DVC Financial Analysis

[Maistre Gracey]

USING ROUND NUMBERS...
Let's say you pay $74/pt for DVC ($84 less $10 for MB). You can use that point 39 times, so you can spread the $74 over 39 years. This means that point will cost you $1.90 every year you use it. Of course, we must add mtc fees of about $4.00/pt which brings the total cost to about $5.90 per point, per year. A week during Dream season is 123 points for a studio. We now multiply 123 by $5.90 to see how much that studio actually costs us. Total- $725.70 for the week....TAX INCLUDED. Can you get that price for a regular hotel room at Beach Club???
(Of course, you can use that figure to compare to any accommodations, not only the Beach Club).

Yes, mtc fees will rise but so what. The price you are comparing it to will also rise. Actually, DVC cost will rise at a slower rate because point cost will never increase, only mtc fees will increase.

Lost interest income- Some factor this in, but I do not for several reasons. I would have bought some other luxury item, so I would not be earning interest anyway. I could go on and on why you should not add lost interest income to the equation. If you'd like more explanation, please ask.
If you opt to factor it in, please don't over do it, as it is likely not as much as you think. Many folks forget to subtract the amount they would otherwise pay for accommodations at WDW.

Hope this helps......

 

[Wags]

Maistre Gracey, I like how your calculation works. That's about as simple of an explanation of cost that I've seen.

Sorry, if I'm a little dense on this, but if I need to convince DW, and she doesn't see us going there every year, does this cost change if you only go every other year?

Now, I understand, that one of two things could occur. 1) Either one could rent the points and you could recoup some of the cost or 2) You'd could bank the points and use them for say a 2 Bdrm or maybe you could take multiple trips by staying in a Studio each time.

I just want to make sure that your cost scenario doesn't change if you don't use the points every year. It doesn't double the cost, does it?

Again, sorry if I'm misunderstanding your analysis, just trying to understand.

Thanks for the help.

 

[Maistre Gracey]

Originally posted by Wags
Maistre Gracey, I like how your calculation works. That's about as simple of an explanation of cost that I've seen.

Sorry, if I'm a little dense on this, but if I need to convince DW, and she doesn't see us going there every year, does this cost change if you only go every other year?

Now, I understand, that one of two things could occur. 1) Either one could rent the points and you could recoup some of the cost or 2) You'd could bank the points and use them for say a 2 Bdrm or maybe you could take multiple trips by staying in a Studio each time.

I just want to make sure that your cost scenario doesn't change if you don't use the points every year. It doesn't double the cost, does it?

Again, sorry if I'm misunderstanding your analysis, just trying to understand.

Thanks for the help.

Hi, Wags. No, the cost will remain the same, as you will use that point 39 times, regardless if it is banked or borrowed.

Some members here choose to use a figure of $10/point, as that is what the average rental price is. In order to use that figure, you would actually have to rent your points, which many members will not do.

Good luck.........

 

[CrayzeeDiz]

If you bought in 1995 and have become sick of Disney World and DVC then you can probably just sell your points for what you paid 8 years ago. Then you could be happy in the fact that you stayed at a First class resort in the heart of DW for the cost of maintanance fees. (which is pennies on the dollar).

The only way DVC could become a bad deal is if DW goes down hill. I don't see it happining.....

There are much cheaper ways to do DW but in my opinion no better way..

 

[WDWguru]

Originally posted by Cruelladeville
For those who say "what will we do with DVC when the kids are grown/"--shame on you!

Absolutely, Cruella! DH and I don't even HAVE kids (and - gasp! - don't plan on any) and we own 700 points that we use all for ourselves!!

We do take extended family and friends, including our last three trips, but we also go by ourselves as often as not. We are also using our points to go back to Alaska this summer. Our eventual plan is to amass enough points to spend most of January and February at WDW every year.

 

[TheRustyScupper]

1) We did the total math.
2) We even included tax deductions and interest-lost.
3) Assuming
. . . $74 / point
. . . 150 points
. . . $3.63 / point maintenance fee (different for each resort)
. . . 10.75% Disney interest (2nd mortgages are cheaper)
. . . 20% net (after itemizing on 1040) IRS bracket

3) Annual AVERAGE cost until 2042 is
. . . at 10% downpayment = $1084
. . . at 20% downpayment = $1070
. . . at 50% downpayment = $1029
. . . at 100% downpayment = $962

 

[RadioNate]

Here would be my question ... and one that does not seem to be included here (unless I have missed it somewhere in the thread)

What about the yearly (or extended) rise in dues. Even if they go down on occasion and up others...one has to assume that over 40 years, it will ultimately rise.

And, considering that this is the biggest part of the DVC investment, how does that factor in?

For example...OKW was $3.16 in 2000 ... for 2003 it is $3.49 ... that's over 10% in 3 years.

So, even if you go low-ball and say it'll be 2% per year ... you're looking at dues being $5.14 a point by 2023 ... $6.26 by 2033 ... etc as time goes by.

This is where I get worried about the "sales pitch" that DVC rolls out to $6 (approx) a point over the life ... yes it does ... but that's only if dues NEVER go up from where they are right now.

Don't get me wrong...I know it is still a great deal ... but I think that is something tends to be "left out" when people are doing the calculations.

 

[WDWguru]

Dues are capped annually at 15% by law and also have to be completely accounted for. DVC can not pad dues to make a profit and can only charge as much as it actually costs to upkeep a resort and the other expenses it covers. They estimate taxes each year, so there is always an adjustment the next year for actual taxes paid. This year that actually lowered the estimated dues for BWV between the time they were announced (early December annual meeting) and the time they were billed (mid January).

 

[crisi]

As with all financial analysis, there are a lot of variables.

We figure DVC would save us money - if we were to travel as much without it as we will with it. That is probably not the case - we will likely go a little more often and stay for a little longer. And if we booked studios over two bedrooms. Also not the case. So in effect, for us (and not necessarily for anyone else), we are paying a little more to stay in a nicer place while not tripping over our children and ensure regular vacations.

While its true that DVC has been outpacing most investments for the past few years - if you have credit card debt hanging around at 18 or 24%, DVC will be much less of a great investment.

This doesn't mean I don't think DVC is a value, just that I've decided this is a little bit like doing the "stay at home mom" analysis - many complicating factors where you can save or spend money that someone else may not. Really, the money doesn't make any difference if DVC is important to you - and its a good value - but not necessarily a savings. And if DVC isn't important to you, nothing will make this a good value.

 

[joepoe]

Originally posted by FriendsOfEeyore
Here is a little different take...

As an Accountant, I like to stay, how should we say... CHEAP! If you look at staying at moderate compared to a dvc (this is what I did).

Sorry, if these numbers don't look as good as some of yours, but this is how I look at it.

Edward

As as fellow accountant and financial analyst, the biggest flaw in your logic, with all due respect, is you are comparing apples to oranges. If you are cheap and do not want to spend more than a moderate, then DON'T buy DVC, that is obvious. If you want deluxe, condo-like accomodations on property, DVC is a good value. I stayed at Carribean Beach last week on business and the moderate was just fine for a night or two. With my family of five, the notion of two double beds, no fridge, and crawling all over each other is not my idea of a relaxing vacation.

Why stop at the moderates? Why don't you just compare DVC to AS or some other value resort? How about the Comfort Inn in Kissimee?

 

[ryoung]

I just did a similar anaylsis before I put in an offer in the resale market. I built in inflation for noth annual dues and conventional room rates. I had a break even on the DVC in about 10 years. After that it savings became even greater because all you have is the annual dues to put against the cost of a conventional room rate.
I do have one additional question, though, in reading the threads, is it difficult to get reservations during off peak times on a short notice (less than 11 ot 7 or even 4 months)?

Randy