When buying an RV, you need to consider many variables and factors. Here, we’ll walk you through everything you need to know about buying an RV, including what to look out for, how much money you have to pay, what types of RVs are best suited for certain activities, how to prevent RV depreciation, and more.
What is Depreciation?
Depreciation is the value loss that occurs over the life of an asset. For example, if you buy a car, truck, motorcycle, boat, or RV, depreciation is the cost of losing those things’ value over time.
The process of depreciation is fairly simple. When you purchase an item, you pay money for it. Over time, that thing loses value. For example, let’s say you bought a $10,000 SUV three years ago. At the end of each year, you’d be able to sell it for less than $9,500. This is called depreciation.
In addition to time, there are several other factors affecting the depreciation of assets. Some items depreciate faster than others. For example, cars, trucks, motorcycles, boats, and RVs depreciate much faster than furniture and appliances. In addition, frequently used items tend to depreciate faster than ones that aren’t used very often.
Are RVs a Good Investment?
RV ownership can offer more than just recreational value; it can also be a financial investment. Understanding the potential financial benefits of RV ownership is essential. Here’s what you should know:
- Equity Building: As you make payments on your RV, you’re building equity in a valuable asset. This equity can be leveraged for loans or used to fund future adventures.
- Rental Income: Some RV owners generate income by renting out their vehicles when not in use. This can offset ownership costs and potentially turn your RV into a revenue source.
- Appreciation Potential: While RVs generally depreciate over time, certain vintage or limited-edition models can appreciate in value, especially if they become collectors’ items.
- Flexibility: Owning an RV provides flexibility for spontaneous travel and eliminates the need for costly hotels, making it a cost-effective option for frequent travelers.
- Tax Benefits: Depending on your financial situation and intended use, you may be eligible for tax deductions related to your RV, further enhancing its value as an investment.
By considering these factors, you can make an informed decision about whether investing in an RV aligns with your financial goals and lifestyle.
What is the Depreciation Rate for RVs?
RV depreciation rates depend on many variables. They include the following:
- Model: Different models of vehicles depreciate differently
- Year/Make/Model: A 2012 model might depreciate faster than a 2019 model, even though the same manufacturer makes both.
- Vehicle Type: Class B motorhomes depreciate slower than class A travel trailers, for example.
- Condition: If your RV is in bad shape, it will likely depreciate faster than one still usable.
- Location: Where you live determines how fast your RV depreciates.
- Owner: How long you’ve owned your RV will impact its depreciation rate.
RV Depreciation Depending on Its Type
The average cost to buy and sell a recreational vehicle (RV) depends on where you live, how much money you have, and how long you plan to keep the RV. The longer you intend to use your RV, the cheaper it will likely become. This is because the “value” of the RV decreases as it ages, and its features can play an important role. For example, Class A motorhomes typically feature one bedroom, one bathroom, and a kitchenette area. In addition, these models usually come with appliances like refrigerators and stoves. If the appliances and amenities depreciate, the entire value of the motorhome will drop. Class A motorhomes, fifth-wheel trailers, and Class C motorhomes are considered luxury vehicles and tend to hold their value better than other RVs. In addition, fifth-wheel trailers have a lower depreciation rate than Class A motorhomes and Class C motorhomes.
RV Depreciation Depending on Its Condition
Before selling or buying a used RV, a good rule of thumb is to check out the vehicle’s exterior. Is it clean and free of dings and scrapes? Does it look like someone took care of it? If you see something that needs attention, mention it during negotiations. A dirty RV could bring down the price considerably.
When it comes to an RV’s interior, take note of what you find there. Do you notice odors coming from the air vents? Are the appliances working properly? What about the bathroom? How does the sink work? Remember, those prospective buyers will have more questions than these basic ones.
Finally, don’t forget to ask about the history of the RV. Was it recently purchased or inherited? Has it seen many miles already? Have repairs been done? These factors will help determine how much it’ll cost to fix up a depreciated/used RV.
Real-Life RV Depreciation Example: Condition Matters
Imagine you’re considering two used RVs of the same make and model year. RV A is in excellent condition, both inside and out. It’s been well-maintained, has low mileage, and comes with a detailed maintenance history. RV B, however, shows signs of neglect, with visible exterior damage, interior wear, and appliance issues.
Despite being the same model, RV A commands a higher resale value due to its well-preserved condition. Buyers are willing to pay more for reliability and a hassle-free experience. In contrast, RV B’s depreciation is accelerated by its poor condition, resulting in a significantly lower resale price.
RV Depreciation Depending on the RV Brand
When you buy a used RV, you want to make sure it’s one you’re familiar with. You don’t just want to take a chance on something that could break down on you. But what about those iconic brands known worldwide—the ones that everyone knows and loves? Do they really hold up well over time? Is there anything special about these brands that makes them worth paying more for? Analyzing some of the most popular RV brands people use reveals a few answers.
The research showed us that even though these brands aren’t necessarily known for being the cheapest RVs on the market, they tend to hold their value longer than those less famous. For example, we found that Airstreams sold better on average compared to Winnebagos.
The price differences might seem small, but they add up. For example, if you bought a Winnebago for $400,000 and it depreciated to $200,000 over the next five-seven years, you’d lose $200,000 in value. On the flip side, if you bought an Airstream for $400,000 and it increased in value to $450,000 over the same period, you’d gain $45,000.
Tiffin is known for its high-end Class A motorhomes that offer luxurious amenities and exceptional craftsmanship. A Tiffin Allegro Bus, purchased for approximately $300,000, could still command a resale price of $200,000 to $225,000, even several years down the line. Tiffin’s reputation for quality and attention to detail makes its RVs attractive to buyers seeking long-term value.
Jayco is a well-established brand recognized for producing a wide range of RVs, including travel trailers, fifth wheels, and motorhomes. A Jayco Jay Flight travel trailer, initially priced at $30,000, might retain a resale value of around $20,000 to $22,000 after several years. Jayco’s commitment to quality and durability contributes to its popularity in the resale market.
Grand Design RV is known for its commitment to quality construction and innovative design. A Grand Design Reflection fifth wheel, purchased for $50,000, could still fetch a resale price of approximately $35,000 to $40,000, demonstrating the brand’s appeal to buyers seeking reliable and well-constructed RVs.
So, if you’re looking to invest in an RV, consider whether you’ll benefit more from investing in a brand that’s more expensive now or one that’s cheaper later.
RV Depreciation by Type of RV
The average age of most RVs is around 15 years old. However, some models are much older than others. If you want to know what motorhome version will depreciate faster, here’s how it breaks down by type.
Class A and B Motorhomes’ Depreciation
The average RV owner spends about ten years owning their vehicle. This means knowing how to value a used RV properly is important. In fact, you could lose thousands of dollars over the life of your RV if you don’t understand depreciation. If you plan to sell your RV within five years, you might want to consider buying a Class B RV in the first place. These vehicles tend to depreciate faster than Class A models because they are smaller and lighter. However, Class B RVs usually cost less money than Class A units.
Class C Motorhome Depreciation
The average lifespan of a Class C motorhome is around eight years. This is about half the life expectancy of a Class A motorhome. The reason for this is simple: most Class Cs are bought brand new, while Class A motorhomes are usually sold used. In addition, because Class Cs depreciate faster than Class A motorhomes, many owners choose to sell their motorhomes early rather than wait another few years.
Depreciation of RV Trailers and Fifth Wheels
A fifth-wheel trailer is basically a small house on wheels with all the comforts of home, including a full kitchen, bathroom, bedroom, living room, and even a fireplace. They come in many sizes, shapes, and styles. Some are designed specifically for camping, while others are built for daily use. There are also travel trailers, which are smaller versions of fifth wheels.
Travel trailers are not nearly as large as fifth wheels but offer plenty of space inside. And because they’re towed behind a vehicle, they don’t require a special permit like most RVs. Depending on the size, travel trailers cost anywhere from $10,000 to $100,000. Fifth wheels start at around $20,000 and go up to hundreds of thousands of dollars.
The price range is very wide, especially for travel trailers. For example, a basic travel trailer starts at about $20,000 and goes up to about $50,000. A luxury travel trailer costs much more, starting at about $80,000 and going up to well over $200,000. A fifth wheel starts at about $25,000 and goes up into the low six figures.
RV Depreciation Calculator
To estimate the potential depreciation of your RV, you can use the following formula:
Depreciation = (Original Value – Current Value) / Age
- Original Value: The initial purchase price of the RV.
- Current Value: The current estimated market value of the RV.
- Age: The number of years since the RV was purchased.
Let’s say you purchased an RV for $80,000 five years ago, and you want to estimate its current value:
- Original Value: $80,000
- Age: 5 years
- Current Value: ?
- Depreciation = ($80,000 – Current Value) / 5 years
Solving for Current Value:
Current Value = $80,000 – (Depreciation * 5 years)
Remember that this is a simplified calculation, and actual depreciation can vary based on several factors, including the brand, model, maintenance, and market conditions. For a precise valuation, consider consulting with an RV appraiser or researching current market prices.
How Can You Prevent RV Depreciation?
RV owners know how much work goes into maintaining their vehicles. But many don’t realize that the vehicle itself also depreciates over time. So while most people focus on the cost of repairs, it’s important to look at the vehicle’s total value over time. If you’re looking to buy a used RV, here are some things you can do to minimize the sum of money you lose when selling.
· Keep up with maintenance: Routine maintenance is one of the best ways to keep your RV running well. It includes regular oil changes, tire rotations, brake pads, transmission fluid flushes, and air filter replacements. Keeping up with these tasks helps ensure that your RV runs smoothly and safely.
· Make sure your RV is ready for winter: Winter weather can wreak havoc on RVs, especially those without proper heating systems. So before heading out on a trip, ensure your RV is properly prepared for the cold season. Check tires, batteries, hoses, lights, and windshield wipers to ensure everything works correctly. Also, ensure that your heater works properly and that your A/C unit is functioning properly.
· Clean it out: As soon as you return home from your next trip, take the opportunity to clean out the RV. Remove trash, empty cabinets, wash windows, and vacuum carpets and floors. If necessary, replace worn items such as seats and carpeting. You’ll want to give your RV a good cleaning before you list it for sale.
· Market Research: Stay informed about the RV market trends and demand for specific models. This knowledge can help you make informed decisions about when to sell your RV for optimal value.
· Usage Patterns: If you intend to sell your RV in the future, be mindful of its usage. Excessive wear and tear from full-time living may accelerate depreciation, so strike a balance between enjoyment and preservation.
RV Trade Show Pricing and Its Implications for Depreciation
Understanding how RVs are priced and promoted at trade shows can offer valuable insights into the potential impact on RV depreciation. RV trade shows often feature dealers offering special discounts on their RVs, emphasizing that these discounts are time-limited and that prices will return to their original levels after the event. These original prices can sometimes be significantly higher, reaching levels like $145,000 for a single RV.
- Initial RV Depreciation: RVs purchased at trade shows may have artificially inflated starting prices, potentially leading to higher initial depreciation rates. Buyers who pay premium prices at the show may experience a more significant initial depreciation hit compared to those who pay market-reflective prices.
- Resale Value Concerns: When it comes time to sell the RV, those who purchased at trade shows may find it challenging to recoup their investment, as the inflated starting price may affect the RV’s perceived value in the resale market.
- RV Depreciation Over Time: RVs purchased at trade show discounts might still depreciate, but the starting point for depreciation is artificially elevated. This means that, over time, the RV’s value could decrease to levels that are much lower than what buyers initially paid.
While trade show discounts can be appealing, it’s essential for RV buyers to strike a balance between getting a good deal and minimizing potential future depreciation. Being aware of market prices and RV depreciation trends can empower buyers to make choices that align with their financial goals and expectations.
RVs lose value over time, but the memories created with them do not. So even if you don’t earn back your entire investment when you sell, most RVers will agree that it was well worth it. You cannot put a value tag on the satisfaction of exploring the great outdoors, even if you must consider RV depreciation when you buy or sell a used motorhome.
RV Depreciation: FAQs
How Much Do RVs Depreciate?
RV owners know that RVs depreciate quickly. However, many people don’t realize just how fast it happens.
The good news is that most RVs depreciate much slower than cars do. This makes sense because RVs are used for living spaces while cars are used for transportation.
Buying an RV can be great for life experiences. However, it would help if you considered selling it for cash before it depreciates more than you can handle.
What may surprise you is that RVs depreciate at different rates, depending upon the type of RV. In addition, some RVs depreciate faster than others.
To ensure that your RV depreciates slowly, you can do many things, including keeping the exterior well-maintained and repairing problems as soon as possible.
Are RVs a Good Investment?
RVing isn’t just about having a place to sleep. It’s about freedom and being able to go wherever and whenever you want. And while there are many reasons why people choose to do so, one major benefit is that you can take an RV anywhere without worrying about where you’ll park.
If you purchase a recreational vehicle, you won’t be stuck paying monthly rent. Instead, you’ll be able to use the vehicle as collateral for a loan against the equity you’ve built up over time. It means that even though you’re spending money on the vehicle itself, you’ll still make money off it later on down the road.
When you talk about investing in an RV, the first question on your mind should be the following: “how much money can I make?” Well, that depends on what type of RV you’re looking at and whether or not you’re willing to spend some extra cash on upgrades. So we looked at the different types of RVs and found that most of them aren’t worth purchasing unless you plan on doing extensive modifications.
What Is an RVs Average Lifespan?
The average lifespan of an RV depends on several factors, including the type of rig you buy, whether it is used primarily for camping or touring, and what maintenance you do yourself versus the maintenance provided by a specialist.
If you purchase a brand-new Class A motorhome, the chances are it will last for many years. However, if you choose to buy one over 20 years old, you might want to consider buying a newer model.
Most experts only talk of an “average lifespan” because RVs come in different models. Moreover, different owners would even use the same models differently. For example, some people like to travel around the country while others prefer staying put.
Some models have lasted for decades. However, most RVs are built to last about ten years. After that, the number of rigs still functioning well drops dramatically.
Should I Consider RV Modifications to Offset Depreciation?
Modifications and upgrades can enhance an RV’s functionality and comfort, but can they also offset depreciation? Understanding whether investing in modifications is a viable strategy for preserving value is crucial for potential RV owners.
While some modifications may add value and appeal to an RV, extensive or costly upgrades may not necessarily offset depreciation entirely. It’s essential to strike a balance between personalizing your RV and being mindful of potential resale value.