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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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.

Truck Research and Snow in KC

Just when you think winter might have shown its face for the last time it snows in Kansas City.  Fortunately, it was beautiful to look at and gone later in the afternoon as the temperature went up.  I’m hoping our plumb trees bear fruit because they have already bloomed and there are a couple freezing nights ahead of us. The boys find a place to hang out when it’s bad outside.

Ringo found a pile of sheets to sleep on because Huck already took up a position on the dog bed.  We also have two cats.

Sylvester appears in the above photo in a typical position after he eats. Sylvester prefers moderate weather and often stays inside when its bad outside. We don’t plan to travel with all these animals in the future. The dogs are getting older so we will have to see who is with us in a couple years.  Sylvester came home with Karen from the veterinarian’s office as an adoption (two years ago). She is looking for a new home for Sylvester which I hope goes well. The dogs love to travel but the cats are used to roaming the acreage outside which is not going to work in an RV.

I spent time inside as well. Finally gathered up all the canning jars, pressure cooker and such to post on Craigslist.  I’m trying to sell off items in larger groups. Next might be the motorcycle, helmets and bike pack. The end of my vegetable growing hobby reminded me of my Uncle Don at about my own age. As I recall, we were standing in his backyard near the base of the stairs leading from his deck and noticed his garden plot was not planted. Don said he stopped planting because it was too much work.  I am like him in a lot of ways. His garden included a watering system therefore so did mine.  Life is a heck of a lot shorter when you think about others who have passed and what they were up to at your own age. No doubt Uncle Don figured out everything he wanted to know about gardening so he moved on to something else. That’s a family trait.

I’ve been hacking away at truck research, adding a new section on the blog to keep my notes. You can find the truck page here.  I stayed up late one night building trucks online to get the base prices. I know what our budget is and am working on finding out the price points each of these monsters come in at. That way it might narrow the search to a model or two from each truck manufacturer that is in line with our budget. These diesel suckers are expensive. I can remember when $10,000 would buy a new Cadillac.

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The starting prices shown include necessary options such as fifth wheel hitch preparation, on-the-fly electronic 4×4, minimum of cloth interior and running boards. The prices include rebates or incentives as of today at the manufacturers suggested retail price (MSRP).

It’s interesting to note additional options sometimes come in a package when selected. Such as Chevy/GMC requires you get a spray in bed liner if you select the fifth wheel hitch preparation.  I also found the base price between all the trucks are within about $500 to $720 of one another. Not much of a price difference to be concerned about.

I’m in the process of learning about what options influence the trucks weight capabilities. Hopefully learning what others mean by a “properly equipped truck can handle” a specific fifth wheel weight.  And along the lines of weight. There are a ton of places to consider such as gross cargo weight and rear axle weight where the front of the camper rides over the truck.  There are assumptions that might factor in such as what is the average cargo weight stored in the front of a fifth wheel. And people are posting in forums you can’t always trust the fifth wheel manufactures posted weights. Some are suggesting pin weight is 10 to 20% (update, a couple readers said their pin weight loaded is 19 and 21%) of the total fifth wheel weight. But then again cargo loaded in the rear of the fifth wheel will offset some of the weight in the front when it pushes down on the rear of the camper, like a teeter totter.  So much to learn. I may be sick in the head but I’m enjoying the research.  Those guys over on the truck forums really are proud of their trucks!  Someday I hope to know enough to ask intelligent questions. Give it a try. Go online and build a truck. Watch how the weight capacity changes when you select gear ratio, 4×4 and engine.

Once I get the spreadsheet done I may post a link to it so folks can look it over.  I’m off to start learning about all the optional equipment so I can build one of each truck online and get closer to the actual MSRP with the options we are interested in. What’s cool about building the truck online are the links to similar equipped trucks for sale in the area.

 

new flash  Here is an informative blog post by Hebard’s Travels titled How to Travel with Cats in an RV

Started Truck Research

I suspect this will be the first of several blog posts I write concerning truck research. I’m hoping to get advice from those more knowledgeable.

Karen and I decided on a fifth wheel because we plan to be parked for longer periods of time while workamping or volunteering. And of course, we will be living in it fulltime. If we were going to move around most of the time we would go with a Class A. We have also decided to start off with a one ton dually truck because of the stability it offers when towing as well as the increased pin weight capabilities. We know this truck might not be the best option for a daily driver but are going to try and live with it. Pulling a car behind a Class A might be the best option for a daily driver or even her driving a second vehicle might work. We prefer to travel together rather than driving separately. Personally, I would not own a pickup truck without four-wheel drive because trucks just don’t have great traction in bad weather without it. My past three trucks have been gas F150 Fords with four-wheel drive.

After touring fifth wheel floor plans we find ourselves attracted to trailers weighing in the ranges of 16,000 to 19,000 gross pounds given their construction, cargo capacity, amenities and our budget should we buy new. Pin weights, or the part that rides over the rear axle of the truck, vary by sometimes large margins. And it is this pin weight that steers us to the dual rear wheel trucks. We are attempting to buy a fifth wheel that we will not want to trade out of sooner than later.  However, if we do we want the option of having a heavier trailer without switching out the truck.

I’ve not come to a definite conclusion but could see picking out maybe three trailers we are interested in for our short list. As we would know the trailer weights I feel safe in buying the truck a little earlier. In the forums, most are recommending ordering the trailer first. I don’t see the difference in buying the trailer first or having three specific trailers we’ve selected to choose from before the truck is purchased, especially as we are looking at well-equipped dually trucks.

To me the advantages of having the truck first is we plan to pay cash for the truck, trading in at least one of our existing vehicles. The trailer will be financed, at least in part, until we sell our home.  We would have the truck to help move our household belongings when sold, to storage, given away or trashed.  Although a lesser concern, we would also have a period of time to get used to driving the larger truck before we hookup a 35 to 40-foot trailer to it. Most of all, if we find the trailer we want parked on a lot for sale, we would be able to purchase it on the spot. Rather than waiting for our truck to be built at the factory or hoping to find a used or new one ton truck for sale at a fair price and locally.  Certainly, we all have read where others had no problem purchasing the truck and trailer at the same time however. And some already owned a good truck and found a trailer it would tow.

The truck research so far has been easier than researching the trailer. I’ve met a few people online who are truck experts and can count on their help. It appears any of the big three truck builders have trucks that can handle the weight we are looking at so the field to search from is far smaller than it was for fifth wheels.

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Standard extra leaf spring in dually F350, you can order the same in an F250

An extra two rear tires is not all one gets with a dual wheel one ton truck.

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Dual real trucks have larger axles and other components

I’ve been stopping by dealerships and picking up their 2017 truck brochures. So far, I’m just trying to get my head wrapped around what options each truck offers and what all the terminology means such as gear ratios, gross cargo or combined weight, and more. And what amenities are standard or can be an option in which models. The words “properly equipped truck” has a lot of meaning in that adding certain options can significantly add to the trucks towing capacity. Real important if we plan to buy a truck with greater towing capacity than we might currently need.

And then there are decisions to be made such as what margin of safety is best to build into the truck such as X percent more cargo weight capacity above what we are routinely hauling.

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This F350 dual rear wheel truck has lower bed sides than the F250

I’ve run into several other concerns, some more minor, which will require a decision. Such as are the truck bed sides tall and leave very little room between the top of the truck sides and bottom of the fifth wheel which could cause damage when you go over large pumps on the road. We have already decided on a long-bed truck so there will be no concern when turning the trailer that it might strike the rear cab of the truck if a slider hitch is not used. I can see having an axillary fuel tank/tool box combination in the truck someday so a long-bed would be important for that as well. And what about color? Do we go with white and put stripes on it later or add a second paint color to match the fifth wheel or what?  I’m hoping by selecting three potential fifth wheels we might buy we can just pick out a color that looks okay with all three. Then again, I’ve never worried much about vehicle colors. Keeping options open with color in the past has allowed me to find better deals because of the larger selection compared to wanting any one color. Not a deal breaker for sure.

The trucks I’ve owned have been one year old when purchased at a substantial discount. I like to buy vehicles with around 20,000 miles on them and still in warranty. I’m finding these dually one-ton trucks hold their value at that low mileage so am certainly considering purchasing a new one as well. A local dealership has always been good about finding a used truck for me at a fair price markup. I’d hope he would do the same with a new one. I’m not brand loyal to any one manufacturer but have the most experience with Fords. So, I started researching what’s important in a truck hauling heavy weights with the Fords, hoping what I learn will be applicable in the Dodge and Chevy. We will most likely purchase a model between the years 2017 and 2019. It should not be hard to find out the differences between the years.

If your interesting – Here is a Link to my truck shopping and research page where I’m parking notes.

 

new flash Forest River revises it warranty parts policy, telling dealers to get the part using the most expedient delivery method. They will cover the increased cost. The hope is to shorten the wait to have RVs repaired.