I am considered DVC and have lots of questions (long)

[golden1]

Hi,

I am a long time Disney fan and I am considering if the DVC is worth it for me at this point in my life. I first thought about it a few months ago but my DH rejected the idea. Since then he has talked to a friend of his who is a DVC member and he might be persueded to do it.

I am looking at probably buying a resale property at 150-200 pts. I am married and have two small children and may possibly have a third in a few years. I know it doesn't seem like a lot of points but I am really only looking to go every other year or maybe every 18 months for a week at a time. Since a 2 bedroom Villa is around 225-250 pts per week it seems like that should be enough points right? I like the thought of being able to bring my extended family with me so the 2 bedroom villa looks great. I also figure that once the kids are grown we could go every year in a 1 bedroom villa or studio.
One question, is the 4 person 1 bedroom villa REALLY have a strict 4 person limit? For example, if I have another child, could I get a crib or cot for the 5th person? That should save some points if it can be done.

So I have been crunching the numbers a bit and doing a lot of research. From what I have seen, I could probably get $78/ point (or a little less) on a resale at Wilderness Lodge (which is my preferance). I read that the maintainance fees have risen in the past by about 2-3% per year. After doing some calculations the total cost including the initial payment and maintainance fees increasing at a rate of 2.5% a year gives me a grand total of $47520. Basically, 25% of your cost is the initial investment and the other 75% is maintainance fees. This worries me for several reasons. What if Disney is doing poorly so they jack up the fees at a higher rate? Is there a limit to how much they can increase these fees?

So using my sample calculation above, I get an average of $8.56 per point -$47520 divided by 150pts times 37 years. (remember, this factors in the estimated increase in fees over the years) . So a week at the Boardwalk Villas in a standard 2 bedroom villa is 236 pts which means I am spending $2031 or $288/night. I understand this is cheaper than the standard rate and that this cost will never increase over the years but it still seems like a lot to me. So this vacation, factoring in cheap airfare for 5, park tickets and food is still going to cost $4000-5000. Is there something I am missing?

Granted, the accomodations are not as nice but a family of five could go and stay at a value or a moderate resort for much less it seems. Is this program just for people who are going to stay at deluxe accomodations anyway?

Thanks for reading,

Judi

 

[TammyAlphabet]

Seems like your analysis is pretty good and you have done your homework. I would add that although 288 a night (even for a two bedroom) seems high right now, in twenty years it will seem like the steal of the century. By that time it may be a steal compared to the value resorts.

Also, many people join with the idea of coming every couple of years and that quickly becomes every six months!

The one bedroom will hold four plus one child in a pack and play crib. So you will be fine with another little one.

Good Luck with your decision!

 

[tjkraz]

Basically, 25% of your cost is the initial investment and the other 75% is maintainance fees. This worries me for several reasons. What if Disney is doing poorly so they jack up the fees at a higher rate? Is there a limit to how much they can increase these fees?

The contract caps annual increases at 15%. However, annual dues are tied directly to the annual operational costs of the resort. Disney cannot arbitrarily raise the dues to any level of their choosing. If the are 15 million points total at VWL and the operating budget of the resort in 2025 is $90 mil, owners will pay $6.00 per point.

There is some allocation for management fees which basically go into Disney's pocket, but that sum is minimal. They make the vast majority of their money building a resort for "X" dollars and selling the points for many, many times their own construction costs.

So using my sample calculation above, I get an average of $8.56 per point -$47520 divided by 150pts times 37 years. (remember, this factors in the estimated increase in fees over the years) . So a week at the Boardwalk Villas in a standard 2 bedroom villa is 236 pts which means I am spending $2031 or $288/night. I understand this is cheaper than the standard rate and that this cost will never increase over the years but it still seems like a lot to me. So this vacation, factoring in cheap airfare for 5, park tickets and food is still going to cost $4000-5000. Is there something I am missing?

Disney isn't cheap and never will be. If you are comfortable staying in a 300 sq ft value resort room and saving money on lodging, so be it. But don't compare it to a 1000+ sq ft deluxe Two Bedroom villa and think it's apples-to-apples.

Also, in terms of your numbers, I think it would make a lot more sense if you express everything in today's dollars rather than mucking the waters with inflation projections.

150 x $78 = $11700. Now divide by 37 years and 150 pts. That gives you a value of $2.11 per point per year for your initial investment. You can then add that amount to your annual dues to reach your costs for any given year. In 2005 it would be $2.11 (initial) + $4.35 = 6.46 per point used. You can figure the rest.

Room rates at Disney will increase annually, too. If we assume that cash room rates will increase at a similar 3-4% rate as DVC dues, remember that a 3% increase on your $600 annual dues is a lot less than 3% on a $1500 cash stay. Compound that over the next 40 years and see how it adds up.

A couple other thoughts: I think you're probably a little low in your $78 per point estimate for VWL. If you are seeing that price on resale sites, be aware that the buyer (you) almost always pays closing costs on resale contracts. And, if there are any points available for the current year, you will probably be asked to pay the dues on those points too. Closing costs will add another $3-4 per point on the size contract you are looking for. Dues are currently $4.35 per point. In addition to getting the seller to accept your terms, you also need to worry about passing DVC's Right of First Refusal on all resale contracts. If you negotiate a deal that DVC deems too good to be true, they have the right to buy the contract at your terms and you get nothing. I seriously doubt that a VWL contract priced at a net $78 per point would pass ROFR.

DVC is currently running a "friends and family" promotion on points at Saratoga Springs resort that could get you a price of $83.70 per point with all fees and costs included. That will also give you the benefit of a contract 12 years longer than at VWL. But I wouldn't recommend buying at SSR if you hope to stay at VWL the vast majority of the time.

 

[highlander]

I also thought that I'd pick up a contract through resale but Disney had other plans. My preference is VWL and had hoped to have a contract by now, but I feel that the SSR promotion may have something to do with Disney picking up any potential resale that is below the SSR promotion. I almost folded and went with an SSR contract through Disney but have always stayed at WL and would like to continue with VWL. This might not be possible if Disney steps in again on another attempt.

There are other places to vacation and I would think that Disney would want people to spend their money on Disney properties. Not everyone is going to go for the hype on SSR or the feeling that "points are points". Are there really that many people lined up with fists full of cash waiting to buy up $92 points at resorts other than SSR?

 

[tjkraz]

Are there really that many people lined up with fists full of cash waiting to buy up $92 points at resorts other than SSR?

Yes, there are. It is rather rare for someone to be able to immediately get points from DVC at VWL, BWV or BCV. Typically members will sit on waiting lists for weeks or months waiting for the points to become available.

DVC has the advantage of being able to carve-up the points in a contract they re-acquire via ROFR. If I want to acquire 50 points at BWV, I have two choices: wait for a rare 50-pt contract to hit the resale market or go direct to DVC.

Going the resale route, it's not unheard of for one to pay MORE than $92 per point when all is said and done. There are two main reasons: 1) Closing costs don't vary greatly with the size of the contract. On a 50-pt contract you may end up paying $5-7 per point just to close, and 2) There is great demand for smaller contracts from people who aren't willing to purchase at DVC's minimum threshold of 150 points. This demand drives-up prices on smaller contracts.

 

[golden1]

Thanks for your input everyone! I agree that it might make more sense to use todays dollars but I was trying to get a sense of how much I was really saving. I still have a lot to think about. In any case, I am really looking forward to going to Disney world once my kids get a little older!

 

[jpolak]

We were in the process of buying a re-sale when we caught wind of this new promotion at ssr. We were going to buy 250 pts. at ssr. The re-sale contract was for 79.00 a point. When we added closing costs the total contract was only $490 less than Disney. Another perk to buying new was that Disney was giving us points now. So with points coming now and another batch coming June 06 it's almost like getting an extra trip. We are very happy with our purchase and look forward to our first trip home.

 

[IndianaDVCMember]

The 1-bedroom villas have a King size bed in the bedroom and a queen-size bed in the tv room area. The sleeper sofa would be a tight squeeze for 2 adults. I am 6'1", and my legs extend beyond the end when using this bed. Two young children would be fine in it.

 

[Caskbill]

Thanks for your input everyone! I agree that it might make more sense to use todays dollars but I was trying to get a sense of how much I was really saving. I still have a lot to think about. In any case, I am really looking forward to going to Disney world once my kids get a little older!

If you want to look at it in real dollars, then besides doing the future costs of DVC dues, you also have to compare that to the future costs of a regular hotel room, and not to a hotel room at today's prices.

If a hotel room today is $150/night, then in 37 years at 3% inflation it will be $448/night. PLus tax, which if it doesn't increase from today's 11.5% will make that room $500/night.

Looking at future values is always difficult because you can't have a feel for it. It looks expensive because you're comparing it to today's prices and salaries.

Someone earning $50,000 today will be earning $150,000 in 37 years if they get an annual 3% increase. Today that $150/night hotel room ($167 with tax), for a week is 2.338% of their annual salary. In 37 years that $500/night hotel room for a week is still 2.338% of their annual salary.

If someone today earns $50,000, and owns 150 points at an annual fee of $4.00/point, those points are $600 annually or 1.2% of their annual salary. At 3% inflation they increase to $12/point in 37 years. But at a new salary of $150,000, those 150 points ($1800.00) are still at 1.2% of their annual salary.

The hard part to calculate is the initial purchase price since that is not amortized over the full 37 years but something shorter. Also a fixed payment is a higher percentage of income initially than it is at the end. Example $180/month today on $50,000 income is 4.32% of the annual salary, but in 10 years that same $180/month payment will only be 3.2% of the annual salary, and then for the last 27 years, there are no more payments.

Looking at past or future 'costs' is very hard to interpret emotionally as everything has to be compared relative to everything else. We can say a beer costs 5-cents in 1880, or that a beer will cost $5.00 in 2010, but in neither case can we have a true understanding of the 'value' of the beer because we can only compare to today's cost of living and not yesteryear's or tomorrow's.

That's why you really have to calculate everything into today's dollars if you really want to understand the true savings.

 

[CarolMN]

....(snip)..... So a week at the Boardwalk Villas in a standard 2 bedroom villa is 236 pts which means I am spending $2031 or $288/night. .......

If you are not buying a BWV resale, you should not count on being able to book a standard view room (any size) on a regular basis. SV rooms make up slightly less than 20% of the available rooms at the BWV - they tend to book up well before the 7 month window opens (when you would be able to book if you own a resort other than BWV).

It's possible to get a SV room if you don't own there, but it is a very long way from a sure thing - especially in CHOICE season or the first two weeks of December (which is Adventure season)! October, November and December are very popular times for DVC members to visit, even though it is not the busiest season for park attendance. Better to plan on paying the points required for the resort you buy. During that time frame a week in a PV BWV 2 bedroom or a 2 bedroom at VWL would run you 282 points.

Good luck with your decision process.

Best wishe s-

 

[LisaS]

So using my sample calculation above, I get an average of $8.56 per point -$47520 divided by 150pts times 37 years. (remember, this factors in the estimated increase in fees over the years) . So a week at the Boardwalk Villas in a standard 2 bedroom villa is 236 pts which means I am spending $2031 or $288/night. I understand this is cheaper than the standard rate and that this cost will never increase over the years but it still seems like a lot to me. So this vacation, factoring in cheap airfare for 5, park tickets and food is still going to cost $4000-5000. Is there something I am missing?

Granted, the accomodations are not as nice but a family of five could go and stay at a value or a moderate resort for much less it seems. Is this program just for people who are going to stay at deluxe accomodations anyway?

Hi Judi. It is often stated on this board that DVC makes sense if you go to WDW at least once a year or every other year and usually stay in Moderates or Deluxes and your calculations demonstrate that. Using your figures (which take dues increases into account so they are a bit high) you would pay the equivalent of $288/night for a standard-view 2 BR villa at BWV. I stayed at Yacht Club last May using a PIN code I got in the mail that saved me $100 off the price of my room. I paid $280 plus tax (=$312)/night for a water-view room. Receiving a PIN code from Disney is a rare event so I might not ever receive another one and AP discounts seem to be drying up lately so it's unlikely I could stay at YC again for that price. The relevant point here is that for the same money, I could have had a 2 BR standard-view villa at BWV. Now I don't need that much space for my family, but if DH and I had two kids, I'm sure we would appreciate that the kids could have their own bedroom and bathroom.

When I did similar calculations this summer when we were deciding whether to buy into DVC, we figured our point cost in today's dollars. For the BWV contract we ended up buying, my 2005 points are costing me about $7 each. My family consists of just DH and I so we can fit comfortably in a studio. At our preferred travel times, I can stay in a PV BWV studio for about $91/night and a 1 BR for about $196/night. A studio is not quite as nice as a regular room at YC, but for $91/night vs. $312/night with tax, I'll take it! And I can move up to a 1BR and still pay only about 2/3 of the best YC discounted rate and have significantly larger accommodations with a separate bedroom and living room area and full kitchen!

So if you are comparing the cost of DVC to the cost of staying in a Value resort, DVC will be more expensive. But for someone like DH and I who love being able to walk to Epcot but dont' like paying $312/night for the privilege, then DVC is a terrific deal!

Good luck with your decision.