First DVC poster: Are these calculations accurate

[Jbryansoutherland]

I have been doing some heavy reading about DVC since we just returned from a 3 day Disney cruise and a 3 day park visit (1st cruise, 2nd park visit ever for me: 37 years old and 2nd for my kids.

So selling points
They say this locks in your rates for 50 years
I understand the reallocation so am I accurate when I think that right now, I can get a 1 BR villa at AK for 34 ppn, then in 10 years, I can do the same? Or close to that?
How much has the annual dues gone up? Right now they are $7.62 per point so $762 for 100 points per year plan.
I have to buy into a certain "home resort?" How does that work?

Calculations
I wanted to put a dollar value on 50 years worth so here goes
These calculations assume an outright purchase and no financing.
These calculations assume no inflation whatsoever.
Flat rate: 100 points are $18,200
Annual dues 100 pts X $7.26=$726
Dues X 50 years= $36,300 plus initial investment of $18,200 so
Total Cash investment is $54,500 over 50 years for 5,000 points
Per point cash "value"= $10.90 per point or $1,090 per year "cash/investment value" so to speak

Looking at AK it looks good: Studio apartment for 7 nights is roughly $450 per night costing a cash investment of $3150 for a 7 night stay.
DVC points during dream for SV (same as above) is 19 Fri and Sat and 17 the other 5 days for a total of 123 points.

This would take 1.2 years to accumulate 123 points so 1.2 X the yearly 1090= for a cost of $1308.

Looking at this, this would be an exceptional deal. However, I looked at the AK 1 BR Villa at 505 per night

505 X 7= $3535 out of pocket
Points were 36, 35, 35, 35, 35, 35, 36=257. This would take 2.5 years to gain these points so yearly "fee" of $1090*2.5 years = $2735 in "cash investment value".
This example would save you $800 over 2.5 years or $320 per year. This example I do not see the value in DVC: tying up $50,000 plus dollars for that low of savings. For the AK studio, it looked better saving 3150-1308=saving $1842 in 1.2 years so this is pretty nice.

Please give me any input you have or accuracy, correctness, etc. Benefits I have missed or if I just missed the entire thing.

Thanks in advance.

 

[Lunagirl]

I am a newbie too, but a few things to consider.

I think you would actually pay the weekly rate on the room if you wanted to go for a week, so it would be 242 points during dream season (versus 257 paying day by day). Not a huge savings but 15 points is 15 points!

The other thing to consider is buying resale versus direct. At resale, you would be looking at more like $110 a point which is a considerably smaller investment.

 

[Minniesgal]

I think you are comparing apples and oranges. You are comparing if I understand you correct a 1 bedroom on points to a studio on cash. You need to compare like to like 1 bedroom on points to 1 bedroom on cash.

Increases in annual dues should not be neglected.

As for the comment of the poster above the weekly rate and the day by day for 7 nights are identical normally.

 

[Dean]

I have been doing some heavy reading about DVC since we just returned from a 3 day Disney cruise and a 3 day park visit (1st cruise, 2nd park visit ever for me: 37 years old and 2nd for my kids.

So selling points
They say this locks in your rates for 50 years
I understand the reallocation so am I accurate when I think that right now, I can get a 1 BR villa at AK for 34 ppn, then in 10 years, I can do the same? Or close to that?
How much has the annual dues gone up? Right now they are $7.62 per point so $762 for 100 points per year plan.
I have to buy into a certain "home resort?" How does that work?

Calculations
I wanted to put a dollar value on 50 years worth so here goes
These calculations assume an outright purchase and no financing.
These calculations assume no inflation whatsoever.
Flat rate: 100 points are $18,200
Annual dues 100 pts X $7.26=$726
Dues X 50 years= $36,300 plus initial investment of $18,200 so
Total Cash investment is $54,500 over 50 years for 5,000 points
Per point cash "value"= $10.90 per point or $1,090 per year "cash/investment value" so to speak

Looking at AK it looks good: Studio apartment for 7 nights is roughly $450 per night costing a cash investment of $3150 for a 7 night stay.
DVC points during dream for SV (same as above) is 19 Fri and Sat and 17 the other 5 days for a total of 123 points.

This would take 1.2 years to accumulate 123 points so 1.2 X the yearly 1090= for a cost of $1308.

Looking at this, this would be an exceptional deal. However, I looked at the AK 1 BR Villa at 505 per night

505 X 7= $3535 out of pocket
Points were 36, 35, 35, 35, 35, 35, 36=257. This would take 2.5 years to gain these points so yearly "fee" of $1090*2.5 years = $2735 in "cash investment value".
This example would save you $800 over 2.5 years or $320 per year. This example I do not see the value in DVC: tying up $50,000 plus dollars for that low of savings. For the AK studio, it looked better saving 3150-1308=saving $1842 in 1.2 years so this is pretty nice.

Please give me any input you have or accuracy, correctness, etc. Benefits I have missed or if I just missed the entire thing.

Thanks in advance.

A few thoughts. It sounds like you'd need more than 100 pts, is it the cost that limiting you? I'd go resale and forego the perks, you can get AKV for about 60% of the retail cost or for the same investment, get around 160 points compared to 100 retail. Dues will go up, I'd use usual inflation projections of 3-4%. Dues will be the biggest long term cost if you go resale, they will be fairly equal between buy in cost and dues for retail. For smaller contracts one should buy a cushion of points, usually 10% minimum but 20% is often better for smaller contracts, studios, lower seasons. IMO comparing to retail DVC costs, even discounted, is a fools comparison unless one would pay that price. IMO the only valid comparisons are either what one would pay to visit not owning or to rent DVC privately. DVC only makes sense if you value staying on property enough to pay more, use ONLY for DVC resorts, plan at least 7 months out, and are OK with the compromises of a timeshare.

Have you stayed on property? Do you know the resorts? Are you versed in timeshares? IMO to make an informed decision, one needs a certain amount of experience to go with the knowledge. Renting privately for a trip is a good investment to make a far better decisions for the long term.

 

[disneynutz]

Select the best UY for your vacation patterns.
Buy where you love to stay.
Book at 11 months.
Buy resale if you can.
If you buy additional contracts, keep the same UY and names on deeds.
If you intend to buy a small direct contract for the perks, buy now before the next increase.
DVD/DVC marketing can change the perks at any time.
Perks and policies tend to change when management changes.
Expect to spend more on Disney vacations after you buy DVC.

Bill

 

[PlaneCrazy]

Someone correct me if I'm wrong as I am a DVC noob and haven't booked with points yet, but one thing that I think also shouldn't be overlooked is when booking with points there are no taxes or extra fees unlike booking on cash at rack rate. So, on cash, an $800/night villa is actually going to cost more than $800/night. Dues will continue to increase/inflate along with cash stay rack rates. I have been quoted 3-4% yearly for dues and that seems to be what I've been able to find looking at historical data. I've been told 8-9% yearly for rack rate increases, but I can't verify that.

We've been to WDW 4 times (20 nights) in the past nine months and DVC just seemed to make the most sense if we come close to keeping up this pace. We initially bought resale, but are now on the wait list to add direct. If you do a Google search for "Best Economical DVC Resort to Purchase" you can find some good info on actual current (and historical) cost of ownership per point of DVC resale properties.

 

[PlaneCrazy]

Expect to spend more on Disney vacations after you buy DVC.

Bill

I've seen you mention that in another thread. Could you clarify? Just curious what you mean by it.

 

[disneynutz]

I've seen you mention that in another thread. Could you clarify? Just curious what you mean by it.

DVC causes you to vacation more, more days, maybe more than once a year. Many buy AP's because they are discounted but you now will take two vacations within the year to justify your AP purchase. Disney is very smart controlling the way that we think and how we spend our money.

Bill

 

[PlaneCrazy]

DVC causes you to vacation more, more days, maybe more than once a year. Many buy AP's because they are discounted but you now will take two vacations within the year to justify your AP purchase. Disney is very smart controlling the way that we think and how we spend our money.

Bill

Ahh, I see. That's what I thought you were hinting at. Well, we were already AP Platinum holders and have been to WDW 20 days at deluxe resorts in nine months on cash so maybe DVC will actually help keep a little more money in my pocket.

 

[Jbryansoutherland]

Wow thanks for the replies.
As far as comparison, I was looking at apples to apples: studio point cost vs studio point cost so I made sure not to compare two different things.

I assume that these calculations are fairly close (without taking dues or resort cost increases when paying with cash).

Overall I am trying to see the value in tying up so much money over 50 years when the benefits don’t seem to be that substantial.

DVC members: what are the main perks?
My thought is that the biggest perk will be locking in a point cost for resort because once you sign up, they cannot charge more total points for that resort, only reallocate within that resort. BUT, is this lock in offset by increasing annual dues? I know that the dvc salesman said AK villas were $150 per night 10 years ago and are now $300 so a 100% increase, but what was the annual due cost and point buy in?

Did anyone get a special assessment for the hurricanes last year? (I don’t like money surprises)

I have thought about using resale: what benefits do I lose? (I could Buy a low amount of points direct and buy the others resale to get benefits right? Or has Disney stopped this?)

If I buy AK as my home place, what does that mean if I want to go somewhere else? Is AK an option or does that shorten the years owned thus affecting the bottom line since this is an older property.

Lastly, is this a sound investment. If I wanted to sell my contract in 5 years or simply rent points out for a year, sill I actually get my money back?

Thank you for all the awesome replies so far!

 

[Bing Showei]

DVC members: what are the main perks?
My thought is that the biggest perk will be locking in a point cost for resort because once you sign up, they cannot charge more total points for that resort, only reallocate within that resort. BUT, is this lock in offset by increasing annual dues? I know that the dvc salesman said AK villas were $150 per night 10 years ago and are now $300 so a 100% increase, but what was the annual due cost and point buy in?

The reality is, the biggest perk is that you'll be getting will be years of vacation memories at WDW that you normally would not get. Most people would never plan to vacation to the same place for 50 years in a row. My family is of the philosophy that varying where you travel to around the world is one of the joys of life. And you'll find that a lot of the members who treat DVC as a luxury purchase will continue to travel elsewhere as well. It's just another tool in your vacationing belt.

On the flipside, a lot of people are so busy with work/life that they always put off going on vacation. I think those people would benefit most from buying a timeshare. It's a forced vacation.

I refer back to @miTnosnhoJ post a lot, as I think it captures the nature of DVC perfectly.

DVC is basically a luxury purchase. I agree that we have enjoyed being DVC members, but we are probably spending 2 to 3 times what we were before. But we are also enjoying Disney more.

Rather than focus on cost savings, I would make sure everything else is in good shape before considering DVC.
1) You can pay cash.
2) You are on track to have a fully funded retirement.
3) You are on track to pay for college for the kiddies.
4) You have paid down all consumer debt except possibly your mortgage.
5) If you were to lose your job or have a financial setback, you have an emergency fund.

If you can answer yes to all this, then DVC is something you should consider as an alternative to buying a boat, a house in the mountains, or other luxury purchases that may interest you.

If you come every year and stay at deluxes, then there is some cost savings. If you only come every other year, the cost savings diminishes because of the time value of money. If you like mods or values, then there may be no cost savings for you.

Annual dues go up about 3-4%/year. Looking at OKW, which has the greatest data sample to draw from, AD have outpaced inflation in terms of cost.

Correcting for inflation into 2018 dollars, in 1991, members were paying roughly $1,150 in annual dues on a 250 point contract (or $627.50 @$2.51/point at the time). Today, those same 250 points cost $1,680* annually. You can imagine that increase will continue to outpace inflation 25 years from now.

As @disneynutz pointed out, you will spend a lot more on Disney than you would without DVC. Most park warriors and Disney fans will peter out after a few years; one could argue the health of the resale market would be a testament to that.

You may want to reframe the idea of buying in to save money. You won't. But you may love that you did nonetheless. Most of the people on this board certainly do.

*Edited to correct for actual 2018 dues rate.

 

[zavandor]

DVC members: what are the main perks?

The main perk is the possibility for DVC members to buy the Gold annual (which is only for Florida residents). If you don't go during the Christmand week it's a good deal and can save a lot of money if you do multiple trips a year.
Sometimes they run some special offer like the Platinum Plus pass for the price of the Gold Pass, like they did last year. Or specials on tickets.

Second perk is the possibility to book the special night events at the parks, however there aren't many so unless you specifically plan a trip to attend one or live nearby, it's not something you'll be able to enjoy often.

However no perk is guaranteed to last.

Did anyone get a special assessment for the hurricanes last year? (I don’t like money surprises)

Vero Beach and Hilton Head had special assessments multiple times. For WDW property it much rarer, last year SSR got a small assessment because of some damage at the treehouse villas, but the increase on dues was neglegible.

If I buy AK as my home place, what does that mean if I want to go somewhere else? Is AK an option or does that shorten the years owned thus affecting the bottom line since this is an older property.

You can book your home resort 11 months in advance. All other resorts 7 months in advance.
Booking at 7 months is becaming increasingly difficult, especially during what is called "Fall Frenzy", from late September to marathon week end in January. You should buy a resort where you like to stay, because sometimes you need to book it at 11 months or you risk to not find anything at 7 months.
However if you're flexible enough with travel dates you can stay at all resorts over time. Especially if you want to book 1 bedrooms.
Have a look at this post:
https://www.disboards.com/threads/h...been-working-out.3549166/page-2#post-56615436

Lastly, is this a sound investment. If I wanted to sell my contract in 5 years or simply rent points out for a year, sill I actually get my money back?

Nothing is guaranteed.
Currently the rental market is booming and it's very easy to rent out points to recoup maintenance fees and even make a good profit. But during next recession it will be much harder.
The same if you want to sell in 5 or 10 years. You don't resell to Disney, only to other people. Currently it's a seller market, prices have increased a lot in the last year. In 5 years? Who knows.

 

[disneynutz]

I don't agree that DVC makes memories, you can still make the same memories without DVC. Your room may cost less with DVC but you will still be paying thousands of dollars for your Disney vacations. My BCV study that I did a couple of years ago had us paying $300,000 for our 50 years worth of yearly vacations.

Bill

 

[Bing Showei]

I don't agree that DVC makes memories, you can still make the same memories without DVC. Your room may cost less with DVC but you will still be paying thousands of dollars for your Disney vacations. My BCV study that I did a couple of years ago had us paying $300,000 for our 50 years worth of yearly vacations.

Bill

True. But I would argue most people wouldn't go to Disney as often as they do, as regularly as they do, without the influence of DVC (or any timeshare).

 

[CraigInPA]

100 points will get you 9 nights in a value studio, or 7 nights in a standard view studio, or 5 nights in a savanna view studio, or 4 nights in a value one bedroom at AKV during dream season, etc... These same points could be used at other resorts as well, if you book 7 months or less from your vacation and there is availability. However, you should be aware that some accommodations, especially value studios, may be unavailable at the 7 month time because they have been booked by people whose home resort gave them the ability to book those accommodations at 11 months.

You need to figure out what resort is the one you'd like to stay at most of all. That "home resort" gives you the 11 month booking advantage over others who have other home resorts. The choice of a home resort is an individual preference. There are people who are passionate about every resort, and people who just bought the cheapest resort (sometimes to stay there, and sometimes because they figure they can always book elsewhere at the 7 month mark).

Once you have decided on your preferred home resort, you now need to figure out your best use year. If you vacation in February, your best use year would be February. That means that your annual points are refreshed the first of February. You can have a vacation using those points after February first, up to January 31 of the next year. Having your use year coincide with the month you normally go to WDW means that you have the ability to cancel a trip and not lose points (in the February example, if you cancel in December, you'd have all those points intact to use for, as an example, a trip in May). If you aren't going one year, you can "bank" your points into the next use year. If you need a few extra points, you can "borrow" points from your next use year.

Once you know your home resort and your use year, you now have to decide upon buying retail or resale. Retail gives you "membership extras" like annual pass discounts, membership magic events, and some other features that usually aren't particularly good uses of your points (such as cruises or Concierge Collection). Resale gives you a healthy discount. Resale asking price right now for 100 points February use year for AKV is $115-117 per point on a popular resale site versus retail price of $171 per point direct from Disney. Retail purchase direct from Disney could close immediately, or you may have to wait (depends if they have that number of points in stock). Resale will take you 2-3 months to close. Retail closing costs are usually $200 or less. Resale closing costs are typically about $600. If you want to buy the latest resort, which is Copper Creek Villas, as your home resort, you'll pay $182 and close immediately.

So, re-working your math...

$11,600 resale purchase of 100 AKV points
or
$17,100 retail purchase of 100 AKV points

Maintenance fees go up every year. $7.62 is this year's price. They are limited to a 3.5% increase, but lately they've been more like 1.25%-1.5%.

I found a AKV standard studio is $3153+tax per week direct from Disney.
If you go through a DVC rental broker to rent the same studio, you'd pay $1520. (no tax)
If you used your own points, it would be $724 (no tax) for the maintenance fees plus some portion of your buy-in price. For the sake of the argument, let's use $3 per point for that apportionment. This makes your own point reservation cost you $1009. So, yes, there is a huge savings potential over any other option.

However, and there's always a however, you're ignoring the time value of money. The initial investment (resale) of $11,600 would be invested or accruing interest. If you were able to get a 5% return on your initial investment, that investment would throw off $580 in returns per year. Interestingly, $580 is nearly the same amount as the difference between renting through a broker and using your own points. Note, though, that the demand for DVC rentals far exceeds the number of owners renting, so you may not be able to obtain a booking and could be forced into getting accommodations direct from Disney at the $3153 price.

But, taken another way, if you planned on going to AKV every year, and were spending $3153 (or more) each year direct, there's a payback period on the initial investment. The delta between $1009 and $3153 is $2144. In five trips, the sum of that yearly difference is the same amount as if you purchased a 100 point resale contract in the first place. After that, you'd be paying only the maintenance fees and wouldn't be concerned with the initial investment (because it's already been paid off by savings).

And, the kicker argument that won over my spouse: Because there is significantly more demand for DVC rentals than DVC members renting, any year we want to go elsewhere for vacation, we can easily rent out our points. That rental income is significantly higher than our maintenance fees, so there's a little left over to fund a trip elsewhere (after giving Uncle Sam his cut).

 

[disneynutz]

Actually the due increase limit is 15%. For 2018 the increases were between .8% and 7.2%. In addition, HH and VB had special assessments due to storm damage.

Bill

 

[Bing Showei]

Resort
2018
2017
Difference
% Increase

Aulani Subsidized:
$5.66
$5.28
$0.38
7.28%

Saratoga Springs:
$5.86
$5.60
$0.25
4.51%

Grand Californian:
$5.88
$5.61
$0.28
4.92%

Bay Lake:
$5.92
$5.62
$0.30
5.34%

Grand Floridian:
$6.13
$5.90
$0.24
4.02%

Polynesian:
$6.20
$6.14
$0.06
1.06%

Beach Club:
$6.44
$6.27
$0.17
2.73%

Boardwalk:
$6.55
$6.47
$0.08
1.19%

Old Key West:
$6.72
$6.41
$0.32
4.95%

Animal Kingdom:
$6.76
$6.59
$0.17
2.59%

Boulder Ridge:
$6.93
$6.54
$0.39
5.95%

Copper Creek:
$7.26
$7.33
-$0.07
-0.97%

Aulani:
$7.54
$7.03
$0.51
7.19%

Hilton Head:
$7.72
$7.27
$0.44
6.09%

Vero Beach:
$8.53
$8.11
$0.42
5.18%

Edited for format legibility

 

[crisi]

For us, the biggest perk was being able to book a two bedroom unit - something we never would've chosen to afford on cash. But we got our 150 points for less than $10k at BWV - and tying up less than $10k was not at all a big deal given our overall asset position.

Other perks have been a "forced" family vacation every few years (we might have put off some of them without the 'we have to use points'), the ability to take friends and relatives for a reasonable outlay on their part and ours (we always treat the room), having breakfast in the room (which has saved us so much time and money on our Disney trips - I hate spending $8 for an egg sandwich), and having a washer dryer in the room (which has made it so much easier to come home without a day of laundry - and its easier to pack in carryons - we don't - airline status gives us plenty of bags).

I would never buy to stay in studios. I don't think the value equation is there. Now that my kids are college age, my husband and I might take trips in studios, but that wasn't what we bought for.

As Bill implies, in terms of a money saving proposition - I think its the rare DVC member who comes out truly ahead in the pocket book. You can afford it and this way to do Disney adds value for you - or you can't afford it - or it doesn't add value. Most of us end up with more trips, or we bring guests, or we stay in larger rooms, or we spend more because no hotel bill and we don't "remember" paying the dues bill, or all of the above. It is possible to save money with DVC, but its not certain, and neither sufficient or necessary as a condition to purchase. Importantly - it doesn't add value for everyone - its less flexible than cash. The room configurations are what they are (mostly a studio has a queen bed and a pull out sofa), you need to be able to book ahead - you won't find a lot of availability if you can't plan months out.

 

[Dean]

True. But I would argue most people wouldn't go to Disney as often as they do, as regularly as they do, without the influence of DVC (or any timeshare).

IMO people just spend the money and then some owning DVC. I don't buy the idea that one can't have just as good memories not owning as owning. It's all about out perception and choices.

Actually the due increase limit is 15%. For 2018 the increases were between .8% and 7.2%. In addition, HH and VB had special assessments due to storm damage.

Bill

The 15% really isn't a limit, just like the limitation on reallocation isn't really a limit as was proven a couple of years ago.

 

[rwatson626]

Wow thanks for the replies.
As far as comparison, I was looking at apples to apples: studio point cost vs studio point cost so I made sure not to compare two different things.

I assume that these calculations are fairly close (without taking dues or resort cost increases when paying with cash).

I think that your mistake is not taking increases over the years in consideration when paying cash. With DVC you're basically locking in your vacation cost upfront. When you pay cash it is the price when booking. For example in 1971 when Disney opened rooms rates ranged from $29 to $44/night Now there a few hundred a night image what 20 years from now what they might be. below is a chart I found for comparison



Item 2003 Price 2013 “Inflation Price” 2013 Actual Price Percentage change from 2003 2023 Extrapolated Price
All Star Music $77 $96 $124 61% $199
Coronado Springs $133 $166 $245 85% $453
Polynesian Resort $299 $371 $562 88% $1056

I hope it's okay to link to the chart - http://micechat.com/23546-price-increases-walt-disney-world/



Thanks
Ron