DVC Analysis


#1

Hello,

I am trying to analyze a hypothesis that I have which is this… Can I earn a better return on investment over the life of the purchase for DVC points vs. a traditional investment (like a CD). I was thinking of buying an additional 200 points (out of savings) with the sole purpose of renting them out every year. Is anyone interested in discussing this idea offline. It would involve e-mailing some spreadsheets back and forth for discussion and crunching some numbers. I need a fresh set of eyes on this. Let me know. :dry:


#2

I saw another guy that does a similar thing. He rents half of his points which pays for all of his annual costs.

I’m sort of thinking about the same thing. Without thinking about the opportunity cost of money, if you just take the cost of the points divided by the term, it’s a reasonable way to do it.

Another way to look at it is it’s just another way to “prepay” your vacations for many years to come.

Don’t think TOO hard about it. Vacations just don’t make financial sense. :biggrin:


#3

Stan, I would be happy to help, but I am going out of town next week, so I am not sure how much time I will have to help you until I come back.

I looked at doing the same thing. You used to be able to sell 5 nights in a studio at Old Key West during the cheap season (total cost was 40 points) on ebay for about $600 - $700 dollars. Then the discounts started happening, and that has gone down to about $400 or less.

My personaly opinion is that if you can only get $10 per point, you may be able to do better than a CD, but I just don’t think it is worth the risk/work. If you can get closer to $12, then ya, worth it. Of course, that is without looking at numbers. If you could have purchased 5 years ago, then you could do it easy.


#4

Not sure if it will help, but I’ve read several analyses over on mouseplanet.com discussing DVC vs. other investments.


#5

Actually, I have been going through the same exercise. These are my thoughts.

There is a raging debate with Buy vs. Rent at the “other” site. The arguments come out 50/50 on both sides of the equation with accountants etc doing extensive analysis and each telling the other that they are wrong!!

I suspect that this is by design. Disney is very smart and took years to jump on the Timeshare bandwagon. Disney, I am sure has studied this and made sure that they make all the money!! It is something never to forget. You will not outsmart Disney!!

In terms of yield, as an investment vehicle vs CD’s, it about break even, except that you are locked in with a lot of money tied up in something that can be a pain to get rid of. Assuming that you can sell your points for $10 per point. For now, that is pretty standard but I have seen points bought and sold for less or more, depending on the circumstances.

Also, Disney can, in the future, raise the maintanence rates and that will cut into any return you might get.

Having said all that, I think that it is a great way to actually vacation in Disney. It is cheaper than any hotel in Disney and you get almost all the benefits of staying in a Disney hotel. If used in that way, it is the best bargain around.

I have bought several hundred points and am renting a lot of points right now as that will pay for the current maintanence bills and I can use it for a large family vacation/reunion which I am planning in 2007.

The best way to utilize points is to assume that you have already spent the money for approx. 8-10 years worth of vacations. You are getting the rest of it (approx. 40 yrs worth) for free!!!

Sell some of them to pay the maintanence fees, then you are really spending nothing out of pocket every year.

If you look at it long term, I can’t think of a better way to spend/save money!!

In summary, I doubt that anyone will “make money” owning points. However, long term, it is the most cost effective way to enjoy the next 10-20 years of vacations.

I hope this helps.


#6

GBlast - Welcome to DC!


#7

First of all - Welcome to DC!

I just wanted to say I agree 100% with your post! Especially the two points above. "Pixie Dust"aside, Disney is a very savvy corporation and money is their first concern. Our points are at Vero Beach and the maintenance fee has already been raised - due to beach erosion and the hurricanes. Something we didn’t even think of when we bought. (we did get a very good deal, so I’m not complaining - but it’s always best to read EVERYTHING and cover all bases, before making the decision to buy).


#8

Aye aye aye, this is all making my head spin. I hope it works out for you but I’ll stick with the pixie dust and use all my points to go on vacations.


#9

We just sold our 2 vero beach accounts just because of the dues issue. It’s funny, but with DVC, we actually had equity from a timeshare. We had small point amounts in each account and they sold the day we listed them. But back to the issue. We just bought 500 more points at SSR and we will rent those 500 each year, and use our other VWL points for our trips. I have found that you are better off renting to someone who knows nothing about Disney, or any of the forums on any website, possibly a co-worker, friend or family member. $10 a point isn’t really a good selling amount if you are looking to make money. We usually rent for $12 per point, but we provide all the information and help anyone would need to visit WDW. Ever since DVC did the $10 per point credit about 5 years ago, that seems to be the price everyone uses. Also, a lot of people forget to bank their points, so instead of losing them, the rent them for $7-$8 a point. I just hate how people who want to rent points try to set their own price, it drives me nuts. A studio rents for about $300 a night, but they only want to pay $60-$120 per night. That’s just crazy. Anyway, good luck with your decision, I hope it all works out for you.


#10

Shouldn’t insurance cover hurricane damage?


#11

How to deal with a cheapskate renter