Serial Renter of DVC, Should I just buy?

[joeytdog]

Okay, some background on me

DH, 31 married with 2 children, both 4 years old

We have rented points the past three years, spending $2000, $2500, and $3000 respectfully

Once again we are ready to purchase our annual trip and this year it will be $3500

Shouldnt we just go ahead and buy?

We would have to finance most of it, using our rental $$$ for the down payment

I was thinking 200 BLT points, which allows us our 9-10 night trip every 2 years

I know financing a luxury purchase is ludicris to some, but does it make more sense to keep throwing money at rentals?

I have been heavily researching DVC the past 2 years and I think it would really make me happy to go ahead and just take the plunge....

Is the water temp okay? Should I just dive in?

 

[Scott]

I'd say you are the poster family for DVC ownership. We were in your position (rented 3 years, researched pros/cons to the point of obsession, trolled the DIS/DVC boards, etc.) and went ahead and took the plunge and don't regret it. Best wishes to you.
Scott
p.s. the water's very nice!

 

[disneynutz]

You need to compare costs dollar for dollar. Don't forget the dues and expect a increase each year.

From your post, you vacation every year, but if you purchase at BLT, you would vacation every other year. Will that be a problem?

You need to purchase at the resort that you love, that can't be BLT because it isn't open yet. Having the 11 month booking window is important in my opinion.

 

[ddiva]

We, too, were serial renters. After 5 years of looking, we finally decided to buy at BLT last week. Good luck with your decision!

 

[Grandbuddy]

Okay, some background on me

DH, 31 married with 2 children, both 4 years old

We have rented points the past three years, spending $2000, $2500, and $3000 respectfully

Once again we are ready to purchase our annual trip and this year it will be $3500

Shouldnt we just go ahead and buy?

We would have to finance most of it, using our rental $$$ for the down payment

I was thinking 200 BLT points, which allows us our 9-10 night trip every 2 years

I know financing a luxury purchase is ludicris to some, but does it make more sense to keep throwing money at rentals?

I have been heavily researching DVC the past 2 years and I think it would really make me happy to go ahead and just take the plunge....

Is the water temp okay? Should I just dive in?

If you use this year's rental money for the down payment, that means (I would assume), no trip this year. I don't know if your annual spending reported above includes your meals and tickets(?) If you purchase DVC, and this year's trip money goes to the down payment, can you handle a monthly payment for the financed DVC debt, pay annual dues, and still save enough for next year's vacation expenses (beyond the accommodations)?

And as Suze Orman would ask, "Do you have an emergency fund?"

If your figures say you can handle the expenses, and you feel good about it, go for it. If monthly income won't comfortably handle the increased debt, it would be a huge mistake.

Speaking as a dad.

 

[5forDiz]

Very sound advice given by other posters here re comparing $ to $ and what seems so important these days as never before in recent memory - an emergency fund.......I think you're a good fit for DVC ownership but jmho I wouldn't think BLT just yet; get in with an onsite DVC via resale at the lowest possible cost per point ( most likely SSR ) and in the future, as your kids get older & your vacation habits indicate, add-on at BLT if you find that resort is to your liking as well and you'd also want to have the opportunity to book some nights there at 11 month window too.

 

[DVC4me4Ever]

WOW, the water is great over here in DVC Land. Sure wish you were here to enjoy it with us!!!!

I know we all pay MFs every year but I do not think they rise as quickly as the rental costs or regular room rates. I never want to go back to just staying in a regular room that DVC is a perfect fit for the way I prefer to vacation.

Do your research (sounds like you are well on your way) and make the decision that is best for you and your wonderful family. If I were a betting person, I think before long we will be able to say those magical words to you. Hint....(welcome home!!!). Sorry I just wanted to practice saying it to you....LOL!!!!

 

[Sandisw]

We went through the same discussion this year as to whether DVC was right for us or not. We have been spending $2000 - $2500 per year on our room for years (mostly at the CR).

When all was said and done, even with the cost of financing, we could make our yearly trips work (including MF's, airfare, tickets, etc) for less than what we had been paying for those same yearly trips and end up in a 1 bedroom vs. a typical hotel room.

So, we went for it. While I agree that financing adds to the cost and stretches out the length of time in which we would "break even", it still made more sense to invest in something for the long term, vs. continue to pay cash for our WDW packages and at the end of the day, having nothing. As it turned out, we ended up not needing Disney financing (made it work with the Disney Visa) so our savings will happen sooner than we figured.

We are thrilled with our BLT purchase and know we made the right move! Good luck!!!

 

[GoofItUp]

We rented DVC points for the first time this spring. Unfortunately, my youngest son was sick, so he and I stayed home while DH and our older son went. We have looked at DVC before, but DH loved staying at BCV so much that this got us looking at it a lot more seriously. I just fixed a rent vs. buy spreadsheet the other night. I'm sure someone on here can poke holes in it, but here's what I found.....

Assuming you rent or buy 160 points annually, with a 3% inflation rate on your rental rate or your MF.....rental rate starting at $11/point.....or buying in at BLT with an up-front cost of $101/pt and MF starting at $3.67/yr.....

Over the 50-year time frame, you will have spent $198,522 renting points OR $82,394 buying DVC and paying MF.

I realize that with renting points you avoid the obligation of having your money tied up for 50 years, but buying in certainly has a cost advantage over the life of the contract. Once I put this chart together, DH even agreed that once we have at least most of the money saved up, we are going to buy in. I can't think of any point in my life where I wouldn't want to go to WDW. And, with DVC expanding into CA, Hawaii, and who knows where next, it gives me even more of a reason to buy in and have other vacation options.

The hard part for us now is waiting until we have more cash on hand. (And, yes, we already have emergency funds, retirement accounts, etc., so this is above and beyond that.)

 

[bumbershoot]

"does it make more sense to keep throwing money at rentals?"


Although we hadn't rented, that's what really got us to buy...the idea of "we're paying x dollars per vacation anyway, might as well make those dollars do something better". The same sort of thing that home-owners think about rent, basically...except we're happy renters who haven't felt like "owning" a home yet, but decided to buy DVC, LOL.


Someone mentioned that if you use the rental money towards the down payment, you don't get a vacay this year...why? The points will be there, so if the other stuff works out, you might as well.

 

[bookwormde]

If you do the calculations using reasonable assumptions (most people forget to include a what “safe” income the DVC$ would have made of DVC was not purchased) if you have to finance you will not save money buy buying if you can rent points for $10 or less. The big factor for buying is having “control” over you reservation.

bookwormde

 

[YourEveryDayAdam]

Please see this thread I created about the savings that owning DVC can provide if you go every year:

http://www.disboards.com/showthread.php?t=2137102

Basically, you can compare the "40% off" costs in my numbers with the price you are paying to rent every year.

In almost every case, DVC comes out WAY ahead.

 

[ssawka]

Tough call! The big question here is how quickly do you think you'd get the loan payed off? If you need the full 10 years, then it becomes a difficult decision. At the $3500 mark, you'll actually pay more for your "every two years" trip than you are now paying for your "every year" trip, but after the loan is payed off you will get 40 years of "MFs only" trips. The numbers below break this out. The first column is the year, the second column is the total loan payments for the year (assuming 10.75%), the third column is the maintenance fees (assuming a 3% increase per year), and the last column is how much the "Every two year" trips will cost.

2009 $245.41 $734.00
2010 $2,944.92 $756.02 $4,680.35
2011 $2,944.91 $778.70
2012 $2,944.92 $802.06 $7,470.59
2013 $2,944.92 $826.12
2014 $2,944.92 $850.91 $7,566.87
2015 $2,944.92 $876.43
2016 $2,944.91 $902.73 $7,668.99
2017 $2,944.92 $929.81
2018 $2,944.92 $957.70 $7,777.35
2019 $2,699.51 $986.43
2020 $0.00 $1,016.03 $4,701.97

It will be more favorable if you don't stretch the loan out for 10 years. So basically, the two questions are:

1. How long to you plan on going to WDW?
2. How long will it take to pay off the loan?

This also does not take into account resale value and time value of money.

 

[disneynutz]

Besides the cost of purchasing and the yearly dues you really need to add in the cost of everything else.

Owning at the DVC obligates you to vacation every year or two, maybe for 50 years. Is that the vacation pattern that you would have anyway?

Adding in the expensive cost of admission to the parks, inflated food prices, the ever increasing cost of airfare and car rentals means that you will spend another $1000 to $2000 every year in addition to the DVC cost.

As a renter or cash Guest, if you decide to skip a year or two to save some money or to just take a break that's no problem. As a owner you have to do something with your points or you will lose them.

How many members have posted that they had to take a Disney vacation because they were going to lose their banked points.

All of this should be considered to determine if ownership is right for you and your family.

 

[thelionqueen]

We were in the exact same position as you! We rented for 2 years and bounced around ownership (and 2 cancelled contracts) for the next 3.

We are financing our purchase which doens't bother us at all. Even though we are planning on (and staying on track to) have it paid off in 3 years, if we are forced to take the entire 10 it is still a win for us.

My thought process is much simpler than those with a background in accounting and amortization schedules posted here on the DIS. My purchase was simply this..I am spending the same amount of money (less in some instances) to buy my DVC than I would be paying for the vacations I'm going on whether I own or rent. By spending money on my DVC contract, the money going out is essentially the same as it would be by renting points or reserving directly with Disney and we get better accommodations, a contract and OUR OWN ability to make and alter reservations at whatever DVC resort we want. Just my simple math.

I don't regret buying DVC for a second, in fact, it is one of the things I "own" that makes me smile every single day!!

 

[twinklebug]

Your question is as personal as making the determination between leasing or buying a vehicle: ymmv from what I'm getting.

I did the same as you, renting 5 times, researching, planning and saving to buy in. It was a true celebration when I closed on my contract last year. I felt all the research was well worth the time spent.

My opinion is that it sounds like you're more than ready to start taking control over your reservations and knowing that you own your own "vehicle" at the end of whatever sort of payment process you devise is right for you is priceless.

 

[tbranan]

Thanks for the hard work, Adam. I have "borrowed" the sheet you put together so I can show the DW when I make my presentation to her next week! Thanks again!!

 

[kim_d]

I think a consideration that might be over looked when talking about financing is the increasing price of DVC (which at some point will not be the case) which allows you to lock in the price point.

My DH and I initially bought into BC in 2002 and financed it. It is now paid off, however I was calculating how much we spent per point including the interest charges and it came to much less than the current selling price per point through Disney and even less than a lot of the selling prices for BCV through resale. So the way I look at is I could buy BCV today in cash or spend the same amount of money over 7 years with financing and get 7 years of DVC trips! So needless to say we don’t regret financing at all.

Good luck with you decision!

 

[lark]

I think ssawka's post pretty much says it all for you.

To me, the question comes down to a realistic assessment of two more questions:

1) How often will you go when your children get older, and

2) Will you skip some years while paying off your loan.

Assuming you put 10 percent down, your out of pocket is about $2,000, and your yearly costs are about $2850 for the loan and interest, and $800 for dues.

If you don't pay the loan early, that's an awful lot of money. Taking into account your initial outlay of $2,000, you're talking about nearly $40,000 over the next 10 years, or $4,000 a year. $4,000 really buys an awful lot of vacation lodging, whether at WDW or anywhere else.

Once the loan is paid off, though, as others have noted, you have a nice asset. If you think you would use it even when your children are teenagers, it's pretty much all gravy at that point -- you get first rate lodging for your dues only. If, though, you'd think about using it less and selling it, at least you have an asset with (hopefully) some residual value to recapture some of that sunken $40,000.

Other problems come in when you decide in a few years that you'd rather go to, say, the Carribean for your vacation. That's where the economics are really punishing. You'll never be able to rent your points out to cover your yearly outlay. Even at $12 per point, you're only going to get $2400 to cover your yearly $4,000 payment. Yuck! If you're not seriously planning to use all your points during the period where your loan is outstanding, it's not likely to make financial sense at least in the short term.

My personal view is that financing most of a DVC purchase with risk of taking more than a modest time to repay the loan is simply a bad idea for all but a few select people who know for a fact that they will continue to use their home resort more than 10 years in the future. I know others disagree with that view, but it's my personal opinion. Models that try to compare value of a hotel attached to a theme park when you're 86 years old aren't really helpful to me, at least.

 

[PHILCT]

I think you might be a candidate for DVC.

I also wonder however as DVC costs to purchase points continue to rise, and yearly points dues continue to rise, the dollar costs per points to rent doesn't seem to rise as offered by DVC members here on DISBOARDS.

Does anyone know how much the average cost per points rentals have been for the last decade?

I would have thought the cost per point to rent would have been like 13 to 15 dollars a point by now.
It does seem like a renter's advantage at the moment.
Example OKW 9 points a night for a studio, at 10 dollars a point, 90 dollars seems like a steal when compared to the best Disney Code Discounts.