DVC Purchase?

[VGCgroupie]

Paid for itself 60% based on Rack rates or based on DVC rental cost? Very different math.

Rack rates with whatever the current discount was for that stay. I would never rent points so that comparison doesn't apply to me.

 

[Brian Noble]

This is totally an aside, but...

Comparing to rack is probably overly optimistic, because Disney often offers discounts at the various DVC resorts. However, comparing to "renting from an owner" is probably overly pessimistic, because owner rentals are less flexible than booking with owned points. So, a "fair" comparison is probably somewhere in the middle--say something between 70-80% of rack, inclusive of taxes. Which end of the range you use is probably best determined by the answer you are hoping for. ;-)

 

[DanCali]

We have rented through DVC Rental Store annually and I am at the point where I wonder if it would be more affordable for us to get a DVC contract but I am totally new to all this. I know timeshares can be a scam and money down the drain, but with Disney it might be more of an investment? We only travel once a year to Disney, so I am curious about any perspectives. Thank you!

If you always stay on property, then buying a contract can makes sense. I'm saying that because there are tons of other options in Orlando. For example, just Marriott Vacation Club has around 10 timeshares in the area and you can usually get a 1BR unit at one of them for less than $300 (that may not even get you a studio at DVC when you rent). Oftentimes it will be less than that, or you can get a studio for even less. And that's a cash rate, with 3-day cancel policy, without having to deal with rentals or anything like that. We did that for ~10 years until we bought DVC (and we even get 30% off cash rates with Marriott as owners), so owning DVC is not just a financial decision.

As for DVC being an "investment" that's neither here nor there. In your case you can think of it more as savings relative to renting every year. But if you buy DVC direct you will lose 30%-60% of that "investment" in the form of a paper loss pretty much once the transaction closes in the sense that the resale value of what you bought is much lower than direct prices. You can mitigate that by buying your contract on the resale market, so you're paying "fair market value" and if you decide it was a mistake then unwinding that purchase in the future will be a lot less costly. Resale contracts offer fewer member "extras" but give you the exact same privileges when it comes to your stays at the resort.

Buying resale also gives you flexibility to buy any resort you want as opposed to the ones DVC is currently offering for sale. They do also offer pricing at "sold out" resorts (contracts they buy back via resale or foreclosures) but those prices are much higher and therefore make the choice to buy resale much easier. For example, Bay Lake Tower resale in the $120s or direct in the $270s per point?

Whether you buy direct or resale, DVC contracts expire so that "investment" is guaranteed to be worthless at that point in time. You just have what you paid up front and the value you managed to extract from it over the time you owned it (and what you get when you sell it, if you don't keep to expiration).

 

[Chili327]

I am trying to understand points and how it converts to stays. Is there a way to find an explanation of this online?
I usually don't travel in the summer because of the heat, but we go every February!

Start here… give some examples to use to compare.
1. When would you go?
2. How long would you stay
3. How big of a room? (Studio, 1 or 2 bdrm)

Start with a number of points per trip, then you can use that to compare and see what you’re really looking for.

 

[TinkAgainU]

... But if you buy DVC direct you will lose 30%-40% of that "investment" in the form of a paper loss pretty much once the transaction closes in the sense that the resale value of what you bought is much lower than direct prices. You can mitigate that by buying your contract on the resale market, so you're paying "fair market value" and if you decide it was a mistake then unwinding that purchase in the future will be a lot less costly. ...

Although when you sell a resale contract you are also out the closing costs you paid at purchase, plus the commissions (8-10%), plus estoppel fee at the sale ... so the loss, even selling a contract you bought resale, is not minor unless the price per point happened to go "up" quite substantially in the interim.

 

[Brian Noble]

...not to mention the fact that inflation exists.

 

[kilik64]

This is totally an aside, but...

Comparing to rack is probably overly optimistic, because Disney often offers discounts at the various DVC resorts. However, comparing to "renting from an owner" is probably overly pessimistic, because owner rentals are less flexible than booking with owned points. So, a "fair" comparison is probably somewhere in the middle--say something between 70-80% of rack, inclusive of taxes. Which end of the range you use is probably best determined by the answer you are hoping for. ;-)

Only works if you were going to stay in a deluxe anyways to see a "savings"

I look at it as I would pay around what I pay now to stay in value/moderate resorts with a discount off the rack rate, but get to stay in much better location/nicer/etc resorts for the same.

DVC wont "save" you money generally, in fact it'll most likely end up making you spend more, especially if you cant keep addonitis at bay!

 

[DanCali]

Although when you sell a resale contract you are also out the closing costs you paid at purchase, plus the commissions (8-10%), plus estoppel fee at the sale ... so the loss, even selling a contract you bought resale, is not minor unless the price per point happened to go "up" quite substantially in the interim.

Very true but you'd incur those same costs when you sell your contract whether you bought direct or resale. Even if the resale price was relatively flat over time, I'd characterize buying at $140/pt (after paying closing costs) and netting $120/pt when you sell as a (relatively) "small loss" compared with buying that same contract direct for $200/pt and netting $120/pt when you sell...

The choice to use a broker when selling is a personal choice. There are other very legit places to list online (redweek, tug) starving for DIY DVC resale listings (even some brokers use them)... But at 8%, the convenience of a broker to screen buyers and move the process along is probably worth it to most people. If the commission was 20%, it may play out differently.

 

[Brian Noble]

Only works if you were going to stay in a deluxe anyways to see a "savings"

Oh, 100% for sure.

DVC can save money on lodging if you can answer yes to all three of the following:

1. You visit WDW at least every other year, and plan to for the foreseeable future.
2. You are only willing to stay onsite.
3. Most of your stays are a mix of Moderate and Deluxe resorts.

And, that only works if you never ever book anything larger than a DVC studio.

Then again, "saving money" doesn't have to be the purpose of DVC. It could instead be "upgrading my lodging" or "forcing myself to take regular vacations."

 

[Chili327]

It could instead be "upgrading my lodging" or "forcing myself to take regular vacations."

This is my reasoning.!!

 

[intamin]

This is totally an aside, but...

Comparing to rack is probably overly optimistic, because Disney often offers discounts at the various DVC resorts. However, comparing to "renting from an owner" is probably overly pessimistic, because owner rentals are less flexible than booking with owned points. So, a "fair" comparison is probably somewhere in the middle--say something between 70-80% of rack, inclusive of taxes. Which end of the range you use is probably best determined by the answer you are hoping for. ;-)

This. On my spreadsheet I compare against rack rate and then I also have a 25 percent off rack rate comparison as well and break evens against both. I will argue though Disney does not always offer discounts on the hotels you actually want to stay at so I give a slight advantage to ownership.

 

[VGCgroupie]

This. On my spreadsheet I compare against rack rate and then I also have a 75 percent off rack rate comparison as well and break evens against both. I will argue though Disney does not always offer discounts on the hotels you actually want to stay at so I give a slight advantage to ownership.

I usually search and find the discount offered on that date of travel to add to my sheet. Typically it's 15%-30% Ive not seen more than that.

 

[TCRAIG]

Honestly - the next time you go to WDW, sign up for the DVC tour. It’s very low pressure, takes about an hour, they usually give you a gift card worth $$ or at least some Disney swag, and do a FABULOUS job of explaining points, use year, banking, borrowing, booking, etc.

 

[Sandisw]

This is totally an aside, but...

Comparing to rack is probably overly optimistic, because Disney often offers discounts at the various DVC resorts. However, comparing to "renting from an owner" is probably overly pessimistic, because owner rentals are less flexible than booking with owned points. So, a "fair" comparison is probably somewhere in the middle--say something between 70-80% of rack, inclusive of taxes. Which end of the range you use is probably best determined by the answer you are hoping for. ;-)

When we bought, we used 35% discount off rack rate because that was pretty much what we had been getting!

Of course, once we continued to add on, all calculations went out the window.

 

[SwanVT2]

Honestly - the next time you go to WDW, sign up for the DVC tour. It’s very low pressure, takes about an hour, they usually give you a gift card worth $$ or at least some Disney swag, and do a FABULOUS job of explaining points, use year, banking, borrowing, booking, etc.

Perfect idea. Thank you!

 

[Chili327]

This. On my spreadsheet I compare against rack rate and then I also have a 25 percent off rack rate comparison as well and break evens against both. I will argue though Disney does not always offer discounts on the hotels you actually want to stay at so I give a slight advantage to ownership.

I usually search and find the discount offered on that date of travel to add to my sheet. Typically it's 15%-30% Ive not seen more than that.

When we bought, we used 35% discount off rack rate because that was pretty much what we had been getting!

Of course, once we continued to add on, all calculations went out the window.

How does rack rate compare to D.V.C rental prices? I feel like that's a more realistic comparison, when considering D.V.C.

 

[intamin]

How does rack rate compare to D.V.C rental prices? I feel like that's a more realistic comparison, when considering D.V.C.

Tbh I never compared against rental rates because I never saw myself renting points.

 

[VGCgroupie]

How does rack rate compare to D.V.C rental prices? I feel like that's a more realistic comparison, when considering D.V.C.

Ive seen places say you can save 30-50% off rack rates but I don't know if they are factoring in discounted rack rates. If I was going to compare Id say DVC rents are between 20-25 per point. But then you also have to factor in how you typically pay for a your Disney stay. Like do you pay with a Disney Gift Card where you saved 15% or with a credit card thats earns you 5% back. When renting points neither of those savings apply. For me, being able to pay dues with discounted Disney gift cards was a huge plus and weighed heavily on my choice to buy DVC.

Tbh I never compared against rental rates because I never saw myself renting points.

Same. For me there was too much risk involved. I was willing to pay a premium to Disney for the lenient cancellation policy.

 

[Steelers0854]

We have never approached owning DVC from the standpoint of it being an investment or trying to minimize/max our ownership, we bought in because we love Disney, love the hotels within DVC and wanted to not have to worry about the hard costs when booking our vacation (like looking at a $1,000 a night room at PIT). YMMV but what worked for us was buying small resale first (100 points). It wasnt long before we realized not only was DVC for us but owning direct was also for us and we just purchased 150 direct at the Poly. If money is less of a concern maybe going direct first makes sense, but for us we needed to ease into it.

 

[Brian Noble]

How does rack rate compare to D.V.C rental prices?

For studios, rack is considerably higher, and usually so is the prevailing discount. However, renting from an owner is not apples-to-apples the same as owning, because renting from an owner is almost always non-refundable with no changes.