Please, sell me on DVC

[kniquy]

It seems you are very $$ orientated, which in that case wouldn't you want to consider purchasing the resort which is the best bargain? This would be SSR. Then you would actually have a bigger savings potential if you are more concerned about the savings.

Now I will tell you my scenario - we wanted to do an extended family stay for a week at WDW. We went ahead and purchased an AK resale contract for $9600 in 2015. With our contract (banking and borrowing) we were able to stay in 2 rooms at the poly for 3 nights and 4 nights in a 2BR at AK - all in all to book with Disney would have been over $8000. So with just that one trip we have come close to breaking even with our initial purchase price and guess what -- we have points to use from now until 2057. Yes their are our MF, but considerably less than what it would cost for a room from Disney.

benefits of purchasing into DVC is that you get a deluxe level resort for the price of a moderate level resort

But you are not really comparing apples to apples. We have stayed in moderates - they are much smaller, do not provide a kitchenette, no balcony and certainly not a deluxe resort.

So if you regularly stay at moderates, you really have to decide whether regular housekeeping is worth more to you than the benefits that come with staying at a deluxe resort.

We actually perfer not to have daily housekeeping - they will do trash daily and will provide towel service on day 4. But if you have a 1BR+ then you have your own laundry - which is a huge plus when packing or you can launder your own towels if they must be clean towels daily.

, if Disney decides to increase the prices of their park tickets, or annual passes, or food, you have no way out.

Disney will never stop increasing prices of EVERYTHING - so as the room prices will go up so will DVC MF -- no escaping it.

If you want to go on a vacation away from Disney, your vacation funds are tied up.

Not true -- you can rent out your points or transfer to another member. Someone is always looking to rent or needs more points, so you will likely not have an issue. This is why if you don't want to travel to WDW at least every other year then DVC does not make sense for you.

When you rent your points you will not recoup the full value you spent on them.

No you will get more for your points. Many people will do a simple equation of dividing their purchase price over the remaining years on the contract then add MF to figure out their rough yearly cost.

For example- a Polynesian contract is selling for $14500 for 100 points - it has 47 years left. Divide your buy in by 47 years then divide by number of points = $3.09 per point per year. Add your yearly MF of $6.76 (poly MF) and your estimated yearly cost per point is ~$9.85. I could rent out those 100 points for $18 per point. Clearly a profit. And as MF continue to increase so will the cost to rent.

I think the biggest drawback is that using DVC almost always limits you to staying at the same resort over and over with very little flexibility due to the availability past 7 months. It also forces you to plan your vacation almost a year in advance.

We love planning our vacations so we can't wait to book! DVC does come with some restrictions which you don't have with booking a hotel room. We have stayed at BW, Poly and AK on our AK points. There are lots of options, BUT it all depends on the time of year you want to travel and the room size you want. If you want to travel Mid Jan - Mid Sept then you could buy the cheapest points and have plenty of room options. If you want Mid Sep to Mid January - you better buy where you want to stay and you better book at 11 months. If you want studios -- these are the highest demand rooms on property simply because the points cost is less than other room sizes - again if this is the room size you want you better book at 11 months.

Basically if you can plan 11 months out and you plan on traveling to WDW at least every other year then buying in will save you money. If you are uncertain of where you want to travel from year to year then DVC is not the best choice for you.

 

[Philsfan77]

Sadly this isn’t true for a couple of reasons.

One, the rate you pay now is based on what ADs are today for your points. Looking at OKW, as it has the longest data set, ADs have outpaced inflation. Yes, rack rates have outpaced even that, but given what a dollar bought in 1991 vs. what a dollar buys today, you have not locked into rates by buying a Disney timeshare. That’s a line the Disney uses to sell timeshares.

Two, given what the retracted reallocation showed us, the buying power of the membership, wholesale, can be reduced with the lockoff premium. So even if the former situation were true, that your points locked you into a certain buying power when you bought in (which again, it doesn’t), Disney have proven they have a money-making tool at their disposal, and more importantly a willingness to use it, that will reduce that buying power overnight. Or more likely, gradually over several years.

I get what your saying...I probably should have called it a hedge against inflation rather than a locked in rate. With the retracted reallocation, it was clear Disney was trying to do something shady, membership called them on it, and they retracted it rather quickly. We are still of the mindset that whatever they do with the point charts going forward, they legally shouldn't be able to price someone out of rooms that they bought into 10-15-20-50 years prior based on point charts (just looking back over the last 15 years, most of the point charts have remained comparable with the biggest changes coming regarding weekend/weekday costs).

We ran our numbers based on assumptions. Buy-in price was locked in...we estimated over the life of our contract MF's will average out to around $2500 on our purchase, we estimated that over the life of our contract Straight rack rates would on average double (we usually stay in 2 BR's). We estimated at time of buy-in plus rising MF's we'd be investing roughly $150K over the life of our contract. Estimated room costs if we didn't buy in for us anyways, would far exceed that. It's all hypothetical of course...there is certainly no guarantee we will own for all 50 years, or that we will continue to go every year, which will obviously change our numbers, but like I said in my original post...it was an emotional buy for us more than a financial investment.

 

[mtoppi]

I’m hoping someone can help me get a better understanding of what the main benefits of DVC are. I feel like I’ve done my research, but something is still not clicking. I keep hearing how great of a value it is. I keep wanting to believe it’s a great value. But from my understanding, the benefits may not really be worth the cost. Here is my analysis. Please sell me on why I am wrong:


Quantitative:


I made up an example to have some numbers to look at.


Assumptions:


Home Resort: Boardwalk

Points to Purchase: 60

Price Per Point: $135

Maintenance Fees: $7.17

Disney’s Inflation Rate: 4.5% (This is an assumed rate of inflation of maintenance fees & cash prices)

Actual Inflation Rate: 2%

Nights to Stay: 7 Nights every other year

Contract Expiry: 2042

Time of Stay: Summer Months


Using these assumptions, I came up with an average cost of the room to be $261 per night in today’s dollars. I looked up the same room type for this current summer, and it is going for about $340 per night. So you are getting a long term savings of roughly $79.00/night


To take this even further, I calculated a Net Present Value of future cash flows comparing the savings on the same room to the cost of DVC. With the assumption that you can earn 6% if you invested the same funds, it would take an additional upfront investment of $7,280 to be able to fund the same trips through cash purchases.


You can make the conclusion from a monetary viewpoint that you would likely come out ahead by purchasing DVC if you regularly stay at deluxe level resorts. The breakeven point would be staying at resorts that roughly cost about $240 per night in today’s dollars. This is roughly the cost of a moderate resort. If you were to regularly stay at anything below that, DVC would end up costing you more.


Qualitative:


The qualitative benefits of purchasing into DVC is that you get a deluxe level resort for the price of a moderate level resort. From what I understand, Disney does not upkeep the DVC sections of the resorts to the same standards that they keep the hotel sections. You also do not receive daily housekeeping. So if you regularly stay at moderates, you really have to decide whether regular housekeeping is worth more to you than the benefits that come with staying at a deluxe resort.


Another thing to keep in mind is that buying into DVC reduces your liquidity, as well as forces you to be a slave to anything and everything Disney. While on the surface this sounds fine (pathetic, I know), if Disney decides to increase the prices of their park tickets, or annual passes, or food, you have no way out. If the quality of the experience care and upkeep of the parks and hotels decreases, you have no way out. If you want to go on a vacation away from Disney, your vacation funds are tied up.


While I do understand you can always sell your DVC or rent your extra points, this does not come without its own costs. There are commission fees. If Disney becomes a less desirable destination, the selling price of your DVC will decrease. If Disney implements even more restrictions on resales, your investment value decreases. When you rent your points you will not recoup the full value you spent on them.


I think the biggest drawback is that using DVC almost always limits you to staying at the same resort over and over with very little flexibility due to the availability past 7 months. It also forces you to plan your vacation almost a year in advance.


In conclusion, with all of the drawbacks to the purchase of a DVC, I would expect a larger discount than $79/night.

Thank you for starting this thread! This is the same kind of thinking and quantitative analysis I've been performing and results I am coming up with. I cannot get the numbers to add up to make this worth the money I'd be putting in over the course of the contract - and I'm looking to pay cash upfront for points, not finance. But talking to DVC members I'm friends with, or even listening to Pete's new DIS DVC podcast, I feel like there's a Kool Aid party I didn't get invited to.

I can say confidently that buying from Disney direct appears to be a horrible investment at the current rate of $188/point and the restrictions they are introducing to staying at that resort, even if buying to stay at 1/2 bedroom villas. And reselling DVC bought from Disney does not include "membership," along with the many other benefits Disney has been slowly removing from resold contracts over the years. Its as if they contractually obligate you to accept that they will dilute the value of your real estate investment whenever and however they so choose. The resale market makes DVC ownership more palatable as a buyer, but I still see issues with tying my vacation money up in a time share with "associated fees," as you mentioned.

I have priced out current seasonal room-only packages for times my family and I would typically visit WDW, and even AP holder room special rates, and found the absolute best deal to save money on your vacation to Disney World is to be an Annual Passholder, take advantage of AP discounted room rates, and get a Tables in Wonderland card to save on dining. (You apparently cannot get TiW with DVC unless you buy direct through Disney at the current $188/point rate.) That way, I also get Memory Maker and daily room cleaning included if I stay in a normal room. The only difference I can think of is that you must be flexible with which resort you are willing to stay at, because the rates vary from year to year - which I presume has something to do with available inventory.

Please, someone change my mind, because I've been going crazy over this for at least four months. We LOVE Disney and staying at Disney resorts! Saving money over time and having access to deluxe accommodations on our annual visits would be fantastic, if it is something we can quantitatively justify.

 

[Bing Showei]

Thank you for starting this thread! This is the same kind of thinking and quantitative analysis I've been performing and results I am coming up with. I cannot get the numbers to add up to make this worth the money I'd be putting in over the course of the contract - and I'm looking to pay cash upfront for points, not finance. But talking to DVC members I'm friends with, or even listening to Pete's new DIS DVC podcast, I feel like there's a Kool Aid party I didn't get invited to.

I can say confidently that buying from Disney direct appears to be a horrible investment at the current rate of $188/point and the restrictions they are introducing to staying at that resort, even if buying to stay at 1/2 bedroom villas. And reselling DVC bought from Disney does not include "membership," along with the many other benefits Disney has been slowly removing from resold contracts over the years. Its as if they contractually obligate you to accept that they will dilute the value of your real estate investment whenever and however they so choose. The resale market makes DVC ownership more palatable as a buyer, but I still see issues with tying my vacation money up in a time share with "associated fees," as you mentioned.

I have priced out current seasonal room-only packages for times my family and I would typically visit WDW, and even AP holder room special rates, and found the absolute best deal to save money on your vacation to Disney World is to be an Annual Passholder, take advantage of AP discounted room rates, and get a Tables in Wonderland card to save on dining. (You apparently cannot get TiW with DVC unless you buy direct through Disney at the current $188/point rate.) That way, I also get Memory Maker and daily room cleaning included if I stay in a normal room. The only difference I can think of is that you must be flexible with which resort you are willing to stay at, because the rates vary from year to year - which I presume has something to do with available inventory.

Please, someone change my mind, because I've been going crazy over this for at least four months. We LOVE Disney and staying at Disney resorts! Saving money over time and having access to deluxe accommodations on our annual visits would be fantastic, if it is something we can quantitatively justify.

Do you mind posting specifics around the calculations you’re using for the 1/2 Bedrooms that make paying cash alongside APs more favorable than the Disney timeshare route? Kinda hard to address your point without that.

 

[Katie L]

Do you mind posting specifics around the calculations you’re using for the 1/2 Bedrooms that make paying cash alongside APs more favorable than the Disney timeshare route? Kinda hard to address your point without that.

I am also curious about this. We just got back from Disney and my husband became an AP so I'm definitely curious about incidental discounts and such... It's like a whole new world.

 

[ljmiii]

Thank you for starting this thread! This is the same kind of thinking and quantitative analysis I've been performing and results I am coming up with. I cannot get the numbers to add up to make this worth the money I'd be putting in over the course of the contract...

On one side you have the cost of your initial purchase of DVC which could be invested and appreciate at whatever % you choose. Add to that side the price of a renting a room (either directly from Disney or a service like David's) which will increase at whatever % per year. On the other side you have the cost of MFs which will increase by whatever % you choose. And your expectation of the % change in price of the contract. As you can probably guess, the financial benefit of buying DVC depends on what numbers you choose to plug into the equation.

I don't know that it can make sense compared to direct. From a financial perspective you are certainly better off buying into SSR, AKV, or OKW extended. But when I looked at DVC vs cash for 1 and 2 bedroom villas a few years ago it was easy to justify DVC (resale) - my 'breakeven' was somewhere between 7 and 12 years.

 

[crvetter]

On one side you have the cost of your initial purchase of DVC which could be invested and appreciate at whatever % you choose. Add to that side the price of a renting a room (either directly from Disney or a service like David's) which will increase at whatever % per year. On the other side you have the cost of MFs which will increase by whatever % you choose. And your expectation of the % change in price of the contract. As you can probably guess, the financial benefit of buying DVC depends on what numbers you choose to plug into the equation.

I don't know that it can make sense compared to direct. From a financial perspective you are certainly better off buying into SSR, AKV, or OKW extended. But when I looked at DVC vs cash for 1 and 2 bedroom villas a few years ago it was easy to justify DVC (resale) - my 'breakeven' was somewhere between 7 and 12 years.

I will say I included on the DVC purchase side the investment income earned on the savings of the DVC dues vs the cash rates assumed. Since this makes it more apples to apples because now my yearly cash outlays are the same. Without doing that you would punish the DVC side because the whole basis of the comparison depends on you taking the trip each year with or without DVC.

 

[bwvBound]

It's like a whole new world.

Dang. Ear worm.

Here, allow me to share it with the rest of you! You're welcome.

 

[Briechen]

My fiance and I are going to become DVC members in a couple weeks when we visit the parks. Yay!! I'm really excited. For me the decision was the cost of renting points for the 1 BR at CCV. For our honeymoon in September we rented points for 1 week in a 1 BR at CCV for $3500 - and that was during adventure season (to stay in the same type of room at CCV from Disney for the same nights would have been about $5200 with taxes). To me, at the time a few months ago before researching DVC, it seemed just like we were splurging on lodging for our honeymoon. But when we travel we like to have a full kitchen so we don't have to eat breakfast and every meal out - we want to stay on property and have that resort feel. So if we are going to pay $3000+ for a week trip, the logic is why not pay into something that we can use once we have kids and while they are growing up. We are looking to just do 105 points for now and go every other year. But even at that rate it will only take 4-5 vacations to make it worth it for us. I'm not a math wiz or number cruncher, but this is how we like to vacation so it makes sense for us. We will probably pick up some extra points later to get a 2 BR every other year so we can take his parents with us after we have kids and they are getting older. I think everyone has different motivations and are in different phases of life, so it really just depends on how you like to vacation with your family. I'm not saying that we are making the smartest decision financially, but it will help us vacation the way we want with our family for many years to come, when we may not be able to afford hotel stays for extensive periods in the future once we have kids (I hear they are draining on your finances haha!). In any event, good luck with your decision!

 

[stewart715]

Uh, you need to check your math. $340 per night at BoardWalk cash rack rate? AFTER taxes?? Where? lol

The cheapest cash rack rate for the 'worst' room during the cheapest season is $485 per night after taxes. At BWV thats $496 per night cheapest possible cash room.

2 bedroom villa during food and wine? That jumps to minimum $1,300 per night.

Obviously discounts happen but they generally can't be counted on and they generally only happen if they anticipate inability to fill rooms at rack rate.

This is why no one really ever argues cash rate vs DVC because it's really not an argument. DVC will ALWAYS come ahead of cash rack rates. The argument is to either rent DVC or own DVC.

 

[stewart715]

We joined DVC because we need/want 2-3 bedroom deluxe accommodations. Renting points isn't flexible enough for us and I am not paying the $1,200-$1,500 per night cash rack rate for those rooms. I'm not sure how the math works out for studios when it comes to other discounts but if you want to stay in 2 bedrooms or larger, DVC really is going to be cheapest option for an annual visit.

 

[stewart715]

even if buying to stay at 1/2 bedroom villas.

Your confidence is misguided. 2 bedroom villas cash go from $1,000 per night to $2,000 per night depending on the season and resort. Even at the current direct price, you will save WAY more money than paying these cash rack rates. You can't compare AP discounted rooms at Coronado Springs to a 2 bedroom villa at the Grand Floridian. It's apples and oranges. 1 and 2 bedroom villas are almost never discounted either (I can't think of a time there was any cash promotions on a DVC resort).

Your resale concern with new restrictions holds water but 50 years at $188 per point saves you a ton of money in 1/2 bedrooms vs the cash rack rates (which will quadruple by the end of the deed).

Unless there is some price sheet that I am missing? Where are you getting your prices for your math?

Those who join DVC should join if they would stay at deluxe accommodations anyways. For example, if DVC ended tomorrow, I would still stay at Beach Club. I still think DVC is right for folks who stay at moderates, depending on the price.

 

[Katie L]

We joined DVC because we need/want 2-3 bedroom deluxe accommodations. Renting points isn't flexible enough for us and I am not paying the $1,200-$1,500 per night cash rack rate for those rooms. I'm not sure how the math works out for studios when it comes to other discounts but if you want to stay in 2 bedrooms or larger, DVC really is going to be cheapest option for an annual visit.

This is why we began considering dvc and likely why I will put in another offer. If Riviera didn't have the restrictions and the dues were in line with the others we would strongly consider direct there. I like the max time left and also want availability at all resorts. Dang it Disney. But studios aren't what we like - it's 2BR. My thought is 200 points to start.

 

[stewart715]

Here's some super quick math:

A week at BoardWalk in a 2 bedroom, standard view, cash, in late September/Early October comes to $9,500. To reserve that same room, you'd need 223 points. Direct, those points (for one year out of 23 remaining) would cost you $1,851 + dues around $1,500, total of roughly $3,400..which represents a 66% discount off of the cash rack rate. If you buy points resale, you'd be spending $2,800 for that room this year.

Yes, you can do some math on investment opportunity and returns elsewhere. But basic math says, this year, I'm spending $2,800 for a room that would cost $9,500 cash. In 20 years, I'll be spending maybe...$4,500 (increased dues) for a room that will cost $20,000 cash. There's really no way around DVC (even if its direct at one of the least economical resorts) being a MUCH better deal than cash rack rates.

Now do that same math on $188 over FIFTY years? It's not even CLOSE. The reason I used BWV as an example is because it has the fewest years left and is ridiculously expensive direct and is STILL a much better deal than cash rack rates.

If you want to introduce renting into the argument, that's a whole different conversation. But cash rack rates are pointless to discuss.

 

[Deb & Bill]

Here's some super quick math:

A week at BoardWalk in a 2 bedroom, standard view, cash, in late September/Early October comes to $9,500. To reserve that same room, you'd need 223 points. Direct, those points (for one year out of 23 remaining) would cost you $1,851 + dues around $1,500, total of roughly $3,400..which represents a 66% discount off of the cash rack rate. If you buy points resale, you'd be spending $2,800 for that room this year.

Yes, you can do some math on investment opportunity and returns elsewhere. But basic math says, this year, I'm spending $2,800 for a room that would cost $9,500 cash. In 20 years, I'll be spending maybe...$4,500 (increased dues) for a room that will cost $20,000 cash. There's really no way around DVC (even if its direct at one of the least economical resorts) being a MUCH better deal than cash rack rates.

Now do that same math on $188 over FIFTY years? It's not even CLOSE. The reason I used BWV as an example is because it has the fewest years left and is ridiculously expensive direct and is STILL a much better deal than cash rack rates.

If you want to introduce renting into the argument, that's a whole different conversation. But cash rack rates are pointless to discuss.

Actually, the standard view for cash through DRC would be equivalent to the preferred view on points. So more like 283 points for the week in October (Sept would be 269).

 

[stewart715]

Actually, the standard view for cash through DRC would be equivalent to the preferred view on points. So more like 283 points for the week in October (Sept would be 269).

I have Sept 27 to Oct 4 booked right now. BWV. 2 bedroom. Standard view. 223 points. But yes. My point is you only need 223 points. You don’t have standard view price option cash. So you can’t just assume 269 points or whatever. I can get a 2 bedroom for 223 points or $9,500 cash. Those are the cheapest options for each method (DVC or cash). That’s it so that’s the comparison that should be made.

 

[Spork24]

We bought DVC planning to never rent studios. We love the larger accommodations. If you start comparing cost against Disney’s suites, the value was certainly there for us. I will add that we bought at a very good time.

I doubt I would have had the courage to take the plunge at today’s rates and restrictions.

 

[Bearrister]

(You apparently cannot get TiW with DVC unless you buy direct through Disney at the current $188/point rate.)

Wow, I wasn't aware of this. Is this true?

 

[stewart715]

Wow, I wasn't aware of this. Is this true?

This is true (unless you bought resale before April 4, 2016).

 

[Spork24]

Wow, I wasn't aware of this. Is this true?

I would think so, I think you have to have a blue dvc card, an annual pass or be a Florida resident to get TIW