DVC RESALES
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Old 04-15-2013, 10:52 AM   #1
theguda
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DECISION TIME! Why I'm prob going to pass on buying into DVC

First off...thanks to everyone who has replied on a couple threads I've started about me looking into DVC. I really do appreciate all the feedback and comments. I'm 99% sure I'm going to pass buying into DVC. I just don't see it as financially a good decision.

The offer I have in hand is basically $10,500 for a 160 point contract with 160 banked points from 2012. Going back to my original post...I can rent points anytime I want for $12 without buying into DVC. So I need to compare the cost of buying into DVC vs the cost of just renting points whenever I want to go to WDW. I understand there are some ancillary benefits to being a DVC member...but we're flexible in our vacation times so I don't expect much of a problem finding the resort we want by renting points.

Looking at it from strictly financial standpoint...I pay $10,500 and get 320 points in 2013 and 160 every year afterward. Again, let's say for the sake of comparison that I rented those points each year with a average profit of $7 per point (I'm basing this # on the last few years of maintenance fee costs vs what people have been renting point for). So on aveage I'd "profit" $1120 per year. Divide my initial cost of $10,500 by $1120 and it will take me almost 8.5 years for my "profit" to match my upfront cost (remember, I started with 320 points instead of 160).

But this also doesn't take into consideration the interest I'd make on that $10,500 if I invested it instead (which I would). If I instead take that $10,500, invest it and get a moderate 5% rate of return...I'd have $15,600 at the end of 8 years. Now my recoup time extends to almost 14 years. I don't consider taking 14 years to recoup my initial cost as a good use of my money.

The beauty of this exercise is that it's easy to compare renting vs owning. Yes, I could use my points instead of renting them....BUT...the difference between renting and owning is still the same. I'm either "saving" by owning and paying a lower maintenance fees....but my upfront cost is huge....OR....I'm "saving" by renting for a larger amt per point with zero up front cost. Either way...the #'s end up similar.

I'm gonna pass on owning DVC and just rent points. For me, it just makes more sense although I'd LOVE for someone to prove my theory wrong because I would love to be a DVC owner...I just don't think it's financially worth it. Is there something I'm missing...a huge error in my #'s that I don't see? Again....I'M LOOKING AT THIS FROM A $ STANDPOINT. I don't have to be a DVC member to go to WDW anytime I want. To me, the best option seems to invest the money and rent points.

ALTHOUGH...if I bought and recouped my inital cost in 14 years....every year afterward I'd realize a massive savings. The contract ends in on 1/31/2054. So after my 14 year recoup time is done I'd still have 27 years of heavily reduced resort stays because all I'd have are the maintenance fees. I guess I could allow my daughters to benefit from this (they could take their families to WDW using my points when they grow up). So that is a pretty large benefit in my eyes.

Last edited by theguda; 04-15-2013 at 11:07 AM.
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Old 04-15-2013, 11:33 AM   #2
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That sounds about right

Honestly, I don't think DVC ownership makes financial sense to most of us. I definately spend more money at Disney by owning DVC. It is constantly calling to me. If fact, we bought a contract at VGC just so we can spend money on the west coast. We do it because we will have nicer rooms than we would want to pay for otherwise. Yes, I could have a room with rental points for less, or stay at a value or mod resort for less, but with a family of 5we enjoy the extra space, kitchen, washer/dryer, extra bathrooms. Our vacation times are not flexible. We have to book 11 months out due to work/school schedules.

DVC is not for everyone. Good luck with your decision.
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Old 04-15-2013, 11:33 AM   #3
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Owning is just a way for people who vacation at Disney every year to save some money on their room, it really isn't a club.

Disney makes money on selling contracts, then they make even more money by locking owners into repeat vacations. If the owners rent out a reservation Disney makes money off of the renter.

My point is that for Disney it's about money, for owners it should also be about money, it's a business decision. Disney does a great job of turning it into an emotional decision and buyers sometimes blur the line between owning and the magic of Disney experienced on property or on DCL. Nothing great is offered to owners that isn't offered to the general public and renters often receive many of the same discounts that owners do by mistake.

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Old 04-15-2013, 11:50 AM   #4
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Our payback period using our HELOC interest rate, difference between renting vs. MFs of buying and the initial buy-in was 12 years. That was assuming that rental and MF increases will be the same which could be completely wrong but at most that would swing my calculation by 1-2 years.

For us, we're young enough to see the life cycle of owing DVC... go while the kids are little and Disney is magical, go to Hawaii and other locales like when we're empty nesters/kids are older and then be able to take the grandkids one day. Since we bought DVC for the long-haul, the MF savings in the future were definitely worth it for us. But everyone has different circumstances.

From a pure numbers standpoint, I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.
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Old 04-15-2013, 11:58 AM   #5
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Quote:
Originally Posted by bisney
I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.
Yes, we'd probably go to WDW at least once per year for the next 10 years...but I'm not following your math.
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Old 04-15-2013, 12:12 PM   #6
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Quote:
Originally Posted by theguda View Post
Yes, we'd probably go to WDW at least once per year for the next 10 years...but I'm not following your math.
Reading through your post, I saw that you were looking purely from a payback period perspective (which I don't disagree with). Just wanted to point out a different way of looking at it: that DVC contracts also have a strong resale market (which you obviously know) which limits your financial exposure to much less than the $10,500 buy-in. If you go to Disney for 5 years (difference between renting and MFs for 160 points being ~$1,100 annually), there's a decent chance that you could net out at least 1/2 of the initial buy-in if you wanted to sell and walk away at that time.
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Old 04-15-2013, 12:45 PM   #7
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Quote:
Originally Posted by theguda View Post
Originally Posted by bisney
I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.

Yes, we'd probably go to WDW at least once per year for the next 10 years...but I'm not following your math.
you would not be dividing $10,500 by your annual cost, necessarily. you would also take into account whatever you expect to receive if you sell in 8 or 9 years...so if you could resell the contract in 9 years for $5000, that improves your numbers.

but you might not get much at all in 9 years, so who knows? there's nothing wrong with not buying if you don't think DVC suits you.
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Old 04-15-2013, 12:51 PM   #8
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From a financial perspective you are quite right it makes sense to rent, although you don't take into account the residual value of your DVC after the 10 years which could be as much as the interest you would make on your investment. I don't see you saving a huge amount of money over 10 years with DVC but at the same time I don't see you losing a ton either as long as you continue to go to WDW.

However, as it is a vacation and thus a luxury and not a necessity to me this is the kind of purchase where a little bit of what the heart wants should come into it. We bought DVC simply because we really wanted to, I wanted to own at my (soon to me two) home resorts, and I wanted to know that we would come back frequently. For us that was important.

While we all need to be sensible with money sometimes within reason and affordability we should buy what we want instead of what is cheapest, in the same way for example you might buy a sports car when a saloon would do....

I would say if your heart isn't in it don't buy but if you really want to own it and you can afford it then buy it and forget about what else you could have done with the money after all you can't line your grave with the stuff! The way we decided is that we have this year and next year some extra money coming in. We decided that if we save 60% of it which we are we can justify treating ourselves with the rest.
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Old 04-15-2013, 12:01 PM   #9
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I don't think there is anything at all wrong with just renting instead of purchasing DVC.
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Old 04-15-2013, 12:09 PM   #10
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If you aren't wanting to go to Disney on a regular basis till you are well past your break even point, buying doesn't make much sense. Renting points is certainly a more flexible option and is cheaper in the short term, while owning is cheaper in the long term.
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Old 04-15-2013, 12:27 PM   #11
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I can see you are a logical thinker but I also detect a hint that you are searching for an excuse to buy-in. Unfortunately the financial sense does not materialize for some time. It's a pre-paid vacation plain and simple. We are buying-in to force us to take vacations because we most likely would not go otherwise. Our kids are very little, so we will have years of travel ahead of us and if we do not buy-in we would most likely go every 3 years or so and would end up in a Moderate hotel or off-property. This ensures us that we will have a nice room and great memories every year

I know its hard to put a value on emotion, but it's something to consider.
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Old 04-15-2013, 01:45 PM   #12
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Quote:
Originally Posted by AddieAidey View Post
I can see you are a logical thinker but I also detect a hint that you are searching for an excuse to buy-in. Unfortunately the financial sense does not materialize for some time. It's a pre-paid vacation plain and simple. We are buying-in to force us to take vacations because we most likely would not go otherwise. Our kids are very little, so we will have years of travel ahead of us and if we do not buy-in we would most likely go every 3 years or so and would end up in a Moderate hotel or off-property. This ensures us that we will have a nice room and great memories every year

I know its hard to put a value on emotion, but it's something to consider.
This is US EXACTLY! We bought in for the same reason. Otherwise, we would find a reason NOT to take a vacation. We did not take on for 10 years before we started traveling to disney. We went two years in a row and then decided to buy in. Our kids are not so little anymore, but they still want to go! Our daughters love Disney so much they are looking into the DCP now.
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Old 04-15-2013, 04:01 PM   #13
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Owning DVC is certainly not for everyone and you've spent a good deal of time and effort analyzing if it was right for you and your family and decided it wasn't. That's fine..for us, we treat our adult kids and families and can need as many as 4 rooms..3 of which are 1 bedrooms..at any one time. I am grateful we can afford to give this gift to our family and sometimes extended family and friends..does not make financial sense in any way, but we love to do it and that is worth much to us. If I ever have extra points I will happily rent them out at the premium VGC now is able to command and if/when it doesn't work for us we'll sell and hopefully recoup a nice chunk. I could not be a renter..I am too OCD about controlling my own trip and being able to book/change/plot/plan with my own points whenever I want to. I like pretty much knowing that at 11 months I can get whatever I want at my home resort. I'm sure your family will have many wonderful trips without DVC...good thing we are all different so that there are people who want to rent out and people who want to rent in
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Old 04-17-2013, 08:47 AM   #14
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Quote:
Originally Posted by AddieAidey View Post
I can see you are a logical thinker but I also detect a hint that you are searching for an excuse to buy-in. Unfortunately the financial sense does not materialize for some time. It's a pre-paid vacation plain and simple. We are buying-in to force us to take vacations because we most likely would not go otherwise. Our kids are very little, so we will have years of travel ahead of us and if we do not buy-in we would most likely go every 3 years or so and would end up in a Moderate hotel or off-property. This ensures us that we will have a nice room and great memories every year

I know its hard to put a value on emotion, but it's something to consider.
Bingo! There's your answer.
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Old 04-17-2013, 09:09 AM   #15
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Totally agree with the post (and quote) above (Dave and Addie). If we didn't own DVC we would NEVER be getting a villa with kitchen, W/D, jetted tub, separate bedroom, etc....not on WDW property. We'd have to book moderates (for 5 of us in a room ) or get a condo type room off property...and we'd only go every 3 years or so. For me, staying on WDW property and eating at WDW dining (at least 1 meal per day...we usually do 2 though) is all part of the Disney vacation. Now, flying in and taking the ME (not messing with our luggage until it's delivered to our villa...sweet!!!) is also part of the Disney vacation. DH is not as sold on the flying in part when he sees airfare costs...our Xmas trip is sending him over the edge .

So, DVC just makes the Disney vacation magic for me...our 1st trip to WDW we drove and stayed off property in Kissimmee in a dive townhouse and we ate dinner at local Kissimmee restaurants (chains that we could eat at home...like Applebees) and packed sandwiches for lunch (blech). It really took from the magic a bit. Our second WDW trip, we stayed at POR and got the DP....ahhhhhh, that was MUCH better. But the third trip...2BR at BWV with DP....WOW!!!! And it's been WOW ever since!
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