Math on DVC Resales

[CLEtoWDW]

I have been strongly considering purchasing a DVC resale contract for the past several years and if my final math is correct I believe it may be in my best interest to simply continue to book Disney hotel rooms for my future trips.

Here’s my logic:
I was considering a BCV contract for $135 per point at 200 points for a total cost of $27000. The contract expires in 2042 so it has roughly 22 years of useful life. The annual dues are roughly $1400 per year. So here’s where I started to analyze the cost per year of the contract.... $27000 divided by 22 years is $1227 per year plus the annual dues of $1400 comes to a total of $2627 per year of cost. At that cost I could just as easily book a deluxe hotel every year for 5-7 nights at either equal or lesser cost than the DVC contract. Oh and that’s assuming the dues don’t rise (which they will).

It’s tricky because now that some of these contracts are beginning to go past the halfway point of useful life their value is also degrading and it’s making the DVC resale market far less appealing IMO.

 

[dreamfinder]

But you can't easily book a like for like, remember a 1BR DVC is much larger than a normal room and has things a normal room doesn't. So you buy 200 pts at BCV, that gets you one week in Value season in a 1BR at BCV. (197 pts for the week) Now a standard room at BC during value season is at least $441 a night (more for weekends) costing you $3087, which is almost $400 more per week. Yes, dues may rise, but so will the room costs. Your numbers are a bit fudged, I'm showing BCV dues at $6.44/per, which is only $1288 for the year, not your $1400.

Yes, if you get a 25% discount on rack rates each year, then a regular room might be less in the long run. But those discounts aren't guaranteed. And other factors such as discounts, in room laundry, full kitchen, etc all are things you need to consider. If they aren't important to you, and you are willing to take the odds on dues going up faster than room rates will, then DVC may not make sense in your case. DVC isn't for everyone, so it may not be for you.

 

[HansGruber]

I'm in the same boat as you. Have been analyzing this up and down for years.
Saratoga Springs is a significantly better value because the initial buy-in is much lower and the contract end date is further out than most resorts.

However, more to your original point…the room rates in general will continue going up.
My in-laws bought into DVC in the late 90’s for $8,000.
Today, 7 days in a deluxe room can easily hit $3,000…which is roughly a third of their initial DVC buy-in.
It WILL eventually pay-off. It just takes a decade or two to realize.

 

[CLEtoWDW]

I'm in the same boat as you. Have been analyzing this up and down for years.
Saratoga Springs is a significantly better value because the initial buy-in is much lower and the contract end date is further out than most resorts.

However, more to your original point…the room rates in general will continue going up.
My in-laws bought into DVC in the late 90’s for $8,000.
Today, 7 days in a deluxe room can easily hit $3,000…which is roughly a third of their initial DVC buy-in.
It WILL eventually pay-off. It just takes a decade or two to realize.

I don’t disagree with 90% of what you said but the “decade or two” before it starts to pay off is kind of null and void with these contracts that expire in 2042. I’m starting to wonder when Disney will reopen DVC contracts at some of the resorts that have contracts expiring in the next 15-20 years.

 

[Lensman]

But you can't easily book a like for like, remember a 1BR DVC is much larger than a normal room and has things a normal room doesn't. So you buy 200 pts at BCV, that gets you one week in Value season in a 1BR at BCV. (197 pts for the week) Now a standard room at BC during value season is at least $441 a night (more for weekends) costing you $3087, which is almost $400 more per week. Yes, dues may rise, but so will the room costs. Your numbers are a bit fudged, I'm showing BCV dues at $6.44/per, which is only $1288 for the year, not your $1400.

Yes, if you get a 25% discount on rack rates each year, then a regular room might be less in the long run. But those discounts aren't guaranteed. And other factors such as discounts, in room laundry, full kitchen, etc all are things you need to consider. If they aren't important to you, and you are willing to take the odds on dues going up faster than room rates will, then DVC may not make sense in your case. DVC isn't for everyone, so it may not be for you.

Isn't this comparison comparing the cost of a week in a Beach Club 1BR suite with the cost of a week in a studio/regular hotel room? It seems to me that we should compare the same room type. A studio during Adventure or Choice season is 107 points for a week. Even in Magic Season (say right now in the summer), it's only 134 points per week. So 200 points will buy you 10-13 (studio) room nights a year. At $441 a night that's $4410 - $5733 a year.

OTOH, just dividing the $27,000 upfront cost by 22 years ignores the time value of money. Assuming you're paying cash and using 2% per year as your cost of funds rate, that's $1644 per year as the cost of the upfront purchase. Add in the $1288 dues and you get $2932 per year as an estimated annualized cost for buying the DVC contract.

Another way of looking at the value of a DVC contract is the value of renting the points in the DVC point rental market. This is useful both in estimating the dollar value of DVC rooms. You can obtain a Beach Club room 7-11 months out by renting points for $17 a point. I call this the "retail" value of the points. In buying a 200 point BCV contract, you're avoiding paying $3400 to rent 200 BCV points each year.

Yet another way of looking at it is to figure out how much money you could get by renting out your 200 points through a point vendor. I call this the "wholesale" value of the points. Wholesale is $14 a point for BCV. So if you rented out your DVC each year through a points vendor, you'd get $2800 a year in income.

 

[dreamfinder]

Isn't this comparison comparing the cost of a week in a Beach Club 1BR suite with the cost of a week in a studio/regular hotel room? It seems to me that we should compare the same room type. A studio during Adventure or Choice season is 107 points for a week. Even in Magic Season (say right now in the summer), it's only 134 points per week. So 200 points will buy you 10-13 (studio) room nights a year. At $441 a night that's $4410 - $5733 a year.

Yup hence me mentioning it's not a like for like, but the OP specifically called out a 200pt contract and a 5-7 night hotel stay. If they were going to stay studio, then there is no need to do a 200pt contract or it would be for a 10-14 night stay. If they are going to compare things, then they should definitely do it on as level a playing field as possible.

 

[DisneyFans4Life]

My wife and I are planning to purchase DVC in a few years, but we're buying direct from Disney, not resale. One thing to keep in mind is that if you buy resale, you do not get to take advantage of whatever offer Disney is offering at the time of purchase. Might not be a big deal to you, but just something to keep in mind.

 

[slappy magoo]

Here’s my logic:
I was considering a BCV contract for $135 per point at 200 points for a total cost of $27000. The contract expires in 2042 so it has roughly 22 years of useful life. The annual dues are roughly $1400 per year. So here’s where I started to analyze the cost per year of the contract.... $27000 divided by 22 years is $1227 per year plus the annual dues of $1400 comes to a total of $2627 per year of cost. At that cost I could just as easily book a deluxe hotel every year for 5-7 nights at either equal or lesser cost than the DVC contract. Oh and that’s assuming the dues don’t rise (which they will).

1: As others pointed out, if you're buying 200 points, and if you're staying in a studio villa (which would be comfortable to a standard hotel room in the non-DVC portion of the Beach Club) that will get you a longer trip than just 5-7 nights. If you had to go during the summer (amongst the busiest, hardest-to-book times) 200 points could get you as long as a 10 night stay. So you'd have to adjust the money you'd spend for a hotel room accordingly.

Assuming you could get 7 night accommodations at a BCV studio for your estimated annual outlay of $2627, that works out to 333 a night before tax,* you're looking at spending about $3750 to get the comparable 10 nights in a Beach Club hotel room.

So based on this one scenario, getting those points and paying the fees will save you $1100 a year. That's assuming you could get a Beach Club room for 333 a night. Now if they're offering a promotion, you could very well get a room at BCV for 333 a night, I suppose, it's possible.* For now. Because...

2: Dues WILL go up, that's true. But so will the price of hotel rooms. Difference being, technically, legally, the price of maintenance fees are only allowed to go up to match what it costs to maintain the property and no more than 15% a year, whichever is lesser. Don't get me wrong, there are plenty of ways Disney makes money on DVC properties but they can't just jack up prices on maintenance without proving the money is actually going to maintenance, whereas with standard hotel rooms, if there's a demand, they can jack the price up as much as they want...and then offer people a promotional price that makes them think they're getting a tremendous value.
Maintenance fees per point at Beach Club this year are $6.44. Last year, $6.27. So they went up a little under 3%. What are the odds the price for a standard hotel room at Beach Club didn't go up an average of 3%?


*I went on the WDW website to get a price for Beach Club rooms in the first half of August, to compare it to my estimate of "200 points getting you 10 nights in a studio at Beach Club during one of the busier seasons." That room would be $343 a night, which would be $386 with tax. So already, the best attempt to compare "apples to apples" you're already paying more out of pocket for the room than you would if you bought points. Now look at early December, which is one of the periods where DVC points stretch out the most. A Beach Club out of pocket is currently going for $400 and that's with a current promotional price, rack rate is over $500. So plus tax, it's $450 a night. Whereas 200 points would get you THIRTEEN nights in a studio. Now, for your outlay average of $2627 a night, you're getting a 13 night stay, which for a Beach Club room at a promotional price direct from Disney, would cost you $5850. And yes, maintenance fees will go up, but so will rack rates.

It's all a YMMV situation. The bottom can drop out of the economy and suddenly Disney will be offering crazy promotions to keep people going to Orlando. Hurricanes could decimate BCV necessitating the biggest possible maintenance fee increases for the foreseeable future. Anything can happen. But based on the math you originally offered, and the A-B choice of "DVC points or booking direct from Disney," you're better off getting points. You can also opt to always rent points through David's, which will likely get more expensive every year or at least every other year, but still be cheaper than booking direct from Disney without any of the headaches associates with owning a timeshare.

 

[DuckTalesWooHoo1987]

We have 250 direct points at BLT and have had them since they originally went on sale. We've finally decided to add on through resale and are looking at doing it at VGF because the contracts there still have a ton of time left, the dues are relatively small, and we love the resort. The thing with DVC for me is I get to go 3 times a year. Have an awesome room and great proximity to my favorite park. Plus the sort of "comfort" of knowing I've always got a room waiting for me. I know there are "cheaper" resorts to add on to but I just think the longer contracts have a greater appeal to me personally and I love the proximity to the MK. The thing for me is I really don't try and look in to all the strict dollars and cents because ultimately I know I'm gonna get what I pay for and just love the flexibility of it. The dues always go up though. I've never for one second regretted being a DVC member and can't foresee that I ever will. It's a GREAT thing IF and I mean IF you like to go a lot. I'm just saying that the optimal way to get your "money's worth" is to go a lot. It's extremely versatile and user friendly and just great for big Disney fans. In the 10 years we've been at BLT I've honestly lost count of the trips we've had just at our home resort and when you look at how much it would cost to spend 24 days a year in just a studio there at cash value you will see what I'm talking about in value. Do what's best for you but I'm sure if you're a big fan that really loves going you will love the DVC. Just think of what resort you'd like to spend the most time at and what proximity it is to your favorite park and little things like that. If you want the cheapest dues BLT is great an has really reasonable dues. The contracts are more now but the dues are great and the contracts still have a long life span.

 

[Lensman]

Yup hence me mentioning it's not a like for like, but the OP specifically called out a 200pt contract and a 5-7 night hotel stay. If they were going to stay studio, then there is no need to do a 200pt contract or it would be for a 10-14 night stay. If they are going to compare things, then they should definitely do it on as level a playing field as possible.

Good point!

Hey, so I found room rates for a 1 bedroom of $750 a night during the "Adventure Season" dates, so that's $5250 for the week. The difference is that it's Club Level and has daily housekeeping. I think I should subtract an incredible $150 for club level amenities, so it's possibly an adjusted $600 a night or $4200 a week for the hypothetical non-Club Level 1 bedroom suite.

 

[correcaminos]

My wife and I are planning to purchase DVC in a few years, but we're buying direct from Disney, not resale. One thing to keep in mind is that if you buy resale, you do not get to take advantage of whatever offer Disney is offering at the time of purchase. Might not be a big deal to you, but just something to keep in mind.

Never buy in for perks. As a long time member I will say they come and go and cannot be counted on.

Good point!

Hey, so I found room rates for a 1 bedroom of $750 a night during the "Adventure Season" dates, so that's $5250 for the week. The difference is that it's Club Level and has daily housekeeping. I think I should subtract an incredible $150 for club level amenities, so it's possibly an adjusted $600 a night or $4200 a week for the hypothetical non-Club Level 1 bedroom suite.

I'm so confused by this. I don't think you are comparing apples to apples at all. The suites that are 1 bedroom are not always comparable to a 1 bedroom villa. Also $150 is mighty low to add for CL and daily housekeeping. I'd do apples to apples (standard rooms) and not try to math it out this way.

 

[DisneyFans4Life]

Never buy in for perks. As a long time member I will say they come and go and cannot be counted on.



I'm so confused by this. I don't think you are comparing apples to apples at all. The suites that are 1 bedroom are not always comparable to a 1 bedroom villa. Also $150 is mighty low to add for CL and daily housekeeping. I'd do apples to apples (standard rooms) and not try to math it out this way.

It is still something to consider when purchasing. When I last looked at the price difference, you weren't saving all that much by buying resale. If I'm buying DVC, I want to be able to take advantage of any and all perks that are available; if that means buying direct, I will.

 

[correcaminos]

It is still something to consider when purchasing. When I last looked at the price difference, you weren't saving all that much by buying resale. If I'm buying DVC, I want to be able to take advantage of any and all perks that are available; if that means buying direct, I will.

Unless you are buying a small contract, I think the math would say otherwise. I've done direct and resale and unless I wanted small contracts (about 75-100 or under) the savings were significant. I saved about $6500 when I first bought in.

Feel free to be emotional and buy direct because I did a few times for smaller harder to find contracts. I just am not sure I'd claim anything about savings. Also as a long time owner, I'd say really perks come and go and should not be a deciding factor. Buying because you want the blue card for other reasons is dine too

 

[HansGruber]

It is still something to consider when purchasing. When I last looked at the price difference, you weren't saving all that much by buying resale. If I'm buying DVC, I want to be able to take advantage of any and all perks that are available; if that means buying direct, I will.

I have no clue where you are looking, but the price increase is astronomical when purchasing direct.
DVC advertises $182/pt. Granted, this is for the newest resorts, but they aren't going to drop the price very much for other resorts.
You can get SS for $100/pt resale.

And while I'm not fully in the loop anymore, it use to be more economical to sell your points and then use the profits to buy a Disney Cruise ticket vs. using your points for the Cruise.

 

[Sirwalterraleigh]

Never lay $135 on a resale that went into use in 1998...

Is that the Bs disney price?? It’s way too high

 

[Sirwalterraleigh]

I have no clue where you are looking, but the price increase is astronomical when purchasing direct.
DVC advertises $182/pt. Granted, this is for the newest resorts, but they aren't going to drop the price very much for other resorts.
You can get SS for $100/pt resale.

And while I'm not fully in the loop anymore, it use to be more economical to sell your points and then use the profits to buy a Disney Cruise ticket vs. using your points for the Cruise.

Agree...buying direct- even after the “incentives” - jumped the shark about 5 years ago. I wouldn’t buy a thing from DDC anymore. They have choked the golden goose (Typical).

 

[HansGruber]

Never lay $135 on a resale that went into use in 1998...

Is that the Bs disney price?? It’s way too high

BCVs sell for ~$140/pt resale. I don't know if you can talk Disney down on their prices, but it "might" be conceivable to get a retail price somewhere around the $140 mark. If so, then it might make sense to buy directly from Disney.

But my guess is, if one is willing to buy BCVs with only 24 year left, they don't really value their money to start.

 

[Sirwalterraleigh]

BCVs sell for ~$140/pt resale. I don't know if you can talk Disney down on their prices, but it "might" be conceivable to get a retail price somewhere around the $140 mark. If so, then it might make sense to buy directly from Disney.

But my guess is, if one is willing to buy BCVs with only 24 year left, they don't really value their money to start.

Insane...sold $65-77 ish new.

I get a reasonable appreciation. But double the cost for half the product is just consumer stupidity...lot of that going around these days.

 

[Lensman]

I'm so confused by this. I don't think you are comparing apples to apples at all. The suites that are 1 bedroom are not always comparable to a 1 bedroom villa. Also $150 is mighty low to add for CL and daily housekeeping. I'd do apples to apples (standard rooms) and not try to math it out this way.

I did previously compare a standard room to a studio and the analysis showed a clear advantage to DVC, according to the cost estimates provided by the OP. However, the discussion wandered to how the OP seemed to want to stay at a 1-bedroom and how it didn't seem possible to compare a 1-bedroom villa against a 1-bedroom cash room except by comparing the point-rental value vs. point purchase.

At any rate, what did you think of my analysis of the standard room vs the studio villa?

I was hoping that taking the time to do all the numerical analysis for people might actually be helpful to the OP. I'd be happy for you to help refine the estimates. I think that doing these estimates is more helpful than going with people's gut.

In what way are the 1-bedroom suites not comparable to the 1-bedroom villas? Also, what do you think is a good price for Club Level and daily housekeeping? I used $150 because that's the difference between the price of a same-view room vs a same-view Club Level room. What number do you think would be better? I'm happy to use it, as I don't have a dog in this fight I'm just trying to provide some financial rigor to this instead of the usual qualitative platitudes.

BCVs sell for ~$140/pt resale. I don't know if you can talk Disney down on their prices, but it "might" be conceivable to get a retail price somewhere around the $140 mark. If so, then it might make sense to buy directly from Disney.

But my guess is, if one is willing to buy BCVs with only 24 year left, they don't really value their money to start.

I'm not sure what you mean by your last statement. What do you mean they don't really value their money if they are buying 24 years of stays vs 39? Looking at the value of OKW '42 contracts vs '57, people are only getting $6-$9 more for the extended contract. So it seems to me that it's all a matter of price and people don't put that much value on the extra 15 years of the timeshare contract.

I do agree that buying direct is hard to justify financially. The savings from buying retail for the resorts where there is a resale market is just too great.

 

[CLEtoWDW]

Never lay $135 on a resale that went into use in 1998...

Is that the Bs disney price?? It’s way too high

No that’s the secondary market price. But you get the point I’m tryin to make... the useful life of these contracts is starting to evaporate yet sales in the $135-$150 range are still occurring when it comes to BCV.

EDIT: one other point I’m trying to make is the DVC’ers that bought contracts in the 90’s and early 2000’s are absolutely genius. The deal they scored is almost laughable by today’s standards.