the game - if you've decided you def want in - and get the rest from resale. At $103, it's 42% off so that's a significant amount.

For my direct contract, I purposely bought at a different place than my resale. I did this because of your point #3. If we are going to use it on future resorts, 75/100 isn't going to get us much for a family of 5. It's a tough squeeze into those new studios for 7 days. A 1 or 2 BR is much more expensive and will probably require us to bank/borrow that specific contract to afford bigger as our resales won't be eligible for use there. So overall cost was a bigger factor than the 11 mo priority - this extends to your #1 and #2 as well to maximize you benefits. Good luck on the ROFR!
 
Also, consider buying Direct at one of the older resorts. I immediately thought of AKV, since your resale was there and I assume you like the Resort. Not sure what the Direct pp price is there, though.
 
I think one thing is for sure, waiting 2 to 3 years will cost more than today. Even if the minimum is still 100, the price will be more.

Buying direct as soon as you are a member, will give you the AP discount for at least 2 of you right now and begin to give you that discount as the children become 3.

More importantly, IMO, is how comfortable you are paying for the direct now. Do you think it makes sense? Do you feel financially able to purchase. ( whether cash or finance)?

I would venture to guess that in 2 to 3 years, that 100 will be 125. But that is just a guess. Personally, I think you should decide based on your situation today and comfort level and not worry about future costs.

Good luck with ROFR!
 


Also, consider buying Direct at one of the older resorts. I immediately thought of AKV, since your resale was there and I assume you like the Resort. Not sure what the Direct pp price is there, though.
It is 176 just bought!
 
I'm going to play Devil's advocate a bit on these points. How you think and feel about my points should be good guidance about how to proceed. Good luck with your decision! :)

The main factors for wanting to purchase direct are:
1.) AP discounts (especially once all 3 kids require tickets and we do plan on visiting WDW at least once per year for 7ish days)
If you are only visiting once per year for 7 days then you won't really need an Annual Pass. Even with the discount, it would likely be just as expensive as purchasing 7-day tickets. However, what we often see with new DVC members is the points start to burn a hole in their pocket and they want to book multiple trips per year. At that point, an AP might be warranted. If this happens then you'll probably need more points; that might be the time to look at a second contract purchased directly. Also, if you can book two trips within the same 12 month period then an AP might be warranted as well. For example, go the second week of April 2019 and the first week of April 2020. One trip per year, but both covered under the same AP.

2.) Dining discounts
You'll have to do the math to determine if the discounts are worth the additional cost. Another strategy would be to buy ONE AP for you and use that for discounts. There is also some evidence pointing to the fact that DVC resale buyers still qualify for the Tables in Wonderland card. That discount would likely equal the dining discount, even for just one trip.

3.) Ability and desire to stay at multiple resorts, including Riviera and future resorts.
You can still stay at any of the L14, but you would be shut out of RIV and forward. However, you can still stay there, just not on your points. It might not make sense to structure a 50-year ownership around something that might only happen once every couple of years. You have to decide what it means to you. We used to own VGC because we went to Disneyland once every three years. We sold that contract and now just pay cash for our stays.

4.) Concerns about future restrictions on resale contracts.
That's a personal choice. For me, the only thing I care about with my DVC is the ability to book my home resort at 11 months, so it doesn't matter if my points are qualified. I will say that historically, resale restrictions have only applied to contracts purchased after the date the restrictions are put in place. So if you are fine with the restrictions as they are now, then you shouldn't have to worry about future restrictions.

If we did purchase direct I would only purchase the 100 min for benefits then add on resale.

Again, this all may be a moot point if our AKL contract goes through. But assuming we have to hit reset which strategy would you recommend?

Thanks!
If your contract does get taken, I would recommend staying on course with a new contract. But ultimately you'll have to decide what makes you most comfortable. Good luck! :)
 
If you are only visiting once per year for 7 days then you won't really need an Annual Pass. Even with the discount, it would likely be just as expensive as purchasing 7-day tickets. However, what we often see with new DVC members is the points start to burn a hole in their pocket and they want to book multiple trips per year. At that point, an AP might be warranted. If this happens then you'll probably need more points; that might be the time to look at a second contract purchased directly. Also, if you can book two trips within the same 12 month period then an AP might be warranted as well. For example, go the second week of April 2019 and the first week of April 2020. One trip per year, but both covered under the same AP.

Unless someone plans the once a year trip for 7 days 51 weeks apart. Then you get two trips out of one pass, potentially making an AP purchase (even every other year) potentially worth it.
 


You can still stay at any of the L14, but you would be shut out of RIV and forward. However, you can still stay there, just not on your points. It might not make sense to structure a 50-year ownership around something that might only happen once every couple of years. You have to decide what it means to you. We used to own VGC because we went to Disneyland once every three years. We sold that contract and now just pay cash for our stays.

If I may ask about your decision here. Did you buy another contract to get 11-mo for where you stayed? What made you decide to sell it isntead of just utilizing it for the resorts you booked? So much is made of the annual dues, resale restrictions, and the flexibility of these contracts that I'm curious as to what pushed you over to let it go.
 
My thought process is to buy roughly 300-350 points between direct/resale and plan on going to the parks a minimum of 7-days so it makes more sense to me to purchase an AP instead of a 7-day ticket. This way if we decided to make additional trips we would have the AP and if not then we would break even purchasing the AP instead of the 7-day ticket. I plan on having enough points to either take 2 trips each year with my wife and kids or 1 trip with extended family. I am considering buying direct at AKL for the 100 points and then adding a 2nd resale contract if my current offer doesn't pass ROFR.
 
My thought process is to buy roughly 300-350 points between direct/resale and plan on going to the parks a minimum of 7-days so it makes more sense to me to purchase an AP instead of a 7-day ticket. This way if we decided to make additional trips we would have the AP and if not then we would break even purchasing the AP instead of the 7-day ticket. I plan on having enough points to either take 2 trips each year with my wife and kids or 1 trip with extended family. I am considering buying direct at AKL for the 100 points and then adding a 2nd resale contract if my current offer doesn't pass ROFR.

Id say buy the resale first. Unless a change comes, It’s easier to adjust your direct contracts UY. Harder to find a resale to fit your direct UY.
 
Unless someone plans the once a year trip for 7 days 51 weeks apart. Then you get two trips out of one pass, potentially making an AP purchase (even every other year) potentially worth it.
I thought I tried to say that at the end...sorry if it wasn't clear. :)
 
If I may ask about your decision here. Did you buy another contract to get 11-mo for where you stayed? What made you decide to sell it isntead of just utilizing it for the resorts you booked? So much is made of the annual dues, resale restrictions, and the flexibility of these contracts that I'm curious as to what pushed you over to let it go.
Sure. I owned at BWV, BLT, VB, and VGC. I now only own at BWV and VB (qualified points, which I think is important to mention). Here's why. We stay 1BR TP view at BLT. Under most circumstances, you do NOT need the 11-month window to book there. So I am not maximizing my efficiency by using expensive BLT points to book there. Yes, I am that anal. Hopefully you aren't as you are probably happier than I am. ;) We use BWV mostly for studios and mostly during F&W. You absolutely have to own there to get that, which is why we do. Maximization achieved. :)

VGC...to me it doesn't make any sense to own VGC. For anyone. At all. I'm being a bit hyperbolic here, and that's on purpose. At today's resale prices, especially compared to what people paid for their VGC contracts (I paid around $90ish pp), it doesn't make any sense to NOT sell the contract. We used our contract once every other year (sometimes one out of three), and yes we did take advantage of the 11-month window. But in selling the contract and locking in the cash gain, we are better off paying cash, even at a rate higher than what it would cost to stay DVC, for the next 10-15 years. I'll take that short to medium term gain over the potential long term gains any day of the week. And if I am ever able to sneak in on my extremely cheap VB points then that pushes out the break-even point even further. And if this recession thing ever happens and people start to jump on the "cashing out" bandwagon, I'll be happy to buy back in at a depressed price.

So back to the hyperbole. I'm not suggesting that everyone who owns VGC goes out and sells it and pockets the cash. But I kind of am. This ties back to the general theme of my posts on here recently, which, to be frank, a lot of people disagree with and I respect them for that. DVC is an amazing product, but the numbers don't make sense anymore. They've basically admitted it's a fragmented system when they introduced the multiple tiers of resale restrictions. That's also why I don't think they'll extend BCV and BWV: those resorts expiring is their opportunity to hit the reset button, at least in part. But back to the fragmentation, you have premier resorts like BCV and BWV where you can stay in studios for 10-15 points a night and most owners got their points for much less than $100. Parallel to that, you have possibly better, but still same tier resorts like BLT, CCV, PVB, and RIV where points are twice as much and the cost of booking a studio is up to twice as much as well. All the while you have 14 million Saratoga Springs points that are being used to stay all over the place, and ticking off quite a few people in the process I might add. The system is completely incongruous and is ripe for exploitation. Some choose to ignore that opportunity, others choose to capitalize on it. I've been pretty candid on here in the past that I bought a VB contract through normal channels for a NET of $11 per point. And just to show that it wasn't an anomaly, I did it again for $14 per point a little while later. So I don't care how much more the dues are than the other resorts, there's no touching that. In my opinion, that signals a problem in the system.

Kudos to anyone who read my ramblings to this point. But for those who want the TL : DR version, I'll paraphrase the great Jimmy McMillan:

The points are too damn high! :)
 
SHopefully you aren't as you are probably happier than I am. ;)

Unfortunately, I am. Which is part of the reason I'm asking. I've got spreadsheets galore that model out hypothetical usage and what it would mean for my finances if I were to buy at each resort...

And if I am ever able to sneak in on my extremely cheap VB points then that pushes out the break-even point even further. And if this recession thing ever happens and people start to jump on the "cashing out" bandwagon, I'll be happy to buy back in at a depressed price.

One of the things I've been considering and haven't gotten to making a spreadsheet on is the breakeven of cheap resorts such as HHI and VB. To your point, the "cheap" rooms of the desired resorts sell out fast. But the rooms that cost much more in points are generally available. So what's the breakeven of buying more cheap points vs paying more for that home resort; etc. It sounds like I'll have to put more effort into finishing this analysis.

I've been pretty candid on here in the past that I bought a VB contract through normal channels for a NET of $11 per point. And just to show that it wasn't an anomaly, I did it again for $14 per point a little while later.

How in the world did you do that? Cheapest I've seen for VB is ~$35 ppt
 
One of the things I've been considering and haven't gotten to making a spreadsheet on is the breakeven of cheap resorts such as HHI and VB. To your point, the "cheap" rooms of the desired resorts sell out fast. But the rooms that cost much more in points are generally available. So what's the breakeven of buying more cheap points vs paying more for that home resort; etc. It sounds like I'll have to put more effort into finishing this analysis.

When I ran the calculations, the break even was around 16 to 18 years vs SSR points which could be used for the same purpose. If you plan on owning for the 23 years only, this could be worth it. Yes, its a bit more in the long run, but not significantly. The real issue is, you don't have home resort priority anywhere in WDW.
 
One of the things I've been considering and haven't gotten to making a spreadsheet on is the breakeven of cheap resorts such as HHI and VB. To your point, the "cheap" rooms of the desired resorts sell out fast. But the rooms that cost much more in points are generally available. So what's the breakeven of buying more cheap points vs paying more for that home resort; etc. It sounds like I'll have to put more effort into finishing this analysis.
This is a great point that I haven't really seen discussed on here. If I'm understanding you correctly, you're looking to explore the relationship between buying BLT or BWV to get the standard rooms at 11 months or walking in with SSR points at 7? I would be interested to see that. In cases like BWV where the difference between standard and other is 5 points it could be pretty significant. In other resorts it's only 2-3 points which I would imagine would be less so.
How in the world did you do that? Cheapest I've seen for VB is ~$35 ppt
I bought a contract with three years worth of points for about $50 per point including MF reimbursement and closing costs. I rented out the points in the contract and my net cost was $11. Obviously that can't happen right now, but the price spike on VB has been less than at the other resorts.

When I ran the calculations, the break even was around 16 to 18 years vs SSR points which could be used for the same purpose. If you plan on owning for the 23 years only, this could be worth it. Yes, its a bit more in the long run, but not significantly. The real issue is, you don't have home resort priority anywhere in WDW.
Very interesting and it leads to a bigger question. With breakeven points getting further and further out, why are we still willing to accept that. When we were buying in 2012, resale contracts were breaking even in 5-7 years and direct contracts were breaking even in 10-12. Now with today's pricing model, we are nowhere near those numbers. Why is that ok?
 
ting and it leads to a bigger question. With breakeven points getting further and further out, why are we still willing to accept that. When we were buying in 2012, resale contracts were breaking even in 5-7 years and direct contracts were breaking even in 10-12. Now with today's pricing model, we are nowhere near those numbers. Why is that ok?

Just to be clear, the breakeven I was discussing was VB vs SSR, for sleep around points. I think (atleast on the much cheaper resorts), the breakeven in terms of cash rates vs DVC is quite a bit earlier. Probably closer to 5 to 7 years.
 
When I ran the calculations, the break even was around 16 to 18 years vs SSR points which could be used for the same purpose. If you plan on owning for the 23 years only, this could be worth it. Yes, its a bit more in the long run, but not significantly. The real issue is, you don't have home resort priority anywhere in WDW.

I have a direct 75 point AKV that would still have home and for the blue card so the rest of the points would be for hybrid.

This is a great point that I haven't really seen discussed on here. If I'm understanding you correctly, you're looking to explore the relationship between buying BLT or BWV to get the standard rooms at 11 months or walking in with SSR points at 7? I would be interested to see that. In cases like BWV where the difference between standard and other is 5 points it could be pretty significant. In other resorts it's only 2-3 points which I would imagine would be less so.

That's exactly correct. Because we all know head to head it's hard to beat, and then we quantify it by saying there's value in availability. But what if we were able to compensate for that availability by buying up? (ie, booking larger rooms, better views, etc.)

I just ran it through calculations - ignoring NPV for now since that's a more complicated spreadsheet. I have a pending PVB @ $128 so I'll use that as a comparison. Even though I've seen cheaper and more expensive, I'll use what's available on market today ($75 HH, $57 VB, $93 SSR, $133 BLT, $144 BCV, $109 BWV).

Head to Head:
On the same number of points, SSR and VB breakeven at about year 9. Upon which, SSR comes out cheaper from then on. Compared to my PVB offer year 15 is breakeven for VB and it would never breakeven with SSR.

250 vs 200 Points:
9 Years breakeven between VB and PVB, upon which VB becomes more expensive.
8 Years breakeven between SSR and PVB, upon which SSR becomes more expensive.

225 vs 200 Points:
11 Years breakeven between VB and PVB, upon which SSR becomes more expensive.
19 Years breakeven between SSR and PVB, upon which SSR becomes more expensive.

So I can definitely see short term value, with it increasing dramatically point wise the shorter you get. This may be of value for say just the teenage years where more bedrooms are needed in a hybrid approach. It looks like if the timeframe is dropped ot hold the contract for roughly 5 years, then you can get some good use out of it.

5 Year VB @ 350 points is cheaper than 200 points @ BLT, BCV, BWV, PVB, CCV. Where as you can only get about 250 points at SSR for that same price over 5 years. So a hypothetical example of buying VB for 5 years and then reselling it - say it drops 50% in current value and sells for $27/ppt when you're done with it. Over the course of those 5 years, it would have cost $9.29 ppt compared to renting which would have cost $18/19 ppt. Even if the contract goes to $0, it would only come out to $14.99/pt. But the point of this analysis is that the availability may be able to be compensated on; but only to an extent as based on availability 1BR as actually the most obtainable, followed by 2 BR and then studios.

I also ran a 5 Year VB @ 200 points vs 100 points @ BLT, BCV, BWV, PVB, and CCV. VB was even with BLT, cheaper than BCV and CCV; but more expensive than BWV. But that essentially means for a 5 year period you can stay at 1 BR @ BCV instead of a studio and based on this (courtesty of availability thread) means you still have a decent amount of availability.

bcv-1bd-jpg.332319


I bought a contract with three years worth of points for about $50 per point including MF reimbursement and closing costs. I rented out the points in the contract and my net cost was $11. Obviously that can't happen right now, but the price spike on VB has been less than at the other resorts.

I think this also plays against it though. So I ran another scenario based on the buying and selling of the contract after 5 years. Because VB hasn't spiked like others, it actually hurts it. I went through the ROFR thread. July to Dec 2014 ROFR - 5 years ago. VB sold for $50/pt. If I go +/- 6 mo, it goes as low as $45/pt. +/- 1 year, it goes as low as $39/pt. Which means 5 years later, VB has actually increased in price based on today's market value by approximately $18/pt aggressively, $7/pt conservatively. Which means that's a total spend of $0.54/pt to 2.40/pt spend if you only held it for those 5 years.

Now of course, I have to be fair. So I ran this against PVB, BWV, BCV, BLT. When compared this way, BWV, BCV, and BLT all went up in value. So if you owned any of those 3 in the last 5 years, you would have made money to sell today - which is better than the $2.40/pt at VB. But this is of course highly dependent on DVD direct prices and resale demand. So this could flip tremendously at any given time, especially with some of these get closer to their expiration.

A lot more calculations to do, but this is interesting none the less.
 
Just to be clear, the breakeven I was discussing was VB vs SSR, for sleep around points. I think (atleast on the much cheaper resorts), the breakeven in terms of cash rates vs DVC is quite a bit earlier. Probably closer to 5 to 7 years.
Thanks for the clarification. I should have been clear in that it wasn't just your time frame I was using, but the generally accepted breakeven analyses we have been seeing on here with similar time frames.

I'm assuming you're talking about resale for that time frame? I think that even with resale I would disagree with you on the 5-7 years as well as using cash rates as the basis of comparison. The generally accepted calculation on here has been to use a 25% discount on rack rates, as that is available for most times of the year in one form or another. While I acknowledge that hotel room rates have gone up, they haven't done so at the rate that DVC prices and dues have, and I would be curious to see the numbers supporting a 5-7 year breakeven analysis of today's DVC.
 
I think this also plays against it though. So I ran another scenario based on the buying and selling of the contract after 5 years. Because VB hasn't spiked like others, it actually hurts it. I went through the ROFR thread. July to Dec 2014 ROFR - 5 years ago. VB sold for $50/pt. If I go +/- 6 mo, it goes as low as $45/pt. +/- 1 year, it goes as low as $39/pt. Which means 5 years later, VB has actually increased in price based on today's market value by approximately $18/pt aggressively, $7/pt conservatively. Which means that's a total spend of $0.54/pt to 2.40/pt spend if you only held it for those 5 years.

Now of course, I have to be fair. So I ran this against PVB, BWV, BCV, BLT. When compared this way, BWV, BCV, and BLT all went up in value. So if you owned any of those 3 in the last 5 years, you would have made money to sell today - which is better than the $2.40/pt at VB. But this is of course highly dependent on DVD direct prices and resale demand. So this could flip tremendously at any given time, especially with some of these get closer to their expiration.

A lot more calculations to do, but this is interesting none the less.
All very interesting, thanks for sharing. To your point about VB, I agree completely. While I may not have seen the appreciation on that contract as we have seen on others, I was able to get in at a lower rate and still be in a good position both in terms of ownership and resale. I think I'm ok with that, especially because I don't think many of us saw the DVC melt-up coming, so it becomes a bit of a hindsight play at that point.
 
That's exactly correct. Because we all know head to head it's hard to beat, and then we quantify it by saying there's value in availability. But what if we were able to compensate for that availability by buying up? (ie, booking larger rooms, better views, etc.)

Looked at a few examples....

Magic Season - Studios. BLT - standard view, vs Lake View.

Standard view = 139 points/week @ 160 = 22,240 + 31,136 (139 * 6.4 * 35) = 53,376
Lake View = 153 points/week @ 110 (SSR) = 16,830 + 34,272 (153 * 6.4 * 35) = 51,102

SSR points win.

Magic Season - Studios. BWV - Standard View vs Preferred View

Standard View = 108 points/week @ 135 = $14,580 + 17,810.28 (108 * 7.17 * 23) = 32,390.28
Preferred View = 132 points/week @ 110 = $14,520 + 19,430.40 (132 * 6.40 * 23) = 33,950.40

BWV wins if you want to stay at BWV. The benefit of going with SSR in this scenario is that you do get the upgraded view, plus more points to play with if you want to venture away from BWV.

These are two specific examples, so you'd have to run the numbers for exactly what your looking for. Also keep in mind, that at certain times of the year, you may not be able to get those higher end rooms at 7 months. Your buying security for that higher price. However, paying less for upgraded views is not a bad thing in my books if your willing to live with disappointments every once in a while.

Edit: added the Maintenance fees for 35 years (time remaining on SSR). Assumed no inflation for quick calc.
 
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