Looking to buy DVC, biggest roadblock: MF

[Reillysmom01]

My husband and I are extremely interested in buying into DVC after touring the models and speaking with a guide. Our biggest concern is the maintenance fees over the course of 50 years. Looking at several posts I noticed that most people have taken into account a 3% increase in MF. My husband created several spreadsheets and factored in a 5-6% increase. We even factored in worst case scenario at 15% which I know is not necessarily accurate (especially taking into account the available data from the WDW properties). We are just trying to enter into this with our "eyes wide open". I want to make sure that we are not going to put any financial hardship on our children when they take it over from us years down the road. I know about the resale, but I'm also unsure what that will look like 20-30 years down the road. For those that had similar concerns when they were looking to buy, what type of information did you gather that helped you make your decision to buy?

Thanks so much for any information you can provide. We are extremely interested and just want to have a firm grip on the risks and rewards. We obviously understand the rewards

TIA!

 

[backyardponder]

Although MF's go up every year, for most folks their income also goes up. As a % of income, I doubt MF's really increase...unless you are on a fixed income.

Before you dive into DVC, I urge you to make sure future expenses, such as kids' education, are covered. Also, you can save $$$ by buying resale. There's a few resale companies out there which specialize in DVC. The sponsor of these boards is one of the well respected companies. We used them and were quite happy.

Welcome to the boards and good luck.

 

[lark]

Maintenance fees are the riskiest part of timesharing. There's no doubt about it. The resale market is filed right now with people who cannot give away their timeshares for free, and they are stuck with the maintenance fees, or defaulting and taking a credit hit. I mean this literally -- there are timeshares that cannot sell for $1 right now, and it's mostly because of the maintenance fees.

Some things to keep in mind with DVC, though. First, it's not like a typical timeshare with 100 units. There are tens of thousands of owners and millions of points. The danger of multiple MF defaults leaving a small pool of members holding the bag is unlikely. It's a property in the middle of the state with somewhat predictable weather, and not on the beaches (unless you're looking at one of the two beach resorts) and thus trends in MFs should stay reasonably consistent. Also, these are not stand alone units. They are in the middle of theme parks -- thus Disney has very strong incentive to ensure that deadbeat non MF payers are ousted and to take on the units (and thus the maintenance) themselves.

It's also a timeshare with a very robust resale market. Obviously, if MFs get out of whack, that could change, and as the expiration dates on the points gets closer the resale prices obviously drop. But at least in the near future, trends suggest you should have some assurance that if the MFs become troublesome for you, you could sell and recapture some of your purchase price and be out.

 

[ILuvMulan]

This chart helped with our decision... hope it helps you too. It shows the amount per point, per year.

Here is the history of DVC annual fees at all of the resorts:

Year OKW VBsub VB HH - BWV VWL BCV SSR AKV BLT

2009 4.73 4.97 6.41 5.36 5.21 5.04 5.00 4.34 4.85 3.67
2008 4.56 4.71 6.04 5.16 5.04 4.87 4.80 4.21 4.71
2007 4.40 4.39 5.63 4.98 4.85 4.73 4.63 4.12 4.62
2006 4.24 4.12 5.27 4.34 4.69 4.61 4.48 3.98
2005 3.86 3.84 4.87 3.86 4.41 4.35 4.27 3.83
2004 3.68 3.67 4.67 3.70 4.25 4.22 4.18 3.80
2003 3.49 3.37 4.37 3.69 4.11 4.05 3.97
2002 3.22 3.33 4.17 3.49 3.92 3.80 3.77
2001 3.13 2.70 3.98 3.32 3.83 3.63
2000 3.16 2.87 4.07 3.25 3.94 3.62
1999 3.16 2.82 3.99 3.18 4.02
1998 3.17 2.76 ---- 3.20 3.94
1997 3.14 2.90 ---- 3.16 3.84
1996 2.99 2.82 ---- 3.16 3.70
1995 2.84 2.76
1994 2.70
1993 2.63
1992 2.56
1991 2.51

 

[Granny]

Our biggest concern is the maintenance fees over the course of 50 years. Looking at several posts I noticed that most people have taken into account a 3% increase in MF. My husband created several spreadsheets and factored in a 5-6% increase. We even factored in worst case scenario at 15% which I know is not necessarily accurate (especially taking into account the available data from the WDW properties). We are just trying to enter into this with our "eyes wide open". I want to make sure that we are not going to put any financial hardship on our children when they take it over from us years down the road. I know about the resale, but I'm also unsure what that will look like 20-30 years down the road. For those that had similar concerns when they were looking to buy, what type of information did you gather that helped you make your decision to buy?

You are right to focus in on the MF as they will be the bigger part of your purchase over the course of the contract.

The one thing that put my mind at ease was knowing that Disney cannot make a profit on maintenance fees. So if you accept that Disney is motivated to keep their costs down on all their resorts then hopefully they will do the same for the DVC resorts.

Good luck with your decision!

 

[Roveer]

Have your husband take a look at the spreadsheet that I recently shared with the forum.

DVC Comparison Spreadsheet

You'll get an idea of the overall costs. If you are big picture people and can consider what you would spend staying in similar accomodations each year than it's pretty clear that DVC will save you money. If you say, well for that money I'd stay elsewhere and not stay in similar accomodations than you can certinly save money going elsewhere.

I just did some quick math on the life of BWV MF's and they average out to a 2.57% annual increase. There were a few years where they actually went down.

DVC is for people who really (and I mean really) want to be a part of the WDW experience. On property, no cars, right in the middle of it... I went looking around Marriot resorts outside of WDW today and whoofa, the costs are much much lower. But you are NOT at WDW. Dont' get me wrong, these were 2 bedroom villas with kitchens in a fairly new property. Let's be clear, we are paying a premium for the WDW/DVC experience. Right now for my family and I who can no longer fit in standard accomodations, DVC is looking like it makes sense. That was until I went looking at other properties. Now it's looking like I'm facing twice the cost to be a part of the WDW experience. Will we still buy DVC, probably, but that's becaused I've analyzed all the costs including MF's and purchase price. It's a very personal choice, but one that thousands of people decide in favor of DVC. Good luck in whatever you decide.

 

[DisneyWalker44]

The one thing that put my mind at ease was knowing that Disney cannot make a profit on maintenance fees. So if you accept that Disney is motivated to keep their costs down on all their resorts then hopefully they will do the same for the DVC resorts.

This isn't exactly true.

We hire the Disney Vacation Club Management Corp to manage the resort for us. Their fee is a fixed percentage of the overall expense. So the higher the expense, the higher the fee.

Second, almost all the servicec DVCMC buys for us come from other arms of Disney. When they hire Disney Grass Cutting Inc (OK, I made that up) to do landscaping, DGCI can make a profit. Especially if DVCMC overpays them.

Ultimately, we just have to trust Disney. So far they've been running things for 16 years, and seem to have done a good job keeping costs down. And if they don't we can leave.

That's how I would answer the OP. What made be feel comfortable about buying is the active resale market. If things go wrong, if I no longer like the way Disney is managing things, if maintenance costs get too high, I can always sell.

 

[wdrl]

My husband and I are extremely interested in buying into DVC after touring the models and speaking with a guide. Our biggest concern is the maintenance fees over the course of 50 years.


TIA!

We had the same concern as you when we bought into the DVC this past May. We knew we could manage the initial purchase price for the points. At least with the points, we knew exactly how much it would cost. But we questioned whether it was advisable to saddle ourselves with an expense (the MF) that would have to be paid every year AND for which there was no certainty about the amount in future years. One of the primary reasons we bought BLT over AKV was that BLT's MF are so much lower than AKV's MF. We even considered the resale market, but found that once MFs were considered, the initial cost advantage of a resale at VWL, BCV, BWV, and AKV was eaten up by MFs, and that even OKW and SSR did not save significant amounts compared to BLT if considered over 20+ years. We finally decided to purchase into the DVC once we determined that even if MFs increased two fold (which will happen in about 18 years if compounded by 4% a year), we could still manage the dues.

But here is the ultimate reason why we bought into DVC: Because we wanted to. In our heart-of-hearts, we really wanted the financial numbers to work in favor of purchasing. We are comfortable with the amount of added financial burden we have acquired with the DVC. If you are in the least bit worried about taking on that burden, then don't. Or at least don't do it today. Disney and the DVC will be here tomorrow and next year, and we'll be more than happy to say "Welcome Home" some time in the future.

Good luck on your decision.

 

[pitzerg]

I agree - running numbers cannot provide the main incentive to buy in. There is an intangible value that has to be 'worth it'

 

[wdwnut]

I agree that it can be an issue of trust; they certainly got my vote when they lowered the MF for BWV in 2000/2001. Most of the time, we're kept in the loop and can see where the MF are being used.

 

[Mtnman44]

If you plan on vacationing at WDW regularly for the next 20+ years anyway, then the inflation of dues is a non-issue as you will be paying hotel costs (subject to inflation) anyway.

 

[Greatfalls]

The MF issue is a good reason to buy smaller blocks. That way, when the kids are grown up, it should be easier to sell off smaller blocks to reduce the fees.