Depreciation Guidelines?

bluwtr49 wrote:
My rule of thumb is that you would pay about 20 to 30% of the original MSRP for a 10 yo coach that is in excellent condition.

That is buying it at a reputable dealer that has completely gone thought the coach and assures that everything is functioning correctly at time of delivery. Private sales would be less but the buyer is left to correct all the deficiencies so the end costs are about the same.

I think your rule of thumb is way off. I bought a 1 year old used coach that had an MSRP of $228K for $135K from a dealer, there is no way I would have bought it 10 years old for the same price, or anywhere near.

Blackdiamond wrote:

bluwtr49 wrote:
My rule of thumb is that you would pay about 20 to 30% of the original MSRP for a 10 yo coach that is in excellent condition.

That is buying it at a reputable dealer that has completely gone thought the coach and assures that everything is functioning correctly at time of delivery. Private sales would be less but the buyer is left to correct all the deficiencies so the end costs are about the same.

I think your rule of thumb is way off. I bought a 1 year old used coach that had an MSRP of $228K for $135K from a dealer, there is no way I would have bought it 10 years old for the same price, or anywhere near.

You can get 20-30% off the lot brand new.

Effy wrote:

Blackdiamond wrote:

bluwtr49 wrote:
My rule of thumb is that you would pay about 20 to 30% of the original MSRP for a 10 yo coach that is in excellent condition.

That is buying it at a reputable dealer that has completely gone thought the coach and assures that everything is functioning correctly at time of delivery. Private sales would be less but the buyer is left to correct all the deficiencies so the end costs are about the same.

You can get 20-30% off the lot brand new.

I think your rule of thumb is way off. I bought a 1 year old used coach that had an MSRP of $228K for $135K from a dealer, there is no way I would have bought it 10 years old for the same price, or anywhere near.

20% of the original MSRP would be around $45,000. With no other information, that doesn't sound ridiculous from the buyer's point of view providing it is in good shape with regular maintenance and average wear, tear and mileage.

Recently I look at a couple of 1995 pushers and the average asking price was usually a couple of thousand over the average sale price. The rigs I looked at were selling for about $25,000 for a rig in excellent shape. NADA lists that rig at about $11,000. So I think recent sales, NADA values and how much you are willing to pay. PPL seems to have the best sales lot prices and owners who cannot forget how much they paid new are the worst prices.

I looked at a rig last week, owner wants about 10K over average NADA and the is about 3 or 4K in body damage and for a new ladder, the tires are really old, about 8 years and all three batteries were flat dead. The rig had been sitting with out being moved(and I think started) for at least 2 years.

The rear cap is pulled loose by the ladder and the ladder is damage, other than that it looks really good, the interior is beautiful and it is low mileage. But I couldn't even make a realistic offer due to what it would cost to bring it to average to good condition would cut the price down to low NADA retail.

muskrat49 wrote:
No you won't. You'll know what people are asking for them. Not what they ultimately sell for.

Really......so everyone across the country who posts an RV for sale gets no where near what they sell for and the combination of numerous vehicles for sale will not give you an idea what it's worth? :S

There's always someone who just can't resist making a comment. What was your input to the conversation, other than a dumb comment?

DunellenGuy wrote:
I've got a couple of questions about depreciation for a Class A Diesel RV. I frequently read that a new RV looses 30% of it's value the moment you drive it off the lot. I've also heard that you should expect to pay about 30% below MSRP on a new RV.

Now, I'm actually shopping used, which leads to some questions:

1) If a new RV is purchased at 30% off MSRP, and then loses 30% of value, does that mean that the resale value after a year is approximately 60% less than MSRP? (For example, MSRP $200,000 - 30% -> sale price of $140,000. Drive off the lot less 30% -> $98,000 resale value?)

2) Is there a simple rule-of-thumb based on MSRP of how much the resale value of a well maintained, quality diesel Class A should be depreciated over the first ten years? Meaning, just to get into the ballpark for negotiations?

I've been researching used Class A gas MHs for about a year, so my experience isn't exactly yours ... but maybe what I've seen can help you...

#1 would stand to reason but is complicated by the fact that many people don't negotiate down to the 30% off of MSRP for new units. People I talk to time and time again have bought new using the car market as reference and have only gotten 10-15% for example (and have thought they've done well). So even though there are a good many of us who do research on pricing, there is significant "inertia" in the market to push real selling prices of new closer to MSRP than the 30% off number.

Additionally, NADA doesn't help the situation. For example, go price a new MH from RVDirect (an example of 30% off pricing) and then go to NADA pricing for a one year old identical unit and you'll (at least from my experience) find that it claims very close to the same price that you could get one new.

So even though one would expect a particular depreciation curve from a new unit based off of 30% off MSRP for example, there exists what I would call a "NADA Bermuda triangle" for 1-4 year old units where the difference between NADA claimed values of these units and what one could by new is very little. This creates an incentive for some to buy new.

A key piece of information to answer the above question would be to get one's hands on the wholesale NADA values. I have yet to go by the library to research that part but the information is available.

#2 On the other hand can somewhat be answered by using the NADA values. Once you get out to 8-10 years the market forces are a little different. Instead of almost new units competing with new units because the price differential is relatively low, now things like history, condition and of course supply/demand come into play. Best I can tell right now, NADA low retail can be used as a general rule of thumb for units that have a good number available on the market to choose from and aren't selling in less than 30days on RVtrader for example. For example, a 2007 Itasca Sunova 35J which is on my short list. It and it's cousin Winnebago have about 5 units to choose from in my region. Based on reading through forums I found that new these sold for around $85k. NADA claims a low retail value of about $45k. Of those I have been watching, I saw one not last long on Craigslist at $39k. Others I see sitting a long time at the $60k price point. So the low retail does not seem unreasonable.

Another point to take into consideration is competition a unit may have from other segments. We looked at two 2012 Thor Hurricane 34? bunkhouses at a local Camping World. The better condition one we looked at had been in inventory for over a year! The pricing was relatively good and with talking to the sales guy I got the impression I could get that one down below low retail. However it was evident to me that it wasn't selling because of price pressures from the "Class A crossover market." Why would one buy a 3 year old bunkhouse with poor basement storage and a "dated floorplan" with lack of some features when a new Thor ACE bunkhouse with all the trendy stuff is almost the same price?

That was very long winded but hopefully some food for thought. If you can take the time to watch the market and specific units for how long they stay for sale (and don't be afraid to ask how long they have been for sale) AND be equipped with the wholesale values, low and avg retail you can be well prepared for your negotiations.

Two Jayhawks wrote:

Effy wrote:

John&Joey wrote:
My fast rule of thumb has always been 50% every five years. Not very scientific, but as a general rule it has served me well.

So a 10 yr old MH is worth nothing?? :h

Nah a 10 year old unit would be worth 25% of when it was new.

Thanks.

You know what Ron White says.

Yes, you can get 25% off on a brand new coach, and yes as soon as you drive out of the lot the value keeps going down. So don't buy a coach as a money making investment. Buy a coach to enjoy it, even though I am not sure which is worse as far as to being a money pit. A boat or a motor home. I guess boats are worse.

Actually the best thing to do is to buy a coach that is around two years old. Lets say it sold new for 800K, in a couple of years you could probably get it for 480K. Lot of coaches on the used market now days.

John&Joey wrote:

Two Jayhawks wrote:

Effy wrote:

John&Joey wrote:
My fast rule of thumb has always been 50% every five years. Not very scientific, but as a general rule it has served me well.

So a 10 yr old MH is worth nothing?? :h

Nah a 10 year old unit would be worth 25% of when it was new.

Thanks.

You know what Ron White says.

No, what does he say? He work in the RV industry or is he a drunk comic?

Some of you are pretty quick to draw your wit guns only to find they aren't loaded.

If the statement was clarified it may have made more sense. 50% of what? 50% run rated over the life of the RV where the rate is applied to the previous years depreciated value per annum or flat 50% off MSRP? I can do math, I've been working at banks for over 20 years. But the statement itself without a clarifying time frame or basis leaves a lot to infer.

Retail depreciation is not that hard to calculate. It's all about fair market value. What does the same or similar unit in similar condition fetch on the open market? You can read NADA or make up a value all day but if it doesn't sell then it's a worthless piece of data.

Depreciation for tax purposes - like a commercial vehicle can realize a 5 year write down - or 20% a year from MSRP. Notice the latter statement references a base point and is not run rated of 20% from the previous year's depreciated value.

At the end of the day, depreciation only matters if you can claim it, or you plan on selling it. Otherwise it's just a number to keep you awake at night.

DSDP Don wrote:
.... Again, someone taking something soooo literally, that they have no room to apply common sense!!!!

X2

For some it sooo very important to be right even in an environment so nebulous as the internet.

There is an old saying that "if you make hammers for a living, pretty soon every problem looks like a nail." So if you're an accountant (or someone very analytical) depreciation has a whole different importance with very little room to apply that common sense you're talking about.

Very possible that the OP just wants to know roughly how much money he will lose on the sale in five years if he buys a RV. Maybe they are willing to throw away 10K but not 100K. So skip the 200K coach and better buy a 20K one.