DVC - Recouping The Cost - An Individual Accounting

mgarbowski

Well-known member
I've been keeping track of our DVC costs since we bought in 2011. A few years in, I started recording some assumed room costs/savings by checking a points rental calculator whenever I book our stays. With a spreadsheet, and a few assumptions, it's now easy to track and project when we hit our break even point. I thought my findings might be of interest so I'm going to post a complete summary.

Upfront Costs
We bought 200 points at BLT direct in 2011. The official price was $130/pt but there was a $15 per point incentive that lowered it to $115 for a buy-in of $23,000. We put the entire amount on a Disney Visa, in 3 separate charges over 2 weeks. Closing costs were $301. I'm also 98% certain we also received a $500 Visa gift card for a total upfront cost of $22,801.

Dues
To date, we have paid $6,988 in dues. Assume an average increase for 2019 and it will soon be $8,196. Add that to the initial outlay and the total nominal cost, ignoring the time-value of money, is $30,996.

Room Benefits
I've been using the rental cost calculator here https://www.dvcrequest.com/cost-calculator.asp to estimate what I would have paid to stay in the same rooms without DVC membership. It's a compromise figure. I could rent points cheaper without a broker. I could also pay hotel rates plus tax to Disney for much more. In truth I would never have stayed in these rooms annually without DVC, and I figure this somewhat midrange figure is fair enough for my exercise. I had to guesstimate the imputed value of 2-3 early stays because I didn't start checking these point rental figures from the beginning.

With those disclaimers, over the years we have stayed 35 nights (a mix of studios and 1-BRs) with a total imputed cost/value of $19,659. Add in next year's stay at Bay Lake (1BR, Lake View) and the totals are 41 nights for $23,909. The average nightly rate is $583 and ranges from a low of $248 per night for 2 nights at a studio at OKW on July 4 weekend in 2017, to $792 per night for a one-bedroom at Boardwalk overlooking Crescent Lake during Easter Week in 2015.

Simple Net
Ignoring time values, we will still be $7,087 away from recouping our initial outlay plus annual dues with room benefits in 2019 after 8 years. But we probably will turn positive in 2 more years after that in 2021.

Accounting for Lost Interest/Earnings
There are lots and lots of theories how to do this. Here is what I did. My interest rate is 3%. It's another compromise between the 0-1% you would have gotten in a bank the last decade, and the 5-8% you reasonably hope to get on a standard mix of investments. I started with my initial 2011 outlay, and carry that into 2012 plus the 3% I would have earned had I not spent it on DVC. To that I add the 2011 dues, and then subtract the imputed value of our 2012 stay. That becomes the new "principal," to which I apply 3%, add 2012 dues, subtract the value of the 2013 stay, and so on. In effect, I treat the DVC costs as a sort of loan that I made, for which I am repaid with room stays. The interest goes down every year as the "principal" amount decreases.
The result of this is that the 2019 deficit/principal will be $10,143, so the assumed interest adds about $3,000 compared to the static nominal dollar model. Projecting out we will turn positive in 2023, just 2 years more than the static model that ignores time value. That is 12 years after the initial purchase.

Additional Notes

My semi-confident estimate, based on a review of current contract listings and sales, is that I could sell this contract now for enough to recoup our initial costs, plus some but certainly not most of our dues or imputed lost interest. It would mean that all our stays to date cost an average room rate of $200-250 a night out of pocket. That's a very rough estimate, but good enough for me and one I find satisfying.

We have mostly made good use of our points. I think we twice let banked points expire, and one of those was a very small amount. But the other was the first year, when we used a relative's points to book half our 2012 vacation (irrelevant long story) so we did not really start getting a good return on our 2011 purchase until 2013. But even in the years we did not waste any points, we also could have been a bit more aggressive using them. I've started using more, and that will accelerate the value recovery.

My actual dues paid largely track the published dues rate multiplied by our 200 points, excpt in 2012 we seem to have been undercharged by about $100. I don't know why, and cannot find a mistake in my math or my records. But at least it was in my favor. And I presume there is a good reason for it that I am just missing. I very much doubt Disney made a mistake like that in my favor. I take my dues paid direct from my online DVC membership. You can go back and check your entire history.

These figures ignore dining discounts, gift store discounts, and annual pass discounts (and anything else I forgot). I've no reliable way to measure how much we have saved, (nor to account for the extent to which it caused us to spend more). Nor does this account for the fact that I paid the entire purchase price, and most annual dues, either with cash back credit cards or gift cards bought at a discount. All of these would lower or further offset our costs, including imputed lost interest, and make this financial analysis more favorable.

Finally, the needless yet necessary disclaimer that your costs are not my costs, your stays are not my stays, my assumptions can be wrong, my math can be wrong (though I doubt that), and I'm not a financial professional and I'm not making predictions or giving advice about you, to you or for you.

But for all that, as I said at the start, I think this might be useful or at least interesting for other owners or potential owners and hopefully worth the time it took me to write it up. Feel free to ask questions or share your own experience if you have kept similar records.
 

George

wishes he had a pink frolicing llama under his tag
Thanks for sharing your numbers.

I have 780 points spread out over three resorts (410 BLT, 200 Poly, 170 VGC), which is more than two of us need for twice-yearly WDW trips and a long weekend at DLR thrown in every year and a half or so. I tend to sell points to pay my annual dues, and paid an average of about $85pp for the BLT and VGC contracts when I started buying them in 2011; $150 for Poly. Going rates are at all-time highs now (VGC points are going for $200 and up!), and I could recoup, but for now the selling points and using the others (and iviting friends with us sometimes, getting larger units) is working for us now.
 

DopeyRunr

the jeweled acrobats only perform amazing stunts f
This is very interesting. We only have a single 110 point contract, purchased resale near the market bottom, so our initial outlay was comparably quite low. As a result the savings on three annual passes for our family, which we've purchased outright three times and renewed once, would be a more significant factor in calculating our breakeven, but less relevant in yours.
 

cboyer

Active member
This is interesting.

I've done my own calculations for us, which is what actually keeps talking me out of it, and found that it would be a 13 year payback for us, not far off your 12 years. I didn't take into account opportunity costs like you did. Not sure I want to add that in, the 13 year payback is making me scared to buy in, extending it out longer will almost guarantee I never do.
 

Strangeite

Well-known member
We bought in about the same time, maybe a little before but the dark secret that I don't really want to factor into financial equations is that we have visited WDW far more times than we would normally have because "we had the points."
 

3dadknight

Well-known member
Mark, I like your methodology. Most guestimates I seen over the years put the breaking point at about 10-12 years. This reasoned analysis confirms it for you, at least. Next time I get in the mood do do some Disney Math on a rainy day, I’ll run my numbers. Thanks for the step by step example.
 

TiggerGirl

Well-known member
This is a lot of what I've been looking for so thanks for that! BF and I are talking about taking the tour on our next trip (January) - we listened to a podcast about the resale market and the one point that struck home was that hotel prices are only going up (as as DVC points) so buying sooner is definitely better than later. But at $188/point (direct from DVC) now it already seems like we've missed the time to buy.

We also have a unique situation where we get a CM discount on resorts thanks to a life long friendship with a CM. DVC never made sense for us because dues alone where always more than the rates she could get us. But now we've started staying at the resorts that you can walk places (BC, YC, BWV, BLT, CR and in February RR) and our 7 night stay at the CR, tower, TP view is $3320 which is an amazing deal but also makes you think hmmm what if we paid $3320 towards a contract instead of 7 nights.

But I'm 47 and he's 57 - and while I do see us going to WDW for the foreseeable future we don't really need 50 years - and don't really have anyone to pass it on to.

So then you start thinking resale market since we don't need 50 years - but Disney has kind of taken the fun out of that market haven't they?

If we did own DVC, direct or resale - can we get AP's that are no longer available? aka the $600 ones instead of the $1100 ones :/ We're going to 14 days so I was all ready to get passes this year and then they took them away :(

TIA for anyone's thoughts and thanks again Mark for this info!
 

DopeyRunr

the jeweled acrobats only perform amazing stunts f
Is that $3320 just for the room? That's about $475/night. If that's approx what you'd be spending per night going forward, then DVC might make sense for you as an alternative. You should consider doing a lot of research. Build out a spreadsheet that shows how many points you'd need every year at each resort you're interested in, cost per point direct (if that's the direction you've decided to go) and annual dues per point. For example:

7 nights at Beach Club = 134 points during summer season
Direct price = $225/point
Total upfront payment (approx) = $30,150 (not sure if you can buy *exactly* 134 point contract)
Annual 2020 dues = $6.94/point or $930/year (figure this will increase *at least* 5%, compounded annually, forever)

Additional benefits like getting Florida Resident pricing on annual passes are not guaranteed (and no, you can't buy unavailable tickets just because you own DVC), so it's probably not wise to count on them existing forever in your cost-benefit analysis.

The length of contract doesn't change whether you're buying direct or resale. Each resort's contract expiration is different (https://www.dvcresalemarket.com/buying/dvc-deed-expirations/).

The biggest difference now (aside from the price) between buying direct and resale is the benefits that Disney reserves for people who buy direct.

Do lots of research, gather all the facts, do the math, and like every major purchase, try to make a data-driven decision and minimize emotion. Good luck!
 

George

wishes he had a pink frolicing llama under his tag
Real Eatate/Purchasing 101: It’s better to buy while prices are trending up than when they’re trending down. Ideally, when they’ve just started going up after a low. No one has a crystal ball, of course, to know when rock bottom happened. If you’re confident prices are “only going up” you should be comfortable with buying sooner rather than later, knowing it’ll still take time to “recoup,” that is, if you ever do.
 

TiggerGirl

Well-known member
Thank you both!!

Yes, that's $3320 for just the room. We have always had a tendency to one up ourselves. Our first apartment was one bed, one bath with parking two blocks away. The next was two bed, two bath and parking just outside. The next was two bed, three bath with a two car garage and and a roof deck with ocean views. At Disney we started at CSR and then CR, YC, BC and then a 1 bedroom at BLT.

We don't do anything all year but save for Disney and this time we're going for 14 nights! Yahooo! But these bigger price tags are what is prompting us to consider buying.

If we were to buy at RR, and wanted to sell it in the future...is it correct that whoever buys it can only use it there?
 

George

wishes he had a pink frolicing llama under his tag
Thank you both!!

Yes, that's $3320 for just the room. We have always had a tendency to one up ourselves. Our first apartment was one bed, one bath with parking two blocks away. The next was two bed, two bath and parking just outside. The next was two bed, three bath with a two car garage and and a roof deck with ocean views. At Disney we started at CSR and then CR, YC, BC and then a 1 bedroom at BLT.

We don't do anything all year but save for Disney and this time we're going for 14 nights! Yahooo! But these bigger price tags are what is prompting us to consider buying.

If we were to buy at RR, and wanted to sell it in the future...is it correct that whoever buys it can only use it there?
What’s RR? Riviera? I haven’t been keeping up with all the recent DVC and WDW changes.

Have you considered resale? It’s worked for me, though I did buy a 200-point Poly contract when it was released, but that was admittedly a “vanity” purchase.
 

bnoble

he's right
This is exactly why we never bought. I was looking at a similar payout, maybe a little longer. Instead we bought a non-Disney timeshare (Wyndham) for pennies on the dollar. Interestingly enough, that was just under 13 years ago. We were not convinced that we'd continue to enjoy WDW long enough to make the payoff horizon work out, nor were we sure that we were willing to pay the onsite premium.

We just added two more weeks this month to bring us to a total of five: the original Wyndham points week that we use for stays in that system, plus the occasional exchang; two fixed summer weeks in Wisconsin that we use for exchanges; and the most recent two are floating oceanfront weeks in Kauai that we are going to use ourselves most years. I've been happy with this strategy, and it has worked well for us. In hindsight, WDW had a little more staying power than I was afraid it might, but it has definitely ebbed and flowed.
 

eidsoj42

Member
I considered these things when evaluating a purchase and couldn’t really make it ever work out as a good financial decision. In the end we bought a contract direct from Disney anyway. It was more of an emotional decision than anything and I’m still happy with the purchase. Being at WDW makes my family and me happy, so the promise of future trips makes it worth it to me.
 
Interesting thread. Thanks for sharing your cost experience Mark. My husband & I've been kicking around the idea of buying DVC for a couple years since we've been visiting/spending much more at WDW. The pros/cons go back and forth to the point we've decided to postpone the decision for 18 months or so.

On one hand it doesn't make financial sense because the cost is currently high, long time to recoup (like above mentions), we may not want it in 15 years, and it might compel us into expanding our Disney budgets. Will we travel less elsewhere? Will the next years see better DVC prices/perks? *shrug*

But then... we love WDW! We'll probably visit every year or more over the next 20+ years anyway. We could get all those ticket savings etc. We'd be happy knowing there's always a trip around the corner. We'd share our DVC with family & friends. Eventually the cost will be recouped and we'd celebrate! At WDW.

For now we are holding off until Reflections sales begin to see how the direct and resale markets fare after the many recent changes. It can go either way but I think we have a decent shot at getting a better deal in the next couple years than now. Who knows?
 

bnoble

he's right
I'm not sure it makes sense to try to time the market. When you decide it's something you want, there is no time like the present.
 

TiggerGirl

Well-known member
What’s RR? Riviera? I haven’t been keeping up with all the recent DVC and WDW changes.

Have you considered resale? It’s worked for me, though I did buy a 200-point Poly contract when it was released, but that was admittedly a “vanity” purchase.
Yes, RR is Riviera :)

We're considering resale but I think if you buy resale on the original 11 you can only use them on the original 11.
 
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