Free Home in Orlando or DVC? Help me justify this math

[hampshire mickey]

Ok Let me preface, I will buy at the DVC and I can't wait (but have a little while) Here is my math problem, so Profesor Duck get ready.
Tom and Judy buy the DVC at the BCV at 250 points or roughly 20,000 dollars. They enjoy many memories and family vacations over the years. In the year, 2042 Tom's son Bernie figures dad spent over $38,000 in maintenance fees. Bernie now looks at the $58,000 in a scrapbook of memories.......
While....
John and Cindy tour with the guide at the DVC. Tom figures silently to himself as he tours. Cindy looks hesitantly at the kitchen and bedroom. Later, back at their room at the All-Stars, John figures while sleeping below his own personal star. Instead of buying 250 points I take my $20,000 and use it as a down payment on a home in the Hunter's Creek Community (some 15 minutes from Disney). John then refinances $38,000 via a home equity line of credit out of his credit residence in Provo, Utah. John rents his home in Hunter's Creek for $865 per month (some $200 more than the $665 house payment on a current renter's 7% interest). John uses the additional $200 per month to pay taxes, up keep and his home equity line of credit. In some 30 years, 10 years earlier than Tom and Judy, John and Cindy move to Florida to retire early and enjoy Bahama Mama's under their own King Palm.
But.........
We all have to realize, one financial decison looks very silly when compared to another. But, the second scenario containse years of searching for renters, arguing on the phone about upkeep, a near divorce b/c the trip to Florida was a stay at off property in which John had to rent a car and he had problems after the nights at Epcot's Rose and Crown. While the first scenerion, brought a family closer together, they shared something very special for the majority of their lives and enjoyed it with the one of the best resorts in the world. Other opinions would be greatly appreciated. I live for family and friends, the financial thing will take care of itself!

 

[CarolA]

Well, the second deal sounded fine until you got to the divorce part and the fights etc... PUNT!

If you know you want to retire to Florida that might be a good deal. I know that I will not retire to the Central Florida area so... Also, if John and Cindy are renting the house to long term renters they still have to pay for hotel rooms. I have friends who own and rent in Hilton Head and it is more work than I realized. (Renters are always tearing something up and the rental company charges a LOT for repairs.)

 

[mikesmom]

I'd also like to know where John is finding a house in Florida that has payments of $665. My payment on a house in Oklahoma is higher than that (at a lower interest rate I might add) and housing is REAL cheap in Oklahoma. It's not cheap in Florida.

Also, do John & Cindy REALLY wnat to retire to a 30 year old house that's been occupied by renters for all that time?

Is Hunter's Creek still a desirable area in 30 years? Also, I wish best of luck to John & Cindy on getting good renters for all that time. It only takes one bad set to really tear up that house and property. Because of a job change and move I was a landlord ONCE for 2 years on a house I owned - never again. It's particularly difficult when you are too far away to keep a personal eye on things once in a while.

Also, let's remind John & Cindy that in 30 years you probably have to replace appliances, the furnace at least once, the water heater a couple of times, the carpet several times and oh yeah, the roof. Plus termite control (this is Florida, remember!) and if they are really unlucky, sky high insurance if one of those hurricanes heads that way.

Give me DVC where those pesky problems are handled and I can actually walk away in 40 years! Many on this board have metioned that at the end of 40 years you don't own anything. Frankly, that could be a blessing!

 

[PamOKW]

At the time I purchased DVC I was considering buying a vacation home in Florida. It wasn't to use for entire winters, just vacations. To me, the hassle of furnishing, worrying about it when it wasn't occupied (expense of hiring someone to maintain), possibly renting but not wanting to tie it up so I couldn't use it when I wanted, etc. led me to purchase DVC. OKW was very much my taste and is a turn-key that let's me vacation in style and forget about it when I'm not there.

It's true that you would have more in the long-run (if a hurricane or tornado didn't hit) but you also wouldn't be having Disney vacations. You would be visiting Disney.


Another story for consideration....a co-worker's parents decided to build a home in Orlando to rent out for income. Her mother went down to furnish the home and wouldn't leave. Honest, she moved in and wouldn't budge. Refused to come back to LI. She spends her days wandering the WDW grounds and is an expert at slipping into resorts and resort pools, etc. So, now they own two houses. A few years ago, they tried to legitimize their pool hopping by buying points at Vero! I've lost touch with their daughter so I don't know how the pool hopping (or crashing) is working for them these days.

 

[DeeP]

I did both. I bought a home in FL and DVC pts so now I have all bases covered! Real estate in FL is actually pretty reasonable compared to the price of real estate in the Northeastern states and when I bought my home in FL 19 yrs ago it was dirt cheap and it has risen very nicely in value but no where near as fast as my home in the Northeast has risen in value. The property taxes in FL are also a drop in the bucket compared to property taxes in the Northeast. My FL home is occupied by a family member who takes very good care of it so that is also not a problem. I have had this plan in play for 19 yrs and it has worked out very nicely for me and my DVC membership is just icing on the cake! Now I am counting down the time until I reverse the situation and my FL home is where I spend the majority of the year and my Northeastern home is my vacation home and of course my DVC home will always be--at least until 2042-- my "get away from it all, play home".

 

[BCVOwner2002]

I agree with PamOKW! We have friends who are in the process of selling their home in the Orlando area. I won't go into all of the details but after listening to their horror stories, we knew we would not purchase a home unless we were living in FL year round.

As I have said in the past, we don't think of Disney as an investment but rather like a leased car. When the lease is up, we'll give it back!!

 

[ncligs]

DeeP,

Very good planning on your part. What part of Florida is your home in?

 

[DeeP]

ncligs,
My FL home is in central FL, approximately 45 - 55 minutes from the land of Mickey.
I do not understand why you ended your post with the roll eyes smilie face that means saracasm. What was that supposed to mean??

 

[ncligs]

Deep,

Not at all, just curious.

 

[DeeP]

Right, I guess you just put the sarcastic smilie in by mistake.

 

[DVCDAVE]

Well, I'll weigh in here just a little. My wife and I have considered buying a home in FLA ever since we got married in 1985. But, it got postponed due to the reality of trading up to a bigger house here in CT, then having children. When it finally came time to buy..... We went house shopping in the WDW area. To our surprise a home in a good area near WDW was no bargin. They are just as expensive as any good neighborhood in the Northeast. The bargin homes we saw were areas we wouldn't want to own, or couldn't bother to fix up.

I conclude this, if you want to be a landlord, be one. If you want a vacation home, buy one.....but don't expect your tenant to move out of his rental (your vacation home) just because his landlord wants a vacation at Wally World for a week. In my honest opinion it seems difficult to rent a 'vacation home' on a nightly or weekly basis in the Orlando area for serious money if you are competing with resorts like the Marriot Maingate that is currently running specials for $49/night, when you are asking more $ without room service, a pool, and a location. By the time you consider your time, and effort to keep it rented and maintained, it is hardly worth the effort. Then again, it may depend on what value you put on your time.

If you want a temporary vacation location, with lots of amenities, DVC is worth the look, and a serious consideration.

 

[DeeP]

We went house shopping in the WDW area. To our surprise a home in a good area near WDW was no bargin. They are just as expensive as any good neighborhood in the Northeast. The bargin homes we saw were areas

I am certainly not promoting purchasing real estate in FL but for $150,000 - $200,000 you can get a lot more house in FL in a very nice, desirable area than you can get in the NY/NJ area. Twenty years ago you could half that figure and get a very nice home in a great area but like real estate everywhere the cost of real estate in FL has risen over the years. I am currently looking at another very nice 3 BR, 2.5 bath rancher with a pool, huge family room, large lot, etc in an excellent area of FL that falls in the above price range. I would not be able to touch the same house with the same features for the same price in the neighborhoods in NY/NJ that I would want to live in.

 

[Lisa P.]

Tom and Judy buy the DVC at the BCV at 250 points or roughly 20,000 dollars.... John and Cindy... use it as a down payment on a home in the Hunter's Creek Community (some 15 minutes from Disney).

If you would be happy with a nice place offsite, why not also consider offsite possibilities that cost far less. Rental homes are out there by the hundreds, often for a very reasonable price (and no landlord woes). Plus, there's no assurance that you'd be able to find a monthly renter, other than perhaps during January-March, snowbird season. You'd probably have to go with a rental management company, cutting into your rental income, while paying their maintenance fees.

If condo timeshare vacationing (similar to DVC) interests you (and if offsite is okay with you), then look into buying a decent red timeshare resale week (or several) for as little as $1,000 elsewhere and trade into one of Orlando area's many beautiful Godl Crown or 5 Star properties (offsite). Annual expenses can be as low as $350 per week (even less if you really shop) for lovely 2BR villas.

Look at Timeshare Users Group - TUG to learn more about finding good red weeks on resale that would do what you want. There are plenty of people who spend extended stays (even some who spend months) in timeshares in retirement. The TUG forums will show you more about this and about how easy it is to trade into nice offsite places in the Orlando area.

...a near divorce b/c the trip to Florida was a stay at off property in which John had to rent a car and he had problems after the nights at Epcot's Rose and Crown.

Hm. If you ever stay offsite again and plan to visit Rose & Crown, take a cab.

Other opinions would be greatly appreciated.

My opinion is that prehaps you've already decided you prefer DVC to buying a rental home.

 

[Laurabearz]

We own three rental houses............

It can be a real pain to find good tenents..... You would be surprised how many little things go wrong in a place that need imedaite attention, and that is very hard to do from far away..... hard enough to do it for our rentals (and they are just minutes away from our house....)

But you do have a point.... in 40 years you will have something to show for your out put.... just dont forget that you will have to EARN it......

Good luck with your desision.... and keep us posted!

 

[Doctor P]

Having been an absentee landlord, I would never do it again. I also don't think that the true financial costs of ownership are fully included in the calculations. Buying a house in Florida is a good move if you are going to live there full time, or nearly full time. My parents went through this decision a few years back, and finally decided it was actually much cheaper to rent as snowbirds than to buy (and you don't have the headaches and costs of ownership when your aren't there). Finally, I have never considered DVC to be anything but a prepaid vacation plan. A house, even a vacation home, is an investment, IMHO.