MamaBear12
Mouseketeer
- Joined
- Jul 19, 2016
Thank you! Not that we would rent long-term if we didn't buy (probably a mix of renting and moderate resorts), but it does give me some perspective.Still year 10 (DVC is $20707 vs rental $21011)
Thank you! Not that we would rent long-term if we didn't buy (probably a mix of renting and moderate resorts), but it does give me some perspective.Still year 10 (DVC is $20707 vs rental $21011)
This makes sense. I personally use 4.5% earnings on the entire purchase amount (figuring half at short term and half at long term) but I also wouldn't use a different increase for rental vs dues. I doubt any of those changes would affect the term significantly and they likely would even out (didn't run the numbers today). That assumes one made the same exact choices owning vs renting. A studio or 2 BR comparison will often be far more favorable than a 1 BR or 3 BR comparison and is one of the situations where one likely needs to look at it both from the direction of what they would have spent without looking at DVC rooms.No. At 4% interest, it takes about 3 years longer.
Edit to add: FWIW, under these specific conditions, by the time the contract expires, this investment angle actually favors DVC ownership. Most people don't consider that if you are allowed to invest your initial buy in, then you are also allowed to invest your "savings" from owning DVC at some point. If the spread between cost of ownership and cost of cash rental is large enough, DVC ownership will eventually overcome the initial deficit and become positive in that regard as well.
This was actually one of the big motivators for me to do DVC. In 2014, I had a run of a bunch of extra freelance income, and made about $20,000 of "extra" money. My husband is a major saver, and I am too -- but not to his degree. I decided to use the $ for vacations, because prior to that, he wasn't willing to pay for them.Same here, while owning DVC has saved us some money on our room of equal accommodations, it has caused us to take more Disney vacations and spend much more money overall then prior to our DVC ownership. That can be a good thing or a bad thing depending on the individual.
Bill
Thank you for all the input! I spent last night building my very own spread sheet to see when we would break even based on changes to purchase price, MF rate of increase, renting rate increase, and lost interest from investing the money (I did account for spending a percent of the invested principal each year on vacations though, because we're going to vacation annually so the money is going to come from somewhere...if not from that pot then from other money that would have been invested if not spent on vacations).
So next step, building a comparison to WDW hotel accommodations into my spreadsheet. What are reasonable room rates for a standard moderate hotel room (sleeps 4) and moderate or deluxe that would sleep 8-9 (comparable to dvc 2 bedroom)? Does anyone have this information handy from their own spread sheets, or is there a particular site that would give me a good general idea? What's a reasonable assumption for hotel price increase over time? Thanks again!
Edit to add: For the investing the principal thing, the way I did it is to take the DVC buy in as the initial principal. Then each year I added the interest at whatever % you choose, added the annual dues for that year, then subtracted the cash cost of the vacation for the year, which gives you the new principal for the following year. This does what you mentioned by taking into account that I'm spending some of my principal each year on a vacation.
That's exactly what I did as well! With that, my principal/investment is running out between 13 and 16 years (depending on where I set purchase price and rental per point cost). I used the cash cost of dvc rental for vacation cost, but I'll probably do another where I subtract the hotel cost once I have that all figured out.
Is it reasonable to factor selling into the equation? I know there's uncertainty, but it seems like DVC resale has a history of being quite stable (except the recent recession..which even then it was still selling, just for less per point). With that, even if we sold after 10 years, we would still break even, correct? (assuming we can get at least half of our initial investment back...though with inflation and rising direct prices, we would likely get more and come out with more than our initial investment back). I can certainly see us owning beyond the 10-year mark, but I can't say with certainty whether our kids will still like going in their late teens/early 20s.
What I did for that was just go to the Disney website and price out a vacation, then compare it with the appropriate number of points based on the points chart based on the date. If you want to be super hardcore about it, you can do several different times throughout the year.
This site is a good source for room rates at Disney.Thank you for all the input! I spent last night building my very own spread sheet to see when we would break even based on changes to purchase price, MF rate of increase, renting rate increase, and lost interest from investing the money (I did account for spending a percent of the invested principal each year on vacations though, because we're going to vacation annually so the money is going to come from somewhere...if not from that pot then from other money that would have been invested if not spent on vacations).
So next step, building a comparison to WDW hotel accommodations into my spreadsheet. What are reasonable room rates for a standard moderate hotel room (sleeps 4) and moderate or deluxe that would sleep 8-9 (comparable to dvc 2 bedroom)? Does anyone have this information handy from their own spread sheets, or is there a particular site that would give me a good general idea? What's a reasonable assumption for hotel price increase over time? Thanks again!
So, I already have a spreadsheet with likely WDW vacations we would take and DVC points needed for each trip over the next 12 years. I found the current discounted prices of Port Orleans- Riverside for June and Dec when we would likely travel, and discounted room prices for Ft. Wilderness cabins (where we would probably stay if bringing family...only sleeps 6 compared to 8-9 with villas, but if only my parents travel with us, that would be our moderate). So, to calculate future room costs for each vacation, by how much would you increase hotel prices annually? 3%? 4%? More? Less?
Thanks so much!
So, I already have a spreadsheet with likely WDW vacations we would take and DVC points needed for each trip over the next 12 years. I found the current discounted prices of Port Orleans- Riverside for June and Dec when we would likely travel, and discounted room prices for Ft. Wilderness cabins (where we would probably stay if bringing family...only sleeps 6 compared to 8-9 with villas, but if only my parents travel with us, that would be our moderate). So, to calculate future room costs for each vacation, by how much would you increase hotel prices annually? 3%? 4%? More? Less?
Thanks so much!
It depends. DVC rooms and resorts are nicer but not that much nicer, certainly compared from to to bottom. As for a valid comparison, IMO there are only 2, what one would have paid without owning and renting points and one should consider both IMO.Using moderates as a comparison is not even close to fair though. That's like comparing economy class to first class on airfare. Two completely different service levels and amenities.
Last year I did a split stay in regular hotel rooms at POR and the grand Floridian. POR was around $230 a night with taxes and GF ran about $600 with taxes (it was club level, which was about $80 more a night).
The difference between the two resorts was massive. Everything about GF is nicer. It's the reason we joined DVC.
Rooms at BCV and BWV typically go for around $450 a night.
From my rough calculations (20% off rack with 3% annual increase in hotel price), break-even point if we stay in the "cheap moderates" (Caribbean Beach/Coronado when it's just the 4 of us and Ft. Wilderness Cabins with 6) is like 18/20 years...I didn't get that far. But if I swap out Ft. Wilderness Cabins for a Jr. Suite at the Coronado, break-even is more like 10-12 years. Does that seem about right?
That sounds long, are you comparing a studio to a regular room?From my rough calculations (20% off rack with 3% annual increase in hotel price), break-even point if we stay in the "cheap moderates" (Caribbean Beach/Coronado when it's just the 4 of us and Ft. Wilderness Cabins with 6) is like 18/20 years...I didn't get that far. But if I swap out Ft. Wilderness Cabins for a Jr. Suite at the Coronado, break-even is more like 10-12 years. Does that seem about right?
If you are using rough calculations, then you probably aren't factoring time value of money - the amount of money you'd make putting your initial investment in DVC into a S&P 500 fund and letting it sit there. g
From my rough calculations (20% off rack with 3% annual increase in hotel price), break-even point if we stay in the "cheap moderates" (Caribbean Beach/Coronado when it's just the 4 of us and Ft. Wilderness Cabins with 6) is like 18/20 years...I didn't get that far. But if I swap out Ft. Wilderness Cabins for a Jr. Suite at the Coronado, break-even is more like 10-12 years. Does that seem about right?
Yes. Studio to regular room. Jr suite or ft. Wilderness cabin for when we would travel with 6. I realize it's not an equal comparison, but I wanted to see how the "deluxe for the price of a moderate" DVC claim bore out. If you stay at the lower end of moderates (hotel rooms and ft. Wilderness cabins), DVC definitely costs more. But if you switch every second or third trip to a jr. Suite (sleeps 6 with 2 baths), it appears you can come out ahead with DVC (at least by my calculations).That sounds long, are you comparing a studio to a regular room?