DVC Total Yearly Cost? Hidden Costs?

[Goonie78]

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]

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]

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]

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]

...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]

...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]

...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]

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.

Bill

 

[Deb & Bill]

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]

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]

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]

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]

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]

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.

Bill

 

[hydrotony]

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.

 

[Dean]

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.

ROFR doesn't help selling and it may hurt selling in some cases. It may at times give you a better return if you sell but it depends on specifics and the activity within the market.

 

[spencerbomar]

You have not inputted the IRR on your purchase. As Points cannot be raised for an accomodation (unless points are lowered somewhere in the Point Rate chart for that resort), you have "locked" in the costs of your vacation at today's dollars. Yes, you "prepaid" for your future vacation years, but you also have to take into account that the costs to buy points will go up every year as well and the $ amount of resales/pt will as well.

The costs of cash rentals will continue to go up every year for rental of hotels/cash basis resort rentals, but yours will not.

Annual dues will continue to climb to account for increased costs and inflation. But sales tax amounts for other types of rentals (hotels) will increase as well as the base rental dollar to rent that room will go up as well.

The key is: If you are going to go on vacation every year anyway, buying most timeshares and especially DVC timeshare is the best investment you can make.
Consider that you can rent out points for a net value/pt at about $6 ($10-$4) estimate of how much you can rent and how much you pay per year in annual dues, you can estimate the # pts/year times the # of years you still have for the timeshare and calculate the NPV of that # at a % that you come up- say 5,10, 15% and then compare to what you paid originally for your pts, then you can estimate whether it was a good purchase.
You still have other variables such as deduction for property taxes you pay with your annual on your own personal taxes, opportunity costs of investing your money elsewhere along with many other variables.

But remember, as Disney told me in 1993, don't look at this as an investment.

Yeah right. With the free park passes every year from our becoming a member in March 1993 until 12/31/99, how little we paid compared to now, how much money we have made on renting out our points on a couple of occassions, and the amount of money we have saved by using points in DVC instead of hotels either off or especially on property, it's been one of the best "investments" we have ever made.

 

[Brian Noble]

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

This.

There are a few DVCers who go just to stay in the condos, mostly cook for themselves, and don't really visit the parks. They are a tiny minority. And, the price of tickets, food, etc. at WDW is only going to go up.

 

[luckyman_apd]

This.

There are a few DVCers who go just to stay in the condos, mostly cook for themselves, and don't really visit the parks. They are a tiny minority. And, the price of tickets, food, etc. at WDW is only going to go up.

While these are good points, and should be considered before purchase, the pp who said it's a prepaid vacation at today's dollars makes a good point. It's definitely not for all disney vacationers, but I know a few over the past few years that SHOULD have bought in. They could have it paid off by now with some of the trips they took, staying at AKV, SSR and such at cash prices.

You should never buy if you THINK you are going to disney or MIGHT do disney a lot. We never thought it would be for us, but after 3 trips in 3 years, we realized it's a vacation we love, and our kids love. After 6 months of NOT being at Disney, we start craving it. That's when I knew it might be for us.

 

[mdinme]

Contracts that are small seem to resell very quickly, and of course contracts with points available to use do to. I spent months trying to find a smallish contract but everytime I called it was "just under contract."

Finally found a 90 point one at SSR that had 130 points loaded into it and called maybe 1/2 hour it went public.

We close early December!