What am I missing?

[lizzyb]

When I look at purchasing DVC the initial cost and then the annual dues I just don't see how you come out ahead. Further, from what I gather DVC members do not get any discounts.

Can someone fill me in?

 

[bakerworld]

We bought to stay within walking distance at a cost of 'moderate room rate' - that was it for us.

 

[chukdotcom]

When I look at purchasing DVC the initial cost and then the annual dues I just don't see how you come out ahead. Further, from what I gather DVC members do not get any discounts.

Can someone fill me in?

If you buy direct and finance, there is no way you will "come out ahead." At least not financially. If you plan on going every year, and buy a resale contract that is priced right (for cash), then you can save about 20% vs renting points from someone every year. And you will have more control over your reservations.

 

[Lorilais_mommie]

We said exactly what your saying for years..

Then one night my sister called us to run numbers for her.. Comparing buy in, annual dues, "mod. Room rates".

My husband ran them through on a spread sheet.. Applying a 4% yearly increase to annual dues and 6% to room rates..
He got the percentage but looking through historical increase in both..

After looking at the numbers it looked great..
We know my sister, mother, or us will go to Disney every year..
If for some reason none of us can go, just means GRAND VILLA next trip..

So it works out for my family..
But if your ok with the values, like mousekeeping, don't go more then once every other year..
I would not buy in! The numbers just don't work in your favor..

 

[DizBub]

We always went once or twice a year, staying in mostly value and some moderates. Never deluxe. We went with another couple while they were buying a contract and saw actual numbers and decided we could do this.

It's really not about the savings for us, it's an opportunity to stay in resorts that we never, ever thought we would be able to and we are enjoying our trips more than ever. These trips are less about the parks and more about our quality of life. Hopefully for many years to come.

DVC does offer a very nice discount on Annual Passes which is great for our 3 or 4 trips a year.

 

[sndral]

Are you looking at direct from DVC sales prices or resale prices? It makes a huge difference. If you have to finance your purchase, either way, IMO you can't justify it financially. From your past trips I see that you recently cruised and have a future cruise planned, cruising is a very poor use of points and if that's the direction your Disney travels are going, then it won't make financial sense for you. I see you have your first deluxe stay planned for later this year, once you've stayed at a deluxe, then you'll have a better sense of whether a large present cash outlay to stay in deluxe accommodations going forward at a reduced cost per night is worthwhile to you.

 

[Dean]

When I look at purchasing DVC the initial cost and then the annual dues I just don't see how you come out ahead. Further, from what I gather DVC members do not get any discounts.

Can someone fill me in?

It really depends on what you compare to and your circumstances. DVC can give you savings or added value and be reasonable if you meet these minimum criteria. You value staying on site enough to pay the extra for the option in a moderate or above, you have a history of going to WDW routinely, you can afford afford it (my def pay cash and no other consumer debt), are OK with the compromises a timeshare brings and you can plan at least 7 months in advance. Until a few years ago I added another option, that of not looking mostly at weekends and that need could return at some point if they reallocate the points again. You really need to hit all of these pretty closely for DVC to make sense. IMO you cannot use the rack rate of DVC as the basis for your comparison and be reasonable. After you decide if DVC makes sense in those general terms then you have to look at your vacation habits, expectations, finances and do some planning based on resort choice, number of points and resale vs retail. Resale will be the cheapest by far with no real compromise other than you may not get the hot/new resort which is a good thing for many buyers. At the end of the day though, DVC rarely saves people money, they just spend the money they would have in other ways from what I can see. Whether that's a problem for you depends on your personal situation but just to be aware.

A couple of other tidbits, the kitchen rarely saves money and those looking mostly at studios often end up getting larger, more costly rooms over time. For WDW, SSR resale will be the cheapest overall and provide the best value in most situations. I'm far more comfortable if people underbuy in terms of # of points (once you get to 100 pts) and level of resort but do feel that owning on property is important if that's your focus and that the risks, long term costs and lack of 11 month priority are deal breakers for other locations if WDW is your only focus. There are a few discounts and perks but non enough to alter the purchase decision. If it doesn't make sense to buy DVC without them, it doesn't with them (1 or 2 very special exceptions).

 

[mrsgoose8]

I see you've stayed at Pop a lot. For us, while there was a lot about Pop we liked, we weren't a fan of the rooms. To get a room that we are more used to (big enough to roll our stroller into!!!) we would have been priced out of frequent trips to Disney. I personally would like to go every year to WDW if I can! We also know we will tend to go around RunDisney races. Dining"deals" and other deals are not really that great around the races. But DVC points are often low around this time. We could have rented points and saved that way, but to us we felt it was worth buying in.

It's really a very personal decision.

 

[Nabas]

I agree with what everyone else has written but want to add one more point to consider.

Historically, DVC resales tend to hold their value. Particularly if you buy at a resort with many years left (e.g. SSR which expires in 2054), there's a decent chance that if you sell, you'll be able to get back roughly what you paid. (No guarantee though; it really depends on whether DVC continues to perform as it has in the past.)

However, this means tying up investment capital. There is inflation and lost investment opportunity to consider.

For many who buy resale and then later sell, there's a reasonable chance that the cost of their DVCs will roughly equate to the cost of annual Maintenance Fee.

Using SSR as an example, a week in a Studio this summer will cost about $85/night just for the MF. Even adding in a sales commission and lost investment, the amount will probably work out closer to $110-$120/night for someone who holds onto a DVC for about 10 years and then sells. That's a really good price for an onsite Deluxe Resort.

I emphasize that this is a simplified way to think of DVC. The actual calculations are much more complicated.

To optimize savings, you really have to buy resale and pay cash.

 

[chukdotcom]

There are certain scenarios where it can work out. Here is an example:

Let's say you buy a 160 point BLT contract for $16,000 after all costs. Now, since this is a real estate purchase, it makes sense to amortize it over 30 years and assume it will be worthless then. And if you happen to be refinancing your house, you could pull the 16k cash out as well (even if you have the cash to buy, rates are very low and you may be better off investing your own money). Using bankrate's calculator, you can run a $16k 30 year mortgage at 4%:

http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx?MSA=5602

That results in a $76.39 monthly payment. That amount is fixed for 30 years (or until you refi your mortgage). That comes out to $917 a year in financing and depreciation costs. Then you are paying maintenance fees on top of that ($4.78 now). That is another $765. That is a total of $1682. If you were to rent those points instead from another person at $13 a point (11 months out, BLT home), that would be $2080. So, that is a savings of about $400 per year, and you are in charge of all of your reservations. If you are a family of 4 and you buy annual passes, you will save another $150*4 = $600. So, in the end, you could save around $1,000 a year with a DVC if you get full use of it. If you decide not to use it one year, you can rent those points for $12, netting you $1920. That will cover your mortgage and MF with a little to spare. Obviously the MF's will go up every year, but I assume DIS prices and renting will go up similarly. All things being equal, your annual savings should remain about the same.

If you are paying retail and/or borrowing at 10%, the numbers simply don't work. Whatever your scenario is, you MUST run the numbers to see if it makes sense.

 

[lizzyb]

Thanks everyone! There's a lot that I did not factor in, especially the resale of the DVC.

 

[chalee94]

one of the other classic blunders:

comparing disney hotel room costs to DVC 1BRs and up, instead of the more comparably sized studios.

if the initial cost that you are looking at is based on 160 pts (a typical first contract purchased directly from disney), that is more than you usually need to stay in a studio for a week. upfront costs for a 100 pt resale contract run more like $8000 - 10,000...still a lot but lower than many use to run their numbers.

of course, many DVCers start with the notion of staying in studios and are tempted to stay in the larger villas...which does lead to spending more money on pts as they start to love the extra space. so that can be a risk that you take.

 

[BenDiscipio]

I still don't get anyone saying it doesn't work financially...even if financed...

Here's what convinced me to buy in last year....we were looking at a family vacation to the Grand Floridian. The cheapest room was going to cost us over $4,400 just for the room for 6 nights during April vacation.

Then I found out, for $15k, I could buy a 100 point stake in VGF, which would let us go down there every other year for the next 60 years, staying in a larger room with a kitchenette...plus $500 or so per year in MF....it's a complete no brainer. Even if I had financed by putting down 20% and paying the rest over 10 years, I still come out WAY ahead. 10 years of every other year vacations would cost me at LEAST $22,000 for accommodations. Or I could pay $15000 plus 6000 or so in MF for $21,000....and at the end of the 10 years, I could turn around and sell it for at least $10,000....for a total vacation savings of $11,000....or if I keep it, I'm already more or less even...or will be soon....and I have another 50 years of every other year vacations for just the cost of MF which is INSANE savings...

Even if you finance at 10.5% which is the preferred credit level, you aren't paying all the money down at once so you don't lose as much in opportunity costs on that money....and you end up paying an addition 6 or 7 thousand....which makes your break-even point further down the road...but that isn't even taking into account room rate hikes....which over 10 years are going to be HUGE. And your main costs are fixed with only MF increasing...

It's a complete no-brainer.

Of course, that doesn't even take into account other discounts like Annual passes, food and dining, regular purchases....

 

[rillsung]

Also, you could be forced to take more trips (hehehe) to make sure you don't lose points. We bought enough resale points that about every 3 years we will have to use some or lose them at the end of the year. So that will mean extra plane tickets at least.

 

[disneynutz]

You have to look at your numbers, your likes and dislikes, your vacation patterns. DVC isn't for everyone and for some they end up spending more because they bought DVC.

Bill

 

[chukdotcom]

I still don't get anyone saying it doesn't work financially...even if financed...

Here's what convinced me to buy in last year....we were looking at a family vacation to the Grand Floridian. The cheapest room was going to cost us over $4,400 just for the room for 6 nights during April vacation.

Then I found out, for $15k, I could buy a 100 point stake in VGF, which would let us go down there every other year for the next 60 years, staying in a larger room with a kitchenette...plus $500 or so per year in MF....it's a complete no brainer. Even if I had financed by putting down 20% and paying the rest over 10 years, I still come out WAY ahead. 10 years of every other year vacations would cost me at LEAST $22,000 for accommodations. Or I could pay $15000 plus 6000 or so in MF for $21,000....and at the end of the 10 years, I could turn around and sell it for at least $10,000....for a total vacation savings of $11,000....or if I keep it, I'm already more or less even...or will be soon....and I have another 50 years of every other year vacations for just the cost of MF which is INSANE savings...

Even if you finance at 10.5% which is the preferred credit level, you aren't paying all the money down at once so you don't lose as much in opportunity costs on that money....and you end up paying an addition 6 or 7 thousand....which makes your break-even point further down the road...but that isn't even taking into account room rate hikes....which over 10 years are going to be HUGE. And your main costs are fixed with only MF increasing...

It's a complete no-brainer.

Of course, that doesn't even take into account other discounts like Annual passes, food and dining, regular purchases....

You are comparing owning DVC to Disney rates. IMO, the proper comparison should be from owning DVC to renting DVC points. That is more of an apples to apples comparison, and you will find out it is much less favorable.

 

[BenDiscipio]

You are comparing owning DVC to Disney rates. IMO, the proper comparison should be from owning DVC to renting DVC points. That is more of an apples to apples comparison, and you will find out it is much less favorable.

Look....the truth is I wanted to stay at either GF or Poly...not sure why this isn't an apples to apples comparison. Yea, I could MAYBE rent VGF points for $15-17/point for a total of $3000+...but that's IF I could find VGF points for rent...and IF there was availability at that point for standard view studios, which is dicey. Availability there for studios is a major issue if you aren't an owner.

And the truth is, the room is larger than the regular GF rooms, just as close as the cheapest GF rooms, and it's beautiful...that's as apples to apples as I need to get.

 

[chukdotcom]

I still don't get anyone saying it doesn't work financially...even if financed...

Here's what convinced me to buy in last year....we were looking at a family vacation to the Grand Floridian. The cheapest room was going to cost us over $4,400 just for the room for 6 nights during April vacation.

Then I found out, for $15k, I could buy a 100 point stake in VGF, which would let us go down there every other year for the next 60 years, staying in a larger room with a kitchenette...plus $500 or so per year in MF....it's a complete no brainer. Even if I had financed by putting down 20% and paying the rest over 10 years, I still come out WAY ahead. 10 years of every other year vacations would cost me at LEAST $22,000 for accommodations. Or I could pay $15000 plus 6000 or so in MF for $21,000....and at the end of the 10 years, I could turn around and sell it for at least $10,000....for a total vacation savings of $11,000....or if I keep it, I'm already more or less even...or will be soon....and I have another 50 years of every other year vacations for just the cost of MF which is INSANE savings...

Even if you finance at 10.5% which is the preferred credit level, you aren't paying all the money down at once so you don't lose as much in opportunity costs on that money....and you end up paying an addition 6 or 7 thousand....which makes your break-even point further down the road...but that isn't even taking into account room rate hikes....which over 10 years are going to be HUGE. And your main costs are fixed with only MF increasing...

It's a complete no-brainer.

Of course, that doesn't even take into account other discounts like Annual passes, food and dining, regular purchases....

10 years of every other year would mean using 200 pts every 2 years. You can buy 200 pts for $14. That is a total of only $14,000 over the 10 years.

 

[chukdotcom]

Look....the truth is I wanted to stay at either GF or Poly...not sure why this isn't an apples to apples comparison. Yea, I could MAYBE rent VGF points for $15-17/point for a total of $3000+...but that's IF I could find VGF points for rent...and IF there was availability at that point for standard view studios, which is dicey. Availability there for studios is a major issue if you aren't an owner.

And the truth is, the room is larger than the regular GF rooms, just as close as the cheapest GF rooms, and it's beautiful...that's as apples to apples as I need to get.

Yes, agreed on the availability, etc.

 

[a742246]

To alot of people time is money. How much is your time worth varies from person to person. For some people it is cheaper to buy direct then to spend alot of time buying resale, renting points, etc. I wish I was in that boat but I am not.
All I can say to those people whose time is more valuable then spending scores of hours learning about resale, how to rent points safely, etc. Is good for you! Buy direct and don't feel any guilt about buying directly from Disney.