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DVC pros & cons
- Thread starter tercon57
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MR. DISNEY
New Member
You get lots of discounts that you are able to get with the Disney Club or a AP, and the rooms are a little bigger. for discounts look at www.wdwig.com
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I have looked into the DVC several times and when we crunch the numbers its still a rip off,the maintenance fees are the bad part of it .Also they dont clean your room you do,Im on vacation I want to come back to a fresh room at night.The maintenance fees can go up every year.Go see for yourself,you get a free lunch out of it and the people are nice,great play room for the kids.It may work for you.:wave:
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Hey guys,
Thanks for the info. We really don't spend alot of time in the room, so we are comfortable enough in a smaller room. I did not know about the maintenance fees though. I guess I need to do some homework. Maybe we will take the open house tour when we get down there.
I'll take a look at what is on www.wdwig.com. Thanks for the help.
Thanks for the info. We really don't spend alot of time in the room, so we are comfortable enough in a smaller room. I did not know about the maintenance fees though. I guess I need to do some homework. Maybe we will take the open house tour when we get down there.
I'll take a look at what is on www.wdwig.com. Thanks for the help.
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Woody13
New Member
The DVC is an expensive paid in advance 40 year reservation. It's far less expensive to invest the money you would spend on the DVC and then pay for accommodations as you go. If you really desire to stay at one of the DVC resorts then just rent points from an existing member. Abundant DVC rental point discounts are available. Here's a good link that provides a balanced debate on the subject:
http://www.mouseplanet.com/dtp/dvc/
P.S. I go to WDW 4 to 6 times a year (10 days average each stay) and I have looked into the DVC on several occasions. I have come to the conclusion that the DVC would be a good deal if resort rack rates were real. However, I think we all know that 40% (or more) resort discounts are commonplace. Good luck.
http://www.mouseplanet.com/dtp/dvc/
P.S. I go to WDW 4 to 6 times a year (10 days average each stay) and I have looked into the DVC on several occasions. I have come to the conclusion that the DVC would be a good deal if resort rack rates were real. However, I think we all know that 40% (or more) resort discounts are commonplace. Good luck.
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Yellow Shoes
Well-Known Member
So far, so good on this thread.
As you may have guessed, this topic is a real hot one.
I think it's right up there with
Pool hopping
Taking kids out of school for a vacation
The first week of June
You know what they say about opinions...
--everybody's got one.
As you may have guessed, this topic is a real hot one.
I think it's right up there with
Pool hopping
Taking kids out of school for a vacation
The first week of June
You know what they say about opinions...
--everybody's got one.
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shari71
New Member
Great information. Keep it coming. My husband and I have just glanced at it on the surface since we go each year and wondered if we could save anything by joining, but it sounds like you give up some of the magic you get used to if you just make reservations each year. And in all the literature from Disney...they kind of gloss over the actual details of yearly fees...That is what scares me most about this all.
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RickEff
Active Member
It's important to compare apples to apples when looking into DVC.
Let's break this down. I'll use Boardwalk as the example. Let's assume you're going to stay two weeks at WDW. Seven nights in Value season, and seven nights in Peak season.
DVC: Value Season week - 85 points. Peak Season week - 111 points. That totals 196 points. Let's round that up to 200 points.
200 points of DVC will cost you: $17,800 points of initial fees (based on $89 / point. You can buy from current members for less if you do some research!)
Annual fees are about $4.00 per point. (I think it's less at Boardwalk, but I couldn't find out for sure) So - 200 x $4 is $800 annually.
$800 x 39 years left at DVC is $31,200 . Add that to your initial purchase price, DVC costs $49,000 for its lifetime.
Now - let's compare staying at Boardwalk during the same periods. Let's assume you're an annual passholder and are getting 45% off.
A week at Boardwalk Inn during value season would cost $1,240 . A week during Peak Season would cost $1691.20 . Total cost per year is $2931.20 . Multiply that by 39 years and you get $114,316.80 .
(fees above based on 2003 rates. Included in fees is a 45% discount. 11.5% tax is added.)
So - as a DVC member you would save $65,316.80 .
As for the argument that DVC annual fees go up, they don't go up any more than resort rates historically have. As a matter of fact between 1999 and 2000, they went down.
Do remember - you do not get room service. So if that's important to you, then DVC may not be for you.
Let's break this down. I'll use Boardwalk as the example. Let's assume you're going to stay two weeks at WDW. Seven nights in Value season, and seven nights in Peak season.
DVC: Value Season week - 85 points. Peak Season week - 111 points. That totals 196 points. Let's round that up to 200 points.
200 points of DVC will cost you: $17,800 points of initial fees (based on $89 / point. You can buy from current members for less if you do some research!)
Annual fees are about $4.00 per point. (I think it's less at Boardwalk, but I couldn't find out for sure) So - 200 x $4 is $800 annually.
$800 x 39 years left at DVC is $31,200 . Add that to your initial purchase price, DVC costs $49,000 for its lifetime.
Now - let's compare staying at Boardwalk during the same periods. Let's assume you're an annual passholder and are getting 45% off.
A week at Boardwalk Inn during value season would cost $1,240 . A week during Peak Season would cost $1691.20 . Total cost per year is $2931.20 . Multiply that by 39 years and you get $114,316.80 .
(fees above based on 2003 rates. Included in fees is a 45% discount. 11.5% tax is added.)
So - as a DVC member you would save $65,316.80 .
As for the argument that DVC annual fees go up, they don't go up any more than resort rates historically have. As a matter of fact between 1999 and 2000, they went down.
Do remember - you do not get room service. So if that's important to you, then DVC may not be for you.
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Another way of looking at this is the Cost of carry. That is the of carrying the DVC investment.
Currently points are more like $80 with discounts from the mouse and buying a resale is less.
200 points is 16000 bucks.
financing that over 30 at 6.5 % by wraping it into a mortgage or home equity product for 30 years makes a payment of 100 a month or 1200 per year. Plus the dues of 800 is 2k a year.
So you compare this to RickEff number above and DVC is about 2000 a year vs 2900. Roughly 2/3 the cost for roughly the same thing.
Now the key is that it is something you will use but assuming you are going to WDW regularly this and Rick's both suggest that DVC is a sound financial move.
I can do the whole thing with net present value too (I sadly was a finance geek in college and enjoy such folly) and it works out in the same general numbers.
Both assumes you have fairly good credit and some equity you can leverage but given the amounts of money involved that seems fair, and if you are working through financial problems you most likely aren't going to WDW regularly either. (or the prices at WDW are the reason for the financial issues
)
Currently points are more like $80 with discounts from the mouse and buying a resale is less.
200 points is 16000 bucks.
financing that over 30 at 6.5 % by wraping it into a mortgage or home equity product for 30 years makes a payment of 100 a month or 1200 per year. Plus the dues of 800 is 2k a year.
So you compare this to RickEff number above and DVC is about 2000 a year vs 2900. Roughly 2/3 the cost for roughly the same thing.
Now the key is that it is something you will use but assuming you are going to WDW regularly this and Rick's both suggest that DVC is a sound financial move.
I can do the whole thing with net present value too (I sadly was a finance geek in college and enjoy such folly) and it works out in the same general numbers.
Both assumes you have fairly good credit and some equity you can leverage but given the amounts of money involved that seems fair, and if you are working through financial problems you most likely aren't going to WDW regularly either. (or the prices at WDW are the reason for the financial issues
)
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RickEff
Active Member
You raise a point that I purposely avoided because I thought of several people I know that carry their WDW trip on credit cards for a year or more before they pay it all off - so I didn't want to open that door :lol:
There are a lot of assumptions made in either case. Two are that a potential owner even is a person that a) goes to WDW that often and b) normally can comfortably afford to stay at a Deluxe resort.
I can't imagine anyone financing a $16,000 purchase over 30 years, but who knows!
There are a lot of assumptions made in either case. Two are that a potential owner even is a person that a) goes to WDW that often and b) normally can comfortably afford to stay at a Deluxe resort.
I can't imagine anyone financing a $16,000 purchase over 30 years, but who knows!
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Disneyfalcon
Well-Known Member
Just to clarify, once you buy your initial points, do you have to rebuy points each year after you've used them? Or do you get new points each year for the annual fee cost?
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No one would finance it over that time, I agree. I chose that as it approximates the life of the asset and amortized the laon over that period. (I was trying to avoid bringing in a residual value into the calculations)
A pure finance look is to do it without amortizing the loan just the cost of carry - 16,000 @ 6.5 per year $1,040 plus 800 = 1,840 vs 2,900.
Picked your example assumptions as it was there to use. Maybe better to do it on a one trip a year basis but it works out in a simmilar way.
Yeah people do carry it on credit cards and that isn't the best financial move.
Now folks will say. "Hey I financed it with a 7 year equity loan and my paynments are much higher than you example." Right but then you have all the years after it is paid where you have no cost of carry or amortization only the maintenance fee. So in those years it is 800 vs 2900. and DVC just kills alternative.
Now the real way to do it is to put it all into net present dollars. You know a bird in the hand... and a dollar in the bank... the dollars a few years out are not worth as much as one now.
So you set up two assumptions for annual cash flows adjusting them appropriatly for expected price level changes and then discount them all back to net present dollar equivilants. Oh it is just great geek fun. (I did it before buying in.)
Oh cleaning is an issue (minus), you get a washer dryer in your room (plus), and can save on meals if you choose to use the kitchen (plus or minus your choice)
Did I mention finance geek in my previous post?
Long story short - It comes out to the same thing. If you are going to Disney regularly and expect to pay for a moderate level resort, dvc gets you into a bigger nicer resort for the same or a little less money.
A pure finance look is to do it without amortizing the loan just the cost of carry - 16,000 @ 6.5 per year $1,040 plus 800 = 1,840 vs 2,900.
Picked your example assumptions as it was there to use. Maybe better to do it on a one trip a year basis but it works out in a simmilar way.
Yeah people do carry it on credit cards and that isn't the best financial move.
Now folks will say. "Hey I financed it with a 7 year equity loan and my paynments are much higher than you example." Right but then you have all the years after it is paid where you have no cost of carry or amortization only the maintenance fee. So in those years it is 800 vs 2900. and DVC just kills alternative.
Now the real way to do it is to put it all into net present dollars. You know a bird in the hand... and a dollar in the bank... the dollars a few years out are not worth as much as one now.
So you set up two assumptions for annual cash flows adjusting them appropriatly for expected price level changes and then discount them all back to net present dollar equivilants. Oh it is just great geek fun. (I did it before buying in.)
Oh cleaning is an issue (minus), you get a washer dryer in your room (plus), and can save on meals if you choose to use the kitchen (plus or minus your choice)
Did I mention finance geek in my previous post?
Long story short - It comes out to the same thing. If you are going to Disney regularly and expect to pay for a moderate level resort, dvc gets you into a bigger nicer resort for the same or a little less money.
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You buy a point level. That gets you that number of points to use every year. You pay maintenance on the points each year.
So in Rick example you get 200 points to use every year. Every year you pay a few bucks a point on maintenance, in his example 4$ * 200 points = $800 a year.
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Yellow Shoes
Well-Known Member
And to clarify..
Only the 1, 2, & 3-bedroom units have a washer and dryer.
The studios do not have a washer in them.
Only the 1, 2, & 3-bedroom units have a washer and dryer.
The studios do not have a washer in them.
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Woody13
New Member
More Math
I'm all for comparing apples to apples or in this case dollars to dollars.
Let's just take the initial investment you quoted of $17,800 and consider how much money you could make in 39 years. With risk free bonds (U.S.) or tax free state municipal bonds you can easily double your money in 10 years at a mere 7.2% average annual return rate. Or you could purchase Fannie Mae or Gennie Mae funds. Or if you are more risk tolerant you can make a bigger return by investing in no load mutual funds such as those offered by Vanguard or Fidelity. In short, it's easy to make a 7.2% average annual return on your money. My annual investment returns have averaged 23.64% over 30 years and my investments have been very conservative.
Anyway let's take that $17,800 and see what happens to it in 39 years at an average rate of 7.2%. After 10 years you have $35,675. After 20 years you have $71,502. After 30 years you have $143,306. And after 39 years you have earned $267,927. So let's subtract the Boardwalk costs you provided. $267,927 - $114.317 = $153,610. Holy cow! I just made over a $153,000 by not buying into the DVC! In short, while you "saved" $65.317, I still took my vacations at WDW and now have $153,000 cash! With that money I could pay for another 39 years at WDW! At the end of the DVC contract what do you have? Nothing. Also please note that for this exercise I didn't include the annual maintenance fees nor did I include capital gains tax. Had I included them my profit margin would have been even larger. Of course, if you finance a DVC membership then more money goes down the drain.
I guess it all depends upon whether you see the glass as half full or half empty.
I'm all for comparing apples to apples or in this case dollars to dollars.
Let's just take the initial investment you quoted of $17,800 and consider how much money you could make in 39 years. With risk free bonds (U.S.) or tax free state municipal bonds you can easily double your money in 10 years at a mere 7.2% average annual return rate. Or you could purchase Fannie Mae or Gennie Mae funds. Or if you are more risk tolerant you can make a bigger return by investing in no load mutual funds such as those offered by Vanguard or Fidelity. In short, it's easy to make a 7.2% average annual return on your money. My annual investment returns have averaged 23.64% over 30 years and my investments have been very conservative.
Anyway let's take that $17,800 and see what happens to it in 39 years at an average rate of 7.2%. After 10 years you have $35,675. After 20 years you have $71,502. After 30 years you have $143,306. And after 39 years you have earned $267,927. So let's subtract the Boardwalk costs you provided. $267,927 - $114.317 = $153,610. Holy cow! I just made over a $153,000 by not buying into the DVC! In short, while you "saved" $65.317, I still took my vacations at WDW and now have $153,000 cash! With that money I could pay for another 39 years at WDW! At the end of the DVC contract what do you have? Nothing. Also please note that for this exercise I didn't include the annual maintenance fees nor did I include capital gains tax. Had I included them my profit margin would have been even larger. Of course, if you finance a DVC membership then more money goes down the drain.
I guess it all depends upon whether you see the glass as half full or half empty.
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Re: More Math
Woody makes the great point that a buck now is worth more than one a few years doen the road. This time value of money is an issue in Ricks add it up an divide analysis.
This why we finance geeks do the thing on NPV basis. The rate for discounting the money back is a source of lots of finance geek bar fights. (Watch out for the flying little pink umbrellas!)
But for fun you need to put in change in price levels (inflation). Raise the cost of maitenabce and renting rooms by some factor and discount all those cash flows. It was much more fun back in the dark days when we had to run the numbers by hand but it isn't so hard with a spreadsheet.
Anyway Woody make a nice point with the fruit example. When I ran the numbers, and considering the cash flow timing DVC still came out as a good deal. Yes it is a push with discount hotels and you do get tied into a contract. On the other hand my DVC contract has apprciated since I got it (given the sales prices that are being made on the secondary market) and I didn't factor that into the assumptions.
Woody makes the great point that a buck now is worth more than one a few years doen the road. This time value of money is an issue in Ricks add it up an divide analysis.
This why we finance geeks do the thing on NPV basis. The rate for discounting the money back is a source of lots of finance geek bar fights. (Watch out for the flying little pink umbrellas!)
But for fun you need to put in change in price levels (inflation). Raise the cost of maitenabce and renting rooms by some factor and discount all those cash flows. It was much more fun back in the dark days when we had to run the numbers by hand but it isn't so hard with a spreadsheet.
Anyway Woody make a nice point with the fruit example. When I ran the numbers, and considering the cash flow timing DVC still came out as a good deal. Yes it is a push with discount hotels and you do get tied into a contract. On the other hand my DVC contract has apprciated since I got it (given the sales prices that are being made on the secondary market) and I didn't factor that into the assumptions.
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mikedvcmember
Member
you are right but the studios you get free use of the washer and dryer
plus when you are a member you get all kinds of other discounts of diffrent things ie meals, tickets, car rental just to name a few...we have been in dvc for 2 years now and it is the best thing we ever did.
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Woody is an inspiration. I fired up Excel.
Here are the base assumptions.
Rick numbers 17800 for DVC 800/yr in fees. vs 2930 in hotel rates.
Hotel rates and DVC fees increase at an average of 3% per year
Run the deal for 10 years. DVC Will appreciate at the rate of inflation but when you go to sell it in 10 years some of the value is gone and you only get you get 75 % of the appreciated value back.
So here are the annual chas flows by year:
(Sorry tables don't work on baords very well)
. . . . . DVC
Year . Buy / Sell dues . . . .DVC Net Flow.|Hotel
1 . . . -17800 . .-800 = . . . . .-18600 - - - |-2930
2. . . . . . . . . . . -824= . . . . .-824 - - - - |-3018
3 . . . . . . . . . . -849= . . . . . -849 - - - - |-3108
4 . . . . . . . . . . -874 = . . . . .-874 - - - - |-3202
5 . . . . . . . . . . -900 = . . . . .-900 - - - - |-3298
6 . . . . . . . . . . -927 = . . . . .-927 - - - - |-3397
7 . . . . . . . . . . -955= . . . . . -955 - - - - |-3499
8 . . . . . . . . . . -984= . . . . . -984 - - - - |-3604
9 . . . . . . . . . . -1013= . . . . -1013 - - - |-3712
10 . . .17400. . -1044 = . . . . 16356 - - - .|-3823
Woody's 7.2% "lost oppertunity to invest cost" will be the rate used to "reverse compund" the future expenses spent to present dollars (we finance geeks call it discounting).
There is compunding involved so the farther away a cash flow the less it is worth now. (you need 100 bucks tomorrow you need 100 today, you need 100 next year you need 90 some now and to earn some interest for a year. You need 100 in ten years you earn interest on interest etc. you need less)
Anyway using that logic, the NPV feature in Excel and woody's 7.3 % the Net present Cost of 10 years of DVC is 14,200 the net present value of the hotel rooms is 22,980. DVC saves you 8780 in today's dollars.
Ah you say, Zurgie you are full of it! The DVC contract will not be worth so much because 10 of the 50 years of life are gone. Well that is why I cut it back to 75% but I did appreciate the value with inflation.
If the DVC contract with 40 years to go has any value at all in year then DVC is a lower net present value. In fact setting the DVC residual value to zero bring the NVP to with in 100 bucks but in DVC favor. I got to think the contract has some value in ten years. I, for one, am still going.
So maybe the logical thing to do is to run the analysis out 'till the DVC contract ends with no value. OK DVC is $27,000 less in net present dollar cost for the life time of vacations.
OK I'll stop playing with numbers, you can wake up now.
Here are the base assumptions.
Rick numbers 17800 for DVC 800/yr in fees. vs 2930 in hotel rates.
Hotel rates and DVC fees increase at an average of 3% per year
Run the deal for 10 years. DVC Will appreciate at the rate of inflation but when you go to sell it in 10 years some of the value is gone and you only get you get 75 % of the appreciated value back.
So here are the annual chas flows by year:
(Sorry tables don't work on baords very well)
. . . . . DVC
Year . Buy / Sell dues . . . .DVC Net Flow.|Hotel
1 . . . -17800 . .-800 = . . . . .-18600 - - - |-2930
2. . . . . . . . . . . -824= . . . . .-824 - - - - |-3018
3 . . . . . . . . . . -849= . . . . . -849 - - - - |-3108
4 . . . . . . . . . . -874 = . . . . .-874 - - - - |-3202
5 . . . . . . . . . . -900 = . . . . .-900 - - - - |-3298
6 . . . . . . . . . . -927 = . . . . .-927 - - - - |-3397
7 . . . . . . . . . . -955= . . . . . -955 - - - - |-3499
8 . . . . . . . . . . -984= . . . . . -984 - - - - |-3604
9 . . . . . . . . . . -1013= . . . . -1013 - - - |-3712
10 . . .17400. . -1044 = . . . . 16356 - - - .|-3823
Woody's 7.2% "lost oppertunity to invest cost" will be the rate used to "reverse compund" the future expenses spent to present dollars (we finance geeks call it discounting).
There is compunding involved so the farther away a cash flow the less it is worth now. (you need 100 bucks tomorrow you need 100 today, you need 100 next year you need 90 some now and to earn some interest for a year. You need 100 in ten years you earn interest on interest etc. you need less)
Anyway using that logic, the NPV feature in Excel and woody's 7.3 % the Net present Cost of 10 years of DVC is 14,200 the net present value of the hotel rooms is 22,980. DVC saves you 8780 in today's dollars.
Ah you say, Zurgie you are full of it! The DVC contract will not be worth so much because 10 of the 50 years of life are gone. Well that is why I cut it back to 75% but I did appreciate the value with inflation.
If the DVC contract with 40 years to go has any value at all in year then DVC is a lower net present value. In fact setting the DVC residual value to zero bring the NVP to with in 100 bucks but in DVC favor. I got to think the contract has some value in ten years. I, for one, am still going.
So maybe the logical thing to do is to run the analysis out 'till the DVC contract ends with no value. OK DVC is $27,000 less in net present dollar cost for the life time of vacations.
OK I'll stop playing with numbers, you can wake up now.
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More details and other scenarios at: http://badshoe.com/dvc_analysis.htm
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