Larger Contract than you intended

[joelp]

The idea was to rent the excess points until I need them. Money sitting in an account drawing .25% interest does me no good. Renting out points at least puts the money to use. I'll recoup that excess cost for a few years, pay for MF and such.

And I've stayed at three DVC properties. We'll be going 1-2 times a year. Definitely don't want to spend the money to stay at a deluxe, and the values are too small. Mods are ok, but even with a discount, paying $150 a night at POR adds up to the value of a DVC contract real fast.

If you are going to WDW 1-2 times per year and staying in a 1BR, I wouldn't count on having too many "extra" points to rent out if you own 300 points ... A week in a 1BR "standard-type" view runs about 200 points (depending on time of year ...)

 

[Dean]

While I agree with you in theory, human nature suggests that for many, the alternative is not saving/investing the money but instead spending it on something else. My insurance agent has told me the story before, how he's had dozens upon dozens of clients say that they would rather buy term insurance instead of whole life insurance and invest the difference. In 30 years he can count on one hand the number of clients who actually did invest the difference. But I do agree that I should have used 4% as my estimated maintenance fee increase as it includes more room for error.

One bad choice does not make another a good one. In many ways I look at this like those who use the W-4 withholding as a forced savings plan, bad idea. While I understand the psychology of your thoughts, I'm reminded that people who can't handle money tend to get in trouble thus anything they do to increase their risk and commitment is a bad thing no matter what the numbers say otherwise. But then I also feel that people shouldn't finance luxury purchases (including cars) and that they shouldn't buy into such a timeshare with other debt other than a reasonable mortgage. I also have the opinion that in reality and no matter how the numbers look, DVC rarely saves people money and that includes most of those that say it has. What it may do is to give them added value for around the same dollars. I'd far rather someone not buy into DVC that would have done well with it than to have those that stretch themselves too thin or have life happen and DVC ends up not being a blessing. IMO it's as much about managing risk as it is savings.

 

[Dean]

Lots of way to play with numbers...

I absolutely agree there are an infinite number of possibilities and I appreciate the info you did provide. Still, I'd point out the obvious, that your comparing DVC to DVC, simply to renting the same points every year vs owning. While I think your assumptions were reasonable for what they were, I'd also point out they represent the best case scenario IMO. For example, the chance of maint fees averaging 3.5% are fairly good but the chance of them being less long term is essentially none and the chance that they'll increase more is fairly high, again added risk. Of course for the OP they're looking at using 100 pts a year now and for a few years.

My goal is simply to get people to think about what they're doing and try to get some reasonable and real information and step back from the emotions somewhat to make a better long term decision for their situation.

 

[rojen]

If you are going to WDW 1-2 times per year and staying in a 1BR, I wouldn't count on having too many "extra" points to rent out if you own 300 points ... A week in a 1BR "standard-type" view runs about 200 points (depending on time of year ...)

We fit in a studio and will for the next three or four years, then we will be looking to move into a one or two bedroom. So 100 works now, will need 300 in the future. Might just do two studios at that point too, 1br seem way over valued point wise.

 

[Deb & Bill]

We fit in a studio and will for the next three or four years, then we will be looking to move into a one or two bedroom. So 100 works now, will need 300 in the future. Might just do two studios at that point too, 1br seem way over valued point wise.

Once the baby (number three) hits three, you'll have too many for a studio and will need a one bedroom at a minimum. And some one bedrooms will still only sleep four unless DVC does more modifications.

So unless number three is in utero, you'll be looking at two years from now in a one or two bedroom villa.

 

[DougEMG]

I absolutely agree there are an infinite number of possibilities and I appreciate the info you did provide. Still, I'd point out the obvious, that your comparing DVC to DVC, simply to renting the same points every year vs owning. While I think your assumptions were reasonable for what they were, I'd also point out they represent the best case scenario IMO. For example, the chance of maint fees averaging 3.5% are fairly good but the chance of them being less long term is essentially none and the chance that they'll increase more is fairly high, again added risk. Of course for the OP they're looking at using 100 pts a year now and for a few years.

My goal is simply to get people to think about what they're doing and try to get some reasonable and real information and step back from the emotions somewhat to make a better long term decision for their situation.

Totally agree with you. Comparing DVC to non-DVC is an apples to oranges comparison though. Staying offsite is always going to be cheaper, so if your goal is to spend as little as possible and you aren't particular where you stay, then stay offsite. If you want to stay onsite though, there are only limited options: Booking through Disney, owning DVC, renting DVC and exchanging into DVC (which I don't know much about).

IMO it's as much about managing risk as it is savings.

This is the part that I think is key and was always my biggest concern, "managing risk".

 

[DougEMG]

My goal is simply to get people to think about what they're doing and try to get some reasonable and real information and step back from the emotions somewhat to make a better long term decision for their situation.

Yup, for me it was all about the numbers. I ran multiple senarios through my spreadsheets before buying. Even now I track everything I do involving DVC in a spreadsheet to make sure reality matches with my models.

 

[Dean]

Totally agree with you. Comparing DVC to non-DVC is an apples to oranges comparison though. Staying offsite is always going to be cheaper, so if your goal is to spend as little as possible and you aren't particular where you stay, then stay offsite. If you want to stay onsite though, there are only limited options: Booking through Disney, owning DVC, renting DVC and exchanging into DVC (which I don't know much about).

IMO, the only true comparison is what the individual would pay not owning DVC. This is the only way to compare $$$ savings. Another approach is what additional value one gets compared to additional costs. I would not agree that comparing DVC to non DVC villas options is inappropriate, IMO, it really is a must for everyone considering it. It's only apples to oranges for those that can't think about staying off site, for most, it really is an actual decision they must make. So often we see people who have no concept of the off property options. They simply assume that on property is great and off is bad. I do not believe that is accurate. So many people actually prefer staying off property even ignoring the cost differences. Put another way, there are a significant portion of DVC members that have made assumptions without a valid off property knowledge to compare to. There are a number of off property timeshares that are as good or better than DVC in many ways. Comparatively, for many, staying on property is a compromise in many ways.

 

[csharpwv]

Something that I am surprised that no one else has mentioned is the fact that we, as DVC owners, are not guaranteed the ability to rent our points.

We can currently rent points to non-owners, but at the end of the day, once all has been said, and read....

We have the ability to use our points at our home resorts on a yearly basis.

We are not guaranteed the ability to bank our points, we are not guaranteed the ability rent them, and we are not guaranteed the ability to trade them (buying a resale, you are already limited on your ability to trade).

SO, when you look at using 1/3 of a proposed membership for the next few years - your plan could quickly find you with far more points than what you can possibly use in a year with your current vacation plans.

We bought enough points to bank, use, borrow for an every 3rd year (with an 11 month booking window) stay in a treehouse villa for a week 2 out of 5 seasons (we typically only travel in adventure and choice seasons anyway). However, when they reallocated the 2BR/GV/Treehouse point values - we find ourselves unable to use that formula in 2013 and forward - in any season. So we would have to do less than a week, and then borrow points at 7 months in hopes of completing the week reservation at that time.

All of that said - do not buy more than you plan to use. The commercial point renters (people who buy points JUST for the purpose of renting them out) are going to ruin things for everyone - or severely limit abilities for ALL members to use our ownership in the way that is best for each owner.

You should never buy a product with the plan that it will pay for itself when the rules and potential of that return are beyond your control. You cannot control DVC policies or dictate the rules. It's not wise for you, for your family, or for your finances.

Something to consider as well, when your family starts growing - you will want the NEWER DVC resorts that are 1BR 2 Bath. AKV, BLT, VGC and presuming they keep with the concept, the Grand Floridian Villas.

So when you look at the resorts where you would want to own, consider your 11 month booking window, and what works best for your family.

 

[Dean]

Something that I am surprised that no one else has mentioned is the fact that we, as DVC owners, are not guaranteed the ability to rent our points.

We can currently rent points to non-owners, but at the end of the day, once all has been said, and read....

We have the ability to use our points at our home resorts on a yearly basis.

We are not guaranteed the ability to bank our points, we are not guaranteed the ability rent them, and we are not guaranteed the ability to trade them (buying a resale, you are already limited on your ability to trade).

SO, when you look at using 1/3 of a proposed membership for the next few years - your plan could quickly find you with far more points than what you can possibly use in a year with your current vacation plans.

We bought enough points to bank, use, borrow for an every 3rd year (with an 11 month booking window) stay in a treehouse villa for a week 2 out of 5 seasons (we typically only travel in adventure and choice seasons anyway). However, when they reallocated the 2BR/GV/Treehouse point values - we find ourselves unable to use that formula in 2013 and forward - in any season. So we would have to do less than a week, and then borrow points at 7 months in hopes of completing the week reservation at that time.

All of that said - do not buy more than you plan to use. The commercial point renters (people who buy points JUST for the purpose of renting them out) are going to ruin things for everyone - or severely limit abilities for ALL members to use our ownership in the way that is best for each owner.

You should never buy a product with the plan that it will pay for itself when the rules and potential of that return are beyond your control. You cannot control DVC policies or dictate the rules. It's not wise for you, for your family, or for your finances.

Something to consider as well, when your family starts growing - you will want the NEWER DVC resorts that are 1BR 2 Bath. AKV, BLT, VGC and presuming they keep with the concept, the Grand Floridian Villas.

So when you look at the resorts where you would want to own, consider your 11 month booking window, and what works best for your family.

You have the guaranteed ability to try to rent your points, that is contractual. However, there is no guarantee you can rent them or for enough to justify doing so.

 

[ELMC]

Something that I am surprised that no one else has mentioned is the fact that we, as DVC owners, are not guaranteed the ability to rent our points.

We can currently rent points to non-owners, but at the end of the day, once all has been said, and read....

We have the ability to use our points at our home resorts on a yearly basis.

We are not guaranteed the ability to bank our points, we are not guaranteed the ability rent them, and we are not guaranteed the ability to trade them (buying a resale, you are already limited on your ability to trade).

SO, when you look at using 1/3 of a proposed membership for the next few years - your plan could quickly find you with far more points than what you can possibly use in a year with your current vacation plans.

We bought enough points to bank, use, borrow for an every 3rd year (with an 11 month booking window) stay in a treehouse villa for a week 2 out of 5 seasons (we typically only travel in adventure and choice seasons anyway). However, when they reallocated the 2BR/GV/Treehouse point values - we find ourselves unable to use that formula in 2013 and forward - in any season. So we would have to do less than a week, and then borrow points at 7 months in hopes of completing the week reservation at that time.

All of that said - do not buy more than you plan to use.

I think this might also be a good example of not buying fewer points than you plan to use as well. I'm sorry that the point reallocation messed with your plans.

The commercial point renters (people who buy points JUST for the purpose of renting them out) are going to ruin things for everyone - or severely limit abilities for ALL members to use our ownership in the way that is best for each owner.

I don't think anyone on here is talking about becoming a commercial point renter. What people are talking about is renting excess points in order to defray their initial buy in costs. Furthermore, if you look at the actual math behind commercial renting it is extremely difficult to make work. I'm not saying that it can't be done, but in the majority of cases the math does not support it as a viable money making strategy. In addition, commercial renting is prohibited by DVD (although the definition of what constitutes a commercial renter is unclear). That being said, I think your statement that commercial point renters are going to ruin things for everyone is a bit of an overstatement. I am curious why you think this would be the case.

You should never buy a product with the plan that it will pay for itself when the rules and potential of that return are beyond your control. You cannot control DVC policies or dictate the rules. It's not wise for you, for your family, or for your finances.

Never say never. I see where you're going with this, and I do agree that Disney does control the rules of DVC ownership. However, as I have discussed before, if you buy a loaded resale contract at a competitive price per point, you have exit options should the need arise. This is the main problem I have with buying direct at today's prices. Whatever may happen, the day you sign you have lost 50% of the liquid value of your "investment". Realistically speaking, I do not think it is an extremely risky proposition to buy a resale contract with the consideration of a point where the contract "pays for itself". I say this especially because many people who are (appropriately) using this term are forming these calculations based on actual use vs. the next best alternative. The major caveat to this is that DVC ownership will inevitably cause a change in vacation behaviors that will most likely lead to greater spending than if one had not purchased DVC. So cash flow wise, one may never come out ahead by owning. But simply looking at dollars spent on lodging, there is a time in the future when owning DVC will have a long term financial benefit. But to your point of contracts paying for themselves, I haven't seen many (or any) posts where people suggest that they are going to rent out the points for the first x number of years in order to get their money back before using their DVC. Except in rare circumstances, it does not make sense.