Maintenance fees

[Tdisney]

Can anyone guess as to what the maintenance fees will be near the end of their contract. I am a BCV owner. If we take the history of fee increases to be around 4-5 percent per year, are we looking at around $23 per point in 2042 ?

Seems crazy

 

[nabi]

Think I saw a thread somewhere that had the forecasted costs for MF's at a 3% growth rate.... from what I recall, getting out in 2042 will be a good thing!

 

[DizBub]

Can anyone guess as to what the maintenance fees will be near the end of their contract. I am a BCV owner. If we take the history of fee increases to be around 4-5 percent per year, are we looking at around $23 per point in 2042 ?

Seems crazy

Yikes! I hope not but by then it won't be my problem anymore.

 

[Illini Al]

$23 won't sound like a lot in 2042. Milk will be at $10 per gallon, and the very cheapest cars will run around $35,000.

 

[Tdisney]

there is a huge difference between 3 and 5 percent annually. Almost 10 dollars per point by the end of the contract

 

[chalee94]

Seems crazy

in 1982, tickets to wdw cost $14 per day. if someone had told you then that tickets in 30 years would go for close to $100, would you assume no one could afford to go in 2012?

the real issue is what inflation looks like overall and what wdw hotel rooms go for in 2040.

it sounds weird and it's worth discussing (as some owners will be on fixed incomes by then), but this is really just an issue of how money works relative to typical inflationary patterns...

 

[disneynutz]

As time goes on IMO the resorts will require additional maintenance and the dues will really increase. Any idea how much it will cost to re-plumb a resort?

BWV has already had some roof work done. At some point it will be cheaper to build a new resort using newer construction standards than to keep fixing the old building.

Bill

 

[Tdisney]

That is a good point. At some point when your contract gets closer to the ending date the contract will be worth less and less. I am concerned that at some point maintenance fees will be more then cash reservations and not being able to sell my contract. Also isn't there something in our contract with Disney that puts a max limit on maintenance fee increases ?

 

[Lynne M]

That is a good point. At some point when your contract gets closer to the ending date the contract will be worth less and less. I am concerned that at some point maintenance fees will be more then cash reservations and not being able to sell my contract. Also isn't there something in our contract with Disney that puts a max limit on maintenance fee increases ?

That cap on MF increases is per year, not for the life of the contract.

MFs are for operational expenses. Housekeeping, landscaping, property taxes,utilities, transportation, etc.

Those are the exact same costs that Disney pays for their non-DVC resorts, so I don't see any reason to assume that the cash reservation rates for comparable rooms would be significantly lower than MFs. That would mean that Disney would eat all of those cost increases for their own resorts, and not pass them on to guests in increased room rates. That the room rates would be less than the operational costs of cleaning the rooms, providing utilities, etc, and not even any profit on top of that. No hotel operator is going to do that.

As far as selling the contract goes, yes, it's going to be worth less and less as the years go buy. That's inevitable in a timeshare with an end date. Most timeshares are worth next to nothing at resale, when I bought DVC I assumed I would get a few bucks, at most, at resale. I wasn't aware that DVC ROFR'd contracts, and that there was sort of a 'floor' for resale prices.

The value of a timeshare is in its use, not in its resale price. I've more than gotten my money's worth out of what I spent on DVC over the years, so even if its resale price were $1, I'd be OK with that.

 

[luckyman_apd]

As time goes on IMO the resorts will require additional maintenance and the dues will really increase. Any idea how much it will cost to re-plumb a resort?

BWV has already had some roof work done. At some point it will be cheaper to build a new resort using newer construction standards than to keep fixing the old building.

Bill

What buildings do you know that need full plumbing replacements at 40 years old? My old house was over 80 years old and the only things it "needed" replaced over the years was a roof, windows, and siding. Everything else was cosmetic to the different owners. I'm not saying repairs won't be needed, but I think you are being a bit extreme. After all, the CR was the first resort built, and it is still going strong withou need for major repairs over the years.

 

[CMOORE185]

What buildings do you know that need full plumbing replacements at 40 years old? My old house was over 80 years old and the only things it "needed" replaced over the years was a roof, windows, and siding. Everything else was cosmetic to the different owners. I'm not saying repairs won't be needed, but I think you are being a bit extreme. After all, the CR was the first resort built, and it is still going strong withou need for major repairs over the years.

Excellent point, but my guess is if CR needed major repairs the cost of a room increase would be spread over all the non DVC resorts.
In the case of DVC if one of the resorts needed major repairs only the owners of that resort would see the increase in MF's. the rest of owners would be unaffected.

 

[Tdisney]

Lynne, what is yearly cap ? Is it a percent or dollar amount ?

 

[tjkraz]

As time goes on IMO the resorts will require additional maintenance and the dues will really increase. Any idea how much it will cost to re-plumb a resort?

That's that the reserves are for. As of 12/31/12, OKW had over $20 million sitting in the bank for future repairs. BWV was over $35 million. AKV $19 million...each with millions more added every year.

BWV has already had some roof work done. At some point it will be cheaper to build a new resort using newer construction standards than to keep fixing the old building.

"Already"? These resorts aren't roofed with black 30-year Owens Corning shingles. It's all part of maintaining the facilities...and it's been budgeted from Day One.

As for it being cheaper to rebuild than repair...not during the 50 year lifespan of our DVC contracts.

 

[WebmasterDoc]

Lynne, what is yearly cap ? Is it a percent or dollar amount ?

I think the annual cap is 15% (not counting Property Taxes). A larger increase would require a vote by the owners - there has never been an increase that large at any DVC Resort.

 

[disneynutz]

My plumbing post was meant as a "food for thought" example. We don't know what products were used during construction and when they may need to be replaced. Iron pipes tend to get plugged over time and millions of buildings have been re-plumed with copper. Other products have had design failures that have required re-plumbing. Replacing the HVAC systems will be expensive.

Are the reserves enough to cover all expenses?

Bill

 

[WebmasterDoc]

...In the case of DVC if one of the resorts needed major repairs only the owners of that resort would see the increase in MF's. the rest of owners would be unaffected.

The cost of major repairs/maintenance are already built into the annual fees - the Capital Reserve Budget is there to cover all anticipated repairs (roof, siding, carpeting, furniture, appliances, etc.) over the life of the property. Unanticipated expenses (like a hurricane) would be covered by insurance and not cause a direct increase in MF's - but possibly a future increase in insurance rates. That has already happened for all DVC resorts - even those minimally affected by a hurricane.

 

[drusba]

It could be as high as $25 (BWV at a 5% average per year increase) or as low as about $12 (BLT at an average 3% increase). If you are asking what is likely the lowest it will be it is probably what is based on 3% average per year increase meaning in $12 to $15 range by 2042 . Capital reserve portion of dues is there for projects like major roof replacement or other major repairs or upgrading. Personal belief is that the 2042 resorts will be around in their same configuration as now with of course usual updates and changes unless for some reason Disney itself goes out of business -- OKW has already been there for over 20 years and I do not view OKW now as something that has to be rebuilt within the next 20 years. Contemporary and Poly have been there since the early 1970s.

By 2042, paying as high as $16 or $17 or even more a point is likely not going to "feel" much different than paying $6 or less today. As a BWV owner of 16 years my dues have gone up about 84% in just 16 years but it does not "feel" like it is that much more now than 1997 (heck, the cost of a gallon of gasoline has gone up over 300% in that same period and that 84% increase is about the same as the price increase of a dozen eggs in the same 16 year period)

 

[abner1776]

Not my problem man....I expect to be pushin up daisies by then so my DD's can worrry about it. Hey...I'm leavin 'em the points...the MF's are their problem !!!

 

[CMOORE185]

The cost of major repairs/maintenance are already built into the annual fees - the Capital Reserve Budget is there to cover all anticipated repairs (roof, siding, carpeting, furniture, appliances, etc.) over the life of the property. Unanticipated expenses (like a hurricane) would be covered by insurance and not cause a direct increase in MF's - but possibly a future increase in insurance rates. That has already happened for all DVC resorts - even those minimally affected by a hurricane.

Not completely accurate. Take HHI for example. Dues were raised for a number of years due to unexpected needs of the resort. Reserves in no way can anticipate every possible capital needed.

 

[tjkraz]

Not completely accurate. Take HHI for example. Dues were raised for a numbers of years due to unexpected needs of the resort. Reserves in no way can anticipate every possible capital needed.

The list of "every possible" repair need isn't terribly extensive. The budget-setters know which items will need to be maintained over the years. We're talking about building interiors, building exteriors, grounds & common areas and parking lots. That's about it.

The issue with Hilton Head was siding that needed to be replaced several years earlier than anticipated. The money wasn't available, thus DVD/DVC leant it to the Condo Association. The loan was repaid over a period of 5 years.

The truly unexpected--damage from fire, flood or other natural disaster--is covered by insurance.

The HHI example appears to be the only blip over 22+ years and 10 resorts.