Anyone here a DVC owner?

jcodirewolf · Post by **jcodirewolf** » Jul Sun 13, 2008 2:04 pm

99Soulz, The maintenance fee(MF) is not "mainly" property tax. THe MF are also not the smallest part of the DVC cost. Year over year it's the smallest, but it adds up to be the largest part of the cost.

The MF is between about $3-5 per point right now (each DVC location is it's own association having to take care of it's own stuff, so it's got it's own fees.) Of that it's about 20% property tax, about 20% goes into a reserve fund, and about 60% is operating expenses (based on the 2008 statements.) It's never happened (as far as I know) but there can also be a special assessment (normally to cover short falls for large projects.)

Over 50 years you'll pay as much as 10x as you did for the the original, assuming a 3.5% (compounding annually) increase every year (which is reasonable based on the last 15 years.) Depending on how much the increase is every year, you are looking at some like $150k over 50 years for 160 pts (assuming a $100 buy-in.)

The break even point is very hard to figure out. 7 years (the DVC propaganda answer) is only the buy-in and it's based on a using Deluxe Accommodations durning a non-value season.) Once you start adding in MF, plus discounts, plus the difference between staying at the value or moderate resort, plus using things like AAA and traveling off season. You end up having to use a spreadsheet to figure it out, and it all depend on your habits.

For instance, if you always eat out at WDW then the fact that you have a kitchen is worth ~$0 to you. If you buy APs, then the DVC saves you about $100/pass/year. If you look at the room as a place to shower, and keep your stuff the larger rooms tend not be worth a lot to you.

Exchanging points as I said is rarely worth it. When you look at what you pay for a vacation in real $ (1/50th of your buy in on the points plus the MF on those points.) For instance, there is a California vacation (not including airfare) 341 points per adult regular season so you are paying 682pts for 2 adults. $4.71 per point (MF at DAKV) + $2 per point (Buy-in) that is just over $4,500 for (6 nights/7 days.) I know I've gone to Anaheim for a week stayed at the Marriott next to DLR, paid for all my meals and the airfare for < $2,000 per person the second person would be less because the room was already paid for (same rate single or double occupancy.)

So Saratoga Springs Resort (SSR) is sold out now. But Disney has the right of first refusal to "buy" your points back if you want to sell them. So sold out means all the points they had to sell are sold. But you can still buy them though Disney (or resale) you just have to tell DVC how many points you want and get on a wait list (although your guide will try to "upsell" you to the current place DAKV.)

10 trips is a bit short. Since you have to use your points at least every 3 years. One year you can "bank" your points for next year, then the following year you have to use those points, but you can "borrow" next years points. So you can get 3x your annual points every 3rd year. So if you have a "full" 50 year contract (the contracts all expire on the same day, so if you buy a resort after it's been "open" for a year, you are buying a 49 year contract...) you'll have to use your points every 3rd year ~17 times.

I wish it was as simple as you make it out to be but as with many things it's not.

johno

kcarts · Post by **kcarts** » Jul Sun 13, 2008 4:36 pm

You had me at hello.

jcodirewolf · Post by **jcodirewolf** » Jul Sun 13, 2008 5:08 pm

kcarts, you want me explain anything in more detail? Or just pass you a pillow?

johno

kcarts · Post by **kcarts** » Jul Sun 13, 2008 5:28 pm

Unless you got anything on how inflation over the next 50 years will affect this, I think I'm all set! I'm still trying to figure out how Matsuzaka walked five and none of them scored.

jcodirewolf · Post by **jcodirewolf** » Jul Sun 13, 2008 6:11 pm

Yep inflation is the wild card, as well as energy prices. In 15 years it might be unaffordable to travel to FLA from Boston. On the other hand we might all have our electric/solar powered Jetsons cars and able to make the trip for a few dollars for the weekend.

johno

99Soulz · Post by **99Soulz** » Jul Mon 14, 2008 9:07 pm

Ok, JCOD...here's the lesson for the day:

Regarding your calcs, if purchasing 160 points at $100/pt (let me do the math for you) that would be $16,000. Then take your MF (not very magical to use this acronym but since you started it I will follow to not confuse you) at say $4 per point (so 160 x $4) is $640 for year 1. If compounded at 3.5% for next 50 years that comes to roughly $84k all said in total. Add in your $16k buy-in you are at $100k. So, still lots of dough but not so sure how you came in 50% higher.

Now, lets take a moderate resort (al be it you can pick All-Stars which is not the same experience so lets split the difference and go in the middle). That would cost you $150 per night, or $1,050 for a week. Now, compound that with same inflation rate of 3.5% over 50 years - that gets you a total of just over $143k for the same period.

I guess you are not a DVC member based on your response (or math), are you?

jcodirewolf · Post by **jcodirewolf** » Jul Mon 14, 2008 9:54 pm

Read above we are infact DAKV DVC owners.

You are correct I got some numbers mixed up, My 50 year Maintenance Fee numbers where for 200 points. Also I let people know what MF was the first place I used it, and if you read the DVC boards people use MF all the time. I recycled some numbers from another post I made a while ago (which was for a 200 pt buy in. Oops, but at least someone read my post

At anyrate the basic premiss is still correct. You can't just can it and say stay 7 weeks at Disney and you'll break even. Also I'm not assuming inflation is 3.5% Annually, I'm saying over the last 15 years DVD has raised the MF by about that amount each year. For OKW 1991 = 2.51$/pt; 2008 = 4.56$/pt, 17 years, which assuming my calculator is right., that is just over 3.5%. I believe since then the rate of inflation was below 3.5% since 1991.

BTW the MF is capped. It's capped at 15% without owner approval.

johno

99Soulz · Post by **99Soulz** » Jul Tue 15, 2008 6:28 am

Ok, I am with you. And agree completely that the MF are the largest portion of what you are paying out over the lifetime of the deed. But, when talking about timeshares, even though we don't like calling it that as much as Disney, you calculate breakeven in terms of initial buy-in. The thought is that once you breakeven after the $16k, the MFs will always outweigh what you would spend on an annual basis for a staying a week anywhere, not just a Disney hotel/resort.

Some exchanging is not worth it, in fact exchanging at ANY other Disney resort will not be worth it as you stated but there are hundreds of hotels/condos where you can use points and they are much more comparable. Such as the Hawaii condos, hotels in Vail or London, etc.

Regarding my point on eating meals, eating at the various options in WDW is one of the best parts of the stays there so I did not mean to eat every meal in. The point I was trying to make was that we can wake up and eat breakfast in the villa and maybe a lunch here and there while taking a mid-day break. Not paying for say 7 or 8 meals during the week of 21 meals for a family of 4 will almost pay for the MF on its own.

As someone else stated, may have been you, there is no fine print but you do need to weigh everything and not just look at the total outlay over the 50 year period. If you do in fact add up a weeks vacation for that same 50 year period you will far outpay over DVC. And really take the points elsewhere every other year or so, the concierge service can find anything in your point range and will not send you somewhere less than Disney quality.

We have our points scattered, from OKW from 15 years ago, to BW, SS, and Vero Beach.

jcodirewolf · Post by **jcodirewolf** » Jul Tue 15, 2008 9:00 am

Oh I agree it's a timeshare. Although I disagree working out the break-even point for the buy-in is all you have to worry about. I think you have to take that in account, just like when you buy a house, you need to account for the property taxes, association fees and the heating and water and landscaping... It's a commitment, you have to make, you can't in 2 years decide to not take a vacation and "save" the MF.

I worry that people who shouldn't be in DVC are getting in because they don't "think it though" how much this is going to end up costing them. $640 is a good chunk of a mortgage payment (or even a payment, just not in the Boston area.) If people buy DVC and can't afford the payments then DVD has to dip into the reserves, and it could be a case where the other members end up holding the bag.

If you don't think it will happen, my wife was on a condo board for years. And she still follows the associations news, multiple condo associations have gone under in NE (and I heard a report on NPR about it happening in the Miami area) this year already, because of just that, people who can't afford to pay their monthly payment AND the association fee. The associations have reserves but often times they aren't enough to cover the shortfall of so many members not paying at once.

Now I'm not saying this IS happening to any DVC association but I'm making the point that it does happen, and if people don't go into DVC with there eyes open to the total costs it could happen. At current rates it would only take 1 in 5 points not being paid for reserves not to be paid into.

I've not found a single exchange (outside of DVC to DVC) which seemed reasonable to me. I admit that I've not looked at EVERY offering, but I've looked at a lot of them (I went though every european offering for this Oct.) Even when you call it $6/pt (if you want to talk fair market value, it's more like $10/pt, but I'm willing to say the hassle of selling points may not be worth the extra $4/pt.)

As for eating in, you have a good idea what the kitchen is worth to you (apparently about $20/person-day = $640/8 days/4 persons) But there have been times when outside of the fridge ($10/day at a value resort) we've not used the kitchen (which believe it or not I used when I figured out our trip "costs" before buying DVC.)

Bottom line I think we are pretty much on the same page. But I think the analysis of buy DVC is harder than most people think. And this all came out (and I'd have to go back and look who said what) of people saying it pays for it self in 7 trips, and MF are mostly property taxes. Neither of those statements are what I would call true. The math isn't hard, but I suspect that for a lot of people it tells the truth that DVC isn't a good match for them.

johno

JWG · Post by **JWG** » Jul Tue 15, 2008 10:02 am

DVC like any timeshare is a luxury. The detailed analysis on "breakeven" is somewhat moot in that you're discussing your "entertainment" dollars and there is no "real" breakeven. You spend your discretionary income in a manner that makes you happy.

If you're a big Disney fan who wants to travel to Disney frequently, DVC may or may not be the right answer. You're guaranteed deluxe accommodations for every stay - even in a studio. You forego package deals and special savings offers (such a free dining and the now less frequent heavily discount offers for rooms of 20-50%).

No matter what, it has to be viewed as a luxury that you should only do if you can afford it. I get really nervous about people who finance their timeshare purchase and end up paying 10-18% interest on such a discretionary purchase. If you finance your purchase, you are saving nothing and I'm not one who thinkgs financing non necessary items is a good idea.

All of that said - I'd LOVE to own DVC.

Chernabog · Post by **Chernabog** » Jul Tue 15, 2008 10:10 am

I think icodirewolf and 99Soulz should have a steel cage match! Winner decides if DVC is worth the money, if the MF will sneak up on ya and 'get cha', and when the break even point is.

agingerbugg · Post by **agingerbugg** » Jul Tue 15, 2008 11:05 am

Basically it all comes down to the old adage, "if you have to ask the price, you can't afford it." In essence, if you have to finance the purchase or even think about affording it, you can't. I know this is not what DVC wants to hear, but it is the truth. People nowadays spend way too much money on things they can't afford. My grandfather always said there are only two things you should go in debt: a house and a car.

mwehttam · Post by **mwehttam** » Jul Tue 15, 2008 11:40 am

I don't agree with jcodirewolf on some of his points. If I as a member do not pay my Dues, then DVC will forclose on my contract, take it and resell it. Any points that DVC has in unsold inventory they pay the Dues.
Same with Condos here where I live in NY. I belonged to my condo board before we moved and if anyone did not pay their dues we would bring legal in and eventually foreclose on the condo and resell it.

jcodirewolf · Post by **jcodirewolf** » Jul Tue 15, 2008 11:41 am

JWG wrote:DVC like any timeshare is a luxury. The detailed analysis on "breakeven" is somewhat moot in that you're discussing your "entertainment" dollars and there is no "real" breakeven. You spend your discretionary income in a manner that makes you happy.
.

That is the core of the problem. If says "I dream/dreamed of owning a condo at WDW" your statement is true, because you just want it. Once people start talking about how it's stretching their vacation dollar, then you need math to back it up.

So when someone posts using phrases like "Getting the most out of your entertainment dollar" and "break-even" with respect to DVC. I start posting, let me know how you figured that out.

Doing the math isn't hard, but it's very individual and the person has to do it with their brain not the heart. Not to start something else, but I also argue often that Disney Magical Express (DME) isn't free, you are simply trading some of your vacation time (which you can assign a dollar value to) for a ride to the parks. But free and no additional charge are different things.

johno

jcodirewolf · Post by **jcodirewolf** » Jul Tue 15, 2008 12:13 pm

mwehttam wrote:I don't agree with jcodirewolf on some of his points. If I as a member do not pay my Dues, then DVC will forclose on my contract, take it and resell it. Any points that DVC has in unsold inventory they pay the Dues.
Same with Condos here where I live in NY. I belonged to my condo board before we moved and if anyone did not pay their dues we would bring legal in and eventually foreclose on the condo and resell it.

Okay first of all I did say it's not a problem with DVC at the moment but it does happen.

The issue is a slow economy/soft housing market, and cash flow and the time/cost to foreclose. It takes sort of a perfect storm for it to happen, which is where we happen to be. Because first people have to get behind, then foreclosure takes some time (still no dues are paid if it's condo board doing it) then the property is seized. Once the bank owns it they are required to pay the dues. But it takes a while, and if you get enough people the association gets cash strapped, and might have to cutback or stop things it had been doing, which can cause the value to drop, and you get into a death spiral.

That said, yes they Disney, and DVD are vested in keeping everything perfect at the DVcs, and I'm sure since Disney (I think it's the resorts part of the company) is a large stake holder in DVD they won't let it happen. But that doesn't mean that DVD/Board can't come back to the owners and ask for a special assessment to make up for a short fall, which the Disney would have to pay for the share of points they control, which is substantial (I'd have to look at my Docs, but there is a special rule in there that Disney the corporation is not restrict in owning points or they have some huge limit like 50% of all points. Mortals like us can only own like 2k pts at a resort and 5k pts at all resorts.)

My understanding is that you are correct at least DVD has a place to "park" unsold points this is a luxury that normal condos and even a lot of timeshares don't have. And that is with the resorts, who uses them for overflow bookings, and they sell them as cash reservations. So this makes it a bit safer than a normal timeshare.

johno

FYI DVD is Disney Vacation Developments, they are the owners/managers of the Disney Vacation Club.