Economics of buying DVC vs. Renting points

[Angeliki19]

Hi all! I posted this over on the Budget Board, but was advised to bring my question here.

I am really struggling with the decision to buy DVC or not. It's something I have wanted to do for a long time but my ex-husband was not on board with it. Now that we are recently divorced, it's weighing heavily on my mind as now I am the one making all the decisions and I'm so tempted to pull the trigger!

However, as a single mom, finances are my top priority. So as much as there are "emotional" reasons for wanting DVC, my main deciding factor is whether this is a good financial decision for me in the long run. In the past, we have always stayed one week at DVC resort villas, paying cash and using my cousin's CM discount of 40%. This has been awesome, but there are two reasons I am not looking at this as my future long-term strategy. One is that my cousin mentions from time to time leaving Disney, and two is that our options have been very limited and I am ready to stay at some of my bucket-list hotels like the Poly, on which she can not usually get a discount.

Renting points is a REALLY attractive alternative, as from my calculations, it saves more like 50% and would give us more options than what my cousin can get us. However, the main drawback is that once you lock in a reservation, I don't think you can change it. Plus you don't have total control over your reservation as far as making room requests and stuff. For a control freak like me, this is less than ideal, but checks off the other boxes of getting into a variety of resorts while saving money.

So when I did my cost analysis of buying DVC, I compared it to the cost of renting, as those seem to be my two main options at this point. I would not consider financing, as that math just doesn't work out. I looked at both buying direct from Disney, and a resale contract. I found that compared to renting DVC points:

• Buying Direct from Disney would start saving me money at year 12, and after 20 years, I would have saved $12,892
• Buying resale would start saving me money at year 8, and after 20 years, I would have saved $17,778

These are kind of rough estimates b/c there are so many variables as to what resort we would actually rent, what season, etc. But I ran it a few different ways and it came out about the same.

So whether I go resale or direct, eventually it will save me money. However my main hesitation is to put out so much money up front at a time when I am just starting off on my own. I have the money in savings, but it would considerably lower my nest egg. I could just wait and save up a few more years, but my kids are getting older and with every trip I pay out of pocket for, I wonder if I should have been putting that towards DVC. I kind of feel like its now or never.

Does anyone have any advice? I know this is such a personal decision, but I am really stuck. Either way I have budgeted for yearly Disney trips, so it just comes down to whether its better to rent points and not have the commitment, or pay up front now and save money later. For people who are DVC owners, do you feel like you have truly saved money? How did you come to the decision to buy?

 

[Ben E N]

Sounds like you're on the right track with your calculations. Something important, and really difficult, to factor in is the certainty that you will be going to Disney in 10 or 20 years. Based on my previous 25 years of loving trips there, I felt pretty good about gambling with a resale purchase.
Another thing to consider is how comfortable you are throwing all the money needed for a purchase away. Once you buy in, there is no assurance you will be able to sell for any value whenever you may need that money in the future.
Lastly, be comfortable in knowing that you will be responsible for yearly dues, and will also want to buy tickets and transportation yearly to make use of the membership.
If none of those areas give you any pause, then yes, buying resale can save you vs. Renting.

 

[disneynutz]

My advice is that you do nothing until you set up your budget as a divorced parent and see how that goes. You can always rent or buy later.

Bill

 

[aoconnor]

If you are renting through a major site like David's I don't think there's much to worry about. You're not "in control" of your reservation per se but it still shows up in your MDE account and you book your own fast passes, your own dining ADRs etc. David's withholds some of the payment to the owner until after your stay to keep them accountable/ responsive.

A simpler way to think of this is on a per-point basis. Using BLT as an example: $125 per point / 42 years remaining = $2.98 + $5.92 maintenance fee = $8.90 effective cost per point. You can compare that to the $16 it would cost you to rent.

Major caveat: this ignores the $125 you're dropping up front. If you could invest that $125 instead and earn just 3% that adds $3.75 to your effective cost ($125 x 3%) pushing it to $12.65 per point.

Still cheaper than $16 but not as dramatic, plus renting comes with one perk owning can never provide-- an 11 month priority window at every resort.

 

[_auroraborealis_]

My advice is that you do nothing until you set up your budget as a divorced parent and see how that goes. You can always rent or buy later.

Bill

This is such good advice. I will add, budget as much as you can assuming that you will not receive any ordered child support.

 

[DaveNan]

As stated you are in control when you rent. It appears in your mde account. You make all requests about check in time, preferences, fast pass, and dining. The only things you are not in control of are magic express bus ride and making the dining plan activation (telling Disney you want the dining plan). The renter tells Disney those two items as part of your arrangement through them or the broker. But you are in control of everything else.

 

[Marionnette]

As stated you are in control when you rent. It appears in your mde account. You make all requests about check in time, preferences, fast pass, and dining. The only things you are not in control of are magic express bus ride and making the dining plan activation (telling Disney you want the dining plan). The renter tells Disney those two items as part of your arrangement through them or the broker. But you are in control of everything else.

Just to be clear - "renters" are non-owners who are paying for a reservation. It is the owner who contacts DVC Member Services to make DME arrangements and to add the dining plan to a reservation.

 

[kboo]

Still cheaper than $16 but not as dramatic, plus renting comes with one perk owning can never provide-- an 11 month priority window at every resort.

Such a good point!

Before we bought DVC, we rented points several times (3-4?) at different resorts and loved it. Did research on the boards here, and many owners said that being able to control the reservation directly and make changes was a big factor for them. Not having experienced that myself, I didn't know what I was missing, and I didn't care.

Now, as an owner, I see how it works, and I have a lot more flexibility with being able to see availability at 7 months, for example, or planning a split stay, or more recently, going from a 1BR to a 2BR so we can take my MIL.

BUT ... the flexibility at 7 months isn't really necessary if you are renting and have 11mo advantage at "every" (most) resorts. Also, figuring out how to use all your points and not leave points stranded, etc. can be a real pain in the mouse. DH and I were talking about timing of trips into 2020 already, and which contract we were planning to use.

Obviously, I like being an owner and having the points at my disposal to book, cancel, switch bookings, etc. But if I had limited resources, or had a concern about tying up a big chunk of money with an annual commitment for maintenance fees, it would be worth it for me, at least for the short run, to rent points for the next few years and make sure my budget as a newly single parent was working for me. Between that and your cousin's CM discount, the $ difference over the next few years won't be that great.

Also - the advice on the boards here is to rent a few/several times to find out whether DVC is right for you, and also which home resort you prefer. So even if you decided today that you were going to buy into DVC, there would be a time lag where you'd be maybe renting at a few different resorts to see what you liked and didn't like.

I get the urge to move forward right away with something you have wanted for a while, now that the impediment is gone. Congratulations on your new beginning!

 

[Angeliki19]

Such a good point!

Before we bought DVC, we rented points several times (3-4?) at different resorts and loved it. Did research on the boards here, and many owners said that being able to control the reservation directly and make changes was a big factor for them. Not having experienced that myself, I didn't know what I was missing, and I didn't care.

Now, as an owner, I see how it works, and I have a lot more flexibility with being able to see availability at 7 months, for example, or planning a split stay, or more recently, going from a 1BR to a 2BR so we can take my MIL.

BUT ... the flexibility at 7 months isn't really necessary if you are renting and have 11mo advantage at "every" (most) resorts. Also, figuring out how to use all your points and not leave points stranded, etc. can be a real pain in the mouse. DH and I were talking about timing of trips into 2020 already, and which contract we were planning to use.

Obviously, I like being an owner and having the points at my disposal to book, cancel, switch bookings, etc. But if I had limited resources, or had a concern about tying up a big chunk of money with an annual commitment for maintenance fees, it would be worth it for me, at least for the short run, to rent points for the next few years and make sure my budget as a newly single parent was working for me. Between that and your cousin's CM discount, the $ difference over the next few years won't be that great.

Also - the advice on the boards here is to rent a few/several times to find out whether DVC is right for you, and also which home resort you prefer. So even if you decided today that you were going to buy into DVC, there would be a time lag where you'd be maybe renting at a few different resorts to see what you liked and didn't like.

I get the urge to move forward right away with something you have wanted for a while, now that the impediment is gone. Congratulations on your new beginning!

Thank you so much. These are some great points. I think I am feeling better about trying renting. We have stayed before in the villas at Animal Kingdom, Boardwalk, Copper Creek and Boulder Ridge, so I have done "some" research but as I said, could never get into places like BLT with my cousin's discount before. It's a huge advantage with renting to be able to book at 11 months out since my main goal is to stay some new places. After talking with the Disney sales rep, I probably would buy into SSR b/c its the cheapest, however I don't have much of a desire to stay there, so I actually have a better chance of getting to stay where I want if I do the renting.

It's still something I want emotionally, but I think I'll hold off and wait a few years... we are going this upcoming Feb and then after that a break until 2021 so I have at least a year to think about it some more. I'll know much better then what my financial situation is.

 

[kniquy]

However, the main drawback is that once you lock in a reservation, I don't think you can change it.

When you rent you are pretty much locked in, there might be a rental company out there who will allow you to cancel with a fee, but not positive.

However my main hesitation is to put out so much money up front at a time when I am just starting off on my own.

This comment makes me want to say hold off for a year. Get yourself established, comfortable and confident in what you can financially handle. Those MF are a larger part of the purchase in the long term and will increase every year, so it is a very real consideration in what you can handle. Maybe take a year off from WDW, but save the money you would have spent and put that towards a purchase next year after the divorce dust has settled. I am not sure how old your kids are but as they get older the expenses get larger.

but my kids are getting older and with every trip I pay out of pocket for, I wonder if I should have been putting that towards DVC.

This is the thought process that makes putting off the purchase more difficult and makes purchasing now more reasonable. But you just went through a very emotional experience so take a little more time to think through things. Maybe give yourself a date for next June to re- look at purchasing. The out of pocket costs of WDW is much more than just DVC -- that only saves you on the room then all the added expenses of food and park tickets is likely a larger percentage of your WDW vacation. As your kids get older there might also be other areas of the country that you want to explore so WDW trips might go to every other year or less.

I probably would buy into SSR b/c its the cheapest, however I don't have much of a desire to stay there,

Do not just go with what is cheapest put some thought into what makes you ok with staying at a resort if you have to be stuck there. We stayed at SSR for our first DVC trip and honestly I would stay there if it was only my last resort, but for essentially the same price per point and slightly more MF we chose AKV.

If you are still really stuck on the idea of buying and you have the money and can afford the MF then you could buy -- the safe spot is that the resale market of DVC is really good in the current market. Baring a huge economic down turn, if you bought and realized that you made a mistake or no longer wanted WDW vacations you could sell and likely not lose any money.

 

[Angeliki19]

When you rent you are pretty much locked in, there might be a rental company out there who will allow you to cancel with a fee, but not positive.

This comment makes me want to say hold off for a year. Get yourself established, comfortable and confident in what you can financially handle. Those MF are a larger part of the purchase in the long term and will increase every year, so it is a very real consideration in what you can handle. Maybe take a year off from WDW, but save the money you would have spent and put that towards a purchase next year after the divorce dust has settled. I am not sure how old your kids are but as they get older the expenses get larger.

This is the thought process that makes putting off the purchase more difficult and makes purchasing now more reasonable. But you just went through a very emotional experience so take a little more time to think through things. Maybe give yourself a date for next June to re- look at purchasing. The out of pocket costs of WDW is much more than just DVC -- that only saves you on the room then all the added expenses of food and park tickets is likely a larger percentage of your WDW vacation. As your kids get older there might also be other areas of the country that you want to explore so WDW trips might go to every other year or less.

Do not just go with what is cheapest put some thought into what makes you ok with staying at a resort if you have to be stuck there. We stayed at SSR for our first DVC trip and honestly I would stay there if it was only my last resort, but for essentially the same price per point and slightly more MF we chose AKV.

If you are still really stuck on the idea of buying and you have the money and can afford the MF then you could buy -- the safe spot is that the resale market of DVC is really good in the current market. Baring a huge economic down turn, if you bought and realized that you made a mistake or no longer wanted WDW vacations you could sell and likely not lose any money.

Thank you!! All good points. I think I will just suck it up, rent this year, and then like you said, make a point to reconsider next year before our 2021 trip. I just feel like I always hear from people that they wish they had bought earlier, which is what my ex-DH said too... we should have done it right when our DD was born 8 years ago. It does make it hard to wait, but what's one more trip? And good point about AKV.. we LOVE it there and would rather have that then SSR so sounds like I would need to do a little more homework!

 

[Bing Showei]

I just feel like I always hear from people that they wish they had bought earlier, which is what my ex-DH said too... we should have done it right when our DD was born 8 years ago.

Right now it sounds like you're able to continue to get a great discount for a WDW trip, so ride that as long as you can.

While it's easy to look back at all the trips spent and lament money that could've gone towards a contract, what you're essentially paying for is freedom. Unlike renting a home to live in; where one could make the argument it's better to own than rent, and that irrespective of finances, you need a place to live; if things go south for you personally, or the economy as a whole takes a dive, you can turn off the Disney for a few years and ride things out until they stabilize. It's a lot harder to do that under the weight of a DVC contract.

The fact that you put such importance on personal finances, and have really been thoughtful on your approach to DVC ownership, I trust you'll be fine with whatever decision you make. I will say that growing up with a strong, single mother who worked hard to raise her four kids on her own, my happiest childhood memories had nothing do with Disney. Good luck with this new chapter in your life; lots of adventures ahead, with or without the mouse.

 

[kniquy]

It does make it hard to wait, but what's one more trip?

You are in the right spot. keep reading everything on these DVC boards (not just the purchasing board) because there will be questions asked by other members that you would have never thought of but could apply to you. By your next visit have it narrowed down to a couple of resorts where you want to buy. Make time to visit those resorts, have dinner, maybe plan to attend one of the evening activities at the resort so that your visit to the resort has a purpose.

What struck me about SSR that I didn't like was the fact that there is not one palm tree in sight. It actually took me a day or so to realized what was off. Of course this is based on upstate NY. I can't go to FL (being from MA) and not see a palm tree. There was nothing that thrilled me about SSR and felt that it was a nice but ordinary hotel. Now staying at Poly or AK can make you feel like you have been transported to somewhere new. EAch resort has something different to offer - some love disney springs, so staying at SSR is ideal. Some people also buy smaller contracts at 2 resorts so each year you can stay at a different resort. This is where I find ourselves -- we bought AK with a plan of every other year trips. Now i find myself wanting a Poly contract for travel in our "off" years.

 

[DougEMG]

I probably would buy into SSR b/c its the cheapest, however I don't have much of a desire to stay there, so I actually have a better chance of getting to stay where I want if I do the renting.

One thing I wish that I had of done was buy less SSR points and more points at some other resorts (like BLT). It seems as if it is getting harder and harder to switch at 7 months depending on the time of year and room one is looking for.

 

[DVC Doctor]

In your case, I would not buy (at least now) until you are totally financially comfortable. Also, most people that rent points will allow changes as long as it is within Disney rules and there is availability and will charge if there are more points required, but will probably not give a refund if less points are needed for a change.

 

[Henwen88]

If you do buy, SSR is a great 'get your feet wet' contract. It was our first contract and taught us what resorts were our priorities (what we can't get at 7 months). The dues were my major factor in purchasing there vs AKL - I have never had a problem booking AKL with my SSR points (obviously not value or club lol), and anything remotely involving live animals is going to be much more expensive (lived on a farm at the time of purchase and knew how much those darn horses cost to keep up... can't imagine a giraffe haha!).

 

[BillPA]

Don't be fooled by a low cost resort, if you don't like staying there you really just waste your money. Do not expect to be able to change resorts at 7 months, unless you travel at non-busy times, and those are getting fewer and fewer. Buy where you don't mind staying. In the long run you will be happier, maybe spend a few thousand more over the next 10 years, but to me that's better than being "stuck" where you don't enjoy staying. On the plus side, all DVC units have there pros and cons.

 

[Bing Showei]

Don't be fooled by a low cost resort, if you don't like staying there you really just waste your money. Do not expect to be able to change resorts at 7 months, unless you travel at non-busy times, and those are getting fewer and fewer. Buy where you don't mind staying. In the long run you will be happier, maybe spend a few thousand more over the next 10 years, but to me that's better than being "stuck" where you don't enjoy staying. On the plus side, all DVC units have there pros and cons.

For the most part, I agree with the idea of buying where you don’t mind staying.

For studios, this is gospel.

That’s what I did with VGF, buying enough points to stay there each year for our usual number of Disney vacation days. VGF will be my go-to resort. This year, I was was able to book 2nd week of December there, and I take comfort in knowing I can easily get F&W in October locked down by November of each year. There’s real value in that kind of security.

The thing is, I stay exclusively in 1BRs and was able to get a string of BCV days (up to 10 if I wanted them) on the exact days I planned to travel this summer as well as a string of VGF days in the summer as well (decided to change last few days at BCV to stay VGF). Being so new to the DVC ecosystem, I also have an interest in trying CCV, Riviera, BWV, AKV-Kidani, Poly and BLT over the next several years as well; perhaps eventually buying in at those places for home resort advantage.

At 7 months though (Outside of Oct-mid Jan), 1BRs are available in most places if you’re on at 8am. And my VGF points are the same as SSR points then. While, long term, the SSR viability may change (and current booking patterns do suggest that is happening), for most people just buying in, SSR is a great way to test the waters for now. Especially if you are looking to explore other resorts.

 

[longboard55]

I would think a single mom has more important things to spend money. Having said that I bought less than two years ago retail and it is priced up over 50% since then so these types of comparisons are not really valid because who can predict what the cost will be in 5-10- years

 

[RichVIII]

All great advice but will pose a different side of things. My wife and I have found that when we have extra cash laying around and it is not being invested in something we tend to spend it on far less desirable things. While DVC is not an investment, it is something you can enjoy with your kids (I know, sounds like a DVC commercial). As our daughter is getting older, our opportunities and magical moments only get more limited. We bought because we kept laying out the cash and after one visit to (BLT with my mother-in-law who paid cash) did we realize it was time. I only wish we had that money she paid to have put it towards a contract. Regardless, we jumped in afterwards. The only other dange is, add-on-itus is real. We now have three contacts and am on the hunt for the 4th. LIke others have said, research is key. I wish we didn’t have three contracts at the same resort and one of those we would have purchased elsewhere since we love it now and it is tough at 7 months. We have increased our trips to WDW. We also have APs. That being said, we use our Southwest Credit card to earn free flights so we try to do it on the cheap. I don’t know, life is short, your kids are getting older, you never know what life will bring you and hopefully if this market stays, you could get out.