DVC "cost of room" math. Is this right?

[Dean Marino]

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[Dean]

Well, we don't do stocks - or go to Reno . One day - a person can do well. Next day? All gone... .

If you are equating reasonable investing with gambling, that is an absurd position IMO.

 

[Ben E N]

If you are equating reasonable investing with gambling, that is an absurd position IMO.

I was lucky enough to have pulled most of my purchase from a position in the Vanguard Wellesley Fund. I saw luckily because it grew 5% annually, plus dividends, before I sold, but only grew .5% this past year. I'll have to keep an eye on it over the next 42 years, though, as long as I keep my BLT contract, knowing that I could have allowed that money to easily grow instead of just taking annual trips to Disney World.

Holding money in these sorts of index funds is very low risk, and a great way to let your money grow. Not at all speculating and gambling.

 

[deerh]

I still say "the sky is falling" people are funny. People talk on here "a recession" will occur. Probably so... When? Who knows? But, the fact remains, when I bought my BWV for $65/point 19 years ago, I would never had dreamed a "timeshare" would double in price to $120-130/point NOW!!! That is a 95% return rate on my "investment".. YES, I know it is not an investment, but a "timeshare".. But that is a 5% increase/year.. Not stock or mutual fund rates, but I feel it is good for a "timeshare".. So, my 15-20 trips to Disney over the years, and I could sell it now for double the price-- Priceless!!!!!

Now, when the end date comes (2042), THAT is a different story. So to those thinking of buying CCV or the new Rivera comes online, I have this strange feeling in 1-2 short years, we will be talking about $200/point!!!!! Just think in 5 years or 10 years what will the price/point be?? $250-270/point! WHO would have ever thought that 10 years ago??? Not me!

So, if I ever sell say 300 points- 300x$125/point=$37500. Purchased in 1999- $18850.. Pocket $18650.. PLUS- 15 trips at $4000/week=$60000. (rough estimate of a 2BR). So, For $18850 original cost I made (counting vacations and selling timeshare)---$78650. NOW, this does not include financing or commission on the sale of the "timeshare".. So, factoring those in roughly- $3650 (commission) and financing ($6000) I am up $69,000.....

 

[Dean]

I was lucky enough to have pulled most of my purchase from a position in the Vanguard Wellesley Fund. I saw luckily because it grew 5% annually, plus dividends, before I sold, but only grew .5% this past year. I'll have to keep an eye on it over the next 42 years, though, as long as I keep my BLT contract, knowing that I could have allowed that money to easily grow instead of just taking annual trips to Disney World.

Holding money in these sorts of index funds is very low risk, and a great way to let your money grow. Not at all speculating and gambling.

The info I've seen suggests that those who jump in and out do worse even if they are out some of the worst times because they miss the best times. I would consider 5%, even after taxes, a poor return personally.

I still say "the sky is falling" people are funny. People talk on here "a recession" will occur. Probably so... When? Who knows? But, the fact remains, when I bought my BWV for $65/point 19 years ago, I would never had dreamed a "timeshare" would double in price to $120-130/point NOW!!! That is a 95% return rate on my "investment".. YES, I know it is not an investment, but a "timeshare".. But that is a 5% increase/year.. Not stock or mutual fund rates, but I feel it is good for a "timeshare".. So, my 15-20 trips to Disney over the years, and I could sell it now for double the price-- Priceless!!!!!

Now, when the end date comes (2042), THAT is a different story. So to those thinking of buying CCV or the new Rivera comes online, I have this strange feeling in 1-2 short years, we will be talking about $200/point!!!!! Just think in 5 years or 10 years what will the price/point be?? $250-270/point! WHO would have ever thought that 10 years ago??? Not me!

So, if I ever sell say 300 points- 300x$125/point=$37500. Purchased in 1999- $18850.. Pocket $18650.. PLUS- 15 trips at $4000/week=$60000. (rough estimate of a 2BR). So, For $18850 original cost I made (counting vacations and selling timeshare)---$78650. NOW, this does not include financing or commission on the sale of the "timeshare".. So, factoring those in roughly- $3650 (commission) and financing ($6000) I am up $69,000.....

That's only helpful if you actually sell at that level. It's not the sky's falling but your position is simply the best case scenario and even then, to expect a similar increase over the next 10 years would be unheard of given the specifics of the situation. I bought BWV at $54, enough below the then ROFR line that another broker called DVC to try to figure out why it went through. We have other RTU experiences in the timeshare world and the ROFR has an affect on value well before the end. At some point BEFORE the end, it will likely not even be able to sell, much less get anything back (maybe 3-5 years out). Riviera will likely have a negative impact on the values of BWV & BCV but I suspect it'll be relatively small. The market was up almost 20% last year and is about zero this year, things ebb and flow. DVC will likely track the economy but in an exaggerated way just like all resort property does. in 2009 one could buy FL panhandle property in many cases for 15-20 cents on the dollar compared to previous values. Ultimately it doesn't matter if you don't sell and truly can afford it though my definition of being able to afford it would include being able to throw it away and not have a major impact on one financially speaking.

 

[MooseBucks]

The info I've seen suggests that those who jump in and out do worse even if they are out some of the worst times because they miss the best times. I would consider 5%, even after taxes, a poor return personally.

That's only helpful if you actually sell at that level. It's not the sky's falling but your position is simply the best case scenario and even then, to expect a similar increase over the next 10 years would be unheard of given the specifics of the situation. I bought BWV at $54, enough below the then ROFR line that another broker called DVC to try to figure out why it went through. We have other RTU experiences in the timeshare world and the ROFR has an affect on value well before the end. At some point BEFORE the end, it will likely not even be able to sell, much less get anything back (maybe 3-5 years out). Riviera will likely have a negative impact on the values of BWV & BCV but I suspect it'll be relatively small. The market was up almost 20% last year and is about zero this year, things ebb and flow. DVC will likely track the economy but in an exaggerated way just like all resort property does. in 2009 one could buy FL panhandle property in many cases for 15-20 cents on the dollar compared to previous values. Ultimately it doesn't matter if you don't sell and truly can afford it though my definition of being able to afford it would include being able to throw it away and not have a major impact on one financially speaking.

Exactly. We bought in knowing at some point there’s a risk that it’s going to be a burden to us and we’ll be forced to ride it out. At no time did we look at a timeshare as investment. DVC has strong potential to depreciate at some point. I’m just hoping the greater fool theory holds true if/when we ever decide to sell.

 

[deerh]

Yes, As I mentioned earlier, I do know that when 2042 comes about, or 4-5-6 years before that, DVC (if I keep it that long) will be worth little to nothing.. Do know it is not a "investment". BUT, it IS nice to know if I want to sell it this year/next year I would be ahead of the game... When the time comes "to throw it away" so to speak, We would have gone on 30+ vacations to Disney/cruise/RCI and would have enjoyed it for many years! Won't regret it at all!

I think that is the essence of DVC-do you enjoy going every year? Do you like not to come up with $4000 every year for accomodations? Or every 6 months? Do you like not staying in a value type resort? Do you like staying on Disney property? Are you Ok with dues every year? If so, DVC is for you!

Will have to disagree with the 10 year argument. I think DVC will increase (the newer properties with many years left) as good or better than BWV has over the past 10-15 years. WHY would the newer properties be any different than BWV, Y/BC, GF??? Isn't GF $180/point now?? Or $200?? Don't see that NOT happening.. There will be ebbs/flows, but in 10 years, DVC will be $250-$280/point. CCV has gone up $12/point in less than 2 years!

Don't think "the sky is falling" on DVC anytime soon.... Maybe other timeshares... Not sure as I have no experience or knowledge of those.

 

[ant37]

When we bought our first contract I distinctly remember our guide stating that "You're paying for your vacations in advance." I actually think the benefit of ownership is much more than that, but I appreciated that they weren't over hyping the deal. Had we not bought our DVC points I feel like we'd have ended up spending as much or more for moderate or value accomodations. So I won't do the math, but I can say that it was definitely the right choice for us.

I remember that when we bought ours too and I still think of it that way. Whatever the points value per night, if we were paying the cash now to book these rooms (outside of DVC), it would be at least triple the dollars or more. I love not having to do that.

 

[Novakm]

Here’s where the DVC math can get really funny:

I bought resale in 2013 for $16,000 cash
I have spent about $9,000 in dues since then, for a total of $25,000

For that I spent 36 nights in a 2 bedroom suite.

So that’s $694 per night, well below cost of CRO.

But wait, it gets better! I have $25,000 equity in my points. If I sold today, my net cost is $0 after paying the realtor fees.

But I’m not selling

 

[TiggerBouncy]

I never understood the need to do all this analysis about how much you spend and how much it's costing and when your break even is considering future value of money and compound interest, etc.

I only have a few questions I need answered:
Did I go to Disney? Check.
Did I stay in a DVC room? Check.
Would said room have cost an absurd amount of cash / would I have never stayed there without DVC? Check
Did i...
Nope. I have no other questions. I'm done. It was a good investment.

 

[Dean Marino]

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