Break even / value calculator for DVC = per resort

[JPKnapp]

I'd welcome any input to the most gaping non-feature of this spreadsheet = asset value. The entirety of this assumes there is no value to the asset (DVC contract). If you can sell the contract for X% what you bought it for, the higher that X, the faster you break even (assuming dues<cash stay). And that X% changes with so many different variables I cant think of a scalable way to account for it. I expect there will be some sort of parabolic curve of value of asset that goes up and down as we get closer to contract end period. I'd welcome any input on how to account for asset value in the future.

My initial thought is something along the lines of tying it to the future cost of cash vacations minus future dues. But I am stuck.

 

[JPKnapp]

Looks Great! Thanks

A couple of nit picky items.

A) In order to access the spreadsheet, just download a copy

B) I did notice one possible issue. The calculation in the investing chart at the bottom doesn't seem correct to me in 2020 (Cell F61 for SSR), which throws off all of the subsequent years. The calculation assumes that if you did not purchase DVC, you would take all of the money and invest it, but not take any vacation in 2020. Obviously, this is a case by case scenario, but I think (especially today since it's only the beginning of February) that you would need to withdraw some money in year 1 to pay for a vacation this year. If you purchased DVC, you would most likely take a vacation this year. I guess this is a bit of a case by case scenario.

C) A continuation of C. In 2021 (Cell G61 for SSR), your assuming that you do not see any growth on the 2021 MF (which are due in January), n'or are you reducing your growth by that year's cash withdrawal.

Good thoughts. Here was my thinking, but I could be convinced to change.
B) Being totally case by case, I went with someone not making DVC purchase today based on vacation spend in 2020. I wasnt sure those were mutually exclusive. You are right that it would throw off all subsequent years, but not really enough for material consideration.

C) SSR (and all other) dues do go up from 2020 to 2021 and accounted for. Not sure if sheets wasnt showing right formula for you, but I double checked. As for the FIFO-like accounting pattern of when you pay/accrue for beginning-of-year/end-of-year. I didnt account for that due to complexity of the calculation. I dont believe it would materially change it, but you are right that there is a different between accruing interest throughout the year vs a one-time payment of dues. It's not like you get all your interest for the investment all at once whereas you need to pay dues all at once. There is a formula out there I could dig up, but I am afraid I wouldnt know enough about it to explain it.

 

[ClemTig]

This spreadsheet is fun to look at, but doesn’t really work for how my family takes vacations, and how I think about the money I put into this originally. We go to WDW about every 4th year. I rent my points out in between. I prefer to think of it this way... my original investment (BWV points in 1998 at $57/point and BLT in 2010 at $81/pt) pays a “dividend” that is equal to the rental fee minus the MF each year. I currently rent BWV for $17/point (-6.57MF=$11.43 or a current yield of 20% on my original “investment”) and I rent BLT for $20/point (- 6.58MF = $13.42 or yield of 16.5%). That dividend has been growing each year significantly. I can choose to spend that “dividend” on a vacation to WDW sometimes, but I see that as a cost every time we go.

This is my “simplistic” way of looking at it, and it works for me and my family. I have other true “investments”, but my bonds don’t grow the payout each year like my DVC points (although I should get back my principal at maturity unlike DVC points), and my stocks grow in value but don’t pay much dividend.

 

[JPKnapp]

This spreadsheet is fun to look at, but doesn’t really work for how my family takes vacations, and how I think about the money I put into this originally. We go to WDW about every 4th year. I rent my points out in between. I prefer to think of it this way... my original investment (BWV points in 1998 at $57/point and BLT in 2010 at $81/pt) pays a “dividend” that is equal to the rental fee minus the MF each year. I currently rent BWV for $17/point (-6.57MF=$11.43 or a current yield of 20% on my original “investment”) and I rent BLT for $20/point (- 6.58MF = $13.42 or yield of 16.5%). That dividend has been growing each year significantly. I can choose to spend that “dividend” on a vacation to WDW sometimes, but I see that as a cost every time we go.

This is my “simplistic” way of looking at it, and it works for me and my family. I have other true “investments”, but my bonds don’t grow the payout each year like my DVC points (although I should get back my principal at maturity unlike DVC points), and my stocks grow in value but don’t pay much dividend.

You are in amazing shape with your purchase. This analysis is really for those looking to buy today and not a retrospective. Your per point costs are well below market value and not only do you get rental “dividends” (loosely qualified since the profit it’s taxed at normal income and not 20% like true dividends) but you have substantial capital gains in per point purchase. It’s mentioned that one of the biggest gaps in this algorithm is the value of the asset over time. You bought in the golden age of DVC and have/will continue to do well with the strategy.
However, since your numbers aren’t close to reality of today’s buyers I didn’t this into the sheet.

 

[ClemTig]

You are in amazing shape with your purchase. This analysis is really for those looking to buy today and not a retrospective. Your per point costs are well below market value and not only do you get rental “dividends” (loosely qualified since the profit it’s taxed at normal income and not 20% like true dividends) but you have substantial capital gains in per point purchase. It’s mentioned that one of the biggest gaps in this algorithm is the value of the asset over time. You bought in the golden age of DVC and have/will continue to do well with the strategy.
However, since your numbers aren’t close to reality of today’s buyers I didn’t this into the sheet.

Well, I think the true "golden age" was when the OKW members bought. The price when I bought BWV was significantly higher than when OKW was sold. And BLT was significantly more expensive than BWV. But BLT is doing at least as well, if not better than my BWV was after 10 years. At the time I bought each I thought they were priced "at the top end". But Disney keeps raising prices. And the demand is as strong as ever, as best I can tell. Perhaps 15 years from now everyone will be calling THIS time the "golden era" of DVC.

 

[MickeyMouseEsq]

What are the "original value" columns? Are they just reference points or do they figure in to some calculation?

 

[JPKnapp]

What are the "original value" columns? Are they just reference points or do they figure in to some calculation?

Since anyone can change the input values (yellow background cells) I put a column which has my original values so I can copy/paste back into the spreadsheet to reset it after someone makes the tweaks to compare their personal vacation habits to determine the break even.

 

[MickeyMouseEsq]

Since anyone can change the input values (yellow background cells) I put a column which has my original values so I can copy/paste back into the spreadsheet to reset it after someone makes the tweaks to compare their personal vacation habits to determine the break even.

That's what I figured.

For your consideration, I made a copy of the main tab and added conditional formatting to the break-even chart to give an easier visual demonstration of the breakeven points. Obviously feel free to delete that tab!

 

[JPKnapp]

That's what I figured.

For your consideration, I made a copy of the main tab and added conditional formatting to the break-even chart to give an easier visual demonstration of the breakeven points. Obviously feel free to delete that tab!

Nice add.

 

[mattpeto]

This is very cool.

 

[JPKnapp]

This is very cool.

Thanks. It's been really neat to see the input values change and how many different types of vacation styles.

 

[ELMC]

I'd welcome any input to the most gaping non-feature of this spreadsheet = asset value. The entirety of this assumes there is no value to the asset (DVC contract). If you can sell the contract for X% what you bought it for, the higher that X, the faster you break even (assuming dues<cash stay). And that X% changes with so many different variables I cant think of a scalable way to account for it. I expect there will be some sort of parabolic curve of value of asset that goes up and down as we get closer to contract end period. I'd welcome any input on how to account for asset value in the future.

My initial thought is something along the lines of tying it to the future cost of cash vacations minus future dues. But I am stuck.

You've really hit on something here, because this is the one variable to DVC that makes the accounting very difficult. Essentially, the value is binary and only potential, not real. As long as you are keeping and using the DVC contract the value is essentially zero (even though it really isn't zero) because you would have to sell the contract to capture that value. But once you do sell, then the value is substantial and completely destroys any financial modeling or break-even analysis. Tough spot to be in.

What if you were to simply calculate a straight-line depreciation of the value over the lifespan of the contract? Granted it is a bit of an oversimplification, but it at least can serve as a fairly decent plug number to look at as you are planning your ownership horizon. I think it is better than having nothing, and leaving people to speculate as to what the true cost would be if they were to sell in five, ten, fifteen years, etc. In this column I would also calculate the value at 92% to account for commissions and fees.

I'm interested to hear what you think.

 

[Cyberc1978]

When I open the spreadsheet and put in my numbers there is an error in F24 that the references is not found?

 

[JPKnapp]

When I open the spreadsheet and put in my numbers there is an error in F24 that the references is not found?

It seems to work for me OK. Maybe multiple people are into the sheet at the same time.

 

[Cyberc1978]

It seems to work for me OK. Maybe multiple people are into the sheet at the same time.

This is what I see:

 

[JPKnapp]

You've really hit on something here, because this is the one variable to DVC that makes the accounting very difficult. Essentially, the value is binary and only potential, not real. As long as you are keeping and using the DVC contract the value is essentially zero (even though it really isn't zero) because you would have to sell the contract to capture that value. But once you do sell, then the value is substantial and completely destroys any financial modeling or break-even analysis. Tough spot to be in.

What if you were to simply calculate a straight-line depreciation of the value over the lifespan of the contract? Granted it is a bit of an oversimplification, but it at least can serve as a fairly decent plug number to look at as you are planning your ownership horizon. I think it is better than having nothing, and leaving people to speculate as to what the true cost would be if they were to sell in five, ten, fifteen years, etc. In this column I would also calculate the value at 92% to account for commissions and fees.

I'm interested to hear what you think.

That will certainly capture part of the value, but I don’t think the calculation would hold up for more than 5-7 years. At the simplest form, DVC is a prepaid/contract commitment for Disney lodging. So the value of a contract is actually more reliant on the cost for a cash stay than a derivative of initial buy because that’s the hard number most people use to financially justify the purchase.

Since it seems 7-10 years is the typical horizon for predicting future Disney stays, we could derive a hypothesis that the per point value of a contract is tied to that 7-10 year cash expense. I might run a backwards comparison to see if that holds up.

For example a BWV contract in 2035 will have more than 10% of the value it has today. I predict very transparent pricing and less variance in those closing years since the cost for cash stays is available about 18 months in advance.