Need help understanding

[beezbaby]

We have considered buying a timeshare but I am trying to rationalize the maintenance fees and whether it more sense to just rent points year after year. We enjoy Disney and would like to visit every year or at least every other year. In order to buy a 1 bedroom we would need about 250 points which would put the admin fee at over $1000 a year.

Obviously, many of you have thought this through better than I so how did you come to the conclusion to go forward with the purchase.

One other question, what if ROFR?

 

[tjkraz]

In order to buy a 1 bedroom we would need about 250 points which would put the admin fee at over $1000 a year.

250 points would get you 8 nights per year in a 1B at SSR during Dream season. The rack rate for those same nights is $3160. Add in 11.5% tax and you could pay over $3500 for that room. Even if you want to assume a 30% discount off of the published rates, you'd still be paying $2500 for the room--quite a bit more than DVC dues alone.

Depending on how economically you intend to use your points and the assumptions you make in your calculations, you will probably find that you will break even on your initial investment within 5-10 years of purchase. After that, with the 50 year contracts at Saratoga Springs, you could get 40-45 years' worth of trips for a fraction of the cost.

I'm assuming you aren't currently paying cash to stay in a DVC 1 bedroom. If I'm correct, then remember a One bedroom is a pretty big upgrade from any other accommodation on site. Whirlpool tub, full kitchen, balcony, washer and dryer, separate living / bed roooms, etc. You need to decide whether the additional cost to upgrade to a 1B is worth it to you. DVC does have studio rooms, which are almost identical to standard rooms at WDW Deluxe resorts with the addition of a kitchenette. If you're trying to financially compare DVC to other on-site accommodations, then you should be looking at the studio, not the 1B.

One other question, what if ROFR?

Right of First Refusal. Before a DVC contract can change hands on the secondary market, DVC has the option to take it at the agreed-upon rates. If this happens the potential buyer gets nothing. This helps DVC keep a floor on prices. The current price point at which ROFR is exercised is pretty well known, within $2-4 per point.

 

[DrTomorrow]

You said that an alternative would be to rent points every trip. As we say here on the DIS DVC forum, when you buy into DVC you are buying a pre-paid (well, plus annual fees) vacation for 38 or 50 years. When you rent, there is no guarantee that points will be available at the resort and the time that you wish; it is also reasonable that the current $10-11 / point rate will increase to keep pace with rising cash rack rates. Finally, there are control benefits when you are an owner; when you rent, there is a lot of trust involved. The owner you rent from always has the ability to cancel the reservation out from under you - and you wouldn't find this out until you showed up at the front desk and they'd never heard of you. Yes, there are legal remedies, but that's cold comfort when you're roomless - or paying rack rate - at WDW.

If you really will be going every other year - at least in the beginning - you could buy a resale contract for 125 points and bank/borrow which would give you 250 every other year. You could always add-on if you decided to increase your visit frequency.

Good luck!

 

[wtpclc]

You can rent at $10 - $11 dollars per point. A quick and dirty calculation (not including present vs. future value of money or financing costs) comes out to ~$5.60 per point for members. If oyu only want to go every other year, you'd only need 1/2 the points.