DECISION TIME! Why I'm prob going to pass on buying into DVC

[theguda]

.

 

[disfanforlife]

Logically thinking, what you have said makes sense. I am not a frivolous person, but I did not sit down and think through as much as you have. Some things I do not feel you can put a price tag on. I like owning DVC knowing I can make a reservation when I want without worrying about complications of renting. Put it simply it works for my family. It does not mean it is the best sense money wise - compared to renting. I never even knew about renting points before buying in. We have been members for 5 years bought direct and are now in the process of adding on resale. I appreciate coming here and seeking advice. I think you do too. I wish you the best!

 

[Minniesgal]

The rental argument makes the huge assumption that points will always be available for rent. Yet at the moment rental sites are raising their prices due to insufficient points to meet demand.

As the economies pick up (hopefully!) I would imagine owners will be more likely to use their points instead of rent/transfer. I really don't think you can assume free availability of points to rent. more and more people are catching on to renting and the demand outstrips supply.

I personally would not rent my points unless we hit unforseens. We bought them for the family to enjoy and thats what we will do.

Also we plan on visiting once every couple of years and yes we did all the calculations and we estimate currently breaking even after 7 trips. We might only go every other year but we intend to go for 15-20 nights. It is not how often you travel that matters for breakeven but how many nights per year you stay.

 

[lovin'fl]

You understand that you could ALWAYS stay at a villa w a kitchen, W/D, jetted tub, separate bedrooms, etc WITHOUT being a DVC owner, right? All you have to do is rent the required points from someone. It's no different than renting a studio...just more points. I shudder to think of the money you're spending on DVC and only going to WDW once every 3 years. There is no doubt you'd be much better off financially renting points.

To be clear I'm not holding up a contract. I made an offer, the seller countered and what I posted as an agreed to offer was their counter. I could have accepted it anytime I wanted, but I decided not to.

Anyone who goes to WDW less than twice a year and owns DVC is making a bad financial choice. Yes there are other factors to consider but for me, I'm not going to let those other factors lead me to a bad financial choice. Studio, 2 bedroom villa, etc...it doesn't matter what kind of room you select or which resort you choose. Renting points to stay in those rooms is a far better use of money then buying into DVC....unless you're going to WDW multiple times a year.

We go 2-3 times a year...then don't go the following year (but do HH or VB with DVC points instead and save on APs)...wash, rinse, repeat. Using APs for the years we do go (started this in 2009 with HH trip, then 3 WDW trips in 2011, then VB trip in 2012 and 2 trips to WDW in 2013 with a trip to HH in 2014...MIL and FIL use 100 of our points to go to OKW every year too). I stated that we would only go every 3 years or so if we didn't own DVC.

Hopefully we'll do 2 trips to WDW in 2015 using APs and then maybe, just maybe, we can do Aulani in 2016....here's hoping.

 

[GOOFY D]

That is exactly my point, thread was started the 15th, he continued to post on the 16th about why he wasn't going to buy, announced on another thread that he had an agreed deal, posted back here that he couldn't justify buying.

My entire point is why make an offer and tie up a contract that a seller is trying to sell?

I read the same thing. Seems very odd. It is almost as if the OP is trying to convince those here that own that they should not and that they made bad decisions. I am not sure why you would state openly here as to why it is a bad financial decision but in another thread talk about offering, counteroffering and accepting an offer at the same time. Confusing.

 

[tjkraz]

You understand that you could ALWAYS stay at a villa w a kitchen, W/D, jetted tub, separate bedrooms, etc WITHOUT being a DVC owner, right? All you have to do is rent the required points from someone. It's no different than renting a studio...just more points.

Your own numbers show that a DVC purchase becomes a "win" after 14 years. (Personally I think it's much sooner than that given the value of the contract itself.)

Nevertheless, I don't know why you are so shocked to hear from members who willingly embrace the savings they will see in years 15-50.

Anyone who goes to WDW less than twice a year and owns DVC is making a bad financial choice.

With all due respect, this is a ridiculous statement. It all comes down to how many points are purchased.

Family "A" owns 300 points and goes 2x per year.
Family "B" owns 150 points and goes 1x per year.
Family "C" owns 75 points and (with banking and borrowing) visits every-other-year.

The cost/benefit is pretty much identical in all of these scenarios. The key is simply not buying more points than are needed. An individual who has historically rented 100 points per year for an annual trip should not buy a 200-300 point contract (unless it's with the specific intention of increasing trip frequency.)

Sounds like you've already made your decision. Good luck.

 

[DaveD]

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.

I know it's not always an easy decision to make. And for years some of us (me) wallow in indecision which is often worse than making the right or wrong decision; at least you learn from those. So good for you for figuring out it's not for you.

I've been to Disney 16 times I guess. Never went as a child, chronologically that is. Started at age 26 I believe. My wife and I, together 11 years have gone 8 times. Once 3 times in 15 months. We put off the DVC purchase year after year. And only last month decided to buy. Last November we stayed at SSR on a friend's rented points and loved the room. For our 17 month and 3 year old the one bedroom villa was it. It's what we wanted from here on out. Pre-kids, my wife and I loved Carib Beach. But we knew we needed more room. And a washer and dryer. For the whiter whites and white noise.

Look, Disney can bankrupt you if you're not careful The reality of purchasing a DVC is that it will cost cost cost; in purchasing it, in dues, in tickets and turkey legs and Mickey hats and chicken fingers and $9.00 Harp Ales. You can talk about break even points and if we go twice a year and charge Aunt Edna who'll sleep in the foyer etc etc. But bottom line is Disney is über expensive. Its a deluxe vacation. Even if you stay at the Holiday Inn Express on I-Drive.

So if avoiding feeling locked in to all that puts you at ease then great for you. You're argument is valid. Stick to it.

Sidenote: I for one love shopping the room rates and trying to see if I can get a deal "on property". I'll miss that if Disney waives us through on our pending contract. I'll just have these points. Like a predetermined roll of skee ball tickets that I tear off and give to the man at the prize counter for my teddy bear (the teddy bear represents the Villa....analogy thing....sorry). No more snickering as I enter Caribbean Beach's Jamaica Building room to my courtyard view that I scored for the parking lot view price.

But I'll also afford my little ones the extra room a DVC villa offers. Thus allowing them to reach full speed when they run into the corner of those low breakfast bar counters. You know the ones. You've seen it happen.

But I digress. Best of luck to you.

 

[bighoo93]

Anyone who goes to WDW less than twice a year and owns DVC is making a bad financial choice.

This is utterly outrageous and absurd. People will make different choices for their own reasons, but to suggest that you have to go to WDW twice per year for a DVC purchase to make financial sense is ridiculous and demonstrably false. This is one of the reasons that knowing how to do different analyses, understanding the assumptions and recognizing how to interpret them is so important. You might think calling something a payback analysis when it clearly is not is just a matter of semantics, but if you then allow it to convince yourself that it takes 14 years to return your initial investment, your error has led you to an incorrect conclusion and potentially a bad decision. I always argue against those who dismiss all financial analyses as useless, but I also always point out that I agree that doing those analyses incorrectly is worse than useless--it is potentially dangerous and costly.

 

[bighoo93]

The rental argument makes the huge assumption that points will always be available for rent. Yet at the moment rental sites are raising their prices due to insufficient points to meet demand.

That's an entirely reasonable assumption, and actually for just the reason you mentioned. When something becomes scarce, its price is bid up. Renters will have to pay more per point, causing some of them perhaps to choose an alternative. Similarly, DVC point middlemen will raise their offer price to attract more owners to rent their points out, putting more rental points on the market. This is fundamental economics. Of course there is no guarantee of being able to get every room type at every time of the year, but that is also the case if you are a DVC owner. But really, it is not a stretch at all to assume that there will always be points available for rent.

 

[bighoo93]

Also we plan on visiting once every couple of years and yes we did all the calculations and we estimate currently breaking even after 7 trips. We might only go every other year but we intend to go for 15-20 nights. It is not how often you travel that matters for breakeven but how many nights per year you stay.

Great point. Also, your assessment of your breakeven point sounds about right to me.

 

[Airb330]

Your own numbers show that a DVC purchase becomes a "win" after 14 years. (Personally I think it's much sooner than that given the value of the contract itself.)

Nevertheless, I don't know why you are so shocked to hear from members who willingly embrace the savings they will see in years 15-50.



With all due respect, this is a ridiculous statement. It all comes down to how many points are purchased.

Family "A" owns 300 points and goes 2x per year.
Family "B" owns 150 points and goes 1x per year.
Family "C" owns 75 points and (with banking and borrowing) visits every-other-year.

The cost/benefit is pretty much identical in all of these scenarios. The key is simply not buying more points than are needed. An individual who has historically rented 100 points per year for an annual trip should not buy a 200-300 point contract (unless it's with the specific intention of increasing trip frequency.)

Sounds like you've already made your decision. Good luck.

Couldn't agree more with your entire post. It really all boils down to buying the appropriate amount of points, not how often one travels to Disney.

OP-Good luck with renting. You entered this process with a clear head and it just doesn't work out for you. Nothing wrong with that at all.

 

[bisney]

I shudder to think of the money you're spending on DVC and only going to WDW once every 3 years. There is no doubt you'd be much better off financially renting points.

...

Anyone who goes to WDW less than twice a year and owns DVC is making a bad financial choice. Yes there are other factors to consider but for me, I'm not going to let those other factors lead me to a bad financial choice. Studio, 2 bedroom villa, etc...it doesn't matter what kind of room you select or which resort you choose. Renting points to stay in those rooms is a far better use of money then buying into DVC....unless you're going to WDW multiple times a year.

Option A: Continue to rent points and invest your $10K in a high quality bond of 5%. Assuming MFs and rent move together at approx 4% (historical for SSR) on 160 points. At the end of 6 years, your bond has returned $13,400 of cash flows and the cumulative difference between renting and buying is $7,429 netting out at $5,971.

Option B: Buy SSR for $10K. The cumulative difference between renting and buying is still $7,429 and I would think it's a safe assumption that your contract in 6 years time would be worth a net $37.50 PP (after commissions, etc) or $6,000.

At the end of 6 years, there is no difference between renting and buying (ignoring convenience of booking, discount on APs and other perks that DVC owners have listed).

If you decide not to sell, the break even would be 13 years (bond's cumulative cash of $18,856 vs cumulative savings vs renting of $18,622) after which point you would have years of deluxe accommodations at a reduced rate.

I've used your contract value, your home resort and your 5% discount factor. As you've stated that you plan on going to Disney annually for the next 10 years and plan on renting, I think that your analysis is incorrect but I don't judge your choice because it's your own choice.

What does bug me is your blanket statement that those who have purchased DVC and don't go multiple times a year are somehow financially irresponsible as well as the attitude towards Lovin'Fl. Also, I'm finding this entire exercise about fiscal responsibility and bad financial choices to be utterly moronic when DISCUSSING DISNEY VACATIONS. Disney trips are inherently bad financial decisions but we make them because we love spending time with family and warm fuzzies that you've been disregarding. This isn't a 401K, this is a luxury vacation so talk of bad financial decisions make me go cross-eyed.

Also - Tim... we're on the same side of the argument!

 

[DaveD]

Option A: Continue to rent points and invest your $10K in a high quality bond of 5%. Assuming MFs and rent move together at approx 4% (historical for SSR) on 160 points. At the end of 6 years, your bond has returned $13,400 of cash flows and the cumulative difference between renting and buying is $7,429 netting out at $5,971.

Option B: Buy SSR for $10K. The cumulative difference between renting and buying is still $7,429 and I would think it's a safe assumption that your contract in 6 years time would be worth a net $37.50 PP (after commissions, etc) or $6,000.

At the end of 6 years, there is no difference between renting and buying (ignoring convenience of booking, discount on APs and other perks that DVC owners have listed).

If you decide not to sell, the break even would be 13 years (bond's cumulative cash of $18,856 vs cumulative savings vs renting of $18,622) after which point you would have years of deluxe accommodations at a reduced rate.

I've used your contract value, your home resort and your 5% discount factor. As you've stated that you plan on going to Disney annually for the next 10 years and plan on renting, I think that your analysis is incorrect but I don't judge your choice because it's your own choice.

What does bug me is your blanket statement that those who have purchased DVC and don't go multiple times a year are somehow financially irresponsible as well as the attitude towards Lovin'Fl. Also, I'm finding this entire exercise about fiscal responsibility and bad financial choices to be utterly moronic when DISCUSSING DISNEY VACATIONS. Disney trips are inherently bad financial decisions but we make them because we love spending time with family and warm fuzzies that you've been disregarding. This isn't a 401K, this is a luxury vacation so talk of bad financial decisions make me go cross-eyed.

Also - Tim... we're on the same side of the argument!

"Also, I'm finding this entire exercise about fiscal responsibility and bad financial choices to be utterly moronic when DISCUSSING DISNEY VACATIONS. Disney trips are inherently bad financial decisions but we make them because we love spending time with family and warm fuzzies that you've been disregarding. This isn't a 401K, this is a luxury vacation so talk of bad financial decisions make me go cross-eyed."

Yes yes yes! That's what I was trying to get across in my earlier diatribe. The worst money I've ever spent (terrible grammar) are my best times at Disney.

When I speed-walk into the Rose and Crown, I don't ask the tender what his cheapest ale is. I ask him how he's doing as he pours the first of my $9.86 cent mystery-sized Harps

I never argue with people who dislike Disney for the crowds and the cost. How can I? Not because I know their right. But because I know that what they are missing I can't help them find.

 

[lovin'fl]

You understand that you could ALWAYS stay at a villa w a kitchen, W/D, jetted tub, separate bedrooms, etc WITHOUT being a DVC owner, right? All you have to do is rent the required points from someone.

Also, want to comment on this. We have only 75 HH points (as well as our 200 OkW and 100 AKV). We are wanting to do 6 nights in a 2BR at HH in Aug 2014. I have to book that this Sept. I will have 177 points (with banking and borrowing) to use...I need 271 total. My choices are:
A- book most nights with my HH points at 11 months out and try to add on to front or back end of trip at 7 months out with my OKW points (and hope that there's availability...it's tough at HH in the summer).
B- rent the additional 94 points (try to have them transferred into our account and book close to the 11 month out window...but I would need to find a member willing to transfer)....could also just book some nights with my points and rent the rest of the nights (have that member book those nights and link the 2 resies). This plan would cost, say, $12/point...$1128 for a one time use.
C- I could add on points...and that's what we're looking into now. If we add on a small resale (cost about $3000-ish), we could use those points for many years to come. Why rent for $1128 to get a resie I can get if we add on points (that we'd own and use every year) for $3000?

 

[theguda]

Please show your numbers that explain your break even point in 7 trips.

 

[DaveD]

I like your logic, I am a numbers cruncher as well and can appreciate it for sure! Although I'd like to know where you are getting a 5% return on your investments, we haven't had a solid 5% in a while now! I'd love some tips!

I crunched numbers a little differently than you when it came to deciding if this was a financial sound decision for us. We only have one child and plan on staying in studios at the Animal Kingdom (AKL owners) as they are so few points. Value studios are only 69 points per week when we travel. However, we aren't able to rent points for a value studio at AKL because they are super high demand and gone at the 11 month mark almost immediately. So that was one reason we were leaning towards buying. (We got a 100pt AKL contract).

When I did my math to see if this was a good financial decision for us, I did it a couple ways. I crunched the numbers for what it would cost to stay full price (what Disney values the room at), what I would pay for renting, and what we would pay if we stayed at a moderate, because we do not love the theming of the values. Each way I crunched it, we came out ahead.

DVC is not for everyone, renting instead of buying is a great option!

Hello from South Berwick, ME....just up the street. UNH alumni. We do essentially everything life related in Portsmouth, NH. I'm not even sure how to get to downtown South Berwick

I agree with your angle. We approached it the same way. We have two little ones so while a studio is doable, we'd be leaning towards a one bedroom. Still waiting on our contract to pass Disney.

 

[disneynutz]

IMO the only issues that matters here is that the people who are considering buying a DVC real estate interest are given the pro and the con and a level playing field. Based on this info the purchaser can decide if it financially makes sense to buy and if they are better off in their situation to buy resale or direct, and if they want to use cash or finance.

Bill

 

[theguda]

Something else that I've been curious about is comparing buying at Saratoga Springs (low entry cost and low maintenance fees) versus buying at AKL or Boardwalk where lower point room options are offered.

I'm especially interested to find out if paying more per point for an AKL contract is better than paying less at SSR when you factor in the greater likelihood of getting a value studio at AKL for 8-10 points less than any other studio for a week.

 

[PCMama]

Please show your numbers that explain your break even point in 7 trips.

I come out with the same numbers a 7 year payback. It assumes no interest earned on the upfront costs and for me I compared to renting a hotel room direct from Disney at going rates. My numbers were for Disneyland though not Disneyworld so there its either pay for a Disney hotel as renting.Dvc there is difficult with vgc being so small. The other option is paying high rates for nearby motels.

 

[MickeyFan612]

OP, get a better deal on your buy in and the numbers will make more sense.

This is correct- Find the right contract and your numbers will make total sense!