Numbers

[Tdisney]

Hey thanks everyone for responding some great insight into how people view the DVC. Just a side note, for the people not getting at least an 8% return on your investments, you need to fire your financial advisor or get your money out of whatever firm you have it with. They are all crooks and have more of a commitment to themselves and to the market then you or the client. I started doing my own investments 2 years ago with ETFs and I am currently up for the year, but anyway. OK I refigured some numbers and since everyone thinks the 22500 that I put away for investments needed to be dipped into to pay for the vacation let me put it another way.

OK lets say I have 78000 to vacation with over the next ten years. OK I booked a week for a 1 bedroom suite at the BCV for just at 5000 including tax and a park hopper pass and water parks for a family of four. If I did that every year for the next ten years and included a 3% annual increase in prices for both room and tickets it comes to 57315. Also in the beginning I took 22500 and invested it at 8% and compounded the interest annually i would wind up with 48500. OK so i started out with 78000-22500-57315+ (22500 + 26000) = 46685. So 78000 - 46685 = 31315/10 years of vacation and I still have 46685 cash in my pocket

OK DVC way. I need 252 points to stay for a week which will cost 22500. Over ten years for maintenance fees and park tickets with a 3% annual increase is 28655. Subtract that from 78000 and you get 26845 left. Now you still have some value in your DVC contract but the question is how much will it be worth after ten years.


thoughts

 

[Cmbar]

Hey thanks everyone for responding some great insight into how people view the DVC. Just a side note, for the people not getting at least an 8% return on your investments, you need to fire your financial advisor or get your money out of whatever firm you have it with. They are all crooks and have more of a commitment to themselves and to the market then you or the client. I started doing my own investments 2 years ago with ETFs and I am currently up for the year, but anyway. OK I refigured some numbers and since everyone thinks the 22500 that I put away for investments needed to be dipped into to pay for the vacation let me put it another way.

OK lets say I have 78000 to vacation with over the next ten years. OK I booked a week for a 1 bedroom suite at the BCV for just at 5000 including tax and a park hopper pass and water parks for a family of four. If I did that every year for the next ten years and included a 3% annual increase in prices for both room and tickets it comes to 57315. Also in the beginning I took 22500 and invested it at 8% and compounded the interest annually i would wind up with 48500. OK so i started out with 78000-22500-57315+ (22500 + 26000) = 46685. So 78000 - 46685 = 31315/10 years of vacation and I still have 46685 cash in my pocket

OK DVC way. I need 252 points to stay for a week which will cost 22500. Over ten years for maintenance fees and park tickets with a 3% annual increase is 28655. Subtract that from 78000 and you get 26845 left. Now you still have some value in your DVC contract but the question is how much will it be worth after ten years.


thoughts

Oh for heaven's sake! I am an accountant and your giving ME a headache

Don't buy into DVC!! It is not an good INVESTMENT!! It is prepaid vacations! If you are getting 8% return on your money, keep it and vacation at Disney whenever you want! DVC is for people who know they want to vacation at Disney forever!!

 

[Cmbar]

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.

Guess I am a little confused by what you are saying since you can buy a 1 bdr and 2bdrm directly from Disney too?? I understand completely that some people want to stay in a spread out hotel room. There are plenty of suites at all the Deluxe resorts to do that as well. For us buying into DVC was so that our relative outlay (after intial investment) of maintenance fee was so that we could stay at a Deluxe resort for the price of a value/moderate resort room price. I think both have value. Room size for some and longer stays for others. My point is still that One Bedrooms are the worst value for your points because you can't fit more than four people and still only have one bathroom. I think they priced the one bedrooms in points too high and it makes more sense to just get a two bedroom and bring family!! That is one of the main reasons we are considering BLT is because you will now at least be able to sleep five and have an extra bath in a one bedroom. That is the only reason we would book a one bedroom. I don't want to be anywhere near a kitchen or a washing machine, unless DH is doing the cooking and laundering!!

Good Vibes everyone, just as we get close to purchasing it is good to clarify why we are buying!!

 

[CarolA]

Oh for heaven's sake! I am an accountant and your giving ME a headache

Don't buy into DVC!! It is not an good INVESTMENT!! It is prepaid vacations! If you are getting 8% return on your money, keep it and vacation at Disney whenever you want! DVC is for people who know they want to vacation at Disney forever!!

I am an accountant too and this fuzzy math has me

So if you have made that good of investments in this market you would be a fool to cash them in.


This is NOT something that can be clearly quantified. You have to be willing to make the investment in YOU and that's not a number. So.... since it's all black and white I think it's a bad choice for you

(And since when has Disney only increased 3% LOL! Plus the taxes will go up too. Florida really likes to stick it to visitors and figure that's NOT going to stop! This site shows the avg ticket increase over the past few years to be more like 5%http://allears.net/tix/tixincrease.htm )

 

[tjkraz]

...the question is how much will it be worth after ten years.

Maybe your investment adviser can answer that for you.

As others have said, the only guarantee is that you will have 252 points to use for each of the next 32 years. Oh, and it's a guarantee that the contract will have zero value on 1/31/2042.

If you are seriously looking at DVC as a commitment of only 10 years and expect to have some pre-defined value remaining at the end, then I think you are looking the wrong place.

 

[Tdisney]

Well im not looking at it as an investment, but just trying to figure the numbers. If I took the 22500 and invested it and paid for a room outright would it cost me more in the long run if I had bought into DVC BCV.

 

[WALTSAGOD]

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.

Good point!

 

[WALTSAGOD]

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!)

25 years will still be a long time to some people.

 

[DebbieB]

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.

I agree that it all depends on what you are looking for. I wanted the "luxury" of a 1 bedroom even if it was just my mom and I or me and my friends. It gives us alot of space. My mom used to call it "our apartment" instead of "our hotel room". I could actually live in an apartment like that. The rack rate on 1 bedrooms is over $400 a night, so it didn't seem to make sense to rent from CRO twice a year for 5 or 6 nights each. I really didn't do math on cash savings, it was an emotional purchase. Almost 10 years later, I have no regrets, only happy memories.

 

[Sandisw]

Well im not looking at it as an investment, but just trying to figure the numbers. If I took the 22500 and invested it and paid for a room outright would it cost me more in the long run if I had bought into DVC BCV.

But your DVC vacations will last longer than 10 years, unless you choose to sell it. If you compare only 10 years of vacation, with the entire cost of DVC, then you are not comparing apples with apples, IMO. To get a true comparison, I really think you need to figure it out for all 33 years and see where you end up.

But it sounds like you see your Disney vacations reasonably occurring for only 10 years. If that is the case, the DVC is definitely not for you.

DVC is something that many of us got into because we love vacationing at Disney on a yearly basis and plan to do so for many years, not just 10.

When I bought my first contract, it was for 50 points at VWL. It cost me $4500.00. With 33 years left, that puts it's yearly cost at $136.00. Now add the $250.00 per year I will pay in MF and I am paying about $390.00 per year for my lodging at Disney for the next 33 years.

Those 50 points will get me 3 nights in a studio, which puts it at $130.00 per night, less than what it would cost me to rent a room there every year (even with the discounts that Disney offers). Is it a huge savings? No, but a savings none the less.

While I realize that the MF will go up, so will the cost of renting a room at Disney, so let's assume that my increase in MF is equal to the increase in room costs over the years.

For me, the future savings is worth the upfront investment. Now, I agree with you, I did not figure in any lost of interest from investing those dollars, and that is because the money I put away each year for vacation, gets used every year for vacation (not invested--I have other funds for that).

 

[Brian Noble]

DVC is for people who know they want to vacation at Disney forever!!

This is the right observation. Unless you can say, "Yes, I want to vacation at Disney for as long as I can imagine being able to travel," then DVC is probably not right for you.

You can buy a resale OKW point today for about $70 or so, and you'd pay dues of $4.73 per point. You could also rent 2009 points (in the form of a reservation) for $10. That gives a 7.5% return on investment---not bad, but nowhere near Dean's 10 year payoff + 20% buffer required to take on the burdens of ownership.

So, from a pure dollars-and-cents point of view, not the best possible investment. And, if you're buying from the developer, probably a bad investment. Many developer purchases have a negative return compared to the point rental market.

But, this isn't why most Members bought DVC. Most bought DVC because they felt sure that they wanted to return to Disney, year after year, for their vacations. It's really a lifestyle choice. In exchange for taking on the risks and burdens of a long-term contract, they have assurance that they can vacation as they wish, without the risks of the rental market.

It's really about what you want out of your vacation dollars.

Full disclosure: in the end, we decided not to buy DVC, because we were not sure that as the kids got older we'd want to come back every year---we can't answer "the big question" with a resounding "yes". We might down the road. We'll just have to see.

 

[jamstew]

Full disclosure: in the end, we decided not to buy DVC, because we were not sure that as the kids got older we'd want to come back every year---we can't answer "the big question" with a resounding "yes". We might down the road. We'll just have to see.

Wow, Brian--I've assumed all this time that you were an owner. I don't know how I missed that

 

[Tdisney]

Well we will want to vacation at disney for some time to come probably for the next 20 years with or without our children when they get older and if they dont want to. My only thing I was trying to figure out and run the numbers is if it is cheaper to pay the money up front to disney or invest it yourself and pay the rack rate over time. Most people say the rack rate will go up over time which I agree with but so does the maintenance fees and ticket cost. When you buy a package through disney it is cheaper then buying the tickets alone so there is some savings in buying tickets with a package then seperate if you are a DVC owner.

 

[Sandisw]

Well we will want to vacation at disney for some time to come probably for the next 20 years with or without our children when they get older and if they dont want to. My only thing I was trying to figure out and run the numbers is if it is cheaper to pay the money up front to disney or invest it yourself and pay the rack rate over time. Most people say the rack rate will go up over time which I agree with but so does the maintenance fees and ticket cost. When you buy a package through disney it is cheaper then buying the tickets alone so there is some savings in buying tickets with a package then seperate if you are a DVC owner.

I just ran some numbers off the WDW website. I did not take into account the tickets since you have to buy those regardless of whether you own DVC or book through CRO. While there is sometimes a small package discount for tickets, not enough to offset the cost of the AP for DVC members (which can be used to your advantage even if you only travel once a year).

According to the site, a standard view room at the BCV for 1 week in the summer, before taxes, is $2993--no discount.

Your initial investment of $22,500 will get you 252 points for 33 years. That averages to around $682.00 per year toward your room. Add on the cost of MF of $1260, for a total of $1942 per year.

So, for the next 33 years, you will be paying approximately $2000.00 a year for lodging at WDW as a DVC member. While MF will go up, so will room rates so let's, for argument sakes, say those two things cancel each other out.

Based on this, your lodging costs are almost $1000 cheaper each year through DVC AND you are getting a 1 -bedroom, instead of standard view room at the Beach Club. Now granted, Disney runs specials all the time, so assuming that you can get an average of 35% discount every year off of the room, it brings that cost to $1945, putting you at the break even point.

And, if you ever decide to use your DVC for a studio and not a one bedroom, you can stay at WDW for 2 weeks a year, or still stay only 1 week and rent out the extra points to cover the yearly MF.

So, if you save $1000 per year off your room costs for 33 years, that is about $33,000 in savings. If you believe that you will make more than that in interest over the years, and are concerned about that, then DVC is definitely not a deal for you.

 

[Brian Noble]

My only thing I was trying to figure out and run the numbers is if it is cheaper to pay the money up front to disney or invest it yourself and pay the rack rate over time.

I believe it's cheaper to own with a 20 year time horizon, even at 8%, and even with a zero residual value. Mary Waring has a good analysis over at MouseSavers if you want to get into the nitty gritty.

I've assumed all this time that you were an owner.

I own several other timeshares, just not DVC. I can't get the numbers to work.

 

[december14disney]

Wow this is ALOT.
In the long run. What about emotions? I say that you never know what will happen. My fiance and I bought in 160 points and we will probably stay in a studio and we can actually get a lot of vacations with that and our AP. Later we might have 2 kids need a 2 bedroom and get less and have to buy more points.
I take emotion as a factor as well. I love WDW. I love being part of DVC. I go more than once a year. I love AKV. We will honeymoon there....you can crunch numbers til your eyes bleed. Who knows if I could have used that 16000 to put in an investment that would have shot up and made me a fortune. Who knows if I would have put it into something and lost every dime. Who knows if it would have just sat in a bank account earning little. I sure dont.
I am not saying that one doesnt need to analyze, make sure they can do it financially and make sure it makes some sense down the line. But I am saying that crunching down to every last interest rate...I don't know...
If you can afford it without putting your family in danger financially....love WDW, you enjoy going every year or every other year, you love the accomodations of a DVC resort...DVC will make memories for your family....just do it. We only live once. Who knows about tomorrow?

 

[jamstew]

I used really simple math to make my decision to purchase. I had the money; I wanted it; I bought it

Seriously, though, I calculated 15 years of use--until my youngest grandchild gets out of high school. I have about $22,500 in 300 points (150 each BCV & VWL). That's $1500 a year for 15 years. MFs are another $1500, for a total of $3000 per year. Would we spend that much money on lodging? That would depend on who was going and when. Some years yes, others no. Is it worth it to me to enable my grandchildren to grow up visiting Disney every year or two? You bet! Once DVC passes to my children, it's only going to cost them the MFs, and I feel relatively certain they'll take advantage of it. If they decide not to, it's theirs to dispose of.

 

[jamstew]

I own several other timeshares, just not DVC. I can't get the numbers to work.

I knew about the others. It was you and Dean that got me started at TUG, the result of which was a TS purchase on eBay

 

[Jaaron2]

I used really simple math to make my decision to purchase. I had the money; I wanted it; I bought it

I second that

 

[5forDiz]

........ When you buy a package through disney it is cheaper then buying the tickets alone so there is some savings in buying tickets with a package then seperate if you are a DVC owner........

I'm not an expert on the packages Disney offers through CRO but from what I know the ticket "savings" often isn't - - the tickets are front loaded pricewise and the accommodations are usually at rack rate.

Also, I think this is mentioned here by other posters but just in case, $100 DVC discount for AP is not guaranteed and can be reduced at any time or elimintated entirely just like any other "perk" that is offered to DVC members so these discounts/perks should not be weighed into decision.

I think best approach ( & what many do when considering a DVC purchase ) is to just look at DVC as a way to pre-pay accommodations. jmho, it's important to want to stay in DVC resorts & like the villa accommodations enough to want to buy/commit to it; sort of liking it isn't reason enough.

Best wishes on your planning, you're doing your homework & that's wise to do