Analyzing a purchase...

[bobbyseal]

So, I made up a spreadsheet trying to convince myself to buy into the DVC. It's a tough decision.

Here goes:

Say one wants to spend a week each year in a lake view BLT 1 bedroom during the magic season which is 301 points. Rental cost for that would be currently $16/pt x 301 = $4816.

Now, let's say I want to buy BLT and get a 301 point contract (I know that they don't exist, but just for argument sake). It seems that points may be around $130/pt based upon some ROFR threads. So buy in would be $39130. Current maintenance cost is $5.92/pt, so I'm looking at $1781.92 per year maintenance fee.

So, they way I see it, the difference between point rental cost and maintenance fee cost is the yearly savings one gets with the DVC purchase and eventually that savings will overcome the initial buy in. So, the yearly savings over rental is $3034.08. If I divide $39130 (initial buy in) by the savings ($3034.08) that should give me the number of trips (or years) it would take to start seeing savings which in this case is just under 13 trips (12.9).

Obviously, maintenance will go up, but rental cost per point would probably rise similarly. Also, I'm totally ignoring the time value of the $39130 being invested over 13 years.

Anyway, the big question to me is it worth it to commit to 13 trips to Disney before getting any savings?

I ran similar scenarios considering a similar purchase with SSR points. If you could buy a 301 point contract at $85/pt ($25585), it would probably take about 8.4 trips to start seeing savings. So, this is a bit better as long as you can get the room you're interested in.

I think these numbers of trips are going to hold true regardless of where you stay as the number of points needed to purchase would drop proportionally with the difference in room selection.

Does anyone else struggle with this commitment to Disney like I am? I guess not because people are buying these contracts all the time!

 

[Ben E N]

I was in similar shape, and had a similar comparison, when I bought into BLT this past summer. Bought for $121 a point and got direct benefits easily, so in a little bit better shape than you, but I went through the same thought process. Ever since buying, it seems there has only been bad news coming out of Disney World. People might go on strike, they now charge for parking, the nighttime parade is not coming back to MK anytime soon, etc.
That being said, is Disney a big part of your life? If so, you are probably locked in anyway. My mom just made vinyl clings for my brother's baby nursery - they were all Disney themed. My daughter has had 4 birthday parties - all Disney themed. I know and accept that I am locked in, so I think I made the right call to just buy in officially.
Something to consider is buying half the points. That way you can do 2 years on, 2 years off by combining banking and borrowing. It may take you longer to pay off the investment comparing it to renting, but it would be less of an initial investment and would be easier to move the contract if you did get sick of it. If you find after a couple years that you have to go yearly, you could always add another contract later.

 

[aoconnor]

Your analysis is pretty good. A simple way to think of it is to divide the purchase price by years remaining and add MF's. So for BLT it's $130/pt divided by 41 years remaining = $3.17 plus $5.92 MF = $9.09 effective cost per point, significantly cheaper than a $16/ pt rental.

Of course as you mentioned this ignores the time value of money for the $130 up front, so if you value your money at 5% for example that adds another $6.50 per point pushing your effective cost up to $15.60 - suddenly not so much cheaper than renting. That said, it it also ignores any potential price appreciation (or at least lack of depreciation) on the $130 buy in.

 

[disneynutz]

IMO people end up spending more money if they own DVC, more vacations, an extra vacation because of our AP's, or extra vacation because Disney or DVD announced a special event. The weirdest argument is that it isn't money, just points. Add the fact that you need to do something with your points every year and you feel after buying that only DVC can allow you to make memories with your families and loved ones. The cost of food, travel, admission and extras all add up. If you would take a vacation of equal cost each year without DVC then DVC might save you some money, if you end up spending more, consider that cost when you do your numbers.

Bill

 

[Ben E N]

IMO people end up spending more money if they own DVC, more vacations, an extra vacation because of our AP's, or extra vacation because Disney or DVD announced a special event. The weirdest argument is that it isn't money, just points. Add the fact that you need to do something with your points every year and you feel after buying that only DVC can allow you to make memories with your families and loved ones. The cost of food, travel, admission and extras all add up. If you would take a vacation of equal cost each year without DVC then DVC might save you some money, if you end up spending more, consider that cost when you do your numbers.

Bill

From your experience, do you think the added experiences such as extra trips, moonlight magic events, neat meals that were discounted, etc, were worth their extra cost? Or do you feel that you were sucked in by DVC ownership and regret buying in?

 

[disneynutz]

IMO people get sucked into buying, Disney is very good at making us love Disney, words like magic, family, wonder, are all marketing and illusion, CM's are on stage after all. They do provide a pretty good product but at a high cost and they work 24/7 to create offerings or changes in policy to get even more money from you. They create excitement which keeps you from thinking about the cost, after awhile as a DVC owner with several DVC/WDW vacations the honeymoon starts to be over and you see behind the curtain and to see Disney for what it is, a billion dollar business. You notice mistakes, problems with your room, issues with IT that shouldn't exist, hold times for MS, wrong info from some CM's, working overtime to book the extras that once attended may not be as great as expected. At the time everything seems and feels great but after you get home and think about that expensive meal or event, you realize that it was just okay and just because they put a smear of sauce on your plate or call something by a fancy name, that doesn't make it a great meal.

Do I regret buying in, no, I regret that big business has gotten so greedy and that they let the financial markets cause them to give up on their core values. If they really cared about their customers, they would fix their IT and not make us work to do business with them.

Bill

 

[Bruin_mouse]

I started looking at DVC in August 2017. I went to DLR this past January and stayed off site. After doing a 15 minute walk each way, twice a day, for three days, I began to see the value in staying at the VGC, but was having a hard time with the cost to stay at the GC hotel. DVC appealed to me because it is so flexible. Between banking/borrowing points, choosing when you want to go and what time of room you want, and most importantly for me: a fairly robust rental and resale market, I was finally able to convince myself to make the commitment and bought a resale 160 point VGC contract. I subsequently bought a resale 100 point BLT contract, and am currently buying two Aulani resale contracts. You can spreadsheet it to death, but a thousand people have laid out the rationale for buying very simply: it (eventually) allows you to stay in deluxe accommodations for moderate prices. One idea would be to look for smaller resale contracts. That's a fairly low risk way to get your feet wet and see whether it fits your travel habits. If it does, you can add on your desired number of direct points down the road. Good luck!

 

[icc2515]

One thing to think about is the hassle of renting 301 points every year. Somebody has to have a pretty large contract to rent that number of points out at BLT. You might find that you have to split the week into a couple of reservations and that will be a major pain for you. You will have to check out and then check back in later in the day. I don't know if you can link reservations from different owners. The rental places are always looking for more points to rent out, so that tells me that some people don't get their requests. If you don't feel like going every year, you can always rent your points out and figure the money over and above the maint fees is money off your initial outlay. Plus you could spend 10 years going to Disney and then sell your contract(s). You can then re-figure the cost of those 10 years worth of trips based on the buying and selling price difference. If you sold in 10 years for even half what you paid for it, that would bring down your break even quite a bit. Remember 13 trips is kind of a worst case situation if you were to sell later because you were tired of going. Who knows you might even get out of it what you paid for it. People who bought OKW when it first came out can sell their contracts for more than they paid for them. Of course your contract may be worth nothing the day after you close on it. I think too many people make their calculations based on keeping the contract till the end and don't figure in that their vacation preferences may change over time. Any money you can get for your contract if you decide to sell has to be figured into the break even.

Where's my crystal ball when I need it.

 

[bobbyseal]

Thanks for all the advice. I think we will probably end up with a SSR contract at some point. I do see BLT as probably where we would want to stay for 5-6 nights over spring break, but we did just fine in a polynesian studio. So, we could probably book at the 7 month window at a few different locations.

I would suspect that we would be able to rent/transfer points to another member if we decide to not do a Disney trip that year. That would essentially be one of the 13 trips needed to break even, though! We shall see. If only there was a stock market crash and these points would drop in value!

 

[Ben E N]

IMO people get sucked into buying, Disney is very good at making us love Disney, words like magic, family, wonder, are all marketing and illusion, CM's are on stage after all. They do provide a pretty good product but at a high cost and they work 24/7 to create offerings or changes in policy to get even more money from you. They create excitement which keeps you from thinking about the cost, after awhile as a DVC owner with several DVC/WDW vacations the honeymoon starts to be over and you see behind the curtain and to see Disney for what it is, a billion dollar business. You notice mistakes, problems with your room, issues with IT that shouldn't exist, hold times for MS, wrong info from some CM's, working overtime to book the extras that once attended may not be as great as expected. At the time everything seems and feels great but after you get home and think about that expensive meal or event, you realize that it was just okay and just because they put a smear of sauce on your plate or call something by a fancy name, that doesn't make it a great meal.

Do I regret buying in, no, I regret that big business has gotten so greedy and that they let the financial markets cause them to give up on their core values. If they really cared about their customers, they would fix their IT and not make us work to do business with them.

Bill

Thanks for your honest feedback. I feel like I am about 10 years behind you on that curve, so I was curious about how you felt about the journey so far. I think your last paragraph is pretty accurate. The dead weight that ESPN is has really had an effect on how they view their theme parks lately. They are trying to squeeze the blood out of a turnip. Hopefully this trend is short lived.
Your input furthers the advice of only buying DVC with cash. This makes it easier to sell, even at a loss, if you find that it is not for you after 5 years or so. As for me, I am pretty sure I am locked in through thick and thin just because of my family's dynamics.

 

[Deb & Bill]

Thanks for your honest feedback. I feel like I am about 10 years behind you on that curve, so I was curious about how you felt about the journey so far. I think your last paragraph is pretty accurate. The dead weight that ESPN is has really had an effect on how they view their theme parks lately. They are trying to squeeze the blood out of a turnip. Hopefully this trend is short lived.
Your input furthers the advice of only buying DVC with cash. This makes it easier to sell, even at a loss, if you find that it is not for you after 5 years or so. As for me, I am pretty sure I am locked in through thick and thin just because of my family's dynamics.

No, it's not. They've been doing that for years. Just getting worse.

 

[Ben E N]

No, it's not. They've been doing that for years. Just getting worse.

Agreed. Of course they are trying to milk the money out of us. They are just getting more desperate lately, as they have to justify Eisner's $300 million salary with stock growth that just isn't happening. Parks are their most profitable division compared to their cost, so why not try to get a little more money out of us if it doesn't cost them anything extra?

 

[CraigInPA]

Thanks for all the advice. I think we will probably end up with a SSR contract at some point. I do see BLT as probably where we would want to stay for 5-6 nights over spring break, but we did just fine in a polynesian studio. So, we could probably book at the 7 month window at a few different locations.

Be careful with an assumption that you'll be able to use SSR points for a monorail resort during spring break. Spring break is popular. The Poly sold out recently. Something like 25% of the poly points are for the bungalows. Most of the Poly contracts aren't for enough points to stay in a bungalow more than a couple of days. These people wanted studios. That means, effectively, that there will be shortage of Poly studios for Poly owners during the busiest times of the year. GFV has only a limited number of studios, so getting one is purely hit or miss at the 7 month mark. BLT has lots of studios, but even those are gone during the busiest times of the year at the 7 month mark. If you buy at SSR, you might be able to switch to somewhere else at 7 months most of the year, but at Spring break, you may not be able.

 

[zavandor]

So, I made up a spreadsheet trying to convince myself to buy into the DVC. It's a tough decision.

Here goes:

Say one wants to spend a week each year in a lake view BLT 1 bedroom during the magic season which is 301 points. Rental cost for that would be currently $16/pt x 301 = $4816.

Now, let's say I want to buy BLT and get a 301 point contract (I know that they don't exist, but just for argument sake). It seems that points may be around $130/pt based upon some ROFR threads. So buy in would be $39130. Current maintenance cost is $5.92/pt, so I'm looking at $1781.92 per year maintenance fee.

So, they way I see it, the difference between point rental cost and maintenance fee cost is the yearly savings one gets with the DVC purchase and eventually that savings will overcome the initial buy in. So, the yearly savings over rental is $3034.08. If I divide $39130 (initial buy in) by the savings ($3034.08) that should give me the number of trips (or years) it would take to start seeing savings which in this case is just under 13 trips (12.9).

Obviously, maintenance will go up, but rental cost per point would probably rise similarly. Also, I'm totally ignoring the time value of the $39130 being invested over 13 years.

Anyway, the big question to me is it worth it to commit to 13 trips to Disney before getting any savings?

I ran similar scenarios considering a similar purchase with SSR points. If you could buy a 301 point contract at $85/pt ($25585), it would probably take about 8.4 trips to start seeing savings. So, this is a bit better as long as you can get the room you're interested in.

I think these numbers of trips are going to hold true regardless of where you stay as the number of points needed to purchase would drop proportionally with the difference in room selection.

Does anyone else struggle with this commitment to Disney like I am? I guess not because people are buying these contracts all the time!

The is a different way to see it (a bit simplistic in calculations, but just to explain my point).

Let's say you decide to sell in 5 years. If there won't be a major recession, resale prices are probably going up, but let's assume they'll stay the same. After 5 years you can sell the contract and recoup your investment, a part from the broker fees. It's around $3,326. But you saved $3,034 per year, so after five year you didn't just break even, you saved $11,844. Not too bad.
Of course anything can happen, but 5 years is not a long period of time and risk is low. The longer the horizon, the highest the risk of a resale collapse (like in years 2008-12) but also greater savings accrued over time.

 

[Bing Showei]

Of course anything can happen, but 5 years is not a long period of time and risk is low. The longer the horizon, the highest the risk of a resale collapse (like in years 2008-12) but also greater savings accrued over time.

I would argue that there’s more risk planning a five-year hold, than if you plan to hold on for the life of the contract. If you’re in a good financial position going in and will not need to sell on a dip, you can ride out any market dip (barring a shift that fundamentally changes DVC).

For those who didn’t have to sell 2008-2012, the Great Recession was completely inconsequential (relative to DVC).

All that said, buying any timeshare (even DVC) should be planned as a long term commitment. If you can get out early on your terms, great. But don’t go in banking on doing that unscathed.

 

[John-DVC]

I like the analysis. I would add in a sell value. Assume at 5, 10, 15 or some other interval that you will sell the contract. I think it’s safe to assume getting the same $/point back. Prob good to do a time value of money on the sell value. It’ll shrink the 8-13 years down a bit.

IMO even with sell costs it’s still not a slam dunk or anything like that. If you like having control of the points I think it makes sense. Otherwise renting is just as good.

 

[disfanforlife]

I think you did a good analysis. We bought in 10 years ago and haven't regretted it. We have only take one year off early on. The next year we used our extra points that were banked to bring friends who now have recently become DVC members. I struggled with the commitment to buy at first but actually ended up adding on another 100 points after 5 years. We now have 300 which is he same as what you are looking at to start. I think that is a great number. We can actually get 2 trips out of our points which is even better for us. One trip kids and one without.

 

[bobbyseal]

Be careful with an assumption that you'll be able to use SSR points for a monorail resort during spring break. Spring break is popular. The Poly sold out recently. Something like 25% of the poly points are for the bungalows. Most of the Poly contracts aren't for enough points to stay in a bungalow more than a couple of days. These people wanted studios. That means, effectively, that there will be shortage of Poly studios for Poly owners during the busiest times of the year. GFV has only a limited number of studios, so getting one is purely hit or miss at the 7 month mark. BLT has lots of studios, but even those are gone during the busiest times of the year at the 7 month mark. If you buy at SSR, you might be able to switch to somewhere else at 7 months most of the year, but at Spring break, you may not be able.

We booked our rental for Easter week this year, 6 months prior in September 2017. I listed what was available at that time. We were in the market for a studio or 1 bedroom with 3 sleeping surfaces. Based upon this, I felt that we would be able to stay at BLT in a 1BR, lake view using SSR points. Again, mileage may vary depending upon year.

Grand Floridian, One Bedroom-Lake View
Polynesian, Studio-Standard View
Polynesian, Studio-Lake View
Copper Creek Villas at Wilderness Lodge, One Bedroom
Boardwalk Villas, One Bedroom-Standard View
Boardwalk Villas, One Bedroom-Preferred View
Old Key West, Studio
Saratoga Springs Resort, Studio-Standard
Saratoga Springs Resort, Studio-Preferred
Boulder Ridge Villas at Wilderness Lodge, One Bedroom
Bay Lake Towers, One Bedroom-Lake View
Bay Lake Towers, One Bedroom-Theme Park View

 

[bobbyseal]

The is a different way to see it (a bit simplistic in calculations, but just to explain my point).

Let's say you decide to sell in 5 years. If there won't be a major recession, resale prices are probably going up, but let's assume they'll stay the same. After 5 years you can sell the contract and recoup your investment, a part from the broker fees. It's around $3,326. But you saved $3,034 per year, so after five year you didn't just break even, you saved $11,844. Not too bad.
Of course anything can happen, but 5 years is not a long period of time and risk is low. The longer the horizon, the highest the risk of a resale collapse (like in years 2008-12) but also greater savings accrued over time.

Yes, I didn't look at residual value over time if one wants to get out early. Obviously points will maintain some value until the time horizon runs out.

 

[Deb & Bill]

We booked our rental for Easter week this year, 6 months prior in September 2017. I listed what was available at that time. We were in the market for a studio or 1 bedroom with 3 sleeping surfaces. Based upon this, I felt that we would be able to stay at BLT in a 1BR, lake view using SSR points. Again, mileage may vary depending upon year.

Grand Floridian, One Bedroom-Lake View
Polynesian, Studio-Standard View
Polynesian, Studio-Lake View
Copper Creek Villas at Wilderness Lodge, One Bedroom
Boardwalk Villas, One Bedroom-Standard View
Boardwalk Villas, One Bedroom-Preferred View
Old Key West, Studio
Saratoga Springs Resort, Studio-Standard
Saratoga Springs Resort, Studio-Preferred
Boulder Ridge Villas at Wilderness Lodge, One Bedroom
Bay Lake Towers, One Bedroom-Lake View
Bay Lake Towers, One Bedroom-Theme Park View

Question: How did you find out this information?