Would you help me run the numbers?

[Melrosgirl]

Can someone help me "run the numbers" for DVC? I would buy 150 points at the $80 per point ($12,000) at BCV. (I'm locked in at 80/point since I requested info in November...before increase...I have until January to decide apparently.)

Then I plan on only taking one trip per year. Room at BCV for the time of year I plan on going the first year would be 123 points (studio is all I need the first year).

Dues I'm guessing would be around $600 per year. (150 points at about $4 point??)

If I followed this schedule reasonably every year (traveling around the same time each year and getting typically the same type or room), do you think it's a good vacation investment over time for my situation here (only needing a studio or 1 bedroom and only having 3 in the family)?

The way I'm working it out is 12000 points divided by 40 years plus about $600 in dues annually is around $900 per year (for total cost). I wouldn't be financing DVC, so no interest. So I'm looking at it as $900 is what the studio at BCV would cost me approximately each vacation. Still have some points left over to bank. ($2400 is approx. what I think a studio at BCV would cost for paying cash for non DVC members for 7 nights.)

Does that seem right? I haven't received the actual paperwork from DVC yet (hurry up, post office!), so I'm learning via your posts, lol.

Jennifer - who is trying to be totally informed so I can explain this to DH who is not against DVC, but is not convinced either.

Thank you!

 

[sheryl0521]

Heads up - point increase as of 12/1 to $84!

 

[Melrosgirl]

I'm locked in at 80/per point ($12,000) since I called them on 11/30. I have until January to decide.

 

[kem330]

Jennifer, I used the same logic for our purpose- with hotel rooms at Y & BC running $300 - $450/night plus 11% tax, DVC is a no brainer. Your calculations for $900/year divided by 150 points = out to $6/point. So 123 point stay = $738 for 7 nights. That's $105+/night. No discount code or AP rate will give you that resort for that price. Now if you stay at PO or CB it would be a break even if you managed to get a discount rate. However you are comparing deluxe to moderates which is like apples to oranges. Sure dues will go up but so will hotel rooms and the opportunity to trade up to larger accomodations offers additional savings.

 

[EROS]

DVC is NOT cheap. It makes sense if one would normally stay ON-SITE in deluxes either yearly or every other year. If you vacation at the moderates, then I would agree with KEM about DVC being a wash. If you're willing to stay OFF-SITE, you can visit WDW for much less $$$ than DVC. It's all about your personal preferences.......... Good Luck,

We're also a family of 3 and predominately book studio units now. However, the nice thing about DVC is the opportunity to book 1 or 2 bedrooms down the road if we choose to bring family, friends, etc.

 

[dianeschlicht]

Are you set on wanting BCV? You could get more points with an OKW resale, and the point charges and dues are less there. I have heard so many negetive reviews about BCV, that I decided not to even look at adding on there!

 

[Terry S]

I think there are a lot of good reviews and bad reviews out there for all the DVC resorts. It is just a matter of personal preference. If you haven't already done so, it is a good idea to look at all the resorts. I am a BCV owner and I am very happy with my decision to buy there. I was more then willing to pay more to purchase there because that is where I wanted my home resort to be.

As far as the numbers, I think what you have run is correct. Just be careful to never stay in a 1 bedroom, once you do, you will not want to go back to a studio. Not that there is anything wrong with a studio, you are still get accomadations that are as good if not better then a deluxe room and a studio includes a mini-fridge and a microwave. I think when comparing DVC to another resort as far as savings goes, it is best to compare a studio since that is pretty close to a deluxe room. You will definatly save money purchasing DVC to stay in a studo vs. paying cash for a deluxe or moderate room.

Good luck with your decision!

 

[vernon]

For "running the numbers" you have to make some assuptions on future costs. IMHO you costing of DVC is probably OK. While there are some good deals available at the moment for $$$$ due to 1) 9/11 and 2) general slow down , IMHO that isn't going to be the case for ever. If taken over the long term the rise in Disney's hotel rates is somewhere about 8% . Dues costs have risen somewhere in the region of 3% per year ( although this year was alittle higher) If you use a spread sheet for future value, using current room rates and dues rates you will find the numbers stack up pretty well for DVC on a like for like basis.

It's possible to make the numbers look better by only staying Sunday to Thursday on DVC points , but that may not accurately reflect your families likely vacation plans. If for example you would usually travel into Orlando on a Saturday evening you could decide to stay in a motel near the airport for your arrival night and transfer early the next day to WDW. This would mean paying maybe $50-60 for a motel room instead of using 25-30 valuable DVCpoints which could be banked and saved to use on another stay getting you 3 nights DVC accomodation if used mid week. To some people this is too much hassle, but with the cost of Friday and Saturday (2 nights) being exactly the same as a Sunday to Thurday stay ( 5 nights) , personally I'd prefer two 5 day stays at WDW to one 7 day stay.

My own way of working out my break even was to work out what I was likely to have spent if I hadn't stayed on a DVC resort ( i.e. paid cash) and deduct that from how much I had laid out up front ( taking into account the cost/loss of interest). In my case I broke even on my original investment in about 6-7 years and since then, in my view, my cost of a DVC room has been the number of points X the dues. Putting me in a OKW studio for about $30 a night (midweek). It seems the general consensus for "break even" point comes anywhere between 8 and 20 years depending on the size of rooms you choose and how mean you are with using your points. Considering there is still 40 years of DVC left to run, even the top end of this estimate means you get 20 years worth of vacations at "dues cost".

 

[Maistre Gracey]

Melrosgirl, here is a good way to figure costs:
$80/pt, and since you will use that point 39 times, you can spread the cost over 39 years. This equals roughly $2.05/pt per year. We then add the annual per pt mtc fee of $4.05 (I'm not sure what BCV's new price is, so I used VWL's). When we add this, we get $6.10/pt, which is what the point actually costs you this year (the cost will rise each year as mtc fees climb, but capital costs will remain constant). Let's say a studio in Adventure Season costs 104 pts (per week); we can easily say that our dollar cost for that room is $90.63/night for a week (using points), averaging weekdays and weekends...TAX INCLUDED. The same thing can be done when using your points at The Poly. Weekday Poly Concierge is 50 pts, so the cost will be $305/night, tax included.
Of course, the cost will rise as mtc fees rise, but room rates you are comparing it to will also rise. Look at your cost using points vs the cash rate....I find point price comes out better even when staying at The Poly Concierge.

Some will factor in interest cost, or lost interest income. I do not factor it in for various reasons, but even if you did, the per point cost would not come out to be more than aroun $7.00/pt.

Good luck, and keep asking questions......

 

[kem330]

To layer to the previous response, I count 40 years of points as your use year will be 2002 so counting 2002- 2041= 40 years. (Unless they restrict usage in 2041) I'm assuming no points for 2042- just the extra month of Jan to use up points. Also Diane brings up a good point about resales, however I respecfully disagree with her about BCV. It has the best location IMHO (walking distance to two parks) and undisputably the best pool. BWV shares location but pool isn't as nice- It all depends what you are looking for. OKW is perfect if you like relaxing, more condo feel, VWL if you like the woods theming. There is definitely something for everyone. You can save money with resale but it gets a little more complicated as far as how many points are available, closing costs, etc.

 

[ToyStory Fan]

I agree with most of what everyone is saying here from a points versus comparable room cost, but the "right" way to determine this is to do a projected cash flow analysis, factoring in certain assumptions, like the opportunity cost of the initial investment, (i.e. your lost interest cost), also factor in assumptions (using both a high and low range) for increases in dues. I am planning on doing this just to satisfy my own (and my brother-in-law's) curiosity. We have already done the simple equation that I think most of here are doing which is the today cost, but what about 10-20 years from now when the dues have compounded 3-5% per year..would you still be selling/renting out your points for $10 bucks each...probably not, but at the same time the regular cash room rates are increasing..so there's no simple way to determine if the numbers work...you need to get really technical and rest assured the financial planners/analysts working for WDW have done their homework and know it works for them.

 

[spruce]

The numbers you are running are good. One question though, are you sure 150 points is enough? I understand your 123 point plan but will you really use your points in this fashion. Let me explain;
We bought 164 OKW points to get a 1br at OKW every summer for 6 nights (1 weekend night). We have never gotten a 1 br at OKW at any time. We've had 2BR's twice, studios a few times taken the cruise on points twice and had a GV once. We have also added on twice. 64 points at BWV which is 2 weekend nights in a preferred studio during magic season and 50 points at BCV. I had figured we could use less BCV points but this time just bought the 50 instead of an exact number needed for a certain season.
If you are set on BCV points, I'd get at least 152 points so that every 3rd year you could have 1 br for 6 nights.

Year 1) 152-123=29 banked. 7 nts BCV studio dream season.
Year 2) 152+29=182-123=58 banked. 7 nts BCV studio dream season.
Year 3) 152+58=210. 210 is 6 nts in a BCV 1br magic season.
Year 4) start over.

The added bonus to this is that you can do more with 29 points left over from your 123 number then you can with 27 points off the original 150 point contract. And 32 left over is even better if you look at the chart. These figures all assume magic season stays except your 123 which is dream season. You could do as I propose during dream season with 150 points, the 3rd year costing 196 points for the 1br with 8 points left over which would get you 1 studio nt at OKW, VB or HH during adventure or choice seasons.

I obviously spent too much time looking at the point charts figuring the best number of points to have in order to maximize their value. Good luck.......spruce

 

[vbfamily]

Our guide told us that we have until Jan.14 to finalize any add ons at $80 per pt because we informed him of the add on before Dec. 1 Just wanted to confirm that they are still honoring that price if you started the process before 12/1.

Regarding your questions about joining..we have done the math over and over and it does look like DVC wins out. We originally were going to buy only 150 but with the price increase and knowing that we are going to want to stay in a 1BR sometimes we ended up buying 250. We told ourselves we were only going to stay in a studio but after looking at pictures we are really tempted by the bigger rooms.

Good luck with your decision.

 

[Maistre Gracey]

Originally posted by ToyStory Fan
I agree with most of what everyone is saying here from a points versus comparable room cost, but the "right" way to determine this is to do a projected cash flow analysis, factoring in certain assumptions, like the opportunity cost of the initial investment, (i.e. your lost interest cost), also factor in assumptions (using both a high and low range) for increases in dues. I am planning on doing this just to satisfy my own (and my brother-in-law's) curiosity. We have already done the simple equation that I think most of here are doing which is the today cost, but what about 10-20 years from now when the dues have compounded 3-5% per year..would you still be selling/renting out your points for $10 bucks each...probably not, but at the same time the regular cash room rates are increasing..so there's no simple way to determine if the numbers work...you need to get really technical and rest assured the financial planners/analysts working for WDW have done their homework and know it works for them.

I do not figure lost interest income. If I did not purchase DVC, I was ready to blow the money on some other luxury item (a Corvette). Since I was not planning to invest that money for 40 years, it did not make sense to figure it.

If you do figure lost interest income, don't forget to subtract (every year) the cost of staying in the hotel room of choice. This would whittle dowm the initial investment quite quickly, and thus there would be no more interest.

Remember.....in the long run, the most expensive part of DVC is not your initial investment, it is your dues.

PS- kem330, you are correct about the 40 years. I just added on, and I used Magical Beginnings. That is why I was thinking 39 years.
Melrosgirl capital cost would actually be $75/pt divided by 39 years, or $80/pt divided by 40 years.

Good luck......

 

[Melrosgirl]

thanks for the help! I'm glad to know I wasn't totally off when running these numbers, lol.

More points huh? 100 times 80 - ACKKKKKKKK! LOL

 

[Dean]

If you would stay on property, go most years and avoid doing long weekends with points; DVC will likely be a very good choice for you. Buy where you want to stay and if that's BCV, buy there at the $80 pp and do not do the Magical beginnings sell back. If you don't care where you own or stay most trips, OKW resale might be much cheaper for you.

 

[JeffreyH]

Maistre Gracey, since you don't believe in the "cost of money" could I borrow $5,000 today and pay you back $5,000 in 30 years?

Melrosgirl, I think you're looking at the numbers in the right manner, although leaving out the cost of money does give you too low of a number. I'm a financial analyst, and I was compelled to run the numbers in 30 different ways to decide if the purchase was worth it. I repeatedly came out to an average cost over the next 40 years of $8-$9 per point in today's dollars...meaning a studio for around $125/night.

One way to think about it...
Assume if you don't buy into DVC you're going to Disney once a year for a week and stay at the Beach Club (or similar) in a standard hotel room. It will cost you say $2,000 in the first year ($257/night plus tax...just a guess) and increasing at 3% per year (actual increases have been higher). Since you didn't "buy into" DVC, you'd still have $12k invested, earning say 5% after taxes (or you could pay down your mortgage and save interest costs, etc...all the same thing). And, you wouldn't have to pay the $600 in dues.

So, in 2003 you spend $2,000 on the hotel room, $1,400 more than you would have spent if you had bought into DVC (you would have just had the dues of $600). You can take this $1,400 out of the $12,000 you still have invested (since you didn't buy into DVC). The remaining $10,600 you have in the account earns $530 in interest, so you start 2004 with $11,130. Now, the room costs $2,060, your dues would have been $618 (also assuming 3% increases). This means you have to spend $1,442 more for your trip in 2004 than if you had bought into DVC.

Well, in 10 years your account will be empty. That $12k you "saved" by not joining DVC will be gone just as if you had bought into the DVC. And instead of continuing to pay just the dues, you'll be paying $2,600-$6,000+ for your hotel room. From 2013-2042, you'll pay about $90,000 MORE for the hotel room than the dues, money which if invested at 5% would leave you with close to $200k in 2042.

Even if you spent just $140/night plus tax for the hotel room (and increase it for inflation), you would still run out of money in the account.

Spending $12,000 today, plus $600 for dues per year (increased for inflation), is similar to paying $1,600/year EVERY year for 40 years if your "cost of money" is 5% (and most of us have some debt out there we could put the money towards and/or would invest the money and not put it under our mattress). Paying $1,600 for a week at the Beach Club is a good deal now...think how good it will be in 20 years.

But, you are committing to paying that amount EVERY year...with the "out" of renting points.

And as for resale, given inflation I would expect that you could get your purchase price and then some back, even in 20 years. Keep in mind that at that time your dues might be $1,000, but a hotel stay will be going for $3,500 (assuming 3% growth in prices from $257+tax/night today). Someone could save $2,500+ per year for 20 years by buying your membership. I think that is worth at least $12,000. In other words, your cost for the 20 years (assuming you sold out at $12,000 in 2022) would be the dues ($800/year on average) and any interest income you could have earned or interest on your debt you could have avoided by not buying into DVC, perhaps $600/year, assuming a 5% return. A total cost of $1,400 per year...probably half of the cost of a hotel room.

So...if you KNOW you will be going to Disney most years for the next 10+ years, I think it can make financial sense to buy into DVC (assuming you plan far enough in advance to make reservations, etc.).

 

[Maistre Gracey]

Originally posted by JeffreyH
Maistre Gracey, since you don't believe in the "cost of money" could I borrow $5,000 today and pay you back $5,000 in 30 years?

Jeffrey, that is not quite what I'm saying. I simply am saying that:
1) I would have blown that money on something else, thus I would have collected 0% interest.
2) Many people will look at investing all of that money for 40 years, and forget that you must subract from that money, every year, the amount that you would spend on hotels.
3) Even if you would have doubled your money (doubt it, because you have been depleting it over the years....see#2), that would only increase the cost per point from roughly $6 to $8 (per year). Twenty years from now, that will be a small percentage of the cost per point, due to inflation on dues.

I do agree that if you take X-thousands and inverst it, there will be a return....(usually).

 

[vernon]

Jeff, I think I said that , glad to see I'm not alone in my logic

Toystoryfan said

you need to get really technical and rest assured the financial planners/analysts working for WDW have done their homework and know it works for them.

The planners from WDW, were looking at this from a different angle, IMHO, to the punters (ie us) . From Disney's point of view this works because
1) they quickly recoup the upfront cost of building a resort ( in fact they make a very good profit on it).
2)They have the resort revert back to them in 2042 to either sell again as DVC II or to use as a resort. A much quicker turnaround than the land they gave to the various hotel chains that built around DTD
3) They have a large number of people "hooked into" returning to WDW on an annual basis. Giving those people a "break" on their room costs is an acceptable cost, IMHO, in order to get at their spending $$$ on tickets, food and goodies.

I think DVC is one of those products that make sense from both angles, it isn't one of those deals that because party A is making out of it automatically means party B is being done a disservice. I think DVC , for the regular Disney vacationer, is a win win situation for both parties.

 

[jcodespoti]

math and "running the numbers" based on a mouse...ya gotta luv it.


Joe in CT