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-   -   DVC Total Yearly Cost? Hidden Costs? (http://www.disboards.com/showthread.php?t=3007629)

Goonie78 10-14-2012 01:07 PM

DVC Total Yearly Cost? Hidden Costs?
 
Hi,
I was planning our 2nd Disney vacation in two years and stumbled across this DVC re-sales option. I'm interested in breaking down the true cost of membership over a 30 year period (at which point it will expire).

Here is my example: say I buy 50 pts for $69/pt and closing costs are $350 so that puts me at $3700. So:

3700/30 years = $125/yr + 275 annual fee (at 5.5% per pt) = $400 to be a member per year

$400/50pts = $8/pt per year.

Are there any booking fees etc?

Also, when people sell their points are they allowed to sell them at a fraction or was the deed originally purchased at that small amount (say 50pts)? I see some folks selling 25/50/100 pts. If I just buy 50 pts am I still a full fledged member?

Thanks in advance, hope to join the club if cost feasible and it just might be...

Dean 10-14-2012 01:54 PM

Quote:

Originally Posted by Goonie78 (Post 46442057)
Hi,
I was planning our 2nd Disney vacation in two years and stumbled across this DVC re-sales option. I'm interested in breaking down the true cost of membership over a 30 year period (at which point it will expire).

Here is my example: say I buy 50 pts for $69/pt and closing costs are $350 so that puts me at $3700. So:

3700/30 years = $125/yr + 275 annual fee (at 5.5% per pt) = $400 to be a member per year

$400/50pts = $8/pt per year.

Are there any booking fees etc?

Also, when people sell their points are they allowed to sell them at a fraction or was the deed originally purchased at that small amount (say 50pts)? I see some folks selling 25/50/100 pts. If I just buy 50 pts am I still a full fledged member?

Thanks in advance, hope to join the club if cost feasible and it just might be...

Assuming your paying cash, that's about it plus any importance you put on the time value of the money paid up front. You will be responsible no matter the outcome, you know the "for better or worse" phrase. The lowest Disney has sold is 25 points but after that it could be 26, 39 or 58. For smaller contracts you'll see 25, 50, 100 & 150 fairly regularly. You'll be a member but 50 points will only get you a studio for 6-7 every other year roughly depending on the resort and season. Just realize there could be changes in just about everything including the points for when you go, maint fees even other fees could be added on likely banking/borrowing, etc. Spend some time getting acquainted before jumping into a timeshare.

cz4ever 10-14-2012 02:22 PM

Quote:

Originally Posted by Goonie78 (Post 46442057)
Hi,
I was planning our 2nd Disney vacation in two years and stumbled across this DVC re-sales option. I'm interested in breaking down the true cost of membership over a 30 year period (at which point it will expire).

Here is my example: say I buy 50 pts for $69/pt and closing costs are $350 so that puts me at $3700. So:

3700/30 years = $125/yr + 275 annual fee (at 5.5% per pt) = $400 to be a member per year

$400/50pts = $8/pt per year.

Are there any booking fees etc?

Also, when people sell their points are they allowed to sell them at a fraction or was the deed originally purchased at that small amount (say 50pts)? I see some folks selling 25/50/100 pts. If I just buy 50 pts am I still a full fledged member?

Thanks in advance, hope to join the club if cost feasible and it just might be...

Your numbers are a bit off, but you have the gist of it.

Buy-in cost: Using your example numbers, 50 * $69 = $3,450 + $350 closing costs == $3,800 total (you had an addition error)

Annual maintenance cost: The exact amount you pay per year varies depending on resort and how much it cost to operate and maintain in the previous year, including property taxes and the like. For the resorts on WDW property, the annual per-point maintenance fees ranged from $4.24 to $5.61 in 2012 (see THIS LINK). These fees increase annually as the costs to maintain and operate each resort increases. I'm not sure where you got the flat $125 fee for renewal, on top of the maintenance fees.

So the cost per point per year is your maintenance fee (ranging from $4.24-$5.61 in 2012) plus whatever you value the amortized cost of your initial buy-in. If you ignore the time cost of money, you're probably talking about $2 per point above the annual maintenance fees, so let's call it $6.50-$7.50 range per point.

There is no additional cost to book rooms, no per-stay fee, etc. And as you have probably noticed if you've hung out here long, there is an active market for DVC point rental where you can rent out your unused points for $10-$13+.

Of course, as Dean says, most DVC rules and perks are subject to change at any time. There are many reasons that DVD might choose not to change them, but they can if they decide it's in their best interest. And 50 points does not go very far.

Hope that helps!

Caren90 10-14-2012 08:51 PM

Don't forget the "hidden costs" or more accurately, additional costs: airfare, food/ beverage, park tickets, and merchandise purchases every time you visit WDW.

Stephen

DisWitt 10-14-2012 09:00 PM

...and be sure to note the restrictions on your reale points (because you aren't buying direct from DVC). No trading to DCL, ABD, hotels, or RCI.

erionm 10-14-2012 09:11 PM

Quote:

Originally Posted by DisWitt (Post 46446110)
...and be sure to note the restrictions on your reale points (because you aren't buying direct from DVC). No trading to DCL, ABD, hotels, or RCI.

Resale purchases have access to RCI exchanges as well as Club Cordial and Club Intrawest exchanges.

chalee94 10-14-2012 10:37 PM

Quote:

Originally Posted by DisWitt (Post 46446110)
...and be sure to note the restrictions on your reale points (because you aren't buying direct from DVC). No trading to DCL, ABD, hotels...

you'd pretty much be restricted from these anyway with a 50 pt contract due to the high point cost of trading out of the system...

disneynutz 10-15-2012 09:33 AM

Here is my 2 cents.

Disney has and will in the future change rules, policies, and perks. Some may have a negative impact on ownership.

You are committing to a Disney vacation every year or two until you sell. Your OOP for those vacations can be a few thousand dollars per year.

Currently some owners rent their unused points but it isn't guaranteed that Disney will allow it to continue as it is today.

Resale prices continue to move downward, good for buyers, bad for sellers. Expect that your contracts will be worth nothing if kept to term.

DVC accommodations tend to stay booked at a 85% plus occupancy rate by owners and Disney who rents the rooms for cash so availability can sometimes be a challenge.

DVC rooms show more wear than the other deluxe resorts. You have to remember that Disney pays nothing to maintain and operate DVC units, everything is paid for by the owners through their dues.

:earsboy: Bill




Deb & Bill 10-16-2012 07:21 AM

I'd plan ownership for 10 years instead of 30 years. I know we are on year 15 now with our initial contract, but fees continue to go up. At some point the dues will be prohibitive. As will park admission.

MrShiny 10-16-2012 11:38 AM

The rental market is a bit part of my calculations, as I often end up renting out points. As long as the point rentals outpace dues, that's great - and they are about double dues. Also rental rates will increase as rack rates go up - but historically much less than rack rates (for instance, it seems they were stuck at $10/point for a long time but recently have risen to $11-13).

If you intend to use DVC more years than not, then it certainly can be cheaper than booking directly in similar accomodations.

Note that the resake market has a bottom that Disney controls through the right of first refusal. But just what that bottom is, only Disney can say.

chalee94 10-16-2012 12:07 PM

Quote:

Originally Posted by MrShiny (Post 46461216)
Note that the resake market has a bottom that Disney controls through the right of first refusal. But just what that bottom is, only Disney can say.

a couple of pts to keep in mind about this:

*in the recent recession, disney largely dropped out of the ROFR business...so you shouldn't really count on "support" from that side. if buyers disappear, DVC won't have any interest in holding the points in inventory either (and they'll probably have analysts that see it coming before most of us do.)

*even if disney were ROFRing a lot more DVC contracts than they are at present...if the only buyer interested in your contract is offering $40 per pt, that is the best you can do. disney might think it's a great deal and take it from the buyer, but you still get $40 per pt as a seller. disney will not bid the contract higher and nothing can force a higher offer from a buyer if $40 is all they are willing to pay.

MrShiny 10-16-2012 12:23 PM

Quote:

Originally Posted by chalee94 (Post 46461592)
a couple of pts to keep in mind about this:
*even if disney were ROFRing a lot more DVC contracts than they are at present...if the only buyer interested in your contract is offering $40 per pt, that is the best you can do. disney might think it's a great deal and take it from the buyer, but you still get $40 per pt as a seller. disney will not bid the contract higher and nothing can force a higher offer from a buyer if $40 is all they are willing to pay.

Well, that means that there is almost always a market. ROFR means that you can always sell your DVC - albeit at below market prices. However if this is after you've extracted the value you intended from the membership, that can be a good thing.

chalee94 10-16-2012 01:33 PM

Quote:

Originally Posted by MrShiny (Post 46461794)
Well, that means that there is almost always a market. ROFR means that you can always sell your DVC - albeit at below market prices. However if this is after you've extracted the value you intended from the membership, that can be a good thing.

it just means that so long as there "is" a market, disney is the one who can take advantages of desperate sellers who are willing to unload their contract at firesale prices. if the economy tanks and the market largely disappears, disney can choose to have no involvement in the resale market at all...and just like in 2008, DVC owners who need to sell will have to take whatever offers they can find. those who expected ROFR to support the value of their contracts were kinda surprised.

fortunately, demand for onsite stays at wdw has been relatively solid (and that is ultimately where the value for DVC pts comes from).

considering disney has now shown a willingness to cut the perks available to resale buyers - and thus theoretically, the prices resale buyers would be willing to pay - i'm a little surprised to see this argument still being raised. DVC seems much more interested in direct sales than supporting resale values (although they will do the latter to the extent that it supports the former). i still think ROFR is mostly a hassle intended to drive some resale buyers to disney direct. we'll see how it pans out, i guess...

disneynutz 10-16-2012 01:51 PM

If Disney has new resort points to sell then that is what they push to buyers because that's where the money is. If there is a delay in new resorts being ready, then they sell more of the "sold out" resorts.

Their inventory comes from foreclosures due to loan and dues defaults. If their minimum sold out inventory drops, they may pick up some contracts through ROFR. BCV resales were a popular direct request so they picked up additional inventory a couple of years ago through ROFR.

Their business model is selling new, not maintaining value after the sale.

:earsboy: Bill


hydrotony 10-16-2012 02:09 PM

Here is one HUGE possible cost you may have...

People almost always sell points AFTER they have used up next years points. They can borrow from next year to use this year which means no vacation next year.

Check your sale details and see if you have points for immediate use OR you have to wait a year or more to first use your points.


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