Economic Decision

Discussion in 'Purchasing DVC' started by Disney Anna, Jan 5, 2007.

  1. Disney Anna

    Disney Anna DIS Veteran

    Oct 2, 1999
    I can easily afford to buy into the DVC. Am married, no children, no debt. I love all things Disney, DH tolerates it. I have averaged one trip per year since my first trip to WDW in 1999. Some years I have gone twice. I have stayed at all level of resorts, but my #1 choice is Wilderness Lodge.

    Even with all the above, I still don't know if DVC makes economic sense. My understanding is that it will cost me $12,900 to buy ($86 point at SSprings until 1/20/07) a 150 point contract. I also understand I will pay a minimum of $4.12 a point for maintance fees per year or $618 in annual dues.

    Most have stated it takes 6-8 years to break even. I typically spend 5-6 nights on each trip. I will presume I can take a 6 nite trip each year on 150 points. Therefore, my after six years, I will have spent $12,900 for buy in and at least $618 a year or $3,708 for a total of $16, 608. So my six vacations would cost me $2,768 per vacation (16,608 divided by 6).

    Is this correct?

    I understand it will get less costly less year. For example, at year 10 the cost would be $12,900 + 6,180 = 19,080 or $1,908.

    But it still seems like a lot of money up front. Especially since I have been able to go on trips where I split the cost with a relative or have received a good deal by buying an Annual Pass.

    Am I missing something? Is my math wrong? It could be since math was always my worse subject.

    Any thoughts would be appreciated.
  2. Slakk

    Slakk House of Mouse Fan

    Feb 12, 2006
    It is a lot of money and is a way to prepay for vacations for many many years. If you do not mind being very flexible and staying in regular hotel rooms then DVC is probably not for you. I love not having to wait for codes and hoping to get the dates I want - now I boot 11 months out and relax!

    In two weeks I will be staying 5 nights in a 2 BR villa would be over 5K through CRO - I never would be able to stay in suites without DVC. Plus my costs are relatively fixed.
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  4. browniemtb

    browniemtb DIS Veteran

    Jan 5, 2006
    You have taken the simple approach to your math and yes it is correct. Funny thing here on the DIS eveyone has a different mathmatical formula for break even. Most will agree that between 6 to 8 visits you do break even. Now the kicker is you have to compare all your stays to deluxe accomodations....which the Wilderness Lodge is. The cost to stay there will go up year after year......your DVC points requirement won't. So sure today it may cost you $2000 for that room but 6 years from now it could be $3000. The other thing you mentioned about splitting the cost of your stay, why couldn't you do that as a DVC member. Just use your points for the stay and charge who ever goes with you for half the points.....example if your week stay in a studio is 120 points charge them for 60 points at $10....$600.
    The up front cost are huge and personally I don't like when dues are due but We do love Disney and feel its a better deal and the larger accomodations are well as the flexibility.
  5. Mtnman44

    Mtnman44 DIS Veteran

    Oct 4, 2006
    Consider this:

    What do you spend for 6 nights at the Wilderness lodge normally, and keep in mind the hotel rooms don't have kitchen, washer/dryer.

    Here is a simplified example. Let's use 20 years as the length of time you expect to vacation annually at WDW

    Let's say right now the Wilderness Lodge costs you $300 with tax, per night for 6 days each year. Let's assume an annual rate hike of 3%. After 20 years, the daily rate will be $526 for that room and you will have spent a total of $48,367 on your 20 vacations for the hotel room.

    Now let's look at the DVC ownership, which is essentially prepaying for your next X number of years vacations with much of it locked in at today's prices. You pay $12,900 now with maint fees = 618. Let's also assume the same rate of increase for the maint fees of 3%. After 20 years, you will have spent $16,606 on maint fees plus your initial 12,900 purchase for a total of $29,506.

    This is an over simplified example and doesn't account for the Net present value and opportunity costs associated with paying that $13K upfront, but it should give you an idea. Now, imagine how big the difference will be if you account for TWO rooms at the wilderness lodge hotel vs. a 2 BR DVC unit or if we extend the comparison out to 30 or 40 years, the savings would really show. However, this is a prepaid contract. You will only see real financial savings over the long haul and is really only beneficial if you plan to visit WDW at least every two years.

    And don't discount the fact that you could sell it after 10 or 20 years and recoup some or all of your initial money back, increasing the bottom line difference between the two strategies. In 10 years the SSR contracts and newer will probably still be selling for more than the price today, resulting in a profit.
  6. Dean

    Dean DIS Veteran<br><a href="

    Aug 19, 1999
    I think most saying that it takes 6-8 years, or 5-7 years, are usually making several mistakes from an accounting standpoint. Many times they assume rack rates for DVC accommodations and they usually ignore items like interest and lost return on the invested dollars. While it's possible to get even in that short a time by doing studios and totally avoiding weekends, that's about the only way to do so and it does assume one would still go every trip and stay in deluxe places on site most trips.
  7. LisaS

    LisaS DIS Veteran

    Feb 7, 2005
    Just an FYI since you mentioned that WL is your favorite resort: you can purchase VWL either directly from Disney ($95/pt) or via the resale market (prices vary, click on "DVC Resale Listings" at the top of this page to see current listings at The Timeshare Store, this board's sponsor). VWL contracts expire on Jan 31, 2042 (vs Jan 31, 2054 for SSR). You get 12 more years at SSR but owning at VWL allows you book there at the 11-month window which can be important at certain times of the year, particularly from Thanksgiving through New Years Day.
  8. rinkwide

    rinkwide <br><img src="

    May 3, 2004
    I'd say economics are the least of your concerns.
  9. NemoMOm

    NemoMOm DIS Veteran

    Aug 9, 2006
    This is how we made our decision. The intial costs divided byt the # of years expecting to keep DVC. That was our annual base then add annual dues (don't forget to facot in inflation). That $$ made sense to us. We go down once or twice a year. We spend anywhere between 1200-2000 a visit for hotel usually for moderate. So for us it just made sense. Good Luck :thumbsup2
  10. Cruelladeville

    Cruelladeville <a href="" targ

    Jan 13, 2001
    You also have to take into account that at any time you can sell your DVC, and recoup all your money, which you can't do when you are comparing to hotel rooms, which is money out the window. While we all want to keep our DVC for the long term, your circumstances may change, and it's nice to know that you can liquidate for instant cash, while money paid for regular hotel rooms is lost forever.
  11. Disney Anna

    Disney Anna DIS Veteran

    Oct 2, 1999
    I appreciate all the responses. Economically there are many things to consider. For example, selling later and recouping some of the investment...factoring in the lost investment value of the initital buy in.

    I've also thought of purchasing the DVC and sharing it with my sister. She doesn't have the means to buy a contract outright, but can afford the annual dues. I could buy the contract with her, me paying for the 150 point buy in initially and she covering the annual dues for a time.

    I think the big hold out is my DH really doesn't see the need for it. Like I said, I love Disney, he can take it or leave it. I think if he was for the idea, it be a no brainer. At worst, it's probably an economic wash or perhaps a small loss, on the plus side, what you are buying is being part of the Disney family and guaranteeing that you will always be staying in nice accommodations.

    I do think the DVC is making more sense as it's been near impossible to use codes anymore to get good deals on rooms. And, I do think it really makes sense for those who need larger accommodations. I have no children, so it's almost always a solo trip or going with my husband or sister.
  12. TenThousandVolts

    TenThousandVolts <font color=darkcoral>I just gave 2 examples for t

    Feb 4, 2005
    I like to do the per point math. My points cost me just under $6 per point. (Buy in price per point ($86)X number of points (160) + closing costs
    ($176) / Number of years (48) / number of points (160) + Mfs (currently $4.12) It is $5.94 per point

    Now I just multiply the number of points per night needed by $6- to see what I am paying for the room per night. ie: a studio at SSR in value season is 11 points or $66. All this said- The savings was not my main motivation in buying DVC. I liked the idea of commiting to taking nice vacations with my family for years to come- Not that you can't do that without DVC- but I think you get what I mean. I like the idea that when DH and I are old and on fixed incomes we can still take our grandkids... It was more of an emotional decision than a financial one- and we condider it a luxury item- not an investment.
  13. tjkraz

    tjkraz <img src="

    Feb 4, 2002
    I think that's your biggest mistake right there.

    If you want to do as close to an apples-to-apples comparison as possible, you need to compare DVC Studio accommodations to standard Deluxe guests rooms. With 150 points, you could actually take a 6-night trip in May AND a 5-night tip in November each year. (I picked those months based upon the trip history in your signature.) Change seasons and/or exact dates (since that 6th night being a weekend will cost a premium price) and your points will go even further.

    If you'd rather use your points for a One Bedroom, that's fine. But you need to include in your analysis the fact that you're getting a much better room (jacuzzi tub, full kitchen, washer/dryer, two TVs, twice as much living space) as a standard deluxe room.
  14. CarolA

    CarolA <a href="

    Aug 21, 1999
    I am single and bought DVC.

    I did hte math. Economically I would probably have been better off investing the funds in a Mutual fund etc.

    However, I consider this an investment in me and that's hard to put a value on. I have no regrets.
  15. kathy carleton

    kathy carleton Mouseketeer

    Jun 6, 2001
    I was in your shoes and "piddled around with it" for the last 7 years!! For the last 7 years we have gone to wdw at least 2 times per year!

    If we had bought in, the 1st time we talked about it, would have had it all paid for by now (it would have more than paid for itself- in many ways- do not forget all the discounts that come with DVC- the annual pass discount for us is 1/2 of our dues at SSR..)...

    Just finished a 160 point resale contract at SSR (with plans to buy into AKV in one year). SSR is my least favorite of the DVC but, the extra 12 years, as well as the promotion are not to be beat. I highly doubt that we will be able to pay less than the $86 per point at any time in the future. Thus, for us, now was a good time. No, SSR is not our favorite, but frankly ALL of the DVC resorts are fabulous, and I feel sure that we will be able to stay and enjoy at whichever has availability.

    We did go the resale route, after much deliberation, for 2 reasons: hard to beat banked points with the deal we got, and to get the right use year that works well for us. DVC could get us a good use year, but not one loaded with points.

    That being said, please do not do as we did! (fiddling around for 7 years and adding and adding it all up).. Seize the moment! I think now is a great time. I have yet to encounter anyone who regrets buying in- usually it is that they did not do it sooner!

    Want to know what you end up doing:goodvibes
  16. jimh13432

    jimh13432 Mouseketeer

    Jun 4, 2000
    don't forget to factor in the 11.5% Resort Tax you pay on Hotel stays @ WDW that you won't pay via DVC:banana: .
  17. Starr W.

    Starr W. DIS Veteran

    Nov 26, 2006
    I think it really depends on the room type(we go 2br for the 4 of us). To be honest my DH and I always laughed about trying to get the kids to adulthood without doing WDW.

    DH hates me spending holidays in the kitchen cooking, so I said lets do WDW for Thanksgiving! Booked SSR through Expedia(wasn't bad including air, as I have spent more for a 2br in Northern MI). DH & I absolutely loved it and so did my silly boys(one has a mild type of autism). Did the DVC tour on Thanksgiving day, came home found this site which has been helpful, DH has a friend who's parents own DVC so got the referral and we're proud owners at SSR. We don't close until Jan 20, but have already booked a short trip in early May and have Thanksgiving 07 booked too.

    Ran the numbers and it worked out well for us. DH is already talking about a small add on at VB!
  18. Slakk

    Slakk House of Mouse Fan

    Feb 12, 2006
    The one thing I have found since owning DVC is the days of commando'ing WDW are over we really have slowed down and enjoyed our trips - we relax, we golf, we hit the SPA basically we just enjoy our second home.

    Maybe he would enjoy the extra room - there is something about a full kitchen, a jacuzzi and a HUGE bathroon as well as washer and dryer AND a living room that just make you relax. Plus the added options of HH and VB - maybe that is something that would be a plus for him.

    Maybe you should try to book a 1BR and see what he thinks?

    Good luck with your decision.
  19. lisaviolet

    lisaviolet Happy DVC Owner

    Jul 9, 2002
    10,836 seem to suggest you have "extra" money . Here is where I'm going to feel the burn...Is there a large purchase your husband has made/makes that you are "not into"? I'm just thinking outloud that if it is "extra" money that you have as a couple and he doesn't like WDW ....well maybe he is just happy to see you make a purchase you love. And see you enjoy DVC with your sister as well as him. I mean we all can't "love" the same things. Since money is not the issue. Life can be very short. I know....kind of rude...kind of personal. Of course if this situation was about money it's different and of course life and marriage is full of compromises. Forgive me!!!!!!!!

    Your husband really doesn't like WDW? Maybe for sure he doesn't, no matter what, but has he had a "different" WDW experience?

    I had a good laugh eavesdropping last vacation. Maybe your husband doesn't realize the best kept secret of WDW. It is one of the best places to do nothing. Shhh. Don't tell all the park commandos.

    I was near two men at the BCV. Lovely day....mid afternoon. Imagine most WDWers are running around for their fast passes in the glorious midday sun!!!!! Not me and not these two men. Their conversation:
    • "what are you up to?"
    • "Oh I think I might wander over there and check out that pool bar"...."you?"
    • "I think I'll go take a nap" "Yeah a nap" "yep"

    That is actually how I vacation all the time. And a lot of DVCers in general vacation. And male DVCers, I think, top the list.

    All the best,

  20. pb4ugo

    pb4ugo Wishing on every star

    Feb 4, 2006

    oh, i so agree with carol a! dh has retired and i will do the same in 3 yrs - we wanted a way to prepay our retirement travel and the dvc price seemed right. the neices and nephews will inherit and can do whatever they want with the membership!

    but this truly was an investment in us - we get a week out of a northeast winter [i have no doubt that it will get here this year yet!]. and this past fall we found out how much we enjoy hhi resort - so that probably means heading south for another week each fall.

    and somewhere along the line dh and i will prob start to take separate girl/guy trips in addition to our two scheduled weeks away. we have reached a point in our lives where we could afford it, we wanted it, so we went for it.

    whatever you decide - be sure you do what is good for you!
  21. Caskbill

    Caskbill <font color="blue">DVC-Operations<br>DVC-Planning< Moderator

    Nov 19, 2000
    That really depends on when you bought. Remember that after 9/11 the market took a nosedive and didn't really recover until just last year.

    If person 'A' bought DVC summer of 2001, and person 'B' left their money in the market, then today, person 'A' is way, way, way ahead.

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