DECISION TIME! Why I'm prob going to pass on buying into DVC

[theguda]

First off...thanks to everyone who has replied on a couple threads I've started about me looking into DVC. I really do appreciate all the feedback and comments. I'm 99% sure I'm going to pass buying into DVC. I just don't see it as financially a good decision.

The offer I have in hand is basically $10,500 for a 160 point contract with 160 banked points from 2012. Going back to my original post...I can rent points anytime I want for $12 without buying into DVC. So I need to compare the cost of buying into DVC vs the cost of just renting points whenever I want to go to WDW. I understand there are some ancillary benefits to being a DVC member...but we're flexible in our vacation times so I don't expect much of a problem finding the resort we want by renting points.

Looking at it from strictly financial standpoint...I pay $10,500 and get 320 points in 2013 and 160 every year afterward. Again, let's say for the sake of comparison that I rented those points each year with a average profit of $7 per point (I'm basing this # on the last few years of maintenance fee costs vs what people have been renting point for). So on aveage I'd "profit" $1120 per year. Divide my initial cost of $10,500 by $1120 and it will take me almost 8.5 years for my "profit" to match my upfront cost (remember, I started with 320 points instead of 160).

But this also doesn't take into consideration the interest I'd make on that $10,500 if I invested it instead (which I would). If I instead take that $10,500, invest it and get a moderate 5% rate of return...I'd have $15,600 at the end of 8 years. Now my recoup time extends to almost 14 years. I don't consider taking 14 years to recoup my initial cost as a good use of my money.

The beauty of this exercise is that it's easy to compare renting vs owning. Yes, I could use my points instead of renting them....BUT...the difference between renting and owning is still the same. I'm either "saving" by owning and paying a lower maintenance fees....but my upfront cost is huge....OR....I'm "saving" by renting for a larger amt per point with zero up front cost. Either way...the #'s end up similar.

I'm gonna pass on owning DVC and just rent points. For me, it just makes more sense although I'd LOVE for someone to prove my theory wrong because I would love to be a DVC owner...I just don't think it's financially worth it. Is there something I'm missing...a huge error in my #'s that I don't see? Again....I'M LOOKING AT THIS FROM A $ STANDPOINT. I don't have to be a DVC member to go to WDW anytime I want. To me, the best option seems to invest the money and rent points.

ALTHOUGH...if I bought and recouped my inital cost in 14 years....every year afterward I'd realize a massive savings. The contract ends in on 1/31/2054. So after my 14 year recoup time is done I'd still have 27 years of heavily reduced resort stays because all I'd have are the maintenance fees. I guess I could allow my daughters to benefit from this (they could take their families to WDW using my points when they grow up). So that is a pretty large benefit in my eyes.

 

[momto3pirates]

Honestly, I don't think DVC ownership makes financial sense to most of us. I definately spend more money at Disney by owning DVC. It is constantly calling to me. If fact, we bought a contract at VGC just so we can spend money on the west coast. We do it because we will have nicer rooms than we would want to pay for otherwise. Yes, I could have a room with rental points for less, or stay at a value or mod resort for less, but with a family of 5we enjoy the extra space, kitchen, washer/dryer, extra bathrooms. Our vacation times are not flexible. We have to book 11 months out due to work/school schedules.

DVC is not for everyone. Good luck with your decision.

 

[disneynutz]

Owning is just a way for people who vacation at Disney every year to save some money on their room, it really isn't a club.

Disney makes money on selling contracts, then they make even more money by locking owners into repeat vacations. If the owners rent out a reservation Disney makes money off of the renter.

My point is that for Disney it's about money, for owners it should also be about money, it's a business decision. Disney does a great job of turning it into an emotional decision and buyers sometimes blur the line between owning and the magic of Disney experienced on property or on DCL. Nothing great is offered to owners that isn't offered to the general public and renters often receive many of the same discounts that owners do by mistake.

Bill

 

[bisney]

Our payback period using our HELOC interest rate, difference between renting vs. MFs of buying and the initial buy-in was 12 years. That was assuming that rental and MF increases will be the same which could be completely wrong but at most that would swing my calculation by 1-2 years.

For us, we're young enough to see the life cycle of owing DVC... go while the kids are little and Disney is magical, go to Hawaii and other locales like when we're empty nesters/kids are older and then be able to take the grandkids one day. Since we bought DVC for the long-haul, the MF savings in the future were definitely worth it for us. But everyone has different circumstances.

From a pure numbers standpoint, I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.

 

[PCMama]

First off...thanks to everyone who has replied on a couple threads I've started about me looking into DVC. I really do appreciate all the feedback and comments. I'm 99% sure I'm going to pass buying into DVC. I just don't see it as financially a good decision.

The offer I have in hand is basically $10,500 for a 160 point contract with 160 banked points from 2012. Going back to my original post...I can rent points anytime I want for $12 without buying into DVC. So I need to compare the cost of buying into DVC vs the cost of just renting points whenever I want to go to WDW. I understand there are some ancillary benefits to being a DVC member...but we're flexible in our vacation times so I don't expect much of a problem finding the resort we want by renting points.

Looking at it from strictly financial standpoint...I pay $10,500 and get 320 points in 2013 and 160 every year afterward. Again, let's say for the sake of comparison that I rented those points each year with a average profit of $7 per point (I'm basing this # on the last few years of maintenance fee costs vs what people have been renting point for). So on aveage I'd "profit" $1120 per year. Divide my initial cost of $10,500 by $1120 and it will take me almost 8.5 years for my "profit" to match my upfront cost (remember, I started with 320 points instead of 160).

But this also doesn't take into consideration the interest I'd make on that $10,500 if I invested it instead (which I would). If I instead take that $10,500, invest it and get a moderate 5% rate of return...I'd have $15,600 at the end of 8 years. Now my recoup time extends to almost 14 years. I don't consider taking 14 years to recoup my initial cost as a good use of my money.

The beauty of this exercise is that it's easy to compare renting vs owning. Yes, I could use my points instead of renting them....BUT...the difference between renting and owning is still the same. I'm either "saving" by owning and paying a lower maintenance fees....but my upfront cost is huge....OR....I'm "saving" by renting for a larger amt per point with zero up front cost. Either way...the #'s end up similar.

I'm gonna pass on owning DVC and just rent points. For me, it just makes more sense although I'd LOVE for someone to prove my theory wrong because I would love to be a DVC owner...I just don't think it's financially worth it. Is there something I'm missing...a huge error in my #'s that I don't see? Again....I'M LOOKING AT THIS FROM A $ STANDPOINT. I don't have to be a DVC member to go to WDW anytime I want. To me, the best option seems to invest the money and rent points.

ALTHOUGH...if I bought and recouped my inital cost in 14 years....every year afterward I'd realize a massive savings. The contract ends in on 1/31/2054. So after my 14 year recoup time is done I'd still have 27 years of heavily reduced resort stays because all I'd have are the maintenance fees. I guess I could allow my daughters to benefit from this (they could take their families to WDW using my points when they grow up). So that is a pretty large benefit in my eyes.

Yes Disney doesnt necessarily make financial sense. For us we are looking at renting at disneyland. It's a difficult place to rent at and I like to have control of my reservation. But I could rent for less off site in a regular hotel or another timeshare system like shell that I could buy for $1 or worldmark which is much less. But I want on site Disney. Our family would require two hotel rooms. So its what you are looking for. If I was doing Disneyworld it might be different. But u might still buy in.

 

[theguda]

I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.

Yes, we'd probably go to WDW at least once per year for the next 10 years...but I'm not following your math.

 

[Deb & Bill]

I don't think there is anything at all wrong with just renting instead of purchasing DVC.

 

[DougEMG]

If you aren't wanting to go to Disney on a regular basis till you are well past your break even point, buying doesn't make much sense. Renting points is certainly a more flexible option and is cheaper in the short term, while owning is cheaper in the long term.

 

[bisney]

Yes, we'd probably go to WDW at least once per year for the next 10 years...but I'm not following your math.

Reading through your post, I saw that you were looking purely from a payback period perspective (which I don't disagree with). Just wanted to point out a different way of looking at it: that DVC contracts also have a strong resale market (which you obviously know) which limits your financial exposure to much less than the $10,500 buy-in. If you go to Disney for 5 years (difference between renting and MFs for 160 points being ~$1,100 annually), there's a decent chance that you could net out at least 1/2 of the initial buy-in if you wanted to sell and walk away at that time.

 

[disneybass]

First off...thanks to everyone who has replied on a couple threads I've started about me looking into DVC. I really do appreciate all the feedback and comments. I'm 99% sure I'm going to pass buying into DVC. I just don't see it as financially a good decision.

The offer I have in hand is basically $10,500 for a 160 point contract with 160 banked points from 2012. Going back to my original post...I can rent points anytime I want for $12 without buying into DVC. So I need to compare the cost of buying into DVC vs the cost of just renting points whenever I want to go to WDW. I understand there are some ancillary benefits to being a DVC member...but we're flexible in our vacation times so I don't expect much of a problem finding the resort we want by renting points.

Looking at it from strictly financial standpoint...I pay $10,500 and get 320 points in 2013 and 160 every year afterward. Again, let's say for the sake of comparison that I rented those points each year with a average profit of $7 per point (I'm basing this # on the last few years of maintenance fee costs vs what people have been renting point for). So on aveage I'd "profit" $1120 per year. Divide my initial cost of $10,500 by $1120 and it will take me almost 8.5 years for my "profit" to match my upfront cost (remember, I started with 320 points instead of 160).

But this also doesn't take into consideration the interest I'd make on that $10,500 if I invested it instead (which I would). If I instead take that $10,500, invest it and get a moderate 5% rate of return...I'd have $15,600 at the end of 8 years. Now my recoup time extends to almost 14 years. I don't consider taking 14 years to recoup my initial cost as a good use of my money.

The beauty of this exercise is that it's easy to compare renting vs owning. Yes, I could use my points instead of renting them....BUT...the difference between renting and owning is still the same. I'm either "saving" by owning and paying a lower maintenance fees....but my upfront cost is huge....OR....I'm "saving" by renting for a larger amt per point with zero up front cost. Either way...the #'s end up similar.

I'm gonna pass on owning DVC and just rent points. For me, it just makes more sense although I'd LOVE for someone to prove my theory wrong because I would love to be a DVC owner...I just don't think it's financially worth it. Is there something I'm missing...a huge error in my #'s that I don't see? Again....I'M LOOKING AT THIS FROM A $ STANDPOINT. I don't have to be a DVC member to go to WDW anytime I want. To me, the best option seems to invest the money and rent points.

ALTHOUGH...if I bought and recouped my inital cost in 14 years....every year afterward I'd realize a massive savings. The contract ends in on 1/31/2054. So after my 14 year recoup time is done I'd still have 27 years of heavily reduced resort stays because all I'd have are the maintenance fees. I guess I could allow my daughters to benefit from this (they could take their families to WDW using my points when they grow up). So that is a pretty large benefit in my eyes.

You have a good point of view between owning and renting based on the value of your money. For me, I bought DVC because I wanted to and I could afford to.

 

[AddieAidey]

I can see you are a logical thinker but I also detect a hint that you are searching for an excuse to buy-in. Unfortunately the financial sense does not materialize for some time. It's a pre-paid vacation plain and simple. We are buying-in to force us to take vacations because we most likely would not go otherwise. Our kids are very little, so we will have years of travel ahead of us and if we do not buy-in we would most likely go every 3 years or so and would end up in a Moderate hotel or off-property. This ensures us that we will have a nice room and great memories every year

I know its hard to put a value on emotion, but it's something to consider.

 

[gardenia]

You're assuming that you'll always be able to rent points cheaply. I wouldn't assume that. A few years ago the "going rate" was $10 per point. In five years it could be $20 per point.

 

[DizBub]

For me, I bought DVC because I wanted to and I could afford to.

I so agree with this statement. People get so tied up in the numbers and make themselves crazy. There is value in using the points, not in just the actual cost of them.

We wanted to, could afford to and we use it often.

 

[chalee94]

Originally Posted by bisney
I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.

Yes, we'd probably go to WDW at least once per year for the next 10 years...but I'm not following your math.

you would not be dividing $10,500 by your annual cost, necessarily. you would also take into account whatever you expect to receive if you sell in 8 or 9 years...so if you could resell the contract in 9 years for $5000, that improves your numbers.

but you might not get much at all in 9 years, so who knows? there's nothing wrong with not buying if you don't think DVC suits you.

 

[chalee94]

You're assuming that you'll always be able to rent points cheaply. I wouldn't assume that. A few years ago the "going rate" was $10 per point. In five years it could be $20 per point.

i would love to see the rental market prices firm up the way purchase demand seems to have done. maybe we'll start seeing $13-15 per pt rental prices soon...

 

[Minniesgal]

From a financial perspective you are quite right it makes sense to rent, although you don't take into account the residual value of your DVC after the 10 years which could be as much as the interest you would make on your investment. I don't see you saving a huge amount of money over 10 years with DVC but at the same time I don't see you losing a ton either as long as you continue to go to WDW.

However, as it is a vacation and thus a luxury and not a necessity to me this is the kind of purchase where a little bit of what the heart wants should come into it. We bought DVC simply because we really wanted to, I wanted to own at my (soon to me two) home resorts, and I wanted to know that we would come back frequently. For us that was important.

While we all need to be sensible with money sometimes within reason and affordability we should buy what we want instead of what is cheapest, in the same way for example you might buy a sports car when a saloon would do....

I would say if your heart isn't in it don't buy but if you really want to own it and you can afford it then buy it and forget about what else you could have done with the money after all you can't line your grave with the stuff! The way we decided is that we have this year and next year some extra money coming in. We decided that if we save 60% of it which we are we can justify treating ourselves with the rest.

 

[tjkraz]

To me, the best option seems to invest the money and rent points.

Just realize that:

1) As an owner, if you decide to sell before year 14 you will still come out ahead due to the residual value of the contract.

2) As a renter, every trip beyond year 14 will represent a loss.

ALTHOUGH...if I bought and recouped my inital cost in 14 years....every year afterward I'd realize a massive savings.

And that's pretty much the factor which prompted EVERY owner to buy.

From a pure numbers standpoint, I would say if you think with reasonable certainty that you will go to Disney for more than 5 years I think it's worth it. Remember that DVC resales have a residual value which limits your financial exposure to much less than the $10,500 buy-in.

Agree.

In our case we had every reason to believe that we would continue using the points well beyond any break-even point, and that's where owning truly pays off. We have been owners for 10 years and have certainly exceeded that break even threshold. However, we could also sell our points today and recoup about 70-80% of what was paid up-front. We paid roughly $25K for our 290 points and they would easily fetch $20K today before commission.

In retrospect, my biggest regret was the two trips on rented points before buying. We would have now "saved" even more if those dollars had gone toward our purchase instead of in someone else's pocket.

Other factors worth some consideration include:

1) Control. OP said: "...we're flexible in our vacation times so I don't expect much of a problem finding the resort we want by renting points." That may be true to some extent, but nothing is more flexible than owning the points and booking at will. Even if you're just taking a flyer on dates without knowing that time off will be available, dates can be secured months in advance and cancelled / adjusted later.

With a rental, you need to be 99% certain of your plans before the process begins. Last minute changes or adjustments can be difficult-to-impossible.

Owners also have full control over dining plan reservation, DME, adding requests to the reservation, using the wait list and so on.

2) Owner perks. The Annual Pass discount is obviously the most beneficial, saving $150-200 per person, per year.

It's certainly worth noting the perks can and do change. There's no guarantee the AP discount will continue beyond 2013.

At the same time, the AP discount has been around since 2005, and it's value actually increased in the last 12 months. A family of 4 could have saved upward of $5000 over the past 8 years using the AP discount. Kinda hard to say that the discount is not worthy of consideration with numbers like that.

 

[disfanforlife]

I can see you are a logical thinker but I also detect a hint that you are searching for an excuse to buy-in. Unfortunately the financial sense does not materialize for some time. It's a pre-paid vacation plain and simple. We are buying-in to force us to take vacations because we most likely would not go otherwise. Our kids are very little, so we will have years of travel ahead of us and if we do not buy-in we would most likely go every 3 years or so and would end up in a Moderate hotel or off-property. This ensures us that we will have a nice room and great memories every year

I know its hard to put a value on emotion, but it's something to consider.

This is US EXACTLY! We bought in for the same reason. Otherwise, we would find a reason NOT to take a vacation. We did not take on for 10 years before we started traveling to disney. We went two years in a row and then decided to buy in. Our kids are not so little anymore, but they still want to go! Our daughters love Disney so much they are looking into the DCP now.

 

[nunzia]

Owning DVC is certainly not for everyone and you've spent a good deal of time and effort analyzing if it was right for you and your family and decided it wasn't. That's fine..for us, we treat our adult kids and families and can need as many as 4 rooms..3 of which are 1 bedrooms..at any one time. I am grateful we can afford to give this gift to our family and sometimes extended family and friends..does not make financial sense in any way, but we love to do it and that is worth much to us. If I ever have extra points I will happily rent them out at the premium VGC now is able to command and if/when it doesn't work for us we'll sell and hopefully recoup a nice chunk. I could not be a renter..I am too OCD about controlling my own trip and being able to book/change/plot/plan with my own points whenever I want to. I like pretty much knowing that at 11 months I can get whatever I want at my home resort. I'm sure your family will have many wonderful trips without DVC...good thing we are all different so that there are people who want to rent out and people who want to rent in

 

[NHTikiBeckie]

I like your logic, I am a numbers cruncher as well and can appreciate it for sure! Although I'd like to know where you are getting a 5% return on your investments, we haven't had a solid 5% in a while now! I'd love some tips!

I crunched numbers a little differently than you when it came to deciding if this was a financial sound decision for us. We only have one child and plan on staying in studios at the Animal Kingdom (AKL owners) as they are so few points. Value studios are only 69 points per week when we travel. However, we aren't able to rent points for a value studio at AKL because they are super high demand and gone at the 11 month mark almost immediately. So that was one reason we were leaning towards buying. (We got a 100pt AKL contract).

When I did my math to see if this was a good financial decision for us, I did it a couple ways. I crunched the numbers for what it would cost to stay full price (what Disney values the room at), what I would pay for renting, and what we would pay if we stayed at a moderate, because we do not love the theming of the values. Each way I crunched it, we came out ahead.

DVC is not for everyone, renting instead of buying is a great option!