How to figure out how much your DVC stays REALLY cost...

[luckyman_apd]

I can never take the "Rack rate" of a DVC room as a comparison, because I would never have stayed in a DVC room on cash if I wasn't a DVC member. (not going to stay on cash as member either). What we did and probably always would have done are moderate resorts. And of the 15 nights we have stayed so far as members, I can say without a doubt I have saved at least $100 per night in my DVC studio vs a moderate room starting price. We have 3 nights at BLT in December (2 rooms as I am using points for my father in exchange for him booking airfare with his credit card miles...which is a better deal for me!) at 46 points per room. My cost this year I figure is $2.10 per point buy in + $4.50 dues cost. That's about $102 a night per room. An all star resort starts at $111...and we would never stay there, we would go moderate.

Each individual must make the choice and figure it out for themselves. For me, if things stay the same, I'll break even after 16 years (13 more to go). After than it can be all savings, or I can walk away. I consider my opportunity cost over 16 years to be the value of the good times in upgraded location/accommodations over that time period. Others will "value" it differently. I'm happy and have no regrets so far, but I don't think anyone should plan based on my experience.

 

[Dean]

Dean, I consider you my friend while you say: Who the H$ll is this guy? I consider you smarter then me! I consider you one of the best resources on the DVC Boards. You benefit the people reading this stuff way more then me!

Every justification I have looked at are flawed in some way or another. They seem to take in 1) All the up-front costs 2) The Due's. 3) Opportunity Costs.

Few of them - if any - reflect 1) A true reflection of WDW's escalating Hotel costs. 2) Comparison of room types. Example - I can go and get a room at a Value resort and have 100 Sq Feet, or, get a nice room with a Kitchen included - that will same me money on the Vacation. 3) The fact that you can sell x-years after and walk away even (or a portion of your investment refunded).

We bought in 93 and got 150 BCV Points for 12.5K.

• 2011: Sold our 150 BCV Points and got 190 OKW Points. Walked away with $45 in profit.
• Our OKW Contract was loaded - rented points and got $700.
• Based on what I see now - could sell my OKW points and break even or make/lose 1000.

Despite that I have estimate the Rack Rate of the rooms I have received are well in excess of $70 to $80K.

If you are buying to speculate or rent out points - a different equation. Agreed.

No doubt there's no perfect way to look at DVC or any similar purchase but there are sure better and worse ways. IMO ignoring up front costs (or even taking them over the entire RTU), ignoring the time value of money, financing and ignoring the risks are major mistakes that many make. Close to that is using the Rack rate as the basis of comparison. Another mistake I see is people limiting their choices to a very small group, say value/moderate vs owning DVC. But if I too your methodology of using rack rate or a discounted rack rate, I'd be at several hundred thousand for likely a much lower costs than your situation with the numbers you produced. Personally I thin using rack rate in any form is an unreasonable comparison for all but the person who routinely stayed in suites prior to owning DVC or paid cash routinely for DVC itself through CRO.

Responding to your sell & buy situation, you had some costs with the exchange and you ended up with something worth less than what you sold. This is one of the somewhat unique situations for VGF and VGC. Not right or wrong, just choices. Now might be a good time to sell as I don't think these prices will hold long term and more than just the years counting down.

As for friendship or respect, it's really OK to disagree. NO matter how strongly each of us feel about a given issue, it really shouldn't affect that. People on such boards are often far too sensitive. For example, if I say that financing DVC is a poor choice speaking to the principle and you financed, you should not have any reason to be upset. Now if I said you were an idiot for financing speaking to you personally, that'd be a different story.

 

[luckyman_apd]

As for friendship or respect, it's really OK to disagree. NO matter how strongly each of us feel about a given issue, it really shouldn't affect that. People on such boards are often far too sensitive. For example, if I say that financing DVC is a poor choice speaking to the principle and you financed, you should not have any reason to be upset. Now if I said you were an idiot for financing speaking to you personally, that'd be a different story.

All my calculations are done WITHOUT financing. Financing throws an entirely different variable into the situation. We were lucky to have the means to do it without financing.....even though the year prior Disney really tried to persuade me to finance it with them right there on the spot.

I don't feel financing is worth it.....but that was my situation. Our friends who bought long before us and paid it off....loved their choice and couldn't have done it any other way. I think in the end it will still pay off for them....but they do view it as a luxury, not a cost/savings thing.

 

[mckelvey72]

Having mentioned financing...WOW, Disney really knows how to market to you and make you feel great about buying in. I called and got a really nice guy who gave me all the numbers.....you can finance your down payment etc. It would be 35K for what I wanted and I would get my "return" in 5-7 years.

Well, I am a numbers person and very afraid of spending that kind of money. Oh, on the phone it sounded great, if I was a different person I would have signed up. What is 500 a month plus 115 for fees. That is less then my car payment...great, sign me up.

Well I am a thinker so I hung up. I calculated 500 a month for 10 years....that 35K turned into 60K. Right then and there I said NOPE. If I can't buy it outright, not going to do it. It takes WAY more than 5-7 years to get your return at those numbers.

Anyway, just my perspective to impulsive people looking to finance...take a step back and realize how much you are REALLY spending.

 

[luckyman_apd]

Having mentioned financing...WOW, Disney really knows how to market to you and make you feel great about buying in. I called and got a really nice guy who gave me all the numbers.....you can finance your down payment etc. It would be 35K for what I wanted and I would get my "return" in 5-7 years.

Well, I am a numbers person and very afraid of spending that kind of money. Oh, on the phone it sounded great, if I was a different person I would have signed up. What is 500 a month plus 115 for fees. That is less then my car payment...great, sign me up.

Well I am a thinker so I hung up. I calculated 500 a month for 10 years....that 35K turned into 60K. Right then and there I said NOPE. If I can't buy it outright, not going to do it. It takes WAY more than 5-7 years to get your return at those numbers.

Anyway, just my perspective to impulsive people looking to finance...take a step back and realize how much you are REALLY spending.

It depends on who you are. I agree with you, but I'm not bashing those that have financed. Today's prices are insane, and buying direct through disney almost seems like you have to finance. I know I don't have $35,000 to drop today. $12,500 for resale was pushing it from savings, but many don't have that.

However, I know a family with 3 kids. The first 2 are twins. One of them had cancer at a very young age. He beat the odds and cancer, so they know life is short and to enjoy it while you can. They bought DVC and financed it, and have NEVER regretted it. They bought many years ago, so I'm sure it was much less than todays prices. They cruise with it, they go down at least once a year. There is no guarantee he will be cancer free forever, so they enjoy what they can and cost is not in their value equation. That's something that can't be put in a spreadsheet or put in a cost/risk analysis.

 

[Dean]

All my calculations are done WITHOUT financing. Financing throws an entirely different variable into the situation. We were lucky to have the means to do it without financing.....even though the year prior Disney really tried to persuade me to finance it with them right there on the spot.

I don't feel financing is worth it.....but that was my situation. Our friends who bought long before us and paid it off....loved their choice and couldn't have done it any other way. I think in the end it will still pay off for them....but they do view it as a luxury, not a cost/savings thing.

I was really only giving an example of speaking to a principle and used the financing issue as that example. That principle being that many of us speak about a principle in general terms and that at times those on the other side sometimes take offense. Whether it be financing, buying direct or using points for cruises among others. Another similar situation is speaking to the real and negatives affects that SSR has on the system where those that like or own there take it as an affront to the resort itself.

 

[bom_noite]

Responding to your sell & buy situation, you had some costs with the exchange and you ended up with something worth less than what you sold. This is one of the somewhat unique situations for VGF and VGC. Not right or wrong, just choices. Now might be a good time to sell as I don't think these prices will hold long term and more than just the years counting down.

Was not the case! We sold 150 BCV and walked away with 190 and a check for $45. We bought the original contract cash, so, no financing costs.

I would not recommend this approach to others - do your research and purchase the resort that best fits your point level and tastes. We did stay at BCV and walked away less then impressed.

On the other hand, we fell in love with OKW the first time there. One very big factor is we drive from Atlanta, so, not being on the Monorail is a very small concern.

As for friendship or respect, it's really OK to disagree. NO matter how strongly each of us feel about a given issue, it really shouldn't affect that. People on such boards are often far too sensitive. For example, if I say that financing DVC is a poor choice speaking to the principle and you financed, you should not have any reason to be upset. Now if I said you were an idiot for financing speaking to you personally, that'd be a different story.

I was really just ribbing you Dean! As I said - you are the smartest guys on these boards.

With all due respect, I still think the financial justification is not the most important litmus test! (Many folks spend with their heart and find out they can not afford it later! Divorce and Job Loss happen! The resale market thrives because many folks perhaps should not have got involved from the get go!).

Dean, you and many, many others have stated: Don't buy DVC to trade out to another Timeshare. Don't buy DVC to book a cruise. Don't buy DVC to stay at another WDW resort. I would add: Don't buy DVC to rent out points (certainly is possible), but - there are better investments. All of the above are losing propositions - IMHO.

With all that said - it comes down to: Do I really want to go to WDW each year - year in and year out? You may say yes now, but, there is a boredom factor after 7 to 10 years.

 

[Dean]

Was not the case! We sold 150 BCV and walked away with 190 and a check for $45. We bought the original contract cash, so, no financing costs.

I would not recommend this approach to others - do your research and purchase the resort that best fits your point level and tastes. We did stay at BCV and walked away less then impressed.

On the other hand, we fell in love with OKW the first time there. One very big factor is we drive from Atlanta, so, not being on the Monorail is a very small concern.

I was more referring to being worth less on a pp basis but regardless, there are costs to this approach. Those costs might or might not be worth if for some. Generally the only times it makes sense cost wise is when downgrading either in number of points and/or more to less expensive. I'm guessing you ignored the time value of money in your costs as well and likely minor losses related to maint fees in the transition. Had you not bought BCV and then bought SSR retail, where would you have been? Resale as the initial purchase for either?

I was really just ribbing you Dean! As I said - you are the smartest guys on these boards.

With all due respect, I still think the financial justification is not the most important litmus test! (Many folks spend with their heart and find out they can not afford it later! Divorce and Job Loss happen! The resale market thrives because many folks perhaps should not have got involved from the get go!).

Dean, you and many, many others have stated: Don't buy DVC to trade out to another Timeshare. Don't buy DVC to book a cruise. Don't buy DVC to stay at another WDW resort. I would add: Don't buy DVC to rent out points (certainly is possible), but - there are better investments. All of the above are losing propositions - IMHO.

With all that said - it comes down to: Do I really want to go to WDW each year - year in and year out? You may say yes now, but, there is a boredom factor after 7 to 10 years.

I feel strongly that unless DVC makes financial sense, it's foolish to buy, this includes ones own financials. Certainly anyone who can qualify has the potential to buy and the right to make that decision. Obviously there's a range of whether it makes sense and after that, there are certainly other factors. I disagree with the idea that one feeling its a good choice automatically makes it so. Based on observations on this board and other locations, I'd venture to guess that a dramatic number buy that can't really afford it at the time they buy and a fair number buy when their purchase doesn't make sense either what they bought, how they paid or buying at all. Obviously for a given situation you'd have to look at the finer details.

I would agree that buying to rent is generally a poor choice as a long term plan realizing there are some short term situations where it makes sense. Obviously it depends on what you buy and how much you pay and the scale. In general, buying vs already owning DVC mirrors the same process as buying or holding a stock. There are differences between the 2 positions. Generally when we're discussing these type issues it's in the context of buying or adding on retail rather than deciding to sell though there are often examples of that situation as well.