From a purely financial stand point....

[Jon99]

Are there any potential long term downsides to the DVC that people have seen??? We are planning on buying into the BCV and I can't think of any...

[crisi]

1. You will commit, but financial circumstances will mean you won't take advantage of the vacations (airfare, meals, etc. will be out of reach due to unforeseen circumstances).

2. A Major Life Event with Financial Consequences will strike shortly after buying (Divorce, illness, job loss) and you will be selling - probably at a loss - particularly after you figure comissions.

3. Saving money by spending less of it is not the same as saving it in a savings account or 401k. That $10,000 could be worth a quarter million when in 40 years. Would you rather have those vacations, or a quarter million dollars 40 years from now.

4. You will become addicted and a "starter" 150 points will become 800 points, with the 800 point burden of fees. Your kids will wonder what you spent their inheretance on.

[Dancind]

Crisi, I'm sure you're trying to present the other side of the argument. I will be 89 in 40 years. Perhaps still able to enjoy that $1 million, but I know for sure I can enjoy the next 20-30-40 years of vacations. Our kids can earn their own nest egg.

Cost of OKW resale 230 points: $14,000
Annual dues on membership: $744

9 days a year at WDW with family: priceless

[Dean]

DVC is not for everyone. It's best for those that will go most years to WDW and who would stay on property most trips. It is not reasonable to be used routinely for the other points options or for exchanging.

[crisi]

I am simply trying to present the downside. I will shortly be a DVC owner - waiting to close - so none of these concerns was over riding for me. But Jon wanted to know the potential financial downside.

A lot of people say their only regret is not buying sooner. I do wish we would have bought before our last trip this last winter, but I'm sure glad I didn't buy 10 years ago. When I think about the financial stresses I've had since then, the health stresses, job stresses, the divorce, remarriage, one adoption, one child by birth - a DVC membership at that time would have been a burden. Fortunately, life changes.

[Granny]

Jon999.....crisi did a good job of identifying the potential financial problems you could run into. Granted, many of them are worst case scenarios, but you did ask for any potential long term downsides.

I think two things are important to keep in mind about DVC. The first, as Dean pointed out so well, is that you pay a premium for on-site accommodations at Disney and that the DVC points are not a good financial deal if you primarily use them to trade out to non-DVC resorts.

Second, DVC is not a savings plan or a capital asset. While there has been some growth in the value of points the past ten years, at some point they will diminish in value as we get nearer to the end of the contract (2042). So comparing DVC to a savings plan or a growth investment is not a good comparison.

DVC is an investment in quality vacations for the next 40 years. For my family, it is an investment in a frequency and quality of vacations we would not have been able to otherwise afford. At the end of 40 years, I expect the investment to be worth $0. I also expect to have a wonderful lifetime of memories.

[Jon99]

We just got married and we both like to vacation and we feel this is a good way to go... Not sure if its a money saving way to go, but as long as we don't get burned I will be happy...

[~Magical Princess~]

This is just my opinion (don't shoot the messenger) - I've analyzed the whole situation out along with my parents and we feel that it is in our family's best interests to "rent" - especially when you can rent for say $7 or $8 per point. We might not go to Disney EVERY year, or even every OTHER year, especially when the kids get bigger and those dues don't ever stop (for 40 years ...)!! Plus too, (unless you live in Florida or very close driving distanc ...) - AIRFARE is the killer (especially if you have a few kids ...) and then there's the price of tickets, and then there's the spending money .... etc., etc.,

Our motto is: Either stay at the values which we have no problems with, or "splurge" and rent points and we have all that we could ever dream of. We "can't" lose is how we view it.

Again, not the ideal response here on the Disney Vacation Club board, but nevertheless, my honest opinion! Good luck to all in whatever they decide!! :) And by all means, if you have the money then guess what you get to spend it on WHATEVER you want!!! How lovely it is to live in America where we have freedom and choices!!!

[Disney Doll]

All the posters bring up some very good points, very much so worth considering. DH and I decided to buy when we realized that after "X" number of years, the only cost for our accomodations at WDW would be the common charges, and in general, the common charges are still going to be less than the cost of the hotel rooms in years to come. This, of course, is only if you are going to plan to go to WDW at least every other year.

The down sides that everyone has shared are very valid points, and certainly worth considering. DH and I like the fact that we have the ability to take a great vacation every year(or more often when possible!;) ). The long-term financial gain isn't as important to us. The money we have spent on purchasing DVC could certainly have been invested elsewhere etc, but, as a nother poster stated, we have chosen to invest in our lives and memories.

[Jon99]

Another question which I failed to ask during the tour is this... Right now the yearly fees are a little under $4 per point, is there a cap to what they can charge over the 40 years????

[~Magical Princess~]

Someone will correct this if it's wrong but I believe there is NOT a cap on the dues. Pretty scary .. but nonetheless they (not Disney ... folks in general) - compare it to staying around "equal" to the value resorts prices or possibly moderate - meaning that even though prices do increase - it's not going to be by some life changing amount ....

Bottom line: value resorts do NOT equal the accommodations that DVC offers (ie., kitchens etc.,) - but if you are comfortable staying in a "hotel" room vs. a "home away from home" resort .... you'd not lose by "not" buying and either renting or being satisfied with staying with normal "value" accommodations. Sort of confusing I guess .. but in theory it works for us!!

We are planning on staying at OKW this fall on rented points, but then if we go back next year - if we can't rent points at what we want (i.e., $7 or even lower) - then we'll just stay at the values - no problems there!! To each his own right?

Good luck!

[Terry S]

I am a new member, but I am almost positive there is a maximum percentage the dues can go up to each year. I know I should know this, but I don't remember. One of the vets can post the number for you.

[disney6]

We find the value to be great for our particular family. We have four kids and are not allowed to stay in one room - always have to get 2 rooms. So that and having a kitchen for breakfast, snacks and most dinners (go out 1 or 2 nights out of five) make it a great deal for US. We are going on our 2nd 7day cruise in October (again, with 4 kids we need 2 cabins and therefore four adult "fares") which we would never be able to afford otherwise (much less take our parents in their own cabin too). Everyone must assess their own situation and go from there............

[wdeversole]

I believe the dues can go up by a maximum of 15% per year, although it hasn't happened yet and some years they have actually gone down - there was a thread recently which had a history of the dues.

[yesdisneyfool]

Now that you said it, I believe 15% is the max per year.

[CRobin]

Jon99, you're asking all of the right questions. DVC is a big financial commitment.

One more point about the dues - they only rise and fall based upon the cost to operate the resort, paying your property taxes, and reserving funds for capital improvements. By law, Disney cannot raise dues to "make a profit". All of the dues go toward the operations of and investment in the resort.

[caverill]

First...Is DVC for everyone...NO!

Everybody has different reasons for buying or not buying. You must be happy in your own mind with how you spend your money.

My DW and I decided that we wanted to vacation every year and living in Minnesota made Florida look pretty good.

The one thing I would like to stress (that other also have) is that DVC is NOT an investment like stocks, 401K, etc. We viewed it as a pre-paid vacation plan, which protects us from future hotel price increases.

I know you could invest the same amount in other things and make money or interest, but I would argue that if you vacation every year, you are spending the money anyway.

Look into the features, understand how it works, look at your own vacation habits, and make your decision on how your family will use it.

It works for a lot of people and doesn't work for others.

Good Luck,

[crisi]

Also look into your future.

Jon, you said you just got married. Do you own a house? Are you planning on buying one soon? If so, how will a committment to DVC figure into that.

Are you planning on kids? Will one of you stay at home (assuming you both work now, that is a significant change in financial circumstances for most people)? If not, what will your daycare expenses be? Will DVC fit into that?

I agree that if you are going to Disney every two years or more often anyway and will continue to do so, this is a great deal. I also think a lot of people don't look at how their life will change with kids - my friends were just telling me "we used to go on vacation twice a year, we haven't gone anyplace since we got pregnant over two years ago - no money, no time, and no burning desire."

[MikeBW]

From a purely financial point of view, we bought our points for between $57 - $62 (2 different purchases with MB) and points will be selling for $80 on June1. Not too bad of a return.

[Johnnie Fedora]

What do most people invest in their 401ks for??? A comfortable life in retirement, the ability to travel, etc. I think DVC is not an investment per say, but it will sure help me enjoy my reitrement more. And, it will help me to enjoy the many years until then too!!!

I wouldn't invest in DVC if you are unable to save for retirement at the same time. Personally, we looked closely at our budget and have cut some things out to accomodate DVC dues. We cancelled home milk delivery, magazines, portions of cable TV, cut back on video rentals, coupon clip, don't get take-out as much, etc. Most people can find an extra $100.00 in their monthly budget if you really look at what your spending on. Cancel that daily Starbucks extra fluffy frappy thingy coffee, $4.25 X 21 workdays a month =$89.25.

Now, if the wife can cut back on the Disney store purchases, we may be able to get more points. :p :D :eek:

[crisi]

MikeBW,

If you sell those points resale today, they will be worth between $60 and $65. Plus you will pay a commission, the one I'm buying has a commission of 12% So your points at top dollar are worth $57 each. Ignoring the money saved on vacations, and looking at is as simply cash in, cash out, you are currently losing money on your $62 a point purchase, a breaking even on your $57 a point purchase. Better than I'm doing with Lucent stock, but not by any means a good return.

[Jon99]

My position... She (we) bought a house about 6 months ago, we both work and we are hoping that once children arrive daycare will be minimal ( our mothers are very willing to watch them and then my wife teaches so she has summers off)...

We have thought this through pretty well, I put 16% into my 401K, we put another few thousand into a Roth IRA and she will recieve her teachers pension when she retires so we would not be doing this instead of retirement planning..

And to us, going on nice vacations is the one area we would like to spoil ourselves and the DVC seems like a nice tool for this goal... I just want to look back 20 years from now and say "Yes, we made the right choice"...

[MikeBW]

crisi,

Where did you get that $60-$65 per point? Someone on ebay was selling for $100 per point. My points are all at BWV which is sold out. I bet (if I was in the market) that I could get higher than $65/pt.
p.s. I also own Lucent - it's at $4.85:eek:

[TheWho]

Jon99,
You sound like you have things under control (financially). I'm in the same position as you but a couple steps later (I have two kids, one in daycare & one in kindergarten, wife's also a teacher). We do the rat race for 10 months a year and we decided we deserve a summer vacation at the BEST family resort in the world utilizing the BEST accomodations. The answer of course was DVC.

Good luck with your decision.

[Tinkrbell]

MikeBW-Just check out the Time Share Store.

Most resales average for about $62/pt. It really depends on how many banked, borrowed or used points you have for resale. Minus the commision, Minus annual dues that the seller pays (why should a buyer pay dues for part of a year they can't or didn't even use?) and possibly closing costs, you could end up with a LOT less than $62/pt


As for $100/pt on ebay, I don't know what their thinking???? Not even Disney has them for that price.

[crisi]

MikeBW,

I'm in the process of buying a BWV resale at $63 a point - and spent a little time watching the resale market. I didn't get the best deal - but did get what appears to be close to the going rate. The resale had been on the market a few weeks, and I paid the asking price - so at $63 a point the owner wasn't swamped with offers.

Check out the resale web sites for a good idea of what points are listing for....and remember that buyers usually offer a buck or two off the posted price (and often expect to get it).

Sometimes eBay is an amazing place :p

(And hey, I didn't own eToys).

Jon, you sound like you are doing darn well and have thought ahead. Good luck on your purchase.

[MikeBW]

Before this gets out of hand (like 5 people in a 1BR), my point was the price/pt has appreciated. When I bought in 1999, the retail price from Disney was $65 and it is going up to $80 on June 1.

[Caskbill]

Sometimes 'investment' return is more than just the current dollar value of the holdings, be it a stock, or a DVC point.

Even if my investment dollar wise was exactly what I paid for it, I would consider the 'value' received from DVC stays worth something.

If I pay $650 in dues and receive accommodations that would have cost me $3000 otherwise, then I look at the difference of $2350 sort of as a dividend.

If I paid $15000 for a stock last year, and it didn't go up a penny all year, but paid an annual dividend of $2350, I would be extremely pleased.

So owning $15,000 of DVC points is similar to owning $15,000 of say a Mutual Fund which paid a $2350 stock divident, then added $650 of my own money, and made a $3000 ressie at a DVC resort.

Exact same effect. It's all how you look at it. Now consider that I get that same 'dividend' every year. :D

Of course you can play all you want with the numbers and 'value' received, but I think the point is valid.

[Dean]

Originally posted by MikeBW
Before this gets out of hand (like 5 people in a 1BR), my point was the price/pt has appreciated. When I bought in 1999, the retail price from Disney was $65 and it is going up to $80 on June 1. The retail cost of buying DVC has increased (call it inflaction) and the resale value has increased but to a lessor degree and will start to decline eventuall. If one bought 2 years ago at say $65 pp (total including closing) and sold today at $60 pp (less the sales commisions), that's not bad. Assuming normal usage, one would lose only about $2500 on a 200 point contract and, as noted, the usage is definitely worth something.

[dianeschlicht]

You have gotten very good information on this thread. You sound like DVC would be a great plan for you. We purchased in '97 about 6 years later than we wanted to. Our only regret is that we didn't do it sooner. We thought we had to pay in full though, 'cuz DH didn't want another payment. We have LOVED our DVC and know we will continue to love it for another 42 years.