Tell Me the DOWN side of this

[adminjedi]

Wow! Thanks for all the replies. We are now aware of the downs and ups of buying Disney. We are going to buy direct with Disney at BLT, 3 separate contracts. We have Sept UY and we are going in Sept anyway. Our guide was able to get us a 1 bedroom and studio (for other family) for this Sept. We know several people who own DVC, all purchased direct through Disney, no one has any complaints, unlike this board, LOL! We haven't signed the contracts yet, they are being mailed. Any last comments, we can still change our minds!

Congrats!

 

[Disneypubgal]

We bought a year ago and have taken 2 trips to date. We've always done Value resorts and once at a moderate. Although the upfront cost of $12,600 on a BCV resale was steep, we were able to pay it in full and now have 150 points a year to use. We're going back next May and can't wait. We figure we'll re-coup the initial buy in within a 7 year time frame. Yes, we have maintenance fees, but had we not bought in, we would never have been able to take all the wonderful WDW trips we're going to be taking or be able to stay on property at beautiful deluxe resorts. Having two toddlers, we have many more years of magic left to experience. The next 16 to 20 years (and probably beyond that) will be filled with priceless memories, at wonderful Deluxe WDW resorts with large rooms. Accomodations in all liklihood we would not have been able to afford had we not bought into DVC. Yes it's expensive up front. But if you look at the complete package you can't put a price tag on it in the end. Staying off site takes so much of the magic away. We've done it before and it's just not the same Disney vacation. We love immersing ourselves in the magic and never leaving it for an entire week. Staying off site is like leaving the magic at the end of each day. It just doesn't work for us. Best of luck in your purchase. May you and your family have many magical memories!!!

I could not agree with you more!!

 

[Malaguti Ball Clan]

I see you agree

I however would tend to agree with Dean's Post above, as I know DVC didn't save me a dime....by owning we are going more now then when we were stationed in Florida (Key west to Orlando isn't exactly a day trip)

I probably could not have stayed for two weeks last summer in a two bedroom villa and still been able to afford to go back this fall to a GV without DVC.

So does DVC offer an overall savings, in my case NO as we would not stay deluxe each year without DVC. If I wanted to "save" I would stay at SOG as I have in the past (nice, but not deluxe nice) or offsite

DVC does give our family great vacation "value" and that was the goal going into it.

 

[gkrykewy]

DVC will not save most people money for several reasons. They miss out on specials, they wouldn't spend the type of money involved otherwise, they spend the extra money on other things, they buy more/longer passes, they make more trips, they get larger/more expensive rooms etc. It may add extra value but it will not save money. Some try to justify this by using the rack rate for DVC, there are few people that is applicable to that paid cash routinely for DVC or suites. Thus my feeling is that using the DVC rack rate in any of the equations for most people is a fool's comparison.

One could similarly say that staying home is a clear money-saver over traveling to WDW. Can't fault the logic, but it misses the point.

As a result of owning DVC, we're no longer hemming and hawing over whether we should stay 4 nights, 5 nights, or 6 nights every 18 months or so in our beloved WDW deluxe resorts. Instead, we're savoring about 10 nights a year. Yeah, we're probably paying the same annually as we used to, but the extra time is a huge quality of life improvement for us.

 

[crisi]

One could similarly say that staying home is a clear money-saver over traveling to WDW. Can't fault the logic, but it misses the point.

As a result of owning DVC, we're no longer hemming and hawing over whether we should stay 4 nights, 5 nights, or 6 nights every 18 months or so in our beloved WDW deluxe resorts. Instead, we're savoring about 10 nights a year. Yeah, we're probably paying the same annually as we used to, but the extra time is a huge quality of life improvement for us.

Yep, we go more often and stay in a two bedroom instead of cramming four of us into a regular hotel room. We've been able to treat my mother in law, brother in law, my sister and her family and my parents to trips. Its been a great addition to our lives, but it hasn't saved us any money.

Saving money really isn't the point of vacations, but it IS a selling point and one of the reasons a lot of people buy DVC. And it CAN save you money if you had certain patterns before purchase and have discipline when using your points. But for a lot of us, the dreaded addonitis, the need to share with our family and friends, or larger rooms (or other things, like going out to dinner nicer places, turning DVC into a golf resort, going to Cirque, deciding to do an Illuminations cruise) means we don't save over what we would have spent without buying DVC.

The other factor is tied up capital. The past few years have been tough for a lot of people, and having points that you can't really use because you can't afford the rest of the trip, having payments on those points, and being in a position to need to sell at a loss is tough. And was the fate of a lot of DVC DISers over the last two years. Its something that people planning a purchase should keep in mind and be aware of the risk.

 

[Dean]

But I didn't USE DVC rack rate!! That is my point I showed you numbers for a room at a value resort vrs a DVC studio (with a kitchette and in a deluxe resort) and it was CHEAPER.

Oh and promotions I used the room only promotion which is what alot of people HAVE because free dining is blacked out or they have APs or the other special was sold out etc. So that was with a promotion.

There is also the point that the promotions could go away at any time but DVC can't up the total number of points, just reallocate (and my comparison would be even better next year as the points for that week I was talking about will be LESS next year).

Your right that if you go more with DVC your not really saving money because your going more. So yeah really I'm not since I still have the same vacation budget per year... I just go longer and do more extras instead of spending it on my hotel room, while getting a better room. So if you want to split hairs and call that just adding value and not saving money fine... either way its still better.

In the end you agreed with me that DVC didn't save you money but it can be an upgrade for many and that can increase the value. My response was to yours but more generic encompassing issues that have come up over the years. The one flaw I see in your info is you didn't account for the time value of money, something I think you must but some disagree.

I am sorry I have to completely disagree with your comments about specials. DVC ownership is for a long period of time...I have had my DVC since 1997 and for most of the specials those 13 years the specials that Disney is curently offering just did not exist... I suspect when the economy rebounds A LOT of those discounts will go away...If you are a dvc member and have your heart set on taking advantage of the specials then rent your pts out and pay cash to take advantage of current promotions

My post was more to those looking now. I bought in 1994 with free passes and I both upgraded my accommodations AND saved money. I guess my bias when this thread comes around is to speak to those looking to buy now or in the future, if you already own it's moot. I think the landscape has changed a fair amount from when you and I joined. I think for most people they don't save money by buying DVC and that includes most that bought back when. I think most people that don't save money think they do.

One could similarly say that staying home is a clear money-saver over traveling to WDW. Can't fault the logic, but it misses the point.

As a result of owning DVC, we're no longer hemming and hawing over whether we should stay 4 nights, 5 nights, or 6 nights every 18 months or so in our beloved WDW deluxe resorts. Instead, we're savoring about 10 nights a year. Yeah, we're probably paying the same annually as we used to, but the extra time is a huge quality of life improvement for us.

It's not at all the same. Certainly staying home may save money but I'm assuming one will vacation at least consistent with their history up to that point and c/w their plans the next few years from the points of discussion. It's amusing to me how people make this about buying DVC vs not vacationing. There are MANY factors and we can't go into all of them at this time. But to summarize, one must look HONESTLY at their situation and history as a point of comparison and then realize all of the options available which include far more than just buying DVC or staying home. They include staying on property with several levels to chose from, village hotels, off site, timeshare vs hotel; a choice of when to go which affects price and discounts and many more including dining methods. In addition one has the ability of taking advantage of various options, including DVC, by renting or other means rather than buying. I've had many trips to Orlando the past 6-7 years where where the total cost was in the $300-400 a week range for a 1 BR or larger unit, many of those stays were at DVC resorts and not using DVC points. There are many choices and infinite ways to save money (or not) but buying DVC isn't one that will save most people actual money over what they would have spent. Hopefully it at least returns value which is totally different in my book.

 

[gkrykewy]

it's not at all the same. Certainly staying home may save money but I'm assuming one will vacation at least consistent with their history up to that point and c/w their plans the next few years from the points of discussion. It's amusing to me how people make this about buying DVC vs not vacationing. There are MANY factors and we can't go into all of them at this time. But to summarize, one must look HONESTLY at their situation and history as a point of comparison and then realize all of the options available which include far more than just buying DVC or staying home. They include staying on property with several levels to chose from, village hotels, off site, timeshare vs hotel; a choice of when to go which affects price and discounts and many more including dining methods. In addition one has the ability of taking advantage of various options, including DVC, by renting or other means rather than buying. I've had many trips to Orlando the past 6-7 years where where the total cost was in the $300-400 a week range for a 1 BR or larger unit, many of those stays were at DVC resorts and not using DVC points. There are many choices and infinite ways to save money (or not) but buying DVC isn't one that will save most people actual money over what they would have spent. Hopefully it at least returns value which is totally different in my book.

You responded to my exaggerated example but not to my point. IMO, the rule of thumb is that DVC *will* save you money if you regularly visit WDW (say, every 1-2 years) and always stay in a deluxe resort on property. The same is also true for moderates, but with a much more distant breakeven. Mousesavers.com has an excellent series of breakdowns in this regard. Yes, it is possible to save even *more* money by really becoming an expert in working offsite timeshare properties for on-site trades or by renting points, but this does not discount the fact that money would nevertheless be saved by regular deluxe guests.

 

[Dean]

You responded to my exaggerated example but not to my point. IMO, the rule of thumb is that DVC *will* save you money if you regularly visit WDW (say, every 1-2 years) and always stay in a deluxe resort on property. The same is also true for moderates, but with a much more distant breakeven. Mousesavers.com has an excellent series of breakdowns in this regard. Yes, it is possible to save even *more* money by really becoming an expert in working offsite timeshare properties for on-site trades or by renting points, but this does not discount the fact that money would nevertheless be saved by regular deluxe guests.

I would agree that in the specific situation where you are comparing a deluxe to a DVC STUDIO or 2 deluxe rooms to a 2 BR, it is possible to save money but not automatic. I suspect most people don't actually save money but many have more money to spend on other items for their vacation. I always want to save even more money when I can. The other thing about DVC that is strange is that some people stress over whether DVC will save them money, then stress over getting the best deal, then simply forget about letting DVC help them save money once they own. Their choice of course, just seems strange to me.

 

[magicron]

Put this in your spreadsheet.....I am staying in a Grand Villa with a frekin pool table in it that over looks a savanna full of animals I would never see in my woods with balconies bigger than some value resorts entire room!! And all I have to do to get this is pay maintenance fees each year....yeah, tough choice for me..not. If I was to owe DVC 10-20k come 2060 whenever, something tells me the time and memories spent with my family, friends, children's children are going to be BEYOND worth the cost. Good bless DVC

Preach it! I'm with you on this.

But, there are those who want to see all the numbers. I'm an engineer, so I can't help myself. There are a few good spreadsheets out there for those who must see the numbers. And they are well thought out, using some heavy finance principles, etc.

I made my own spreadsheet, with assumptions about resale. I found data on DVC sell prices 10 years ago, and 20 years ago, compared to what those properties are reselling for now. Not much depreciation in value.

For my analysis, I assumed I had $18,400 sitting in the bank. I could give that money to the bank and earn 5% (if I'm lucky), and draw that amount down each year to pay for rooms at a moderate resort at $200 per night, 7 nights each year. Or, I could give that money to DVC, to by 160 points at BLT, including closing costs. I could use my DVC points for a lakeview studio for a week. So, somewhat comperable accomodations, except the studio has a kitchen, laundry, and likely a better view.

Each year I pay maintenance fees to DVC of about $550, plus 3.5% increase each year. Or, instead, I could draw off $1,400 each year from the bank account for a moderate resort, and assume a 6% increase in room rate each year.

Results. At year 4, if I decide to sell, subtract selling commission of 10%, subtract maintence fees, and assume I can only get 90% of my original purchase price....I will have about the same amount of cash in my hands, as if I had used the savings account method.

After year 10. The savings account is depleted. But, if I sell my DVC property, I'll have about $8,500 in hand (after subtracting maintenance fees, closing cost to sell, commission, etc.).

At year 20, my DVC cash available is about zero, meaning what I get back from selling is almost completely offset by the maintenance fees I've paid over 20 years. But, I can still 'go home' by paying my annual maintance fees for many more years! On the bank account side, I depleted my savings at year 10, so year 11-20 I need come up with the cash - about $35,000 over those years to keep going.

As with any of these analyses, it all depends on the assumptions made. Assuming value resort at a discount will take longer to justify DVC. Assuming cash on a DVC villa will resort in a shorter time justifying DVC.

The original thread was 'what is the downside'. So here are a few:
You're already planning your next trip while you're on your current one, and you're wondering if you can keep enough points on-hand.
You stay in a 1BR (with family of 4), and you can't go back to a studio, or a basic hotel room, for that matter.
You start thinking about who else you can take on your next trip, and wondering if you'll need a 2BR for that trip, if if you have the points.
You see that a DVC annual pass is a better value than a 7-day (around there) parkhopper. As a result, you convince yourself that the only cost for coming down another time during the year is transportation and meals.
You start thinking about how you can come up with points to go to Hawaii or Hilton Hear, for a change of pace.
You start wondering if you need more points to cover all of the above.

 

[Sandisw]

I would agree that in the specific situation where you are comparing a deluxe to a DVC STUDIO or 2 deluxe rooms to a 2 BR, it is possible to save money but not automatic. I suspect most people don't actually save money but many have more money to spend on other items for their vacation. I always want to save even more money when I can. The other thing about DVC that is strange is that some people stress over whether DVC will save them money, then stress over getting the best deal, then simply forget about letting DVC help them save money once they own. Their choice of course, just seems strange to me.

And that is probably the key--how one is defining "saving" money. If the money saved by DVC is re-spent at WDW, then some would say you didn't save because you spent the money anyway.

However, some might simply say that "savings" is defined only with the initial piece. So, if DVC saves money on the room portion, X, then that is all that matters.

But, I do agree with you, sometimes people try so hard to look at every little piece-time of money, perfect buy in price, etc. that it can become overwhelming.

We took a bit of different approach. If my yearly trips cost around $5000 (rooms, tickets, food, airfare, car rental, and spending) a year, I decided that I needed DVC to cost my no more than this. If it did, I was getting upgraded accommodations or a longer vacation for those same dollars. Therefore, I was getting better value for my dollar.

 

[Redbudlover]

It is a great investment if you plan to use the points to go on DVC Disney vacations and you go often. It is a bad investment if you plan to use the points for resorts apart from Disney in that the value of the points is much less outside of Disney. IMHO!

The downside for DVC me is that I love the pampering I get at WDW luxury resorts. Towel service and maid service every few days bums me out. In the future I plan to pay extra for maid service every day. Apart from that the upside is the kitchen and sofa.... And a lot of folks like having the washer and dryer. I don't cook on vacation and I sure do NOT do laundry so if you are like me the upside is not as great as it is for most everyone else.

 

[Snurk71]

Time for some real world math experience for illustration to the naysayers...

Prior to buying DVC we stayed at GF, always at GF, every year for about 10 years. We used to get a room discount years ago, but were striking out most recent years. So here we go...

GF garden view rack rate - $435
2010 cost for 7 nights, with tax - $3,630

But let's be a little conservative and assume we might get a 40% discount every other year. So we restate the GF rate to 80% of current rack rate.

GF garden view rack rate - $348
2010 cost for 7 nights, with tax - $2,903

As regular room rates go up every year, let's use a 4% average inflation increase (we'll use this same rate for maintenance fees on the DVC side).

Here are the cumulative GF 7 night room costs:

5 years - $15,726
10 years - $34,859
20 years - $86,459
30 years - $162,840
40 years - $275,903 (though I don't know if I'll still be alive in 40 years)

Now for the DVC numbers...

A 7 night stay at BLT in a 1BR LV in Choice season is 240 pts, 274 for Dream season. So let's stay conservative and use a 260 pt need for our week's stay as we cross seasons occasionally.

260 point cost in 2010 at the current $110/pt - $28,600

Let's assume maintenance fees are $4/pt and will grow at that same 4% inflationary factor we used for the GF room. 2010 MF - $1,040

Since we paid cash for the points, we have lost capital use of that money. I'm not getting anything near this now, but let's assume the old standard 8% cost of capital factor on the money I don't have use of because I spent it all on pts. So in 2010 it's going to cost me another $2,139 to not be making money off that money I used to buy the points.

So here are the cumulative 7 night stay costs for BLT:

5 years - $43,962
10 years - $55,835
20 years - $74,714
30 years - $102,073
40 years - $142,571

Breakeven - year 17

Under this conservative model I break even at year 17 and save $133K over the 40 years of vacation. I say it's conservative because I'm not staying at less point resorts, taking a standard view every so often, and I didn't add back in the cost of capital on the money I'm actually saving starting in the latter years.

Now, my real numbers were a little better since we bought at $97/pt, will occasionally stay at lesser point resort and lower point room category, and I'll be lucky to have a cost of capital of 5%. I think I'll break even on a 1BR in 10-12 years. What if we stop going to Disney in 10 years, around the time we break even? I think it would be fair/conservative to assume we could probably sell for at least half of our initial buy-in cost and be up $14K. I'm not planning on doing this or recommend doing it as an investment, but that's just how the numbers play out for us.

Your witness, counselor...

 

[Malaguti Ball Clan]

Time for some real world math experience for illustration to the naysayers...

.

Where were you when I cannonballed in and said wohoooooo lets do this disney thing...

 

[magicron]

Time for some real world math experience for illustration to the naysayers...

So here are the cumulative 7 night stay costs for BLT:

5 years - $43,962
10 years - $55,835
20 years - $74,714
30 years - $102,073
40 years - $142,571

Breakeven - year 17
Your witness, counselor...

Hmm. 17 year breakeven would not be too attractive, especially with the high end alternative to DVC compared.

Perhaps the 8% savings rate for DVC money is throwing things off, as it appears to be included in the DVC side. I'm not a finance or accounting person, but seems to me the 8% savings rate should be added to the DVC alternate side. In other words, you have $28,600 plus closing costs in the bank. You could either give that to DVC, plus annual maintenace costs. Or you could keep that $28,600+ in the bank, earn interest (5% or 8%, either way), and then use that money to pay for a room over time.

Here's how your numbers came out for me.

At around year 5, you've paid DVC about $34,000. Or you've earned some interest on your cash, all the while drawing it down by paying for hotel each year. After 5 years you've paid about $13,000 for the hotel. However, you own an asset in DVC. If you can sell at 90% of your original points value, less 10% commission, and closing costs...you'll clear about $20,000 (that's sell price less annual maintence fees for 5 years, less commissions, closing, etc). On the hotel plan, you'll have about $20,000 in the bank, so you're about even at that point. At 10 years, you'll clear about $15,000 on the DVC side, and you'll only have about $5,000 left in the bank for the hotel side.

Now perhaps a finance or accounting person can jump in and reconcile our differences in breakeven, etc. Anyone? Anyone?

 

[Sammie]

We could have gone to Disney for less money but we would have never been able to afford a DVC resort two bedroom even with discounts.

We paid $18000 for our DVC and we pay about $1500 a year in fees.

We took 3 trips in 09 and if we had paid rack rate for our stays it would have come to $13,376 dollars for one year of trips.

So yes we have recouped our money very quickly.

At this point I have no idea if in 10 years we will go as often but even if we sell them and break even on what paid for them, we have saved a lot for this level of accommidation.

 

[Dean]

Hmm. 17 year breakeven would not be too attractive, especially with the high end alternative to DVC compared.

Perhaps the 8% savings rate for DVC money is throwing things off, as it appears to be included in the DVC side. I'm not a finance or accounting person, but seems to me the 8% savings rate should be added to the DVC alternate side. In other words, you have $28,600 plus closing costs in the bank. You could either give that to DVC, plus annual maintenace costs. Or you could keep that $28,600+ in the bank, earn interest (5% or 8%, either way), and then use that money to pay for a room over time.

Here's how your numbers came out for me.

At around year 5, you've paid DVC about $34,000. Or you've earned some interest on your cash, all the while drawing it down by paying for hotel each year. After 5 years you've paid about $13,000 for the hotel. However, you own an asset in DVC. If you can sell at 90% of your original points value, less 10% commission, and closing costs...you'll clear about $20,000 (that's sell price less annual maintence fees for 5 years, less commissions, closing, etc). On the hotel plan, you'll have about $20,000 in the bank, so you're about even at that point. At 10 years, you'll clear about $15,000 on the DVC side, and you'll only have about $5,000 left in the bank for the hotel side.

Now perhaps a finance or accounting person can jump in and reconcile our differences in breakeven, etc. Anyone? Anyone?

I agree, too many risk on the DVC side to make break even more than 10 years a reasonable option if cost is the main factor. He added in a 4% inflation rate on the GF AND on the DVC dues which accounts for changes there. Thats a fair number though I think the starting point of $4 a point is a little low overall. Only BLT has a number around or under that and I believe it's artificially low at present. One thing people tend to overlook in these equations is the risk. While there are risks on both sides, the risks on the DVC side that the assumptions won't work out are much higher. Plus you can alter the variables on the cash side if you need to ongoing but not once you buy in other than selling, generally at a loss.

 

[minnie6895]

We love our DVC points. We don't look at it as an investment, and have been pleased with the accomodations we have stayed in for the points we have used. Wish you the best!

 

[Snurk71]

Hmm. 17 year breakeven would not be too attractive, especially with the high end alternative to DVC compared.

Perhaps the 8% savings rate for DVC money is throwing things off, as it appears to be included in the DVC side. I'm not a finance or accounting person, but seems to me the 8% savings rate should be added to the DVC alternate side. In other words, you have $28,600 plus closing costs in the bank. You could either give that to DVC, plus annual maintenace costs. Or you could keep that $28,600+ in the bank, earn interest (5% or 8%, either way), and then use that money to pay for a room over time.

Here's how your numbers came out for me.

At around year 5, you've paid DVC about $34,000. Or you've earned some interest on your cash, all the while drawing it down by paying for hotel each year. After 5 years you've paid about $13,000 for the hotel. However, you own an asset in DVC. If you can sell at 90% of your original points value, less 10% commission, and closing costs...you'll clear about $20,000 (that's sell price less annual maintence fees for 5 years, less commissions, closing, etc). On the hotel plan, you'll have about $20,000 in the bank, so you're about even at that point. At 10 years, you'll clear about $15,000 on the DVC side, and you'll only have about $5,000 left in the bank for the hotel side.

Now perhaps a finance or accounting person can jump in and reconcile our differences in breakeven, etc. Anyone? Anyone?

By the way, I'm a finance/accounting person - so I'll take my numbers.

I shared the numbers because of the statements that pop up here every so often that you won't save money going from a cash resort stay to a 1BR - the numbers say you can, and we will. Granted, the numbers will vary some based on where you stayed cash vs. where you're staying DVC and what you buy in at. But it worked out for us in a major way.

Also, my real break point is around 10 years - so I think I'm good. But even when all the stars are misaligned like in my example case, I showed that you can still get a decent deal changing over to a 1BR.

 

[wildernessDad]

Make sure you look into Use Year (UY) and what that potentially means to your particular vacation times.

 

[adminjedi]

Look at your personal financial situation.
Look at your vacation pattern - Disney or national parks
Consider what is important to you - 1 star or 4 star hotel, off property or on property, etc.
Use some sort of spreadsheet to estimate true cost (current cash value etc) of ownership, compare to staying cash at deluxe resorts etc.
Make an educated and informed decision.
Then, buy the points and party party party as a DVC owner and enjoy your vacations at WDW or DL!