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View Full Version : It seems like DVC is a screaming good deal, no?


GeoffM24
07-21-2004, 09:41 AM
I have read some posts from people saying that it either takes a long time to make it worth while or that DVC isn't that great of a deal. I have run the numbers and it seems to me that it is a screaming good deal!

My math:

I can buy 60 points off resale for $4,940 including closing costs. 60 points buys me a basic DVC room for 5 weekdays. The rack rate for AKL is $260 druing the period I want to go. Factor in roughly $260 in maintance costs per year for DVC property.

With these numbers the DVC pays for it self in a hair over 4 years! And that DOES NOT include the discount on park hoppers and other savings which makes the break even LESS THAN 4 years. This also does not factor in the value of the time share in 4 years when it will be worth at least as much as I paid for it. So in 4 years you have a free time share worth roughly $5,000 and spent exactly what you would have spent anyway.

Kick it up to Beach club with a $360 per night rate and I'm breaking even in a little over 3 years.

How is this not world's cheaper then not buying in?

spiceycat
07-21-2004, 09:48 AM
some of these people are comparing a 2-bedroom villa to a value resort - then the number won't add up. Or it takes them years to do it.

they aren't comparing like to like - a deluxe hotel room with a studio - 5 to 10 years.

also take into consideration the discounts. (yes I know that WDW probably won't take discounts forever - but for the next 5years they probably will so you need to take that into consideration).

Some of I do believe are other timeshares salespeople and do their best to make DVC look like a bad buy.

crisi
07-21-2004, 09:54 AM
Or they figure they'd never pay rack rate. If you never pay rack rate, it takes a little longer to pay off.

Or they are working with 150 points - which makes it harder to break even because 150 points for most of the year means more than a week in a studio. So if you are only going a week now, you are making choices like upgrading to a one bedroom, staying longer, going more often. Which adds expense.

We figured (I think) 6.5 trips.

GeoffM24
07-21-2004, 10:03 AM
So say 6.5 trips and then you have a free timeshare worth thousands which isn't "breaking even" that is making money.

jarestel
07-21-2004, 10:04 AM
Well, that's one way to look at it. Some of the things that MAY cause problems with your plan:

Many of us buy with the intention of only going once a year, but find we like the DVC experience so much, we end up taking multiple trips per year. Ring up some more points here!

If you have or anticipate having children, at some point you'll outgrow the "basic" DVC room and will require larger accomodations. Ring up some more points here.

A lot of the fun of DVC ( for us, anyway ) is inviting friends and family who have never been to WDW to join us. This definitely requires multiple rooms. Ring up some more points here.

I think you'll find that many people here who bought a small number of initial points, end up adding on ( ringing up some more points ) within a couple of years because we do enjoy the experience so much. Your numbers look great as long as you can stick to the plan. If not, be prepared to ring up some points! Good luck!

rocketriter
07-21-2004, 10:31 AM
I read posts all the time implying that DVC is not a good deal because it incites a family to go to WDW more often and spend more money. I just hope these posters are writing with a wink
;)
because DVC is an inanimate entity that doesn't incite anyone to do anything. If you choose to go more often or take more relatives, then God bless! It's a positive choice to take advantage of an opportunity that's made by a responsible adult, not a negative that can be blamed on DVC and factored against the presumed profitability of a timeshare purchase.

Mickmse2002
07-21-2004, 10:35 AM
I still maintain that DVC is a screaming good deal as it is a basic hedge against future inflation and price increases for rooms. There are lots of different ways to value points, rack rates, discounts, lost income potential if you invested the same money, interest rates, the price of tea in China and the list goes on and on. DVC is a screaming good deal as it provides first class accommodations at first class resorts for families to enjoy together.

CarolMN
07-21-2004, 10:47 AM
There is some risk in assuming you will be able to sell your "investment" in 5 years for what you paid for it. If Disney stops exercising its ROFR, prices will almost certainly decline.

Also, at some point as the number of years left on the contracts decline, so will the price. Individuals assess/quantify this risk diferently, but it is still there.

I agree DVC can be a good deal in the right circumstances, but I am not counting on "recouping" any of our initial outlay. Great if it happens, but it is by no means a sure thing.

Best wishes -

jarestel
07-21-2004, 11:09 AM
Originally posted by rocketriter
It's a positive choice to take advantage of an opportunity that's made by a responsible adult, not a negative that can be blamed on DVC and factored against the presumed profitability of a timeshare purchase.

Yep! But it costs money in order to do these things. If all you factor in is the cost of the accomodations, you'll definitely love your break-even point. Bottom line is everything associated with going to WDW does cost money ( food, tickets, transportation, etc), and if you want a reasonable estimate of costs, it should be considered. If you inferred anything negative from my post, you misunderstood the point.

Having made more than a dozen trips to WDW since joining DVC, I could compare the savings from the DVC accomodations vs staying in a deluxe resort and convince myself that I had "saved" a lot of money. But the "true" cost is way higher than just comparing room costs.

Lisa P.
07-21-2004, 11:12 AM
I can buy 60 points off resale for $4,940 including closing costs. 60 points buys me a basic DVC room for 5 weekdays. The rack rate for AKL is $260 druing the period I want to go. Factor in roughly $260 in maintance costs per year for DVC property.

Many people who calculate the costs of a timeshare consider two things: opportunity cost and annual fees. Opportunity cost is the cost of tying up your purchase monies, often figured between 5%-10% of the purchase price ($247-$494, in your case).

So this would place your ongoing annual expenses at approx. $507-$754 for 5 weeknights in a studio at OKW (only 4 weeknights during school breaks at the other resorts). If you include a Friday or Saturday night, then you reduce the length of your stay by at least 2 weeknights.

Considering that you would be making a commitment with your money, and depending on your anticipated travel plans, this could either be a great deal or a poor one. Many money-conscious people avoid paying rack rates and like to take advantage of special deals and discounts.

With these numbers the DVC pays for it self in a hair over 4 years!

And what if your best case scenario doesn't end up being as you would like to use the points? What if you decided that you'd like to spend a long weekend, using less vacation time from work? What if you wanted to visit during a more popular season? Then, your annual costs of $507-$754 (and 60 points) would not even provide a Sat/Sun 2-night weekend without borrowing. Certainly, if you are looking to make the most of the points, you would not choose to use them this way. But by only looking at the best case scenario, it's inaccurate to characterize DVC as a screaming good deal.

And that DOES NOT include the discount on park hoppers and other savings

A bargain is not a bargain unless you had planned to make the purchase anyway. If you would have purchased a length of stay pass, then you would see a DVC discount. There's no DVC discount on park hoppers. Look carefully at the DVC discounts to see whether they are purchases which you would normally expect to make. Since they're subject to change, it's wise NOT to count these benefits in calculations of costs anyway.

This also does not factor in the value of the time share in 4 years when it will be worth at least as much as I paid for it.

Careful there. Timeshares are not a financial investment. There is NO guarantee that they will be worth anything in 4 years. The past is not an indicator of the future, particularly when it comes to leisure expenditures. Do enjoy what you buy but don't assume any financial return. Let that be icing on the cake, if it happens.

pumpkinboy
07-21-2004, 11:19 AM
All of our calculations are different. Like Lisa P and many others I had to factor in opportunity cost, for which I used the cost of my mortgage (what is not used for DVC might otherwise go to pay down mortgage and save there). BTW, first rate analysis, Lisa P!

In my calculations, Buying BWV new (which you could do when we bought), the payoff period ended up in the high 9s, but still ended up being, as you say a screaming good deal for us. As a comparable, we used the average room cost of our last 4 trips (POFQ, Swan, Swan, AKL -all but the first with good discounts). Plus, I am not counting on being able to recoup my initial investment either, but it would be nice if we could (but then we wouldn't have "our own place" at WDW anymore).

For our non-US friends it has become an even better deal with the weakness of the US dollar. This may change with interest rates going up and possibly a smart Democrat coming into the White House to finally help the economy, but for now our weak dollar is to our foreign freinds' advantage buying into DVC.

Of course, now that we own, we need more points so we can spread out in the manner to which we have become accustomed.:teeth:

SoCalKDG
07-21-2004, 12:03 PM
"Then, your annual costs of $507-$754 (and 60 points) would not even provide a Sat/Sun 2-night weekend without borrowing. Certainly, if you are looking to make the most of the points, you would not choose to use them this way. But by only looking at the best case scenario, it's inaccurate to characterize DVC as a screaming good deal."

So you pay cash for the weekends. Thus you get a major discount on weekdays, and pay the same amount on weekends(less since you get a DVC discount) like you would if you didn't have a DVC membership. It is a great deal. Many people already move out on weekends to maximize value. Having less points to just cover 5 weekdays, combined with paying cash on weekends does the same thing.


"There is some risk in assuming you will be able to sell your "investment" in 5 years for what you paid for it. If Disney stops exercising its ROFR, prices will almost certainly decline. "

I keep reading this, but would it really go down? Because many of the DVC's are attached to regular hotels(BW, BC, WL) the cost of regular rooms will always keep the DVC rooms up. If Disney charges $400 per night for their rooms 5-10 years from now, point value isn't going to drop to $50 per point. This would allow people to get studios for $65-$75 per night. Won't happen. The demand for points would be higher than the supply, keeping up the cost. Now if Disney goes downhill, thats another matter. All my opinion of course.

GeoffM24
07-21-2004, 12:56 PM
Points will 100% have value until they expire and even then they might have value if they give you the ability to buy into a new timeshare etc.


While I agree that the value will decrease as the expiration date approaches I have zero concerns about them not having value at any point in the next 38 years. As long as they buy rooms, they have value.

spiceycat
07-21-2004, 01:09 PM
do you use opportunity cost when you buy a car?????

sorry folks this is not a big time expense - you are not paying $100,000 or more.....especially buying until a 100 points.

I looked at it as buying a car (yes a more expensive car) - but in the long run - much, much better for me and my family.

I would have brought the tickets that I did? - well at that the time we were going to WDW 2 to 3 times a year - so yes I have increased my visits - but the time in the parks (since they did away with the free passes) not really - we go alot - but we don't to the parks alot. there is a big difference.

this might change if DVC comes out with a good discount on the annual pass.

oh some people actually have will power (I don't....) and stick to the previous vacation plans......

Now my food prices have gone down - why - no longer eating everything in WDW restuarants. I have allergies so this was a big PLUS for me. The grocery prices in Florida are not greater than what I pay at home. You would need groceries anyway. I only shop off-site.


I try to get tickets when I see a good sale from a known seller of WDW tickets. They do happen.....

rinkwide
07-21-2004, 03:26 PM
Originally posted by Lisa P.
There is NO guarantee that they will be worth anything in 4 years.

Are you impling DVC contracts might be worthless in 4 years?

Try and tell that to the early buyers who bought OKW back when it was called DVC.

st92jmdc
07-21-2004, 03:44 PM
It's a GREAT deal. How many of us contantly say that they wish they had done it earlier?

The only "bummer" is that there is no "investment" after 50 years (SSR). Other timeshares are owned property and could be sold 5 years from now, if need be.

But I don't care.

tjkraz
07-21-2004, 03:51 PM
Originally posted by GeoffM24
While I agree that the value will decrease as the expiration date approaches I have zero concerns about them not having value at any point in the next 38 years. As long as they buy rooms, they have value.

I agree they will have SOME value, but it's hard to predict exactly what that value might be. DVC has a vested interest in keeping resale prices within a stone's throw of prices for "new" contracts. Therefore, they will exercise Right of First Refusal on any contract that they think is changing hands at too low a price.

The net result is that resale prices are set more by ROFR than they are by supply and demand.

It's conceivable that DVC at some point in the future, DVC could determine that the timeshare market is saturated and stop building new resorts. If that happens, they would have zero interest in exercising ROFR. Prices would then be 100% dictated by supply and demand. And, it's impossible to predict what might happen to resale prices under these circumstances.

I think you are absolutely correct in the DVC can pay for itself in a very short period of time. Personally, I think your only mistake is dwelling too much on the "value" of your points throughout your ownership. That really is a big unknown. The only certainty is that you will have a great place to vacation for the next 38 years at a great price. IF you should decide to sell the contract at some point, sure it will have some value. But it's nearly impossible to determine what that value might be in 5...10...20...30 years.

WithDisneySpirit
07-21-2004, 03:53 PM
Yes, GeoffM24!!!! I agree with you completely::yes::

That is why after purchasing 230 OKW points several months ago and not having been home yet (October:teeth: ),
I have not suffered even one poor nights sleep:earsboy: I am so excited about the next 37 or so years of vacations with my family:hyper:

Are you all set to buy DVC?

Lisa:sunny:

spiceycat
07-21-2004, 04:07 PM
I think some people would like DVC to be treated like the other timeshare in the area - other words you can get on the resale market for half it value (or even less).

I don't think this is going to happen period. Why? think about it folks -if DVC is not interested in buying back DVC - yes the value will decrease - but WDW will not let it decrease that much - they have a vested interest in kepting DVC up and in good shape. they will get the property BACK in 2042 or 2054. RIght now CRO has little trouble renting DVC properties -do you see that changing???? We only get penality if we cancel 60 days before - another words in 60 days or less - CRO can and will generally rent the property. Most hotels would love that turn around - CRO does it all the time.

too many people want to stay ON-SITE - the DVC resorts are the only on-site timeshare (no matter what Fairfield says)....as long as that is true - the demand will only increase.

I brought in 93 - of course with this latest price increase if I wasn't already a member - I don't think I could afford it.....It has become very high price.

HUFF590
07-21-2004, 04:45 PM
All I to say I really dont care what I paid .or how long it will take to pay for itself, I dont rent points, I just love to go on vacation at WDW and the DVC resorts, I NEVER worry about how much or how much that, my DW and I just plain love it ,so dont woory about making money or if you lost money a true DVC member just plain loves WDW and family values. Injoy relax have fun.:sunny:

Lisa P.
07-21-2004, 10:56 PM
Are you impling DVC contracts might be worthless in 4 years?

Not at all. The emphasis here is that timeshares (plural, in general) do not have the kind of reliable stability people may believe when they look at past resale history. They are a leisure/pleasure purchase which have NO guarantee of return. Worthwhile, yes. An "investment," no. Anything could happen to our economy and travel in 4 years. It's not like a bank CD or a more tangible investment.

Spiceycat, I don't consider opportunity cost with a car purchase because a car is more of a necessity and the depreciation to zero value is so rapid. A timeshare is a longer term commitment to annual dues and it's definitely not a necessity, just a very nice way to allocate my vacation lodging budget money. :)

Dean
07-22-2004, 06:32 AM
Originally posted by rinkwide
Are you impling DVC contracts might be worthless in 4 years?

Try and tell that to the early buyers who bought OKW back when it was called DVC. Compared to today's value, it's unlikely the existing resorts will go up in value and at some point will start to go down in resale value. IF DVC stops the ROFR, it will be harder to sell at the same price resales go for now even if many are listed at that price.

Obviously there are many ways to look at the value. Comparing to rack rate at a deluxe isn't one of the better ones. Actually comparing to rack rate anywhere isn't at all reasonable. The real question is what would you spend if you didn't own DVC and how would you use DVC in place of those trips?

I think Lisa's post is really right where you need to be in a thinking process. As she mentioned, 60 points won't get you a studio anywhere except OKW or adventure time, when you could get AKL as low as $119 per night with the right code. Plus you wouldn't get housekeeping which is important to som. You have left out the time value of the cash investment, something that should be included or else the interest if one finances.

A more reasonable approach to value puts DVC costing about the same or minimally less as a moderate with discounts, assuming you use it just for DVC studio. Maybe a little less if you ONLY use it for weekdays. 60 points may be too restrictive for most people as well unless you're looking at less than a trip a year with banking and borrowing.

pumpkinboy
07-22-2004, 11:19 AM
Originally posted by Lisa P.
...I don't consider opportunity cost with a car purchase because a car is more of a necessity and the depreciation to zero value is so rapid. A timeshare is a longer term commitment to annual dues and it's definitely not a necessity, just a very nice way to allocate my vacation lodging budget money. :) Actually, we figure that putting off replacing our '93 Mazda and '99 Caravan for a few years (and waiting to replace cars after that) will save enough to cover our DVC purchase. Not that these are coming from the same household accounts anyway, but, driving an old car for a longer time is a really good way to save money. Anyway, our calculations have us covering DVC purchase plus opportunity costs in another 7 yrs, which will put our mental book value down to zero, so everything after that is gain.

SoCalKDG
07-22-2004, 12:18 PM
I think Lisa's post is really right where you need to be in a thinking process. As she mentioned, 60 points won't get you a studio anywhere except OKW or adventure time, when you could get AKL as low as $119 per night with the right code. Plus you wouldn't get housekeeping which is important to som. You have left out the time value of the cash investment, something that should be included or else the interest if one finances.

60 points will get you 5 days at any of the resorts about half the time. You can get a room at OKW for as low as 40 points, or BWV for 45 points. Using a $7 cost per point(this can be debated elsewhere), you are talking a cost between $280 to $420.


Now compare that to AKL, as you mentioned, at $119 a night, you get $595. This doesn't include tax, which brings us to around $670. So for the five days, you can save between $250 to $390.

This doesn't even take into account that AKL will go up in the coming years(I know dues can go up also), which will result in an even greater savings.

mydogdrew
07-22-2004, 01:01 PM
"This doesn't even take into account that AKL will go up in the coming years(I know dues can go up also), which will result in an even greater savings"

Based on the last few years, the price of cash rooms vs. dues inflation has been a concern. I think we would all be happy if these moved relative to each other in which case you could remove the inflation factor from your list of concerns. In any event, you can be sure that if the annual dues does overrun the cash price at some point in the future, your timeshare investment will have no real value any longer. This is one of the reasons I place no value on the extra years at SSR.

SSRex
07-22-2004, 01:33 PM
We just returned from a 5 night Sunday-Thursday stay at BCV in a 2 bedroom. The WDW official site lists that same room as $545 per night and that is in the Value Season. I used 200 DVC points.

Including tax, I figured it would have cost me $3,038.38 for Cash.
Dividing that by the 200 points used, that's a $15.19/point value.
Sure makes the idea of renting at $10/point sound like good deal.

Based on my SSR purchase price of $79/point, I paid $11,850 for my 150 points. I can do three of this same trip in the first 4 years.

That would have cost me at least $3,038.38 x 3 = $9,115.14 if I had paid cash. So I could break even during trip #4 in year #5.

Yes, that is without taking into account the dues. $3.80/point x 150 points x 5 years = $2,850 (yes, dues can and will increase).

Still looks like a pretty good deal to me. We also saved 10% off on meals at Cape May, Rainforest Cafe, renting mouseboats, & DisneyQuest tickets as well as valet parking without the $6/day.

Most of all, could we even have gotten a 2 bedroom villa for cash and if not where can a family of 6 stay in a single room (nowhere, else, but the FT. Wilderness cabins and they have a single toilet.

We got a full kitchen, private master bedroom with king bed and whirlpool tub and washer and dryer. It was better, not just good deal. That is the part that sold me, the rooms, not just the cost.

Would I, could I pay $95/pt, probably not, I was smart &\or lucky.
I hope to be happy with it for the next 20 years plus & then let my kids enjoy it for the remaining 30 years. Should have done it sooner.

champagne27
07-22-2004, 01:48 PM
Ok - I have been tossing around whether or not buying DVC might be a "good deal" for us and thought this thread might answwer a couple of questions.

Is there a cap on how much the yearly maintainence fee can go up each year?

Also, is this fee due in full at the renewal or home month date?

Does this work for anyone who would only go once every 2-3 years?

I thought it might work out if we bought 150 or so points and only went every other year for 7 nights in a 2 bdrm. That would allow us to bank/borrow as needed. Does that work for anyone else?


Thanks for any feedback - Karolyn

crisi
07-22-2004, 02:06 PM
Ok - I have been tossing around whether or not buying DVC might be a "good deal" for us and thought this thread might answwer a couple of questions.

Is there a cap on how much the yearly maintainence fee can go up each year?

15%

Also, is this fee due in full at the renewal or home month date?

January (IIRC), some people choose to pay monthly

Does this work for anyone who would only go once every 2-3 years?

We go every other year. Works great.

I thought it might work out if we bought 150 or so points and only went every other year for 7 nights in a 2 bdrm. That would allow us to bank/borrow as needed. Does that work for anyone else?

Exactly what we do.

tjkraz
07-22-2004, 02:20 PM
Originally posted by champagne27
Also, is this fee due in full at the renewal or home month date?


As crisi said, they are normally payable each January. If desired, DVC can also set you up to pay 1/12 of your annual dues as a direct debit from your checking account on a monthly basis. There is no additional cost for this--compared to paying in one lump sum, it's like getting an interest free loan.

Also, if you make your initial point purchase from DVC they can finance you for a term up to 10 years, with the monthly payments coming right out of your account. Of course, you can buy older contracts cheaper on the resale market, or finance yourself (likely at a lower interest rate.)

jarestel
07-22-2004, 02:58 PM
If you think it's a screaming good deal, it's a screaming good deal. No need to analyze it any further. Let us know when you decide to buy so we can welcome you home!

Dean
07-22-2004, 04:49 PM
Originally posted by SoCalKDG
60 points will get you 5 days at any of the resorts about half the time. You can get a room at OKW for as low as 40 points, or BWV for 45 points. Using a $7 cost per point(this can be debated elsewhere), you are talking a cost between $280 to $420.


Now compare that to AKL, as you mentioned, at $119 a night, you get $595. This doesn't include tax, which brings us to around $670. So for the five days, you can save between $250 to $390.

This doesn't even take into account that AKL will go up in the coming years(I know dues can go up also), which will result in an even greater savings. Dues and room rates will likely all go up. Unless you buy those points at BWV, you will be able to get standard view so I don't think you could count that. There's no doubt that if one does just a studio and NO weekend days you can do well. The problem is that that's not how most people travel and stay over time.

MarriedAtDisney
07-23-2004, 01:44 PM
I have one other "value" to cook into this discussion.

I have been a notorious workaholic and until recently had never taken more than a few days off at a time and never more than a week at a time in the 15 years I've been working since college.

Having bought into SSR last year, I now have a "paid-for" vacation every year. Well, at least a "mostly" paid for vacation since I'm now stringing two sun-fri stays together and paying cash for a Fri/Sat night stay. (first trip "home" is in sept with a week at SSR and a week at Vero)

I guess the point is, this whole discussion comes down to what's important to you and in my case this is one way for me to force myself to take a two week vacation every year for the price of dues and two "cash" nights.