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Cost of Owning DVC through 2042 - Interesting Calculations

Discussion in 'Purchasing DVC' started by Maverick, Nov 26, 2012.

  1. DougEMG

    DougEMG DIS Veteran

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    Instead of trying to figure out if owning DVC in 30 years time will still be a good deal, what interests me is, when is the breakeven point on owning DVC. Once I'm past the breakeven point, the risk of owning DVC drops considerably. Worst case I let Disney foreclose on the contract and walk away.

    You can figure your breakeven point by comparing to various other options, such as what you would normally have spent going to WDW without owning DVC (ie we use to stay in a moderate with FD), comparing to rack rates with a discount, comparing to renting points, etc.

    So when I ran some numbers, it worked out to around 6 years for me to breakeven. So in year 7 if for some reason I couldn't pay the MF, I could just get rid of my contract for $0 and still have come out even or slightly ahead over not owning DVC. That was something I could live with.

    So the risk that I worry about is the risk in the first 6 years of my ownership. And it is because this is the way I look at it that makes the upfront costs so important to me. Lower upfront costs means less time to hit that breakeven point.
     
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  3. jkpatrick

    jkpatrick Mouseketeer

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    A way to kinda offset that 'scary' feeling, is that the 3.6% average increase is in future dollars, not current dollars. So while you are paying $5.50 (or some number) in MF today, you will be paying $11.50 MF in 20 years but in 2032 dollars.

    You are buying the contract in today's dollars, so that is set in today's money, unless you are financing.
     
  4. myxdvz

    myxdvz DVC - BLT

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    This is how I do my calculations as well. I know I paid high since I bought direct... but even so, after 2 years of owning, I have gotten 50% ROI already and I'm on track to get my $$$ back in the next 3-4 years. So yes, to me the breakeven point is 6-7 years. Anything after that is freebie hotel stays as far as I'm concerned - my youngest will be 8.

    I even have a spreadsheet where I keep track of the cost of the hotel, had I paid in cash. All our DVC stays, including BCV in June, my total $ cost is $2.93 cents, including all MFs for 2011-2013 less rental $$. Obviously this didn't factor in the original purchase price.
     
  5. BeachLove

    BeachLove Mouseketeer

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    If I ran numbers all day, I just wouldn't have ever bought. I'm so happy I made the leap and never looked back!
     
  6. zavandor

    zavandor DIS Veteran

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    You should analyze also how your salary increased in the latet years and compare it to the fees. If you think it will increase on average of 3.7% or more, MF will have less and less impact on your income.
     
  7. bwang123

    bwang123 Posts: 1,457,177,981

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    So far, we've worked backwards. BLT, AKV savannah, BWV standard (upcoming), AK value (upcoming). I wonder if I can use DVC points to trade into a cardboard box after that.
     
  8. joelp

    joelp DIS Veteran

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    Apply that same 3.6% increase per year to an average rack rate room cost at a Deluxe Resort ... it's scary what a night's stay could cost in 30-45 years ...
     
  9. KingRichard

    KingRichard DIS Veteran

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    So for $100 per year you get a much better location? Seems like a great deal to me!

    People spend thousands more for a better location on a cruise ship for one week and the room is exactly the same size.
     
  10. DougEMG

    DougEMG DIS Veteran

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    If it was $100 extra per year and payable at the start of each year, then sure I would do that as well. But it is actually $100 per year left on your contract all payable in one lump sum at the start; hence the $4800 difference in purchase price between buying the equivalent SSR vrs BLT contract.

    Lots of people on the cruise ship buy standard rooms yet still enjoy all the ammenities that the cruise ship has.

    There is no right and wrong answer here, the whole point is to allow people to make informed decision so they can do what works best for them.
     
  11. GOOFY D

    GOOFY D DIS Veteran

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    You're right, there is no right or wrong answer. It is based on personal preference. If paying that $4800 up front basically guarantees (I know there are no "guarantees") that you will be able to stay at a resort that you greatly prefer via the 11 month booking window (in this case BLT), then maybe it is a small price to pay.
     
  12. jkpatrick

    jkpatrick Mouseketeer

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    Right, it all depends on what someone values. As in, what they feel like their dollar is worth to them. Also, it was brought up on a thread, the cost of living where the owner lives and their salary affects what they can buy. Someone living in LA, SF/Silicon Valley, NYC probably would have the extra discretionary income to view that $4800 is pocket change. Also someone who lives in Hawaii, wouldn't care so much for an ocean view room on a cruise ship.
     

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