I did some calculations, please tell me if they make sense

[mooses41]

Ok, I just tried to evaluate the cost of dvc w/o inflation. I figured an increase of 3% in dues per year and 8% in hotel rooms. Heres what I typed in word(just to let you know, if it seems like I am talking to myself when I'm typing, I was)Please let me know what you think:

Cost breakdown-

Comparing 5 weekdays summer in 2br. @ okw to 5 days standard hotel (75 per night+tax)for a family of 6
Keep in mind the fact that the villas are much bigger and can be rented for around 10pp (1,500)
We will not factor in inflation, so everything will be in today’s dollars.
Now let first find the total cost of points.
Lets assume that a purchase is made for 150 points @9000.
Now, dues are 3.14 per point, so that equals out to 471 per year in dues
471 * 40 (# of years left in DVC) is 18,840, but rising dues must be factored in.
So, lets go
Year 1- 471
2- 485.13
3- 500
4- 514.67
5- 530.11
6- 546.01
7- 562.40
8- 579.27
9- 596.65
10- 614.55
11- 632.98
12- 651.97
13- 671.53
14- 691.68
15- 712.43
16- 733.80
17- 755.82
18- 778.49
19- 801.84
20- 825.90
21- 850.67
22- 876.20
23- 902.48
24- 929.56
25- 957.45
26- 986.17
27- 1015.75
28- 1046.23
29- 1077.61
30- 1109.94
31- 1143.24
32- 1177.54
33- 1212.86
34- 1249.25
35- 1286.73
36- 1325.33
37- 1365.09
38- 1406.04
39- 1448.22
40-1491.67
Ok now lets add them up.
The total is 35, 043.26
So now, to find the total cost of dvc, we ad $35,043.26 to 9000, which is 44043.26

Total DVC cost: 44043.26

Now, for the total hotel cost (this one is easy)
75 per night, lets say 5 dollars tax, so that’s 80 per night. Now, the standard hotel room only fits 4 or 5 (barely), so we’ll need 2 rooms. So that’s a total price per night of 160. Now we are assuming a 5 night stay, so 5 x 160 is an even 800 bucks.
So, we have to assume room rates will go up every year, so lets use the standard 8% that Disney rooms go up each year.
So, that a total of 8x 40 years= 320 % rise in room prices over 40 years

Year 1- 800
2- 864
3- 933.12
4- 1007.77
5- 1088.39
6- 1175.46
7- 1269.50
8- 1371.16
9- 1480.74
10- 1599.20
11- 1727.14
12- 1865.31
13- 2014.54
14- 2175.70
15- 2349.75
16- 2537.74
17- 2740.75
18- 2960.01
19- 3196.82
20- 3452.56
21- 3728.77
22- 4027.07
23- 4349.23
24- 4697.17
25- 5072.94
26- 5478.78
27- 5917.08
28- 6390.45
29- 6901.68
30- 7453.82
31- 8050.13
32- 8694.14
33- 9389.67
34- 10140.84
35- 10952.11
36- 11828.28
37- 12774.54
38- 13796.50
39- 14900.22
40- 16092.24

that adds up to a total of total of 192845.32

so, now you are looking of a savings of 148,802.06 over 40 years in todays dollars.
Keep in mind that this is a comparison of a spacious, 1392 square foot villa IN Disneyworld that happens to be one of the world’s most desired timeshares, to 2 hotel rooms that are 300-350 square feet each, if you are lucky.

So, this is the financial breakdown. Its pretty obvious that once you get over the sticker shock, you’ll find out that you can save almost 150 thousand dollars.

 

[ncligs]

Mooses41, Thanks for taking the time to do that. Even if it is not exact, it would be a pretty close estimate. That why we joined almost 3 yrs ago, for the long term savings,memories, and spaciuos accommodations. After your initial purchase is paid(ours is) the dues are well worth the cost over the next 41 years of enjoyment, for us and our children, and granchildren.

 

[msdis]

Not to heat this up to a debate and I love your analogy but the key point that most "investors" take note of is the value/future value of that $9000 initial investment. If that was invested at a modest 6-8 %, add that with the dues and you stay pretty close in line to "moderate" resort rates. Now we ALL know our DVC rooms do NOT compare to ANY off site property and not really to any other Disney property resort, so THAT is the real value of DVC as most of us see it.

Every time we do an add-on I think of what else we may do with that money. For instance, we debated a 7 day cruise recently or an add-on at VWL. When we compared what the money bought us for a 7 day cruise vs. 41 years of VWL the decision was easy, we added on. And yes, we will pay dues for 40 more years but the 7 day cruise would have come and gone so the upfront cost of the VWL add-on is a wash after 7 nights(the included meals are great on the cruise, but not our selling point, so it's moot). So I calculate +- 45/night in a studio for those "designated" points at VWL.

You are right though, if you forget about that initial 9 grand. Pretty scary, huh?

 

[mooses41]

msdis, yes i see where you are coming from, but i was assuming that i would end up spending that on vacations over the 40 years. Anyway, heres how i think it would effect it:

Ok, so now I’ll assume a 7 percent increase on the 9000 per year. For this to be accurate I believe I’ll have to make that 4 percent, though, because in reality the money loses 3 percent every year in inflation, so it only gains 4 %. Now, I’m not sure this is accurate with my other non-inflation calculations, but I believe it is.

Year 1- 9000
2-9360
3- 9734.40
4- 10123.78
5- 10528.73
6- 10949.88
7- 11387.87
8- 11843.37
9- 12317.12
10- 12809.81
11- 13322.20
12- 13855.09
13- 14409.29
14- 14985.66
15- 15585.09
16- 16208.49
17- 16856.83
18- 17531.10
19- 18232.35
20- 18961.64
21- 19720.11
22- 20508.91
23- 21329.27
24- 22182.44
25- 23069.74
26- 23992.53
27- 24952.23
28- 25950.32
29- 26988.33
30- 28067.86
31- 29190.58
32- 30358.20
33- 31572.53
34- 32835.43
35- 34148.85
36- 35514.80
37- 36935.39
38- 38412.81
39- 39949.32
40- 41547.29

$41,547.29-9000 initital investment= 32547.29

So, and once again I’m not 100% positive this is the right way to go about this, but 148,802.06-32547.29= 116,254.77.
------------------------------------------------------------------------------------
What do you think???

 

[chris1gill]

I think that in order to make this more accurate, you have to calculate the 9,000 plus interest, but then you have to subtract out what you spent that year in hotel costs.... Your 9 grand would be wiped out in probably six years anyways...

 

[QueenAnne]

Anyway that you look at it, it will save over the years especially if you want to do WDW every year. It also give you the oppurtunity if you don't want to go to WDW to explore other possibilities with the VB, HH and the Concierge collection. This was one of the best financial decisions that my DH and I made. We wanted to take our DD to WDW or someplace Disney every year and this makes it possible for us! Thanks for doing those calculations, it really reminds us that we did make the right decision!

 

[Dean]

There are lots of ways to look at this and they are not necessarily right or wrong. One family who uses money out of savings should consider the initial investment plus the time value of money. Another who finances but who normally saves, should consider the initial investement plus the interest paid along with the time value of money. One who never can save anything may want to ignore both components.

A couple of flaws that I saw in just scanning your issues are these. The value of $9000 at 7% in 40 years is 146802.70 and the buying power (after inflation) would be 44458.84. Also you stated you were going to ignore inflation but then you adjusted the dues and hotel rooms for inflation. 8% is an unreasonable figure if we are looking at inflation of 3%, at least over the long haul.

In your example, to ignore inflaction, it's easy. Simply take current dues of $3.23 pp at OKW times 40 years equals $19380 in total dues. Add to that the investment price of $9000 would give $28380 or to the adjusted value of the $9000 would give $166182. The hotel in your example would be around $33300 for 2 rooms, 5 days for 40 years. The best and easiest comparison is likely one studio at DVC to one hotel room but don't forget the fact that you have more flexibility if not locked into to DVC. Stay weekends, stay off site, visit other places and the like.

Other factors are that tax is 11% (over $8 per room), you will not consistently need 2 hotel rooms, if you change the week timing (stay weekends) the curve shifts dramatically toward the hotel, the only accomodation you can consistently get a 2 BR at WDW with 150 pts is at OKW and BW standard (not Premier time). Of course someone buying now could not likely get 150 pts for $60 pp.

 

[mooses41]

Dean- i see where you are coming from in alot of places. However, on your last point, as far as resales go, one could find a 150 point resale for 60pp relatively easily. If you click the timeshare store ad you can see that one is currently pending. Thanks for the input.

 

[jcodespoti]

I hate to admit this but even though I am a numbers kinda of guy, I only took a quick look at the numbers and then bought my DVC membership. Why? yes I bought on emotion..well mostly..something very rare for me to do. Has anyone else done this?


Joe in CT

 

[mooses41]

alright, i tried again and made an attempt to be more accurate. Here goes:

This time I’ll assume 6 days at a hotel @75 per night +11% tax and a 5 weekday, 1 weekend stay in an okw 1br in the summer

3.23x150x40= 19380

dues= 3% rise(effectively nothing in todays dollars as inflation is 3%)


Hotel room



83x6x40= 19920
increase in rate- 5%(effectively only 2%, as inflation is 3%)


1-498
2-507.96
3-518.12
4- 528.48
5- 539.05
6- 549.83
7- 560.83
8- 572.05
9- 583.49
10- 595.15
11- 607.06
12- 619.20
13- 631.58
14- 644.22
15- 657.10
16- 670.24
17- 683.65
18- 697.32
19- 711.27
20- 725.49
21- 740.00
22- 754.80
23- 769.90
24- 785.29
25-801.00
26- 817.02
27- 833.36
28- 850.03
29- 867.03
30- 884.37
31- 902.06
32- 920.10
33- 938.50
34- 957.27
35- 976.42
36- 995.94
37- 1015.86
38- 1036.18
39- 1056.90
40- 1078.04
=30,080.16

30,080.16- 9000= 20,080.16
**so it would be 20,080.16(total hotel cost after subtracting initial dvc investment) vs. 19,380 in dues

**or would it be 30,080.16 hotel vs 28,380(dues +9000) dvc??

---------------------------------------------------------------------------------------------------------------------------------
Or would it be this-
9000x1.04-498 (year 1 hotel costs)= 8862
8862x 1.04- 507.96= 8708.52
8708.52x1.04-518.12= 8538.74
8538.74x1.04-528.48=8351.81
8351.81x1.04- 539.05= 8146.83
8146.83x1.04- 549.83= 7922.87
7922.87x1.04- 560.83= 7678.96
7678.96x1.04- 572.05= 7414.07
7414.07 x1.04- 583.49= 7127.14
7127.14 x1.04- 595.15= 6817.07
6817.07 x1.04- 607.06= 6482.70
6482.70 x1.04- 619.20= 6122.81
6122.81 x1.04- 631.58= 5736.14
5736.14 x1.04- 644.22= 5321.37
5321.37x1.04- 657.10= 4877.12
4877.12x1.04- 670.24= 4401.97
4401.97x1.04- 683.65= 3894.39
3894.39 x1.04- 697.32= 3352.85
3352.85 x1.04- 711.27= 2775.69
2775.69 x1.04- 725.49= 2161.23
2161.23 x1.04- 740= 1507.68
1507.68 x1.04- 754.80= 813.19
813.19 x1.04- 769.90= 75.82

So it would take 23 years to run out of the 9000 at 4% per year. Then it would be the dues vs. the remaining 17 years?

**So that would be 19380 in DVC vs. 15,715.37 in hotel costs

So what one, if any, do you think is the most accurate?

Thanks again.

 

[chris1gill]

Hmmm Mooses41, you did a great job!! In my book, your second example is the closest to reality...

For our family however, I just took our purchase price divided by 40 (years) divided by 250 (points purchased) - this gave me our total cost per point & each year I add that figure (like a dollar & change) to the dues per point... brings us to ~ 5.50/point....

We always stayed at the BW or OKW villas on cash... somewhere between 200 (at OKW) & 270 (for BW) - always in a 1 bedroom, always with an AP discount...

So given that we were spending that much per night, our break even point at 12 nights per year was just a couple of years, and the interest on our initial payment would have been eliminated within 4-5 years....

Given all of our situation, I think it's fair to multiply the total number of nightly points times the 5.50... That means in the off season, an 8 point studio costs us 44.00 & a 16 point 1 bedroom costs us 88.00... A huge savings for us...

If you are a family that always stays in moderate or value resorts, your figures do get skewed in a lot of different directions, but if you are like us & stay at the Deluxes, you go through your initial payment in hotel costs rather quickly, and the figures get much easier to calculate!!!

PS. I almost forgot to mention we actually purchased 150 points, then a couple years later when we broke even, we bought another 100 points (thereby keeping our interest lost to a very minimum)

 

[Dean]

Originally posted by mooses41
Dean- i see where you are coming from in alot of places. However, on your last point, as far as resales go, one could find a 150 point resale for 60pp relatively easily. If you click the timeshare store ad you can see that one is currently pending. Thanks for the input.

Not with closing and Transfer which accounts for around $3.50 per point. Of course you'd have to adjust for depleted points with many of the contracts.