Is DVC "worth it" for me?

[MJ6987]

So, I have created a spreadsheet to work out whether DVC is "worth it" for us. I have assumed we buy 100 points and use them to stay for 14 nights every other year by banking / borrowing. I have calculated that 100 points is enough for this, staying in a studio during the "Choice season" in a mix of BWV Standard room (using the 11 month window) and other more expensive studios (using 7 month window). I have assumed a contract buy-in of $90 per point (including costs) and used the current BWV dues and an assumed "Disney inflation rate" of 3.2% for both dues and hotel cash rates.

I have compared this with staying in Disney moderate hotels every other year, using a current quote for October 2014 and then taking off a 20% discount, assuming that this discount could be achieved every time. I have also assumed that we get interest of 3% on any bank balance.

See link below (hope this works for you):

https://docs.google.com/spreadsheet/ccc?key=0AuE0aH3V53rkdHBuZDRZcm03T1FXbDByU0hfek9sblE&usp=sharing

The "Bank Balance without DVC" shows what we would have in the bank if, instead of purchasing DVC, we put the money we would have spent on the contract and annual dues into a dedicated bank account paying 3% interest and used that to pay for the Disney moderate hotel every other year.

This money would "run out" after around 14-15 years (the breakeven point) and after that we would have been better off buying DVC. The total saving for DVC by 2042 is around $21,000. I have not taken into account the fact that DVC resorts are generally "better" than the Disney moderates.

Do you see any flaws in my logic (or the calculations - I have put this together quite quickly)?

Feel free to adapt and use this spreadsheet for your own circumstances (you will need to make a copy)

Thanks

 

[Dean]

So, I have created a spreadsheet to work out whether DVC is "worth it" for us. I have assumed we buy 100 points and use them to stay for 14 nights every other year by banking / borrowing. I have calculated that 100 points is enough for this, staying in a studio during the "Choice season" in a mix of BWV Standard room (using the 11 month window) and other more expensive studios (using 7 month window). I have assumed a contract buy-in of $90 per point (including costs) and used the current BWV dues and an assumed "Disney inflation rate" of 3.2% for both dues and hotel cash rates.

I have compared this with staying in Disney moderate hotels every other year, using a current quote for October 2014 and then taking off a 20% discount, assuming that this discount could be achieved every time. I have also assumed that we get interest of 3% on any bank balance.

See link below (hope this works for you):

https://docs.google.com/spreadsheet/ccc?key=0AuE0aH3V53rkdHBuZDRZcm03T1FXbDByU0hfek9sblE&usp=sharing

The "Bank Balance without DVC" shows what we would have in the bank if, instead of purchasing DVC, we put the money we would have spent on the contract and annual dues into a dedicated bank account paying 3% interest and used that to pay for the Disney moderate hotel every other year.

This money would "run out" after around 14-15 years (the breakeven point) and after that we would have been better of buying DVC. The total saving for DVC by 2042 is around $21,000. I have not taken into account the fact that DVC resorts are generally "better" than the Disney moderates.

Do you see any flaws in my logic (or the calculations - I have put this together quite quickly)?

Feel free to adapt and use this spreadsheet for your own circumstances (you will need to make a copy)

Thanks

You've done a tremendous job. I see no flaws in your logic off hand, in principle it's exactly the way I'd look at it. I probably would consider a couple of slightly different choices were I doing this. Not to split hairs but just so you have the benefit of what those are. First, I'd look at a slightly larger contract. Since you can get a better price and likely better contract if you go up to around 150-170, I'd consider that instead. I do realize it's quite a bit more points but, I think it's a better long term decision and if one is cutting it close to afford it, buying is likely a bad choice anyway. I'd also assume a slightly better long term investment return. I normally use 1% on about half the entry level resort and 8% on the other half. If one is buying a MUCH more expensive option, I'd simply increase the dollar amount on the 8% money, say for VGF 1% on 1/4 and 8% on the rest. In this case, I'd likely jump your assumed return up to 4-5% as an average, at least to show you the comparison. The other slight difference which can be a real difference is I normally assume 4% inflation to give me a cushion. I think you'll see each of those changes will add about 2 yrs each to your "break even" for each 1% change. Plus you get a better room and a few perks here and there but you have commitment and added risk.

 

[MJ6987]

You've done a tremendous job. I see no flaws in your logic off hand, in principle it's exactly the way I'd look at it. I probably would consider a couple of slightly different choices were I doing this. Not to split hairs but just so you have the benefit of what those are. First, I'd look at a slightly larger contract. Since you can get a better price and likely better contract if you go up to around 150-170, I'd consider that instead. I do realize it's quite a bit more points but, I think it's a better long term decision and if one is cutting it close to afford it, buying is likely a bad choice anyway. I'd also assume a slightly better long term investment return. I normally use 1% on about half the entry level resort and 8% on the other half. If one is buying a MUCH more expensive option, I'd simply increase the dollar amount on the 8% money, say for VGF 1% on 1/4 and 8% on the rest. In this case, I'd likely jump your assumed return up to 4-5% as an average, at least to show you the comparison. The other slight difference which can be a real difference is I normally assume 4% inflation to give me a cushion. I think you'll see each of those changes will add about 2 yrs each to your "break even" for each 1% change. Plus you get a better room and a few perks here and there but you have commitment and added risk.

Thanks for your suggestions. In terms of investment rates, the interest rate in the UK has been very low for a long time now. We get 3% by tying money up with a 3 month notice period and much less on our "instant access" savings account. Obviously that may change over time.

Interesting comment about buying a bigger contract. I have seen that 150 point contracts go for a bit less per point than 100 point ones. My thinking is that a smaller initial contract is lower risk in case it doesn't work for us as there is less capital tied up and a smaller contract would be easier to sell (I would imagine).

Used every other year, 100 points would give us, for example, 14 nights in a studio in October split between BWV standard view (9 nights) and AKL savannah view (5 nights). In reality we would also be able to go in September in a few years as our kids will be leaving school, which is even "cheaper" in terms of points, although the comparison point would also be cheaper.

We could obviously buy additional contracts in the future if we find we need more points, either at the same or another home resort.

 

[bakerworld]

We've owned 5 years now and I'm still a bit shocked. Are we expecting to 'break even'? Well, according to your spreadsheet I don't think breaking even is possible given our age . It's probably the most fun we've had wasting $$.

 

[MJ6987]

We've owned 5 years now and I'm still a bit shocked. Are we expecting to 'break even'? Well, according to your spreadsheet I don't think breaking even is possible given our age . It's probably the most fun we've had wasting $$.

Yeah, that's the sort of thing my wife says unfortunately I am an accountant turned buyer though so I can't help myself!

On a serious note though, you could still break even by selling the contract at some point if you don't think you will still be able to use it.

 

[Dean]

Thanks for your suggestions. In terms of investment rates, the interest rate in the UK has been very low for a long time now. We get 3% by tying money up with a 3 month notice period and much less on our "instant access" savings account. Obviously that may change over time.

Interesting comment about buying a bigger contract. I have seen that 150 point contracts go for a bit less per point than 100 point ones. My thinking is that a smaller initial contract is lower risk in case it doesn't work for us as there is less capital tied up and a smaller contract would be easier to sell (I would imagine).

Used every other year, 100 points would give us, for example, 14 nights in a studio in October split between BWV standard view (9 nights) and AKL savannah view (5 nights). In reality we would also be able to go in September in a few years as our kids will be leaving school, which is even "cheaper" in terms of points, although the comparison point would also be cheaper.

We could obviously buy additional contracts in the future if we find we need more points, either at the same or another home resort.

The reason I use 8% for long term money (5 yrs or more) is because I feel that's a conservative return on money actually invested. The reason I split it up is you'd use some of the money more quickly than 5 yrs and some much later. I am not going to let extra long term dollars sit around losing the inflation battle.

Your choice of course but the slightly larger contract gives you a likely better buy in price and puts a lot more contracts on the table giving a better chance of finding the perfect one, likely with a lot of extra points if you're diligent. I do think you're cutting it too close and if by chance DVC doesn't work out for you long term you can sell one about as good as you can the other. The smaller contract really doesn't help you in that regard. Cutting it too close now and adding later will further increase your costs, likely by about $1.5-2.5K in todays dollar comparing buying 200 now to 100 now and another 100 later (ignoring reduce value of the RTU). What the extra points does is give you options and a cushion. You're looking at points totals for essentially the lowest time in the smallest unit mostly for the cheapest unit. If you decide one trip to stay in a 1 BR or can't get standard view BWV, you simply wouldn't have enough points for the full trip. IF DVC did a reallocation that got you your 14 days might turn into 11-12 very quickly even with no other issues. If they changed the banking/borrowing rules in a way negative to your situation you'd be stuck.

Were I looking at the specifics you are I would not buy in unless I did one of 2 things. Either I'd go a little larger or I'd resign myself to the fact I'd likely have to supplement those points in some way. Maybe by a paid transfer, renting additional points, a cash stay, missing at least one year or an additional timeshare option. You can always rent the points if you have extra, if that option goes away it won't matter what you own anyway.

What Disney/Orlando experience do you have? Have you compared to non DVC timeshares? What other trips do you take?

Yeah, that's the sort of thing my wife says unfortunately I am an accountant turned buyer though so I can't help myself!

On a serious note though, you could still break even by selling the contract at some point if you don't think you will still be able to use it.

Unless DVC makes sense financially, it's foolish to buy. Get enough information to make a good decision up front (you're well on your way thinking wise) so you have less chance of having to worry about it later.

 

[MJ6987]

What Disney/Orlando experience do you have? Have you compared to non DVC timeshares? What other trips do you take?

Thanks again. We first visited WDW in 2008 and then 3 times again since then. The first time we stayed on Hotel Plaza Boulevard in WDW (what was the Regal Sun resort, now Wyndham (?) and the other three times in Disney moderates (POR, POFQ and Coronado). We have realised that we prefer staying at Disney resorts. Without DVC we wouldn't be able to afford to stay in the Deluxe resorts for 14 nights as the costs are much more than the moderates.

 

[Dean]

Thanks again. We first visited WDW in 2008 and then 3 times again since then. The first time we stayed on Hotel Plaza Boulevard in WDW (what was the Regal Sun resort, now Wyndham (?) and the other three times in Disney moderates (POR, POFQ and Coronado). We have realised that we prefer staying at Disney resorts. Without DVC we wouldn't be able to afford to stay in the Deluxe resorts for 14 nights as the costs are much more than the moderates.

So you don't have any knowledge of top non DVC timeshare resorts in the area? Do you have knowledge or experience of timeshares in general? Do you go on vacation otherwise, if so, would a timeshare be beneficial for those trips as well?

 

[MJ6987]

So you don't have any knowledge of top non DVC timeshare resorts in the area? Do you have knowledge or experience of timeshares in general? Do you go on vacation otherwise, if so, would a timeshare be beneficial for those trips as well?

No, I have no knowledge of timeshares apart from DVC, which I have researched. We do go on other vacations in Europe, e.g. Lanzarote, where we have tended to stay in Iberostar hotels (a Spanish company) plus short breaks in the UK or cities such as Paris, Rome, etc.

Can you stay in Disney hotels with non-DVC timeshares? Does it work out as efficient?

 

[Dean]

No, I have no knowledge of timeshares apart from DVC, which I have researched. We do go on other vacations in Europe, e.g. Lanzarote, where we have tended to stay in Iberostar hotels (a Spanish company) plus short breaks in the UK or cities such as Paris, Rome, etc.

Can you stay in Disney hotels with non-DVC timeshares? Does it work out as efficient?

You can potentially stay at DVC using none DVC timeshares on exchange, we do routinely. But we are empty nesters so we can take what pops up and tends to fit in. But it's not for the faint of heart as you can't make the reservation directly and for any system that would allow a direct reservation, it's not going to be a good exchange rate (think DCL using DVC points), If your other options work well and you don't plan to go other places in the US or other locations that are saturated such as MX, Caribbean, Canary islands; it might not be for you. Marriott has a few south Spain and the one near DLP. Another timeshare might be a compromise for WDW but give other options, it just depends.

 

[rsimon]

So, I have created a spreadsheet to work out whether DVC is "worth it" for us. I have assumed we buy 100 points and use them to stay for 14 nights every other year by banking / borrowing. I have calculated that 100 points is enough for this, staying in a studio during the "Choice season" in a mix of BWV Standard room (using the 11 month window) and other more expensive studios (using 7 month window). I have assumed a contract buy-in of $90 per point (including costs) and used the current BWV dues and an assumed "Disney inflation rate" of 3.2% for both dues and hotel cash rates.

I have compared this with staying in Disney moderate hotels every other year, using a current quote for October 2014 and then taking off a 20% discount, assuming that this discount could be achieved every time. I have also assumed that we get interest of 3% on any bank balance.

See link below (hope this works for you):

https://docs.google.com/spreadsheet/ccc?key=0AuE0aH3V53rkdHBuZDRZcm03T1FXbDByU0hfek9sblE&usp=sharing

The "Bank Balance without DVC" shows what we would have in the bank if, instead of purchasing DVC, we put the money we would have spent on the contract and annual dues into a dedicated bank account paying 3% interest and used that to pay for the Disney moderate hotel every other year.

This money would "run out" after around 14-15 years (the breakeven point) and after that we would have been better off buying DVC. The total saving for DVC by 2042 is around $21,000. I have not taken into account the fact that DVC resorts are generally "better" than the Disney moderates.

Do you see any flaws in my logic (or the calculations - I have put this together quite quickly)?

Feel free to adapt and use this spreadsheet for your own circumstances (you will need to make a copy)

Thanks

Any analysis has to take into account the depreciated/appreciated value of the points as well. Obviously if you take the contract out to its conclusion, there is no residual value, however, when you first purchase those points, they do have a value and it may appreciate as the BWV points have done based on the price when the points first went on sale.

Obviously at some point there the number of useful years has to be accounted for in the price per point, but I think when you first purchase the points, you still have an asset with a value that has to be taken into account.

For example, if you wanted to sell after 5 years, you are not out the $9000, you may in fact be able to break even on that purchase so you are only out the dues you have paid which is actually about 50% of the hotel cost.

 

[HokieGCC]

I have done this analysis comparing to Deluxe rooms and I see the breakeven point be in the 8-10 year range (assuming DVC is purchased resale). So, your conclusions seem reasonable to me comparing to Moderate resorts.