Maintenance Fees

[JudgeMils]

I just used the DVC Point Planner Calculator to estimate my Total Cost of Ownership. I am looking into Grand Californian, 200 points. Per the calculator, based on an inflation rate of 3%/year, I would end up paying $ 99,2581 in MFs over the lifetime of the contract. By 2060, the MFs will be around $3900. That isn't even including the initial buy-in price.

My question is really hypothetical. Based on your experience with Timeshares in general, is there a point where MF rates tend to plateau? Or do they really increase by 3-4% EVERY year???

I am trying to justify this DVC purchase. But the MFs presented this way scare me. How did y'all justify your DVC purchase with the knowledge that MFs just keep on rising???

 

[davedmaine]

It is surprising based on how stable ticket and restaurant prices have been .. oh, wait.. Not to make this worse, but I think the GC's ave MF increase has been 5% ..

 

[DenLo]

Maintenance fees are based cost increases, not very often does the expenses of running a hotel decrease, as salaries go up, utilities increase and building maintenance also goes up. As buildings age the more maintenance needed. I find it hard to believe it would decrease.

 

[LynJ]

We've gone to wdw 5 times in 5 years. The cost of a 7-9 day hotel stay is far more expensive than annual maintenance fees on enough points to stay in a studio for the same length of time. Price out the annual cost of an equivalent hotel stay, and you'll see a savings.

 

[longboard55]

I 100% own a unit in Hawaii that is rented out so I see the actual expenses, and there are a lot of items. people will not use A/C at home but in a hotel it goes 24/7. You have front desk people, maintenance people, security, landscape, pool cleaners, you need to replace those towels people steal, new sheets, lots of cleaning, insurance, no one wants bed bugs- better hire monthly exterminators, then we need to repaint and recarpet every five years, then of course you need to pay the company that manages all these expenses

The good news in California is with prop 13 taxes, property taxes are manageable but that is a big one.

I would fully expect 3-4% a year. The good news in 2060 the general hotel room rates will be $3000 a night

 

[chalee94]

Per the calculator, based on an inflation rate of 3%/year, I would end up paying $ 99,2581 in MFs over the lifetime of the contract. By 2060, the MFs will be around $3900. That isn't even including the initial buy-in price.

My question is really hypothetical. Based on your experience with Timeshares in general, is there a point where MF rates tend to plateau? Or do they really increase by 3-4% EVERY year???

have you looked at what Disney tickets cost 30 years ago? have Disney tickets "plateaued"?

if you will be living on a fixed income soon, it's true that DVC is probably not for you...but I suspect you simply don't understand inflation.

 

[disneynutz]

Many buy thinking that DVC is a better deal than what it is. DVC is a good deal if you vacation at Disney every year or more and you sell as soon as you decrease your Disney vacations. IMO many hold on to their contracts even though they don't vacation as much as they once did. We met an couple during out last vacation who had not used their points for 5 years, they don't rent them out, bank or borrow, "to complicated" is what they said.

I did a BCV study and we will spend over $300,000 during our ownership for our Disney vacations.

Bill

 

[LynJ]

Many buy thinking that DVC is a better deal than what it is. DVC is a good deal if you vacation at Disney every year or more and you sell as soon as you decrease your Disney vacations. IMO many hold on to their contracts even though they don't vacation as much as they once did. We met an couple during out last vacation who had not used their points for 5 years, they don't rent them out, bank or borrow, "to complicated" is what they said.

I did a BCV study and we will spend over $300,000 during our ownership for our Disney vacations.

Bill

Did you offer to manage their points for them, in exchange for using their leftovers? Sounds like it would be a great deal!

 

[Disney Dad ADL]

I just used the DVC Point Planner Calculator to estimate my Total Cost of Ownership. I am looking into Grand Californian, 200 points. Per the calculator, based on an inflation rate of 3%/year, I would end up paying $ 99,2581 in MFs over the lifetime of the contract. By 2060, the MFs will be around $3900. That isn't even including the initial buy-in price.

My question is really hypothetical. Based on your experience with Timeshares in general, is there a point where MF rates tend to plateau? Or do they really increase by 3-4% EVERY year???

I am trying to justify this DVC purchase. But the MFs presented this way scare me. How did y'all justify your DVC purchase with the knowledge that MFs just keep on rising???

Yes, the MFs should continue to increase every year unfortunately. Even if nothing changes in terms of services, just the simple fact of inflation will cause the MFs to increase every year.

The way that you can justify it is that the prices of Disney hotels will also probably go up every year, and at least recently it's been going up much faster than 3-4% per year. This is not a guarantee though, so there is some risk to it as you figured out.

Example:

SSR studio from 1/15-1/22 is $2598 (including tax).
SSR studio preferred view is 97 points for the week

So, how much would a 100 point contract cost vs paying cash over the life of the contract cost?

DVC:
SSR 100 points x $85 per point = $8500.
2016 MFs = $5.44 per point. Assume increase of 4% per year
Total MFs over life of contract = $49,174.
Total DVC cost = $57,674.44

Cash:
SSR 1 week = $2598
Assume 3% increase per year and staying every year at the same time.
Total Cash cost until 2054 = $187,665

You can see that in this case, DVC saves you a lot of money.

That being said, you have to buy into the assumptions, which are:
1. You really want to go to WDW every year for the next 40 years
2. You really want to stay at an onsite deluxe resort
3. Disney will continue to get more expensive over the next 40 years
4. You will still be able to afford the expenses as time goes on.

Also, generally you can find a discount somewhere on cash rates, so you might want to knock of 20% or so off of the cash calculations.

On the plus side for DVC, you get free parking.

So, ultimately it's a bit of a risk, but one worth taking if you really want to go to WDW every year IMO.

Edit: since you were going to buy VGC, I suppose VGC would have been a better example, but the idea is the same. We just purchased VGC earlier this year, so I still think it's reasonable, although the case for VGC vs a WDW resort is slightly weaker. Owning VGC will lose pricewise to an offsite hotel on Harbor, which are just as close to DLR as VGC. Also, VGC costs a lot of points. The math still works out in your favor though, if ultimately you are dedicated to staying at Grand Californian every year.

 

[Dean]

I just used the DVC Point Planner Calculator to estimate my Total Cost of Ownership. I am looking into Grand Californian, 200 points. Per the calculator, based on an inflation rate of 3%/year, I would end up paying $ 99,2581 in MFs over the lifetime of the contract. By 2060, the MFs will be around $3900. That isn't even including the initial buy-in price.

My question is really hypothetical. Based on your experience with Timeshares in general, is there a point where MF rates tend to plateau? Or do they really increase by 3-4% EVERY year???

I am trying to justify this DVC purchase. But the MFs presented this way scare me. How did y'all justify your DVC purchase with the knowledge that MFs just keep on rising???

That's the beauty of compounding. It's really a study of what you're looking to pay long term. By the time you got to 2060 that roughly $28000 initial investment could have been worth upwards of $750K. But we're talking vacation dollars here so it's sunk money to a degree though I always want to make sure I'm getting reasonable value for my investment and effort. MF will increase based on real inflation of costs to run the resort. Even during the last 2 recessions, timeshare MF continued to increase. I generally use 4% when doing these calculations but 3% is reasonable and likely the low end of the expectation.

To address the underlying question of whether the investment and risk is worth it to you, here's some factors one might look at. Can you afford it (to me that's no consumer debt and pay cash), can you plan way ahead (at VGC that's likely day one 11 months out), will you use almost all at VGC, would you stay at DL onsite at least EOY and are you OK with the compromises of a timeshare. If the answers to all of these are yes then buying DVC and VGC is likely a good choice for you. If DVC makes sense in general terms but you wouldn't stay at DL almost all of the time then you'd want to consider other cheaper resort options but even then, only if looking to stay at DVC resorts. And in some cases a more generalized DVC view would relax the need to plan a full 11 months out but even then one should be looking at a minimum of 7 months out and consider the demand for the underlying options because there are some other options that also require 11 months out and day 1 planning or even more.

 

[Deb & Bill]

....the plus side for DVC, you get free parking...

Everyone staying on site gets free parking. You don't get free parking just because you are DVC. You don't get free parking if you are staying off site and own DVC.

 

[Disney Dad ADL]

Everyone staying on site gets free parking. You don't get free parking just because you are DVC. You don't get free parking if you are staying off site and own DVC.

Parking at GCH is $18 per day for hotel guests, but free if you are staying at VGC. Aulani is $37 per day for hotel guests, also free if staying at DVC.

 

[LAX]

Parking at GCH is $18 per day for hotel guests, but free if you are staying at VGC. Aulani is $37 per day for hotel guests, also free if staying at DVC.

I think Deb & Bill was referring to WDW resorts.

LAX