Investment

[Tdisney]

I know this has been asked but we are still playing around with buying into the BCV. I know they are not an investment like a peice of land would be but is paying for your vacation up front for 30,000 dollars worth it. We travel with 4 adults and two children. We usually stay in a 2 bedroom suite at the YC and luv it. However it is rather pricey. I guess the only thing that bothers me is the maintenance fee at the BC for 350 points.

 

[dwelty]

You are the perfect candidate for DVC. You go to WDW regularly and stay at a deluxe resort.
When you think of maintenance fees remember, even with the yearly cost, over the long run you are still beating "Disney" room inflation. As someone here mentioned in a previous post, a room at the Contemporary was $30.00 in 1971, now it is almost $400.00 per night!
If you had said you stay at the All Stars, off site, or at a moderate, I would have different advice.

 

[Tdisney]

Is the maintenace fees at the BCV the highest because its a small resort? Someone said its about 3.50 per point is that right?

 

[Gren]

The maintenance fees per point for 2007 are:

OKW ..... $4.40
BWV ..... $4.85
VB ...... $5.63
VB ...... $4.39 (subsidized)
HHI ..... $4.98
VWL ..... $4.73
BCV ..... $4.63
SSR ..... $4.12
AKV ..... $4.62

 

[LisaS]

Is the maintenace fees at the BCV the highest because its a small resort? Someone said its about 3.50 per point is that right?

Here is a table of the dues/point at each resort along with the annual increases: http://personalpages.tds.net/~rb/DIS/DVC/DVCDuesHistory.htm Based on the current data in the table, the average dues increase varies from 2.5 to 4.5% per year depending on the resort.

If you own the resort until the end of the contract, you will pay more in dues than you will pay for the initial purchase. For example, if you purchased 150 points at BCV for $100/pt (ignoring closing costs) that comes to $15,000. But the total dues from 2007 through 2041 for those 150 points could easily exceed $50,000. On the other hand, if you continued to go to Disney every year and pay for an equivalent number of nights in deluxe accommodations, your costs would be even higher due to the increase in hotel rates during that same time frame.

 

[Tdisney]

Good Point Lisa but what if you took that iniital cost of 15000 and invested it lets say even in a conservative investment arent we jsut about breaking even. I luv the Dis but I cant see Disney doing anything that is gonna save the consumer money and make them lose money over the long run. Their resorts were full before they built DVC. All they had to do was add on the BC and it would have sold out as well. To me it seems as if they just got people to pay for a hotel that will one day be Disney's 100 percent. If it werent for the maintenance fee and there increases I would be sold on it.

 

[Budshark]

In terms of Investing it... This is a tough conversation. The question is whether with DVC you take the exact same vacation as you would have without, or does ownership in DVC cause you to take longer, more frequent, or higher class vacations. I'd guess the majority would be the latter - so its an intangible "value". Sure, I might invest it and get an extra $3,4 or 5000 (or more depending on how much you put in) - BUT - would you really trade that income for the memories?

With that said - I still believe it is a wise investment. To your point that Disney wouldn't save us money - Absolutely they would! Why? Cuz the hotel room isn't the major money maker. Its the park attendance, the souvenirs, the meals, the golf, etc, etc. that makes them the most money. If they can give you a 'deal' which saves you 20-25% on hotel rooms over time and get you into the park 30-40% more often - they've made a boat load of money.

So - what about money? Well lets assume you don't change your vacation behavior at all. You take 1 vacation a year, 7 days and stay in a 1 bedroom. All things being equal, your room savings each year (the cash room costs - points used * maint.) is $2526 for VWL during Oct. for 2007. The initial investment to get 215 points (which is what is needed) is $19,350 @ $90/pt.

So how does that work out? Assuming you invest the $19,350/yr and get 8% return after 15 years you'd have: $63,988 (but you get no yearly deposit growth because you're spending $2526 extra at Disney)

Contrast that to joining DVC. You start at 0, but deposit $2526/yr for the next 15 years and the same 8% return. You'd have: $70,208 at the end of 15 years.

Hmmm... so at 15 years, DVC saved you $6,000 AND will save you annually $2526 more every year.

So emotionally, memory wise, and financially the DVC makes sense. I'm sure others will point out bad assumptions on my part or pieces I missed, but this is just taking the information at face value.

Hope this helps or at least is interesting to how I looked at it...
Chris

 

[Budshark]

One more thing I forgot...

The above calculation assumes ownership to the end... but historically speaking if life were to change after 15 years and you sold your interest - you'd end up recouping your initial investment and then some making DVC a slam dunk financially.

So either way - I don't see how you lose. I think the only 'losers' financially in DVC are those that buy in, and use never or once and turn around and sell within the first 2-3 years of ownership. You'd probably lose a couple thousand in this case.

Chris

 

[DVC Grammy]

I look at it a little differently........

At this point in our lives, my DH and I go 3-4 times a year to WDW and love the DVC accomodations. I don't expect us to be still going in '42, much less '57 (our last add-on). In fact, chances are very remote that we'll still be alive.
We have 3 grown chidren who themselves will be old by '42 and '57. If, in about 10-15 years, all or some don't want DVC and its fees, we'll sell some or all of our "homes" and recoup at least "something" on the dollar. Meanwhile, we've had all those years of relatively "cheap" trips 3-4 times/year!
I have no idea what our first home, BWV will be selling for in 10 years, but I still think it will be attractive to buyers just for its location.

 

[vandy]

I know this has been asked but we are still playing around with buying into the BCV. I know they are not an investment like a peice of land would be but is paying for your vacation up front for 30,000 dollars worth it. We travel with 4 adults and two children. We usually stay in a 2 bedroom suite at the YC and luv it. However it is rather pricey. I guess the only thing that bothers me is the maintenance fee at the BC for 350 points.

A 2 br suite at YC is $1215/nt in the value season according to the chart on the main DIS site. Are you saying you pay this much per night and you still question a DVC investment? I do not know what room discounts are available and when you travel, but let's just say you can get that 2BR suite at YC for $1000/nt, stay 7 nights and pay tax. You will spend around $7800 for lodging on just one trip. Based on the numbers you posted, your DVC cost will be this years dues (350 pts x 4.63) of $1620.50 plus your yearly membership cost ($30000 divided by 35 years remaining on BCV) of $857.14 for a total this year of $2477.64. That's a savings of over $5,000 on just one trip for this year! (You know the room rates will only go up and at a greater percentage than your dues will.)

As far as putting your money into some other financial investment yes you may see a good return on $30,000.00, but you may end up spending all of your gains for the extra lodging expense you will incur. To earn back that $5000 DVC savings for this year, you will need to have a return of 16.66% on a $30,000 investment in something else. Maybe you can still make money and own DVC as well. The initial price is a shocker, but if you can save over $5,000 in just this first year by buying DVC, maybe take that $5,000 and invest that per year and make some money. Otherwise, to me, comparing a DVC purchase (especially when you are spending money on rooms anyway) to what you could profit investing that money in another financial investment is just like comparing apples to oranges.

 

[Mtnman44]

Here's a basic, rough comparison. Obviously every situation is different with lots of variables, but for a relavtive comparison: You could earn interest on the initial investment instead of purchasing DVC, yes, but you would still have the yearly vacation cost so you have to subtract that each year from your investment principal and earnings. In this example, inflation is estimated at 3% annually both for maint fees and hotel costs.

*Edit to add: By the way, If you started with the sum of $14,560 cash in this example but instead invest it with an after tax return of 6%, using these cash hotel cost estimates, I calculate you will run out of cash, including all the interest earned, before the 7th year. if you somehow achieve an after tax return of 10%, you will run out of money by the 8th year. {this is not shown in the chart below, just given as an FYI}

 

[Caskbill]

Good Point Lisa but what if you took that iniital cost of 15000 and invested it lets say even in a conservative investment arent we jsut about breaking even. I luv the Dis but I cant see Disney doing anything that is gonna save the consumer money and make them lose money over the long run. Their resorts were full before they built DVC. All they had to do was add on the BC and it would have sold out as well. To me it seems as if they just got people to pay for a hotel that will one day be Disney's 100 percent. If it werent for the maintenance fee and there increases I would be sold on it.

There are many ways to look at it. Don't forget to factor in taking money out of that conservative investment every year to pay for similar accommodations at WDW, making up the difference in what you would have paid in dues, and what shortfall there is in the ROI you received on the investment that goes toward paying for the regular WDW room.

Simple Example, similar to what MtmMan posted.

Suppose you want to stay 5 nights in a WDW moderate, and compare it to 5 nights at BCV.

BCV mid season would be 65 points, so say you purchase a resale contract for 65 points and pay $6200. Your annual dues will start at about $4.50/point, or about $293 out of pocket. Next year dues go up 4%, so it will be about $304 out of pocket. Adjusting at 4% for 3 more years, you pay out of pocket $316, $329, $342. Your out of pocket for 5 years totals $1581.

Instead, you invest the $6200 and can manage 8% return. You elect to stay those same 5-nights in a Moderate, let's say at $180/night plus tax, or about $200/night. Year 1 you pay the DVC equivalent $293 out of pocket. You receive $496 interest on your $6200 investment, so your total is $789. Now to stay even with DVC, you have to withdraw $212 from your capital to have the total $1000 you need for the 5 nights.

Year 2, your now $5989 investment earns $479 in interest. Add the year 2 equivalent DVC dues out of pocket of $304, and you have a total of $783. The room however has gone up 4% so it's now $1040 for the 5 nights. You have to withdraw $257 from your account to make up the difference.

By year 12, your original investment of $6200 is completely gone, and you are paying the entire WDW moderate resort room out of pocket. After 20 years, you have paid a total of $14,910 (8,710+6200) for your 100 DVC nights, or you have paid $29,778 for your regular WDW hotel room. The major difference of course is that you still have DVC. Your $6200 DVC 'investment' is still paying off.

With DVC you still get new points every year for only the cost of the dues. Whereas your initial investment you used by not buying DVC is completely gone, and you will be paying regular WDW room rates.

The spreadsheet below shows these calculations. Of course this is the simplest version trying to keep an apples to apples comparison, and getting the best value for your DVC points (Studio, weekdays). You can change a lot of things such as having a 7-night DVC stay versus 7-nights in a WDW hotel. You would need to calculate the comparison based on your expected vacation travels.

Here's a spreadsheet showing the calculations:

One more thing. You have to pay taxes on your investment gains, so you don't really get that much back. This would make the difference between the two even greater. AND, a portion of the DVC dues you pay actually go to Property Taxes. You can deduct these from your income and actually save some more.

 

[rinkwide]

A 2 br suite at YC is $1215/nt in the value season...

What's worse, you often have to walk through a lobby full of suits. Nothing breaks the Disney spell like a group of serious-faced ConventionEars.

 

[vandy]

You stated: "I luv the Dis but I cant see Disney doing anything that is gonna save the consumer money and make them lose money over the long run."

If it were not for DVC, I would not be staying on-site. The money spent to rent two rooms (or a large suite) did not make financial sense compared to the price of off-site lodging. With a larger family, the practical living aspects of a suite best suits our needs and we can find those at decent prices (although we would sacrifice the Disney amenities). Disney is simply trying to get the money they were losing anyway.

Plus you are forgetting the biggest factor: with DVC, we travel more often than we would without. Disney reaps monetary rewards from more ticket sales, dining sales, shopping sales and so forth. Why do you think the resorts in Las Vegas give out free rooms to gamblers? They will more than make up the room price on their guest's spending. Disney is not losing money on DVC, we as owners are paying the cost of operation with our dues. You are right, they will get their money, just in a different method.

 

[Slakk]

I know this has been asked but we are still playing around with buying into the BCV. I know they are not an investment like a peice of land would be but is paying for your vacation up front for 30,000 dollars worth it. We travel with 4 adults and two children. We usually stay in a 2 bedroom suite at the YC and luv it. However it is rather pricey. I guess the only thing that bothers me is the maintenance fee at the BC for 350 points.

So if the room is $1200 a night then a week is $8400 plus taxes which means in four years you are breaking even. Then after year 4 your cost is only maintenance and let's go on the high side and say $5 a point maintenance so your total cost year 5 is $1750 for an entire week's stay in a 2 BR suite.

 

[4DisneyGolfnuts]

I was reading one time and someone said don't think of it as an investment, but as a great pre-paid vacation plan.

I think if you are going on a vacation every year this is without a doubt one of the best deals going.

Investments that are guaranteed maybe make 5-6 percent annually. When you consider the 50% or more over the long haul you will save with DVC and then look at price increases, inflation etc, it is a great deal.

Plus if you invest everything until you are old, you won't even feel like going anywhere and your kids will be gone.

I looked at DVC for 7 years, put everything on paper multiple times and I am glad I finally jumped in.

I liked the pre-paid vacation plan thought. That really made sense when you look at it like that.

I hope this helps put your mind at ease. Think of the great times that money could never buy.