Over the years, I've read many posts which ask if it's worth it to buy into DVC. The simple answer is YES and here is my justification. If you are going to continue vacationing at Disney at least once a year, you will always eventually reach a "break even" point with your purchase way before the 50 year contract expires. We bought into Saratoga Springs in 2007 and have already broke even. I do still have Maintenance Fees but here is the reality of it broken down into dollars. My Maintenance Fees are a little less than $5.00 a point. Depending on which DVC resort you choose to stay and what time of year you're traveling, the average cost for a Studio Villa is around 12 points a night. Do the math and 12 points times $5.00 of Maintenance Fees equals $60 a night for a Studio Villa. The current rates for a DVC Studio range from $350 - $625 a night. I can assure you that as maintenance fees increase over the years, so will the nightly room rates. Simply stated, once a DVC Member breaks even with their purchase, they will continue to pay only about 12% of the rack rate for a room in a DVC resort. If you plan to visit Disney at least once a year for many years to come, DVC will save you money.
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DVC is worth it and here's why...
- Thread starter Chic429
- Start date
Your reasoning presupposes very specific conditions.
1. The guest will visit Walt Disney World every year.
2. Maintenance fees will increase proportionally to "rack" room rates.
3. A non-DVC member would pay the "rack" rate.
4. A non-DVC member would ONLY stay a a deluxe studio.
5. Your calculations ignore the time value of money.
For most peoples' purposes (bracing for incoming member flames):
1. You might WANT to go to WDW every year but; a) stuff comes up, and b) that's very inflexible.
2. That's not necessarily true.
3. Most people take advantage of discounted rates which push the "break even" point further out in time.
4. Many people might choose to enjoy a value or moderate resort instead of a deluxe studio every time.
5. If you HADN'T bought DVC, you could have invested that money in a growth-stock mutual fund and averaged around a 10% return per year. That 10% could have been used to help fun your WDW vacations.
In conclusion, DVC *may* be worth it. To state categorically that it *is* worth it is going way overboard and making a LOT of assumptions.
GoofGoof
Premium Member
10% seems a little high. This guy bought in 2007 so his stock investment would have cut in half in October of 2008. Most of that may have come back, but you would have been taking money out for trips in 2008 or 2009. Don't forget that you have to pay tax on that gain too so net of tax even a 10% return is really 7.5%. A more conservative estimate would be around 5% post tax.
There are numerous assumptions that go into the analysis. You can pretty much manipulate the results to get whatever answer you want by tweaking the inputs. Historically hotel rates and fees have gone up about the same. Granted this is a relatively short history and could change in either direction. If you are comparing DVC to moderate resorts you will never break even.
For me I have become accustomed to staying in condos on vacation so I bought in to rent Villas. I bought 160 points at BLT but only go every other year so I bank/borrow. I calculated a break even of around 16 years comparing my DVC to a 1 week stay at CR at 25% below rack rate. I used a 5% interest rate for time value of money and a resort and fee increase of 3.2% per year. I will be renting a 1 or 2 bedroom villa depending on the time of year and length of trip. I don't really see DVC as a way to save money. I see it as a way to get a 1 or 2 bedroom villa for around the cost of a deluxe room for my next 8 trips. Renting villas for cash is not a great option. The rack rate for a BLT 2 bedroom villa in November (off season - when my next trip is planned) is over $1,000 a night after tax!!!! Even if you got free dining or a 40% rate discount that is still outrageous. Once I hit 16 years I can either keep using it or sell. Assuming the resales are still around $40 per point at that time (a pretty conservative estimate considering there will still be 32 year left on the contract but who knows what the market will be) I will get a little less than $6k back.
Overall I think it will be worth it for me, but who knows what the future will bring. It is a big investment and keep in mind that the room cost is only a portion of the total costs of a trip. Tickets, airfare, meals and souvenirs all add up big time. Of course you can always try to rent your points and/or sell your share.
ParentsOf4
Well-Known Member
IMHO, DVC makes sense if the following 3 conditions are satisfied:
http://www.mousesavers.com/dvc.html
I highly recommend it for anyone considering a DVC purchase.
DVC is not the least expensive option for visiting WDW. For example, it is cheaper to stay offsite (offsite condos or home rentals offer the most space at the lowest price) or at a Value Resort. However, DVC does offer a good value if the right set of criteria are met.
- The person intends to vacation at one of the DVC resorts for many years.
- The person intends to stay at Disney Deluxe Resorts.
- The person can afford the initial purchase price and annual Maintenance Fees (MF).
http://www.mousesavers.com/dvc.html
I highly recommend it for anyone considering a DVC purchase.
DVC is not the least expensive option for visiting WDW. For example, it is cheaper to stay offsite (offsite condos or home rentals offer the most space at the lowest price) or at a Value Resort. However, DVC does offer a good value if the right set of criteria are met.
captainkidd
Well-Known Member
As the others have said, the answer isn't as black and white as you're making it out to be. To be honest, you sound exactly like a DVC worker at one of the kiosks around WDW trying to convince you of how much money you're wasting by not joining, while all the while, holding back half of the actual truth.
There are two simple reasons why or if it makes sense to purchase DVC.
A. You can afford to.
B. You want to.
Everything else is a moot point.
A. You can afford to.
B. You want to.
Everything else is a moot point.
captainkidd
Well-Known Member
I agree with those 2 reasons, but do think there are others as well. I just don't think it's that black and white.
For some, going every 3rd year could be worth it, by banking and borrowing points to get the points they need for their trips. I know a few DVC owners that do this.
DVCOwner
A Long Time DVC Member
I think this is one of the most overlooked things about DVC, you do not have to go once a year. I travel in large groups and using banking and borrowing we avarage a trip about once every 18 months.
captainkidd
Well-Known Member
Don't you feel then that paying the dues for those years that you don't go is a waste?
DVCOwner
A Long Time DVC Member
No - Dues are paid on points per year. If you bank the points you do not have to repay dues for that year. Let's say that you plan on using 450 points every three years staying at DVC. You than would purchase 150 points and only pay dues on the 150 each year. Still when you bank and borrow you will have 450 points to use at the time of your trip.
captainkidd
Well-Known Member
Yes, but you're still paying money during a year in which you're not visiting Disney.
Makes more sense to me to rent points the years you're going to visit and not worry about paying a dime the years you're not.
Sharkreef11
Well-Known Member
Right but if your having a hard time buying say 450 points per year, and paying the annual dues, it is a much easier pill to swallow only paying dues on 150 per year and banking them for three years is what he is saying.
We tend to go to WDW every other year so we bank and borrow points so that we can get the accommodations we want for the length of stay we want. We have probably gotten a little spoiled since we bought our DVC and now enjoy staying at the deluxe DVC resorts and don't think we would enjoy the value or moderate resorts at this point. We like staying in either 2 bedroom or grand villas and bringing friends with us on these trips. While I am not sure how long it will take for us to break even on our purchase I know we enjoy the trips we take and we view our DVC purchase as a quality of life decision. I don't think anyone should be buying DVC thinking of it as an investment. Some people may realize better savings than others depending on their vacationing patterns but even for the people realizing the biggest savings I would imagine you could find a better "investment" for your money if that is how you are viewing your DVC purchase.
Taking into consideration that I have been choosing Deluxe accommodations since buying into DVC in 2007, I have already broken even. My family visits either Disney World or Disneyland and we travel to these destinations multiple times a year. Using Maintenence Fees as a calculator, my current cost for a Studio Villa is about $60 a night which is less expensive than a Disney Value Resort. If I'm correct, the Value Resorts are currently around $90-$100 a night. If I ever choose to rent my points, they typically bring in around $12 a point which is about 3 times the amount I pay in Maintenance Fees. DVC has been a very wise move financially for my family and we have no regrets. As I mentioned in my original post, one must choose to travel to Disney when using ownership for it to be worth the purchase. Why go anywhere else!!!!
1. We actually go more than once per year, and the 2 of us stay in a 1bdr each trip. If you think that going to WDW is inflexible, then I do not think you would be a good candidate for DVC. We cannot wait to get back after every trip, even the years we make 3 trips there!
2. Actually "rack rates" might go up more, since they are not tied to actual costs as the maintenance fees are. By law, the maintenance fee CANNOT make a profit for Disney. They can raise the rack rates all they want to make more money, and as our economy improves, you can bet that Disney will raise their rates, and the discounts will get smaller and smaller.
3. Some people, like us, cannot travel when there are discounts, so we have to look at rack rate when comparing what we would have spent.
4. Yuck! We will NEVER stay in a value. We have stayed at POR, POFQ, and FW, but we prefer to stay deluxe only. Call us deluxe snobs if you'd like. And staying off-site will never happen either.
5. DVC is NOT an investment! Too many people compare it to getting a return on stocks, bonds, or mutual funds, and that is simply an unfair comparison. Disney has NEVER acted like DVC is an investment that makes money in the long term. It is merely a method to (mostly) prepay for deluxe rooms that will save you money over the long term of the contract.
Tim, no flames at all, but it appears that you are not a good candidate for DVC, and that's OK. It doesn't work for everyone, or we'd have millions of members already, instead of 400,000. It will NEVER work for someone that is OK with staying in a value or off-site. It may eventually work for someone who stays in a moderate, but that payoff could be 30 years or more down the road. I know that a few people like to rent points, and that is a cheaper alternative as well, but it just doesn't work for us. We love owning a piece of the mouse, and we think it was the best decision for us. So for us, it is definitely "worth" it, but for you, not so much.
ParentsOf4
Well-Known Member
I enjoyed your post but think Tim_4 (sorry if I put words in your mouth
) is suggesting that rather than paying for DVC, you could take the same money and invest it in something with a positive rate-of-return, the proceeds of which could then be used to pay for annual cash vacations.I'm not particularly crazy about Tim_4's suggestion since growth funds are highly volatile. They might make sense as a long-term investment but I'm not sure they make sense to fund an annual vacation, where the money has to be available every year. Of course, if the fund plummets, then you've got bigger problems and maybe shouldn't be vacationing at WDW anyway ...
captainkidd
Well-Known Member
How many nights per year are you going and how many points do you have?
I enjoyed your post but think Tim_4 (sorry if I put words in your mouth
I'm not particularly crazy about Tim_4's suggestion since growth funds are highly volatile. They might make sense as a long-term investment but I'm not sure they make sense to fund an annual vacation, where the money has to be available every year. Of course, if the fund plummets, then you've got bigger problems and maybe shouldn't be vacationing at WDW anyway ...
The other problem is if the fund is going to cover the cost at all. If you take the money out of the investment to pay for a room at WDW, then you are left with less money in the fund to earn interest, and then Disney raises the price of the room (think 20 years down the road, not next year), and you can pretty much guarantee that the fund will probably NOT cover the cost of the room by then. For me, I will only be paying maintenance fees to get a great room.
I have a spreadsheet that I use to calculate everything DVC. What we paid, dues, points, what we would have paid if we paid cash for a particular stay (taking into account any discount we might have gotten as well), etc. My dues in 2032 will be approx. $3,100. Assuming the same rate of increase for the room rate, a 1bdr at SSR will run just over $1,000 per night. With our points, we can get at least 10 days in a 1bdr, so for that $3,100 in dues, we would spend over $10,000 for the same room! Even with a 30% discount (and if people think that's going to last forever, I want what they are smoking), that would still be over $7,000. No matter what, I still save more than half, and up to 70% if discounts go away! Anyway, it still doesn't work for a lot of people, because they have a hard time thinking that maybe they won't want to vacation at WDW in 20 or 30 years, and for them, it won't work. For us, we will be going there until we are too old to know where we are, and our grandkids are pushing us around in wheelchairs.
Oh, and we do vacation elsewhere. We'll be taking another Disney cruise next year, we visited DL just a few months ago, and we visit with relatives out of state. We have gone to South Padre Island, Washington D.C., New Orleans, and other places as well over the last few years. It isn't always about WDW.
captainkidd
Well-Known Member
If your dues are only going to be $3,100 in 2032, you must not have a lot of points or you're able to go in the off-season. 10 nights in a 1 bedroom at Boardwalk during the summer would require about 400 points, and dues on that right now would be over $2,200 per year.