Motorhome Depreciation

I think that is very good advice and both the fuel prices and stock market are volatile and will be for a long while I'm afraid to say. That's why I've said so many times about buying the right rig from the beginning. If I'm going to live with it, its going to be what I want!

I feel really bad for anyone buying a dud motorhome but if I've learned nothing else I've learned to pay a few bucks to have a professional go over every foot of it. We do it for a stick home and need to do it for a motorhome as well.

Harry

Depreciation is also a variable that depends on outside forces that we all have very little control over. If, for reasons beyond our control, the price of fuel doubles in the next year or so, the sales value of large Class A RV's will drop a huge amount. If the price of fuel drops in half, then more RV's will be sold and the sales price of the good ones will increase.
Also, many people, including me, think that the stock market is higher than where it should be. If there is a major downward correction in the stock market, the sales values of RV's will plummet. If the company that built your RV goes under, that can also affect the sales value of your RV.
Basically, buying an RV is a gamble. There are too many things that can affect the depreciated value, that are beyond your control, to be of any use in trying to calculate the future value of your rig.
The best bet is to never "invest" any more in an RV than you can afford to lose. If, at some point in the future, you sell or trade your RV and receive any cash value for it, just consider yourself lucky.

There is another side to the new versus used discussion. On another forum I see a couple bought a one year old unit with only 6200 miles and the dealer just lied through their teeth about the rig. Customer ended up with massive headaches on his "gently used" motorhome. If someone dumped it, there had to be a reason and you may not know what that reason is.

Depreciation from MSRP is a difficult analysis because different units have different margins. Entegras can generally be bought for at least 30% below MSRP and closer to that 35% mark while Newmars tend to be closer to 25-28% and the same with Tiffins. It is very difficult to evaluate the depreciation based strictly on MSRP.

Actual Example:

The first owners of my rig purchased it for something less than its MSRP with owner modifications of $290,000.

7 years later, they traded the rig to a dealer for a newer rig.

The rig was then sold by the dealer for $120,000, with some sort of profit.

So, at almost precisely the 7 year old anniversary, the rig depreciated from MSRP, not including sales tax if any, $170,000 (or more if the dealer made a profit on resale).

Result:

69% depreciation in 7 years (10% straight line average) from MSRP.

$24,300 average annual loss in value each year.

et2 wrote:
The depreciation comes off the price you paid. If you over paid then the depreciation is more, if you get a screaming deal, it still depreciates after you drive off the lot.

It can't be based off the price he paid AND if he overpaid then is more. That is twisted logic. No one knows what you paid, so it is not based on what you paid. It based on industry and financial depreciation models that take into account several factors like make, model, condition, year, condition, etc. it has nothing to do with what you paid for it.

For example, if two people bought identical coaches at the same time and one paid full MSRP and one paid 35% under MSRP... and assuming a predetermined time in the future... say 1 or 2 years later... AND the coaches were kept in identical condition... The depreciated value would be exactly the same on both coaches. The depreciation comes off MSRP and is probably much higher than 18% for year one.

Dave M, if only people who could afford to pay cash for a motorhome were buying them, then there would be no motorhomes to buy as the companies would have all gone out of business long ago. So hopefully a lot of people don't follow your advice or the industry is done.

IS amazing, my thoughts are folks who are making an investment in a RV, big or small are kidding them self. Hell, I paid $195,000 for a 6 yr old 36' coach 6 yrs ago, have spent very little on repairs, but over $50,000 on wanted u0grades. I know the money is gone, no tears, but many great memories and exeriences.
The other side of the coin is the finance issue, my thoughts are, if you can not pay cash for it, your just digging a deeper hole.
But you gotta do what your happy with.
If debt makes you happy, smile.
Dave M

Foodsman wrote:
My thanks to all of you for your information...

Ivylog I’d say you’ve summed things up pretty well. I came into my motorhome plans thinking I new what I wanted. The more I learned the more confused I became as I settle into what I want to do.

Right or wrong I want to buy “ONE” motorhome and I want it to be the right one! I don’t buy toys, nor do I think of a motorhome of $250,000.00 + dollars as a toy! I do however have some rudimentary understand of money and deprecation and if I’m buying a motorhome deprecation is a fact of life you deal with.

My natural reaction is to buy new but I've learned from you good folks that used may well be a better direction. Not only for purchase price and depreciation but having someone else go through the pains of working the kinks out!

So its a evolutionary thing with me and the ability to confuse myself as best I can. Its like you start each day will a little mole hill and build it into a mountain before days end.

Anyway, sorry for any confusion, I appreciate all your help and think the best thing I can do is getting out to some dealers and see things first hand! In the interim I will guard against any wayward posts... :)

Thanks one and all

There can be a lot of factors on the new versus used deal. I would think the most economical way to buy a motorhome is be a cash buyer and find the best two to three year old motorhome you can find and pay 50% or less of the original MSRP for it. But for the vast majority of us who are not cash buyers, we may actually be better off with a new unit versus a couple of year old unit. New units come with better warranties and usually the finance terms are a lot better. For example you may get a 4% loan on a new unit while used unit financing may be in the 6% or more range.

I bought new simply because that's the way I am. I take care of my stuff so I like to be the one who owned it directly out of the factory so I know it's been taken care of. I'm willing to pay the price for that.

wincrasher65 wrote:
I don't know where that scale came from, but my experience is 50% depreciation in 3 years. A bit less if the unit is in A1 cosmetic condition, a bit more if it's in rough shape or has mechanical issues.

MSRP is a fantasy and everyone knows it. Base your calculation on at least 27% off MSRP as the transaction price.

I believe the 27% off MSRP. I believe the 35% is to high

I think the 18%for the first year is to high

I think the 50% in 3 years is a little to high, but not much. That is roughly 27% plus 8% a year for 3 years. Not bad imo.

All that said the discount off MSRP and the depreciation are significant

My thanks to all of you for your information...

Ivylog I’d say you’ve summed things up pretty well. I came into my motorhome plans thinking I new what I wanted. The more I learned the more confused I became as I settle into what I want to do.

Right or wrong I want to buy “ONE” motorhome and I want it to be the right one! I don’t buy toys, nor do I think of a motorhome of $250,000.00 + dollars as a toy! I do however have some rudimentary understand of money and deprecation and if I’m buying a motorhome deprecation is a fact of life you deal with.

My natural reaction is to buy new but I've learned from you good folks that used may well be a better direction. Not only for purchase price and depreciation but having someone else go through the pains of working the kinks out!

So its a evolutionary thing with me and the ability to confuse myself as best I can. Its like you start each day will a little mole hill and build it into a mountain before days end.

Anyway, sorry for any confusion, I appreciate all your help and think the best thing I can do is getting out to some dealers and see things first hand! In the interim I will guard against any wayward posts... :)

Thanks one and all