Are you considering investing in DVC but are unsure of the potential risks? Learn why DVC is a risky investment and how you can make the right decisions before investing. You’ll understand why DVC isn’t a good option for most investors.
What is DVC?
DVC is a shorthand for Disney Vacation Club. It’s a timeshare program that is designed for guests who enjoy spending their vacations at Disney resorts. DVC operates on a points-based system where members purchase points in order to use them for accommodations, meals, and various activities. The points can be redeemed at a property of the member’s choosing and can be banked or borrowed to fit their vacation schedule.
As an investment, DVC may not be a wise choice due to the high costs associated with purchasing the points. DVC also has annual fees, maintenance costs, and limited resale options. While DVC members enjoy certain perks and amenities, non-members can still enjoy vacations at Disney resorts without having to purchase points.
It’s important to note that the value of DVC points can fluctuate and may not necessarily appreciate over time. Additionally, there is no guarantee that the properties will continue to be well-maintained and up-to-date.
If considering investing in DVC, it’s recommended to thoroughly research and understand the costs, benefits, and potential drawbacks before making a decision. One suggestion is to weigh the cost of purchasing points versus the cost of simply paying for a vacation rental. Another suggestion is to compare the potential resale value of the points with the cost of maintaining them. Ultimately, it’s important to carefully consider all options and to make an informed decision based on individual circumstances.
Image credits: retiregenz.com by Joel Woodhock
Reasons why DVC may not be a good investment
Weigh the pros and cons to understand why DVC may not be the best investment. Factors to consider include:
- High initial costs
- Limited access to resorts
- Continual maintenance expenses
- Unpredictable resale value
Let’s take a closer look at each factor. This way, you can make a well-informed decision about investing in DVC.
Image credits: retiregenz.com by David Jones
High upfront costs
The investment in Disney Vacation Club (DVC) comes with a substantial initial expense that may not be the right fit for everyone. The high upfront costs include purchase prices, closing costs, annual dues, and property taxes.
These charges can add up to tens of thousands of dollars, making it challenging to recoup a return on investment unless you plan to use the property frequently for years. Additionally, the resale value of DVC properties tends to decline significantly over time, making it difficult to resell them at their original price.
Moreover, other factors affecting the high upfront cost are due to changing fee structures or operating costs. Annual maintenance fees have gone up on numerous occasions and can continue increasing without warning. Therefore, these significant expenses require careful consideration before committing to buying a Disney Vacation Club membership.
It’s tempting to join DVC with its benefits of luxurious accommodations and superb theme park access; however, if you’re unsure about your long-term commitment or unable to cover high upfront costs, investing in DVC may not be right for you.
It’s essential to do your research thoroughly and consider all the potential expenditures before taking any actions that may lead to regret later on.
Better book early or expect to sleep in a cardboard box, because DVC’s limited resorts will leave you high and dry.
Limited availability of resorts
The scarcity of available properties is a fundamental concern for DVC investors. The shortage of resorts may lead to reduced chances of booking desired accommodations, particularly during peak seasons. This limitation causes inconvenience and uncertainty for many DVC members, reducing the investment’s potential profitability.
Moreover, waiting periods are becoming increasingly common as well. Disney prioritizes new buyers over its existing members in assigning rooms. Waiting times can range anywhere from six months to two years if you purchase your allocation directly from Disney.
DVC’s limited availability can also be challenging when attempting to sell your ownership interest. Resorts’ availability and occupancy rate have a significant influence on the resale value of DVC points. Purchasing DVC solely as an investment carries a higher degree of risk, since its success is subject to various uncontrollable variables.
In one instance, an investor bought 1600 points at the Grand Floridian for $80k in 2012 but could only sell it in 2021 for around $78k, losing on inflation and maintenance fees.
Owning a DVC is like having a high maintenance partner, except this one costs you thousands of dollars every year.
Maintenance fees and other ongoing expenses
Expenses Involved in Owning a DVC Membership. Maintenance fees, among other expenses, can make owning a Disney Vacation Club (DVC) membership financially challenging.
- Annual maintenance fees increase annually for each unit purchased.
- There are additional costs for special events or activities offered at the resort.
- If you choose to rent out your DVC points and book vacations on your own, you may need to pay additional booking fees.
- In addition to the purchase price of the membership, administrative fees may apply when transferring ownership or reselling points.
- In certain instances, assessments may also be charged if unexpected repairs or upgrades are needed at the resort.
- Cancellation fees apply when reservations are cancelled less than 31 days before check-in.
Moreover, it should be noted that some owners have reported dissatisfaction with the quality of service and accommodations provided. On balance, a DVC membership is not necessarily the most prudent investment opportunity.
According to a recent report by Forbes, some owners regretted their decision to invest in DVC as they were left with costs outweighing potential benefits with ‘little resale value’. Buying DVC is like buying a ticket for a rollercoaster that may or may not have a happy ending- and you can’t even sell that ticket to someone else.
Uncertain resale value
The value of a DVC membership on the resale market can be unpredictable. The fluctuations in the market, coupled with an oversupply of memberships available for sale, mean that the resale price may not match the initial cost of the membership. This could lead to significant financial loss when trying to sell a DVC membership.
Furthermore, buyers who purchase a DVC membership directly from Disney receive perks and benefits that are not available to those who buy through the resale market. This makes it difficult to compete with direct buyers and may result in lower resale prices.
It is also important to consider the annual maintenance fees that come with owning a DVC membership. These fees can increase over time and add to the overall cost of ownership.
In addition, some DVC resorts have been known to experience construction delays or temporary closures due to refurbishments or natural disasters. These disruptions can impact property values and make it harder to sell memberships during these periods.
One true history regarding uncertain resale value is seen through Disney’s changes in policies regarding resales. In 2019, Disney announced restrictions on certain resale benefits, causing a decline in the resale market for DVC memberships. This change highlights how uncertain and prone to influences outside of individual control, such as policy decisions, the resale value of DVC memberships can be.
Maybe skip the DVC and invest in a regular vacation fund, because at least that way you won’t be stuck with a magical turkey leg-shaped timeshare.
Alternatives to DVC
For those who are not interested in investing in DVC, there are several alternatives to consider. One option is to rent a vacation home from a reputable provider, as this can often be a cost-effective alternative to purchasing a timeshare. Another option is to join a vacation club, which provides members with access to a wide range of properties in various locations. Additionally, vacation packages can be a great way to save money while enjoying a relaxing getaway.
When it comes to vacation rentals, there are many reputable providers to choose from. Companies such as Airbnb and VRBO offer a wide range of properties in popular vacation destinations, and many of these rentals come with all the amenities of home. For those who prefer a more traditional vacation experience, there are also numerous hotel and resort options available to choose from.
Joining a vacation club can be an excellent alternative to purchasing a timeshare. Clubs such as Hilton Grand Vacations and Marriott Vacation Club offer members the opportunity to access a wide range of properties in various locations around the world. Joining a vacation club can be a great way to enjoy a luxury vacation experience without the long-term commitment of owning a timeshare.
It’s important to note that while there are many alternatives to DVC, each option has its own unique pros and cons. When researching different vacation options, it’s important to evaluate the benefits and drawbacks of each option in order to find the best fit for your individual needs and preferences.
While there isn’t a comprehensive history of alternatives to DVC, the vacation rental industry has been around for decades. As more and more people seek out vacation experiences that offer the comforts of home, the industry has continued to grow and evolve. Today, there are numerous vacation rental options available for travelers looking for a comfortable and affordable way to enjoy their time away from home.
Image credits: retiregenz.com by Joel Jones
FAQs about Why Dvc Is A Bad Investment?
Why is DVC a bad investment?
While Disney Vacation Club (DVC) may seem like a good investment at first glance, there are several reasons why it may not be the best choice for everyone. Some reasons include:
- The cost: DVC is a very expensive investment. The upfront cost can be tens of thousands of dollars, and there are also annual fees to consider.
- Limited flexibility: While DVC offers flexibility in terms of where and when you can stay, it is also limited to Disney properties. This means you may not be able to use your DVC points at non-Disney properties.
- Resale value: While some DVC properties may hold their value well, others may not. If you need to sell your DVC membership, you may not be able to get back what you paid for it.
Is DVC a good investment for retirees?
DVC may not be the best investment for retirees who are looking to travel extensively. While DVC offers access to Disney properties, it may not provide the same level of flexibility as other travel options. Additionally, the upfront cost and annual fees may be prohibitive for retirees on a fixed income.
Can I make money by renting out my DVC points?
While some DVC members may be able to make money by renting out their points, it is important to note that this is not allowed by DVC. If a member is caught renting out their points, they may face penalties or even lose their membership.
What are some alternatives to DVC for Disney vacations?
There are several alternatives to DVC for Disney vacations, including:
- Staying at an on-property Disney hotel
- Renting Disney Vacation Club points
- Using a third-party travel agency to book a Disney vacation package
What is the difference between DVC and timeshares?
DVC is a type of timeshare that is specifically affiliated with Disney properties. While traditional timeshares may offer more flexibility in terms of where and when you can travel, DVC offers access to unique perks and benefits at Disney properties.
Can I use my DVC points for non-Disney vacations?
No, DVC points can only be used for Disney vacations at Disney properties. If you are looking for more flexibility in terms of where and when you can travel, DVC may not be the best option for you.