To DVC or Not... help with the math!

[MrInfinity]

We've long been going to WDW... We typically stay at the Poly. Now with Poly rooms going DVC, we are for the first time ever considering the purchase option. Can anyone shed some light on this?

In my scenario, I'm picking an 85-point direct purchase ($165/pt) contract. Paying cash, which would be $14025. So there are no interest charges to be concerned with.

I envision going back again in a few years. After that we might want to do Aulani at some point. How realistic is it to transfer to Aulani? And Is it worth it to transfer to Aulani? If other people are getting points for $60 whereas mine cost $165, but on the 7-mo market they are equal, then presumably it's a bad deal to trade premium points like this for Aulani, and I should instead just rent them out to someone who would want them for their Poly value and use that money to pay for a Hawaii trip.

Now the math. We're 6-10 ppl, and get 2 rooms. On our upcoming trip we have 2 Poly rooms booked for about $4900 total for 7 days. This is my basis for comparison.

Two Studio Poly DVC rooms would be about 250 pts and sleep the same number of people, albeit on sleepers instead of extra beds. So we're looking at around 85 pts purchased, to be able to do the Save-Use-Borrow every 3 years, thereby consuming around 250, which is less than 85x3.

Looking ahead 15 years... (5 trips)
$4900x5 = $24,500 via Resort (x93% via Target/DVA = $22,785)
$14,025 + $500x15 = $21,525 via DVC.

DVC seems cheaper, until you consider that you've had to sink $14,000 in, instead of investing it elsewhere.

Even a mere 5% (less 3% inflation = 2%) would net $4200 over 15 years. ($280/yr for 15 years). This $4200 serves to reduce being a Resort guest from $22,785 to $18,285. (aka returns earned from our investment in something other than DVC would serve to pay down each vacation)

Now we have, after 15 years:
$18,585 spent on 5 resort stays
$21,525 spent on 5 DVC stays

It just does not pay back, even within 15 years we are still $3,000 in the red.

The issue I'm running into, is that every year DVC costs you another $500 ($1500 per 3-year trip). And your cash investment of $14,000 is not earning you a return (which I put at 2% after inflation, or $280).

So where is the break even point?

A single 3-year resort trip costs $4557. ($4900 x 93%).

3 years of DVC, ignoring the initial outlay costs $500 in fees plus $280 in interest not earned, or $780x3, or $2340.

Subtracting, $4557-$2340 is $2217 saved by staying DVC, per trip, and $2217 into the original $14,000 is 7, which means it takes 7 trips to WDW to just break even. That's about 21 years for me.

Now I can see how the key factor here is the $165/pt initial outlay. Could we get these for $60 or even $100 (BLT), the math is vastly different. But Poly is where we want to stay.

So. I guess, can anyone tell me if / how I am miscalculating here? I think the upcoming Poly sales are where I would want to jump in if I was to ever jump in... and it does seem to save me a good $2000 per trip... but even at that, it takes 7 trips / 21 years to make back the $14,000.

A cash investment that does not recover any profit for 21 years... Worth it??

Thank you!!

 

[Novakm]

I think you may have missed something. At the end of 15 years, you will be 3k in the red BUT, you will still own the points, which you could sell.

I think it's safe to assume that the day you buy the points they lose 1/2 thier value, but then they appreciate every year after. I think I saw a post that showed that points bought 5, 10, or 15 years ago when resorts opened are worth more now than the original purchase price.

In my case, I bought resale two years ago. Even after selling expenses, I could get more for them today.

 

[MrInfinity]

I think you may have missed something. At the end of 15 years, you will be 3k in the red BUT, you will still own the points, which you could sell.

I think it's safe to assume that the day you buy the points they lose 1/2 thier value, but then they appreciate every year after. I think I saw a post that showed that points bought 5, 10, or 15 years ago when resorts opened are worth more now than the original purchase price.

Aha... That's a good point.

So if they go for what a BLT goes for today, they'd be worth $100pp, that's $8500 they're still worth at that point. So it is in the black sooner then, and is not money completely spent. I think I should only be comparing to the portion of the $14,000 that cannot be recovered by selling them later. In that case it breaks even after closer to 2 trips / 6 years. Which is a more compelling case for buying in.... Hmmm.

 

[Lauren in NC]

One other thing I don't believe you took into account is that the cash price for the normal Poly rooms will continue to rise. I'm not very familiar with it, but I've heard others complain here on the boards that they're being priced out of staying there. With DVC, you'd only need to worry about the increase in dues each year.

Also, the general recommendation is that you should plan on going at least every 2 years. While you can technically go every 3 years, if you need to skip a year due to unforeseen circumstances, you may end up forfeiting your banked points (or renting them out for a reduced rate). Just something else to be aware of!

 

[Docmom]

Also add to your calculation that resort rooms historically go up. I would guess you could search and see what percentage they go up. You need to factor that in to determine a more accurate cost of paying cash and staying in a regular room. Also keep in mind that annual dues also go up every year...about 3% I think but that amounted to just a few cents per point for us this year. Still another factor to consider in your calculations.
Few other issues to consider: will your family always be happy staying in 2 studios at the Poly? Are you huge Poly fans to the point that the convenience/benefits of a 2 bedroom with a full kitchen, washer/dryer, private master bedroom, etc. is outweighed by being at the Poly? Have you stayed in a DVC room, whether a studio, 1 or 2 bedroom villa? I think it's easier to gauge if you'll be ok staying in studios at the Poly if you've stayed in a larger 1 or 2 bedroom villa and compared the pros and cons of both. If you think that you could be happy at any DVC resort then I'd go with a resale somewhere else. Your same cash outlay will get you double the points in most cases. But if you are huge Poly fans and only want to stay there then DVC can offer some cost savings. Because of the large number of studios at the Poly it is highly likely that they will be available for non-Poly owners at the 7 month point but there are no guarantees so if Poly is the only resort you want to stay at then buying there is the only way to guarantee that with the caveat that it may still be very difficult to book at peak times (like early December) even at the 11 month window. If any resort would work for you then I would research point charts, look at room photos and layouts to see what would work best for your family, and look at the resale sites.

 

[Minniesgal]

I think you are at the extremity of the type of travellers who save money through DVC.

Firstly to really save quickly you need to travel every year or every other year. Longer between trips lengthens your break-even time as you see.

Secondly most people purchase resale for greater savings. Making savings at 165 a point is possible but takes longer.

I think your break-even in 7 trips is probably about right. We have been tracking what we book and what it would have cost us to rent for equivalent reservations and we are looking at 7 trips to break-even.

If you really want to Poly I'd look on it as protection against future room cost inflation.

 

[dsnydaddy]

I think you may have missed something. At the end of 15 years, you will be 3k in the red BUT, you will still own the points, which you could sell.

I think that this is a very valid point. As far as I have been able to tell DVC holds it's value better than most other timeshares. Sure the value waxes and wanes but I've never seen it on ebay for $1. I'm pretty sure that when I'm ready to sell mine I'll get most if not all of my money back out of it.

 

[Deb & Bill]

Have you added in the cost of annual fees? Currently, I think Poly member fees is about $6 a point (and change). Those will go up every year. And the cost to maintain the bungalows will be included all member fees there.

 

[MrInfinity]

I appreciate all the advice. It's a really tough decision.

Would we always be happy in 2 studios? Yes. We currently stay in Poly Standard rooms, and those are 415 sf. New Studio DVCs are 457 sf, so it's actually more space and one more shower than we're used to. The trade of a bed for a pull-out is there, but not a deal-breaker. Housekeeping we can live without, and a kitchen will never be something we want on vacation. coffee maker and minifridge so we can store some milk and soda and that's about the extent of the cooking we'll do. Laundry down the hall is just as good as in our room for the one load we might do.

So it's not a Poly vs somewhere cheaper decision for us... and this is the only time we've even considered buying in, cuz we just don't see wanting to stay elsewhere. The Poly has the right vacation experience for us... the proximity to the things we want, the amenities, and the vacation feel.

It becomes purely an investment decision... Since we will stay several times in coming years at the Poly, whether by renting or buying. And the rooms are very comparable. And we have an upcoming trip, so we are planning on chunking out $4700 now, which would do nicely toward a purchase, which I could use immediately in December (buying now you get an Oct UY which gives us an extra set of points immediately), and get in on Feb 18 or whenever the booking date is, before any 7-monthers, so I figure getting a couple studios will not be a problem. (might it?)

Decisions, decisions.

EDIT... A few questions...

How does one go about adding the DDP once you book a room via DVC points?

Do people tend to book rooms via the website or by calling in?

Is there a strategic advantage to booking online like there is with FastPasses, in that you can get dibbs at midnight Eastern instead of when Customer Service opens in the morning?

 

[lovewdwdvc]

Also, do you want your money to be tied up in a DVC. We bought years ago and it has been a good investment for us. Financially is has been good but more importantly it has been a joy to our family.

 

[zavandor]

I appreciate all the advice. It's a really tough decision.

1) How does one go about adding the DDP once you book a room via DVC points?

2) Do people tend to book rooms via the website or by calling in?
Is there a strategic advantage to booking online like there is with FastPasses, in that you can get dibbs at midnight Eastern instead of when Customer Service opens in the morning?

1) You can book the Dining plan calling Member services. There is no discount, however there is no fee for high season as well.
However, being a DVC member will allow you to buy the Tables in Wonderland card. It gives 20% discount for up to 8 people at most of the WDW restaurants. A lot of members find it more convenient than the dining plan. It includes alcohol in the discount and it does not force you all to eat entree + dessert.

2) Reservations online open at 8am (EST), while MS open at 9am. So online you get one hour booking advantage over the phone. Also, I find more convenient to do it online: no wait and I can browse availability by myself.
To modify a reservation, use one time points, use transfered points you need to call, you cannot do it online.

 

[disneynutz]

Disney doesn't give money away, they wouldn't be selling DVC contracts unless they were the winners. Can a DVC owner save money too, maybe? Disney still comes out ahead by locking you in as a repeat vacationer.

 

[Docmom]

Since you vacation regularly at the Poly and are ok with the 2 studios then yes, DVC sounds like a good option for you. Buying now when the prices are the lowest they will most likely be (at least direct) and getting the most time from your purchase would be a good choice. Also your plan of booking as soon as you can should work for a December stay. If I remember the timeline correctly all the phases should be done by then so there should be 360 studios available. While not all declared they are usually good about working wonders (meaning pulling undeclared inventory that would normally go as a cash room) for your first visit. Perhaps ask your guide to help book this first stay as a condition of the deal (may or may not work).
Agree with PP about Tables in Wonderland, especially if you plan on going more than once in a 13 month timeframe. Break even point for that is about $500. We've done both DDP, used the DVC discount and now use TIW. Decided to go the TIW route after calculating out the cost of the other options and discovering TIW would save us money and allow us more flexibility in what we ate.

 

[MrInfinity]

TIW - yes I'd love to get TIW. I've looked at the tradeoffs... and we do have 3 Disney-kids and do lots of character breakfasts, so DDP does prove viable for us, but TIW seems more useful in that it applies to alcohol, which we have been known to buy back at the hotel...

As to my guide... I actually asked him that. If he could guarantee me a couple studios in early December to lock the deal, since I am after all using an already booked room to justify funding the sale. You'd think this would be a no-brainer "yes of course, please sign here" type of thing as it costs them nothing to promise and surely they anticipate the capacity to be there... yet he was reluctant for it being "un-Disney-like". Um. Yeah. He is nice and all but this is a timeshare he's selling while calling himself a guide. If anyone knows of a wonderful guide that they've worked with and might want to engage, feel free to PM. Or, not sure if that is pc to mention. If it's not, apologies.

 

[Pirate Granny]

I'm not sure a first time buyer can get 85 points. I thought the minimum was 100 points.

 

[Minniesgal]

There is the official minimum purchase of 100, then there is how low the guides are prepared to go to make a sale. i've heard of them go as low as 50 for a first time purchase. Nothing is impossible.

 

[MrInfinity]

There is the official minimum purchase of 100, then there is how low the guides are prepared to go to make a sale. i've heard of them go as low as 50 for a first time purchase. Nothing is impossible.

Yeah he said the minimum was 50. 85 was no problem.

 

[CKCruising]

A couple of thoughts on this

I envision going back again in a few years. After that we might want to do Aulani at some point. How realistic is it to transfer to Aulani? And Is it worth it to transfer to Aulani? If other people are getting points for $60 whereas mine cost $165, but on the 7-mo market they are equal, then presumably it's a bad deal to trade premium points like this for Aulani, and I should instead just rent them out to someone who would want them for their Poly value and use that money to pay for a Hawaii trip.

With your 85 point logic, you are kind of forced to use the points every 3 years. Using them after two years would mean you have 170 points and using them after 4 years would mean losing points. You are taking away some of the flexibility DVC allows. This flexibility is one of our favorite parts. We also like to visit different resorts at different times which is different than the way you plan to use the points.

You would have enough points for Aulani which is good. The availability depends on the time of year. I don't think you would win renting out your points. You can rent out your points, but then you would have to pay cash for the Aulani room (with the DVC cash discount). In the end, I think it would cost as much or more.

Now the math. We're 6-10 ppl, and get 2 rooms. On our upcoming trip we have 2 Poly rooms booked for about $4900 total for 7 days. This is my basis for comparison.

Two Studio Poly DVC rooms would be about 250 pts and sleep the same number of people, albeit on sleepers instead of extra beds. So we're looking at around 85 pts purchased, to be able to do the Save-Use-Borrow every 3 years, thereby consuming around 250, which is less than 85x3.

5 people in a studio will be tight. You said you had 3 kids...If you are investing for a long term vacation plan, they will get bigger.

There is only one season (Adventure) consisting of 6 weeks which costs less than 125 points. That is 118 for a standard view. If it is like BLT or AKV, you might have an issue getting a Standard View at 11 months. Even a lake view is 148 points this season.

My opinion (and mine alone) is that you are shoehorning yourself into a very specific vacation and you will find DVC more work than value.