1. Welcome Home to the DVC Boards at DVCinfo.com, an online community where you can join other Disney Vacation Club members (and potential members) from around the world discussing all things related to Disney and DVC. We pride ourselves on being a pleasant community built around people posting news and information, getting and giving help and guidance, and just having fun and conversing with other people who share our interest in DVC and Disney.

    You are currently viewing our forums as a guest. To gain full access to the DVCinfo discussion forum you must register for a free account. As a registered member you will be able to actively participate in forum discussions, start new discussion topics and vote in site polls, communicate privately with other DVC devotees, post your own photos, and much more. So, Come Join the Fun!

    Registration is absolutely free, so register today! You can even login using your Facebook, Twitter or Google account for immediate access. If you have any problems with the registration process or your account login, please contact us. Or, skip the registration process by logging in with your Facebook, Twitter or Google account.

Value of aging DVC contracts?

Discussion in 'Buying and Selling DVC' started by WDWNole, Mar 19, 2017.

  1. WDWNole

    WDWNole Member

    Joined:
    Mar 18, 2017
    Messages:
    19
    DVC Since:
    2017
    First Name:
    Dale
    Has anyone considered what the resale value of a contract terminating in 2042 will be in 10 years? With only 15 years left will the price per point drop considerably?
     
  2. Dan68

    Dan68 New Member

    Joined:
    Mar 19, 2017
    Messages:
    2
    DVC Since:
    1999
    First Name:
    Dan
    I would look at it another way. Right now you can rent your points out for $12-$14 per point, and the dues and taxes are around $6/pt. If you assume both of these will go up with inflation (they'll go up more probably, which makes the investment worth more, but let's just assume inflation for the sake of simplicity), then with 25 years left, the current value is $150-$200 per point. Why the discrepancy with the resale of around $90? Risk. It's a risky investment. My 2 cents? I'd assume a modest 2% increase above inflation. Therefore, value on the rental minus cost of dues and taxes will roughly be $8.50/pt in today's dollars. That yields a value of $128 (15 x $8.50) in 10 years. Discount for risk about 50% and you have a value of $64/pt in 10 years in today's dollars. So, bottom line: look at value on rental market and assume an increase rate with respect to inflation, add in a risk premium and you can arrive at some type of value 10 years out.

    If you want to get cute and add back in an inflation rate of 2%, then it will be worth around $78/pt. in 2027.
     
    Frank likes this.
  3. Dan68

    Dan68 New Member

    Joined:
    Mar 19, 2017
    Messages:
    2
    DVC Since:
    1999
    First Name:
    Dan
    I was curious so I looked up the avg. price of OKW, as they have both 40 and 25-year contracts (so you're comparing apples to apples). Amazingly, the 40 year is worth only 10% more ($81 vs. $74) than the 25 year, even though it is 40% more in duration. The economics of this makes my head spin. You are getting, then, if you buy the 40 year, the final 15 years (2042-2057) for $7. That's around 50 cents per year per point! The first 25 years is then $3 per year per point.

    There are a number of reasons this could be the case, but one is that when you extend a contract from 50 to 75 years on a building, the costs of maintenance will be much higher for those last 25 years. So increasing cost of maintenance is probably a factor, too. Another reason is simply the risk is higher the longer-term the contract. Who knows what economic conditions will be in 2042?
     
  4. rfc0001

    rfc0001 Elite Member Staff Member Moderator

    Joined:
    Feb 7, 2016
    Messages:
    2,729
    DVC Since:
    2013
    First Name:
    Russ
    Welcome to DVCinfo Dan :tu:!

    :welcome3:
     
  5. rfc0001

    rfc0001 Elite Member Staff Member Moderator

    Joined:
    Feb 7, 2016
    Messages:
    2,729
    DVC Since:
    2013
    First Name:
    Russ
    The spot resale price over time go up or down, but eventually will depreciate to $0 by the end of the contract, no matter what. If you plan on using it through the end of the contract, the price doesn't really matter. That's how I feel about our SSR - yes, I could sell it for 40% profit in 3 years - but we still want to stay at Disney and it's still the most cost effective way to do so. We own more than we need right now, so I could trim back, but I also think we'll make the jump to 2 Bedrooms at some point, so will need the points eventually.
     
  6. papaspride

    papaspride Member

    Joined:
    Mar 27, 2017
    Messages:
    7
    DVC Since:
    2007
    First Name:
    Jim
    Can an Owner pay to extend an Old Key West contract?
     
  7. DVC Mike

    DVC Mike Administrator Staff Member Administrator

    Joined:
    Jan 13, 2016
    Messages:
    2,105
    DVC Since:
    2007
    First Name:
    Mike
    No. It was a one-time offer.

    The Year 2007 - DVCinfo.com
     
  8. rfc0001

    rfc0001 Elite Member Staff Member Moderator

    Joined:
    Feb 7, 2016
    Messages:
    2,729
    DVC Since:
    2013
    First Name:
    Russ
    However, you can still purchase new extended contracts from DVC.
     
  9. wdrl2

    wdrl2 Well-Known Member

    Joined:
    Jan 14, 2016
    Messages:
    153
    DVC Since:
    2009
    Actually, Disney might still let you pay to extend an OKW deed from 2042 to 2057.

    On September 8, 2016, Disney filed an "Extension Deed - Ownership Interest from February 1, 2042 to January 31, 2057" for an OKW owner who owned 240 points. Based on the Deed Document Tax paid on the filing, it appears the consideration amount was $6,000, which comes to $25 a point.

    This was the first and only Extension Deed I have noticed in the several years I have been working with the OCC website.

    If an OKW owner is interested in extending their deed to 2057, it would not hurt to call DVC and inquire about your options.
     
    Frank and rfc0001 like this.
  10. magicaldisney

    magicaldisney Elite Member Staff Member Moderator

    Joined:
    Jan 18, 2016
    Messages:
    2,792
    DVC Since:
    2007
    First Name:
    Lori
    That's very interesting. I wonder if there are some stipulations on that. Did it have to be an original direct purchase? Could someone buy resale right now and then extend it?
     

Share This Page