RV Depreciation

As usual, this blog post turns out to be a long one. If you’re just interested in quick RV depreciation opinions then scroll down to the text in red.

Karen and I decided to make a run to Grain Valley Missouri which for us is only a 45-minute drive. The town is home to three RV dealerships.  It was also the first time in a week Karen could get out of the house for an extended time. She had cataract surgery and received a new lens. She has had very bad eyesight her entire life. Those days are over. It was wonderful watching her excitement as we drove through the rolling hills which are in full bloom with green trees she can see at a distance.  Karen took a book to read for the drive as she normally does. She never opened it. The best part of the trip for me, now that I think about it, was watching Karen’s excitement. She gets the next eye fixed in a week.  Glad we have the time and money before taking off in 2019 to see the rest of the country together. Money well spent!

Speaking of money well spent what about depreciation on an RV purchase? I recall a conversation I had with a person when I was 18 years old regarding the need to purchasing a new television. Back then the selection of televisions was not as complicated compared to today’s models in varying sizes, resolutions and technical capabilities. Although I still don’t know what they mean by a “smart TV” because the darn things still require someone smarter than me to figure out how to set them up and use them. When I was 18 I hated spending money on something that might have to be replaced and still do. Because spending it reduces your net worth, a concept I had way back then. Perhaps the attitude came from learning the value of a dollar as a child, especially when you don’t have a lot of those dollars. The value of a dollar was further ingrained in my personality perhaps because I was a business major in college.  I spent some time in the corporate world, earning an income above our monthly needs. I kept the attitude to live below my means. I moved into public service as a law enforcement officer and the hourly pay became once again barely enough to save for a future. So, I found myself once again comparing expenditures as reducing my net worth, like I was 18 again. I compare the costs of large purchases against the hard-earned hourly rate for my time at work.

I’m sure these attitudes about the costs of things are shared with each one of you, regardless of income or life experiences. There is much evidence of this. The cost of living full time in an RV is front and center in much of what I read in your blogs, forums and articles.  It’s evident the ability to finance a retirement through savings and pensions may well be among reasons most of us do not retire a lot earlier. Especially for those of us who are in a hurry to move on to retirement, having already lived two thirds of our life expectancy.

I’ve not found the depreciation costs of an RV listed in other’s posted budgets.  It’s not in my estimated monthly budget either and will never be. It is however listed in my long-term financial plan. I know what our budget is for the RV and the truck purchases. I know my net worth and what it should look like if we stay on the road for six years beginning in October of 2019. I have an educated guess at what the value of the RV and truck might be worth when and if we sell it and move back to a stick built home. All the planning might not work out but I do have a couple plan Bs to cover possible changes. Although I can’t control most of what would affect Karen and me in the event of a financial catastrophe. Short of staying on the job until I’m much older, retiring and dying in what could be a short time later. I’m not willing to do that. Neither is Karen.

As part of long-term planning I researched what others had already figured out for RV depreciation schedules. I hope you would agree the variables for what might affect depreciation are considerable. What someone paid for the RV to start with and what the economy might be at the time of sale are a couple big variables. Especially if they overpaid for the RV or sell it when the rest of the baby-boomers finally sell theirs, saturating the market.

Speaking of the baby-boomer generation who will eventually sell their RV’s, assuming they don’t kept them until they have zero value. It’s a little off topic but should be a concern for anyone who might want to buy a used RV or attempt to sell one in the future. I did a study back in the mid 1990’s as part of preparing for a presentation. I was assigned to work in the crime prevention unit at the time. I have a passion for protecting the elderly which developed after a terrible event involving an elderly person. I wrote a research paper trying to win a federal grant to fund a crime prevention program. Working with a local Rockhurst University professor, part of the grant had to do with estimating the average age of persons in my jurisdiction in various future years. What I discovered was that here in Missouri, the percentage of persons turning 60 years of age, as a percentage of the population, would change significantly in 2010 and peek in 2020.  This was based on census data. If I recall the figures correctly, our state would be moving from an annual rate of .7 percent of our population turning 60 years of age to 1.7% beginning in 2010.  It was a significant shift in our demographics. Birth rates might have changed some of those figures, regardless you can see the point.  It’s effecting RV purchases now with record sales of new RVs and may cause a future record for used units on the market. Hmm, this might even present an opportunity for those that have the time to find the right used unit.

You know I can’t stop from writing a desertion about anything RV related. I started just wanting to write out what I’ve researched regarding a simple RV depreciation schedule. Sorry, can’t do that. I write like I think and to this point I believe the above information must be considered when estimating what our rigs will be worth in the future. And more importantly how do any of us justify spending hard earned money on any large purchase that does nothing but depreciate? You already know the answer to that question but I’ll still give you my opinion in a few moments.

If you scrolled down for quick information on RV depreciation then start reading here.

In my own financial planning, I’m figuring a new  high-profile luxury fifth wheel RV will depreciate 54% in 6 years.  I’m using 50% for the depreciation on a new one-ton diesel truck over a six-year period. Right now, my total budget is $84,655 for the trailer and $66,700 for the truck to include taxes and some of the items needed to equip the RV and truck. Although I suspect we will purchase some of the RV/camping equipment with current income rather than out of savings as we plan to purchase our rig up to a year before retirement. I’ve got just over eight weeks of vacation to use in 2019!  I have already decided it is most likely we will buy a one year old truck with well under 20,000 miles on it and save an estimated 22.24% compared to a new truck.

I found an interesting article written at Camper Reports.com. The writer’s conclusion is on average a new RV loses 21% of its value when it leaves the lot. The best value is found in buying a used five-year-old RV based on his depreciation schedule research. He believes there is “no significant difference from year one since model years are announced a year in advance–helping resale of a two-year-old trailer which seems to be only one year old to a potential buyer.” You can check the trailer label for the date of manufacture. The author’s research goes on to estimate depression off the purchased price on fifth wheels at 25% by year three, 29% by year four, 37% by year five and 38% by year six. Depreciation begins to level off at year five. So, if I’m reading his article correctly, total depreciation by year six off the manufacturer’s suggested retail price is 59%. That assumes you lose 21% when you drive it off the lot and another 38% by year six.

I can’t find the link but have it in my notes the writer at RV Research.com estimated the depreciated in general for RV’s at 50% by year five. This guy at Axleaddict.com has done a lot of research on motorhome depreciation where he compared two specific units. His research estimates total average depreciation at 58.9% through year five.

It’s okay to stop reading if you were just after a few opinions on depreciation schedules.

There may be other cost considerations as part of this. Such as inflation rates and what one loses in interest by not keeping the money in the stock market (or whatever) rather than spending it.  The “old me” might have considered that! I’m planning not to think so much about the money details someday which will be the “new me”.

For my planning, the estimated depreciation only tells me what I might be able to sell everything for and then use the money to buy a home or whatever should we ever come off the road. OR elect to buy another RV and continue on.  The old me sees the depreciation in our budget as something costing on average around $7,618 a year or $634 a month. Add the truck and the monthly expense becomes $1,097 given our budgeted purchase prices over a six-year period. I know some of you are going to figure it up on your own – it comes out to $78,984 for six years.  At 7% earnings that money would generate $33,178 if invested rather than spent. Sorry – the old me chimed in at the last moment.

So how does one justify the expense of it all. The old me says; the hotel rooms for a year could cost over $27,000 or maybe $162,000 in six years, the food would be expensive if not cooked at home and you have to own a car anyway.  The new me says; what price does one place on looking out over a view that photos can’t capture, what price do you place on spending time with family and friends, what have you been saving for, is it really that important to work until death and I hope we can do this before the North Koreans figure out how to launch a long-range missile. If you want more opinions on if the depreciation is worth it, go to this 22 page forum thread.

Karen, with her new eyes, and I are going on an adventure. I’m not giving a second look at depreciation because it does not matter short of how much will we have left for our next adventure.

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6 thoughts on “RV Depreciation

  1. Mark, nicely written article, (like your blog btw). I’ve read a number of articles concerning depreciation, but can’t seem to find the answer to the following question. Does the depreciation start from MSRP or the price you pay for a new RV? How would anyone know 5 years down the road, (other than you)?

    Thanks Bill M.

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    • Thanks Bill,

      I’ve had the same question as to if the depreciation is figured against the purchase price or the MSRP. For sure, one of the articles I referred to was using the MSRP. For my own planning, I figured it based off my starting budget because we have not purchased the RV yet – not to add another dimension.

      I would think the entire idea about value of an RV is totally based on what someone is willing to pay for it at the time of the sale regardless of what we think it is worth. What’s the condition of the unit, what’s the economy like, what’s the competition, what time of year and where are you trying to sell it – all I would assume are factors. So the depreciation schedule might have less meaning then we think. It’s a planning tool.

      I’m not sure I can answer the question. Myself, for long-range planning, I had to take an educated guess at what might be the % of depreciation six years down the road. That way I could budget in what money we might have after the sale such as for a stick built home or another RV. It’s a guess.

      Truth is there will be a good chance there will be a lot of used RV’s available at some point. Because of the past few years of record sales. Perhaps another question would be during what year will there be hundreds of good used units for sale, maybe based on the average number of years someone owns a given type of RV before selling it? No telling if that will lower the resale price of all used RVs. One of the reasons we are sticking with a rear living room fifth wheel is because it’s been a popular floor plan for a long time. Figure that will help with resale. If we stay shorter in length, maybe there will be a larger group of people who might buy it for vacations and such. Again, who knows.

      You brought up a good question Bill!

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  2. OMG Mark – you and Bill will, someday when we meet in person, get along famously! I have not met another person, be it face-to-face or in a forum or blog that speaks so clearly his language! So happy you came to the conclusion that it (depreciation on your new home on wheels) will be what’s it’s going to be – just gotta roll with it – there’s life to be lived! We got our Landmark new – but feel we got an exceptional deal. Our truck was a lightly used (22,500 miles) 3 year old, in perfect condition beauty. Love how you talked about your excitement about Karen’s new vision! I’ve worn glasses my whole life – Bill tried for years to talk me into surgery correction, but I’m a big chicken – but cataracts are a different thing (unable to be corrected with glasses). How exciting for her! Hope the second eye went as well as the first!

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    • Thanks for the complement Kelly. Means a lot coming from someone who writes a wonderful blog like yours and takes the time to educate all of us future timers.

      We will have to meet up someday. Hope you guys are still out there when our time comes!

      Thanks for the info on your truck. Helps confirm one of my decisions. I had always meant to ask about your truck being an extended cab rather that the monster four door type? Was that decision made to cut off a foot or so of your rig length, just what you found at a good price or what? We don’t need one of the longer truck cabs but prefer it.

      Your Landmark floor plan rules! It’s one we like at that length. Bighorn has one in 2018 also. It does not have the water line in the slide.

      Karen gets her other eye fixed next Monday. I’ll let you know how that goes. I can’t imagine what it’s like for her to never see something clearly that’s beautiful in the distance, even with massive corrective lenses.

      Liked by 1 person

  3. Bill would have preferred a full four cab and also a Lariet package with the associated bells and whistles, but question was: how much are those things worth? I found the truck on CraigsList, being sold as a combo with a toy hauler. I reached out and the seller was willing to separate them. We have never regretted our decision. Saved us almost half vs if we had bought a brand new “ideal” truck. We put some of that savings into a more than initially budgeted for 5th Wheel – another decision we have never regretted. The rest of the savings helped finance our first year on the road, as we didn’t work at all that first year.
    As far as still being on the road in 2019 (that’s your expected leave time right?), unless something bad happens, we will be out and about somewhere. Bills brother asks us every time we see him after being gone awhile “When and/or where will we be settling down?” – and the answer is – “no idea!”

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    • My leave date from work right now is Nov 1, 2019. However, I have an option of leaving in 2019 after working 1,000 hours for the year which, according to the pension folks, for me is around June of each year. I’ll be 56 years of age by then. Not staying until 62 hurts the bank account but I’m not sure I can make it that long. And working till 65, well, that can’t happen even if my health care is limited. Besides I am actually looking forward to workamping. But mostly being around good people. Tell you more about that if Karen and I ever meet up with you guys.

      I have just over 8 weeks of vacation to use up by then so I’m not sure how that figures in. We can retire and be paid for unused vacation but I don’t see a need for that. I’d rather get the trailer before we sell the house and get used to it. Also have anything repaired that’s needed and equip it. Also give us an option for a place to live if we sell the house early in spring of that year. Thankfully, I can still tolerate the job and if that stays the same, I’ll go ahead and work until November of 2019 and vacation a bunch before then. Don’t like to talk about issues at work so I rarely do – in public. It’s also against the rules to discuss matters on the job in social media. My immediate supervisor knows I plan to leave my division at work, into something a little less demanding. I work in criminal investigations right now and am watching the job board for another position, one that allows for more travel and starts to relax my mind. Also want to spend more time with family and my wife sooner than later.

      Sorry for the long reply. That about sums up when we will be leaving. So may see you while on vacation!

      Liked by 1 person

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