So in my last post I told you about the Disney Vacation Club, which I was introduced to by the Disney Doorway to Dreams store in Woodfield Mall.

Doorway to Dreams is the Disney version of a timeshare, where you buy into Disney resort properties, but buying in effectively buys you points you can use at any Disney property and any of over 500 other resorts worldwide. In a nutshell, it's a prepaid vacation plan, with about 5 year timeline to recover your upfront costs and begin saving money. I've been through at least 3 presentations since they opened, and the price has steadily increased, even in this down economy. Current "list" price is about $112/pt, although incentives can drive it down about $10/pt.

There is also a resale market to these points, since you have a titled deed to your "property" you're allowed to resell or transfer ownership. Checking the listings, it looks like there's a hefty chunk of points on the market, ranging from $75-$90 pt depending on when points are available. There are all sorts of ways you can "bank" points for a future year or "borrow" points for the current year, which leads to all these variations in cost. These aftermarket points are no different from "brand new" points, and I spent a fair amount of analysis on these as well when I was considering buying.

So what happened? Why didn't I buy into this wonderful prepaid vacation plan?

Couple of things. First, a crazy foreclosure market in the Orlando area. This was an area of the country where home values had skyrocketed to insane levels, primarily driven up by speculators who flipped as often as they could. When prices started dropping, and flipping for a profit became impossible, these speculators walked away from their loans leaving the homes to foreclose. And banks had (and in some cases are still having) fire sales.

So I started running the numbers. Disney prices really haven't dropped. Aside from some really nice incentive plans to stay at a resort (free birthdays, free meals, free nights, depending on the program) the costs keep going up. You can spend an amazing amount of money at the nice resorts. At Doorway to Dreams they told me about a man from the UK who had spent $64k on a package that included 18 days at the Grand Floridian with his kids. $48k was the cost of the resort itself.

Renting at one of these off resort homes, like mine , is significantly less expensive. 18 days, at peak season is about $7k. For 7 bedrooms, your own pool, and your own game room. Now, you do have to rent a car and you don't get to take advantage of "Magic Mickey" hours (an hour earlier or later admission to resort guests, depending on the day and the park participating) but WOW... do you ever save money. So much so that I started looking at which property I'd like to rent from.

Then I saw the prices I could buy in at. Now, I have to caution that this isn't an investment for the faint of heart. The property I bought required a complete overhaul. It's a pretty new home, about 4 years, but a had to replace all the "cheap" flooring with tile and paint EVERYTHING. Except the insides of the closets, because those really aren't exposed to any sort of use. Then I had to furnish a 7 BEDROOM HOME. My goodness, that's a good chunk of cash.

But even with these investments I expect to "break even" in about 4 years, which compares favorably to the Disney Vacation Club "break even" at 5 years. Now, the economy could really put a dent in my estimations for bookings, which are pretty conservative to begin with, or the prices could drop tremendously and impact any profits I'd need to pay off the investment, but it's a calculated risk like any other investment. Certainly can't be any riskier than the stock market.

So that's my story and my reasoning. I really do like the Disney program, and the people working there are great. One of our favorites, Tom, actually owns vacation rental property as well as a DVC property, so who knows... maybe I'll end up in the same boat at some point.

But right now I'm really enjoying my new home...