DVC Cost Analysis

[ELMC]

Hey all,

So I've really been interested in reading all of the different views on DVC ownership posted on this forum. So it got me thinking that I should do an analysis of the numbers. Personally, our history shows that we vacation in Disney at least once a year and we like to stay in Deluxe Villas. So we decided it makes sense for us. But just how much sense? Well I crunched the numbers on purchasing a DVC RESALE contract at BWV for $52 pp, 150 point contract. (This is our actual pending purchase). There are 104 points left over from 2011 which are included in the first year numbers.

I made a couple of assumptions in my cost analysis. The numbers shown here assume a 3% annual increase in MF and a 3% annual increase in the cost of renting points, starting at $12 per point. I took a little liberty with this one because although they have remained somewhat constant, one has to assume that the price of renting points will go up over time. Also, I used $12 because it is the official price of one broker (TTS) and it is a happy medium between private rental prices ($10-11pp) and David's ($13 pp). This doesn't factor in the cost of use of money because I felt that would overly complicate things and only have a minimal effect. As you can see, owning DVC becomes cost effective after 6 years vs. renting points. Not a bad deal when you think about it.

Keep in mind that this does not compare buying DVC with staying at values or mods. It also doesn't consider buying DVC at direct prices (hint: the break even point is twice as far out).

Hope people find this helpful and I'd love to hear your comments and critiques of my work.

Dan

Year Annual Cost of Annual Cumulative Savings
Outlay Renting pts Savings
1 $(9,068.00) $3,048.00 $(6,020.00) $(6,020.00)
2 $868.50 $1,800.00 $931.50 $(5,088.50)
3 $894.56 $1,854.00 $959.45 $(4,129.06)
4 $921.39 $1,909.62 $988.23 $(3,140.83)
5 $949.03 $1,966.91 $1,017.88 $(2,122.95)
6 $977.50 $2,025.92 $1,048.41 $(1,074.54)
7 $1,006.83 $2,086.69 $1,079.86 $5.32
8 $1,037.03 $2,149.29 $1,112.26 $1,117.58
9 $1,068.15 $2,213.77 $1,145.63 $2,263.21
10 $1,100.19 $2,280.19 $1,180.00 $3,443.21
11 $1,133.20 $2,348.59 $1,215.40 $4,658.60
12 $1,167.19 $2,419.05 $1,251.86 $5,910.46
13 $1,202.21 $2,491.62 $1,289.41 $7,199.88
14 $1,238.27 $2,566.37 $1,328.10 $8,527.97
15 $1,275.42 $2,643.36 $1,367.94 $9,895.91
16 $1,313.68 $2,722.66 $1,408.98 $11,304.89
17 $1,353.09 $2,804.34 $1,451.25 $12,756.13
18 $1,393.69 $2,888.47 $1,494.78 $14,250.92
19 $1,435.50 $2,975.13 $1,539.63 $15,790.55
20 $1,478.56 $3,064.38 $1,585.82 $17,376.36
21 $1,522.92 $3,156.31 $1,633.39 $19,009.75
22 $1,568.61 $3,251.00 $1,682.39 $20,692.15
23 $1,615.67 $3,348.53 $1,732.86 $22,425.01
24 $1,664.14 $3,448.99 $1,784.85 $24,209.86
25 $1,714.06 $3,552.46 $1,838.40 $26,048.26
26 $1,765.48 $3,659.03 $1,893.55 $27,941.80
27 $1,818.45 $3,768.80 $1,950.35 $29,892.16
28 $1,873.00 $3,881.86 $2,008.86 $31,901.02
29 $1,929.19 $3,998.32 $2,069.13 $33,970.15
30 $1,987.07 $4,118.27 $2,131.20 $36,101.36

 

[ELMC]

Ok, so it looks like the formatting got a bit messed up.

Column 1 is Annual Cash Outlay

Column 2 is Cost of Renting Points

Column 3 is Annual Savings

Column 4 is Cumulative Savings (it becomes positive in year 7. Before that, owning DVC is a "loss" vs. renting points.)

Hope this helps clarify.

 

[joeytdog]

I would like to discuss this further....as I am interested in buying myself and constantly run these numbers myself

Here is what I am thinking off the top of my head

Lets assume 300 points (really the number of points is irrelevant JIMO) at $50 per point, for simple math and $5.00 current maint fees (once again for simple math)

Here is what I come up with

Lets say 30 years on cotract (2042 expire at BW, which is what I would buy)

SO

300 points at $50pp is $15000 (assuming NO finance costs)

And then I think this:

I have rented points 4 times in past 5 years. Yes I paid $13pp through David the first year, and then $11 through someone else, but then $10 the last two years...and honestly, if you are goinng to assume renting each year, you have got to (JIMO) assume $10 is what you would pay. Its pretty easy to get $10pp now a days (JIMO) and I have numerous people that I can get $10pp from

SO FINALLY:

300 points at $10pp is $3000 per year/ over 30 years / is $90,000 TOTAL

OR

$15,000 initial buy in PLUS $1500/yearly dues ($45,000) is $60,000 TOTAL

This assumes that the rate of increase on dues (say 3%) is the same as the rate of increase on rental points (say 3%)

Thats "only" a savings of 33% or really $1,000 per year---

IS that savings of $1000 per year worth the risk?

I have to say NO based on the following:

-I would rather spend the 33% more each year rather than commit to 30 years
-You could take the $15k now and invest it, thereby making back most of the $1000 or 33%
-Based on the number of points flooding the market and recent history, it may even be a stretch to say rental points will increase at the same rate of fees, it may actually stay stagnant on the rental end for quite some time

I really am open to discussing this as I actually want to buy but when I look at the numbers it just makes sense to keep renting at this point.....

What are your thoughts?

Am I missing something?

I know renting involves risk but at this point I have established the relationships with sellers such that its not really a risk anymore

 

[joeytdog]

Perhaps you could send me your spreadsheet via a PM so I could see it better--the formatting is not good on your post

And once again, I want to have a healthy discussion, not an arguement or fight

My intention is to learn and understand

Like I said, I want to buy!!! At GF too when it comes out---

 

[joeytdog]

Ran quick numbers

In your example over 30 years you save 36k total, most of it, late in the 30 years......

If you take your $10k now, put it into a Roth IRA, you would only need a 4.5% return rate to make $36k in 30 years

You would have to assume you would make 4.5% annually over 30 years

 

[Missyrose]

Ran quick numbers

In your example over 30 years you save 36k total, most of it, late in the 30 years......

If you take your $10k now, put it into a Roth IRA, you would only need a 4.5% return rate to make $36k in 30 years

You would have to assume you would make 4.5% annually over 30 years

But are you taking into account the cost of your Disney trip each year? It's pretty easy to say you'll save more money by NOT buying DVC than if you bought in. DVC isn't strictly about saving money, it's about increasing the value of the deluxe Disney vacations you'd be taking otherwise. As many people have said, DVC isn't for everyone. You have to know you'd want to be going to Disney most years on the remainder of the contract.

 

[stocker1042]

A few things that throw the numbers off a bit...

The dues vary greatly per location. That, and they go up at different rates...which are difficult to predict.

A bigger variable...is...we can rent our points out for MORE then $13 a point when you are selling to someone who is looking to save over standard rack prices. What I do is tell someone to get a price through Disney on where they would like to stay and then I come up with a price based upon rack prices, not per point prices. I only sell (or barter) to friends, family, and co-workers...and they are getting a good deal....I am selling my unused points, and everyone is happy.

I look at the $10-$11 price per point as the "I'll dump my points so I don't lose money" price.

 

[chalee94]

If you take your $10k now, put it into a Roth IRA...

if you are trying to decide whether to save for retirement (roth ira) or buy DVC, then save for retirement. that's kind of a silly comparison.

if you are comparing vacation costs with DVC and without DVC, that is more to the point.

if you have a reliable source of cheap rental DVC pts and you don't want to make a commitment, then it's entirely valid to keep renting.

for others who are concerned about fraud or losing a reservation when DVC owners don't keep up with their payments, the ability to have more control is an issue...especially if it saves them a little money and they intended to make regular trips to wdw and stay onsite anyway...

but don't feel like you should buy DVC to be a "member" of a club or something. it's not a product that works for everybody. if money is tight and renting works well in your situation, then keep doing it... no worries...

 

[joeytdog]

Thank you everyone for the feedback!

It is greatly appreciated....Charles, I especially like what you said about wanting to join the "club"

You hit it spot on---

My latest thoughts:

---Sure I can save money by getting rental points at $10--but lets face it people who buy timeshares dont want the hassle of doing that process and are also buying for ease and comfort

---I am lucky to have two people that have multiple points that I can consistently can rent for $10pp

---I just dont have the outlay for the initial buy in right now

---For now, I will continue to go (been 4x in past 5 years, all one bedrooms, between 8 and 10 nights per year) and have the flexability (one bedroom will eventually turn into 2 bedroom) of renting....

Thanks So Much Everyone---

Bottom Line: I wish I had the money to buy but I just dont and I will have to be satisfied with renting. And really the bigger question is: Why does that bother me???? LOL

Thanks Again!!!

 

[Mtnman44]

99% of us end up traveling to and spending lots more money at Disney with DVC than we ever would have done otherwise, over the length of ownership. So, in a technical, theoretical sense, DVC saves money. However, in reality, we are spending much more.

Disney did not create and operate the DVC program to help people spend less at Disney.

 

[luckyman_apd]

Renting is good for you since A) you have access to rental points the time you want to go and B) don't mind someone else controlling your reservations or where you stay.

By Renting, you don't control your reservation, and you can only take what's available at the time someone else books for you. In a strickly $ and cents analysis, this doesn't make a difference. But when comparing whether to buy or not, you have to consider all factors.. I've rented before and had a great time. But to truly know what's available when I want, and to plan it the way I want to, I need own it. I picked a home resort to stay at that I prefer. To some this is not a big deal and that makes renting more desirable. For me, having the location I want is more desirable.

I've always gone by an easier set of Math calculations. Take the buy in cost, and divide it by the number of points left on the contract. (100 BWV points for $52 point. Take $5200 divided by 3104 and that comes to $1.68 per point). Every year, you paid $1.68 to own your points. Then add the current years dues and that is your price per point each year. Each resort points will be different due to different buy in prices and dues amounts, but they all fall within a range.

Now take the price per point for your purchase, and compare it to the price of your typical stay if you weren't DVC. Go to the WDW website and try to book a room only reservation.

Remember, if you are someone that just stays at sudio's or someone who stays 2 bedroom everytime, the value changes. You can't get 2 br room unless you go DVC. You will ALWAYS save on that room with an ownership over booking cash. In a studio, you will save significanty over values and still save compared to moderates. Me personally, we will be getting 1 br. for a little more than staying moderate, but the difference in size and amenities of the room more than cover the difference in cost.

You can't really predict increases in dues or rack rates in the future. The track history since DVC started shows DVC dues increase at a slightly lower rate. But the last few years do not show that same trend, but you can never take just a few years to make a long term projection.

 

[ELMC]

Perhaps you could send me your spreadsheet via a PM so I could see it better--the formatting is not good on your post

And once again, I want to have a healthy discussion, not an arguement or fight

My intention is to learn and understand

Like I said, I want to buy!!! At GF too when it comes out---

Thank you for saying this, but I didn't take your comments as aggressive or argumentative at all. This has always been a topic that sparks a lot of debate and I am glad to hear opinions contrary to my own. I'm glad that everyone is keeping it friendly!

 

[ELMC]

Ran quick numbers

In your example over 30 years you save 36k total, most of it, late in the 30 years......

If you take your $10k now, put it into a Roth IRA, you would only need a 4.5% return rate to make $36k in 30 years

You would have to assume you would make 4.5% annually over 30 years

What you are saying is true, investing money is certainly going to give you a better rate of return over time than spending it on a timeshare. I think people try to view their timeshares as investments and if that's the case, they are really BAD investments. I don't think that I can say that buying DVC is the best use of your money. What I was trying to figure out is if, assuming you are going to spend money on vacations, purchasing DVC a better way to do it versus the next best comparable option. I think it is.

That being said, you may be better off staying in values using PIN codes and bounceback offers, or investing the money as you suggested. But those are apples and oranges situations. But if you're going to vacation at Disney and stay in deluxes, DVC seems to be the way to go.

Although...your post has me thinking. I'm going to work on some different numbers (hopefully with better formatting) and post later.

 

[ELMC]

Renting is good for you since A) you have access to rental points the time you want to go and B) don't mind someone else controlling your reservations or where you stay.

By Renting, you don't control your reservation, and you can only take what's available at the time someone else books for you. In a strickly $ and cents analysis, this doesn't make a difference. But when comparing whether to buy or not, you have to consider all factors.. I've rented before and had a great time. But to truly know what's available when I want, and to plan it the way I want to, I need own it. I picked a home resort to stay at that I prefer. To some this is not a big deal and that makes renting more desirable. For me, having the location I want is more desirable.

I've always gone by an easier set of Math calculations. Take the buy in cost, and divide it by the number of points left on the contract. (100 BWV points for $52 point. Take $5200 divided by 3104 and that comes to $1.68 per point). Every year, you paid $1.68 to own your points. Then add the current years dues and that is your price per point each year. Each resort points will be different due to different buy in prices and dues amounts, but they all fall within a range.

Now take the price per point for your purchase, and compare it to the price of your typical stay if you weren't DVC. Go to the WDW website and try to book a room only reservation.

Remember, if you are someone that just stays at sudio's or someone who stays 2 bedroom everytime, the value changes. You can't get 2 br room unless you go DVC. You will ALWAYS save on that room with an ownership over booking cash. In a studio, you will save significanty over values and still save compared to moderates. Me personally, we will be getting 1 br. for a little more than staying moderate, but the difference in size and amenities of the room more than cover the difference in cost.

You can't really predict increases in dues or rack rates in the future. The track history since DVC started shows DVC dues increase at a slightly lower rate. But the last few years do not show that same trend, but you can never take just a few years to make a long term projection.

I like what you said about controlling the reservation. Especially now with the online reservation system, I see a big advantage in being able to "shop" for available dates and resorts during the planning process.

Also, I like your calculation, it's a much simpler way of comparing costs. I wanted to do my calculations to try to account for the lump sum of money being spent up front. You're right, every time I rent I'm paying an extra $2.70 per point vs. buying. My question was, at what point in time do those $2.70s add up to my lump sum purchase price.

 

[ELMC]

Joey got me thinking. Instead of buying DVC, let's say I took the money I was going to spend and invested it in (whatever). Then I'll simply rent a villa every year instead of owning DVC. What would happen?

If I took my original $9,068 and instead of spending it on DVC, I invested it at 5% over 30 years (although today's economy is horrible, I think that assuming 5% over a 30 year period is a relatively safe assumption). After 30 years I would have $37,325. In that time, renting points, I would have spent $84,441. This gives me a net amount spent on vacations of $47,116. (You're welcome Disney).

By purchasing DVC, over the same time period I would have spent $48,340, which is slightly more. But, I am getting value of being a DVC owner such as discounts, booking convenience, etc.

I guess what I'm trying to say is that you can change variables in hundreds of different ways and compare staying Deluxe vs. Value or going places other than Disney and make all the counter arguments that have been presented here. But in the end, if you are going to vacation at Disney World and you enjoy staying in Deluxe accommodations, then purchasing DVC (through resale) is actually a very good way to go. That being said, renting isn't a bad deal either, especially if you don't currently have the resources to buy. Thanks for reading and I can't wait to read other people's ideas on this.

 

[luckyman_apd]

Joey got me thinking. Instead of buying DVC, let's say I took the money I was going to spend and invested it in (whatever). Then I'll simply rent a villa every year instead of owning DVC. What would happen?

If I took my original $9,068 and instead of spending it on DVC, I invested it at 5% over 30 years (although today's economy is horrible, I think that assuming 5% over a 30 year period is a relatively safe assumption). After 30 years I would have $37,325. In that time, renting points, I would have spent $84,441. This gives me a net amount spent on vacations of $47,116. (You're welcome Disney).

By purchasing DVC, over the same time period I would have spent $48,340, which is slightly more. But, I am getting value of being a DVC owner such as discounts, booking convenience, etc.

I guess what I'm trying to say is that you can change variables in hundreds of different ways and compare staying Deluxe vs. Value or going places other than Disney and make all the counter arguments that have been presented here. But in the end, if you are going to vacation at Disney World and you enjoy staying in Deluxe accommodations, then purchasing DVC (through resale) is actually a very good way to go. That being said, renting isn't a bad deal either, especially if you don't currently have the resources to buy. Thanks for reading and I can't wait to read other people's ideas on this.

Renting is definitely a great way to go.....if you have a trusted renter and rentee. You are TOTALLY reliant as the renter on the owner who makes the reservations. Only after you have a reservation confirmation can you check to see that you have a reservation. There is risk as a renter and an owner who rents.

For me, I had a great vacation when we rented....I felt like I was staying in luxury compared to our previous trips. But I can't count on finding someone willing to rent points. I know there is the rental thread, and David's seems legit, but owning definitely makes it cheaper. We are POSiTIVE we will be vacationing at our schedule at Disney for the next 10 years or so. DVC just made sense for us.....at a low point buyin. More than 125 pts for us would have made it not worth it. At this amount, in the future if we want to skip 3 years of the WDW we can bank and borrow and in the middle year have enough points to go to Hawaii. Just an option for when the kids are older teenagers. After that, we can decide what to do, but the buy in price will have paid for itself by then so it will only cost us our Dues each year.

I've always said DVC isn't for everyone. I mean, I used to keep on walking when the sales people would try to get my attention. I rent 1 time, start looking into the program, and here I am a year later in the middle of a resale purchase.

It helps that our buy in may be paid for by my grandfather as a gift, so that just makes it that much better for us, as our points will only cost us dues every year. But I bought before knowing he was going to do that, so I still stand by my calculations and decision to buy.

 

[E2ME2]

Hey all,

So I've really been interested in reading all of the different views on DVC ownership posted on this forum. So it got me thinking that I should do an analysis of the numbers. Personally, our history shows that we vacation in Disney at least once a year and we like to stay in Deluxe Villas. So we decided it makes sense for us. But just how much sense? Well I crunched the numbers on purchasing a DVC RESALE contract at BWV for $52 pp, 150 point contract. (This is our actual pending purchase). There are 104 points left over from 2011 which are included in the first year numbers.

I made a couple of assumptions in my cost analysis. The numbers shown here assume a 3% annual increase in MF and a 3% annual increase in the cost of renting points, starting at $12 per point. I took a little liberty with this one because although they have remained somewhat constant, one has to assume that the price of renting points will go up over time. Also, I used $12 because it is the official price of one broker (TTS) and it is a happy medium between private rental prices ($10-11pp) and David's ($13 pp). This doesn't factor in the cost of use of money because I felt that would overly complicate things and only have a minimal effect. As you can see, owning DVC becomes cost effective after 6 years vs. renting points. Not a bad deal when you think about it.

Keep in mind that this does not compare buying DVC with staying at values or mods. It also doesn't consider buying DVC at direct prices (hint: the break even point is twice as far out).

Dan

Dan;
Lots of intangible variables to be considered, and those are usually what sways folks when it comes to parting with their money. I don't think buying direct would push the break-even point out by a factor of two. There are some perks that are valuable to some that are included in buying direct. The convenience is worth more to me, than it may be to others. I just bought direct at SSR, and using my own personal analysis, figure I break even after about 7 -8 years. & there is a convenience factor knowing that I have access to upscale accommodations. When we go to other resorts at the 7 month window, we are gaining more of a return on our points. So many variables, that the dollars and cents get lost in the process. If you use your points every year, and you would have vacationed in those years if you had not purchased DVC, you are probably coming out ahead. & If you use your points with your family, children, grandchildren........you are getting a value that can not be itemized in dollars!

 

[E2ME2]

I've been on some "Budget Vacations" over the years, and a few times would have been willing to pay more money for better digs and better service. In retrospect, it's often worth it to pay more for a better quality experience. especially when it involves vacationing

 

[luckyman_apd]

I've been on some "Budget Vacations" over the years, and a few times would have been willing to pay more money for better digs and better service. In retrospect, it's often worth it to pay more for a better quality experience. especially when it involves vacationing

exactly. We took a trip to Vegas 4 years ago. We were going to do it on the cheap, but ended up spending money on extra activities out there like a helicopter flight into the grand Canyon. Looking back, the extra $ was worth it as we had a fantastic time and have memories we wouldn't have. Spending more doesn't always = better, but being cheap usually = worse.

 

[chalee94]

If I took my original $9,068 and instead of spending it on DVC, I invested it at 5% over 30 years (although today's economy is horrible, I think that assuming 5% over a 30 year period is a relatively safe assumption).

the other side is that by investing the money, you are often putting it at risk.

if you invest the money in stocks and the value tanks 20% (as it did not too long ago for the whole market)...and then you have to pull out money for your first vacation...then if the market slips a little more or stays flat and you have to dip into the principle again, you don't have very much left.

you might have still averaged 5% over a 30 year period but if your investment is wiped out over a few years by early losses and vacation spending, that's a moot point.

just another consideration...