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mjaclyn
03-19-2009, 10:07 PM
I'm trying to figure out if it's more cost effective for DH and I to continue renting DVC points every year, or just become DVC owners ourselves. I keep getting confused with the numbers so if anyone can help me out it would be greatly appreciated!!

So here goes...if DH and I rent 200 points per year at $10-$12 per point, how long would it take for a $22,000 DVC Membership to start paying off? (Also taking into consideration the $700 per year maintainence fees)

Does anyone know how long it would take before being a DVC Owner would pay off? Or does it? Is it still cheaper just to rent the 200 points every year?

Zone Stop
03-20-2009, 01:11 AM
REALLY SIMPLIFIED VERSION:

You buy 100 points at $112/point. This is an initial buy-in of $11,200. You pay $6.00 per point per year for 50 years of contract. You've paid $41,200 all total, for a total of $8.24/point over the life of the contract. Alternatively, rent that same 100 points at $10/point, and pay $1000 yearly for 50 years - you have spent $50,000 on your Disney Vacations.

Year 1: $11200 $ 1000
Year 2: $11800 $ 2000
Year 3: $12400 $ 3000
Year 4: $13000 $ 4000
Year 5: $13600 $ 5000
Year 6: $14200 $ 6000
Year 7: $14800 $ 7000
Year 8: $15400 $ 8000
Year 9: $16000 $ 9000
Year 10: $16600 $10000
Year 11: $17200 $11000
Year 12: $17800 $12000
Year 13: $18400 $13000
Year 14: $19000 $14000
Year 15: $19600 $15000
Year 16: $20200 $16000
Year 17: $20800 $17000
Year 18: $21400 $18000
Year 19: $22000 $19000
Year 20: $22600 $20000
Year 21: $23200 $21000
Year 22: $23800 $22000
Year 23: $24400 $23000
Year 24: $25000 $24000
Year 25: $25600 $25000
Year 26: $26200 $26000
Year 27: $26800 $27000


AGAIN, THIS IS INTENSELY SIMPLIFIED

BigRedDad
03-20-2009, 09:34 AM
You must also take into consideration of the $11,200 invested. For all intents and purposes, all future values of investments are calculated at 8% per year. It takes 9 years for that money to double. Therefore, your calculations are like this:

(using $10k because it is easier)
Year 0: $10,000
Year 9: $20,000
Year 18: $37,000
Year 27: $74,000
Year 36: $148,000
Year 45: $295,000
Year 50: $434,000

If you pay $2000 per year to buy points from someone else and it goes up 5% every year (unlikely), you will still be up $16,000 after 50 years if you invested the money. The time share is worth $0 at the end of 50 years. Also, the DVC membership will lose value as it ages. The points may not lose value, but the principle loses an average of 2% per year (lower early and increasing as it ages). Will the DVC points cost increase 5% per year, extremely unlikely.

You can do all types of calculations to manipulate data to prove a point you want to see. The simple fact of the matter is if you have money and you can throw away $11,200, then by all means buy into it. Otherwise, save up for your vacations and buy points and watch what the buy in can do over time.

For me, I would find a way to save money to buy points from someone else. Let someone else pay the mortgage for the timeshares.