confused on the draw to DVC

[igrsod]

Given how you’re one of those folks that managed to buy-in at $12/pt during the Great Recession, what calculation could possibly suggest that you are not saving money?

Perhaps I shouldn’t have generalized so much, but I guess for me, the money is spent and I’m definitely saving money staying on my points over the alternative. So while I understand enjoying seeing how cheap the effective cost of my room is, what sort of new information about the cost effectiveness of having bought in will an owner glean by running those calculations year after year after the initial purchase has been made? I’m honestly wondering.

I can imagine that if rack rates plummet and the cost effectiveness of a Disney timeshare is negated that information would be helpful to re-evaluate the viability of owning, but what options would an owner have at that point? It’s not like you could sell at that point. If paying rack is cheaper, then owning is going to be a losing proposition no matter what you’re paying per night.

What is the purpose of doing this cost analysis every time you book a room on points? Have you ever found, or do you foresee ever finding that it would be more cost effective to do otherwise?

I don't do it every time... but sometimes I do it to make myself feel good, or just for pure interest sake.

 

[Christiney]

We bought because we go every year and we would like to start going twice a year. Every year the price of WDW is going up and, for the price we pay, we could have already bought into it!! I like that we can get the dining plan without buying tickets since we love hanging at the resort. We bought resale and saved thousands of dollars!! I just could not bare to shell out 4 grand again for a one week stay when I could pay a little bit more than that for 30 years!!!!

 

[Momtomouselover]

I can't speak for everyone else - but I look at the financial cost every single time. I have a value set for my points. (Buy-in calculated at cost per point/#years of contract + MF) and I look at that cost for the room.

My 3 night stay coming up at BWV is costing me $411 and this is how I calculate it:
2019 points cost me $4.92 for buy-in + $7.17 for dues = $12.09 / point.
34 points for 3 nights = 34 * $12.09 = $411.14.
That's $137.05 per night at the Boardwalk - and there's no tax on that.

Not sure what it would have cost at Pop Century or CBR, but I doubt it's less.

How did you calculate your $4.92 pp for buy in price? I’m trying to do something similar using 100 points direct at AKL. Do I mark some assumptions (avg # nights for instance) and then calculate over life of contract? Thanks for any info.

 

[Bing Showei]

How did you calculate your $4.92 pp for buy in price? I’m trying to do something similar using 100 points direct at AKL. Do I mark some assumptions (avg # nights for instance) and then calculate over life of contract? Thanks for any info.

That's purely a calculation based on your buy-in price, inclusive of closing costs, divided out by the number of points on the contract over the remaining years on the RTU.

So if you buy 100 AKL contract direct, $176/point. That cost is $17,600 plus closing (assume $500). $18,100 buy-in cost, divided out over the life of the contract (2056 will be last year of points distributed - RTU is to January 31, 2057).

Assuming contract came with 2019 points, that would give you 37 years of points. Each point would come to $4.89/point.

 

[Ms.Minnie]

We have owned our DVC for 20 years now. I know for a fact we wouldn't have gone to WDW every year sometimes multiple time in one year if it weren't for DVC. There is no way I want to pay $5,000+(I'm sure this number is way low) each year to visit WDW. I have no doubt that I have recouped my purchase price and dues over the years. DVC has been a very good decision for me and my family. No doubt about it.

DVC may not be a good decision for everyone. Each of us has to weight the cost and commitment involved in owning DVC to determine if it is right for us and our family. Nobody can answer that question but you.

All you can do is get as much information as possible and base your decision on what you have learned. Good luck.

 

[Momtomouselover]

That's purely a calculation based on your buy-in price, inclusive of closing costs, divided out by the number of points on the contract over the remaining years on the RTU.

So if you buy 100 AKL contract direct, $176/point. That cost is $17,600 plus closing (assume $500). $18,100 buy-in cost, divided out over the life of the contract (2056 will be last year of points distributed - RTU is to January 31, 2057).

Assuming contract came with 2019 points, that would give you 37 years of points. Each point would come to $4.89/point.

Thank you so much! Now to work this out for other resorts I’m considering and/or resale.

 

[peabody58]

DVC in 2010. Then this happened....

Started vacationing more regularly. Stress went away. Our marriage improved, no more divorce potential (saved us $500K easily). Retired early at 57. Even more less stress. Better health. More vacationing. Marriage happiness index hitting all time highs! DW down 67 lbs, almost off insulin injections. 24 nights at WDW this coming AP year. Starting SS in Jan at age 62. Adult kids still love to vacation with us at WDW (10/2020)[on our dime of course].

Coincidence? Ummmm.... You decide. The DVC draw is not always about $$.

Oh and if it's about $$, our average per night cost (Studios, 1 and 2 BR's combined) is now down to $230/nt. If we sold our DVC today it would be $42/nt. Obviously your calcs may vary, but my nerdy side spreadsheet multiple analysis formulas (updated with every trip) continue to show an economical benefit to having DVC as part of our lifestyle strategy. Plus, we love our afternoon naps in our villas - a guilty pleasure for us seenagers!

 

[igrsod]

Thank you so much! Now to work this out for other resorts I’m considering and/or resale.

I have a chart of what I'm willing to pay for each resort when I'm hunting for an add on contract. It has to make sense to me financially to buy a contract. It amazes me just how much some contracts are listed for.

 

[igrsod]

DVC in 2010. Then this happened....

Started vacationing more regularly. Stress went away. Our marriage improved, no more divorce potential (saved us $500K easily). Retired early at 57. Even more less stress. Better health. More vacationing. Marriage happiness index hitting all time highs! DW down 67 lbs, almost off insulin injections. 24 nights at WDW this coming AP year. Starting SS in Jan at age 62. Adult kids still love to vacation with us at WDW (10/2020)[on our dime of course].

Coincidence? Ummmm.... You decide. The DVC draw is not always about $$.

Oh and if it's about $$, our average per night cost (Studios, 1 and 2 BR's combined) is now down to $230/nt. If we sold our DVC today it would be $42/nt. Obviously your calcs may vary, but my nerdy side spreadsheet multiple analysis formulas (updated with every trip) continue to show an economical benefit to having DVC as part of our lifestyle strategy. Plus, we love our afternoon naps in our villas - a guilty pleasure for us seenagers!

You analyze like my hubby. He likes to factor in the things that can't be measured in dollars.
Those things are far more valuable than a $.

 

[GaSleepingBeautyFan]

I was thinking for you OP getting DVC might not be worth it.

For me it was. I mostly go solo 3 or 4 times a year. Sometimes my husband joins me, sometimes not. (Currently for the next 2 years I'll probably only go twice a year since my last child is now in college and we are paying for it).

I haven't done the calculations financially in a few years but I was staying moderate or deluxe the majority of the time and found that it was actually cheaper for me getting DVC and staying in studios. I still end up with a stay that I pay for regularly since I don't have enough points for every trip and that's ok. It's nice to stay in a non-dvc resort too.

I've added one small resale contract on and am just waiting on the contract for another that I'm hoping DVC won't take. Between my original buy in of points and my one resale contract I can stay a full week if I want.
While that will most likely never happen (I usually stay 4 or 5 days at a time) adding in this next small contract will enable me to add another 4 days in stays.

When I go, I don't spend all of my time in the parks. I enjoy the resort more. And touring other resorts and even taking a day and driving to one of the beaches within an hour or two. Sometimes I take a day and go over to Universal as well.
My trips have been more relaxing since I've joined DVC and that for me has been totally worth it!

 

[skier_pete]

How did you calculate your $4.92 pp for buy in price? I’m trying to do something similar using 100 points direct at AKL. Do I mark some assumptions (avg # nights for instance) and then calculate over life of contract? Thanks for any info.

I'll give you my example. We bought 75 points at BWV in 2017 for $105 a point. With fees the contract cost $8404 dollars.
I got a some 2017 points and all 2018 points and forward. Counting up 22 years of points that's 1708 points. (Through 2041 - remember even though they tell you the contract is until 2042 - that's January 2042 to you don't actually get 2042 points.).

That's $8404 / 1708 points = $4.92 / point as the value of my buy-in. Then in 2019 my dues are an additional $7.17 / point - so in 2019 those points cost me $4.92+7.17= $12.09 / point

My other contracts -
AKV in 2014 at $74 a point - $1.86 / point.
AKV last month at $112 a point = $3.14 / point

So let say you pay $175 direct at AKV and we'll include 2019 points. One hundred points cost $17,500 + whatever closing cost so let's call it $18,000. 2019 to 2056 is 38 years worth of points, so 3,800 points. so cost basis is $4.73 / point. So you would be paying roughly $1.59 / point more than I paid to earn member benefits. Then add MF of $7.44 / point give you $12.17 / point of your actual cost per point. So a night in a 1-bedroom at 26 points would cost $316.42.

Yes this doesn't take into account inflation of the original $$ buy-in, but to me that is sunk costs unless I sell the contract, so I just keep that number the same year to year. You could add an inflation factor if you like.

A couple last examples:
Riviera at $188 / point and 50 years gives you $3.76 / point, so on a per point basis, Riviera is technically the cheapest direct buy per point, but MF of $8.31 a point = $12.07 / point - it's actually a very similar cost. Then factor in the points to stay at Riviera vs AKV and you will find a 25 point room at Riviera costs a lot more than a 16 point room at AKV. However, the value of the Riviera point is very similar to the AKV point.

Cost basis ranges can be huge.
Now Beach Club direct at $235 / point with 22 years left you are looking at $10.68 cost basis, compare to $3.76 / point for Riviera, there's an awful good argument for buying Riviera direct versus Beach Club. And in 20 years when Beach Clubs value is near zero, you will still be able to get some value for Riviera.

 

[Ms.Minnie]

No offence to anyone but way too many calculations going on for me. DVC was a good decision for me and my family. I will leave it at that. Just sayin...

 

[SecondEventuality]

I'll give you my example. We bought 75 points at BWV in 2017 for $105 a point. With fees the contract cost $8404 dollars.
I got a some 2017 points and all 2018 points and forward. Counting up 22 years of points that's 1708 points. (Through 2041 - remember even though they tell you the contract is until 2042 - that's January 2042 to you don't actually get 2042 points.).

That's $8404 / 1708 points = $4.92 / point as the value of my buy-in. Then in 2019 my dues are an additional $7.17 / point - so in 2019 those points cost me $4.92+7.17= $12.09 / point

This precisely why, when I looked at buying a small contract yesterday with Beach Club, I passed since it comes out to be ~$17 / PP. Not worth it (anymore). $350 a night. I like Beach Club, just not THAT much. LOL!

 

[Jenniebee]

Same here! Hurts my head. I did a simple "when will I break even" calculation, maybe tried to figure out what the MF's will be when they are $10-$12pp and left it at that. It all works for me.

 

[DougEMG]

Given how you’re one of those folks that managed to buy-in at $12/pt during the Great Recession, what calculation could possibly suggest that you are not saving money?

.....

What is the purpose of doing this cost analysis every time you book a room on points? Have you ever found, or do you foresee ever finding that it would be more cost effective to do otherwise?

It wasn't quiet that low

I'm just about 60, so what is on my mind is how many more years can I go to Disney and thus when/if should I sell? It has been brought up in the past, but if one wouldn't buy in at these prices because the value isn't there, then should one look at selling? So what I'm more interested in is when should I sell and that still comes down to a value question, hence why I still look at what value I am getting out of DVC.

Having said that I did just buy my latest contract in Dec 2018 at BLT, so I guess I'm still seeing value in owning.

 

[Ms.Minnie]

I'm older then you and I'm planning on going to WDW for many more years to come. If at some point I can't go anymore I will give to my children. I don't think selling is in my plan.

 

[DougEMG]

I'll give you my example. We bought 75 points at BWV in 2017 for $105 a point. With fees the contract cost $8404 dollars.
I got a some 2017 points and all 2018 points and forward. Counting up 22 years of points that's 1708 points. (Through 2041 - remember even though they tell you the contract is until 2042 - that's January 2042 to you don't actually get 2042 points.).

That's $8404 / 1708 points = $4.92 / point as the value of my buy-in. Then in 2019 my dues are an additional $7.17 / point - so in 2019 those points cost me $4.92+7.17= $12.09 / point

My other contracts -
AKV in 2014 at $74 a point - $1.86 / point.
AKV last month at $112 a point = $3.14 / point

So let say you pay $175 direct at AKV and we'll include 2019 points. One hundred points cost $17,500 + whatever closing cost so let's call it $18,000. 2019 to 2056 is 38 years worth of points, so 3,800 points. so cost basis is $4.73 / point. So you would be paying roughly $1.59 / point more than I paid to earn member benefits. Then add MF of $7.44 / point give you $12.17 / point of your actual cost per point. So a night in a 1-bedroom at 26 points would cost $316.42.

Yes this doesn't take into account inflation of the original $$ buy-in, but to me that is sunk costs unless I sell the contract, so I just keep that number the same year to year. You could add an inflation factor if you like.

A couple last examples:
Riviera at $188 / point and 50 years gives you $3.76 / point, so on a per point basis, Riviera is technically the cheapest direct buy per point, but MF of $8.31 a point = $12.07 / point - it's actually a very similar cost. Then factor in the points to stay at Riviera vs AKV and you will find a 25 point room at Riviera costs a lot more than a 16 point room at AKV. However, the value of the Riviera point is very similar to the AKV point.

Cost basis ranges can be huge.
Now Beach Club direct at $235 / point with 22 years left you are looking at $10.68 cost basis, compare to $3.76 / point for Riviera, there's an awful good argument for buying Riviera direct versus Beach Club. And in 20 years when Beach Clubs value is near zero, you will still be able to get some value for Riviera.

I know that this is a popular approach to valuing, but I'm not a big fan of taking purchase price dividing by total points and then adding in this years MF to get what it is costing you per point. The reason why is because the time value of your initial purchase can have a big impact. So your actual opportunity costs are much higher.

If you had of invested that initial purchase of $8404 at 1% over inflation that becomes $10,357 in today's dollars. At 2% over inflation that is $12,738 and at 3% over inflation that is $15,634. So those costs in today's dollars are really $12.09 if you assume 0% return, $13.23 at 1%, $14.62 at 2% and $16.32 at 3%. At 3% you are underestimating your costs by 35%.

 

[DougEMG]

I'm older then you and I'm planning on going to WDW for many more years to come. If at some point I can't go anymore I will give to my children. I don't think selling is in my plan.

My daughter was placed on any contracts I purchased after she turned 18. While she loves going now, who is to say if she will when she is 65, which is the age she will be when my last contract expires.

 

[Jenniebee]

If you are having fun and enjoy it keep it. I plan to run out the clock on mine. But who knows, if my income changes or if I cannot afford the MF's in my retirement maybe things will be different.

 

[Momtomouselover]

I'll give you my example. We bought 75 points at BWV in 2017 for $105 a point. With fees the contract cost $8404 dollars.
I got a some 2017 points and all 2018 points and forward. Counting up 22 years of points that's 1708 points. (Through 2041 - remember even though they tell you the contract is until 2042 - that's January 2042 to you don't actually get 2042 points.).

That's $8404 / 1708 points = $4.92 / point as the value of my buy-in. Then in 2019 my dues are an additional $7.17 / point - so in 2019 those points cost me $4.92+7.17= $12.09 / point

My other contracts -
AKV in 2014 at $74 a point - $1.86 / point.
AKV last month at $112 a point = $3.14 / point

So let say you pay $175 direct at AKV and we'll include 2019 points. One hundred points cost $17,500 + whatever closing cost so let's call it $18,000. 2019 to 2056 is 38 years worth of points, so 3,800 points. so cost basis is $4.73 / point. So you would be paying roughly $1.59 / point more than I paid to earn member benefits. Then add MF of $7.44 / point give you $12.17 / point of your actual cost per point. So a night in a 1-bedroom at 26 points would cost $316.42.

Yes this doesn't take into account inflation of the original $$ buy-in, but to me that is sunk costs unless I sell the contract, so I just keep that number the same year to year. You could add an inflation factor if you like.

A couple last examples:
Riviera at $188 / point and 50 years gives you $3.76 / point, so on a per point basis, Riviera is technically the cheapest direct buy per point, but MF of $8.31 a point = $12.07 / point - it's actually a very similar cost. Then factor in the points to stay at Riviera vs AKV and you will find a 25 point room at Riviera costs a lot more than a 16 point room at AKV. However, the value of the Riviera point is very similar to the AKV point.

Cost basis ranges can be huge.
Now Beach Club direct at $235 / point with 22 years left you are looking at $10.68 cost basis, compare to $3.76 / point for Riviera, there's an awful good argument for buying Riviera direct versus Beach Club. And in 20 years when Beach Clubs value is near zero, you will still be able to get some value for Riviera.

Thank you!! This really helps and I never did follow along the reasoning on a cost per point until now. You explained it well. Now, I need to figure out just what is best for us. I want to start small. AKL is somewhere I wouldn't mind staying if I have to always stay at home resort. I do like Riviera and struggle with that but haven't gotten comfortable with the restrictions yet and worry about the gondola, etc.