Talking myself out of DVC...help

[lmhall2000]

Tonight I saw a contract that appealed to me, we are saving cash and should have enough by December. I thought “why not put in a low bid offer just to see if it gets accepted”- I’ve been following this contact for a month and it’s reduced twice.
Maybe it’ll be so low it gets rejected by sellers, passed by sellers, the. Taken up..so, then I started crunching numbers. NO!!! Why??

we mostly will use the 2 BR- not studios. Seems studios are a great way to use your points and push your value up..but they won’t work for us.

looking at around 200 points- keeping contract around 20years- we would spend 26k on contract and 47k on maintenance fees (more because I didn’t account for increases)..so, really looking at 75k-100k just on lodging (and maybe parking)...I’ve always scored incredible deals...just returned from our first trip to Hawaii- cost less than $900 for 5 nights staying at Aulani and Royal Hawaiian...got a 10 night Med on Magic cruise for 7 people for under 4k...we always travel September or very off season to score these...I could plan 10 great trips the next 20 years including all expenses for that amount of money...I’m getting really cold feet seeing that reality. If we do sell it in 20 years-that helps allay my jitters... then I think we should buy BLT or Aulani just to cut down that long term maintenance fee (subsidized Aulani) because 2 BR availability seems pretty open at 7 months.
Any other tips on not over-spending?? Aaa agh! I figured we need 200-220 points...was looking at CC- but higher maintenance fees seems silly when availability is open on those across the board.

 

[The Jackal]

Tonight I saw a contract that appealed to me, we are saving cash and should have enough by December. I thought “why not put in a low bid offer just to see if it gets accepted”- I’ve been following this contact for a month and it’s reduced twice.
Maybe it’ll be so low it gets rejected by sellers, passed by sellers, the. Taken up..so, then I started crunching numbers. NO!!! Why??

we mostly will use the 2 BR- not studios. Seems studios are a great way to use your points and push your value up..but they won’t work for us.

looking at around 200 points- keeping contract around 20years- we would spend 26k on contract and 47k on maintenance fees (more because I didn’t account for increases)..so, really looking at 75k-100k just on lodging (and maybe parking)...I’ve always scored incredible deals...just returned from our first trip to Hawaii- cost less than $900 for 5 nights staying at Aulani and Royal Hawaiian...got a 10 night Med on Magic cruise for 7 people for under 4k...we always travel September or very off season to score these...I could plan 10 great trips the next 20 years including all expenses for that amount of money...I’m getting really cold feet seeing that reality. If we do sell it in 20 years-that helps allay my jitters... then I think we should buy BLT or Aulani just to cut down that long term maintenance fee (subsidized Aulani) because 2 BR availability seems pretty open at 7 months.
Any other tips on not over-spending?? Aaa agh! I figured we need 200-220 points...was looking at CC- but higher maintenance fees seems silly when availability is open on those across the board.

DVC is not for everyone. One can almost always find a cheaper accommodations at or near WDW. You can rent houses near WDW for less, stay at the Value resorts for less. DVC in the long run will be way cheaper than staying at the Deluxe resorts and you’ll be in just about as nice of a room. DVC rooms can get a little more worn, due to high occupancy and longer times between refurbishments. The new SSR rooms are very nice. You have to want to go to Disney for years for DVC to make sense, some people like to go to different places every year. Not sure if this helps. Good luck. We just stayed at VGF in a 2 bedroom for a week. There is no way I would pay the rack rate for that room for a vacation. The room was beautiful, DVC made it affordable.

 

[eMoneyBug]

Put in your low bid and ask seller to pay closing as well. See where it goes. Maybe they say No with no counter, that will ease your current feelings

 

[we"reofftoneverland]

I think dvc is more of an emotional than a financial thing. We got a great deal on resale, but ultimately I don’t think we are saving money. We got great deals on the open market previously too. And I think there will always be great deals out there. I don’t think dvc is a bad deal, but soon after we bought the member fees went up much more than we thought they would— and much more than they had ever historically. It made it less of a deal. I can only imagine how annoyed I would be if we had not purchased resale. If the member fees continue to go up as they did last year, we will probably sell after a couple of years. The member fees can dramatically change the economics.

 

[RaymOOOnd]

not worth it anymore
remember that it's artificial, the idea that you "own" a piece of Disney World
What you're doing with DVC is pre-paying for vacations at a specific resort, in a little separate section of each resort designated for those who pre-pay; areas which are less well-maintained than the rest of the resort and requiring >7 months notice (and in some cases 11 months) just to secure your spot.

It used to be QUITE worth it, but now it almost seems like a bubble effect -- people thinking it can go nowhere but up, willing to pay anything, attached emotionally, forgetting the fundamentals or engaging in weird tangential thinking to justify the absurd prices.

Check in once or twice per year to see if the bubble pops (i.e. I'd buy Riviera for $75pp or VGF for $120pp)

The antidotes for me have been to remember that
1. I work REALLY hard for my money, as I assume many on here do as well, and
2. The idea that these purchases somehow give me some permanent connection to a resort, to help me feel all attached to Disney during the 48 weeks per year that I'm not on vacation (sad phenomenon, really), is a mirage. In fact you're tied most closely to Disney World when you simply have more cash in your bank account, because you can then book a room, any resort, at short notice.

 

[Sandisw]

DVC works well for those that want to use it at the DVC resorts, if you are a last minute traveler and can score some of those last minute deals to other places, then DVC may be too confining for you.

 

[Jenniebee]

It works if you want a timeshare, so you can go on vacation every year to WDW, and maybe some other places.

It can save you some money over the same vacations booked as cash stays. But it's not a "deal", or a discount like a promo offer. Remember the house always wins, and they would not be building more DVC resorts year after year if this was not super lucrative for them.

I am doing this because I have been going to WDW at least every other year, spending $5-$7k annually on my vacations. So for me I think it's a great idea. I have been enjoying WDW for over 35 years, I know I won't tire of it, and I want to keep going there for many years to come. I am buying and planning on running out the clock on it. I did some number crunching on how long it may take me to break even, and what the MF's may be once they are all over $10 (will happen sooner than later) but I did not get much more granular than that. You may be putting it under a microscope too much? Only you know if it's a good idea for you.

 

[The Jackal]

I think dvc is more of an emotional than a financial thing. We got a great deal on resale, but ultimately I don’t think we are saving money. We got great deals on the open market previously too. And I think there will always be great deals out there. I don’t think dvc is a bad deal, but soon after we bought the member fees went up much more than we thought they would— and much more than they had ever historically. It made it less of a deal. I can only imagine how annoyed I would be if we had not purchased resale. If the member fees continue to go up as they did last year, we will probably sell after a couple of years. The member fees can dramatically change the economics.

The MF’s went up a lot to pay the cast members better. They will probably go up more than avg this year too. Their wages are going from around $10 hour to $15 hour by 2021 I think. But last year was the largest increase. This years ~9% increase will probably never happen again. Plus regular hotel room prices increased too, so those deals cost more now too. Just remember if our costs go up, everyone’s costs go up.

 

[lmhall2000]

DVC works well for those that want to use it at the DVC resorts, if you are a last minute traveler and can score some of those last minute deals to other places, then DVC may be too confining for you.

you all make awesome points!! My husband will be so sad- he really ‘wanted’ this because he is looking at the future trips with grands (we don’t have any yet), I’ll keep watching the market, talk to the kids about their interest in using it the last 30 years- I think that’s really the only way it makes sense- if you keep it 50 years and go at least once a year, being practical- with 80-100k will buy us amazing vacations around the world and will keep scoring deals...surely that $49 one way SW gave to Hawaii will repeat So, Ill probably plan a trip to WDW renting points for just me and my husband to give him that fix. It’s been 2 weeks since we left Aulani- I guess that’s our “realty bites” time clock. Or, just buy a contract for 120 points and let that be his mid-life crisis splurge

 

[Sandisw]

you all make awesome points!! My husband will be so sad- he really ‘wanted’ this because he is looking at the future trips with grands (we don’t have any yet), I’ll keep watching the market, talk to the kids about their interest in using it the last 30 years- I think that’s really the only way it makes sense- if you keep it 50 years and go at least once a year, being practical- with 80-100k will buy us amazing vacations around the world and will keep scoring deals...surely that $49 one way SW gave to Hawaii will repeat So, Ill probably plan a trip to WDW renting points for just me and my husband to give him that fix. It’s been 2 weeks since we left Aulani- I guess that’s our “realty bites” time clock. Or, just buy a contract for 120 points and let that be his mid-life crisis splurge

Sounds like you have a plan. It really is something that needs thought. We already knew our kids love to visit WDW so making the investment for long term made sense.l..not to mention that I love it and now that I am retired, plan to go a lot..probably 8 times a year, even if it’s solo!

The other option is to buy a smaller contract to see how it works vs. the larger one. Could give you the best of both worlds!

 

[we"reofftoneverland]

The MF’s went up a lot to pay the cast members better. They will probably go up more than avg this year too. Their wages are going from around $10 hour to $15 hour by 2021 I think. But last year was the largest increase. This years ~9% increase will probably never happen again. Plus regular hotel room prices increased too, so those deals cost more now too. Just remember if our costs go up, everyone’s costs go up.

Yeah, I know, but it doesn’t matter to me why it went up, just that it went up. They can always come up with reasons to make it go up. And I expected it to go up, but not at that rate. I expected it to keep to its historical pattern and it did not. So now, I realize the sky is the limit on member fees. And we definitely would not have purchased if we had thought that would be the case. And watching what is going on with the skyliner at Riviera and how high their fees are— due to transportation costs btw, not cast member wages, not that I care what the driver is, but just pointing that out- I am quite resigned to the idea that they will bring the less than appealing non air conditioned skyliner to other resorts and eventually hit us at our resort and I too will be paying to ferry anyone who wants to get on that thing (wdw guest or not) all over the property. So, yes, I think the new management has the mentality that dvc has not been squeezed enough and that there is much more money to be made off of existing and future members. As I said I do not think it is a bad deal, but I do not think it is a deal.

 

[CanadaDisney05]

And I expected it to go up, but not at that rate. I expected it to keep to its historical pattern and it did not. So now, I realize the sky is the limit on member fees.

Maintenance fees, just like the stock market, real estate, or any other type of inflation are long term averages. They are not linear progressions.

If the long term average says that fees should go up 4% per year, that does not mean it will go up every year by exactly 4%. It just means that over the long run, the increases will AVERAGE their historical rates. Look at these two progressions.

1 x 1.04 = 1.04 (4% increase)
1.04 x 1.04 = 1.0816 (4% increase)
1.0816 x 1.04 = 1.125 (4% increase)

1 x 1.00 = 1.00 (0% increase)
1.00 x 1.02 = 1.02 (2% increase)
1.02 x 1.1028 = 1.125 (10.28% increase)

Both scenarios end with maintenance fees of 1.125 in year 3. Both average a 4% long term increase. In fact, due to the "sequence of returns", you actually pay less overall maintenance fees in the second scenario even though it had by far the largest increase in the last year.

DVC maintenance fees just had their highest all time increase and likely will again next year two. But there is nothing to suggest that this trend will continue forever. Suggesting that is like suggesting that you should have sold all your investments in 2008 after the crash. All time records are records for a reason. They arent likely to be broken year after year after year unless there is a fundemental reason that suggest that is the case

 

[we"reofftoneverland]

Maintenance fees, just like the stock market, real estate, or any other type of inflation are long term averages. They are not linear progressions.

If the long term average says that fees should go up 4% per year, that does not mean it will go up every year by exactly 4%. It just means that over the long run, the increases will AVERAGE their historical rates. Look at these two progressions.

1 x 1.04 = 1.04 (4% increase)
1.04 x 1.04 = 1.0816 (4% increase)
1.0816 x 1.04 = 1.125 (4% increase)

1 x 1.00 = 1.00 (0% increase)
1.00 x 1.02 = 1.02 (2% increase)
1.02 x 1.1028 = 1.125 (10.28% increase)

Both scenarios end with maintenance fees of 1.125 in year 3. Both average a 4% long term increase. In fact, due to the "sequence of returns", you actually pay less overall maintenance fees in the second scenario even though it had by far the largest increase in the last year.

DVC maintenance fees just had their highest all time increase and likely will again next year two. But there is nothing to suggest that this trend will continue forever. Suggesting that is like suggesting that you should have sold all your investments in 2008 after the crash. All time records are records for a reason. They arent likely to be broken year after year after year unless there is a fundemental reason that suggest that is the case

There is also nothing to suggest that large increases will not be the new norm. We previously took comfort in the historical trajectory but not anymore, not since last year’s MF increases. Disney has also changed the business model more generally over the last year. Time will tell:

 

[CanadaDisney05]

There is also nothing to suggest that large increases will not be the new norm. We previously took comfort in the historical trajectory but not anymore, not since last year’s MF increases.

Well there is. The reason for last year's (and most likely this years) big increase is because of the large jump in minimum wage. This is not sonething that should be repeated indefinitely.

Disney has also changed the business model more generally over the last year. Time will tell:

MF aren't revenue for Disney. Its simply the costs of running the resorts that we own. (Yes there's some funny accouting for things like transportation, but thewe things do go through audit by an independent firm). Its like owning a house. Just because you buy a house doesnt mean your done paying. You still have to replace the roof and mow the lawn. If the prices for those services go up, so do your expenses

 

[bakerworld]

We joined DVC to stay in a location where we could walk to a park and still pay a moderate cost for the room

 

[Deb & Bill]

Don't buy for grandkids that don't even exist yet. Buy for what you need/want now. They may all want to go to Universal instead since Disney will be so politically correct.

And, remember, you make an offer too low and Disney sweeps it up with ROFR if you can get the owner to accept your low offer.

 

[we"reofftoneverland]

Well there is. The reason for last year's (and most likely this years) big increase is because of the large jump in minimum wage. This is not sonething that should be repeated indefinitely.



MF aren't revenue for Disney. Its simply the costs of running the resorts that we own. (Yes there's some funny accouting for things like transportation, but thewe things do go through audit by an independent firm). Its like owning a house. Just because you buy a house doesnt mean your done paying. You still have to replace the roof and mow the lawn. If the prices for those services go up, so do your expenses

I understand what you are saying but I just don’t see it as solely tied to wage increases. If that were the case, I don’t think RIV member fees would be so high. I do think Disney is trying to see how far they can push members and also what they can get members to pay for under the guise of member fees. I suspect there will be the occasional year when fees won’t go up quite as much, but I do think dvc member fees are on a different trajectory than they once were. I hope you are right by the way, but I do not see what happened with Member fees last year as an outlier but instead as a departure.

 

[CanadaDisney05]

I understand what you are saying but I just don’t see it as solely tied to wage increases. If that were the case, I don’t think RIV member fees would be so high. I do think Disney is trying to see how far they can push members and also what they can get members to pay for under the guise of member fees. I suspect there will be the occasional year when fees won’t go up quite as much, but I do think dvc member fees are on a different trajectory than they once were. I hope you are right by the way, but I do not see what happened with Member fees last year as an outlier but instead as a departure.

I can't say your wrong as I cannot predict the future, but I think its been pointed out several times on these forums before that new resorts generally start out with high fees, but see very limited increases in the first few years. They basically build in a buffer because they cannot accurately predict the costs. I think that since Riviera is the first DVC only resort since SSR, the buffer had to be a bit larger than normal.

Remember, Disney doesn't have free reigm when it comes to maintenance fees. They do go through and independent audit.

 

[lmhall2000]

Don't buy for grandkids that don't even exist yet. Buy for what you need/want now. They may all want to go to Universal instead since Disney will be so politically correct.

And, remember, you make an offer too low and Disney sweeps it up with ROFR if you can get the owner to accept your low offer.

that’s kind of my point, if Disney take FROR it helps the seller- figure I’m helping them and I’m trying to test the bottom the market will bear. I, personally, think the market will be flooded with contracts the next 8-12 weeks...Disney won’t increase their takes by 300% to match the increase of sellers...I think I got too excited on some low bids going through- I talked myself into more points...80% of the reason we want to buy DVC is to offer an opportunity for the kids to get away without a lot of the cost. Our kids are begging us to do it and say they’ll definitely take it over- but you do need to think ahead...if we only thought of ourselves- we’d buy 50 points and stay 3 days a year- definitely not worth investing in DVC for that scenario.

 

[_auroraborealis_]

Labor costs impact almost every part of resort ops. Desk? Housecleaning? Transpo? MS? Maintenance maybe least because they were the best paid of the lot mentioned here.