I Must Be Missing Something

[rscotty]

I've been reading much lately about DVC and there must be something I'm missing.

I can't make the DVC model work financially. For example, If I purchase the minimum 150 points for $95/point that works out to $14,250. Financed over 15 years at current interest rates, this would be an annual capital investment of $1397. Add to that the maintenance fees of roughly $600/year, I wind up with an annual cost of $1997. This covers lodging only - no passes into the parks.

Even at non-discounted 'rack rates' during peak season, I can stay at AKL for 7 nights for $1,600 - $400 less than the annual costs outlined above. Figure in package discounts that are regularly available and the savings are even greater.

So am I missing something here?

 

[poohj80]

You're not thinking long term. Once the initial investment is paid off, you will only be paying the $600/yr for the same accommodations you have now (remember, rack rate lodging prices will continue to increase). Also, your 150 points should get you more than 7 days at WDW dpending on time of year and DVC rooms offer more space than a typical hotel room at AKL.

 

[Happy Birthday Cat]

You would be right on target if you could lock in that price at the AKL for the next 50 or 38 years. I have locked in the BWV at a much lower price than what you have in your example. True enough that the maintenance fees do increase but that is the larges t portion of the cost. That being the cost of the points. You will have that paid off in how ever many years you finance for. In 5 years you will still be paying for the AKL but at a higher rate than you are today and will have nothing to show for it.

Good luck in deciding if DVC is right for you. It has saved my faily of 6 thousands over the years.

HBC

 

[JimC]

Disney room rates have a long term history of about 4.8% increase per year. You lock in the capital cost portion of the room rates in today's dollars. And DVC's operating costs are lower than the Disney resorts, primarily because of the more limited housekeeping that is included in the deal.

Also, it was unclear from your example, but you must remember to add 11.5% resort tax to the room rates. This tax is not paid by DVC members.

 

[r3ngels]

It is a big decision my DH and I are still thinking about it after years of debate but another thing to think about is you won't (hopefully) have the loan for the whole 15 years. The quicker you can payoff the loan the better (DUH, I guess that is the case with any loan) I am a huge advocate of DVC. My parents have been members for 5 years and it has been wonderful for them and for our whole family we get together every other year and it's by far the best vacations we have ever had (my girls agree).

Another reason I love DVC is that my DH and father are workaholics and DVC forces (twist my arm) to take a vacation. It would be so easy for them to put it off... for years. And this way when the points are there we go. That isn't a financial debate and it is kind of stupid to say but I know so many people like that.

 

[lillasmom]

I bought into DVC as an investment in vacations over the next 38 years. As the cost of rooms at WDW increase, I will use the same number of points today as I will use in 2042, but the cost of the room in 2042 will be higher, much higher I assume.

I also and planning a vacation for my family and some friends this year. In cash the vacation would cost around $13000, between a Disney Cruise for 8, and 5-6 nights at WDW at various locations. I would never be able to do this if it weren't for DVC. And how do I price the memories...Priceless!

DVC isn't for everyone, it just happened to be for me. Best wishes on your decision.

 

[tjkraz]

Two big flaws in your logic:

1. Standard "Deluxe" WDW resort rooms are comparable in size and amenities to the DVC Studios.

You can get a week at a studio at Old Key West for as little as 80 points. You can get a week at the Beach Club Villas for as little as 104 points.

So, in effect, you're comparing a week at AKL to 1.5 - 2 weeks at a DVC resort in comparable accommodations. And, your points will go even further if you pay cash on the weekends. That 80 point week at OKW actually breaks down like this:

8 pts / night Sunday to Thursday = 40
20 pts / night Friday and Saturday = 40

If you take short trips or pay cash on the weekend you could get as many as 18 weekday nights PER YEAR with 150 points.

2. As poohj80 mentioned, even if we stick with your 15 year financing example, in years 16+ year would be paying only $600 (in today's dollars) for that same stay.

 

[Montana Disney Fan]

I was renting DVC rooms (2-BR) for $550/night so I purchased the 250 points I needed to do the same thing year in and year out only the cost of the room will never go up. I did not finance so I don't have that additional cost but my annual maint. fee is $900. I can use my 250 points for 7 nights in a two bedroom for the time of year that I vacation.

So I spent:

$550/night x 7 - $3,850 (this is what I WAS spending).

Cost of DVC 250 Points (good for 50 years) - $22,500

Maint. Fee - $900

SO:

$3,850 - $900 = $2,950

$22,500 / $2,950 = 7 2/3 years

I basically get my investment paid for in 7 2/3 years which is not the best investment in the world, but it's what we wanted to do. From here on out, it costs me $900 (maint. fee) for my weeks stay, so:

$3,850 - $900 = $2,950 This is now the amount that I save each year not counting inflation. You can add in the 2% average increase for inflation and that is the additional amount of money I save each year for 42 1/3 more years beyond my payback year.

Not counting inflation, that figure is - $124,873.50

Counting inflation, that figure is - $376,776.56 !!!

That's not a terribly bad investment when you think about it

 

[Coach Rick]

In August I am taking 10 other people with me. For the same lodging I am getting with my points it would have cost me close to $8000. To me I have almost realized my initial investment. That all said, it's not for everyone.

 

[MELSMICE]

We debated for a few years about joining DVC. DH was very skeptical but now that we did he says we should have joined sooner.

We paid off our points in 18 months & are able to go 2 or 3 times a year depending on the time & accommodations. I know we wouldn't go that much if we were paying all cash at a WDW resort. Yes, we pay maintenance fees every year, but when we go to Disney our accommodation costs are significantly less, even considering the maintenance dues.

You definitely have to think long term when considering a DVC investment. Do you plan on continuing to vacation there in 15 or 20 years? If you do then you should probably consider DVC, if not, maybe it's not right for you.

As others have said, rates will go up & even with discounts, you will not be getting the "same deal" that us DVCers are. Right now our DD's are 14, 11 & 11 so we vacation with them, but our plan is to spend time there with our DD's & their families some day because who knows where they will be living once they are done with college.

For us it was about saving money on accommodations in the future & also about being able to make memories with our DD's & future grandchildren.

Good luck with your decision.

 

[Dean]

As long as you use the ponts for DVC resorts and not do long weekends, DVC works out roughly to the cost of a moderate. You must make sure you add in the 12-13% taxes also. If you do mostly Sun-Friday, he cost of a studio is about the same as a value Disney resort. But DVC will only save you money if you would have gone the same trips and stayed on property at moderates or higher. Otherwise it just gives you great vacations that don't save you money.

 

[mommytobug]

One of the reasons we bought is the investment for our children. when we are gone or stop going, our children and their children will go. This makes us very happy. Also, we did look at it financially. I like to stay at the deluxe resorts whether it be Disney or elsewhere. When we were at the session with DVC my dh said, well, what did we pay for this trip. All I could think was OH No He is going to pass out. We stayed at the Poly and were out several thousand $$ He said well then a few more trips and we will have paid for this!! We also said we would not take our 2nd child (that we are adopting this year) until he was 5......the first day we said Oh No cant wait that long......so again while it is not for everyone those of us who love it REALLY LOVE IT!!

 

[momtofour]

Recheck the price quoted for the AKL. According to Mousesavers,the rack rate during peak season is $289.00. Seven nights of lodging plus tax would cost roughly $2326.00. Good luck with your decision!!!

 

[JLS]

I do not think I would have bought if my only choice had been to pay the outrageous interest charged by DVC. At today's low interest rates, if you have any assets (a home, a condo, etc.) you should be able to borrow against that at a very low rate and still pay for DVC that way, which would save you a lot of money over the long run. Another thing that people do is open a no-interest for 6 months or a year credit card (such as the Disney Visa) and charge your points on that. You get the first 6-12 months (6 with Disney Visa but there are better deals out there) interest free, and you also get the rewards offered by the card. That worked well for us, and we were able to save enough during that time to pay off our purchase without having to incur any financing charges.

But even with financing charges, DVC ends up being a good deal if you think long term. If you are just thinking that you will want 3-7 years of Disney vacations and then probably want to sell, it may not be a good way to tie up your money.

 

[Sammie]

Depends on where you want to stay also. At peak rates a 2 bedroom villa for 7 nights is over, $6000.

 

[helenabear]

Originally posted by rscotty
Financed over 15 years at current interest rates, this would be an annual capital investment of $1397.

As someone else pointed out that statement right there is the fault in your logic. It may be financed over 15 years, but you have *50* years you need to divide it over or look at it 15 years later and see how little you are paying. If you did it over the course of 50 years, the math would be (using your cost with interest) $419/year for the points and about $570 for the maint. Adding that together you get $989 for the first year. That would be about the same cost as AKL in off season w/ tax using an AP rate for 7 nights.

However you also have to realize those 150 points will get you MORE than 7 nights at even BCV studios in the off season (10 nights). Or if you are looking at peak season, the cost will be higher for AKL and you can get 8 nights at BCV (studio again, if we are comparing one for one... or as close as you get).

So no matter how you look at it, yes it does save money even compared to AP rates over the life of the contract.

 

[dianeschlicht]

Originally posted by helenabear
As someone else pointed out that statement right there is the fault in your logic. It may be financed over 15 years, but you have *50* years you need to divide it over or look at it 15 years later and see how little you are paying. If you did it over the course of 50 years, the math would be (using your cost with interest) $419/year for the points and about $570 for the maint. Adding that together you get $989 for the first year. That would be about the same cost as AKL in off season w/ tax using an AP rate for 7 nights.

However you also have to realize those 150 points will get you MORE than 7 nights at even BCV studios in the off season (10 nights). Or if you are looking at peak season, the cost will be higher for AKL and you can get 8 nights at BCV (studio again, if we are comparing one for one... or as close as you get).

So no matter how you look at it, yes it does save money even compared to AP rates over the life of the contract.

LOL, Elaine, we already have you talking like a pro!

 

[poohj80]

Originally posted by mommytobug
When we were at the session with DVC my dh said, well, what did we pay for this trip. All I could think was OH No He is going to pass out. We stayed at the Poly and were out several thousand $$

When we toured DVC our rep asked us the same thing. She was actually amazed when we told her how little we paid as we've always taken advantage of AP or Shades of Green rates (when SoG was under construction and they were offering discounted rates at other WDW resorts). When we toured, we were staying in a BWV 1BR for $150/night. She was quick to point out that wasn't typical but we were already aware.

 

[erikthewise]

I think your financial analysis is reasonable, but your interest rate is awful high. I financed my purchase on a home equity loan for 4%, so my interest expenses are about the same as annual dues.

Admittedly the deal is for 50 years rather than 15, but it is perfectly reasonable to expect a timeshare to give you a fair return on your money in the first 15 years; beyond that everything is uncertain, including the validity of many financial analyses.

If you would be just as happy staying at AKL as at a DVC resort, then you don't need DVC, although you may still find it interesting. I like AKL too, but I'll tell you my DW was NOT happy a couple years ago when we split a stay between BCV and AKL! We spent 5 wonderful days in a 1BR at BCV, then 3 days at AKL in a room less than half the size. With two young boys bouncing off the walls, it makes a big difference.

IMO DVC does not necessarily save you money. If $2000 is what you can afford for accommodations, that is what you will spend, and the question is what can you get for your money. DVC gives you better accommodations than you can find anywhere else in WDW for a price far less than you would pay through reservations for those same rooms.

In other words: perhaps not cheaper, but definitely better!

 

[dcfromva]

rscotty,
I don't think you are missing much in your analysis--except that the maint. fees can (and usually do) go up each year.

I am in agreement with erikthewise, though--the DVC accomodations are much better.

We've only been members for a couple of years now and our expectations for accomodations has really gone up. Since joining DVC, we stay in 2BR units when DH and DS also come to WDW and there is such a world of difference. It is really difficult to go back to a regular hotel room for stays at places other than WDW. (Even renting 2 hotel rooms falls way short.)
-DC :ears: