Is my math correct?

[Mtnman44]

I ran your scenario and came up with slightly better numbers. This is all in constant dollars, no figuring for increase in hotel rates or the annual dues. An important question to consider before comparing: You say you are currently spending $5k per year. You are then comparing that scenario to your proposed DVC vacation schedule. The important question is, Will the DVC schedule cost approx $5k or is it more? 22 nights totalling $5,000 is only $227 per night and this includes tax. This seems a little low to me, considering 13 of those nights are in prime July season. Add in the fact that those 13 nights are in a 1 BR and that really skews the comparison. I'm guessing your average cash cost should be around $300 per night for the studio and $500 for the 1 BR in order to even it out. That is actually a $9,200 cash reservation cost equivillant of your DVC contract.

HOWEVER,

There is no reason anyone should spend $104 per point on SSR. Even DVC sells it for $96 (a "promotional" price). However, there are tons of resales available for around $85. Let's figure at $86 to be safe. That makes a total purchase price of $54,868. Annual dues on 638 points are somewhere around 2,690. Based on these figures, I show you would break even sometime in year 23.

However, if you had the $55k right now and instead invested it at a simple 5 or 6%, then calculating a net 4% return after taxes would give you $2,200 per year to use toward your hotel expenses, resulting in only needing to spend $2,800 per year. This then becomes the cheaper than DVC at year 50. By then you will have spent 140,000 in cash and the DVC ownership will have cost you $189,000. This is flawed however because in reality the $2,200 will always be $2,200 whereas the hotel expenses will of course keep going up with inflation.

Based on your numbers and your scenario, I'd say a DVC purchase is iffy, unless you are really in it for the long haul. If I had the cash, I would probably not buy DVC in this situation.

However, as I mentioned earlier I don't really think you have set up an equivilant comparison. Using a more realistic $9,200 cost per year, I show you would break even in year 9 which is close to when most of us break even. At year 50 the cost is DVC 189,000 vs. Cash $460,000

 

[SSRFred]

Buying from a reseller would be the way to go. That would save almost $10,000. Of course, Disney has the right of 1st refusal.

I think the person who said it's not a decision based on saving money is dead on. There are too many variables that can be taken into consideration that make it extremely difficult to say that you would be saving money.

I wouldn't worry about ROFR. The numbers I used were acceptable. The savings is actually ~$5000. The current incentive at SSR is $10pt. 425 x $94 ~$40,000.

It certainly is not about saving money and one should not have to be convinced to buy as stated before. I was staying at a comparable 2br(marble counters, laundry room, jacuzzi etc. for $220/nt) with a shorter drive to all areas (except AK of course) in comparison to staying at AKL. We just like that Disney "bubble" more.

Most of the variables can be applied to both renting vs. owning. However, one's own personal variables are ultimately the determining factor.

You can always rent the points:
425 @11 = $4675
638 @11 = $7018
Subject to availability of course.

 

[boomhauer]

Ever stayed in a DVC one bedroom?

No. We saw them. They were very nice. It's just not a big factor to us. Staying at the WL is - We love it there. Size of the room - Not so much. We don't spend a lot of time in the room. And when we do, we're either sleeping or getting ready to go.

 

[boomhauer]

You say you are currently spending $5k per year. You are then comparing that scenario to your proposed DVC vacation schedule. The important question is, Will the DVC schedule cost approx $5k or is it more? 22 nights totalling $5,000 is only $227 per night and this includes tax. This seems a little low to me, considering 13 of those nights are in prime July season.

Yeah - I was rounding down, definitely. Being exact, it's about $5,400 for the 22 nights. That's as of right now. I'm not counting, but hoping for an AP discount come July.

I think the biggest factor to me is thinking that no matter what, even if dues never increase, if we go when want to go, we'll always have that $2,500 per year bill for dues. That's alot to have on your mind for the next 40 or 50 years.

 

[Mtnman44]

Let me clarify. I don't doubt that you are spending an actual $5k (or $5,400) right now. I believe you. What I mean: is $5k a fair and reasonable estimate of your cash cost for the DVC rooms (or equivillant)? I doubt it. Now if you change your 13 day 1 BR stay to a studio instead, that starts to bring the two scenarios closer for comparison purposes. Of course, that will also reduce the point requirements significantly.

Yeah - I was rounding down, definitely. Being exact, it's about $5,400 for the 22 nights. That's as of right now. I'm not counting, but hoping for an AP discount come July.

I think the biggest factor to me is thinking that no matter what, even if dues never increase, if we go when want to go, we'll always have that $2,500 per year bill for dues. That's alot to have on your mind for the next 40 or 50 years.

 

[Mtnman44]

at a 3% rate, those annual fees will be over $7,900 by year 40!

Of course, at the same rate of inflation, that $5,400 you spend every year on hotel rooms will actually cost $17,100 by year 40.

I think the biggest factor to me is thinking that no matter what, even if dues never increase, if we go when want to go, we'll always have that $2,500 per year bill for dues. That's alot to have on your mind for the next 40 or 50 years.

 

[boomhauer]

It's all relative in terms of inflation. Actually, inflation is worse off without DVC.

We've decided to not go with DVC. Things could change. We may want to go back to All Stars. We could end up moving to Florida and working for Disney. Too many "if's" right now to make such a big decision.

 

[DVC Mike]

We've decided to not go with DVC.

Hmmm, why am I not surprised?

 

[boomhauer]

Hmmm, why am I not surprised?

I don't know. Why?

 

[DVC Mike]

I don't know. Why?

Just reading the entire thread -- I suppose. It didn't seem to be an Apples-to-Apples comparison.

A financial comparison would compare a Studio (not a 1-BR) to a hotel room, and I'm not sure getting the hotel room for all those days at the quoted rate was particularly realistic.

I like the the sample comparison posted on Tim's web site at: http://dvcnews.com/index.php?option=com_easyfaq&task=view&id=55&Itemid=148


It's too bad your calculations didn't have DVC making sense for you.

 

[Jaaron2]

Interesting thread. When we purchased about a year ago I never got that deep into the financials of buying into DVC (and I work in Finance). For me it was simply wanting the ownership and being part of the "DVC lifestyle". I had the money to put up front for the purchase and always knew I could sell down the road to recoup some of the money if need be.

We make one long trip per year (usually 10 nights) and stay in a two bedroom villa. For us the cost would be huge to pay cash for that type of room every year so it works out well.

 

[boomhauer]

Just reading the entire thread -- I suppose. It didn't seem to be an Apples-to-Apples comparison.

A financial comparison would compare a Studio (not a 1-BR) to a hotel room, and I'm not sure getting the hotel room for all those days at the quoted rate was particularly realistic.

I like the the sample comparison posted on Tim's web site at: http://dvcnews.com/index.php?option=com_easyfaq&task=view&id=55&Itemid=148


It's too bad your calculations didn't have DVC making sense for you.

I saw his comparison. It all make sense, but again, he's factoring in staying only during low season, no weekends, and paying with cash up front. For most people, that's not realistic.

 

[dianeschlicht]

I saw his comparison. It all make sense, but again, he's factoring in staying only during low season, no weekends, and paying with cash up front. For most people, that's not realistic.

Why is that not realistic? I see from your signature that you are used to staying in values. If that is your comparison, then DVC is NOT for you anyway. DVC really only makes sense if you expect deluxe accommodations. You mentioned that you "are never in the room for more than sleeping or getting ready anyway". While that's true now, you will find that most DVC members stop the "commando touring" once they get a few trips as members under their belts. For one thing, staying in a deluxe 1 bedroom or larger DVC unit is FAR different than a room at the All Stars, and I can see why you wouldn't choose to spend any time in the room there. At DVC it's just different. You KNOW you will be back, and probably to that same resort, so you tend to do less commando touring and more "see a few things and then experience the resort" type touring. We have been members for 11 years. We do still go to the parks nearly every day of our 10+ stays each trip, but we don't try to stay there all day. We tend to go to one park for a few specific attractions early in the day and then go back to the resort to miss the crowds midday. We then find our way back to a park for dinner (or maybe another resort) and then take in parks the rest of the day. It truly becomes a "VACATION" then, and not a "let's see how much we can do and see in a 24 hour period" trip.

 

[boomhauer]

Why is that not realistic? I see from your signature that you are used to staying in values. If that is your comparison, then DVC is NOT for you anyway. DVC really only makes sense if you expect deluxe accommodations. You mentioned that you "are never in the room for more than sleeping or getting ready anyway". While that's true now, you will find that most DVC members stop the "commando touring" once they get a few trips as members under their belts. For one thing, staying in a deluxe 1 bedroom or larger DVC unit is FAR different than a room at the All Stars, and I can see why you wouldn't choose to spend any time in the room there. At DVC it's just different. You KNOW you will be back, and probably to that same resort, so you tend to do less commando touring and more "see a few things and then experience the resort" type touring. We have been members for 11 years. We do still go to the parks nearly every day of our 10+ stays each trip, but we don't try to stay there all day. We tend to go to one park for a few specific attractions early in the day and then go back to the resort to miss the crowds midday. We then find our way back to a park for dinner (or maybe another resort) and then take in parks the rest of the day. It truly becomes a "VACATION" then, and not a "let's see how much we can do and see in a 24 hour period" trip.

I don't think staying for 11 nights a year, but skipping all weekends is realistic. That would entail 3 seperate trips per year. That'd be tough for many.

Paying that much up front is also not realistic for many people. I know it's not for me.

I don't think we're park commandos anymore. Not with 2 infants. We took a lot of breaks from the parks. But I was more than comfortable in our standard room at the WL. I'd take a nap, then go ride a bike, rent a boat, have a drink.

I totally agree about the All Stars. We don't spend alot of time at the resort when staying there, and if we did, we'd probably get bored. Not so at WL. I just found that room we had there was more than adequate. I was perfectly comfortable. That being said, I can see when the kids get older that it'd be nice for them to have a seperate room so we could relax when we wanted to.

 

[Laurabearz]

Well I for one am happy you have decided not to buy DVC... I can't show you my calculations as to why I am happy, I just am.

And my happiness paid for itself with interest even before I finished typing this post

 

[boomhauer]

And my happiness paid for itself with interest even before I finished typing this post

Um.

OK?

 

[tubtruck]

This post just goes to show how different the cost is for those buying in now and for those of us who bought in more than 10 years ago. We figured we broke even in less than 5 years, but we only paid $62 and $65 a point. We also did NOT finance, so another thing that made it a better deal.

Has anyone considered accounting for inflation when quoting what they paid for DVC 10 years ago, i.e what is the real price they paid for their points in todays money compared to what they actually cost now.

 

[browniemtb]

I saw his comparison. It all make sense, but again, he's factoring in staying only during low season, no weekends, and paying with cash up front. For most people, that's not realistic.

What you are saying here is true in one respect. Many can not afford the up front costs, I for one couldn't but plan on finish paying next year. Weekends I thought there was a Friday and Saturday night in his example. As far as peak season, regular cash "CRO" type reservations are subject to changes in cost during certain seasons as well. Also I don't agree with his comment about if you stay in 1 bedroom or larger accomodations your not saving, thats bull. I compared renting a villa through CRO and DVC....if you compare these to costs you find the same results....a breakeven of about 6 trips, even when you add in some interest. Is DVC for everyone, no. You truly have to love WDW and that type atmoshere. A trip every year or every other year makes the ownership work. For us it was a no brainer. We were there once a year staying in a deluxe so DVC made sense. Now for less money we routinely stay in a 1 bedroom that gives us a kitchen, laudry and a priceless view.

Brownie

 

[Mtnman44]

The 11 nights per year example in the link DID include weekends, fyi. He did mention that a DVC owner could further economize by skipping weekends.

One other thing not mentioned. The DVC contract could be sold in year 20, for example. Let's just say you buy 600 AKV points today for $96. That's around $58k. now in 2027 you're done vacationing WDW so often and want to sell most of your points. You decide to sell 450 points. Let's speculate Hypothetically that DVC continues to grow as it currently is and with inflation and DVC price increases the market rate for DVC contracts continues to grow around $2 per point, per year. So in 2027, new DVC contracts are selling for approx $136 per point. If you sell in 2027, your contract has 30 years left so let's discount that around $15 per point to (guestimate only of course). So you sell your 450 points for about $54,000. When this gets factored in to the total DVC cost, even though it is in 2027 dollars, it still totally changes things, wouldn't you say? This is very speculative, but you can see how some people see DVC as a good option. They save some or a lot on their annual vacation expenses plus after a couple decades they have an assest to either continue saving with or to sell off. Just mentioning some reasons people choose the DVC route. It's not the "best" way or the only way, it's just one way to go about WDW vacations. Everyone chooses what works best for them.

 

[eva]

I also am not surprised that you chose not to buy. Since the size and comfort of the room did not seem to be very important to you, I was just pretty sure that you would decide DVC wasn't for you. Like I said before, I don't think that people buy for economic reasons. The majority buy for the accomodations. You will find the the average DVC member is in their room more because they no longer hit the parks in commando style.