Has anyone ever figured their "break even" point?

[DisneyKidds]

We are considering some DVC resales. From all my figuring (cost of resale, dues, points use, income from renting whatever points we don't use, cost of hotel rooms if we didn't do DVC, etc, etc) I am coming out with 2015 as my "break even" - the point at which savings on future accomodations recoups my initial DVC purchase price. From then on the cost of dues would be less than the cost of equivalent hotel rooms and the difference is money in the bank.

Has anyone ever figured this out for themselves. What was/is your break even point? Curious if my calculatiuons make sense.

I know I have been posting a lot of questions and we will probably make an offer soon. Thanks for the help.

My latest plan is to figure how many points we will ultimately need (enough for a 2 bdr at VWL in the summer, 300 to 350) and buy that now. Prices will only go up in the future and if we have more points than we need over the next few years we can just rent out what we won't use. What do you think?

 

[Richyams]

We bought in '92 and had two years of points for our first trip in '93. We paid less than $11,000 for 230 points. Our first stay was 12 noghts in an OKW Grand Villa. These rested for near $1,000 per night. Our break even was our first stay.

12 days times 6 free passes per day makes for 72 one day hoppers. Add that to the take and Disney paid us to join DVC.

 

[CaptainMidnight]

Extra points can also be used for some local weekend getaways at some pretty nice DVC partner resorts, if any are near you. A weekend trip to NY is a possiblity, to see a broadway play or two...

 

[PKS44]

My only concern would be how easy it will be to rent out points...I have no idea if that is an easy thing to do or not...it seems the rental board stays pretty busy, so maybe you can count on that...Good luck with your decision...

Paul

 

[Granny]

Originally posted by DisneyKidds
Has anyone ever figured this out for themselves. What was/is your break even point? Curious if my calculatiuons make sense.

Different folks have different ways of figuring their break even points. It's going to depend on what accommodations you would otherwise use, how often you go, what time of year you go, etc. For me, my calculations put this at about 8 years.

Of course, those like Richyams got their breakeven really fast with the free park admissions the first several years of the program. Other newbies like me can only jealously sit back and sigh when considering that!

As for the extra points, the banking option helps there as well. You can also extend your stay a couple extra days every few years, or actually stay on multiple weekend days that cost so darn many points.

 

[Granny]

Oh yeah, one other thing about calculating break even points.

If I did not own DVC, I would not be able to go to WDW every year. So even though I put that in the "number crunching", the fact is I will be getting much more vacation time at WDW than I ever would have.

Also, the accommodations will be much better than I otherwise would have afforded. My breakeven compares to a standard room at a deluxe resort....my gosh, a villa studio or 1 bedroom blows that away. So you are comparing an accommodation upgrade.

Both of these intangibles, increasing the quantity and quality of vacation trips, made the financial number crunching seem a little less critical to me.

 

[Lesley]

I got 5 years....here's how:

I didn't want to compare apples to oranges, which would be comparing our previously "budget" WDW trips to what we get with DVC. I compared rack rates (which is what I would get without making Herculean efforts to get great discounts) on DVC rooms to what I've paid/will pay as a member. To reserve the rooms we plan to stay in until 2005 would cost me the same as my DVC buy in and dues for that time. After that I'm on dues alone....and what I can get for that $600 a year is quite amazing to me! Probably what I'd pay to stay the same amount of time at the All Stars (no thanks!) or less.

I didn't figure renting into the equation because we will be using all our points. I didn't compare to moderate or value resorts because we get much nicer accomodations. Pay less, get less. And my time and effort to get discounts on deluxes would be much more than the effort I put into being a DVC owner and managing my points....so I didn't figure that in.

Would I necessarily have spent all that on Disney vacations...no, I'm not that stupid...DVC was a better deal! We wanted Home away from home accomodations and why pay that much for them for only 5 years of trips when could have DVC for 42 (at the time we joined)? Yes we could go cheaper in the short term, but in the long run this is still the best option for us. And we get what we really want instead of settling for less.

 

[DisneyKidds]

You guys are right, there are many different ways to calculate break even. Thanks for your thoughts. Here is where I came up with my estimates.

If I compared rack rates for the same rooms I'd get thru DVC I'd get a break even of about 5 years. However, I didn't figure that because it is not likely that we will always pay rack rate and it wouldn't be a "fair" comparison. I know discounts are easy to find now and may not be in the future - but there is likely to be some level of discount more often than not. I could be wrong of course.

I could have compared slightly discounted rates for the same rooms I'd get thru DVC and gotten a break even of about 8 years. However, I didn't figure that because I know if we didn't do DVC we would stay in lesser accomodations. We would likely use a mix of moderates and deluxes, upgrading to a 1 br when necessary, and probably never get a 2 br if we didn't do DVC. I tried to compare the cost of non DVC rooms we would likely stay in to make it realistic. Some would consider that an apples to oranges comparison, and from a room standpoint it is. However, I am just looking at it financially.

I didn't use rack rate for the non DVC rooms I did plan on. That would have resulted in a break even of 12 years.

If we didn't do DVC, the non DVC rooms we'd actually pay for (while not as nice as DVC accomodations) at rates reflecting some discount (but not always) results in my break even of 14 years.

Even at 14 years (out of 41) for break even it is good. Given that we would end up with nicer accomodations the whole time makes it even better .

Thanks again for the help. Please point out any flaws in my logic. I am feeling good about the potential of making a DVC purchase and I'm sure you can make me feel even better.

 

[KNWVIKING]

I think the only way to properly do a break even analysis is to compare apples-to-apples. When I had to get an extra nite in the studio at VWL, had I not been a DVC member,my price would have been 269.00. We were there 11 nites, equals $2959. As a DVC member it would have been 189.00 or 2079.00. I used points anyway but had I not been DVC I potentially could have paid 2959.00 for this trip,plus were going back for 13 nights in May and another 10 in Dec. Potentially I could pay 9146.00 in a 52 week period. I realize there are tons of very nice off-site resorts I can stay at for $99.00 a night, but thats comparing an apple-to- an orange. Even if I could pay the DVC price of 169.00, that's still 6426.00 for the 34 nites. After my first three trips were on-site,my fourth trip was off-site. I will not stay off-site again for more then a day or two, so for me the only comparisions that can be made are with WDW deluxe resort prices. I figure by the end of 2002 I'll be pretty close to even. We joined in late '98.

 

[Granny]

Originally posted by DisneyKidds
Thanks again for the help. Please point out any flaws in my logic. I am feeling good about the potential of making a DVC purchase and I'm sure you can make me feel even better.

I think your logic is sound. You are comparing what you probably would have realistically paid to what DVC will cost.

Think about it this way. Let's say your analysis gave you a break even of 40 years. DVC would still get the vote because the accommodations for those 40 years are so much better than moderate and luxury resort rooms!

 

[vacationman]

IMHO, you don't have to be an original DVC member to break even quickly. I joined just over one year ago using magical beginnings resulting in a cost of $67 per point. Using the Timeshare Store as a guide, the going rate per point for the number of points I have is $68. With various commission and closing costs I would have to pay, I would probably net around $65 per point. That would put my cost at the cost of funds for the time since I joined and the maintenance fees paid last January. Even with some room for errors in my estimates, the money I have paid in got me 8 nights at BWV during June, 4 nights at Vero during Thanksgiving week, and seven nights at BWV durig spring break.

The only way this becomes a bad deal would be if (1) I did not use my points consistently over the next 40 years; or (2) the resale falls dramatically (and not proportionately to the number of years left in the contract).

The intangible - which means as much, if not more than the money, is that I have a reason (excuse?) to: (1) get my family to WDW several times a year before my kids head off to college/marriage/etc.; (2) get away several times a year with my wife when we become empty nesters; and (3) get together several times a year with my kids and grandkids (God willing).

 

[Pluto4President]

thats a hard one. Initially I figured it to be 3 years. But I have bought 2 additional resales in that time. That always complicates the mathematics.

 

[drtpaper]

Until you stay at resort like BWV, you can not do a true comparison.
Walking from EPCOT back to your room for a slow paced lunch, swim and nap while everyone else is trying to find a place to eat in the park - priceless.
Swimming at the Boardwalk pool or SAB during the hottest part of the day - priceless.
Staying in a 2 bedroom with 6 kids and 5 adults and not feeling the slightest bit cramped - priceless.
Taking your closest friends on one of their best vacations ever. - priceless
Most of all, you can split up and take the big kids on the rides and the small kids back for naps with a real bedrooms, a jacuzzi, and a kitchen.

If you are looking at the economics, you will have a tough time. I can give a quick example of the value of the accommodations on the open market.

150 points at Boardwalk go for about $60 a point after closing costs
These points cost less than $4 a year in maintenance fees.
The going rate for renting points goes from $8 to $12.
After maintenance fees, you net about $4 to $8 a point - 7% to 14% yield and you still
have an asset that has some appreciation potential.
Price per points should continue to climb for the next 10 years or so.

As you can see, the market values the DVC. Those that are buying see the value. Worst you can do is buy in, stay once and then resell, and you will probably break even. We got hooked after a stay with friends and could not imagine going any other way.

 

[Cruelladeville]

All you math geniuses out there impress me, but I figured my break even point a different way: I added the cost of my points minus Magical Beginnings, plus financing and guessed at dues for the same time frame. Then I went back and used my receipts for what I had paid for rooms over the years, and averaged that before dividing it into my figure for DVC costs, and it came out at 5 years. I started out at Polynesian Village, and slid down to Caribbean Beach as the prices went up. I bought into DVC when Disney had the gall to raise their prices at CB to $150 per night!!!! Anyway, I know now that the cost recoup is really around 3 years or so for my circumstances, and I'm happy with that. And, as others have noted, I'm stayed at much nicer resorts now, too!

 

[DeeP]

We bought in '92 and had two years of points for our first trip in '93. We paid less than $11,000 for 230 points.

Using the $11,000.00 figure that comes out to $47.82 per point. In 1992 points were less than $48.00??

 

[Richyams]

I did the math in my head quick. We paid $51 per point for our first set of points. $11,730.....we got 12 nights in the OKW GV, these were in the neighborhood of $1,000 per night plus tax. We still broke even on our first trip.

When you add the free passes, Disney paid us to join DVC.

We did a 200 point add on during that first stay, I believe that was $57 or something, the second stay had us break even for the add on too.

All that doesn't even take into account the free passes. Another way to look at it is that we bought the passes and got fifty years of lodging for the cost of dues.

Any way you look at it, break even happens and it usually hapens sooner rather than later.

 

[EROS]

Don't forget annual dues. Even though we recouped our equity outlay early on, we're still paying approx. $1200/year in dues (on 300 pts). Not exactly small change............. at least to me . If we chose to stay off-site on a budget, $1200 would go a looooooong ways. But then we wouldn't be at BWV

 

[DisneyKidds]

Good point EROS. I should clarify that my 14 years break even considers dues and all. Basically, for us it will take 14 years before the amount we would spend on non DVC hotels rooms (granted, not as nice as DVC accomodations) exceeds the amount we will have spent on the initial DVC contract plus the annual dues for 14 years.

We are not big fans of off site (except for Marriott Courtyard in the Disney Village). On site $1200 barely covers a week unless you go to All Stars. Years from now we will need deluxe accomodations to accomodate 5 - $1,200 only covers a fraction of that for a week.

The more we look at it DVC makes sense for us.

 

[vernon]

I joined in 92 so the passes were still being offered then. Taking them into consideration and I used a moderate resort as my "yardstick" ( because that is what I would have stayed in ) I estimated before UI bought that it would take 6-7 years to break even. With the use I actually made of DVC and some good juggling of weekends/weekdays I think that 5 years was probably closer to the truth.

With no passes, some aggressive discounts at the moment and the higher cost of DVC compared to 8 years ago I would think your estimate of 15 years isn't going to be far away (depending on how you finance the deal) if anything it may be a little conservative and like me you'll find in reality you hit "break even" earlier, but that will depend on how you use your points.

I would never pay $$$ to rent a two bedroom or a grand villa so IMHO for me that comparison doesn't give a true reflection for my financial break even, I don't put a $$ value on the aesthetic value of staying in a better quality resort.

I agree with your comment , the more I look at DVC ( in hindsight) the more sense that choice makes to me. Each time I visit I'm grateful I had the time to look seriously into DVC because without a three day rain storm I would never have taken the time to look into DVC .

 

[Lisa F]

I figure it will take us about 10 years, or the length of our loan, to break even. When we first bought into dvc we bought 170 BWV points, which is enough for a standard studio in the off season for 2 weeks (when we like to go). With our loan payment + dues we were spending about $1700/year on DVC. We used the AP rate for the BWI that we had on the trip when we bought in since we are really spoiled by deluxes (start at the GF for your honeymoon and it's hard to go down from there!) as a comparison. At $169/night + 11% tax, that $1700 would've bought us 10 nights at the BWI, whereas with DVC it was buying us 14 nights in a studio. For us, even with financing looking at it year by year is a really good deal.

Since then we've added on a bunch more points (another 130 at BWV and another 50 at VWL for a total of 350 points). I suspect the value of DVC is not quite as high in busier time periods when lately you've been able to get the same $169 rate for cash while the DVC points cost per night is higher, but my original estimate got me 14 nights for the price of 10 so without doing the math I am guessing that by going a few times a year during various seasons that we are more or less breaking even (paying in dues and loan for the year what we would have paid for a cash room). THe big difference is at the end of those 10 years when there is no more loan and assuming both dues and hotel room costs rise at approximately the same rate, using todays dollars we will be getting a $190/night room (that's the 45% discounted rate for BWI) for under $50/night. wow.

Lisa