Maintenance Fees?

[StitchesGr8Fan]

S there a limit to how high the maintenance fees can go during the life of a contract? We are thinking about buying DVC, but are concerned about the maintenance fees. I've heard they go up every year.

 

[BirdsOfPreyDave]

S there a limit to how high the maintenance fees can go during the life of a contract? We are thinking about buying DVC, but are concerned about the maintenance fees. I've heard they go up every year.

There is a cap of 15% (pre taxes) per year set by Florida state law. Fortunately, actual increases are usually nowhere near this high. They're typically in the 3-5% range and are tied to the actual operating expenses for the resort. (Some resorts have been higher than the average, and there have been some years where increases were higher than normal. Hilton Head and Vero Beach are the only resorts that have ever had what could be called "significant" increases in a single year.) There are also the possibility of special assessments, which are outside the 15% cap. These would most likely only be used in the case of a catastrophic loss such as fire or hurricane damage.

While the past isn't always a perfect predictor for the future, you can look at the complete history of maintenance fee prices on this thread.

 

[StitchesGr8Fan]

Sorry for the stupid question, but does that mean if I'm paying $1000/year in maintenance fees now, it could go up 15% every year until I'm paying $57000 in maintenance fees a year? I know that probably won't happen, but it could. Even if they just go up 3% a year, in 30 years my monthly MF payment would go from $84 to $197.

I really want DVC, but I'm worried that the MF will get to be more than we can afford some day. I'm a planner and a budgeter, so that kind of unknown bothers me. Any advice from current DVC owners?

 

[belias21]

Sorry for the stupid question, but does that mean if I'm paying $1000/year in maintenance fees now, it could go up 15% every year until I'm paying $57000 in maintenance fees a year? I know that probably won't happen, but it could. Even if they just go up 3% a year, in 30 years my monthly MF payment would go from $84 to $197.

I really want DVC, but I'm worried that the MF will get to be more than we can afford some day. I'm a planner and a budgeter, so that kind of unknown bothers me. Any advice from current DVC owners?

Something seems slightly wonky with that math. Let's assume your $1000 is MF on 160 points @ $6.25pp. If the fees are increased 15%, that brings it to $7.1875pp bringing your yearly total to $1150.

 

[belias21]

Oh wait... I get your point. You're talking lifetime. Hold on - now I need to bust out my calculator....

 

[BirdsOfPreyDave]

Sorry for the stupid question, but does that mean if I'm paying $1000/year in maintenance fees now, it could go up 15% every year until I'm paying $57000 in maintenance fees a year? I know that probably won't happen, but it could. Even if they just go up 3% a year, in 30 years my monthly MF payment would go from $84 to $197.

I really want DVC, but I'm worried that the MF will get to be more than we can afford some day. I'm a planner and a budgeter, so that kind of unknown bothers me. Any advice from current DVC owners?

Those who bought OKW in 1991 when DVC was first created have seen a 107% increase in their MF over the past 20+ years. Annual MF changes for that resort average 4% per year.

$1,000 going up 3% a year would be MF of $2,356.57 in the 30th year. So, yep, about $197 a month.
4% would be $3,118 per year by the 30th year. This would be about $260 a month.
$1,000 going up 15% a year would indeed be $57K per year after 30 years. So let's all cross our fingers that it doesn't do that!

 

[jlewisinsyr]

Remember, any increase has to be justified, it cannot just be on a whim to increase it, it has to be tied to expenses. Yes, you can mess with the expenses a bit, but it really is unlikely that you will see anywhere near 15% increase, and if you did, it wouldn't be multiple years you see this happen.

 

[zavandor]

And don't judge MF in the 30th year with your today income.
Hopefully it will grow with the same rate, or even better.

 

[erionm]

And while your looking at annual increases in maintenance fees, also look at annual increases in rack rates for hotel rooms.

 

[Sandisw]

While I do understand your thinking, it's the same thing that happens when someone buys a house and has to pay property taxes. If you try to figure out the final cost of it all, I'd think you'd drive yourself crazy and never buy anything.

Yes, the rate per point can be increased based on actual expenses but over the lifetime of your contract so will the cost of the rooms at Wdw as well as your income, etc. So hopefully it is all relative.

Good luck!!!

 

[Jkpark]

I would also keep in mind Disney costs (tickets, rooms, etc) increase. So if you think you will be visiting Disney for the next 30 years, it will cost a lot more than it costs today with or without DVC.

 

[drusba]

Your annual dues can and likely will increase per year. They cover operational costs, management fees, maintenance, reserves for future rehabs, property taxes and other costs. A very large chunk (majority) of your fees are labor costs and workers do have a tendency to ask for and get raises now and then. Dues for a year are determined based on estimated costs for the year (which is itself based to a great extent on prior actual costs). They cannot build in a profit into any increases. Historically, annual dues have increased on average about 3% a year and thus you should suspect that if you pay $1,000 now you will be paying $1800 to $1900 in 20 years. Ticket prices have increased over the years at a much more significant clip than 3% annually and you can probably guess that in 20 years you will be paying a lot more for those.

 

[StitchesGr8Fan]

Great info everyone! Gives us a lot to think about.

 

[YourEveryDayAdam]

While annual dues will increase pretty much every year (some years there have been decreases) I take comfort in this fact:

By law, Disney is not allowed to arbitrarily increase the dues. They can not decide to just increase the dues and pocket the money. The money from dues is kept in a separate bank account and MUST only be used for the operation and maintenance of the resort itself. Disney is NOT allowed to make a profit on the annual dues. If they collect more money one year than they spend, then that money is rolled over in to next year and the dues for that year are decreased appropriately.

Over the entire life of DVC annual dues history, the dues have been pretty much stuck to the average annual cost of inflation, going up on average about 3.5% every year.

The only item in the annual dues that I could see that Disney MIGHT make some profit on would be the management fee they charge the resort. HOWEVER, this fee is charged as a flat percentage of all the other maintenance costs of the resort, it can not be changed, and it also includes the cost of Member Services, mailing the point charts each year, the reservation system, etc.

 

[disneynutz]

IMO Disney has kept the dues for new resorts artificially low to induce sales. Aulani has already had a increase and 3 executives were fired because of it and BLT went up over 8% this year.

The older resorts have settled down and seem to have a pattern of increases. I expect AKV to increase due to the expense of running 2 resorts and maintaining the animals and club level at Jambo.

With the DVC everything is paid for by the owners, Disney pays for nothing. That's not necessarily a bad thing but something that all owners and potential buyers should understand.

Bill

 

[rcchello]

I was looking and my maintenance fees doubled since I bought in but a room at Port Orleans has gone up 2.7 times in the same period.

 

[DoryDorito]

And while your looking at annual increases in maintenance fees, also look at annual increases in rack rates for hotel rooms.

^^^exactly

People, DH and I included, forget the cost of vacation rises over the years. When we were doing the numbers in deciding if DVC was for us or not, we had to factor in the cost of vacation without DVC over the life of the contract.