Doing the math - The real cost/savings

[rocketriter]

I am tired of spending weeks or months searching on line to get lucky and find a great price for a particular resort, sometimes not getting what I want and settling for an alternate resort. I just want to decide where to go and book.

Exactly. On one hand, I don't want to pointlessly throw money around. But, on the other hand, I bill for more per hour than I can save nickle-and-diming every vacation; my clients take up all the work hours I can stand, after which I just want to play with my wife and kids and go to bed. So DVC is a good choice for me, even including the occasional trade-out.

 

[Plutofan]

You definitly save a lot of money off of the Disney rack rate. Without factoring how much dues will go up and how much the room rack rates will go up I am surprised at how many people are willing to lose money by renting out their points. You figure that the rough cost of 100 points is as follows:

Original purchase SSR ($83.30 x $100/48yrs x 100) 1.74
2006 Maintenance fees 3.98
Financing of DVC @ 6% (or money in a CD @ 6%)
mortage interset only since principal is factored in
the 1.74 (83.30 x 100 x 6%)/100 points 4.99

Cost per point asuuming mortage or loss of interset
at 6% 10.71

This was a simple exercise excluding discounts on A/P, assume a 6% CD which you can not find, etc. But, I am surprised on how many rent their points out for $10 or less so that renters can save 20% - 60%.

The bottom line is maybe you should compare buying to renting and not just Disney's rates. Of course the DVC'shave incrased in price over the years and that is not factored into the equation. We bought a lot points for non fiancial reasons - we love Disney and it will force us to go on trips we would not have done on cash. It is just that DVC is not for everyone and you need to consider all options.

 

[CHOPR]

We have been going to WDW every year anyway. I'm not getting into all the number crunching here---been there ,done that. But with three kids-- a 2 bedroom with kitchen,living space etc...so much more relaxing and the cost savings of making some meals yourself will always be cheaper. 2 more years and i'll only be paying yearly dues but still going for a week in premier accomodations. Add all those little savings... food,drinks,laundry, DVC dining discounts in addition to points payed for, and IMHO money saved !

 

[Plutofan]

A lot of people are saying that they never pay rack rates. I have not really seen many times when Disney has discounted a DVC room to a non DVC person. I see a lot of discounts for Disney owned hotels. Also just for the fun of it I gone to Sams Club and priced out DVC rooms. On several occassions I found DVC rooms being offered at MORE than the Disney rack rates. What is up with that.... I guess this is America.

 

[Olaf]

All those numbers make me dizzy. DVC forces us to take a vacation on a regular basis--something we didn't do before buying in, and that's a "good thing">

 

[bom_noite]

I have seen 100 folks on this board and other sites try to complete a calculation to justify the purchase. None of them consider:

1) The increase in the asset. Unlike other timeshares, over time the DVC has increased in value. Below are some rough numbers (very rough), but, the way I see it we have had FREE vacations since buying in to DVC!

I had a stayed 20 days in a moderate resort I would be out $3000 or more.


2) Pride in ownership. What other timeshare has a board with 1000's of people who love their investment so much that they check in on posts each day? What other vacation investment opportunity has 400 posts when the managment group puts a new sign in front of the competitors property?

The way I see it:

If you enjoy WDW and the Disney experience, then, the calculation is this: DVC = MILLIONS!

If you are not sure that a WDW vacation every year or every other year is right for you -then - it does not make fiscal sense.



My Rough Numbers:

1993 we bought 150 BCV points at $74 a point ($84 a point - but $10 per point for selling back first years points). Cost: $11,100.

I am guessing, but we have probably paid $1800 in membership dues.

Current price of BCV points are about $90 per point. Minus $600 in sales costs (I am guessing?):

Costs: $11,100 investment + $1800 Membership dues = $12900
Equity: $13500 (150 pts X $90) minus $600 Sales Costs = $13000

NET: Break even.

For my breakeven investment we have had 4 vacations and have stayed at:

OKW (3 times), BCV (2 times) and VB (1 time).

Also, plan to get a OKW GV for 5 days next year (Rack Rate of $5500!).


Yeah, I think this investment has paid off well.

 

[bom_noite]

I would like to follow-up to my previous post and mention a few other things:

1) We have been EXTREMELY lucky with the appreciation at BCV. And, I do not see the same appreciation at SSR. But, I could be wrong.

2) I have been in the Credit industry for over 25 years. We have a saying:

"Dont mortgage the house to buy a blouse!".

While a DVC membership is a long term asset, it is also an asset that can be done without. I would recommend going camping instead of WDW for 2 years and use the savings to fund your dream purchase.

Credit Cards can lead to trouble and that is why the industry see's charge-off rates of 5% to 8%!

 

[magicmama]

I'm getting dizzy looking at all these numbers!! I did the same number crunching when we purchased DVC. Factoring lots of other costs and then dividing over the years does make it at least seem more affordable! It works out to be as good or better than the value resorts or staying offsite. The advantages of staying onsite are wonderful.
However you crunch the numbers, if it works for you and your family - then DVC is well worth it!

 

[nestlejean]

Bom Noite,
"1993 we bought 150 BCV points at $74 a point " -----I think you meant to say 2003. BCV wasn't around for a DVC purchase in 1993, I think it was only OKW then. No big deal but some people might think--only $1800.00 in maintenace fees for 12 years???? We don't want to confuse anyone)more than we are already!!!).

 

[LarryM]

We bought 450 points 300 at 62 and 150 at 65 both at Boardwalk. The way I figured it was I took 40 percent off of rack rate. It has taken us about 5 years worth of trips to make back the original amount (we've also taken family and given rooms to friends in that span). Now we are gaining on the dues. But the best part of it for us is that we can share it with family that would not or could not afford to stay in such a nice resort and really soak in Disney. Like the commercial says that is priceless.

 

[Hibernians]

I agree with the financial aspect of the calculations - over 49 years, this really is a bargain.
One other key motivator for me was the fact that my family will have a DVC membership for 49 years and I know that in 15 -20 years from now when my kids have graduated college and entered the workforce there is no way that they would be able to buy into something like this.
Its sort of like wishing my father/grandfather had bought a cottage on the Cape or the Vineyard 30 years ago !
Well, w/our DVC membership we will always have a vacation home and I know my kids & future grandkids will be very happy we had the foresight to do this.
And who knows, maybe someday they can all chip in to pay the maintenance fees

 

[mello]

The best motivation to buy into DVC is that it gurantees you will be back on a regular basis!

That's it in a nutshell for us.

 

[Cinderpals]

Hi,

I purchased into DVC rather late: BCVs and BWVs. I love owning at both resorts, and would like a small contract at the VWL too! I can't imagine not owning points there. We've had so many great times at WDW already! We haven't gone to Hilton Head, or traded points through Interval International which were strong reasons for our purchase. When I think about what it will cost to stay a week at Hilton Head during peak season, compared to renting a home for a week at the Outer Banks, I think, "deal, deal, deal!!!"

 

[ScarletFire]

TOTAL BUY IN COST: $30,940

Current maint costs is $3.85/pp - $1232/year

Let me know if I am wrong, but what if you invested the $30,000 in mutual funds? Say you make 10% interest ($3000/ yr). Isn't that enough to pay for vacation lodging? And then you still have the $30,000 in the bank.

Maybe I am missing something here, but the only way I see joining DVC being a good deal is if you make a profit buying and renting points. Become a member, then sit on the boards all day and wheel and deal. One could make $1-2 per point and it looks to me that one could make $100 profit per day if they sat on the boards all day.

 

[golden1]

Let me know if I am wrong, but what if you invested the $30,000 in mutual funds? Say you make 10% interest ($3000/ yr). Isn't that enough to pay for vacation lodging? And then you still have the $30,000 in the bank.

I agree with you. I very much considered joining DVC but when I talked to my DH about it, we decided that it made more sense for our lifestyle if we rented points when we needed to.

A. There is no commitment and we are not tying up our money.

B. We can still enjoy the amenities of DVC by renting.

C. We would probably never go more than once every 2 or 3 years.

I think there is just an emotional appeal of "owning" a piece of Disney which I do not underestimate. However, I like to leave my options open and it is worth paying a little extra for that IMO.

30000 at 10% per year after 49 years gives you $291,000 - enough to pay for plenty of nice Disney Vacations!

 

[mickeyfan2]

You forgot one very important thing in your calculation. The 30K you put down invested over 48 years with a moderate return needs to be deducted from the 68K savings you talked about.

 

[Northern Lights]

We viewed the $15,000 as a vacation fund to be used annually. Investing in mutual funds that might return 10% is not practical for an investment you intend to use every year. So, assuming you put the vacation fund in a safe vehicle where you make 2-3% or even 5%, the vacation fund quickly sinks and you wind up with nothing left in about 7 years. Now, after 7 years, we firmly believe we will be able to sell the points for at least (probably more than) as much as we paid for them. The best part, however, is that we can afford to take more vacations now! On a whim, we decided we were ready to go back the first week of March during DD's spring break. The APs are still good from last May (saved over $300 with DVC discount), the room is free, so why not? Food, gas and souveniers should be less than $750. Can't take a spring break trip anywhere these days, much less a WDW-BWV vacation, for that amount of money.

We may get sick of it but I figure we can at least break even on years we don't go by renting the points. On our summer trip this year, we are taking my sister and her family with us who have never been due to cost.

Yes, Disney wins b/c we spend our vacation money there every year. Guess what? - Disney had already won that battle. Now at least it is somewhat of a win-win.

 

[golden1]

No, I know that you would be deducting the $3000/year from that investment. My point is that there is not just the initial $30000 cost but also the value lost from not investing the money which I am sure most of you are aware of anyway.

I guess for me it is not worth it because I won't be going enough. For those who are going to go evey year or multiple times per year, it may be a good investment - and like I said - there is a certain appeal to "owning" a part of Disney.

 

[Northern Lights]

Since in 49 years the amount of money I will need for a Disney vacation is $0.00, I completely agree with Golden's analysis.

Remember, DVC is a Disney Vacation club, not a retirement annuity. If you don't have this money already allocated for Disney Vacations, then it should be invested/spent elsewhere.

 

[Northern Lights]

Scarlet, the problem with your analysis is that it makes assumptions that has a risk component for 2 variables - the rate of return and the cost of future lodging. For us, we bought enough BVC points to take 2 vacations per year - check in Sun, check out Fri, and still have a few points left over to bank to the following year. That investment cost us a little over $14,000.

What annual return would I need to get to ensure me my 2 vacations per year? I don't know the answer to that b/c I don't know what 2 vacations are going to cost in 2-3 years let alone 10-15 years. I am pretty safe in guessing, however, that it is well above 10%. Please tell me where I can be guaranteed at least a 10% rate of return for the next 10-15 years and I will gladly invest my entire 401k and IRA there!!!!

Besides, I am pretty confident that after 10-15 years (and the priceless family vacations during that time period) later, we will be able to sell the remaining 15-20 years left on our DVC for at least what we paid for it. And if we can't for whatever reason, I am okay with that (see priceless family vacations above).