Long term value of DVC

[ParrotBill]

Actually, I think this article is right on by starting out explaining that DVC is not a real estate investment. The surprise is how DVC contracts are holding their value over time, how you can actually get your money back or close to it, and showing which ones did better than others.

It has amazed me how a resales have not depreciated sharply given the end dates of the contracts!

When I did my financial analysis, I compare the cost of going on vacation without DVC and with DVC and included an inflation escalator. I determined I could go cheaper than DVC, but not in deluxe rooms (which have increased in price more than my inflation predicted due to demand and reduction in inventory.)

So I viewed it as an investment in high quality vacations, just as this article suggests, and have never regretted it. Even in lean years, we could afford to go to WDW because the rooms were already paid for.

 

[luckyman_apd]

The time factor, inflation, and compounding is not lost on me.....BUT...they are highly variable and not easily calculated. For me, it's very easy to ignore these factors. As a Studio Only owner, the cost of EVERY trip I have taken in those studio's has been LESS than the cost of a Moderate resort (which is where we would be staying if not for DVC). Just for example our next trip is 55 points and my easy math of dues plus cost per point over the long haul is @$385. The cost for a Moderate room for the same timeframe is $624. That's a 38% savings on a room....and sometimes it's more, sometimes less. Point is, being a studio user (not applying this to 1 or 2 br users) I'm saving more on my Disney trips than I would make each year with that investment (I purchased resale so I'm not talking even close to 30k up front)

Now, I'm no illusionist, and this is just MY scenario....which is why we purchased. I don't expect my scenario to be the same for others.

 

[kamik86]

The time factor, inflation, and compounding is not lost on me.....BUT...they are highly variable and not easily calculated. For me, it's very easy to ignore these factors. As a Studio Only owner, the cost of EVERY trip I have taken in those studio's has been LESS than the cost of a Moderate resort (which is where we would be staying if not for DVC). Just for example our next trip is 55 points and my easy math of dues plus cost per point over the long haul is @$385. The cost for a Moderate room for the same timeframe is $624. That's a 38% savings on a room....and sometimes it's more, sometimes less. Point is, being a studio user (not applying this to 1 or 2 br users) I'm saving more on my Disney trips than I would make each year with that investment (I purchased resale so I'm not talking even close to 30k up front)

Now, I'm no illusionist, and this is just MY scenario....which is why we purchased. I don't expect my scenario to be the same for others.

I agree with this post. Although the article was mainly just looking at how much someone could get back over what they paid for the points they forgot that in between when they bought and sold the person got to USE the points. The points used have a value.

I bought in because I knew I would want to stay at moderate resorts at the very least and sometimes deluxe resorts, and as the above poster said for a studio the stay its cheaper. Now the times i have stayed in a 1 bedroom we paid more, but we also got a nicer room, if we compared to a suite type room at other places I'm sure we still saved money.

We assumed we would want to keep going back. At first for just us and then with children. This was true for several years. Now its a bit less true but neither of us foresaw fertility problems leading to possibly not being able to have children.

However even now I still have options. This year we didn't want to go to WDW. So I rented my points. My 160 points were all rented at $11 a point (and that was because I was nervous about renting for the first time and used David's service, next time I might just try this on my own and may be able to get more) even after dues and figuring a portion of the initial buy in price that left me ahead.

We thought about selling since we are less interested in going to Disney again and again now that we are potentially looking at being a childless couple. However we do still want to go every few years, and we figure we can rent out the points and use that for trips elsewhere in the other years.

When I first bought I did the math assuming that everything would be completely worthless by the end of the contract. It wasn't an investment. It was prepaying for vacations.

 

[illinidp]

I agree with this post. Although the article was mainly just looking at how much someone could get back over what they paid for the points they forgot that in between when they bought and sold the person got to USE the points. The points used have a value.

Points used or rented have a value that also increases with time and that increase has historically outpaced inflation by a pretty wide margin. An estimated value of the points used and/or rented over 20-30 years before reselling needs to be included in any analysis.

 

[WilsonFlyer]

It humors me every time this happens.

People trying to justify the value over the long haul of a purchase that is the absolute epitome of a luxury purchase with virtually no long-term value. To add insult to injury, unlike most timeshares, DVC is an EXPIRING lease. Personally, I think that's a plus but to each his own.

Y'all keep going. It's always fun to watch.

 

[Dean]

It humors me every time this happens.

People trying to justify the value over the long haul of a purchase that is the absolute epitome of a luxury purchase with virtually no long-term value. To add insult to injury, unlike most timeshares, DVC is an EXPIRING lease. Personally, I think that's a plus but to each his own.

Y'all keep going. It's always fun to watch.

I think we often use savings and value interchangeable on such discussions which is fair I believe. While I would agree one should consider that it's possible it's all lost money, the reality is that there is a potential return if one wants out and savings over what one would have spent AND/OR additional value when one uses the options well. Even with a finite RTU, DVC still holds it's value more than most timeshare options and is certainly more liquid than any of them I know of both from a sales and rental standpoint. However, 40 years (roughly) is a long time and it's just as possible DVC will be a liability rather than an asset as the end nears. To a degree we're ALL betting on Disney when we purchase DVC though some more than others. The beach or mountains will still be there but Disney might not be or might not be viewed in the same light. However, anyone that would buy knowing the numbers don't support it is making a poor purchase. I've seen a few over the years say they bought in just to be a member of the club for the exclusivity when they themselves admitted it didn't make financial sense, that comes under the category of "I don't believe I would have told that".

 

[zavandor]

I find funny people who say that since DVC is a luxury purchase, any rationale should be disregarded.
If one doesn't care of the money, he should NOT buy DVC. Paying cash for a concierge room is more confortable, more luxurious, more flexible. Buying into DVC if money is not a problem is the wrong thing to do.
For everyone else who is trying to understand if DVC is the right purchase to save money or upgrade the comfort of their stay, getting an idea of how the resale market works and how much contracts has held their values in the latest 25 years is a useful information, I think.

 

[carlbarry]

No, it's not a silly game. I'm continually amazed by the fact that otherwise well-educated people simply don't (or refuse to) understand the time-value of money. Nearly every single DVC "cost" analysis I've ever seen just divides the cost of a points purchase by the number of years on the contract, and calls that the annualized purchase price. The reasons why people refuse to use opportunity cost are many and varied. But, those who insist on not using it are essentially saying that they'd be willing to give me $30,000 today, have me give them back $1,000/year over the next 30 years, and would call it even at the end.

I'll take that deal from as many people as are willing to participate.

You can say that again! I was talking to the wife of an elderly man I know. They had just returned from a 2 week vacation using their Wyndham timeshare points. The wife happily informed me that it cost them only $80 to stay 2 weeks.
How is that, I asked. Well, 2 weeks of maintenance fees is $80, or $40 per week. I pointed out that that was their only vacation for the year, using all their points, and they pay almost $2,000 per year in MF, so that is the real cost of the vacation. Her response? "I guess you can look at it that way, but we don't. We went for 2 weeks, so we only figure the cost for 2 weeks." I responded, that would make sense if you had another 25 vacations this year, but you don't. Again, "I understand what you're saying, but we don't figure it that way."

 

[Brian Noble]

2 weeks of maintenance fees is $80, or $40 per week.

What in the world were they booking that was that cheap per week? I can't think of anything. Even a Studio at the legacy Fairfield resorts costs 28K per week. If they only paid $40 in MFs for that, they have an astoundingly good MF/K ratio. Even if they were VIP and got it for half in the discount window, I still can't think of anything that is only $2.80/K.

 

[zavandor]

They divided their MF by 52, so they pay $40 per week. They stay 2 weeks so $80 per vacation. I guess people who don't know math may be happier.

 

[Brian Noble]

Wow. Just wow.

 

[mort1331]

They divided their MF by 52, so they pay $40 per week. They stay 2 weeks so $80 per vacation. I guess people who don't know math may be happier.

And there is another one born.

 

[Dean]

Wow. Just wow.

In all honesty some of the justification we see here on DIS get's pretty close to that line of thinking at times.

 

[mort1331]

Almost like my DW, tongue in cheek, "how can I do a budget if I don't know how much things cost. I have to buy it first." insert bang head here

 

[bams50]

I'm trying to understand- this is a page about DVC, right? But here's a thread with a group of smarty-pants smugly looking down their noses at people who have bought DVC, and denigrating them for being stupid for having done so. Why would you even come to this board? Just to troll and hopefully make people feel bad for being so stupid while professing how you're so smart?

Guess you showed us! Bravo.

 

[Halle]

We purchased OKW in 1993 and sold our points (309) last month, 10,000 plus more than our initial investment. Downside....capital gains tax. Upside we have to buy more points to avoid paying that tax.

 

[Dean]

We purchased OKW in 1993 and sold our points (309) last month, 10,000 plus more than our initial investment. Downside....capital gains tax. Upside we have to buy more points to avoid paying that tax.

Will that work. My understanding was timeshares didn't qualify for 1031 exchanges and I can't think of any other method to avoid the taxes currently on a gain.

 

[GAN]

When I'm dead, all these calculations you've mastered won't mean a darn thing to me. So I'll try not to read too much into them. I'm happy -nothing else really matters.

Have you run any analyses on purchasing a ham sandwich versus a turkey? I'm heading to lunch in a bit and would like some input.

 

[Brian Noble]

And that's why timeshares---not just Disney's---can sell for what they sell for!

 

[Dean]

When I'm dead, all these calculations you've mastered won't mean a darn thing to me. So I'll try not to read too much into them. I'm happy -nothing else really matters.

Have you run any analyses on purchasing a ham sandwich versus a turkey? I'm heading to lunch in a bit and would like some input.

Don't you think a purchase of $10-30K or more is different than a ham sandwich, I certainly hope so. People who don't pay attention to their money tend to not have any.