Does DVC just not work for some people?

[JimMIA]

There are definitely people for whom DVC is not a good fit. Everybody enjoys Disney differently, and even differently on two trips in the same year. So it should surprise noone that some folks are happier with one of the many, MANY options other than DVC ownership.

There are two suggestions I really like in this thread, and I would recommend them to any prospective buyer of any timeshare -- onsite or offsite:

1 - Dean's suggestion of using a shorter timeframe than length of contract for evaluating the financials.

Although a LOT of people assume otherwise, I think most timeshare owners will NOT hold their contracts the full term. 30-50 years is a very long time and life has a way of changing. If most of us don't stay in our homes long enough to pay off a 30-year mortgage, what's the likelyhood that we'll really keep anybody's timeshare for that period? My heart might tell me I love the place, but my brain is saying, "NOT!"

I think Dean's suggestion of a 10-year timeframe is reasonable, although it will be too long for some. Once you use that timeframe, then you have the difficult task of trying to guess what the resale net will be in 10 years. I think that is either next to impossible -- or not too far from zero. Take your pick. Personally I think zero recovery is the only safe number, but YMMV.

Using a 10 year timeframe will yield what should be a much more rational value for acquisition cost per point per year. And it will definitely change the math for price comparisons toward a much more conservative equation.

2- Brian's suggestion of renting first -- not only ONsite, but also OFFsite

In fact, I would recommend that any prospective buyer of anybody's timeshare rent first both ONsite at DVC and OFFsite. I think a lot of us just assume onsite is SO much better (I know I did), but we don't really try it. Renting is a very low-risk way to test the waters before taking the plunge.

Trying both before purchasing anything would give prospective buyers a much more clear-eyed view of the pros and cons of each...as they apply to their own family's actual experience.

 

[Dean]

There are definitely people for whom DVC is not a good fit. Everybody enjoys Disney differently, and even differently on two trips in the same year. So it should surprise noone that some folks are happier with one of the many, MANY options other than DVC ownership.

There are two suggestions I really like in this thread, and I would recommend them to any prospective buyer of any timeshare -- onsite or offsite:

1 - Dean's suggestion of using a shorter timeframe than length of contract for evaluating the financials.

Although a LOT of people assume otherwise, I think most timeshare owners will NOT hold their contracts the full term. 30-50 years is a very long time and life has a way of changing. If most of us don't stay in our homes long enough to pay off a 30-year mortgage, what's the likelyhood that we'll really keep anybody's timeshare for that period? My heart might tell me I love the place, but my brain is saying, "NOT!"

I think Dean's suggestion of a 10-year timeframe is reasonable, although it will be too long for some. Once you use that timeframe, then you have the difficult task of trying to guess what the resale net will be in 10 years. I think that is either next to impossible -- or not too far from zero. Take your pick. Personally I think zero recovery is the only safe number, but YMMV.

Using a 10 year timeframe will yield what should be a much more rational value for acquisition cost per point per year. And it will definitely change the math for price comparisons toward a much more conservative equation.

2- Brian's suggestion of renting first -- not only ONsite, but also OFFsite

In fact, I would recommend that any prospective buyer of anybody's timeshare rent first both ONsite at DVC and OFFsite. I think a lot of us just assume onsite is SO much better (I know I did), but we don't really try it. Renting is a very low-risk way to test the waters before taking the plunge.

Trying both before purchasing anything would give prospective buyers a much more clear-eyed view of the pros and cons of each...as they apply to their own family's actual experience.

Jim, my assumption is that in 10 years DVC maint fees will equal the value for current points, in other words, DVC contracts won't have intrinsic value for selling above other costs. Obviously this isn't likely to be the case but to tie up my money, I want anything above that to be gravy and I doubt it'll be far from the case for the 2042 contracts. We're at what now, 50% of retail minus sales costs.

 

[taaren]

I give a lot less consideration to the time value of money in todays investing environment (extremely low interest rates and crazy volatile stock market)

FWIW, I completely agree with this. You can pick the cost rate you like (and can still justify buying resale even with a relatively conservative cost of capital) but you should at least consider it. For anyone who would rather not do so, I have a proposition: loan me $10,000 today, and I'll pay you back $500 a year for the next 20 years.

FWIW, I agree with montrealdisneylovers for a different reason. I ignore the time cost of the initial investment of DVC, largely because I, like many DVC purchasers, bought DVC with my "extra" money that I was planning on spending on something. The truth is, if I have the cash for a luxury purchase like DVC, odds are good I was going to spend it on something. Our alternate plan for our DVC money was a big fancy wedding. For others, they would have taken a lavish vacation, or bought a fancier car, or maybe a luxury jewelry purchase. We all traded in something else to buy DVC. I don't think anybody said "hey, let's take my retirement fund which could be worth a much higher amount in 30 years and use it to buy a timeshare!". We had this earmarked for an unnecessary item, and that's how we used it.

Could you have invested the money and made a lot off of it? Sure. Would you have saved it and not bought a different item that you really wanted? I think the answer to this for most owners is ... probably not. Disciplined savers we might be, but saints we are not.

 

[Dean]

FWIW, I agree with montrealdisneylovers for a different reason. I ignore the time cost of the initial investment of DVC, largely because I, like many DVC purchasers, bought DVC with my "extra" money that I was planning on spending on something. The truth is, if I have the cash for a luxury purchase like DVC, odds are good I was going to spend it on something. Our alternate plan for our DVC money was a big fancy wedding. For others, they would have taken a lavish vacation, or bought a fancier car, or maybe a luxury jewelry purchase. We all traded in something else to buy DVC. I don't think anybody said "hey, let's take my retirement fund which could be worth a much higher amount in 30 years and use it to buy a timeshare!". We had this earmarked for an unnecessary item, and that's how we used it.

Could you have invested the money and made a lot off of it? Sure. Would you have saved it and not bought a different item that you really wanted? I think the answer to this for most owners is ... probably not. Disciplined savers we might be, but saints we are not.

Obviously saving the money and not going on vacation is the best financial situation but, IMO the best approach for this subject is to assume you would have gone on vacation and deduct the funds from the initial balance incrementally assuming the appropriate growth parameters that one decides. Adding in yearly amounts for maint fees. That generates 2 baskets of funds at least, that for 5 years or less and that for 5 years and greater. IMO timeshares have considerable risk so one needs a significant return to make them worthwhile. Something that's a lot harder to realize with DVC than many other timeshares resale. Basically the best case scenario is about the only situation that will generate a savings/increase in value for most and even then, it only works for a subset of those that consider DVC including those that buy DVC. Put another way, there are a subset of members where the numbers will never make sense from a dollar standpoint.

 

[k3chantal]

FWIW, I agree with montrealdisneylovers for a different reason. I ignore the time cost of the initial investment of DVC, largely because I, like many DVC purchasers, bought DVC with my "extra" money that I was planning on spending on something. The truth is, if I have the cash for a luxury purchase like DVC, odds are good I was going to spend it on something. Our alternate plan for our DVC money was a big fancy wedding. For others, they would have taken a lavish vacation, or bought a fancier car, or maybe a luxury jewelry purchase. We all traded in something else to buy DVC. I don't think anybody said "hey, let's take my retirement fund which could be worth a much higher amount in 30 years and use it to buy a timeshare!". We had this earmarked for an unnecessary item, and that's how we used it.

Could you have invested the money and made a lot off of it? Sure. Would you have saved it and not bought a different item that you really wanted? I think the answer to this for most owners is ... probably not. Disciplined savers we might be, but saints we are not.

I see my DVC purchase in the basically same way. My husband and I never broke it down the costs. We had the money to pay for the purchase outright, considered it a luxury purchase, thankful we had the money to 'burn' and hoped that it would give us years of enjoyment. It has given us years of enjoyment so far.
We are usually very conservative spenders and are very careful with planning for our future. We knew this was one of the few times in our lives we would throw caution to the wind and we thought of it as a reward for being so cautious and careful with our money.

I think for some analyzing the costs of DVC is part of the 'fun'. It becomes a justification to spend the money and they need it to feel good about their purchase.

 

[ELMC]

I think that the variety of replies we have seen on this thread suggest that a prospective buyer's perspective and situation are two crucial aspects of the purchasing decision that have to be factored in. Unfortunately, for all of our posts, we know very little about each other on here, which makes our advice a little general.

I think that one attitude that some of the more "financially liberal" posters are trying to encourage is helping to foster a "joy of living" type mentality (and Disney certainly does provide a lot of happiness to a lot of people). I think one situation that "financially conservative" posters on here are trying to avoid is people making ill advised purchases or perhaps making purchases that will end up putting them in a difficult financial position down the road. But the common message I hear from both sides is that prospective buyers should make well informed decisions about their purchase (or lack thereof).

Value aside, there is a attitudinal spectrum that exists when considering any major purchase where on one end you have "I need to make sure that every penny I spend is spent wisely" and on the other end you have "I can't take my money with me, so I might as well spend it". I would suggest that happiness lies somewhere in the middle. One needs to find where DVC lies on that spectrum when making the decision to purchase. If you consider that one poster's perspective is most likely vastly different from your own, it makes it easier to read what they have to say without the discussion becoming adversarial.

 

[Sammie]

Basically the way I see it, DVC only has to work for me.

Everyone else can figure out what works for them.

 

[wdwfamilyinIL]

We have been throwing around the idea of buying dvc for a while, for some reason we have just enough doubt that we don't go for it. As a family we go to WDW once a year, typically we like to stay 7-10 days. I love french quarter, don't really have the bug to into the deluxes although we are staying for 2 nights after our cruise at CR. My whole thing is I can't figure in where it will save money for us. My husband is a disney addict, I know we will go every year unless something major would happen. We will always stay on site, just for the fact we fly in and I don't want to worry about a car and going back and forth. Typically a trip for us runs around 7000, give or take, so we could easily have our money back in 3 years......but is it going to really save us anything? I also find that I get very confused with all the points, as it is now I call my TA and tell her what I want and thats it, done deal.

I would love to find a way to save some money, and maybe its my misunderstanding of DVC, but would it work for people like us?

 

[zavandor]

Since you usually stay in a moderate resort, DVC will not save you much money. In your case it would allow you to upscale your resort to a deluxe one for around the same money.

 

[Dean]

Basically the way I see it, DVC only has to work for me.

Everyone else can figure out what works for them.

Exactly, but they need the information to do so, the more the better. I'd suggest that the numbers at least need to make sense for that decision to be a reasonable one though.

 

[ELMC]

Exactly, but they need the information to do so, the more the better. I'd suggest that the numbers at least need to make sense for that decision to be a reasonable one though.

Agreed. However, as we have seen on here, people can do lots of things to make the numbers "make sense" even when they really don't.

 

[jennybdis]

We have been throwing around the idea of buying dvc for a while, for some reason we have just enough doubt that we don't go for it. As a family we go to WDW once a year, typically we like to stay 7-10 days. I love french quarter, don't really have the bug to into the deluxes although we are staying for 2 nights after our cruise at CR. My whole thing is I can't figure in where it will save money for us. My husband is a disney addict, I know we will go every year unless something major would happen. We will always stay on site, just for the fact we fly in and I don't want to worry about a car and going back and forth. Typically a trip for us runs around 7000, give or take, so we could easily have our money back in 3 years......but is it going to really save us anything? I also find that I get very confused with all the points, as it is now I call my TA and tell her what I want and thats it, done deal.

I would love to find a way to save some money, and maybe its my misunderstanding of DVC, but would it work for people like us?

I am assuming your entire trip costs about $7k? Perhaps half of that is your hotel cost? If somehow or another you're paying $7k for a week's stay at a moderate, I'd jump on the chance to do DVC as it would definitely save you money.

If about half of your $7k is your hotel cost ($3500), I would say that if you bought resale, and if you bought outright without financing, you would probably get your money back in about 2 years on the initial purchase (not taking into account maintenance fees). Assuming you'd only need a studio (since you're currently only doing a hotel room), and if you bought at OKW, you would need about 130ish points to stay around 9-10 nights depending on which season you travel. Most OKW contracts are currently selling around $55 point, which would make your contract cost approximately $7150.

Obviously, you'd need to take into account maintenance fees, which will go up (as will hotel costs, though), but, currently, you'd be looking at another $675 yearly for 130 points. One of the things that makes me feel a little better about the payment of maintenance fees is that they're pretty much equal to the savings we get by gaining a kitchen and not needing to eat out every single meal in the park. (But that's just what works for me in terms of justifying the yearly expense.)

You need to figure out if it works well for you and if my assumptions and numbers are close to your own numbers, but I would think that if you're a yearly Disney traveler and already have a $7k budget for Disney travel, DVC would work well for you.

 

[Brian Noble]

people can do lots of things to make the numbers "make sense" even when they really don't.

And they are welcome to do so, as long as they are not using my money for the purchase.

 

[ExpatDisneyLover]

So we're Disney people. We love Disney and go a couple times a year (DL &/or WDW). Recently discovered cruising with DCL and LOVE it. We went to the presentation of the DVC on the ship last week, but I just cannot see how it makes sense. For us, at least. I am guessing that it must just not make sense for some people?

I'd really like to say that we are DVC owners, but I am not sure it works for us. Any thoughts?

The biggest downfall is that we don't stay on property at WDW. We don't like it; we stay at Windsor Hills and love it there (in a 3 bdr. townhouse with private pool, and way better beds and linens than Disney). We'd rent a car and park at the parks even if we stayed on property, as we hate taking disney's shuttle buses. Our cost staying in a whole house off property is something like $125 a night on the high season, so considerably cheaper than the DVC points for a much better accommodation. Just for the maintenance fees a year we stay for almost two weeks in a house... so I'm not getting why we'd pay $20,000+ in addition to the yearly maintenance fee. Am I missing something?

DVC definitely doesn't work for everybody. Definitely something to research before you buy.

I wouldn't buy DVC if I wasn't interested in staying onsite at Disney deluxe resorts. If cruising is all I would ever use my points for - I definitely wouldn't buy into DVC. I think the best value of DVC is staying onsite at Disney resorts and that is my primary reason for purchasing though every once in awhile I think I will use my points for cruising and the other Disney collections options - but that in once in awhile.

 

[pilferk]

Not judging, just offering my opinion on a subject that's been discussed extensively over the years and one where there are many variables and many end points depending on the assumptions one makes related to the numbers. You can go back and search for those thread's if the numbers are important to you. Rather than getting into the "my number is better than your number" issue, I'm simply offering my opinion on the principle that ignoring the time value of money is unreasonable in valuing such a purchase though anyone is free to make their own assumptions. I'm to the point in life and this board to simply offering my opinion on subjects at times rather than go through the steps to get there, if that offends you, then you'll simply have to be offended. If you want to know how I got to a specific thought, you're always free to ask but the reality is that it's often going to be based on knowledge and experience rather than simply numbers.

I'm not offended.

But offering opinions without reason, and/or without substantive information which depicts the difference, isn't really worth much. It's precisely what I suggested: passing judgment on contributions rather than actually contributing anything interesting.

If you can't be bothered (which is essentially what you said)...don't be bothered. Simple as that.

 

[pilferk]

I give a lot less consideration to the time value of money in todays investing environment (extremely low interest rates and crazy volatile stock market)

It's a good point.

Looking at our actual return on investment, over the past 5 years, we're not really even covering inflation (that's money in the market, FYI, not liquid savings)...even considering compounding money. Looking at our rate of return...it's right about average for the market over those 5 years. Since 2007, there have been at least a couple years we've LOST money. At best, it's a wash when factoring in inflation.. Hopefully that will change over time (2012 has been a much better year, so far)...but not yet.

 

[pilferk]

FWIW, I completely agree with this. You can pick the cost rate you like (and can still justify buying resale even with a relatively conservative cost of capital) but you should at least consider it. For anyone who would rather not do so, I have a proposition: loan me $10,000 today, and I'll pay you back $500 a year for the next 20 years.

To be clear..it was considered...and I said as much when talking about opportunity cost. Just not in the rough room rate calculation...because the analysis I presented was done at purchase (5 years ago) and I didn't have any interest in playing clairvoyant with something as roughed out as "approximate nightly room rate in year 5".

 

[pilferk]

We have been throwing around the idea of buying dvc for a while, for some reason we have just enough doubt that we don't go for it. As a family we go to WDW once a year, typically we like to stay 7-10 days. I love french quarter, don't really have the bug to into the deluxes although we are staying for 2 nights after our cruise at CR. My whole thing is I can't figure in where it will save money for us. My husband is a disney addict, I know we will go every year unless something major would happen. We will always stay on site, just for the fact we fly in and I don't want to worry about a car and going back and forth. Typically a trip for us runs around 7000, give or take, so we could easily have our money back in 3 years......but is it going to really save us anything? I also find that I get very confused with all the points, as it is now I call my TA and tell her what I want and thats it, done deal.

I would love to find a way to save some money, and maybe its my misunderstanding of DVC, but would it work for people like us?

While your trip may cost you 7k a year....I'm betting lodging is only a small portion of that. And THAT'S the portion you want to consider using in any break even scenario...because all the other costs (tickets, food, transportation) are going to remain.

 

[pilferk]

1 - Dean's suggestion of using a shorter timeframe than length of contract for evaluating the financials.

Although a LOT of people assume otherwise, I think most timeshare owners will NOT hold their contracts the full term. 30-50 years is a very long time and life has a way of changing. If most of us don't stay in our homes long enough to pay off a 30-year mortgage, what's the likelyhood that we'll really keep anybody's timeshare for that period? My heart might tell me I love the place, but my brain is saying, "NOT!"

I think Dean's suggestion of a 10-year timeframe is reasonable, although it will be too long for some. Once you use that timeframe, then you have the difficult task of trying to guess what the resale net will be in 10 years. I think that is either next to impossible -- or not too far from zero. Take your pick. Personally I think zero recovery is the only safe number, but YMMV.

Using a 10 year timeframe will yield what should be a much more rational value for acquisition cost per point per year. And it will definitely change the math for price comparisons toward a much more conservative equation.

I think the time frame has to be incredibly variable based on the person buying, which is the problem. There isn't really a "best" time frame for everyone, IMHO.

We have no intention to ever sell...and we're 5 years into it. We bought it as pre-paid vacations at a discount, not an "investment" (meaning something we would eventually recoup costs on, via resale). Granted, it doesn't mean we won't change our mind in 10 or 15 more years...but as of now, we have no compelling reason to do so. We bought with the intent to use the contract until expiration (ours or the contracts). Maybe 50 years is too long to amortize over (though we were in our early 30's when we bought, and were making annual trips before we ever had kids)...but 10 (for us) would be far too short to be representative of use.

I suspect the shorter term is based on the way that person perceives they will use the timeshare. Timeshare "specialists" seem to buy and sell much more frequently than the "average" buyer,at least anecdotally. For them, 5 to 10 years might be about right...because it's likely going to be sold around that time frame.

I use 50 years because, without knowing the proceeds of resale (which will be based on a ton of factors, including the economy at the time of resale) when/if there is a choice to resell....it's an impossible calculation. Since I have not thought of selling it...it's impossible to project even the relative use that will be left in the contract when/if we were to sell. It's dicey using the current 2042 contract prices...because the economy stinks. Yes, I've heard the point that the lower economy drives people to resale for cheaper prices...it also drives people completely out of the market, altogether.

In any case, if I were to use the same calculation, but amortize the up front cost over 10 years, include our annual dues, our room rate for our upcoming trip would be about $330 per night (9 nights this trip). That's not taking into account opportunity cost on the initial money.

Of course, after 10 years of use...your "estimated room rate" is likely going to drop into the 130's (assuming the same growth in dues over the next 5 years)...which makes the discount even more substantial.

 

[Dean]

Agreed. However, as we have seen on here, people can do lots of things to make the numbers "make sense" even when they really don't.

And that was partly my point. While I agree with Brian that they have the right to make bad decisions, I'm always sad when people do so, esp if they had the opportunity to have more info and make better decision. I'm quite aware that often people will make emotional decisions in spite of reasonable information, we see it here and elsewhere all the time.

I'm not offended.

But offering opinions without reason, and/or without substantive information which depicts the difference, isn't really worth much. It's precisely what I suggested: passing judgment on contributions rather than actually contributing anything interesting.

If you can't be bothered (which is essentially what you said)...don't be bothered. Simple as that.

If that's the way you took it then I apologize, that was not my focus or intent. However, these are issues that have been discussed to excess over time plus the principle was the important thing and I felt (still do) that a numbers discussion was not helpful or reasonable in this situation. However, it seems you are saying that one needs to explain and justify every time one posts an opinion, we'll simply have to disagree if that's the case.