Monthly Fees vs. Cost of OOP Room

[joeyrose]

there is never a loss until one sells. it is really a moot point how one calculates a paper loss. that said, in today's market, i would never buy direct. i believe that most who do are simply unaware of the resale market other than through disney.

 

[DougEMG]

If buying DVC is like buying a car then:

• Buying DVC direct is like buying a new car with seat covers on all the seats that you can drive off the lot right away.
• Buying DVC resale is like buying a new car for half the price but only getting seat covers on the front seats and having to wait 2-3 months to get delivery of your car.
• Buying DVC direct can make sense if you can't find the exact model car you are looking for or want to go for a drive right away.

Car = resort, points and UY
Seat covers = perks

 

[radmcg]

DougEMG your kind of scaring me every time I read one of your post I understand it right off. I never really liked seat covers.

 

[JimMIA]

there is never a loss until one sells. it is really a moot point how one calculates a paper loss. that said, in today's market, i would never buy direct. i believe that most who do are simply unaware of the resale market other than through disney.

In my post above, I wasn't really talking about realized vs. unrealized losses.

Bill said if he sold now, he would net about a 30% loss after holding some of his contracts as long as 12 years. Owning them that long, he obviously paid FAR below what anyone is paying direct these days, and probably bought some contracts for less than they are selling for resale today.

So when someone jumps in, ignores the 10% commission and says, "Hey, 20% over 12 years ain't bad!" it just makes sense to point out that there is a gaping hole in that logic.

If Bill had bought in 2010, instead of 2000, his loss would have been MUCH greater. If he'd paid $100, $110, $120 per point, he'd likely be selling at a 40-50% loss + commission...and over 2 years, not 12.

And, in fact, that is exactly what a LOT of DVC owners have done over the last couple of years...sold at HUGE losses. Many haven't even been able to sell -- they've just walked away.

When we have discussions like this, it's fun to do the hypothetical stuff, but we also need to have a solid understanding of the history.

To take things out of historical context can seriously mislead readers...especially newbies who don't know any better.

DVC resale prices have taken a precipitious drop in the last 2-3 years. Not taking that recent history into account really can lead to some erroneous assumptions about the "value" of DVC.

When we post stuff here, those of us who have been here a while are always conscious of the fact that some readers do not have the historical context and therefore we have to really be careful what we say and how we say it. Everyone here is trying to help each other, but sometimes making easy, simple statements can be misleading to folks who are new to the discussion.

We don't want them thinking, "Hey Bill only took a 30% hit in 12 years -- 2.5% per year; that ain't bad..." when in fact they may be looking at 50-60% (or more) in two years if they buy now and have to sell.

 

[joeyrose]

none of us know what is going to happen in the future with dvc. buying a small number (e.g., 150) of dvc points on the resale market just isn't as scary or as big a decision as some try to make it. let's see, 150 points at $50 each (can be had without too much work), we're talking about $7500 invested. this investment is for 30 years use at a minimum, with the mf's paid annually. and i feel certain that the points will be worth something in five years if one chooses to sell. we're not talking about buying a house or a spouse here. too much analysis causes paralysis.

 

[ELMC]

none of us know what is going to happen in the future with dvc. buying a small number (e.g., 150) of dvc points on the resale market just isn't as scary or as big a decision as some try to make it. let's see, 150 points at $50 each (can be had without too much work), we're talking about $7500 invested. this investment is for 30 years use at a minimum, with the mf's paid annually. and i feel certain that the points will be worth something in five years if one chooses to sell. we're not talking about buying a house or a spouse here. too much analysis causes paralysis.

Everything is relative and I'm guessing from your perspective, $7500 is not a lot of money. But the thing is, for a large portion of the population it is. So if somebody has saved up to buy DVC and spends $7500 on a contract, and then loses their job or has some other issue and is forced to sell, they could be looking at losing thousands of dollars. That is a big deal for some people.

I understand the paralysis by analysis statement, but I think it's equally dangerous to be so flip with significant amounts of money. I would recommend that everyone read Jim's post again trying to find the points that ring true to them, not those that they can try to refute. It is sound advice that has the benefit of experience and time.

 

[ELMC]

A good analogy would be "like purchasing a new car and driving it off the lot"

Great analogy, and it can even be taken further. Instead of seeing a 20% depreciation in your car, you could see a 40-50% depreciation in your DVC. Also, people are more likely to accept this loss of value in their car because they plan on driving it at least 4-5 years and even in the toughest of times people aren't likely to sell their car to get some quick cash. (I mean, how else would they get to work?) So it's a pretty safe bet that your car's depreciation won't affect you.

DVC, on the other hand, is a luxury purchase that MANY people have to sell within the first few years of ownership. The possibility of taking a huge hit is very real, and it is dangerous to advise people to ignore that possibility without knowing the details of their situation (like some posters on this thread have done).

But just like new cars, somebody has to 'drive them off the lot' or they would never be available for resale.

So true.

 

[joeyrose]

if someone doesn't have $7500 of discretionary income to make dvc purchase, then they should not make a dvc purchase. this is a luxury item and it is not for folks who don't have the money. and, as with any purchase, there is a risk. but, this is not a big, scary, or irrevocable decision.

i own more points than most and have for more years than most. i've bought points direct, bought them resale, and sold them resale. it just not as a big a deal as some try to make it.

start small, buy resale with cash, hope for the best, but realize that you may lose some of this discretionary investment that has a limited life in the first place. then, don't worry, be happy and enjoy! a cash resale dvc purchase is much less of a crap shoot than most things in life.

 

[ct_chris]

Trying to breakdown true savings of DVC before we buy. We are once per year, prefer Deluxe kind of people (although Poly is our favorite). Does the annual MF negate the value of buying resale (probably about 160 points at AKL)? Seems that the DVC resale is worth it but then when you look at the MF per year those alone are almost what one pays for a room with a discount or a promotional rate. So please tell me how DVC resale with MF is better than waiting for promos/discounts? What's the advantage then to DVC? Thanks in advance!

Wallygirl-
Since you want to stay at a Deluxe resort, I will compare DVC Villas vs. standard rooms at the Beach/Yacht Club since the amenities, extra Magic hours, etc. apply equally to both, thus the only difference is cost, room size, and housekeeping (daily for Standard Beach Club, "trash and tidy" day on day four for DVC).

I am going to use Beach Club - Standard View Room (40% discount) and Beach Club Villas (107 pts/ week - Studio and 197 pts/week - 1 br. both adventure season) for my comparison.
For adventure season the rack rates for Beach Club 2012 is $335 - weekdays and $360 - weekends, so a total of $2395 at rack rate. Now let's say you get a 40% discount this would cost you $1610 Total.
40% Discount - $1437.50 + 12.5% tax (172.50) = $1610 total.

2012 Beach Club MF are $5.50/ point
and my $78/pt resale buy-in cost for 30 years = $2.60/point/year. So total cost point for 2012 is $8.10.

Therefore
Beach Club Standard Room = $1610
BCV Studio = 107 * 8.10 = $866.70
BCV 1br = 197 * 8.10 = $1595.70

Now sq ft comparison for the three rooms are
Beach Club - 381 sq ft - $1610
BCV - studio - 356 sq ft - $866
BCV - 1 br. - 726 sq ft - $1596

As you can see, if you can afford the upfront cost of DVC, go to Disney every year or two and like to stay in Deluxe resorts on property than it is a good value when you run the numbers considering that for the same cost a a standard room you get a 1 br villa with approx. twice the space, a full size fridge, king bed, kitchen, and washer/dryer.

So to further answer the question you asked, the numbers and comparison above should give you an idea as to the the cost benefit of buying DVC resale + yearly MF cost compared to waiting for Annual Passholder promos/discounts (40%)? Finally, with DVC you can book your trip 11 months in advance and not have to wait/hope for a Annual Passholder promos/discounts.

 

[JimMIA]

we're not talking about buying a house or a spouse here.

You BUY spouses? I might be willing to part with one; let me know if you're interested!

 

[joeyrose]

You BUY spouses? I might be willing to part with one; let me know if you're interested!

yep, wondered if someone would catch this...now that is a BIG purchase, one that many of us make without a lot of research/analysis!

 

[Sandisw]

yep, wondered if someone would catch this...now that is a BIG purchase, one that many of us make without a lot of research/analysis!

Sorry...but this just hit the funnybone right today!!!!

 

[DannysMom]

You BUY spouses? I might be willing to part with one; let me know if you're interested!

yep, wondered if someone would catch this...now that is a BIG purchase, one that many of us make without a lot of research/analysis!

Yeah, not willing to sell my spouse..... I mean really, without his income, even if I got really good price for him, how would I afford the ongoing costs of DVC? .

When you read this, Happy Anniversary, honey.

 

[RayJay]

Trying to breakdown true savings of DVC before we buy. We are once per year, prefer Deluxe kind of people (although Poly is our favorite). Does the annual MF negate the value of buying resale (probably about 160 points at AKL)? Seems that the DVC resale is worth it but then when you look at the MF per year those alone are almost what one pays for a room with a discount or a promotional rate. So please tell me how DVC resale with MF is better than waiting for promos/discounts? What's the advantage then to DVC? Thanks in advance!

I prefer to keep it simple.

Staying 1 bedroom christmas week.

Yearly dues = $1000
Rack Rate during xmas for a week = $4000

I believe it pays for itself after 4 to 5 trips, then it's just dues.

RayJay

 

[JimMIA]

yep, wondered if someone would catch this...now that is a BIG purchase, one that many of us make without a lot of research/analysis!

Like buying DVC, it's NOT the initial purchase price.

It's the annual maintenance that is the real cost!

 

[Missyrose]

Quote:

Originally Posted by wallygirl

Trying to breakdown true savings of DVC before we buy. We are once per year, prefer Deluxe kind of people (although Poly is our favorite). Does the annual MF negate the value of buying resale (probably about 160 points at AKL)? Seems that the DVC resale is worth it but then when you look at the MF per year those alone are almost what one pays for a room with a discount or a promotional rate. So please tell me how DVC resale with MF is better than waiting for promos/discounts? What's the advantage then to DVC? Thanks in advance!

I prefer to keep it simple.

Staying 1 bedroom christmas week.

Yearly dues = $1000
Rack Rate during xmas for a week = $4000

I believe it pays for itself after 4 to 5 trips, then it's just dues.

RayJay

And the cost of actually buying the points gets factored in how?



Posted from DISboards.com App for Android

 

[rlmas]

I think the difference between the $4,000 and the $1,000 or $3,000 over the above stated 5 or 6 trips equals $15,000 to $18,000 and covers the purchase price. Every trip thereafter you only pay the dues which will increase above the $1,000 but never catch the then current price of the room so you save the difference. I hope this helps.

 

[BestDadEver]

I think the difference between the $4,000 and the $1,000 or $3,000 over the above stated 5 or 6 trips equals $15,000 to $18,000 and covers the purchase price. Every trip thereafter you only pay the dues which will increase above the $1,000 but never catch the then current price of the room so you save the difference. I hope this helps.

I like this guy . But many here have difrrent ways of calculating their dvc value .

 

[alice99]

Excuse me if this has been posted, or something similar. I copied and pasted this from an older thread , debating the same topic, a few months ago.

This is how I figured the cost per point on my reservations.

I have 50 Boardwalk points that cost me 80$ / per point. = 4000.00
Points are good for 30 more years .... 50 x 30 = 1500 points total.
4000 divided by 1500 = 2.67 per point.

I now add the 2.67 to my annual maintenance per point and that is the ACTUAL cost per point to use.

So if maintenance is 5$ per point per year.... this year my cost per point for reservation equals...

2.67 + 5.00 = 7.67 per point.


Missing from this equation is any interest paid on loan to purchase the points (though I didn't take any loans).... also closing costs, you can add that into original cost of purchase.

My numbers, above are very similar to my actual transaction... though not exact. They are hypotheticals to show how I figure the true costs of my vacation.

I have rented my points out in the past , and used the $$ to go on other vacations (or in the case of this year.... pay my son's medical bills)

 

[alice99]

This is exactly the kind of comparison I'm talking about. Unless you would actually pay $800 per night for that room, this is an absolutely meaningless exercise.

The price of a hotel room is only relevant for comparison if you would PAY that price as the alternative to using DVC. If you really would typically pay $800 per night for a hotel room at WDW -- year after year after year -- then comparing the cost of DVC to that hotel room is valid.

If you wouldn't pay $800 -- and very few of us would -- it's a make-believe comparison. That's like saying I'm going to Europe for vacation because it's less expensive than space tourism.

Comparing DVC to an offsite hotel (or timeshare) is probably a more accurate comparison because it is a real option that most of us have used prior to buying DVC.

It's much more realistic to evaluate a full week in a two-bedroom at Wyndham Bonnet Creek for $800 than it is to compare an $800 per night hotel room that nobody would book. Lots of people get that deal at WBC and some get it for less. One of our regulars here got it for <$500 just a couple of months ago.

I completely agree with your assessment, in fact we were a family that could NEVER justify paying on-site prices until we worked the numbers for DVC.
We went straight from being off-site , timeshare users to on-site DVC members.

Sorry....still baffled that anyone would take a loan out to purchase a timeshare especially an expensive one like DVC; specifically if the thought going in is to save money.......
No one should buy if the thought is that they can 'just sell it if it doesn't work out.' This isn't good risk management with your money.

I agree, if you want a truthful, real comparison, you have to include the interest also...... which, btw, is ridiculous!! Disney's interest is over 10%. Outrageous.