Quick & Dirty Method for Determining if DVC will " Save " you Money

[Bearval]

Take the total cost of the contract and and factor it as a 10 year "signature" loan current available rate 7.5%. Take the monthly payment and multiply it by 12 and add the cost of the maintenance fees. ex. BRV 200 points 99pp ( this contract does exist) total cost $20,649 (closing costs included) would be $245 per month for $2940 per year + $1702 MFs = $4642 per year

Use the "cheapest" method of renting out a DVC room ( I am using David's 21pp & 23pp) ex. 200 points x $23.00 =$4600

Subtract the cost of renting points from the total of the yearly loan payment and maintenance fees.

$4642 - $4600= $42.00 so buying resale in this example costs you $42.00 more per year then if you just rented the points. After year 10 the loan is paid off and you are now "saving" . This works best if you plan on going to WDW every year and yes the MFs will rise each year .

 

[Sandisw]

I would just add that using renting cost only works if you would actual do that. We used a discounted cash rate when deciding because renting points was not something we would do…just like we would have never stayed at a value resort.

 

[tom1944]

I looked into renting and for some reason I was not comfortable with it

Honestly I could not tell you why

 

[Brian Noble]

One big reason: rentals are generally not cancellable, and rarely can be rebooked. If for some reason you can't go, you are out the cash. Yes, you can buy trip insurance, but that will generally only cover you for a subset of possible reasons, and these days cancel-for-any-reason insurance is getting pretty pricey.

That's not a big deal for the seven night, $350 total 1BR I picked up at Vidanta's Grand Mayan NV for next week. Yes there are hefty resort fees, but I only pay those if I show up. I'm only out the $350 if for some reason I don't get on the plane. It's a bigger deal for a $3500 DVC rental.

If you rent often enough, it makes sense to "self-insure" and just eat it if you happen to miss one--you can spread that cost out over all of the ones you take, and still do okay for yourself.

 

[Bearval]

I would just add that using renting cost only works if you would actual do that. We used a discounted cash rate when deciding because renting points was not something we would do…just like we would have never stayed at a value resort.

If the cash discount rate is the cheapest method you would do then you would use that in place of where I used "David's" cost. The goal would be to get both the yearly loan with MFs and the cheapest rate you would pay for a DVC room each year to cancel each other out or better. This method would be for someone who wants to stay in a DVC room. It removes the "time valve" of money invested since you are not buying DVC with funds you have been investing and you were going to use this money on your room when on vacation anyway. The difference is after 10 years you paid off your loan and can either sell for what the residual value is left or keep it and only have MFs to pay each year.

 

[crisi]

In my experience, you can use a whole lot of methods to justify a DVC purchase. The problem being that owning DVC is very likely to change your travel patterns - even over renting. So my advice...if you NEED to save money to make DVC work, don't buy it - there is risk that you will change your behavior enough that DVC will pull a lot more money from your pocket. The biggest risks - if you own your own points and aren't spending cash when you make the reservation, you are more likely to bring friends along, or stay in a bigger room. You might get addonitis because you really need to squeeze in one more trip over the holidays, or you discover that you need the eleven month window at your other favorite resorts. You might take a trip that your wouldn't have taken because that year you felt a little broke - but hey, you have the points and you'll just make it a resort trip - which still means dues and travel costs and you aren't likely to eat every meal in the room. If you can afford it, and the system works for you - warts and all, and you want to buy it, buy it. You might save money, you probably won't - but in that case might gain more value for the additional dollars you did spend than if you didn't.

The calculations are fun (hey, I'm an accountant) but really not useful.

 

[Craho]

The Magic in the Music posted this chart…

 

[Sharene0724]

I always tell people that buying DVC isn't about saving money or getting the best value for a room. It's about having access to the DVC resorts and rooms that fit your needs in terms of amenities like kitchens and separate sleeping spaces/surfaces. It's not about value or saving money, it's about the resorts and rooms. It's hard to place a "value" on how I feel about a resort and what I want to accomplish at Disney at that time. Also adding in the risk factor in renting is a factor in trying to calculate value.

 

[crisi]

I always tell people that buying DVC isn't about saving money or getting the best value for a room. It's about having access to the DVC resorts and rooms that fit your needs in terms of amenities like kitchens and separate sleeping spaces/surfaces. It's not about value or saving money, it's about the resorts and rooms. It's hard to place a "value" on how I feel about a resort and what I want to accomplish at Disney at that time. Also adding in the risk factor in renting is a factor in trying to calculate value.

Yep....although I'd argue that if resort flexibility is what you want in resort access - and not just rooms with kitchens and a door between the living space and bedroom (I want to stay at the Beach Club this year and next year I really want to stay at the Grand Californian at Disneyland - any room is fine) is important to you, renting points and/or staying on the hotel side (depending on what you want) is a better VALUE - even if it is more expensive.

We bought for the "affordable for us" access to rooms where we could close the door between Mom and Dad and the kids on vacation.

 

[gobears157]

I'm staying at Aulani in a 2br in a couple weeks (family member has VGC and applied it to AUL), and as I've done research these past few weeks leading up to the trip, I'm thinking that becoming an AUL DVC member fits my family's profile. My partner and I have two young kids and we prefer to stay in ABNB or VRBO type places when we travel so that we have the extra space, and we lean towards nicer'ish places (e.g., condos we've stayed in Maui/Oahu are typically $1k-2k/night).

Looking at the resale market, DVC AUL can really allow us to have decent savings at a nicer hotel/resort at the sacrifice of shifting our travel from Maui to Oahu more often (or to rent out the points), which I'm willing to do. I'm thinking about the longer-term opportunities to bring our kids' friends as our kids get older, invite another family/friend to join us, etc.

Just wanted to drop my first post to thank this forum and all of you for the insights - it's been incredibly helpful! Appreciate any additional advice as well!

 

[Jlo85]

Looking at the resale market, DVC AUL can really allow us to have decent savings at a nicer hotel/resort at the sacrifice of shifting our travel from Maui to Oahu more often (or to rent out the points), which I'm willing to do. I'm thinking about the longer-term opportunities to bring our kids' friends as our kids get older, invite another family/friend to join us, etc.

I do think a Net Present Value calc is the best way to determine/compare 'savings' for DVC. But whenever I do it, Aulani resale is always the best deal (assuming you get a good price), whether you want to stay there or use it for sleep-around points. Partly why I also bought there - welcome!

 

[Brian Noble]

DVC AUL can really allow us to have decent savings at a nicer hotel/resort at the sacrifice of shifting our travel from Maui to Oahu more often (or to rent out the points), which I'm willing to do.

It might also be worth looking at e.g. the Westins in Kaanpali, which would mean you don't have to switch to Oahu.

 

[gobears157]

It might also be worth looking at e.g. the Westins in Kaanpali, which would mean you don't have to switch to Oahu.

I've never been a fan of west Maui (usually prefer to stay Kihei/Wailea).

 

[Brian Noble]

I'm not sure there is anything of equivalent quality in that direction, timeshare-wise.

 

[sheilafri]

One big reason: rentals are generally not cancellable, and rarely can be rebooked. If for some reason you can't go, you are out the cash. Yes, you can buy trip insurance, but that will generally only cover you for a subset of possible reasons, and these days cancel-for-any-reason insurance is getting pretty pricey.

That's not a big deal for the seven night, $350 total 1BR I picked up at Vidanta's Grand Mayan NV for next week. Yes there are hefty resort fees, but I only pay those if I show up. I'm only out the $350 if for some reason I don't get on the plane. It's a bigger deal for a $3500 DVC rental.

If you rent often enough, it makes sense to "self-insure" and just eat it if you happen to miss one--you can spread that cost out over all of the ones you take, and still do okay for yourself.

I have rarely gotten trip insurance. It runs around 7% of covered price IIRC so I would need to cancel every 14th trip to break even. I usually don’t have much in non-refundable or non-changeable costs so it doesn’t seem to make sense to me.

 

[Brian Noble]

That's why I almost never buy it. The few exceptions are large, all-inclusive trips with very long cancel windows--for example, cruises. And even then, not always.

After all, on average, most people who buy insurance spend more than they receive. At least, that's true if the insurance company manages to stay in business!