Major assessment in year 42

[golfmaven]

My family is seriously considering SSR. In the ongoing family debate over the finances, one question pops up. Lets say we buy in for the 50 year contract. Annual dues continue to increase at somewhere between 1-5% per year (very fine...no problem). Now it is year 40 (or 42 or 44) and SSR needs major work (i.e., new roof, new facade, plumbing...pick any or all) and there is a costly assessment to all members. Given that there are only 10, or 8 or 6 years left on the life of the contract, wouldn't most people just give up their points in lieu of paying additional money that will not be re-couped with visits?

Asked another way, is Disney hoping that points will be returned earlier than 50 years, thereby making their investment more profitable and my financial analysis based on an initial 50-year contract wrong?

I hope I asked the question the right way although I'm sure its probably been asked before. Any help "convincing" us either way is truly appreciated.

 

[spiceycat]

disney annual fees are high - because Disney is during maintence all the time.

at the DVC resorts all the rooms are complete redone every 5 years (sometimes sooner if needed - they aren't complete redone - just whatever wrong is fixed).

OKW is the oldest of the DVC resorts - but go visit sometimes - it is so beautiful.

all the DVC resorts do maintence constantly - you are paying for it with higher fees - but I think it is worth it.

if you doubt that WDW wants it resorts to be the best - just go look at the Polyn - WDW has closed part of the resort and is taking down walks (not the outside just the inside) because of the constant complaints about smells that they couldn't get rid of it otherwise. this resort is being rebuilt building by building.

DVC will not have to do that because they are very quick to answer complaints - if you have a problem just call housekeeping (this is also generally maintence).

now I don't understand why BCV is getting so many complaints!!! this is not generally true of a BCV resort. It might be a problem with the contractor again like BWV.

 

[JimC]

DVC reserves for capital improvements, betterments and replacements each year. Those items are separately accounted for in our annual statements and budgets. Much of this is governed by Florida laws affecting timeshare and condominiums.

While it is possible that additional assessments may be needed at any time, most of the major items should be well reserved when they come due for replacement, having been paid for by those who have received the benefits over the years.

 

[wilderness01]

I know that the BW just had work done on it last year. Did that include redoing the inside rooms as well as outside work? Does this include replacing furniture within the rooms that are now damaged/worn? I didn't realize each resort was redone every 5 years. How many resorts are done at once? It would seem that Disney has so many resorts that several would have to be redone at the same time to keep up. Just curious.

 

[RobDoc]

Originally posted by wilderness01
I know that the BW just had work done on it last year. Did that include redoing the inside rooms as well as outside work? Does this include replacing furniture within the rooms that are now damaged/worn? I didn't realize each resort was redone every 5 years. How many resorts are done at once? It would seem that Disney has so many resorts that several would have to be redone at the same time to keep up. Just curious.

The bulk of the BWV work recently done was all exterior- and was not paid for from dues. It was all covered by the contractor. During this same time, any needed interior repairs/replacements were also accomplished, but not in the large scale needed for the siding replacement. Interior enhancement is done on an ongoing basis and is part of the justification for the 2% owned by DVD as that allows the resort to take rooms out of service for such maintenance.

 

[Dean]

I actually expect the DVC dues to go down the last few years for all but SSR. DVC and Disney in general is pretty good at planning and keeping on top of these type of things. I wouldn't worry about them letting it go then hitting you with an assessment. The one thing that I think should worry SSR owners as the end of the rest of DVC draws nears is that DVC has created this large admin group that will be hard to pare down and control costs. If it's only SSR, that will be tough. If there are more resorts, it won't be so bad.

 

[DebbieB]

Given that there are only 10, or 8 or 6 years left on the life of the contract, wouldn't most people just give up their points in lieu of paying additional money that will not be re-couped with visits?

You really can't "give up" your points. You are contractually obligated to pay dues unless you sell it. It's a real estate interest. Like you can't just walk away from a house you own without some legal problems.

The interior of Boardwalk was renovated around 2000. On our first stay in December 2000, our room was freshly painted.

 

[Richyams]

Dean made my point.

When we bought in way back in '92, timeshares had a bad reputation. You could buy in, have low dues and great stays, then it quickly becomes obvious that dues need to go up, since they have been so low, they need to go WAY up....or maybe not, maybe they will stay reasonable, maybe even for a long time, then something big breaks, the owners vote not to spend the money to fix it, the resort is disbanded.

I think Disney's immense amount of experience in mantaining resorts has allowed them to make VERY accurate predictions in how much something would cost to replace and how often it would need to be replaced.

I really think the number one reason for me being so willing to buy in was that experience and the confidence that it gave me is the reliability of their replacement and reserve costs and that dues would not have to increase dramatically to cover things and that assessments would only come in the case of extreme things...which insurance would cover anyway.

 

[Mojomanny]

Disney uses what is known as a "Main Street Project". This means that all of their properties are intended to be as pristine and immaculate as they were when brand new.

Whether you are on the Disney Magice cruise ship, at a DVC or Non-DVC resort or on Main Street USA, it should always be well maintained.

As an example, you will not see grafitti in a Magic Kingdom resort. The restrooms are checked every 20 minutes for cleanliness and supplies. If Grafitti were discovered, it would be cleaned or repainted immediately, even if they need to close it while doing it.

Disney understands planned maintenance is cheaper then repair. They have comprehensive programs and plans designed to achieve the most benefit without sacrificing quality or the Disney experience.

For this reason, as well as the fact that Disney will take over the properties when our contracts expire, they will not allow them to become run down nor will they bilk the owners with rehab expense assessments at the last minute.

Nobody asked, just my 2 cents

 

[golfmaven]

Thank you all for your responses. They are greatly appreciated. a couple of follow up questions if I may:

Has anyone requested a copy of the insurance policy (ies) covering DVC or does Disney self insure?

Does anyone know whether owner/members can be responsible for a liability claim made against DVC (i.e., someone's kid drowns in a pool and sues DVC and its "owners")?

Do the physical structures themselves have separate hurricane insurance and, if so, if there is a hurricane deductible?

 

[erikthewise]

Part of the problem is that IMO you should not be purchasing based on a 50-year financial analysis. If you don't see yourself getting your money's worth in a 10-15 year time frame, you probably shouldn't buy. Both on practical considerations and on accounting principles, what happens in the final decade has relatively little influence on the present value of your purchase. If you insist on a 50-year analysis, consider asking an accountant to assist you.