Been at this for years - looking at my math - what am I missing here?

[MIALIAS]

Already have 100 points at BCV. Very happy - bought it low ($67). No regrets.

Now looking to add-on. Prices have gone up. When I do the math now - I don't see where it makes sense anymore - please tell me what I'm missing.

Forget direct. I don't know how buying direct especially from Poly or GFV would ever make sense.

So lets pick a Saratoga resale and a 10 year period - staying in 1 bedrooms

The sale: 160pt at $80/pp = $12,800 + $500 closing + 10yrs of maintenance $8272

total spend over 10 years: $21,572 for 1600 points

average pts for a 1 bedroom: 40

so bottom line is I'm paying $21,572 for 40 nights which = $539 per night.

I have BCV and know I cannot get an October reservation through DVC even though I'm "an owner" within 7 months. But I checked orbits and I can get into the Beach Club 5 months for $425 within 6 months. I can cancel without a penalty, and I will have daily housekeeping!

So why buy DVC at this point?

I know rates will go up over time, but I also didn't allot for maintenance fees to go up either.

Plus I can put that 21,572 in the bank and get interest on it over 10 years.

Tell me where I'm off on this -

thanks!!

 

[Snurk71]

If that's how you're approaching the math, subtract something for selling after 10 years - that's what you're missing. Guess low and assume you can sell for $50/pt ($8,000). Now divide $13,572 by your 40 nights and it's $340/night - for a 1br.

Either that, or then assume your 1brs start going for just MFS after your 10 year period ($240/ night in today's dollars ).

But yeah, you're missing part of the math.

 

[JimMIA]

If that's how you're approaching the math, subtract something for selling after 10 years - that's what you're missing. Guess low and assume you can sell for $50/pt ($8,000). Now divide $13,572 by your 40 nights and it's $340/night - for a 1br.

Agree, if your assumption is only 10 years of use (which I think is more reasonable than assuming you will use it until expiration), you should also assume recovering some of your acquisition cost. We can quibble about what that recovery might be, and the truth is, nobody knows.

But if you use the estimate of selling for $50 per point, I'd also remember that you will have to pay a broker commission on the sale -- usually 10%. So, in Snurk71's example, your recovery would only be $7,200, which would cause a slight increase in your per-night cost over your use period.

The other miscalculation in the original analysis is that you would not be collecting interest on $21,000 -- only on the $13,300 initial outlay you would not have if you left the money in the bank.

 

[Rylie Grite]

Already have 100 points at BCV. Very happy - bought it low ($67). No regrets.

Now looking to add-on. Prices have gone up. When I do the math now - I don't see where it makes sense anymore - please tell me what I'm missing.

Forget direct. I don't know how buying direct especially from Poly or GFV would ever make sense.

So lets pick a Saratoga resale and a 10 year period - staying in 1 bedrooms

The sale: 160pt at $80/pp = $12,800 + $500 closing + 10yrs of maintenance $8272

total spend over 10 years: $21,572 for 1600 points

average pts for a 1 bedroom: 40

so bottom line is I'm paying $21,572 for 40 nights which = $539 per night.

I have BCV and know I cannot get an October reservation through DVC even though I'm "an owner" within 7 months. But I checked orbits and I can get into the Beach Club 5 months for $425 within 6 months. I can cancel without a penalty, and I will have daily housekeeping!

So why buy DVC at this point?

I know rates will go up over time, but I also didn't allot for maintenance fees to go up either.

Plus I can put that 21,572 in the bank and get interest on it over 10 years.

Tell me where I'm off on this -

thanks!!

Your math does not account for the contract having a value after 10 years, there are 39 years left on that contract. The $425 for the beach club is a studio not a 1 bedroom right? I see that a 1 bedroom in BCV on a Saturday night in oct is 33 points not 40. Even if you only stayed on weekends 40 seems steep. If you spend 4 nights (2 weekend nights) in oct at BCV it would be 124 pts (31/night avg)

I would calculate the value of the points like this:
$13,300 (cost w/closing) / 160 (pts) = 83.125 / 39 (years remaining) = 2.13 per point

2.13 + 5.18 (maintenance) = 7.31 per point per year

7.31 * 31 (avg cost of 1 bedroom) = $226 (per night in 1 bedroom Oct BCV)

 

[pangyal]

Your math does not account for the contract having a value after 10 years, there are 39 years left on that contract. The $425 for the beach club is a studio not a 1 bedroom right? I see that a 1 bedroom in BCV on a Saturday night in oct is 33 points not 40. Even if you only stayed on weekends 40 seems steep. If you spend 4 nights (2 weekend nights) in oct at BCV it would be 124 pts (31/night avg)

I would calculate the value of the points like this:
$13,300 (cost w/closing) / 160 (pts) = 83.125 / 39 (years remaining) = 2.13 per point

2.13 + 5.18 (maintenance) = 7.31 per point per year

7.31 * 31 (avg cost of 1 bedroom) = $226 (per night in 1 bedroom Oct BCV)

I'm not sure where you are getting 39 years, as BCV ends in 2042, which is only 27 years from now. 26 if you calculate that you're not actually getting the 2042 points.

 

[KAT4DISNEY]

I'm not certain where the avg of 40/pt for a 1BR at SSR is coming from. It's just over 32. A 2BR is approx 41 - all which are very different from a studio at BCV for the cash price mentioned.

If one looked at a studio at SSR it's less than 16 pt/night avg so a little more than 100 nights in those 10 years or $215/night not considering any value for disposing of the contract after 10 years. Use the assumption of selling for $50/pt and you're looking at $135/night in a studio for 100 nights in those 10 years.

The greatest value has always been in studios. We personally like to get larger accommodations (1 or 2 BR's) for similar cash prices of a hotel room but we are not buying today. Even DVC marketing has extended out the purported payback time for purchasing DVC from what it was even 5 years ago although buying resale at some resorts (like SSR) puts it back to a shorter time. Still, one has to want to go to Disney consistently and to stay onsite to have it ever make sense.

I'm not sure where you are getting 39 years, as BCV ends in 2042, which is only 27 years from now. 26 if you calculate that you're not actually getting the 2042 points.

39 years is what is left on SSR which the OP was using in their purchase example.

 

[MIALIAS]

to clarify 40pts for a 1 bedroom was an average of all the resorts during high times of the year.

and if you take out selling the timeshare of a period of time - just using it for 40 years...

it comes to approx. 50,000 for 160 nights = $312/nt

 

[KAT4DISNEY]

And the comparable used for cash at BCV? What size room? If I look up the price at Christmas which would match up to the highest requirement for DVC a studio at BCV is $687/night including tax or a 1BR is $859 including tax. Or a standard room at BCV would be $671. But cash prices at WDW are all over the place too depending on the dates and at certain times of the year the specials offered.

There's lots of variables that each potential buyer should take into consideration. For example you are using avg of 40/night - so high season but another buyer might only go in Sept or early Dec so low season. An avg for all 1BR's at WDW over the year is approx 36.5 pts/night but then there's a resort like the Poly where DVC didn't even build 1BR's.

 

[DVCcurious]

In general buying DVC resale at this point in 2015 can still make sense financially, but it's not a slam-dunk like it used to be.

In late 2012 I got a VWL for $55 per point. That was a slam-dunk no brainer good financial deal.
In late 2014 I got a BLT for $105 per point. That is arguably a mild positive financial deal.

So I'd agree with the sentiment of "show me where the value of buying DVC is, because it looks like a pretty long-term payback period", but I'd disagree with "buying resale DVC is a losing financial proposition right now". My payback period for the VWL was about 7 years => $14 to rent points - $6 in dues = $8 benefit for owning each year. $55 purchase price / $8 annual benefit = 7 years. My payback period for the BLT was about 12 years => $14 to rent points - $5 in dues = $9 benefit for owning. $105 purchase price / $9 annual benefit = 11.5 years. Clearly 7 year pay back is better than a 12 year pay back. But a 12 year pay back is still a marginally decent financial deal. (and no, I'm not counting interest you could earn on the up-front cost because at .5% it's pretty much irrelevant)

In late 2012 when people were grabbing OKW and SSR for low 50's regularly, and BLT for 90, and BWV or VWL for 60, and BCV for 80....those were obviously good financial deals.

But those days are gone and when the economy tanks and pushes prices down again many resorts will be so close to their expirations it may not make sense to buy them even at massively depressed prices (buying VWL for $55 with 30 years left in 2012 is much better than buying VWL for $55 with 20 years left in 2022)

So rather than worrying about what was we can focus on what is happening today. And today buying DVC resale is marginally beneficial.

 

[disneynutz]

It's one thing to save some money buying DVC it's another to have to put up with the changes, policies and rules forced on DVC owners. Seems like it's one thing after the other from a website that works sometimes to now having to pre-register your phone call to MS and still have to wait on hold sometimes 40 minutes.

IMO DVC under the current management is about as customer un-friendly as it gets and it isn't getting any better.

Bill

 

[Deb & Bill]

It's one thing to save some money buying DVC it's another to have to put up with the changes, policies and rules forced on DVC owners. Seems like it's one thing after the other from a website that works sometimes to now having to pre-register your phone call to MS and still have to wait on hold sometimes 40 minutes.

IMO DVC under the current management is about as customer un-friendly as it gets and it isn't getting any better.

Bill

But Bill, didn't you see their cute video last week? It tells you why you love them.

 

[BrittanyLynn]

As an accountant...I see a lot of holes in your math. You have to value things based on their life expectancy. If you plan on selling at the 10 year mark, then you should account for a reasonable resell value less commission. I would also evaluate your points per night.

 

[disneyberry]

Ignoring the holes and just using your calculation method, rack rate for a 1bdrm at SSR is at lowest $571.50 after tax. So there's already savings there.

 

[Dean]

Already have 100 points at BCV. Very happy - bought it low ($67). No regrets.

Now looking to add-on. Prices have gone up. When I do the math now - I don't see where it makes sense anymore - please tell me what I'm missing.

Forget direct. I don't know how buying direct especially from Poly or GFV would ever make sense.

So lets pick a Saratoga resale and a 10 year period - staying in 1 bedrooms

The sale: 160pt at $80/pp = $12,800 + $500 closing + 10yrs of maintenance $8272

total spend over 10 years: $21,572 for 1600 points

average pts for a 1 bedroom: 40

so bottom line is I'm paying $21,572 for 40 nights which = $539 per night.

I have BCV and know I cannot get an October reservation through DVC even though I'm "an owner" within 7 months. But I checked orbits and I can get into the Beach Club 5 months for $425 within 6 months. I can cancel without a penalty, and I will have daily housekeeping!

So why buy DVC at this point?

I know rates will go up over time, but I also didn't allot for maintenance fees to go up either.

Plus I can put that 21,572 in the bank and get interest on it over 10 years.

Tell me where I'm off on this -

thanks!!

I happen to agree with you on using 10 yrs to recoup your up front just like a high risk investment. After that there is potential value and savings but there is also risk. It's likely that the positive side will win out but it's not a guarantee by any means. And there's the time value of money in addition which further adds to your costs. Having said that, the price you calculated is still a decent price for 1 BR's across the resorts, locks in your costs other than MF and ignores the 12 to 12.5% tax. Part of it is that the 1 BR is the worst value from a dollar standpoint, if you do the same calculations for a 2 BR or studio, I think you'll see their more favorable. DVC in general is a specialty item for those in a specific niche who value staying on property, can plan ahead, are OK with the compromises of a timeshare and can afford to do so.