Am I calculating this correctly?

[MickeyMom2Boys]

I'm pretty much sold on DVC and thought DH was too, but now I think he's getting cold feet. I have read other peoples testimonies and calculations and it seems like the right thing to do for us and no matter how I calculte it, it seems like we come out ahead. That being said, DH has not looked into anything and is strictly going on what I tell him. I'm trying to give him neutral answers, provide my thoughts in the different areas, but ultimately let him make his own decision. I want to go into this with 100% buy in from him. He's OK with the initial purchase, but the dues seem to be scaring him. So I decided to break it down to a value per individual point using today's dollar. I am not incluing the increases in annual dues over the next 50 years just for simplicity purposes. (He knows the dues will increase over time). Here's what I came up with:

AKV - $104/pt with annual dues at $4.65 per point
Annual dues for the next 50 years (again, on today's dollar) 4.65*50=232.50
So each point will cost us 104-232.50 = 336.50 over the next 50 years. Divide that by 50 and we're paying $6.73 per point per year, plus inflation.

Now - how does that compare?

*All Rates & Points below are based on "Dream Season"
Option 1
AKV Studio Value Cash - $1883/wk
AKV Studio Value DVC - 83 points - 83 x $6.73 = 558.59
Savings - $1324.41 or 70%

Option 2
AKV Studio Standard Cash - $2345/wk
AKV Studio Standard DVC - 99 points - 99 x 6.73 = 666.27
Savings - $1678.73 or 72%

Option 3
AKV 1 BR Value Cash - $2695/wk
AKV 1 BR DVC - 169 points - 169 x 6.73 = 1137.37
Savings $1557.63 or 58%

Option 4
AKV 1BR Standard Cash - $3150/wk
AKV 1BR DVC - 198 points - 198 x 6.73
Savings 1817.46 or 57%

Am I looking at this correctly? Am I missing anything other than allowing for increased dues over time?

 

[hakepb]

You are doing an OK basic calculation. (Although you are missing any current incentives off your purchase price )

A true financial wiz would calculate the present value of the purchase and dues (You put your DVC purchase into an investment earning interest, with withdraws every year on the cash rates) and then compare current present value to normal Deluxe discounts. (You cannot compare rack rate to normal discounts)

Everything I've seen always shows DVC as the "winner" when comparing Deluxe resort prices. (moderates and Values usually come ahead) Although DVC resorts do not have full "Deluxe" service like daily housekeeping and in the interest of saving $ you really never compare a 1BR (because a studio is always cheaper) rates. A 1BR just happens to be an additional luxury that you can "buy" with your DVC points.

And remember, if you love AKV, then buy there. If you love another DVC better, you can buy at the other resorts (resale or non-discounted through Disney)

 

[TSMIII]

In addition to what was mentioned above, also keep in mind that while you are keeping the dues (and room rates) at curent dollar values you are also assuming the rate of change for these will always be favorable.

There is the possibility that over time, should the MF rate of increase exceed the cash cost rate of increase, DVC may not be the better deal.

 

[dvc_john]

A couple of other things to consider are:
1) the time value of money for the purchase price
2) interest payments if you finance
3) are you including tax on the cash rates (about 12-13%)?
4) inflation should affect the cash rate over time more than the maintenance fees (eg in your option#1, if both the cash rate and the maintenance fees go up 3%/year, that means the cash rate goes up about $56 plus tax after 1 year, while the maintenance fees would go up about $11.50. After 5 years, the cash rate would go up about $300, but the mf would only go up about $61.)
5) interest (if any) and the portion of mf's that goes for real estate taxes should be income tax deductible

 

[MickeyMom2Boys]

A couple of other things to consider are:
4) inflation should affect the cash rate over time more than the maintenance fees (eg in your option#1, if both the cash rate and the maintenance fees go up 3%/year, that means the cash rate goes up about $56 plus tax after 1 year, while the maintenance fees would go up about $11.50. After 5 years, the cash rate would go up about $300, but the mf would only go up about $61.)

I have averaged out the MFs toa 4% increase per year. But does anyone know how much the cash rates typically increase per year?

 

[Deb & Bill]

Dues only go up. Except for a few times out of many resorts and many years.

Don't forget, you still need to travel to the parks, you still need to eat, you still need admission. Those will continue to increase through the years as well.

Have you always stayed in DVC resorts on cash in the past? Why not compare what you will be paying using DVC vs what you have actually used/stayed in during the past. So, if a value is okay and you have stayed there, it might make a difference in your calculations.

 

[thepops]

Yes you will need to travel to Disney, still need to eat, and still need admission (although there are folks who travel and don't go to the parks every time). But you would have to do these as well regardless if you did DVC or did cash, so that's really not a factor in comparing the costs, sicne they would cancel each other out.

 

[Deb & Bill]

But with DVC, you're going to be spending more on travel to and from DVC, tickets for the parks, etc. You tend to vacation more with DVC.

 

[vwlvette]

I recall resding someplace that rack Rates for Disney Rooms go up 8% on the average a year. I am not sure if that is accurate, But I believe it is.
Good luck with yoru decision, We certainly don't regret buying our 300 VWL points last year!

Can't wait to go again in Nov, 73 days and counting!!!

 

[Belle & Ariel]

You might also factor in a possible resale. We just bought at BWV for $81 a point. Those points sold for about $63 in 2000. So the original buyer paid about $9450 for 150 points. At that time dues were less than $4 p/p, so let's say $600 a year. After vacationing several years for 600-750 dollars which is the current dues, he is reselling for a $2700 profit, less commission.
Key West has even greater return, while right now Saratoga would be sold at a loss.
There are so many variables but you might also need to look at possible resale value also. It takes a lot of the bite out of the sticker shock.