Looking at purchasing an RV

[Okichewy1]

Little about myself. Married with 2 young adult children in college and 2 large dogs (75 and 90lbs). Live in southern Idaho but have family in Michigan, Georgia, Alabama and Florida. I am 46 y/o and wife is 43. I retired from the Marines and currently work for the US Forest Service. Have about 14 years till I plan on retiring at age 60. We are looking to purchase an RV in 2021 when we have our car, truck, boat and home heating system paid off. I already have budgeted about 1200.00 max a month for the RV loan payment, 100.00/month for storage and then have a couple quotes for insurance so have that money budgeted in. We initially will be using this for random vacations due to working still, but would like to have something paid off prior to my retirement. We have looked at Class A and Class C's and think were hooked on the Class A's. Any pointers for a new couple looking into these would help. Sorry this is so long.

Thanks,
Ken

[Okichewy1]

donn0128 wrote:

Okichewy1 wrote:
thanks for the information. It helps a lot with search process. Yeah, plan is to purchase with a 20 year loan and payoff within 12 years.

Big, BIG mistake. With a DEPRECIATING asset it will mean you will absolutely up side down for at least 12 years. Maybe more. At the end of 5 years you could still owe almost what you paid for it, and it could only be worth maybe 50%.
Unless you like throwing your money away,or have a lot of disposable cash look again at value. You pay 200K for a new MH, 5 years down the road you sell it for a hundred K. Can you absorb that much of a loss?

This is one of the big reasons I came on this forum, to gather information about MH's. I at least have 3 more years before we even purchase, but want to make sure we are doing the right thing. Me personally, I wanted to purchase a 2nd home on The Big Island, HI since I have found some for less than 200k. But the wife wants an RV.

So looking at RV dealer sites, they show the MSRP as say 200k, but sale price is 150k, then I emailed them and they say their online deal is 129k for a new 2018 model. If RV depreciation from the MSRP or the sale price? I am a pretty good negotiator when it comes to auto's and my boat. Didn't really need to negotiate when I bought my TT except the dealer dropping 1000 off the price to drive 6 hours to pick it up. There is so much to research in purchasing a MH I have found out.

[Okichewy1]

Optimistic Paranoid wrote:

Okichewy1 wrote:
Yeah, plan is to purchase with a 20 year loan and payoff within 12 years.

Have you actually talked to a bank or credit union about this?

FWIW, the credit union I belong to will only give a loan for an RV for 10 years (120 months) MAX, and will only finance up to 90% of the purchase price up to $60,000 for a NEW RV and up to 80% of the purchase price up to $50,000 for a USED one.

This, of course, is using the RV as collateral.

Not yet, this was talking with a couple dealers when we were window shopping to see if there was any models we liked. The dealers around where we live use the same banks/CU's we already have accounts with. So just assumed 20 years would be good, also, I understand it depends on the amount financed will dictate the years financed. My plan was to budget 1200.00/month and hopefully purchase something with a 700-800/month payment, then dump the extra up to 1200 into the principle of the loan. The CU's and banks I use have loans up to 20 years for RV's.

[donn0128]

Okichewy1 wrote:
thanks for the information. It helps a lot with search process. Yeah, plan is to purchase with a 20 year loan and payoff within 12 years.

Big, BIG mistake. With a DEPRECIATING asset it will mean you will absolutely up side down for at least 12 years. Maybe more. At the end of 5 years you could still owe almost what you paid for it, and it could only be worth maybe 50%.
Unless you like throwing your money away,or have a lot of disposable cash look again at value. You pay 200K for a new MH, 5 years down the road you sell it for a hundred K. Can you absorb that much of a loss?

[Optimistic_Para]

Okichewy1 wrote:
Yeah, plan is to purchase with a 20 year loan and payoff within 12 years.

Have you actually talked to a bank or credit union about this?

FWIW, the credit union I belong to will only give a loan for an RV for 10 years (120 months) MAX, and will only finance up to 90% of the purchase price up to $60,000 for a NEW RV and up to 80% of the purchase price up to $50,000 for a USED one.

This, of course, is using the RV as collateral.

[Optimistic_Para]

I'll give you something else to think about. Instead of a class A, have you considered the idea of buying a commercial bus conversion?

As somebody once said, "When a bus gets into an accident, it looks like a bus had an accident. When a motor home gets into an accident, it looks like a tornado went through a trailer park."

Here's a couple of sites to give you a few things to think about:

RV Insurance Coverage

RV Depreciation

Finally, sir, Thank You for your service!

[Okichewy1]

Yeah, when I bought my brand new 2012 Jayco TT, we paid 13,500 out the door at a dealer, 2 years later sold it for 12,000 to a couple. Thought it was a good investment for the 2 years.

[DarkSkySeeker]

ksg5000 wrote:
Many would argue that you should never borrow to buy an RV - they depreciate rapidly and your likely to be underwater soon after you purchase.

Agreed. It was very enticing to hear how low the payment on my TT would be when buying it, and now, 2 years later, I definitely owe more than it is worth.

[Lwiddis]

Did you budget for a toad?

[Okichewy1]

thanks for the information. It helps a lot with search process. Yeah, plan is to purchase with a 20 year loan and payoff within 12 years.

thanks again for the information and things to think about, I didn't budget for maintenance. Budgeted for monthly payment, storage, annual insurance and vacation money to get us places.

[ksg5000]

Many would argue that you should never borrow to buy an RV - they depreciate rapidly and your likely to be underwater soon after you purchase.

RV lose about half of their value in the first 8 years or so and some would argue buying used is better than new because you avoid most of the depreciation and new RV's tend to come with plenty of small/big problems which might be covered by warranty but you might wait weeks for a dealer to get around to fixing them. No fun making RV payments while your rig is sitting on dealer parking lot waiting for warranty repair work.

If it were me - I would buy used - probably a 10 year old rig from owner who kept maintenance records (priceless). I would keep sufficient cash reserve to insure I could keep up with the required maintenance. If you go diesel then make sure you do additional research on the specific engine (some have issues). Also - some rigs have better reps than others - research is key.

[DrewE]

I would look for a well-maintained used unit, especially for a first RV. If possible, I would avoid financing an RV (or any "toy"), but I do know others have different opinions on fiscal matters.

You will need to budget some for maintenance; how much varies some with different RVs. Tires, in particular, can be a not insignificant expense especially for a large class A; a set of 19.5" or especially 22.5" truck tires adds up to thousands of dollars. If you're not handy (and not willing to learn how to be handy), paying someone to do all the little fixes and maintenance duties an RV requires will also get pretty expensive pretty quickly; they're similar to boats in that regard. It's been said that the main difference between an RV and a boat is that the water can also leak out of the RV.

If you don't have experience RVing, I would heartily recommend renting one for a weekend or preferably a week before buying. It will help you know if you enjoy the mode of travel or not, and give you a better idea of some of the sorts of things that matter to you in looking at various models. (Do you prioritize a larger shower or more kitchen counter space? Is the arrangement for dumping tanks convenient enough for you use easily? Is there space to put a trash can?)

[Okichewy1]

Thanks for the info. We used to own a 26' TT that was good when the kids were little, then they grew and it was cramped. With my monthly budget I have planned, the max I would like to finance is about $144,000, we plan on putting down at least $5k, maybe more. That was the other option was purchasing used from a dealer. The ones I have looked at were were priced between 85k -130k. Similar in size from 33' - 38'. The larger one was a Class A toy hauler.

[donn0128]

Remember, a class A is the absolute most expensive form of RV there is. Not only purchase price and insurance, but upkeep and maintenance costs. Add the necessity of a second vehicle, a "toad" to get around when parked, does it make economic sense? That you have to decide. I would look and make your purchase now. Make time to start your RV experiences by taking weekends, vacations etc to see if this is what you really want. A decent quality used 35 foot MH can be had for under a hundred thousand dollars. Is that within your budget?