Net Present Value and DVC

[bighoo93]

Ultimately I'm just saying that I think it's almost inconceivable that the order of prices per point does not remain Dues < Rental < Cash.

I agree. If this ever got out of whack it would be a very temporary thing.

 

[Kwkiwi]

Interesting to read through this thread some 6 years later and see that rental rates have risen to $18 a point. Thats an anualised 7% increase in the rental rate since it was $12 in this thread. There are a fair number of Facebook groups where renters and Dvc owners can try and match up so David’s is not setting the price so much. Dues are going up big time as well!!

Also interesting to read the npv approach to analysing a Dvc contract. My DH did it slightly differently to OP taking all the factors into account that the OP mentions.

DH calculated the discounted cash flow per year based on contract price, staying at Dvc every second year and renting points out every other year. From there he calculated the npv for the contract. We made an assumption that in yr 15 we might sell the contract for a residual value so stopped the calculation after that. Then we divided the discounted cash flow by the number of stays and nights stayed over the term we would hold the contract to get a discounted average nightly rate for the contract. From there we appraised the nightly rate and decided whether it was A. Within our price range for what we spend on hotels for a holiday and B. Was it significantly cheaper than what we would pay in terms of a cash rate for similar room type. We use this spreadsheet from time to time to appraise Dvc contracts on offer.

Agree with several points the OP makes. That it’s in the interest of Disney to keep the cash rates of Dvc villas in particular much higher than the ‘price’ you pay by owning Dvc. The interesting thing I found from reading the TripAdvisor reviews is that people out there actually pay these phenomenal cash rates. Also agree that the lower an interest rate used and using higher inflation rate does make Dvc npv calculations stack up much better. Anyway I’m happy. I just used our SSR Contract to secure some nights at copper creek cabins. OP - did you ever do an analysis on the best bang for your buck Dvc resort contract? Would be interested to know if you did!! Disclosure my husband is a finance major and works in the financial markets as an analyst.