Making sense of a DVC purchase...a few questions for a finance genius :)

[supersnoop]

When I was researching, I had a spreadsheet with 600+ resale contracts and 35 columns and calculations based on every point available with a utility factor for use year. But in the end, I found that a very simple calculation landed me at the same conclusion.

First of all, you have to make the decision if buying meets your needs. Once you make that decision, the rest is just a value decision.

(Purchase Price / Years remaining) + (Current Maintenance Fees) = Value
The lower the number, the better "deal."

 

[ColinBlair]

Using just the current retail price of the Polynesian as a baseline, here is what the actual retail price of each resort should be.

Original DVC $87.50
SSR $129.50
AKV $140
BLT $150.50
GFV $164.50
POLY $168

Using those numbers, you can get a better gauge on if you are getting a discount for resale, or paying premium for a sought after collector's item.

 

[miTnosnhoJ]

. Logically I know that a spreadsheet will not predict anything. Especially given how many variables there are with travel. From research it seem slike everyone buys with the intent of going and staying with the minimum amount of points and then transition the the villas over the years. But for some reason it is my crutch when making a big purchase. You should have seen my spreadsheet when I bought my car (9 years ago, LOL). I don't like parting with my hard earned dollars without having as many details as possible.

I did a spread sheet, too, and I could pretty much make it say what I wanted it to say.
For one thing, do I compare how I actually travel or how I aspirationally would like to travel?

I actually travelled like this (pre-DVC):
Stayed in 1 luxury resort (AKV)
Stayed free on Marriott Points at the Marriott Orlando World Center.
Stayed free on Hyatt Points at a nearby Hyatt Resort.
Stayed in multiple cheap hotels in Kissimmee.
Stayed in multiple timeshares in Kissimmee with average rental for 2-bedroom at $85/night.

How I would like to travel:
Stay at the Grand Floridian every time. (But I am way too cheap to pay $750/night for a hotel room.)

So in my spreadsheet, if I compare DVC at VGF to how I actually travel, it never makes sense to own DVC. If I compare DVC to how I would like to travel (at Grand Floridian every time), I can make the numbers work.

Another huuuuuuge factor in my spreadsheet is that in the past, I did not come every year. If the economy was down, if I was out of work, if we were busy, we didn't come. This flexibility is worth a lot. I could cancel up to the night before in many cases. If my spreadsheet assumes 10 nights a year at VGF, I get one answer. If I assume that I come once every three years if the economy is good, I get a different answer.

There definitely is a huge emotional aspect to this DVC purchase. We are just Disney lovers to the core. That is pretty much the only place we travel.

So once again, for us, it became an emotional decision.
An addition to the emotional factors I mentioned before, there is the multigenerational factor. I first saw Disney World when I was about 12 years old. I then saw it through the eyes of my children. And now I get to see it through the eyes of my grandchildren. And I experience each attraction not only as I see it today. I also experience it with the memories of being that 12 year old. And I can afford it, so we bought.

WOW! That was impressive. I think I got mostly all of it

One more comment on my long dissertation on discount rates and inflation. It should be clear that it will never make sense to buy DVC at any reasonable discount rate if you are financing through consumer finance rates. Disney was offering 16% when we bought, which is somewhere between double and 16 times a reasonable discount rate.
You could never make a spreadsheet break even at that rate. (At least for buying direct....I would not say categorically that you could not make it work for resale, but I have my doubts.)


Finally, best of luck as you make your decision. We are a year into it and really enjoying it.

 

[supersnoop]

Using just the current retail price of the Polynesian as a baseline, here is what the actual retail price of each resort should be.

I'd love to see that math.

 

[linzjane88]

I did a spread sheet, too, and I could pretty much make it say what I wanted it to say.
For one thing, do I compare how I actually travel or how I aspirationally would like to travel?

I actually travelled like this (pre-DVC):
Stayed in 1 luxury resort (AKV)
Stayed free on Marriott Points at the Marriott Orlando World Center.
Stayed free on Hyatt Points at a nearby Hyatt Resort.
Stayed in multiple cheap hotels in Kissimmee.
Stayed in multiple timeshares in Kissimmee with average rental for 2-bedroom at $85/night.

How I would like to travel:
Stay at the Grand Floridian every time. (But I am way too cheap to pay $750/night for a hotel room.)

So in my spreadsheet, if I compare DVC at VGF to how I actually travel, it never makes sense to own DVC. If I compare DVC to how I would like to travel (at Grand Floridian every time), I can make the numbers work.

Another huuuuuuge factor in my spreadsheet is that in the past, I did not come every year. If the economy was down, if I was out of work, if we were busy, we didn't come. This flexibility is worth a lot. I could cancel up to the night before in many cases. If my spreadsheet assumes 10 nights a year at VGF, I get one answer. If I assume that I come once every three years if the economy is good, I get a different answer.



So once again, for us, it became an emotional decision.
An addition to the emotional factors I mentioned before, there is the multigenerational factor. I first saw Disney World when I was about 12 years old. I then saw it through the eyes of my children. And now I get to see it through the eyes of my grandchildren. And I experience each attraction not only as I see it today. I also experience it with the memories of being that 12 year old. And I can afford it, so we bought.



One more comment on my long dissertation on discount rates and inflation. It should be clear that it will never make sense to buy DVC at any reasonable discount rate if you are financing through consumer finance rates. Disney was offering 16% when we bought, which is somewhere between double and 16 times a reasonable discount rate.
You could never make a spreadsheet break even at that rate. (At least for buying direct....I would not say categorically that you could not make it work for resale, but I have my doubts.)


Finally, best of luck as you make your decision. We are a year into it and really enjoying it.

When you say Disney was offering 16%...do you mean that was their financing rate??! You have to be kidding, right?
Well, I just started looking at the rates for these timeshare places. I guess that might not be a typo after all. We weren't going to finance so I hadn't looked into it until now. Sheesh.

Thank you hugely for the amount of knowledge you have shared. Although my husband might not. A plea from our discussion tonight "You can buy your DVC as long as you stop trying to explain this to me."

 

[ColinBlair]

I'd love to see that math.

Sorry, my original post was longer with more numbers. When I got on the retail equivalency numbers I became so enamored with them that I deleted the rest of the stuff and left them alone without the information on how I got there.

First, since I am talking retail price, I am not looking at maintenance fees.
Second, I am considering every point as worth the same as every other point.
Third, I am using an interesting point someone made around here several months ago that at the time of purchase, all of the points already exist. So, when someone bought 100 points at the Polynesian last year, they were really buying 5,000 points.

So, if you buy 1 point of the Polynesian this year at $168/point, you are really buying 49 points of the polynesian at $3.4286 per point

Original Resorts Points per purchased point

Original DVC 25
SSR 37
AKV 40
BLT 43
GFV 47
POLY 49

I may be off by 1 on the point totals, I think I may have had the Poly as 48 in my original calculation which skewed the numbers slightly. It was also an easier cost per point to calculate at exactly $3.50 per point.

Taking 168/49 multiplied by each resort's point total gives you the retail equivalency:

Original DVC $85.71
SSR $126.86
AKV $137.14
BLT $147.43
GFV $161.14
POLY $168

 

[ziravan]

DVC changes the way we do Disney. We don't save money, we go much more often and so, spend more.

With DVC, we are going from Texas to the World 3-4x/yr instead of once every 3 years.

"You're going to Disney again!?!"

"Yes. Yes, we are."

That makes Disney much more of an emotional component for me and makes any spreadsheet worthless.

Can we afford it? Absolutely.

Is it a good "investment"? Absolutely not.

Do we regret buying DVC? Not at all. My next four trips (WBC, BCV, BCV, Split Poly/BCV) are already booked and in various stages of planning...

 

[linzjane88]

I want to thank everyone for all the really great advice. I finally came to the conclusion that DVC will work for us. Yeah, I could probably save money staying at the WBC every year. But I love Disney, I can't see us ever not going--I want the deluxe accommodations and convenience that it has to offer. I am finally ok with breaking up with my money . I can afford it pretty easily--between my husband and I (company match included) we are putting in 18% of our AGI into retirement and I am driving a car that has been paid off for years. We bought our home during the recession at a great price so our mortgage is less than most pay for rent. And you know what? I just WANT to have my piece of the bubble. There. I said it. I realize my piece will be nothing more than a room for so many years but, regardless, I want it.

Again, thank you all for such great tips and things to think about. Now....onto WHERE I will get to call home

 

[Dean]

I want to thank everyone for all the really great advice. I finally came to the conclusion that DVC will work for us. Yeah, I could probably save money staying at the WBC every year. But I love Disney, I can't see us ever not going--I want the deluxe accommodations and convenience that it has to offer. I am finally ok with breaking up with my money . I can afford it pretty easily--between my husband and I (company match included) we are putting in 18% of our AGI into retirement and I am driving a car that has been paid off for years. We bought our home during the recession at a great price so our mortgage is less than most pay for rent. And you know what? I just WANT to have my piece of the bubble. There. I said it. I realize my piece will be nothing more than a room for so many years but, regardless, I want it.

Again, thank you all for such great tips and things to think about. Now....onto WHERE I will get to call home

Good luck with your quest.

 

[VrBchJ]

Keep us updated on your progress. BTW my decision to purchase BWV and BLT was based totally on emotion!

 

[cdnjason]

I want to thank everyone for all the really great advice. I finally came to the conclusion that DVC will work for us. Yeah, I could probably save money staying at the WBC every year. But I love Disney, I can't see us ever not going--I want the deluxe accommodations and convenience that it has to offer. I am finally ok with breaking up with my money . I can afford it pretty easily--between my husband and I (company match included) we are putting in 18% of our AGI into retirement and I am driving a car that has been paid off for years. We bought our home during the recession at a great price so our mortgage is less than most pay for rent. And you know what? I just WANT to have my piece of the bubble. There. I said it. I realize my piece will be nothing more than a room for so many years but, regardless, I want it.

Again, thank you all for such great tips and things to think about. Now....onto WHERE I will get to call home

Good luck. My decision was very similar to yours. I took time to research, run numbers, etc. In the end, it just made sense because we know we'll use it. Disney World vacations have become a routine for us. So why not buy in?

 

[linzjane88]

There are a ton of options as far as resale companies to go with. I am wanting to look at all my options company wise vs the obvious top few that come up on a google search. I see one that is on a website called "buy a timeshare dot com". They have quite a few listings at a lower price than the 'big guys'. Is the process still the same with these companies that list many different timeshare types vs exclusive DVC resales?

Also, it's insane to me that BCV is going for a pretty close price to BLT considering how much more time BLT gives you for the price. If expiration date wasn't such a big factor for me I would love to go with BCV though. I think I have narrowed down the most important features for us which are:
-walking distance to a park (or DTD in SS's case)
-no 2042 expirations

 

[ziravan]

There are a ton of options as far as resale companies to go with. I am wanting to look at all my options company wise vs the obvious top few that come up on a google search. I see one that is on a website called "buy a timeshare dot com". They have quite a few listings at a lower price than the 'big guys'. Is the process still the same with these companies that list many different timeshare types vs exclusive DVC resales?

Also, it's insane to me that BCV is going for a pretty close price to BLT considering how much more time BLT gives you for the price. If expiration date wasn't such a big factor for me I would love to go with BCV though. I think I have narrowed down the most important features for us which are:
-walking distance to a park (or DTD in SS's case)
-no 2042 expirations

I don't like BLT. I love BCV. That's a matter of personal preference, but that's my preference.

27 years is a long time. I'll be in my 70's.

I have a 2066 resort, Poly. I'll be 98 when my RTU (right to use) is up.

At some point, your decision should focus on how you'll use the next decade or two of benefit.

Buy where you want to stay. That's good advice. I wouldn't and didn't place much stock in end dates.

So I won't have BCV in my 80's (unless I buy when they expand there rumored to be after VWL). I'm going to enjoy the heck out of it now.

I'm looking most forward to my week in a BCV 1BR during the upcoming F&W.

 

[SuperRob]

When we ran all the numbers (then confirmed by our spreadsheets after a couple of trips), you're essentially buying discounted Deluxe accommodations. Effectively, you're staying Deluxe for the price of a Moderate. You do get some additional discount opportunities, but that's the long and short of it.

For the trips we've taken (see my signature), we've stayed at all Disney's flagship hotels, and we've paid between $120 and $160 a night. Rack rates are well over $450 a night at any of those hotels. (Note, we didn't finance our DVC membership.)

If you're happy staying at Moderate resorts, DVC won't save you anything, but it will give you an "plussed up" experience. If you prefer staying at Deluxe resorts, you'll save some money in the long run.

Our break even was basically hit this year. There's a few different ways to calculate it, but even the most conservative numbers I've run has us breaking even after only five years of ownership. With a contract not ending until 2054, we're basically staying on Disney money from now on. It's more complicated than that, of course, but the numbers can work.

As soon as you finance, the numbers get trickier. You're paying less upfront, but you're paying more per year than just dues, skewing your break even with interest payments. The last time I estimated, it would take at least 13 years to break even, possibly more depending on the loan term.

Of course, life threw us a curve ball, and we've now got a little princess in our home, so we're trying to get a second contract to bolster our points and give us something to leave her later if she wants it.

 

[linzjane88]

I am really tempted to put an offer in on a BLT for 110/point--it's a 200 point contract with no 2016 points but I think the per point cost is low enough to offset the lack of this years points? I looked thru the ROFR thread and didnt see much for less than 113 a point.

This is so exciting but stressful. This is why I will still be driving the same car in twenty years and be in the same house. I hate scouring for deals and always questioning what I will pay! It is slightly more fun with Disney purchases though

 

[SleighBelle]

Go for it! Seems like 99.9% of the people on this forum are happy with their purchases!

(My offer was accepted and am waiting to enter ROFR)

 

[linzjane88]

Well we put in an offer on SS....we shall see! I just couldn't justify buying into BLT when the best deal I could find was still over $30 more expensive per point (and that for a partially stripped contract!). Plus BLT's look never appealed to me, if it weren't for proximity to MK there would be no appeal. However, all my excessive spreadsheets pretty clearly showed the best choice (strictly looking at cost per point, annual fees, length of contract) was : SS, BLT, GFV. The worst values using the same formula were at VB, BCV, BWV--in that order.
While this purchase obviously is considered a luxury I still want to get the most bang for my buck and really we are happy at any resort. Since I was a teenager I have looked at SS and though of how cute and "homey" they looked (okay, SS and GF. ).

I got an update from the agent who said the sellers are going through divorce (reason for sale) and the offer has to get approved from both parties via the attorney so we might be waiting to hear for a few days. Oh well, I can wait.

 

[SuperRob]

Well we put in an offer on SS....we shall see! I just couldn't justify buying into BLT when the best deal I could find was still over $30 more expensive per point (and that for a partially stripped contract!).

SSR is a great way to start. Inexpensive, reasonable dues, and you can always book there at 11 months, and then use the 7 month window to try and find something else. We own at SSR, and we haven't stayed there a single time yet.

 

[Dean]

Well we put in an offer on SS....we shall see! I just couldn't justify buying into BLT when the best deal I could find was still over $30 more expensive per point (and that for a partially stripped contract!). Plus BLT's look never appealed to me, if it weren't for proximity to MK there would be no appeal. However, all my excessive spreadsheets pretty clearly showed the best choice (strictly looking at cost per point, annual fees, length of contract) was : SS, BLT, GFV. The worst values using the same formula were at VB, BCV, BWV--in that order.
While this purchase obviously is considered a luxury I still want to get the most bang for my buck and really we are happy at any resort. Since I was a teenager I have looked at SS and though of how cute and "homey" they looked (okay, SS and GF. ).

I got an update from the agent who said the sellers are going through divorce (reason for sale) and the offer has to get approved from both parties via the attorney so we might be waiting to hear for a few days. Oh well, I can wait.

IMO SSR is the best $$$ value for WDW, BLT second over time.

 

[jerseyduke]

Hello!
We (I) have been evaluating a DVC purchase for a few years on and off. Now that point prices are through the roof I have finally decided this is a direction we need to go Mr. Linzjane88 might need some more convincing. As far as home resort convenience is biggie. We love the dining at Epcot and DTD. SSR, BCV, or BWV seem to be where I am leaning but I am also looking at the ease of selling down the road. We are pretty hardcore Disney fans--I can't see us ever NOT going to Disney but who knows the future? I am very much a spreadsheet nerd and while I feel like we have reached the point where DVC would be a wise choice I also like to have some data in an Excel spreadsheet to back me up. While I enjoy hard numbers and data, economics and money talk are not my strong point so some of the ready-made DVC valuation spreadsheets keep losing me. I want to 'run the numbers' but I want to make sure I am doing it accurately and I am running into a few questions after hours pouring through threads:

1) Why do people compare the value of the dollars spent towards DVC against the value of the same dollars put into a retirement fund or high-interest savings? Obviously, that's going to make DVC look like a terrible way to go but it's not realistic. If I don't buy DVC that doesn't mean I am going to take my vacation fund and cancel all vacations forever to invest. I am still going to spend X dollars per year, just on hotels. Am I missing something there?

2) Why factor in inflation into the cost of long term ownership? I understand that in 2040 the cost of a hotel room is going to be a gazillion dollars but the cost of MF's is going to have gone up as well and I assume I am going to be making considerably more as well. Can't I just leave those out of the equation for convenience?

3) A contract that expires in 2042 seems like a glaringly poor choice, right?. If I decided to sell in 20 years I imagine people are going to be less interested in a contract that's going to have 0 value in 11 years. I realize this is not an investment but given the option isn't a longer contract much better?

4) Expiration dates aside, could BWV/BCV be a solid choice considering the walking distance to what will likely be a very popular Star Wars land? Assuming it's completed by 2042 .

5) Does it seem like a possibility that point rental might become considerably more popular over resale the closer we get to expirations? For those who like deluxe accommodations but don't want to pay cash prices and won't want to buy a contract that has a few years left.

We plan to go in September doing a split stay at AKL and BCV on rented points. Any purchase won't be until later in the year more than likely. My plan is to continue gathering data and then present a strong case to DH after the deluxe stay in September. As it is right now trying to explain how DVC works is getting me nowhere. I think I need some of the lines from the DVC sales pitch

ETA: I see the typo in my thread title and can't figure out how to change it so it stays
ETAx2: I figured it out.