Break Even Point

[arich35]

Newbie here and I know this has been probably discussed a lot but trying to get an idea if I am on the right track or way off. I have been trying to do just simple calculations when I would break even if we bought certain contracts that are listed right now. I did it based off we were to rent the points at $18 per point. Would like to know if it sounds right or if I am way off:

SS- 125 pts, $135 per point- 14 years to break even
SS- 250 pts, $132 per point- 13 years to break even
Poly- 150 pts, $177 per point- 18 years to break even

From what I have read I thought it would be less than that.

 

[CarolynFH]

Newbie here and I know this has been probably discussed a lot but trying to get an idea if I am on the right track or way off. I have been trying to do just simple calculations when I would break even if we bought certain contracts that are listed right now. I did it based off we were to rent the points at $18 per point. Would like to know if it sounds right or if I am way off:

SS- 125 pts, $135 per point- 14 years to break even
SS- 250 pts, $132 per point- 13 years to break even
Poly- 150 pts, $177 per point- 18 years to break even

From what I have read I thought it would be less than that.

Most people compare the purchase price to the Disney price of the same accommodations - not necessarily rack rate but discounted price, e.g. I think Disney is offering some DVC villas at a 35% discount from rack rate for certain dates. IOW, they’re thinking about how long to break even by using their points to stay in the DVC villas themselves instead of paying Disney to stay there, not to rent them to other people.

ETA we booked two 2BR G/P villas at BWV for 6 nights in December 2020 for a family trip. Looking at our purchase price amortized over the length of the contract when we bought, plus MFs for those points, I calculated that each of those villas cost us $433/night, way less than what Disney would have charged us for those same villas.

 

[chalee94]

Yeah, owning was also a better deal when purchase prices were lower.

But I agree that people are typically comparing ownership to "cash prices" for stays rather than rental costs.

If you are happy renting, that is a pretty good deal that gives you options (book BCV one year and Poly the next - or skip 4 years if you prefer).

But if you are leaning towards ownership, then owning offers more control over the reservation and more flexibility to change plans if you need to cancel a reservation.

 

[arich35]

Most people compare the purchase price to the Disney price of the same accommodations - not necessarily rack rate but discounted price, e.g. I think Disney is offering some DVC villas at a 35% discount from rack rate for certain dates. IOW, they’re thinking about how long to break even by using their points to stay in the DVC villas themselves instead of paying Disney to stay there, not to rent them to other people.

ETA we booked two 2BR G/P villas at BWV for 6 nights in December 2020 for a family trip. Looking at our purchase price amortized over the length of the contract when we bought, plus MFs for those points, I calculated that each of those villas cost us $433/night, way less than what Disney would have charged us for those same villas.

Yeah I don't think we would compare to rack rates, that makes sense why they seem quicker.
This is the third time we have rented and I don't think we would ever go back when staying at Disney.

 

[wnielsen1]

Newbie here and I know this has been probably discussed a lot but trying to get an idea if I am on the right track or way off. I have been trying to do just simple calculations when I would break even if we bought certain contracts that are listed right now. I did it based off we were to rent the points at $18 per point. Would like to know if it sounds right or if I am way off:

SS- 125 pts, $135 per point- 14 years to break even
SS- 250 pts, $132 per point- 13 years to break even
Poly- 150 pts, $177 per point- 18 years to break even

From what I have read I thought it would be less than that.

Other factors:

• Poly points can probably be rented at a higher price.
• The rental price can vary, but the spread between dues and rental price has been widening. I'm assuming the reverse can also occur if demand slows down.
• Anybody renting through a broker is probably paying more than $18 which also drives down the time to break even.

So, in summary it depends what you are comparing to: rack rate, discounted rate, broker rental, independent rental.

 

[Sandisw]

When we bought, we did use discounted Disney cost as we were not comfortable with renting.

But, take into consideration that rental costs will also go up over time. It’s definitely going to take longer now than it did years back, but depending on your long range plan, it can still make sense.

If you decide not to go one year, you can rent points yourself to offset the cost

 

[BillPA]

If you buy, no matter when the break even date is, you will own it. It will have real value in the resale market, how much no one really knows but it will be worth more than another rental bill.

 

[chalee94]

If you buy, no matter when the break even date is, you will own it. It will have real value in the resale market, how much no one really knows but it will be worth more than another rental bill.

This is definitely true also.

Some people might plan to own for 10 years - if you assume that you can buy SSR at $135 and sell it at $135 in 10 years (which is iffy - might be more, could be less), then you would come out way ahead since you were only paying dues (plus closing costs to buy and broker fees to sell) during your ownership instead of rental prices... but it depends on your assumptions...

 

[Robbie Cottam]

Newbie here and I know this has been probably discussed a lot but trying to get an idea if I am on the right track or way off. I have been trying to do just simple calculations when I would break even if we bought certain contracts that are listed right now. I did it based off we were to rent the points at $18 per point. Would like to know if it sounds right or if I am way off:

SS- 125 pts, $135 per point- 14 years to break even
SS- 250 pts, $132 per point- 13 years to break even
Poly- 150 pts, $177 per point- 18 years to break even

From what I have read I thought it would be less than that.

Depends on how you do the math….

I bought last summer at RR. 180 per point. I can rent them at 20 per point with fees of fees are about 6 / per point. Break even is 13 years.

on a 50 years contract that means 37 years of “almost free” vacations

 

[DVC Doctor]

Newbie here and I know this has been probably discussed a lot but trying to get an idea if I am on the right track or way off. I have been trying to do just simple calculations when I would break even if we bought certain contracts that are listed right now. I did it based off we were to rent the points at $18 per point. Would like to know if it sounds right or if I am way off:

SS- 125 pts, $135 per point- 14 years to break even
SS- 250 pts, $132 per point- 13 years to break even
Poly- 150 pts, $177 per point- 18 years to break even

From what I have read I thought it would be less than that.

You have to define what you mean by "Break even" If that means the DVC contract is fully paid off, then your calculations are correct - assume $10pp above annual dues for rental rate

However, I would state your break even occurs much sooner, like in two to three years, and the reason for that is the resale price of your contract will be more than what you paid minus $30 (assume $10pp x 3 years rent). Of course, if you sold, there are commissions and closing costs, so perhaps break even is in the 4-5 years.

The concept that your cost for the DVC will be $0 in 13-18 years with the above numbers is mostly true, but then you will still have 20 years left with $0 cost other than annual dues.

Not to many timeshares have the hue demand in rentals and hold value like DVC

 

[Robbie Cottam]

You have to define what you mean by "Break even" If that means the DVC contract is fully paid off, then your calculations are correct - assume $10pp above annual dues for rental rate

However, I would state your break even occurs much sooner, like in two to three years, and the reason for that is the resale price of your contract will be more than what you paid minus $30 (assume $10pp x 3 years rent). Of course, if you sold, there are commissions and closing costs, so perhaps break even is in the 4-5 years.

The concept that your cost for the DVC will be $0 in 13-18 years with the above numbers is mostly true, but then you will still have 20 years left with $0 cost other than annual dues.

Not to many timeshares have the hue demand in rentals and hold value like DVC

Great, point I didn’t consider the resale value !!!! Also great point about defining break even as this is very subjective term

 

[DVC Doctor]

Great, point I didn’t consider the resale value !!!! Also great point about defining break even as this is very subjective term

Although timeshares are not true investments, they often cost a lot of money to buy, so consumers should be well educated on them.

The main factors are
-purchase price (including financing if any)
-annual dues
-benefit (i.e. use of points per year or $10pp profit from rental)
-resale value (minus commissions)

I find it helpful to use a 5 or 10 year increment to gauge value and if it is worth it.

 

[sethschroeder]

I did it based off we were to rent the points at $18 per point.

I think that's fairly hard. I feel like you need to do an annual increase in cost of renting points and calculate in possibly 1 lost rental or partially lost rental.

A decade ago I was renting points for like $12-$14 per point.

In 10 years have to think baseline rentals will be in the $20+ range.

Also seperately selling needs to be calculated in on the back end. Not for breakeven but for the all in cost.

 

[arich35]

I think that's fairly hard. I feel like you need to do an annual increase in cost of renting points and calculate in possibly 1 lost rental or partially lost rental.

A decade ago I was renting points for like $12-$14 per point.

In 10 years have to think baseline rentals will be in the $20+ range.

Also seperately selling needs to be calculated in on the back end. Not for breakeven but for the all in cost.

I thought about this point, I figured it would be more to rent as the years go by especially if you go through a company.

Thank you everyone who has commented on this post, a lot of great insight!

 

[tweetykl]

My family thinks of break even is when the cost of the same accommodations (or as similar as I can get at VGC) through Disney meets the cost of the contract. Our Grand Californian contract cost a lot. Our Aulani contract cost about $24,000. After a 3 night two bedroom at VGC, a 4 night one bedroom at VGC, and our upcoming 10 night one bedroom at Aulani, the reservations would have cost $26,000. we did all of these stays in the first year and a half of owning.

 

[chicagodisneyguy]

My family thinks of break even is when the cost of the same accommodations (or as similar as I can get at VGC) through Disney meets the cost of the contract. Our Grand Californian contract cost a lot. Our Aulani contract cost about $24,000. After a 3 night two bedroom at VGC, a 4 night one bedroom at VGC, and our upcoming 10 night one bedroom at Aulani, the reservations would have cost $26,000. we did all of these stays in the first year and a half of owning.

The question I have is would you have actually paid those prices if you didn't own DVC? If so, then the math makes. But if not, then I think using rack rate for those rooms isn't quite fair.

We own BWV and BLT. Usually when I'm doing off the cuff math on what value I get from DVC I look at what I would have paid instead. For my Sept 2022 BWV standard studio I look at what a 4 night stay at Swan/Dolphin would cost...because that's what I would pay if I didn't own DVC. For my dates it's right around $300/night including resort fees. The same nights at BWI are north of $600. While it might make me feel better that I'm getting $2500 in value....I'm really getting $1200 in value. I will say BWV is a nicer hotel than the dolphin so there is some added value for more deluxe accommodations, but I've never really factored that in to my values.

I do acknowledge post pandemic prices are nuts and many ARE paying Disney's asking price. So if you/others are in that camp DVC really is a no brainer in many cases.

 

[theMoreDisneytheBetter]

I don’t necessarily think it’s fair to compare VGC or VGF to Swolphin. It’s a MUCH nicer experience to stay at DVC locations and it’s a MUCH nicer experience to have the extra space in a 2BD. Maybe the truth lies somewhere in the middle.

 

[Sandisw]

I don’t necessarily think it’s fair to compare VGC or VGF to Swolphin. It’s a MUCH nicer experience to stay at DVC locations and it’s a MUCH nicer experience to have the extra space in a 2BD. Maybe the truth lies somewhere in the middle.

I have to agree. It just not the same experience. Now, for some, staying those places is a viable option. But when deciding if DVC will work for someone, using the Disney locations you are getting is important.

 

[Robbie Cottam]

You have to define what you mean by "Break even" If that means the DVC contract is fully paid off, then your calculations are correct - assume $10pp above annual dues for rental rate

However, I would state your break even occurs much sooner, like in two to three years, and the reason for that is the resale price of your contract will be more than what you paid minus $30 (assume $10pp x 3 years rent). Of course, if you sold, there are commissions and closing costs, so perhaps break even is in the 4-5 years.

The concept that your cost for the DVC will be $0 in 13-18 years with the above numbers is mostly true, but then you will still have 20 years left with $0 cost other than annual dues.

Not to many timeshares have the hue demand in rentals and hold value like DVC

I think that's fairly hard. I feel like you need to do an annual increase in cost of renting points and calculate in possibly 1 lost rental or partially lost rental.

A decade ago I was renting points for like $12-$14 per point.

In 10 years have to think baseline rentals will be in the $20+ range.

Also seperately selling needs to be calculated in on the back end. Not for breakeven but for the all in cost.

I think you rental rates are low. Maybe the represent distressed points.
I started renting points in 2013 @ 15 per point at SSR 16 per point BLT
I current rent SSR at 18 a point and RR BLT at 20 per point

i have seen points being rented in the 22 dollar range already and confirmed reservation closer to 26….

I think you $20 per point is now not 10 years from now.

 

[Robbie Cottam]

The question I have is would you have actually paid those prices if you didn't own DVC? If so, then the math makes. But if not, then I think using rack rate for those rooms isn't quite fair.

We own BWV and BLT. Usually when I'm doing off the cuff math on what value I get from DVC I look at what I would have paid instead. For my Sept 2022 BWV standard studio I look at what a 4 night stay at Swan/Dolphin would cost...because that's what I would pay if I didn't own DVC. For my dates it's right around $300/night including resort fees. The same nights at BWI are north of $600. While it might make me feel better that I'm getting $2500 in value....I'm really getting $1200 in value. I will say BWV is a nicer hotel than the dolphin so there is some added value for more deluxe accommodations, but I've never really factored that in to my values.

I do acknowledge post pandemic prices are nuts and many ARE paying Disney's asking price. So if you/others are in that camp DVC really is a no brainer in many cases.

I’m sorry, but what you are saying is if I didn’t own a Cadillac, I would only have to pay for a Kia …..

you Can not compare DVC the a retail hotel. They are not the same. Compare DVC to a suite and the comparison becomes a lot closer