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.

Updated Summary of Trailer and Truck Purchase Decisions.

Karen and I started touring RVs in January 2015 with a visit to the local RV show. In time, I came up with an outline of seven steps we might consider leading to the eventual purchase. As usual my personality provokes me into over-thinking every aspect of the decision. It has been a fun process as I enjoy research and meeting others who have gone through the process of selecting their rig. Karen and I agree with the concept of buying your third trailer first. In other words, whatever we get we are planning to keep for a long time and avoid taking a hit on depreciation should we trade out the trailer within a couple of years. I have read several times where others estimate trailers depreciate quickly in the first five years.

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Final Truck Research

Five weeks ago, I posted an article regarding my initial truck research. Because of the trailer weights we are considering, our truck will be a one ton dually. A second article was posted a couple weeks later.  Readers passed along the pin weights of their fifth wheel trailers were running between 19 and 21% of their total trailer weight. That’s also consistent with what others are reporting in forums. The pin is the front of the trailer that rides on the truck’s rear tires and is a reason we are going with a one ton dually.

I found all three manufacturers can handle the weights we are interested in. I researched the 2016 and 2017 truck models. Base prices on their least expensive trucks were within $720 of each other. The manufacturer’s suggested retail price (MSRP) for 18 new truck builds, with the options I was initially interested in, varied as much as $18,435. And of those new trucks, 12 were over our budget.  In a roundabout way, it helped to further narrow the list with our decision that we wanting leather interior. None of the new truck models were within our budget with leather interior. The decision then became what used trucks we could afford that had the options we were interested in.  There were huge changes from 2016 to 2017 in Ford heavy duty trucks. The Ram was unchanged between those years and there were a few changes in the Chevy/GMC. It took some time but I was able to locate used trucks with most of the options we are interested in.

Research showed an average discount of 22.24% off the new MSRP for trucks if bought one year old. And those are compared with ones located on dealers’ lots at their asking prices. Many had mileage of less than 10,000. Several were even at local dealerships.

2017 Used Truck Prices_LI

All things considered and for what are my preferences, the Ford F350 Lariat and Ram Laramie 3500 were the two trucks I am most interested in. As a side note, I was surprised to find the Ram is the only one of the four brands that’s available in 2017 with factory air suspension.

Another point I want to make is about brand loyalty. I get it. The last three trucks I’ve purchased were Fords. On several occasions folks have suggested they wished they could buy one companies engine paired with another’s transmission. ALL four manufactures have the same powertrain warranty. So, if they think their truck has a better setup then why not show it in the warranty? Personally, I’m hoping that having a couple trucks in mind to purchase will at least double the chances of finding a fair deal.

2017 Truck Warranty

We should purchase our truck next year and will most likely trade-in one family car at the time. Most likely we will keep Karen’s car to be sold sometime before we leave in 2019 on our future in an RV. We are discussing selling it earlier if she is comfortable driving the larger truck. I posted about going to one family car.

Because I’ll have at least three specific trailers selected and know their critical weights, I have no problem buying the truck first.

I put together a spreadsheet on the topic.  Sorry, I only knew how to post the spreadsheet link as a PDF. If you have trouble loading the spreadsheet and want a copy send me an email at mseneker@hotmail.com. I’m happy to send it.

Truck Comparisons PDF  (click here to see the spreadsheet). The nuts and bolts of the research is outlined in the spreadsheet which was easier than repeating it all within this blog post.

Here are a few internet links of more interest than others:

  • From the Big Truck Big RV YouTube site: 2017 truck of the year opinion. He owns a 2016 Ford and selected the 2017 Ram. Here is the link. He adds all three manufacturers can handle a 20,000 pound fifth wheel and believed no engine/transmission is better than another.
  • Roads Less Traveled blog has several postings regarding their 2016 truck upgrade. They test drove all of them!
  • Side by Side Video: 2017 one tons by MrTruckTV and another guy I’ve seen in a lot of videos. Towing around 22,000 pounds. Pin weight in this test is at 19% or over 4,180 pounds. Max tow for the Chevy is 23,000 pounds so they had to limit in order to compare. Chevy won the race with Ram coming in second place.

If you find any details in this post to be incorrect, please let me know. I’m no expert and don’t want to put out any bad information.

After writing this blog post I’ve kept looking at truck adds each day. I’m finding some wonderful trucks around the 20,000 mile mark. Found a 2015 Ram 3500 Laramie Longhorn Limited Edition for an asking price of $51,700 at a local dealership. And a loaded 2016 Ford F350 Lariat with less than 10,000 miles at another local dealership listed at $55,000. There are newer dually Ram Tradesmen Editions out there in the mid 40’s in great condition.

Sales Chart for 2015/2016 Fifth Wheels

At the local RV show I took a photo of this chart on the side of a Keystone Montana fifth wheel:

trailer-sales-2016

A factory representative had posted this chart.  He also had a list in a file comparing the Keystone Montana’s features against the Grand Design Solitude. He would not let me take a photo of that! I nearly missed it on the chart but noted it represents the top 20 models by sales. The charts source of information is listed as Statistical Surveys Inc, Grand Rapids Michigan. Per their website, Statistical Surveys (founded in 1958) is a provider of market research for marine, manufactured housing, trailers and recreational vehicles. They report an impressive list of publications where their research has been posted to include RV News, Trailer Life and the Wall Street Journal.

From what I could gather at the Statistical Survey’s website, companies can purchase the data. It might be reasonable to assume those companies would then present the data in whatever light they feel might shine brightly on them. It is however common knowledge the Montana has been the best-selling fifth wheel for years. The above chart combines three different full profile trailers from Heartland those being the Bighorn, Landmark and Big Country.  I thought it important to note the Montana full profile line includes the High Country which was not listed next to the Montana. Nor was the Cedar Creek Silverback listed next to Cedar Creek. To me, it’s important to note the High Country has a drop frame basement and the Silverback does not. I understand drop frames are more expensive to build and the basement space is considerably larger. One obviously needs to keep these construction variations in mind when comparing trailers in each price point. It is good to see some of the relatively lighter weight trailers on the list such as the Forest River Sierra and Sandpiper. The

Here’s what else we have been up to: I’ve been busy studying up on one ton trucks. Real glad the selection is limited to the big three. The hard part has been trying to figure out all the equipment options available that influence their towing/cargo capacity.

Karen and I are steadily working on downsizing. At this point selling larger items on Craigslist and trying to fill the trash can each week. I just ordered three large capacity CD/DVD wallets to reduce the footprint of our music and movie collections. I’m also getting close to having important personal and business documents completely scanned as part of going paperless. My photos have been scanned and Karen wants to get her’s finished up soon. It’s been very convenient to view old photos on the computer that I’d not taken the time to look at for years as prints.

And for the first time I’m working with a financial planner and may write about the decision and how it has been going in a future blog post.

 

new flash  Today Show video about workampers where the average age of workers is 53.

new flash  Highland Ridge fifth wheels recently put out a new factory tour video.

Finally Selected a Basic Floor Plan

Below is a long, but hopefully informative blog post related to floor plan selection. Karen and I just got back from the local RV show. This is the fourth straight year we attended and often spent two days looking over the trailers. Finally, we have decided a rear living room plan with three slides is for us. We decided on a fifth wheel a couple years ago.

This year at the show we ran into my first cousin Lee and wife. They have lived on the south side of the city and elsewhere. First time we ever met up in town. Go figure. He is an engineer by trade. He moved into sales and had some additional training. Lee said people are going to buy what they most want. Some use a spreadsheet and all kinds of data to justify decisions they have already made. I can agree with that. Lee was not carrying a notebook – never thought I’d see that out of him. Fortunately, I was already aware of the risk of justifying a decision by fudging numbers on a spreadsheet.

dmc-zs50s_alt01-470x352  I want to send out a thank you to Ingrid at the Live Laugh RV blog for helping me decide on a pocket camera purchase. It’s nice to depend on someone who had already done all the homework. Ingrid, I went with the Panasonic DMC-ZS50S (silver). Found it on Ebay as a factory refurbished for $210. It came with a 90-day warranty and I passed on the $34 extended warranty. Love it so far. I bought a small camera case with a shoulder strap that only holds the camera and kept my hands free. Learned that from another fulltimer.

I thought it might be a good idea to get a few questions out for those not interesting in reading further.  We would appreciate any answers you offer for these questions:

  • With wide body trailers, have you found any concerns?
  • A couple floor plans we were interested in lacked overhead cabinets above the recliners in the living room.  How much do you use yours? (update, met up with one of the Cedar Creek designers who said they will never put cabinets over the theater seating because it cuts into the view out the window. Personally, I think their slide is not as tall as some which is another reason.)
  • What about not having cabinets over the bed?
  • Should we rule out any trailers that do not have access to the bedroom and refrigerator with the slides in? It is a given with us that we want access to the bathroom when traveling.

 

Hit the continue reading button if you are really interest in floor plan opinions!

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Aunt Tancy

Let me begin this blog post with a small amount of RV related material.  The remainder is dedicated to my family but might be interesting to you as well.

rv-comparison-book
I purchased the 2017 JR Consumer RV review eBooks on Thanksgiving Day because they were priced half off. I’d hoped their section on RV construction would be good because it’s hard to find one consolidated source of information covering construction. For the most part the construction section was okay. They also had some information about the 2017 trailer models. It might have been better to wait until the end of the year, about October, to purchase their guide for more reviews of 2017 models. If someone was not willing to do about a year of research these books would be of greater value.  I do think they are a good purchase at the discounted price even for those that have already done much research.  It’s a good way to compare your findings against their ratings and confirm other conclusions.  Now on to some family stuff….

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Augusta RV Factory Tour

We all spend so much time trying to find a new or used trailer that fits our needs. Much time is spent researching the components, frame size, what slide systems are used, do they have disc brakes and more. Most likely the trailer, no matter what upgraded parts it comes with, are only as good as the people who assemble them. Then we consider if something breaks how easy is it to get repaired under warranty; and repaired right the first time. Then comes consideration whether the company who built the trailer will stand behind their warranty.  Like you, I’m spending the necessary time to understand the components of an RV and the reputation of the company that built it.

For my family who reads this blog, and may not be that interest in shinny new RV’s; I’m working on a post regarding Aunt Tancy.  Mary, glad Russ was not with us when we looked at the Mercedes class B’s – we never would have gotten out of there.

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