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Old 11-30-2014, 07:54 PM   #1
Joshuy
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Cheapest DVC property per point? Look at annual fees

So I thought I’d write a post in case anyone else wanted a math heavy analysis of DVC point cost. I went for my tour with Disney and was sold. (My parents were already members and we were already interested so it wasn’t a hard sell). When the guy was talking to me, I kept getting a sense that he wasn’t telling me the complete math story of what it was costing me. It took me a while to figure out what was bothering me and the following is how I made sense of it….

1st of all, I’m basing all my math on resale prices.

If you look at straight cost per point, at a place like the timeshare store, costs are ranked as follows.

Cheapest to most expensive on initial cost
1. Vero Beach $59/pt
2. Hilton $65
3. OKW $67
4. Saratoga $75
5. Boardwalk $79
6. Animal Kingdom Villas $79
7. Wilderness $80
8. Beach Club $93
9. BLT $100
10. Aulani $105
11. Californian $132
12. Floridian $145

Seems like if I want to buy a ton of points cheaply I should buy Vero Beach. (I'm tempted!)

Remember though that these are 50 year contracts. So the total cost of ownership includes
Initial cost plus yearly fees x 50 years.

So for example if I bought 100 BLT points at $100/pt, my initial cost is $10,000. Let’s say the yearly fee stays at $5/pt/year then my yearly fee is $500. So my total cost for ownership is $10,000+$500x50=$35,000. So the first thing I learned was that the initial cost is ONLY 28.5% of the total cost of membership. The annual fees is the major cost of ownership. Each $1 difference in annual fee between properties is the same as paying a WHOPPING $50 difference in initial price per point for a membership.

So how do annual fees stack up? They vary widely.
Annual fee
1. BLT $4.78
2. Saratoga $4.91
3. Californian $4.94
4. Floridian $5.41
5. OKW $5.41
6. Beach Club $5.79
7. Wilderness $5.93
8. AKV $5.97
9. Boardwalk $6.01
10. Hilton $6.28
11. Aulani $6.44
12. Vero Beach $7.75

Also, over 50 years, I would get 50x100 points which is 5000 points total. $35,000/5000 points=$7/point. That is how much each point costs me. So if a stay cost me 250 points for a week let’s say, then that is $1750 for a week. So I decided to take annual fee into account and reorder which points are cheapest per point over the life of the contract. So for a 100 point contract, a person gets 5000 points total, and I repriced the contracts per point of the 5000.

So how does this reorder things? If you take annual fees into account, then it looks like this….
1. Saratoga $6.41/pt
2. OKW $6.75
3. BLT $6.78
4. Wilderness $7.53
5. AKV $7.55
6. Hilton Head $7.58
7. Californian $7.58
8. Boardwalk $7.59
9. Beach Club $7.65
10. Floridian $8.31
11. Aulani $8.54
12. Vero Beach $8.93

So while Vero Beach seems like a steal initially, it becomes by far the most expensive DVC property to own. BLT which seems expensive initially becomes the 3rd cheapest property to own.

One last adjustment. The contracts expire at different times if you buy resale. So what happens when you take the length of ownership into account? (I googled the info-can't post links yet)
So the cost for Beach Club would be initial cost + annual fees x 27. The total points would be # points purchased x 27.

Taking this into account then the ranking from cheapest to most expensive per point looks like this…
1. Saratoga $6.83
2. BLT $7.00
3. AKV $7.85
4. Californian $7.87
5. OKW $7.89
6. Floridian $8.37
7. Aulani $8.67
8. Hilton $8.69
9. Wilderness $8.89
10. Boardwalk $8.94
11. Beach club $9.23
12. Vero Beach $9.94

BLT becomes the 2nd cheapest property to own. Vero Beach becomes even worse. Floridian is nearly 16% cheaper than Vero Beach!! And the contracts with shorter time frames do worse as well except for Saratoga.

Caveats (because there are always some)….
1. If you are planning on reselling your points at sometime, then you have some extra steps to take into your calculations
2. The shorter time frames may be better “worth it” because you will lay out less money overall
3. Home resort matters (that’s why we don’t all rush out and buy Saratoga Springs)
4. Annual fees will change (I know) but the principle won’t (that annual fees really matter A LOT).

So my main point is that the initial price per point doesn’t really matter nearly as much as annual fee which seems small but adds up. Length of contract matters too. It is the lack of discussion on annual fee that made the math not feel right when I was talking to the DVC rep from Disney. Remembering this is what keeps me from buying a ton of Vero Beach points.

So here you go… (I have a google spreadsheet but I can't post links yet).
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Old 11-30-2014, 08:34 PM   #2
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That's pretty good math .by your estimate I am right in the middle of most of it since I own at okw and bcr just the way I like it .
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Old 11-30-2014, 09:20 PM   #3
Joshuy
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One last thing, financing the initial cost blows the finances out of the water. Don't do it. I suppose if you could buy Vero Beach cash but had to finance Grand Floridian for the same number of points, then the higher annual fee functions as the interest cost to a certain extant.
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Old 11-30-2014, 09:35 PM   #4
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Good info. A couple of additional thoughts. Maybe I missed it but I didn't see the Time Value of Money accounted for. When considered it will spread the resorts related to the purchase price and favor the cheaper resorts in the final analysis. Annual MF will be increased in a compounded way so it'll also exaggerated the cost related to fees, spreading out the resorts in that listing as well. Lastly, there are 2 resorts where fees are likely to increase (or cont to) more than the rest, BLT & VGF. It won't make a big difference in the actual long term costs other than to put SSR as an even cheaper option comparatively and likely to move BLT to maybe 5 or 6 looking at long term costs for the same points, assuming resale.
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Old 11-30-2014, 09:41 PM   #5
djohn06
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Love this post. I don't claim to be a "math guy", but I know enough about the resorts to say this is good enough.

One last variable I would add would be class of room, per resort. When most people buy into a resort, I believe the first or second question that pops in their mind is, how many days can I stay here. In your example you used 100 points as a basis. However 100 points isn't the same vacation experience at every resort. For example, this is what 100 points gets me during Dream season in each resorts lowest category (Sun - Thurs). I am going to stick with all Studios for now since its a low point amount:

AKV - 10 nights in a value studio
Aulani - 5 nights (Choice season estimate)
BLT - 5 nights STD
BCV - 6 nights
BWV - 7 nights STD
VGC - 5 nights (Choice season estimate)
VGF - 4 nights STD
HHI - 7 nights
OKW - 7 nights
SSR - 7 nights
VB - 6 nights
VWL - 6 nights

What this tells me is a couple things. In order to have the same amount of days at WDW resorts, when compared to AKV I need anywhere from 130 to 210 points at the other resorts. I think you would need to quantify this difference on the front end as well as with maint fees going forward to get a clearer picture. If you factor in this difference , where do you lie?
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Old 11-30-2014, 09:49 PM   #6
Joshuy
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@Dean
Totally agree. I dodged the math of time value of money because people use their money so differently and invest very differently, and my math has limits.

Also, I'm at BLT and I have a hope that the fees will stay low but the reality is no one knows. Which means that the majority cost of membership is unpredictable.

@djohn
I go through this math when I'm thinking about padding my BLT membership and I want "just points" for the sake of having points. Not thinking about 11 vs 7 month windows and all that.

So going backwards from I want to be able to have a 1 BR suite for 7 days at dream season that I can book 11 months out, then the calculation I think would be different. I'd have to work that out. That's a good way of thinking about it.
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Old 11-30-2014, 10:10 PM   #7
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GREAT POST!!!!!

Thanks!!
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Old 11-30-2014, 10:25 PM   #8
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Quote:
Originally Posted by Joshuy View Post
@Dean

@djohn
I go through this math when I'm thinking about padding my BLT membership and I want "just points" for the sake of having points. Not thinking about 11 vs 7 month windows and all that.

So going backwards from I want to be able to have a 1 BR suite for 7 days at dream season that I can book 11 months out, then the calculation I think would be different. I'd have to work that out. That's a good way of thinking about it.
Josh - Same here. I bought 200 BLT first, and it is very hard to pad. My thoughts were I need a 1 bedroom for a week and I need to buy 200 points to make it happen at BLT. As I have been in timesharing since the 90's, I still think in terms of what does a week buy me. The point system can be very deceiving. DVC does a good job of making resorts at WDW seem "very close to each other" or just a few points more. However, when you express it in days or weeks, you see that there is a huge gap between resorts which translates into, we are selling VGF for 2x the price of AKL or 50% more than BLT.
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Old 11-30-2014, 10:27 PM   #9
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Quote:
Originally Posted by Joshuy View Post
Taking this into account then the ranking from cheapest to most expensive per point looks like this…
1. Saratoga $6.83
2. BLT $7.00
3. AKV $7.85
4. Californian $7.87
5. OKW $7.89
6. Floridian $8.37
7. Aulani $8.67
8. Hilton $8.69
9. Wilderness $8.89
10. Boardwalk $8.94
11. Beach club $9.23
12. Vero Beach $9.94
I just want to point out, based on this final ranking, the gap between 2 and 3. SSR and BLT are, by far, the best long-term purchase on a per-point basis.

Dean and I constantly disagree on the time value of money calculation. What he's really asking for is an opportunity cost calculation. If you assume that the future rate of return matches the rate at which maintenance fees, then your figures are already discounted to the net present value of all future maintenance fees. Likewise, as the value of a point increases, commensurately with the price of on-site lodging, then your calculated price per point also reflects the net present value of all future points. Therefore, I completely agree with your ranking.

Now, however, comes the personal, qualitative judgements. You need to evaluate the point cost of a room at each resort, weighed by the likelihood of booking that room with and without the home-resort booking advantage. You'll need fewer point for a value room at AKV or a standard view at BWV, but you'll only get those rooms if you own there. If those are the only rooms you'd ever stay in, the. The cost difference of buying fewer points will outweigh the buy-in and maintenance costs of buying more points at a "cheaper" resort. Also, you'll need to weigh the benefits of each resort in relation to their long-term desirability, which will help them hold their value over time and make your vacations better, easier, and more relaxing in the future.

Personally, I purchased SSR and BLT. SSR because it's the cheapest over the long term, and BLT because it's almost as cheap with the added benefit of it being the only resort within walking distance to the Magic Kingdom. I made my decision based largely on the same model you explained here, but applied it to each available resale contract at the time, weighing the value of loaded or stripped contract based on the total number of points remaining over time. Hopefully that evaluation will pay off over time in contract value and long term cost.
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Old 11-30-2014, 10:30 PM   #10
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Quote:
Originally Posted by djohn06 View Post
Love this post. I don't claim to be a "math guy", but I know enough about the resorts to say this is good enough.

One last variable I would add would be class of room, per resort. When most people buy into a resort, I believe the first or second question that pops in their mind is, how many days can I stay here. In your example you used 100 points as a basis. However 100 points isn't the same vacation experience at every resort. For example, this is what 100 points gets me during Dream season in each resorts lowest category (Sun - Thurs). I am going to stick with all Studios for now since its a low point amount:

AKV - 10 nights in a value studio
Aulani - 5 nights (Choice season estimate)
BLT - 5 nights STD
BCV - 6 nights
BWV - 7 nights STD
VGC - 5 nights (Choice season estimate)
VGF - 4 nights STD
HHI - 7 nights
OKW - 7 nights
SSR - 7 nights
VB - 6 nights
VWL - 6 nights

What this tells me is a couple things. In order to have the same amount of days at WDW resorts, when compared to AKV I need anywhere from 130 to 210 points at the other resorts. I think you would need to quantify this difference on the front end as well as with maint fees going forward to get a clearer picture. If you factor in this difference , where do you lie?
Cost per night is a big deal - when you look at BWV, dues are expensive - but when you look at standard view rooms, your cost per night is actually pretty low.

Another thing is that the calculations for that very thing are different for those of us that have owned for a decade or more, those that bought for a low price during the recession, and those making a purchase decision now. And those of us that bought more than a decade ago had a much easier decision - everything expired at the same time, and there were only a few resorts.
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Old 12-01-2014, 06:10 AM   #11
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Another thing is that the calculations for that very thing are different for those of us that have owned for a decade or more, those that bought for a low price during the recession, and those making a purchase decision now. And those of us that bought more than a decade ago had a much easier decision - everything expired at the same time, and there were only a few resorts.
Very true. Although I owned for only 18 months now, I caught the tail end of the recession price wise. When I was looking for my BLT add on at around $95, HHI was sitting there at $44. HHI proved to be be a much cheaper alternative for me.
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Old 12-01-2014, 06:30 AM   #12
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The yearly fees increase each year, it would be nice to see the numbers including the total fees with the increases for the length of the contract.

Buying the less expensive resort only works if you love staying there or you are willing to take chances booking somewhere else at 7 months.

Saving some bucks on your resort may be an important consideration as a new owner but it only takes a few years until many owners change their focus from spending all day long in the parks and spending more time at the resort and other venues.

Studios are great when you don't spend much time in the room and the views from the room doesn't seem to matter much so standards can save some points but again later the view becomes important and a 1 bedroom with a kitchen and clothes washer is great for longer stays.

Bill
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Old 12-01-2014, 07:40 AM   #13
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Buying the less expensive resort only works if you love staying there or you are willing to take chances booking somewhere else at 7 months.
This is also very true. If I were paying cash for a room through CRO, I wouldn't consider SSR, even if it were a few hundred dollars less per night than my preferred resorts. I want to be closer to the parks and I like the hotel style resorts.

If I were simply looking for the cheapest room, I'd be offsite - or at a value.

So paying a little more to get a preferred booking window at a resort I want to be at is a good deal - provided its affordable to us. If it were a huge stretch, I wouldn't think of it.
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Old 12-01-2014, 08:55 AM   #14
Joshuy
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Well super snoop, I'm going to have to change my first post to "math oriented" instead of math heavy because you sound more math heavy than me.

Calculating future value was beyond me as well as future costs (future value of points and future costs of annual fees).

I did not think about rate of return as that is a issue of whether or not a person should buy. (well kind of, I suppose it changes whether you want to put up a ton of money up front with lower annual fees (GF) vs lower up front cost with higher fees (vero?))

It'd be fun to redo the number instead of per point to do it per week
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Old 12-01-2014, 08:56 AM   #15
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Here is my info
https://docs.google.com/document/d/1...it?usp=sharing
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