Buy VB over Poly - is this crazy

[Dean]

However, I think there is a compelling argument to buy VB over Poly for families that want to join DVC for as cheap as possible, don't care where they stay at the 7 month window, and will probably sell the contract in less than 15 years. Sure, that is a lot of IF's, but the price of some VB contracts are going to sell in the $30-$40 range and that is a pretty good deal.

Certainly compared to buying the Poly but that's not the real question just to get into the club. The real comparison for that purpose is to HH, SSR, AKV & OKW and possibly to BLT simply because of the lower dues. IMO VB and the Poly are both poor choices just to have points for WDW.

 

[DVC Doctor]

Certainly compared to buying the Poly but that's not the real question just to get into the club. The real comparison for that purpose is to HH, SSR, AKV & OKW and possibly to BLT simply because of the lower dues. IMO VB and the Poly are both poor choices just to have points for WDW.

We BOTH agree that SSR probably represents the best bang for the buck in terms of someone buying into DVC that is flexible in terms of where they want to stay at the 7 month window.

But some people may consider VB over SSR in the following scenario.

Buy points at SSR @ $85 vs buy points at VB @$45

The difference between the two (assuming they are equal in terms of banked/current/future year points) is $40pp and probably a little higher in terms of closing costs, but lets just assume they are the same.

100 points = $4,000 savings buying VB over SSR
200 points = $8,000 savings buying VB over SSR
300 points = $12,000 savings buying VB over SSR

If SSR dues is $5.18 and VB dues is $8.06, then the difference is $2.88 per year

$40 / $2.88 = 14 years to catch up (assuming the dues will always be $2.88 more at VB) where it would be better to buy SSR over VB.

This also assumes both deals are paid in full for cash.

For some people that may only want to be a DVC member for 7-10 years then buying VB is possibly better than SSR, especially if they need 250 points as this would be a $10,000 savings. If they sell in 7-10 years, then the RTU really is not a factor and resale values will probably still have VB as the cheapest DVC and if the current price from DVC is $200+, then logically you could easily find someone to buy your VB for $40pp. Of course, perhaps SSR will increase in value while VB does not, but no matter what, buying VB NOW can save a lot of money if you plan is to only be a member for 7-10 years.

The average persona moves homes every 7-10 years so I would assume that there are many families that would consider buying DVC now and selling in 7-10 years.

 

[Dean]

We BOTH agree that SSR probably represents the best bang for the buck in terms of someone buying into DVC that is flexible in terms of where they want to stay at the 7 month window.

But some people may consider VB over SSR in the following scenario.

Buy points at SSR @ $85 vs buy points at VB @$45

The difference between the two (assuming they are equal in terms of banked/current/future year points) is $40pp and probably a little higher in terms of closing costs, but lets just assume they are the same.

100 points = $4,000 savings buying VB over SSR
200 points = $8,000 savings buying VB over SSR
300 points = $12,000 savings buying VB over SSR

If SSR dues is $5.18 and VB dues is $8.06, then the difference is $2.88 per year

$40 / $2.88 = 14 years to catch up (assuming the dues will always be $2.88 more at VB) where it would be better to buy SSR over VB.

This also assumes both deals are paid in full for cash.

For some people that may only want to be a DVC member for 7-10 years then buying VB is possibly better than SSR, especially if they need 250 points as this would be a $10,000 savings. If they sell in 7-10 years, then the RTU really is not a factor and resale values will probably still have VB as the cheapest DVC and if the current price from DVC is $200+, then logically you could easily find someone to buy your VB for $40pp. Of course, perhaps SSR will increase in value while VB does not, but no matter what, buying VB NOW can save a lot of money if you plan is to only be a member for 7-10 years.

The average persona moves homes every 7-10 years so I would assume that there are many families that would consider buying DVC now and selling in 7-10 years.

One flaw I see is that dues will increase at an inflationary rate so they will continue to grow further apart. So the time to crossover will be less than the 14 yrs. At 4% inflation, you crossover a $40 pp difference at yr 9. Of course if you also factor in the TMV (which I would) for the difference the length is longer, I didn't do the math on that one but I'm guessing the crossover then becomes around 15-17 yrs at a 4.5% return (the return I use for resale with 1/2 at MM rates and the other half at 8% after tax). I always assume payment in full in cash, IMO there's no other reasonable option for buying a timeshare. I also strongly recommend against buying to sell later even with a 10 yr window though it's nice to have options, you have a lot less with VB. I don't believe any of this makes VB a reasonable option but I would agree that there is a price break where that might occur. You've got to put some value on the following factors and they all assume that DVC makes sense for either of them and one is just trying to decide..

• Not having a WDW 11 month option vs having an 11 mo VB option.
• Up front costs.
• Length of RTU 42 vs 54.
• Inherent value of the 2 contracts (not to resell but just in case)
• Risk of each resort for major issues, termination, natural disaster and special assessments (VB loses in all).

IMO when it's all said and done and looking at WDW use only I think VB has to save you 10-20% long term over at least the 2042 date compared to SSR giving consideration to both dues inflation and the TMV. I don't think you can get the prices far enough apart to do so other than if you only look at subsidized contracts AND get the price down under current market. But it's a nice resort in it's own right so if one wants to stay there part of the time it may be worth it. HH is a better choice for an East coast non WDW.

 

[DVC Doctor]

The fun and interesting thing about these forums is the ability to get a variety of analysis.

My friend and I both seriously looked at buying a VB contract resale (we are both DVC members) and I was close to pulling the trigger and decided to stick with SSR and he decided to buy VB instead of SSR.

The MAJOR deciding factor for both of us was the length of time to hold the contracts.

I have a 10-15 year time frame where the odds of me selling in less than 10 years is slim.

He has a 7-10 year time frame and the odds of him holding for more than 10 years is slim.

We both bought the resort to give us the best bang for out money as both of us traditionally book Disney trips within the 0-7 month window so the home resort is irrelevant.

It will be interesting to look back in a few years to see how we did, but I feel he made a better short term investment and I feel I made a better long term investment in DVC when you factor in the purchase price, annual dues, and estimate of resale value when we both sell. Neither of us is planning on keeping the contracts until the end of the RTU.

I really love the 3 bedroom at VB so perhaps we can work out a trade in the near future and so far, both of us are happy with our different purchases.

 

[MountainMouse]

The fun and interesting thing about these forums is the ability to get a variety of analysis.

My friend and I both seriously looked at buying a VB contract resale (we are both DVC members) and I was close to pulling the trigger and decided to stick with SSR and he decided to buy VB instead of SSR.

The MAJOR deciding factor for both of us was the length of time to hold the contracts.

I have a 10-15 year time frame where the odds of me selling in less than 10 years is slim.

He has a 7-10 year time frame and the odds of him holding for more than 10 years is slim.

We both bought the resort to give us the best bang for out money as both of us traditionally book Disney trips within the 0-7 month window so the home resort is irrelevant.

It will be interesting to look back in a few years to see how we did, but I feel he made a better short term investment and I feel I made a better long term investment in DVC when you factor in the purchase price, annual dues, and estimate of resale value when we both sell. Neither of us is planning on keeping the contracts until the end of the RTU.

I really love the 3 bedroom at VB so perhaps we can work out a trade in the near future and so far, both of us are happy with our different purchases.

If your friend and you don't mind,, what were the purchase prices of the contracts. Just wondering how enticing each were.

 

[Dean]

The fun and interesting thing about these forums is the ability to get a variety of analysis.

My friend and I both seriously looked at buying a VB contract resale (we are both DVC members) and I was close to pulling the trigger and decided to stick with SSR and he decided to buy VB instead of SSR.

The MAJOR deciding factor for both of us was the length of time to hold the contracts.

I have a 10-15 year time frame where the odds of me selling in less than 10 years is slim.

He has a 7-10 year time frame and the odds of him holding for more than 10 years is slim.

We both bought the resort to give us the best bang for out money as both of us traditionally book Disney trips within the 0-7 month window so the home resort is irrelevant.

It will be interesting to look back in a few years to see how we did, but I feel he made a better short term investment and I feel I made a better long term investment in DVC when you factor in the purchase price, annual dues, and estimate of resale value when we both sell. Neither of us is planning on keeping the contracts until the end of the RTU.

I really love the 3 bedroom at VB so perhaps we can work out a trade in the near future and so far, both of us are happy with our different purchases.

As I stated, I don't think it's a good idea to buy planning to resell later but a 15 yr window is much better than 7. I do think it's smart to consider an exit strategy in case one is needed later. I think the current trend of buying specifically to be able to exit at a significantly higher cost is a mistake. For example, many are suggesting buying multiple smaller contracts but IMO the cost to do is is usually too high to make it worthwhile. Best case scenario is your friend will break even with you and they have more risk and likely a more difficult time selling at even 7 yrs compared to 10-15 years. Obviously assuming WDW is the goal.

 

[djohn06]

Doctor, I would say your friend should have a 3 to 5 year timeframe with VB. Wait until he has to make a couple dues payment or a special assessment. Of all the Disney resorts, VB is the only one that has barely increased in price in the past 3 years and its for good reason. I'd be really worried about getting my principle back in 10 years from VB.

 

[Dean]

Doctor, I would say your friend should have a 3 to 5 year timeframe with VB. Wait until he has to make a couple dues payment or a special assessment. Of all the Disney resorts, VB is the only one that has barely increased in price in the past 3 years and its for good reason. I'd be really worried about getting my principle back in 10 years from VB.

Plus it narrowly missed a special assessment a few years ago it appears.

 

[bpadair32]

We just signed the contract for VB points and are waiting on ROFR.

I am very happy with our decision but agree that it is not for everyone. Here is why I am happy with it though (hopefully it gets through ROFR). We would be getting 250 points. Currently that is right around $2000 per year in maintenance fees. For us and our budget, that is really no big deal. What would have been a big deal is paying a huge amount up front. I am 100% against any type of financing, I don't even have a mortgage on my home. My in-laws are also DVC members, so for us, we would be taking a family vacation with them every 3 years, going to VB every 3 years, and taking a vacation with just our immediately family every 3 years. We would want a two bedroom villa, and using the availability tools to check the times that we want to go, it does not appear to be a problem to get one at 7 months. So we get a low cost of entry, the ability to have a set vacation plan, a locked in price, and maintenance fees that even if they increase are well within our monthly budget. Its an all around win.

 

[djohn06]

We just signed the contract for VB points and are waiting on ROFR.

I am very happy with our decision but agree that it is not for everyone. Here is why I am happy with it though (hopefully it gets through ROFR). We would be getting 250 points. Currently that is right around $2000 per year in maintenance fees. For us and our budget, that is really no big deal. What would have been a big deal is paying a huge amount up front. I am 100% against any type of financing, I don't even have a mortgage on my home. My in-laws are also DVC members, so for us, we would be taking a family vacation with them every 3 years, going to VB every 3 years, and taking a vacation with just our immediately family every 3 years. We would want a two bedroom villa, and using the availability tools to check the times that we want to go, it does not appear to be a problem to get one at 7 months. So we get a low cost of entry, the ability to have a set vacation plan, a locked in price, and maintenance fees that even if they increase are well within our monthly budget. Its an all around win.

On paper it does appear to be risk free...... Don't get me wrong. I thought about doing exactly what you did. Personally, you should feel good about your purchase. You fit the perfect profile for someone who should attempt this.

My main thoughts were, of all the WDW resorts VB has the biggest risk. In three years, at the current pace of Maint Fee increases, VB could cost the same amount for you to rent points from someone vs owning VB. Not sure where you typically stay onsite, but some 2 bedrooms go for 185 points a week during low season.

This is when you have to think is the risk to own really worth it?

When this happens, I see many timeshares go into a tailspin.

 

[bpadair32]

On paper it does appear to be risk free...... Don't get me wrong. I thought about doing exactly what you did. Personally, you should feel good about your purchase. You fit the perfect profile for someone who should attempt this.

My main thoughts were, of all the WDW resorts VB has the biggest risk. In three years, at the current pace of Maint Fee increases, VB could cost the same amount for you to rent points from someone vs owning VB. Not sure where you typically stay onsite, but some 2 bedrooms go for 185 points a week during low season.

This is when you have to think is the risk to own really worth it?

When this happens, I see many timeshares go into a tailspin.

We generally go during the slow(er) seasons and get a 2 bedroom at BWV. That being said, which resort doesn't really matter to us, and from all of the research I have done (and it has been a lot) there seems to be only a few very rare times that we would not be able to get a 2 bedroom somewhere at the 7 month mark.

 

[DVC Doctor]

On paper it does appear to be risk free...... Don't get me wrong. I thought about doing exactly what you did. Personally, you should feel good about your purchase. You fit the perfect profile for someone who should attempt this.

My main thoughts were, of all the WDW resorts VB has the biggest risk. In three years, at the current pace of Maint Fee increases, VB could cost the same amount for you to rent points from someone vs owning VB. Not sure where you typically stay onsite, but some 2 bedrooms go for 185 points a week during low season
.

Annual dues = $8
Average rental rate = $12 (this is 50% more than annual dues)

If VB dues do go to $12, then the rental rates will probably be $18

I DO NOT think this is an issue to worry about

 

[djohn06]

Annual dues = $8
Average rental rate = $12 (this is 50% more than annual dues)

If VB dues do go to $12, then the rental rates will probably be $18

I DO NOT think this is an issue to worry about

I did a quick type and probably didnt explain all the factors that I considered. It's not a singular factor to consider when determining whether VB is a better option, rather multiple.

Also, I would not assume rental rates increase with annual dues. Your dues will go up every year regardless of the economy. If we have a dip in the economy you will not be able to increase rental rates at the same pace. Supply will be greater than demand.

Here is why I thought a safer play would be to just renting points from an owner vs buying VB and holding over a few years. I am not sure what was paid for VB, but I am just going to assume it was $48, which seems like a decent price during this market.

250 VB points at $48 pp along with CC = $12,500
3 years of VB dues beginning in 2016 (4 percent annual increase) = $6,534
Selling assumption in 3 years that you will lose about 12% of what you paid due to commissions, estoppel fees, etc = $1,500
TOTAL COST of VB $8,034

Renting
Contact owner that owns BWV and say I will give you $13 pp for the next 3 years who can book a 2 bedroom Standard room for you during low season. Total Cost 220 x $13 x 3 = $8,580

Being a non-owner of BWV will also mean that you will not always get your standard category 2 bedroom. Lets say 2 of the 3 years you did not land a standard 2 bedroom during low season, it would cost you an additional points. So you point total would look like this:
220 year 1/ 269 year 2/ 269 year 3. Total 758 points. You have to buy 8 points at $13 pp = $104

What if you never land a standard room (which can be very likely)? Over 3 years you would have to buy 57 points @ $13 pp = $741.

So if you wanted to stay at BWV over the next 3 years and cannot land a standard room in any of those 3 years, VB would actually cost you more than renting from a BWV owner.

You also may be able to rent for $12 pp at BWV saving you $660.

In addition, I haven't even factored in the time value of keeping your money in your pocket vs. having it tied up in DVC.

You could probably make this case for other DVC resorts in this current enviroment in which prices are very high and the chances of them continuing to go up is slim. That's why I think the current DVC model of becoming an owner has little financial benefit compared to renting. Resale prices along with maint fees are steadily decreasing the financial benefit.