# DVC Point Math

#### Arthur2990

##### Earning My Ears
Warning: About to dispel some of the magic.

I have heard others wonder about this on YouTube Videos and myself. How much does a DVC stay cost using my own points vs assumption that oh i didn't get a bill at check out. I did a little math and this is the formula i came up with.

I will admit that I am not a mathematician so if my formula is wrong then please feel free to correct me. It should be noted that this value will change year to year as maintenance fees increase.

(((Purchase Price+Closing Fees-maintenance Fees)/number of years left on contract)/number of points per year)+per point maintenance fee=Per Point Cost for current year

Per Point Cost for current year*total points for stay=total cash cost of stay

#### FFMickey

##### DIS Veteran
That's the formulas I use to track. I also use a spreadsheet with the formulas and like to track what the rack rates are to compare. One of these days we might hit the break even point.

#### davper

##### DIS Veteran
(Purchase Price+Closing Fees-maintenance Fees)
Why are you subtracting MF from this first number? MF is paid yearly not all upfront when you purchase.

And yes, your cost of stay is about \$10 per point per year at today's prices on new resorts. For me, that is about \$1.50 lower because I bought in at \$80 instead of todays \$165.
But try and pay for the same room in cash each time you come down. you are going to pay at 4 times as much for the same room. You are getting deluxe accommodations for the price of a cheap moderate.

Let's skip the benefits of having a kitchen when in large groups. Or large soaking tubs after a long day in the parks. Private balconies with seating. separate living room when the significant other wants to go to bed and you don't. Larger rooms.

So I ask, what is your point in thinking that you can dispel some of the magic? Because you didn't. DVC is not for everyone and you should go into it eyes wide open.

• #### Arthur2990

##### Earning My Ears
Why are you subtracting MF from this first number? MF is paid yearly not all upfront when you purchase.

And yes, your cost of stay is about \$10 per point per year at today's prices on new resorts. For me, that is about \$1.50 lower because I bought in at \$80 instead of todays \$165.
But try and pay for the same room in cash each time you come down. you are going to pay at 4 times as much for the same room. You are getting deluxe accommodations for the price of a cheap moderate.

Let's skip the benefits of having a kitchen when in large groups. Or large soaking tubs after a long day in the parks. Private balconies with seating. separate living room when the significant other wants to go to bed and you don't. Larger rooms.

So I ask, what is your point in thinking that you can dispel some of the magic? Because you didn't. DVC is not for everyone and you should go into it eyes wide open.
I think people going in on Pixie Dust and just want to enjoy the points with out thinking about the costs. I kind of equate it to people using chips in Vegas to gamble with vs using cash.

##### Mouseketeer
The calculation is a bit more complicated than that because you have to factor in something called Time Value of Money. Essentially, a dollar today is worth more than a dollar tomorrow due to inflation.

The real formula is the (Net Present Value of Future Cash Flows)/Total Points over the duration of the contract = Price Per Point.

Net Present Value of Future Cash Flows can be a bit complicated to calculate. You probably need a spreadsheet to do it properly because you are probably going to need to make some assumptions of how much maintenance fees increase annually. Excel has a built in NPV Formula.

I did a rough calculation using Saratoga Springs as my example. Here are my assumptions:

Purchase Price = \$100/Point
Points Purchased = 150
2019 Maintenance Fee = \$6.40/Point
Maintenance Fee Avg Annual Increase = 4.5%
Inflation Avg = 2%

My Results were the following:

Net Present Value = -69,482 (this is the amount of money I would pay over the remaining 35 years of the contract in today's dollars).
Total Points = 5,250 (150 x 35)
Price Per Point = \$13.23 per point

#### KAT4DISNEY

##### Glad to be a test subject
I think people going in on Pixie Dust and just want to enjoy the points with out thinking about the costs. I kind of equate it to people using chips in Vegas to gamble with vs using cash.
You haven't been on these boards long if that's what you think most of us think. lol

#### Mickey of the Villages

##### Can't have nice things
Oh my goodness we love to spreadsheet the heck out of DVC. I know I do. And then I get mad when I see others do it. I am so ashamed.

#### DougEMG

##### DIS Veteran
The calculation is a bit more complicated than that because you have to factor in something called Time Value of Money. Essentially, a dollar today is worth more than a dollar tomorrow due to inflation.

The real formula is the (Net Present Value of Future Cash Flows)/Total Points over the duration of the contract = Price Per Point.

Net Present Value of Future Cash Flows can be a bit complicated to calculate. You probably need a spreadsheet to do it properly because you are probably going to need to make some assumptions of how much maintenance fees increase annually. Excel has a built in NPV Formula.

I did a rough calculation using Saratoga Springs as my example. Here are my assumptions:

Purchase Price = \$100/Point
Points Purchased = 150
2019 Maintenance Fee = \$6.40/Point
Maintenance Fee Avg Annual Increase = 4.5%
Inflation Avg = 2%

My Results were the following:

Net Present Value = -69,482 (this is the amount of money I would pay over the remaining 35 years of the contract in today's dollars).
Total Points = 5,250 (150 x 35)
Price Per Point = \$13.23 per point
Which then makes it look like people renting points for \$15/point a getting a pretty good deal.

#### miTnosnhoJ

##### DIS Veteran
Which then makes it look like people renting points for \$15/point a getting a pretty good deal.
Precisely. It is tough to make money renting DVC points. It is positive cash flow-wise if you would otherwise lose the points. But only because people ignore the purchase cost.

##### DIS Veteran
Warning: About to dispel some of the magic.

I have heard others wonder about this on YouTube Videos and myself. How much does a DVC stay cost using my own points vs assumption that oh i didn't get a bill at check out. I did a little math and this is the formula i came up with.

I will admit that I am not a mathematician so if my formula is wrong then please feel free to correct me. It should be noted that this value will change year to year as maintenance fees increase.

(((Purchase Price+Closing Fees-maintenance Fees)/number of years left on contract)/number of points per year)+per point maintenance fee=Per Point Cost for current year

Per Point Cost for current year*total points for stay=total cash cost of stay
I don't know why that would dispel the magic....it's exactly why I love DVC. Ignoring TVM (the money was going to be spent anyways, not invested) my cost right now per point being used is around \$9.50 (including the buy in and current MF's). When I look at booking a studio for less than a value room costs, that brings the magic to life for me! I have a 5 night stay at Beach Club this summer for a per night cost of \$147....no taxes, no parking. In October I have a 7 night stay at AKV with an average per night cost of slightly over \$90. I hate having to book cash rooms, even Value rooms, when this is what I'm paying for DVC studios.

#### aoconnor

##### WDW Nut
Which then makes it look like people renting points for \$15/point a getting a pretty good deal.
Agreed, I'm perplexed that rental rates haven't increased much in the past few years. Renting is more well-known and promoted by websites and guide books than ever. Points listed with brokers like David's are gone within hours. I think they could easily fetch several dollars more if the whole market would agree to move.

#### crvetter

##### DIS Veteran
Which then makes it look like people renting points for \$15/point a getting a pretty good deal.
This number is a bit deceiving in a sense to see if you are going to make money or lose money between owning or renting points, because the \$15 a point is a weighted average of the entire contract length. You would need to do something similar for renting points to get what that cost will be on average (NPV'd) and you will find that to be \$24 a point, assuming \$15 a point rental and a 4.5% increase in the rental rate YOY.
Precisely. It is tough to make money renting DVC points. It is positive cash flow-wise if you would otherwise lose the points. But only because people ignore the purchase cost.
I don't really think it is positive cash flow-wise only if you ignore the purchase price. So taking the data and assumptions at @CanadaDisney05, I can figure the NPV of a hypothetical rental income to be \$127,694 (assuming \$15 per point rental income, inflating 4.5% per year). This does show that the total NPV of the contract would be \$58,211 if we were to rent out all 35 years, including the purchase price. A typical metric often used to determine if an investment (of this kind) is good would be to look at the Internal Rate of Return, which can be used as a basis to benchmark to other investement returns such as the stock market, etc. For this hypothetical contract the IRR is 13.8% which is fairly impressive. However, this does assume the status quo going forward (healthy rental market, Disney is desirable for the next 35 years, etc). But 14% is a fairly high return thus I would expect a fairly large amount of risk with that return.

#### Pooh12863

##### Mouseketeer
I like to keep things simple....my purchase price for 1 year and current MF's is \$3257 for this year, 6 days in a two bedroom which is what I bought enough points for is \$6258 at rack rate. I don't imagine MF's will outpace rack rates by that much to affect that equation much over the years. Plus I got my 300 2017 points for \$1879 (1 year purchase price+ 4 months MF's), so I'm already ahead of the game. My magic remains intact.

It really is that simple.

#### Dean Marino

##### DIS Veteran
Well, I'm a little dumb .

We bought into DVC in 2012. CASH. Bank interest rates were about 1%, so we used \$28K up front.
Since 2012? We have tracked DVC vs "Discounted" Main Hotel, each visit. Twice per year. Each visit? We have taken Initial investment+dues - discount price.

It took us 6 years to hit "break even". That would be the point where, IF YOU WERE GOING TO GO ANYWAY, we beat all AP or GP room discounts. Oh yes, we did the "time value of money" thing... it was pretty poor at the time. Please don't tell me about the stock market "go to Reno" thing. We don't do that.

Having hit "break even" - we continue to GO, twice per year, 16 days total. Our Room cost is roughly \$125 per night, vs over \$400 per night, with the perpetual 30% discount at the Wilderness Lodge.

Now, every family is different. These are OUR results. Two older people with no debt, and kids THROUGH college. DVC is great, under the right conditions - it's a WANT, not a NEED. It's a TERRIBLE thing to Finance (think 10% plus interest rates).

But if you are GOING TO GO, at least every 2 years? It CAN be a good deal.

All personal opinion - I'm not necessarily right, no one else is necessarily wrong.

#### bumbershoot

##### DIS Veteran
I think people going in on Pixie Dust and just want to enjoy the points with out thinking about the costs. I kind of equate it to people using chips in Vegas to gamble with vs using cash.
?

People might sometimes go into the decision a little confused, but at no point is it even possible to act like it’s not actual money. They do present you with a large amount of money to pay or pay off. They continue to send you yearly bills. You have to pay to drive or train or fly to get there. Etc.

At no point is it even possible to pretend like it’s cost free.

It IS possible, 10 years in, to know that the buy-in cost is long done with, and now all you’ve got, timeshare-wise, are dues. The money spent before is gone. No point in thinking about it anymore. Going forward, it’s dues.

Agreed, I'm perplexed that rental rates haven't increased much in the past few years.
Why would people pay more? Renting is a pain. All it most of the money up front. No cancellation. Pay for the dining plan all up front. Etc. Then there’s the worry that the owners are on the up and up.

People who could pay more than that per point will likely just buy in, if they want the timeshare experience.

#### crvetter

##### DIS Veteran
No magic dispelled here.

As a new member from a resale purchase (literally got my member number in the mail yesterday), I used this chart to select which resort has the best value-per-point cost before purchase. Fortunately, Bay Lake Tower was where I wanted to be anyway.

(See the chart halfway down the page)
https://www.dvcresalemarket.com/blog/best-economical-dvc-resort-to-purchase-spring-2019/
I would like to just highlight that the analysis that DVC Resale Market does ignores the time the value of money, inflation of MFs, and the average nightly point cost of the desired room type at the resort. It’s a good start but if you factor those above three items in you’ll see that the resorts move around a bit, mostly driven by the average nightly point cost of the desired room type at the resort. For instance when including those items VGF becomes less of an economical resort to one of the more expensive resorts.

##### Mouseketeer
mostly driven by the average nightly point cost of the desired room type at the resort
This part has a major effect on the calculation, but is completely different based on the individual circumstance. If you don't plan on staying at your home resort anymore than any of the others, then this isn't important. If you plan on staying solely at your home resort, this has a dramatic effect. This is why I never understood when people talk about the most economical resorts as if their is a finite answer

#### crvetter

##### DIS Veteran
This part has a major effect on the calculation, but is completely different based on the individual circumstance. If you don't plan on staying at your home resort anymore than any of the others, then this isn't important. If you plan on staying solely at your home resort, this has a dramatic effect. This is why I never understood when people talk about the most economical resorts as if their is a finite answer
Oh yes I should have definitely stated that it only mattered if you plan on using your home resort priority period and mostly staying there. Likely if your target room is a studio or 2 bed during fall frenzy too it’s important to consider this because of the lack of availability no matter an individual’s intention.