Numbers

[Tdisney]

Ok I crunched some more numbers and now Im having doubts. Ok for one week in may at the BCV, 1 bedroom suite for a family of four with park hopper and water park the full price was 5000. Now for me to get a week in may I need 252 points for a 1 bedroom suite at a cost of around 22500. Now maintenace fees on that are 1260/year. A week park hopper pass for a a family of 4 with water park option is 1242. So not including my 22500 investment im at around 2500/year that i will have to pay for the rest of the contracts life to go every year. So if I booked through disney over the next ten years its going to cost me 50,000. If I buy DVC and tickets seperately Im at 47500 = (2500 * 10) + 22500. Not to mention if you are diligent and would have taken that 22500 and invested it in something that over ten years gives you an 8 percent return you will earn 1800 annually not counting compounded interest. So if i keep the 22500 and make my 18000 over ten years im at 40,000 cash in my pocket. Subtract that from the 50000 it would cost me to go through disney and im negative 10000 over ten years. Now if i give DVC my 22000 plus 1260 a year in maintenance fees and 1242 in tickets im out 47500. Help me ratoinalize this.

 

[cheezNE1]

Ok I crunched some more numbers and now Im having doubts. Ok for one week in may at the BCV, 1 bedroom suite for a family of four with park hopper and water park the full price was 5000. Now for me to get a week in may I need 252 points for a 1 bedroom suite at a cost of around 22500. Now maintenace fees on that are 1260/year. A week park hopper pass for a a family of 4 with water park option is 1242. So not including my 22500 investment im at around 2500/year that i will have to pay for the rest of the contracts life to go every year. So if I booked through disney over the next ten years its going to cost me 50,000. If I buy DVC and tickets seperately Im at 47500 = (2500 * 10) + 22500. Not to mention if you are diligent and would have taken that 22500 and invested it in something that over ten years gives you an 8 percent return you will earn 1800 annually not counting compounded interest. So if i keep the 22500 and make my 18000 over ten years im at 40,000 cash in my pocket. Subtract that from the 50000 it would cost me to go through disney and im negative 10000 over ten years. Now if i give DVC my 22000 plus 1260 a year in maintenance fees and 1242 in tickets im out 47500. Help me ratoinalize this.

Where can you earn 8% ROI now adays.
You're also assuming for the life of the contract, the price on all the above will stay the same.

 

[Paging Tom Morrow]

There are many mathematical problems with your analysis, but in reality if you are buying DVC in place of an investment, you should probably find another place to invest.

In my opinion, you need to withdraw the money spent on Disney accomodations out of that investment fund each year if you are going to do a real/cost benefit analysis of how to better spend that money. If you do that, your fund will be dried up in about nine years.

If you add back in the dues that you would be saving each year, you'll get all the way to 13 years before hitting the negative range.

Additionally, DVC has some value of what it can be sold for. Most owners have positive value over their initial buy-in costs. So, they've received vacation accomodations for nothing more than the cost of annual dues.

Finally, I think an 8% return on any investment in the new global economy is way too optomistic. How have your investments performed since the turn of the century? The economy of this millenia is very different than the economy of the mid 1900's which many economists use to produce an average annual return of 8%.

 

[DISNEY FIX]

I'm not trying to be a jerk but, the 30k we bought BCV and VWL with, would like the rest of our portfolio would be approx. worth 15k. So I feel ok with the investment has paid off already for future vacations.

 

[Paging Tom Morrow]

So if i keep the 22500 and make my 18000 over ten years im at 40,000 cash in my pocket. Subtract that from the 50000 it would cost me to go through disney and im negative 10000 over ten years. Now if i give DVC my 22000 plus 1260 a year in maintenance fees and 1242 in tickets im out 47500.

You can't accept interest on all $22500 if you are also drawing from this fund for your vacations. When you take out the costs of the vacation accommodations on an annual basis, the math is very different. You'll realize that you won't be able to pay for your annual Disney vacation from this fund in 8 - 13 years (as explained above).

 

[backyardponder]

One question in your analysis...are you planning to go every year for 1 week. If you are not, let's say you are going once every 3 years...then you only need one third the points since you can bank one year and borrow one year.

Let's say you want to go in July 2010 and you have a June use year and, for convenience, you need 300 points. You have a 100 point contract...

In June 2009 you get 100 points which you bank into 2010.
In June 2010 you get 100 points. Now you have 200.
For your July 2010 stay, you borrow 100 points from 2011. You now have 300.

 

[Paging Tom Morrow]

Year Last Years Funds + 8% Cost of Disney Accomodations (3% annual increase) Dues (3% annual increase) Remaining Funds
2009 $25,000.00 $3,758.00 $1,141.56 $22,383.56
2010 $24,174.24 $3,870.74 $1,175.81 $21,479.31
2011 $23,197.66 $3,986.86 $1,211.08 $20,421.88
2012 $22,055.63 $4,106.47 $1,247.41 $19,196.57
2013 $20,732.30 $4,229.66 $1,284.84 $17,787.47
2014 $19,210.47 $4,356.55 $1,323.38 $16,177.30
2015 $17,471.48 $4,487.25 $1,363.08 $14,347.31
2016 $15,495.10 $4,621.87 $1,403.97 $12,277.21
2017 $13,259.38 $4,760.52 $1,446.09 $9,944.96
2018 $10,740.55 $4,903.34 $1,489.48 $7,326.69
2019 $7,912.83 $5,050.44 $1,534.16 $4,396.55
2020 $4,748.28 $5,201.95 $1,580.19 $1,126.51
2021 $1,216.63 $5,358.01 $1,627.59 $(2,513.79)
2022 $(2,714.89) $5,518.75 $1,676.42 $(6,557.22)
2023 $(7,081.80) $5,684.31 $1,726.71 $(11,039.40)
2024 $(11,922.55) $5,854.84 $1,778.51 $(15,998.88)
2025 $(17,278.79) $6,030.49 $1,831.87 $(21,477.41)
2026 $(23,195.60) $6,211.40 $1,886.82 $(27,520.17)
2027 $(29,721.79) $6,397.74 $1,943.43 $(34,176.10)
2028 $(36,910.19) $6,589.68 $2,001.73 $(41,498.13)
2029 $(44,817.98) $6,787.37 $2,061.78 $(49,543.57)
2030 $(53,507.05) $6,990.99 $2,123.64 $(58,374.40)
2031 $(63,044.35) $7,200.72 $2,187.35 $(68,057.72)
2032 $(73,502.34) $7,416.74 $2,252.97 $(78,666.11)
2033 $(84,959.40) $7,639.24 $2,320.56 $(90,278.08)
2034 $(97,500.33) $7,868.42 $2,390.17 $(102,978.57)
2035 $(111,216.86) $8,104.47 $2,461.88 $(116,859.45)
2036 $(126,208.21) $8,347.60 $2,535.73 $(132,020.08)
2037 $(142,581.68) $8,598.03 $2,611.81 $(148,567.91)
2038 $(160,453.34) $8,855.97 $2,690.16 $(166,619.15)
2039 $(179,948.69) $9,121.65 $2,770.87 $(186,299.47)
2040 $(201,203.43) $9,395.30 $2,853.99 $(207,744.74)
2041 $(224,364.32) $9,677.16 $2,939.61 $(231,101.87)
2042 $(249,590.02) $9,967.48 $3,027.80 $(256,529.70)
2043 $(277,052.07) $10,266.50 $3,118.63 $(284,199.94)
2044 $(306,935.93) $10,574.50 $3,212.19 $(314,298.24)
2045 $(339,442.10) $10,891.73 $3,308.56 $(347,025.27)
2046 $(374,787.29) $11,218.48 $3,407.82 $(382,597.95)
2047 $(413,205.79) $11,555.04 $3,510.05 $(421,250.78)
2048 $(454,950.84) $11,901.69 $3,615.35 $(463,237.18)
2049 $(500,296.15) $12,258.74 $3,723.81 $(508,831.08)
2050 $(549,537.56) $12,626.50 $3,835.53 $(558,328.54)
2051 $(602,994.82) $13,005.30 $3,950.59 $(612,049.52)
2052 $(661,013.48) $13,395.45 $4,069.11 $(670,339.83)
2053 $(723,967.01) $13,797.32 $4,191.18 $(733,573.15)
2054 $(792,259.00) $14,211.24 $4,316.92 $(802,153.32)
2055 $(866,325.58) $14,637.57 $4,446.43 $(876,516.73)
2056 $(946,638.07) $15,076.70 $4,579.82 $(957,134.95)
2057 $(1,033,705.75) $15,529.00 $4,717.21 $(1,044,517.54)

 

[maburke]

Ok I crunched some more numbers and now Im having doubts. Ok for one week in may at the BCV, 1 bedroom suite for a family of four with park hopper and water park the full price was 5000. Now for me to get a week in may I need 252 points for a 1 bedroom suite at a cost of around 22500. Now maintenace fees on that are 1260/year. A week park hopper pass for a a family of 4 with water park option is 1242. So not including my 22500 investment im at around 2500/year that i will have to pay for the rest of the contracts life to go every year. So if I booked through disney over the next ten years its going to cost me 50,000. If I buy DVC and tickets seperately Im at 47500 = (2500 * 10) + 22500. Not to mention if you are diligent and would have taken that 22500 and invested it in something that over ten years gives you an 8 percent return you will earn 1800 annually not counting compounded interest. So if i keep the 22500 and make my 18000 over ten years im at 40,000 cash in my pocket. Subtract that from the 50000 it would cost me to go through disney and im negative 10000 over ten years. Now if i give DVC my 22000 plus 1260 a year in maintenance fees and 1242 in tickets im out 47500. Help me ratoinalize this.

You're only counting up 10 years, but you are using the whole price of a contract that has more than 30 years left. After 10 years, you could sell it, who knows, you may get as much as you paid for it. Or rent the points for the rest of the years, at $10 per point, it's paid for itself.

It's much more about how you want to vacation, if it is a match for you.

 

[CarolA]

Additionally, DVC has some value of what it can be sold for. Most owners have positive value over their initial buy-in costs. So, they've received vacation accomodations for nothing more than the cost of annual dues.

I agree with EVERYTHING but this statement.

DVC is an EXPIRING asset. As we get closer to that expiration I expect that values will go DOWN not up! I would not assume you can sell for cost or close to it. If you do, great! But.... Why would someone pay top dollar for an asset with 10 years left when Disney will likely be selling "new" assets with 50 years left?

The big problem I have with the OP's math is how did she/he come to the $50,000 to go to Disney every year for 10 years. And park tickets come out of the equation. If you plan to go you buy them either way.

A week at a moderate at RACK rate is running about $1200 right now. While this year Disney has "deals" that's not the general rule and in truth they RAISE the price to give the deal. Based on the rate of increase of a Disney room that's where I see the "guranteed" 8 percent. Disney gets it LOL! Since the ticket in your example costs $1242 that means you paid around $3,800 for the room

Assuming a 5% price increase at Disney each year for lodging (which when you include tax seems more then possible)

Year 1 $3,800.00
Year 2 $3,990.00
Year 3 $4,189.50
Year 4 $4,398.98
Year 5 $4,618.92
Year 6 $4,849.87
Year 7 $5,092.36
Year 8 $5,346.98
Year 9 $5,614.33
Year 10 $5,895.05

Total $47,795.99

Tickets cost the same no matter what (and in truth if you buy from a broker like Undercover Tourist are cheaper then Disney LOL!) But assuming NO price increase on tickets thats another $12,420 making your total cost to book direct $60,000 or so not the $50,000 you post (And let's get real, Tickets are Going UP!!!! They go up EVERY YEAR!)

Now if you were doing a value resort, the math might not make ANY sense. They are cheaper and more likely to get "discounts". If you really want a 1 bedroom then... it does make sense. They cost a lot and don't have as many discounts!

There is another poster on this board doing the same thing, but they are going to stay value. In that case the math doesn't really add up. Deluxe or 1 bedroom... it probably does.

Now the bigger question. Do you WANT to go to Disney every year? If this meant that I could NOT go someplace else... it would be a no go for me. I can't imagine ONLY going to Disney. But I have enough vacation time and descretionary income (and right now the ablity to work from whereever at least part of the time) that I use my DVC for "extra" trips LOL!

 

[Cmbar]

Ok I crunched some more numbers and now Im having doubts. Ok for one week in may at the BCV, 1 bedroom suite for a family of four with park hopper and water park the full price was 5000. Now for me to get a week in may I need 252 points for a 1 bedroom suite at a cost of around 22500. Now maintenace fees on that are 1260/year. A week park hopper pass for a a family of 4 with water park option is 1242. So not including my 22500 investment im at around 2500/year that i will have to pay for the rest of the contracts life to go every year. So if I booked through disney over the next ten years its going to cost me 50,000. If I buy DVC and tickets seperately Im at 47500 = (2500 * 10) + 22500. Not to mention if you are diligent and would have taken that 22500 and invested it in something that over ten years gives you an 8 percent return you will earn 1800 annually not counting compounded interest. So if i keep the 22500 and make my 18000 over ten years im at 40,000 cash in my pocket. Subtract that from the 50000 it would cost me to go through disney and im negative 10000 over ten years. Now if i give DVC my 22000 plus 1260 a year in maintenance fees and 1242 in tickets im out 47500. Help me ratoinalize this.

A couple of points:
One bedrooms are the worst use of your points. Do you ever see yourself using the studios? If so, lower point value is a possibility.

If you are DVC owner you should take advantage(if you can) of maximizing your ticket purchases. Either buy Annual passes with the 100 discount for each member of the family and stager your trips so you at least use use one cost of tickets twice in one year. Better yet buy non expiring tickets to use on mulitiple trips. Also, why in the world would you buy water park and fun each time you go to Disney. One time buy the tickets and make them non expiring and use them over mulitiple years trips.

In addition to what other posters have said, you probably won't get an 8% return on your money and also then you don't have that money to spend on vacations. At the end of 10 years when you have shelled out $5000 a trip (this is today's prices and will not be the cost in 5 or 10 years) you have nothing to show for it. At the end of 10 years you have a DVC membership for an additional 30 to 40 years with just maintenance to pay.

If you only plan to go to Disney once a year or only can see yourself doing that for the next ten years, DVC probably isn't for you. I know I will be there in 20 years with my Grandkids, so I want to invest in this vacation future for my children and their children. Yes I could put it all in an account for them, but then the account can tank and they would have nothing and no memories that we cherish.

just my 2cents! Good Luck on your decision!

 

[DebbieB]

A couple of points:
One bedrooms are the worst use of your points. Do you ever see yourself using the studios? If so, lower point value is a possibility.

I disagree. The 1 bedrooms and larger are the best of DVC. Studios have less square footage than most WDW deluxe resorts. I would never have bought DVC to always stay in a studio, especially with a family of 4. I would have just kept staying in deluxe resorts. I guess I got spoiled because my first DVC experience was in a 2 bedroom.

 

[Dean]

I disagree. The 1 bedrooms and larger are the best of DVC. Studios have less square footage than most WDW deluxe resorts. I would never have bought DVC to always stay in a studio, especially with a family of 4. I would have just kept staying in deluxe resorts. I guess I got spoiled because my first DVC experience was in a 2 bedroom.

studios and 2 BR are the best value for the right size party, 1 BR are the worst value from a $$$ standpoint along with 3 BR units comparatively.

Regardless of whether you agree with the OP assumptions, using a full week and a 1 BR unit, it's likely you can never make the numbers work out to support buying in, at least with the savings I would demand. IMO, if one is going to buy in, you need to recoup your initial investment IN 10 YEARS, take into account the lost value of money, add in the dues and still have a 20% discount for DVC to make sense from a financial standpoint. Even then, you need to compare to what you would have spent otherwise; using the rack rate for the DVC unit is not an accurate representation from a $$$ standpoint unless you would consistently rent DVC on cash OR suites at non DVC Disney resorts.

 

[Paging Tom Morrow]

Additionally, DVC has some value of what it can be sold for. Most owners have positive value over their initial buy-in costs. So, they've received vacation accomodations for nothing more than the cost of annual dues.

I agree with EVERYTHING but this statement

I don't see how anyone could disagree with the previous statement. It's a fact that every DVC contract has a financial value at this point. It may not be equal to purchase price (although in many cases particularly for those who purchased pre-August 2003, the current value exceeds the initial buy-in), but it does have SOME value.

The OPs original statement ran a 10-year cost analysis and did not account for the residual value of their DVC purchase at that 10-year point. Even if you sold the specified DVC membership (252 points) originally purchased at approximately $100 for $50 per point, that's still $12,500 of value that was not calculated into the cost analysis.

 

[Deb & Bill]

I disagree. The 1 bedrooms and larger are the best of DVC. Studios have less square footage than most WDW deluxe resorts. I would never have bought DVC to always stay in a studio, especially with a family of 4. I would have just kept staying in deluxe resorts. I guess I got spoiled because my first DVC experience was in a 2 bedroom.

I'm with you on this one, too, Debbie.

 

[Dean]

I don't see how anyone could disagree with the previous statement. It's a fact that every DVC contract has a financial value at this point. It may not be equal to purchase price (although in many cases particularly for those who purchased pre-August 2003, the current value exceeds the initial buy-in), but it does have SOME value.

The OPs original statement ran a 10-year cost analysis and did not account for the residual value of their DVC purchase at that 10-year point. Even if you sold the specified DVC membership (252 points) originally purchased at approximately $100 for $50 per point, that's still $12,500 of value that was not calculated into the cost analysis.

There currently is a residual value. I do not think once can make that assumption on a long term basis. And I suspect that the majority of the members could NOT sell for more than they paid if you include the costs of resale. Still, it's reasonable to assume most cost sell for some value at least the next few years, after that, who knows.

 

[Sandisw]

OP, you mention that a typical vacation through CRO for BCV, with tickets, would run around $5000.00 per year.

If this is typical of what you normally spend on vacation (whether to WDW or elsewhere), then I think you need to compare the costs of DVC to your vacation dollars that would be spent.

If, after cost averaging everything out --upfront costs, MF, tickets, etc. for the life of the contract, and it comes out to LESS than $5000.00, you know that DVC is a good way to spend your vacation money.

If you are using money that you have earmarked for investment, then I agree with many of the others, that DVC may not be for you.

DVC is not an investment in anything other than vacation. When I decided to buy, this is exactly how I ran the numbers. I realize that I would be spending less over the years on vacation doing it this way and thus the reason I bought into it.

 

[Cmbar]

I'm with you on this one, too, Debbie.

I disagree with both of you . I won't buy into DVC to stay in a room with a kitchen and washer and dryer. Not planning on doing laundry or cooking while on vacation. I will be buying into DVC for the Resorts only. I want the deluxe resort for a lower price. The one bedroom may have a separate sleeping place for the adults, but it is still the same number of bedding (except in BLT and AKV). Everybody has their reasons, mine at this point would not be to use my points to get a bigger room, mine would be to spend more nights at Disney by getting the Studio accomodation. To each their own. That is why DVC is a personal choice and different for each potential purchaser.

 

[PinkTink63]

I disagree with both of you . I won't buy into DVC to stay in a room with a kitchen and washer and dryer. Not planning on doing laundry or cooking while on vacation. I will be buying into DVC for the Resorts only. I want the deluxe resort for a lower price. The one bedroom may have a separate sleeping place for the adults, but it is still the same number of bedding (except in BLT and AKV). Everybody has their reasons, mine at this point would not be to use my points to get a bigger room, mine would be to spend more nights at Disney by getting the Studio accomodation. To each their own. That is why DVC is a personal choice and different for each potential purchaser.

I'm with you! I bought into DVC knowing that we probably never would stay in anything but studios. We are a family of 3 and although, I would like to try a one bedroom, we more than likely won't. My family would rather have twice as long there than a bigger room! I do, however, splurge on views as opposed to standard views. That is why DVC works for us!

 

[CarolA]

There currently is a residual value. I do not think once can make that assumption on a long term basis. And I suspect that the majority of the members could NOT sell for more than they paid if you include the costs of resale. Still, it's reasonable to assume most cost sell for some value at least the next few years, after that, who knows.

I sold a HH after owning it for several years...... And I lost money! LOL!

The other unknown is how long Disney will "subsidize" the market. In 10 years BWV (where the OP wants to buy) will have what 25 years left? Disney will be selling "the Villas on the Moon" for $150 a point. If they aren't willing to deal with BWV and the 25 years left they could quit excersing ROFR. At that point expect the laws of supply and demand that effect ALL timeshares to hit! and DOWN DOWN got the prices.

A timeshare is NOT a financial investment that you should expect a return on, like a home. (That said my return on my home right now would be next to nothing! I could do better by selling my BCV!)

 

[hellerjw]

I disagree with both of you . I won't buy into DVC to stay in a room with a kitchen and washer and dryer. Not planning on doing laundry or cooking while on vacation. I will be buying into DVC for the Resorts only. I want the deluxe resort for a lower price. The one bedroom may have a separate sleeping place for the adults, but it is still the same number of bedding (except in BLT and AKV). Everybody has their reasons, mine at this point would not be to use my points to get a bigger room, mine would be to spend more nights at Disney by getting the Studio accomodation. To each their own. That is why DVC is a personal choice and different for each potential purchaser.

You are correct, there is no right or wrong way to use your DVC membership.

I think what they meant (at least this is how I feel) is that in order to get the main benefits of a DVC unit over a traditional hotel room you have to stay in a 1BR or larger because those are the units that include the full kitchen, washer/dryer, dedicated bedrooms, etc.

You can book cash rooms at any DVC resort without being DVC members so the resort itself isn't exclusive feature to DVC. Yes, you can save points only booking studios but for many of us the main draw to DVC was the larger units and the ability to spread out and not be cramped in a single room.