Travel Trailer Depreciation?

I was wondering if the OP was thinking about writing the trailer off as business expense and was wondering what other folks were doing in regards to the depreciation schedule.

Gr8life wrote:
I would be reluctant to call anyone else foolish when it comes to buying RV's. A few folks on here may claim to buy low and sell high but the vast majority of us look at it as the cost of entertainment. If one can purchase at a hugely discounted price and sell in a seller's market, the financial loss may not be terrible. The joy of rving can be priceless.

True - there is no way to financially justify the cost of the TT, fuel, supplies, depreciation, etc. Even if you calculate the cost differential between a night at a CG and a hotel at $100/night, you would have to camp 10 years at 25 nights/year just to make up for the original cost of buying the TT. Throw in the cost of a TV, tolls, gas, maintenance, etc and it would probably take 20 years.

The biggest way I justify my TT is that I get to go where I want and sleep in my own bed and use my own bathroom. We also love to sit by the campfire and cook meals (both inside and outside on the Aussie grill that came with the TT).

And maybe I'm strange, but I like the sense of accomplishment being able to tow our little house to where we want to go, and use it as a base camp.

The downside is that in my area you can only do this from about April-November, so we are resigned to staying at hotels when traveling from December-March.

This summer we are contemplating leaving the TT on a CG site for all of August to see what it is like. We have never done that before, because we love to visit new places all the time. I can't see being a seasonal camper, but one month could work well for the rest of my family while I'm working.

There is an easy way to reduce the impact of depreciation, simply use the trailer more. I use mine over 200 times a year which means that $3,000 in depreciation amounts to $15/night. For those who only use theirs 50 nights a year, that cost soars to $60/night. I have always received book value for my trade ins, and the dealers don't even ask how often I use mine. For those who seldom use their trailers, buying used really makes sense. I like new since I value what that gives me in terms of warranty, and reliability.

Gdetrailer wrote:

dadmomh wrote:
We just sold our Rocky 2604 after only having it for 1 1/2 years. We bought it for about 33% off MSRP. Never expecting the changes we're making in our lifestyle now, we looked at 5% interest we'd pay on a loan vs 8%+ on our investments. Debated whether we should take money out and pay cash, but decided that seemed like a no brainer with making 3%+ more plus being able to deduct the interest as a second home. Now the bad news. Long story short, it cost us about $1000 to sell it. One of those things that if we knew then what we know now, we'd probably have kept our '07 ROO 23SS or just gotten out of camping entirely at that point. I can't imagine how folks that trade every couple of years keep from taking a bath on it....maybe they don't avoid it. I checked NADA, did tons of online searches and our price was right where it should have been, except for that darned $1000. So guess the answer is that you need to keep it for 3 or 4 years or so to come out at least even, maybe ahead a smidge. In any event, it was a key part of our changes and we're just thankful it wasn't any worse. The man who bought it is from LA and had seen the layout, but he said he never buys new and had a heck of a time finding a really good almost new. We feel like he'll be a good "dad" for Rocky and take excellent care. Making this huge change is like watching money flying out the door, which it really is, but in the big picture we'll be ahead when the dust settles.

Sorry that you had to sell off your trailer, sounds like you really liked it.

However, your experience should drive home the point that I have made numerous times on this forum and others have argued that I am totally wrong that buying a RV with CASH IS YOUR BEST BET WHENEVER POSSIBLE.

Taking out a loan on a depreciating HOBBY "asset" like a RV and comparing interest of a loan VS pulling SOME money from "investments" is a fools game.

In your case, circumstances can and often change which CAN make a loan payment no longer feasible or at the least a family or health issue can make a RV sit in your yard or storage for years with no use..

I understand not everyone has the "cash" just laying around, BUT there are things you can do like start putting money aside like you are paying a loan payment to a bank.. But instead of a bank you are paying yourself into an account that is separate.. It is an "old fashion" term called "SAVINGS"..

That is pretty much how I get the next down payment for my next vehicle.. I put a lot of miles on for my commute and have no choice but to replace vehicles often.. I put down a good size down payment then pay extra against the principle.. This allows me to pay off a 5yr loan in about three years.

Once loan is paid off I then put the the same amount of money I WOULD HAVE been paying to the bank until I need to replace the vehicle.. This builds up the next down payment.. When done right it will snowball and the next down payment will be larger to cover the rising cost of the next vehicle.

As far as the OPs question goes.. There is no real "set" amount of depreciation on RVs.. In the used market, AGE is typically the main "factor" in what it is worth.. The older it is the less it will be worth to the next buyer..

A used RV is really only "worth" what the next buyer is willing to pay regardless of what some "book" tells you.. And in the used market there are many more used ones for sale than buyers..

I drive by several used car lots that have had at least two TTs and one 5ver pretty much all the time.. several have been sitting on those lots for several years..

They would have taken the depreciation hit whether they financed it or paid cash. And in fact if they had the cash to purchase outright then the difference in interest paid vs. investment gains was most likely small. If they paid the entire purchase with cash their hit would actually be higher as they would have lost all the investment income plus the depreciation.

I would be reluctant to call anyone else foolish when it comes to buying RV's. A few folks on here may claim to buy low and sell high but the vast majority of us look at it as the cost of entertainment. If one can purchase at a hugely discounted price and sell in a seller's market, the financial loss may not be terrible. The joy of rving can be priceless.

dadmomh wrote:
We just sold our Rocky 2604 after only having it for 1 1/2 years. We bought it for about 33% off MSRP. Never expecting the changes we're making in our lifestyle now, we looked at 5% interest we'd pay on a loan vs 8%+ on our investments. Debated whether we should take money out and pay cash, but decided that seemed like a no brainer with making 3%+ more plus being able to deduct the interest as a second home. Now the bad news. Long story short, it cost us about $1000 to sell it. One of those things that if we knew then what we know now, we'd probably have kept our '07 ROO 23SS or just gotten out of camping entirely at that point. I can't imagine how folks that trade every couple of years keep from taking a bath on it....maybe they don't avoid it. I checked NADA, did tons of online searches and our price was right where it should have been, except for that darned $1000. So guess the answer is that you need to keep it for 3 or 4 years or so to come out at least even, maybe ahead a smidge. In any event, it was a key part of our changes and we're just thankful it wasn't any worse. The man who bought it is from LA and had seen the layout, but he said he never buys new and had a heck of a time finding a really good almost new. We feel like he'll be a good "dad" for Rocky and take excellent care. Making this huge change is like watching money flying out the door, which it really is, but in the big picture we'll be ahead when the dust settles.

Sorry that you had to sell off your trailer, sounds like you really liked it.

However, your experience should drive home the point that I have made numerous times on this forum and others have argued that I am totally wrong that buying a RV with CASH IS YOUR BEST BET WHENEVER POSSIBLE.

Taking out a loan on a depreciating HOBBY "asset" like a RV and comparing interest of a loan VS pulling SOME money from "investments" is a fools game.

In your case, circumstances can and often change which CAN make a loan payment no longer feasible or at the least a family or health issue can make a RV sit in your yard or storage for years with no use..

I understand not everyone has the "cash" just laying around, BUT there are things you can do like start putting money aside like you are paying a loan payment to a bank.. But instead of a bank you are paying yourself into an account that is separate.. It is an "old fashion" term called "SAVINGS"..

That is pretty much how I get the next down payment for my next vehicle.. I put a lot of miles on for my commute and have no choice but to replace vehicles often.. I put down a good size down payment then pay extra against the principle.. This allows me to pay off a 5yr loan in about three years.

Once loan is paid off I then put the the same amount of money I WOULD HAVE been paying to the bank until I need to replace the vehicle.. This builds up the next down payment.. When done right it will snowball and the next down payment will be larger to cover the rising cost of the next vehicle.

As far as the OPs question goes.. There is no real "set" amount of depreciation on RVs.. In the used market, AGE is typically the main "factor" in what it is worth.. The older it is the less it will be worth to the next buyer..

A used RV is really only "worth" what the next buyer is willing to pay regardless of what some "book" tells you.. And in the used market there are many more used ones for sale than buyers..

I drive by several used car lots that have had at least two TTs and one 5ver pretty much all the time.. several have been sitting on those lots for several years..

A used trailer is only worth what someone will pay for it .

ugh wrote:
I was shopping for a used TT. The TT that I was looking for is around 26ft bunk house camper with or without a slide. I noticed that the cost or asking price of a 5 year old trailer was sometime too close to a brand new TT that was on sale with huge mark down like a RV show price. I almost made a mistake of buying a used one without a looking at the new one to see what kind of deal I could get. I bought my camper for 18K last Saturday, a lot of used one with similar floor plan between 8 to 10 years old have a asking price of over $10K. Many of them were in $12-15K range. So I figured that in ten years, I may loss around 6K or more. The math is much different for higher end TT. Like Mercedes, it deprecate a lot more than a Honda. My 2 cents

We got a good price on our 25 ft bunk house in 2011 for $13,500 and you could have knocked me over with a feather when it was totaled by hail and the insurance valued it at $12,500. We couldn't find anything even close for the $3000 buy back so we took the trailer and a check.

I tried getting an estimate of what my 2-year old TT is worth on NADA.com. However, it lists options such as electric slide out room and fiberglass exterior as options, even though they are standard with the model I own. Those two options, if I check them off, add over $5K to the average retail price. This makes no sense to me, and the average retail price becomes more than I paid for the TT originally.

RavensFan24 wrote:
In the end the value lies in the maintenance.

Certainly if you're selling privately a well maintained, clean unit will attract more interest than one that's obviously been neglected and may in some cases encourage the buyer to ante up a bit more for something he thinks he really wants. However - and this is a BIG however - dealers negotiate in wholesale value only and on average will calculate depreciation at 20% the first year and 10% for each year thereafter until the fifth year by which time any unit at best would be worth at most 40% of it's original value. Trade in the first five years and you're going to take a beating ... even if you think you're not the dealer will always get it back on anything he may next sell you. Beyond five years you'll still take a beating if you trade as recreational vehicles depreciate like a rock tossed into water but at least you will have (presumably) gotten good use out of the unit during the time you owned it. It's an expensive sport. ;)