Resale prices and savings

[CraigInPA]

Do the math. I showed you how. Take a theoretical BCV contract ... maybe 100 points at $155 a point. Total cost is $15,500, plus dues of $613 for the year. Figure out the cost basis. 100 points / 26 years of life left is roughly $3.85. Then add the dues per point, which at BCV is $6.13, so that's $9.98 per point. Figure how many points it would take to stay in a studio for a week. I only stay in the slow seasons (I'm frugal with my points), and I stay in studios because my family is small. An Adventure Season week is 107 points. OK, so if I don't want to borrow, I need to buy 7 OTU points at $15 each, for $105. 100 points times the cost basis is $998, plus $105 is $1103. Divided by 7 gives you a DVC cost of $157.57 per night for that room.

And done from another perspective... That of someone who may want to rent points without owning DVC.
107 points * $16 per point = $1712, or $245 per night. $245 is a LOT less than the $400-$500 per night Disney charges for a BCV studio, but about what one would pay for a moderate room without a discount.

 

[eccobleu]

Do the math. I showed you how. Take a theoretical BCV contract ... maybe 100 points at $155 a point. Total cost is $15,500, plus dues of $613 for the year. Figure out the cost basis. 100 points / 26 years of life left is roughly $3.85. Then add the dues per point, which at BCV is $6.13, so that's $9.98 per point.

I don't think your math is correct in this scenario. If the total cost of the contract is $15,500, you would divide it by the total points (100 x 26 years) or 2,600. This would equal to $5.96/point + the monthly dues of $6.13/point = a total of $12.09/point.

 

[AnnaKat]

SuperRob, your example makes sense. But I can't figure out how you arrived @ the 3.85 price per point. $15,500 divided by 2600 points is more than 3.85. What am I doing wrong, or missing?! Thanks. I would like to figure out our break-even point, etc.

 

[SuperRob]

I don't think your math is correct in this scenario. If the total cost of the contract is $15,500, you would divide it by the total points (100 x 26 years) or 2,600. This would equal to $5.96/point + the monthly dues of $6.13/point = a total of $12.09/point.

SuperRob, your example makes sense. But I can't figure out how you arrived @ the 3.85 price per point. $15,500 divided by 2600 points is more than 3.85. What am I doing wrong, or missing?! Thanks. I would like to figure out our break-even point, etc.

Neither of you read what I posted correctly, but that's because I didn't do that great a job explaining it. It's the number of points you get per year, divided by the number of years of life in the contract. So a contract expiring in 2042 - 2016 = 26 Years. So 100 points / 26 years is $3.85 (rounded up). This is what I usually call the base value of a point. Then when you add the dues per point, you get the approximate value of each point.

The total amount you spent up front is actually immaterial other than to compare against how much you've been "saving" over time to calculate break even. So why am I using the years of life left? You're effectively amortizing the price per point over the life of those points. And since I'm using the price per point, it actually factors in what you paid but spread out over every point for the life of the contract. By using the total cost, in the calculation like eccobleu did, you basically charged yourself twice.

EDIT: Yup, I misread my spreadsheet. It should be Price per Point / Years of Life. I'll fix the original post. Sorry, guys!

 

[montrealdisneylovers]

I also am confused at the $3.85 number. I think what you should do is divide $155 (cost per point)by number of years left 26 which gives $5.96 per year. Now you add the $6.13 dues to get an annual cost of $12.09 per point.

 

[msjprincess]

I'm also confused by the numbers. Yes 100/26= 3.85, but it's not $100/26.

 

[SuperRob]

I looked back over my spreadsheet, and you guys are RIGHT.

Yeah, it should be cost per point / years of life. I'll fix the post.

 

[Novakm]

I bought into dvc for a very specific reason, and it has saved me money. I had a plan to go three times in three years with three different sets of grandkids. After looking at the numbers vs discounted rates at AOA family suite, or renting points, after factoring in depreciation and selling costs I figured I would come out ahead by buying. Here's the math:

$70.80 per point including closing costs
$17.93 per point for 3 years dues
Total 88.73 per point cost

I can sell now for $72 net per point after selling fees
So my total cost thus far is $16.73, or $5.58 per point per year ( much cheaper than renting points)

I have averaged 250 points per 6 night stay, or $232 per night. Discounted rate for the time I go is $389 per night for the AOA suite.
I could argue that BLT has been nicer than AOA, but I don't really know because I have never been there.

So I saved significant money. But here is where they get you. I don't want to sell my points now. I want to keep going every year. So I will probably spend every cent I saved and more over the next several years.

Ymmv

 

[CarolMN]

.....(snip)..........So I saved significant money. But here is where they get you. I don't want to sell my points now. I want to keep going every year. So I will probably spend every cent I saved and more over the next several years.

Ymmv

Most of us end up going more often, upgrading to nicer accommodations and/or treating family and friends. (Not to mention the extra money we spend because "after all, we won't have a hotel bill when we check out"). Those fancy spreadsheets are moot - apples to oranges!

 

[ziravan]

I am not questioning the saving you money aspect.

Since it is the newest one, I am using Poly in my example:

My point is, let's accept it saves you 50%. I always assumed that meant 'in total over the life of a 50 year contract', factors in Time Value of Money at some rate, etc, etc.

If that is the case, then yo would save less over a shorter contract. If the contract was one year, you would lose your shirt, 2 years, just your t shirt, so the number of years has to matter.

I do not see how 2042 resorts can save you anywhere near 50% at 155 a point, and probably using Disney's formula, may not save you a penny. If buying direct, the Poly has to be an almost infinitely better value based on 168 per point, 50 years, vs 155 per point, for 26 years. Or am I just not thinking in the correct way?

Another thought on this.

BCV opened in 2002 as a 40 yr resort with an expiration in 2042 for an initial price of $84/point: $2.1/point

PVB opened in 2015 as a 51 yr resort with an expiration in 2066 at an initial price of $160/pt: $3.2/point.

None of that counts inflation, time value, etc. I also left out closing costs. Even though PVB is twice as much new, the costs per point isn't twice as much because PVB started with 20% more points over the RTU.

Now, my specific situation since I own points at both:

I bought BCV points in 2014 for 84/pt: $3/point for 28 years.

The math on PVB is the same as above at $3.2.

At $84/point for 28 years vs $165/point for 51 years, my purchases of BCV and PVB are very similar in value, with BCV being a slightly better deal.

You're right, at 155/point, BCV makes no sense, but that can be said of buying most of the older resorts at retail.

The real question is if BCV is a value now, in 2016 at $115/point average resale price: that comes out to $4.4 per point at BCV vs $3.2 at PVB over the life of the contract.

Now, to put my spin on this. If you own 200 Poly points (enough to stay a week a year), it has a greater value of $1.2/point over buying 200 BCV on today's market: that's $240/year, or for each trip you take.

When you're planning a multi thousand dollar vacation, what's the value of staying where you want to stay? $240?

Even then, that valuation is over the life of the contract. Making decisions about where you want to stay over 30 year valuations seems moot to me.

BCV is probably overpriced on the resale market at $115/point, but it's currently a heated market. If I wanted to stay at BCV, I wouldn't let it stop me. I believe the value of DVC in general is in buying where you want to stay. If you hedge on that, then I think it changes the entire valuation of DVC. Even those buying at SSR to trade out are making valuations of price point vs. staying where they really want to stay.

If BCV is where you want to stay, buy there, even at today's resale prices. Otherwise, your savings by buying where you don't want to stay isn't worth it.

One final thought: I mentioned to DW that we could sell our BCV at a healthy profit and showed her the current $115/point market. Her reply? "I wouldn't sell our BCV contract for $150/point." There you go.

 

[BeachClub2014]

Owning DVC hasn't saved us a dime, in fact, quite the opposite. The real value of DVC, in my opinion, is the memories you create with family and friends over the many, many vacations you take to WDW. It certainly isn't for everyone, and I often think we tend to get caught up in the perceived dollar value and "savings" that owning DVC may represent over some arbitrary metric that we apply. We first owned DVC for over 12-years, then in a boneheaded move, sold it. Two years later we are back, re-purchased and loving being a part of DVC again. I used to keep spreadsheets to "track" the $ value, now I just look at all our family pictures of our kids "growing up Disney" and smile; that's the real value.

 

[Nabas]

Owning DVC hasn't saved us a dime, in fact, quite the opposite. The real value of DVC, in my opinion, is the memories you create with family and friends over the many, many vacations you take to WDW. It certainly isn't for everyone, and I often think we tend to get caught up in the perceived dollar value and "savings" that owning DVC may represent over some arbitrary metric that we apply. We first owned DVC for over 12-years, then in a boneheaded move, sold it. Two years later we are back, re-purchased and loving being a part of DVC again. I used to keep spreadsheets to "track" the $ value, now I just look at all our family pictures of our kids "growing up Disney" and smile; that's the real value.

You don't need to be a DVC member to realize that "real value". Non-DVC members experience the same "real value" by simply paying for a WDW hotel room.

I went to WDW for 30 years before becoming a DVC member and cherish those pre-DVC trips just as much.

 

[ziravan]

You don't need to be a DVC member to realize that "real value". Non-DVC members experience the same "real value" by simply paying for a WDW hotel room.

I went to WDW for 30 years before becoming a DVC member and cherish those pre-DVC trips just as much.

Yes, but.

DVC trips aren't more valuable, memories-wise, than non-DVC trips.

But for a variety of reasons, DVC facilitates taking trips to WDW.

1. Staying routinely in deluxe for the price of a moderate would be a better sales campaign than 50% off, in my opinion. Before DVC, my stays were at budget inn, AS-Sports, and POR. Since DVC, BLT, Poly, BCV, OKW, etc. It definitely facilitates better accommodations. I would never justify a deluxe if buying a package.

2. Because I own DVC, I have an AP. With room and park tickets prepaid, we can - and have - come to WDW on the spur of the moment, and I live in Texas. I planned a week at WDW in August less than 30 days from deciding to go. Amazing.

3. For many, DVC frames vacations. I won't say it forces people to vacation, but it does prioritize those vacations because they are essentially planned years in advance.

4. Because DVC makes WDW routine, it's hedged our park commando mentality. Being able to enjoy the resorts because I don't have to ride every E ticket ride twice this trip, that has immense value. When people here talked about DVC changing the way they did Disney, that enticed me far more than any hint of savings. (DVC, if you're reading this, pay attention. Your ad campaign for DVC should be, "Rockin' my Disney Side, DVC Style!")

5. DVC is a timeshare. It's also a club. Not because Disney says it is. But, look at the communities on the interwebs based on DVC membership. That so many people want to post here and make DVC part of their daily conversation also appealed to me.

What is the value of a DVC membership? It's certainly not in how many years it will take until I "break even".

 

[dismedvc]

EDIT: Yup, I misread my spreadsheet. It should be Price per Point / Years of Life. I'll fix the original post. Sorry, guys!

The end result is everyone seems to agree in your example that the simple calculation comes out 155/26 = $5.96

However, that simple calculation ignores the time value of money.
If you borrowed the $155 at 5% interest, you would need to make 26 annual payments of $10.78 to pay off that loan.

For those who say but I am not borrowing the money, I have the cash available, the calculation is basically the same.
If you invested that $155 in an account that paid 5%, instead of using it to buy one DVC point at $155 you could withdraw $10.78 a year from that investment account for 26 years, so that is what you are giving up on an annual basis for the next 26 years when you spend $155 per point on a DVC contract that expires in 26 years. (at a 5% rate)
Plus you still have to add in the annual dues.

You could do this for any cost per point, or any interest rate you wanted to use.
At $115 per point for 26 years at 5% it is $8.00 per point per year. (not $115/26 = $4.42)
At $155 per point for 26 years at 2% it is $7.70 per point per year (not 115/26 = $5.96)
At $160 per point for 50 years at 5% it is $8.76 per point per year. (not $160/50 = 3.20)

The point being the simple calculation of "price per point/years of life" understates the true cost.

 

[BeachClub2014]

You don't need to be a DVC member to realize that "real value". Non-DVC members experience the same "real value" by simply paying for a WDW hotel room.

I went to WDW for 30 years before becoming a DVC member and cherish those pre-DVC trips just as much.

I totally understand that point, and agree with you. You certainly don't have to be a member of DVC to create cherished memories at WDW; but that wasn't my point or the discussion theme in the thread of "calculating savings" associated with DVC and re-sales in particular.

Owning DVC definitely changed the manner and frequency that my family "did" WDW vacations. Absent DVC we would have never gone as often as we have, at least once a year and often twice. So in the big picture, owning DVC didn't "save" us any money. We definitely paid less than rack rate, doubled up trips on annual passes which reduces the per day cost for parks, etc. to lower our costs; but overall have spent way more money at WDW than we would have if we'd never bought into DVC. Absent DVC we would have never gone as often as we did. But that's just us, every family is different.

 

[crisi]

We also haven't saved a dime.

What DVC has done for us is provide an affordable way to have the kids in a different room while we vacation while remaining onsite. Its the nookie premium. When we bought, family suites weren't built.

If we were just going to stay in studios, we wouldn't have bought - and our family of four can fit fine in a regular hotel room when we need to.

If your goal is to save money, stay offsite.

 

[SuperRob]

However, that simple calculation ignores the time value of money.

...

The point being the simple calculation of "price per point/years of life" understates the true cost.

It certainly does. As much as my math uses some assumptions (like paying rack rates for a comparable room), having to calculate FV would require even more assumptions, like the theoretical interest rate you could earn by investing the money. With interest rates on savings at historical lows, and the stock market fairly volatile, I found it to be a needless complication. Fact is, the vast majority of people who would buy DVC wouldn't have the financial discipline to invest the money anyway.

... If your goal is to save money, stay offsite.

And if you don't WANT to stay off-site, and also don't want to pay Disney's exorbitant prices on hotel rooms? There's rarely ever just one factor in this decision.

 

[zavandor]

If your goal is to save money, stay offsite.

That's very true. DVC is going to save money only to a very small amount of members: people going at least every two years, always staying in deluxes and not caring with the trade offs of a timeshare. There are certainly plenty of people with this, but not hundreds of thousands. So what?
Since I bought DVC I've spent much more in Disney vacations than I ever did in my life. I've already gone to WDW twice for 2 weeks and to Disneyland twice and staying at the VGC. When I bought I made a spreadsheet basically to convince myself that I was going to save a lot of money. But really, the end of the line was to calculate if I could upgrade the quality of my vacations without breaking the bank.
It may sound like I'm a fool, but I'm more confortable to have paid about $12.000 for DVC rather than paying $650 for a room for a night at the Grand Californian.
However, now resale prices are much higher than when I bought, so I'm not sure I would buy at today prices.

 

[crisi]

And if you don't WANT to stay off-site, and also don't want to pay Disney's exorbitant prices on hotel rooms? There's rarely ever just one factor in this decision.

Stay value. You might save money with DVC, but are unlikely to do it over value resorts.

If money is a big factor in your decision making, revisit the thought process behind DVC. Its an expensive luxury, and if you are buying it because it will be cheaper - you might end up wrong by the time DVC starts changing your trips. (And if money is not a factor at all, the Disney Suites are lovely).

 

[SuperRob]

Stay value. You might save money with DVC, but are unlikely to do it over value resorts.

If money is a big factor in your decision making, revisit the thought process behind DVC. Its an expensive luxury, and if you are buying it because it will be cheaper - you might end up wrong by the time DVC starts changing your trips. (And if money is not a factor at all, the Disney Suites are lovely).

No one ever suggested you'd save money over staying at a Value resort. DVC is absolutely cheaper than paying cash to stay at a Deluxe resort. It's roughly a wash over Moderate. And I think I made that point clear. Some people, like myself, have expensive tastes but don't want to pay those prices. DVC absolutely saves that person money. If you're perfectly content staying Moderate or lower, you won't save anything, but you will get a better experience.