Are you considering purchasing an RV of your own? This could be an excellent decision that you will be very happy with, especially if you play your cards right. That said, as is the case with any big purchase, it’s best to think long and hard before you dive into an RV investment. After all, RV ownership isn’t for everyone.
Not sure what you need to be thinking about before you purchase an RV and give the RV lifestyle a try? In this article we will talk about the pros and cons of RV ownership and answer some frequently asked questions on the subject to help you better understand what you might expect from an RV investment.
Understanding What an RV Investment Looks Like
First, let’s talk about what exactly an RV investment looks like. If you decide to purchase a used or inexpensive rig and have a decent savings account, you may be lucky enough to pay cash for your RV. That said, the vast majority of individuals have to turn to RV financing.
Depending on where the money is borrowed from, what RV is being purchased, and what the buyer’s credit looks like, interest rates for RV financing can be anywhere from 5.24% to 19.95% or more. Of course, most people can expect to fall somewhere between those two numbers, usually toward the higher end of the spectrum. While you may not be able to avoid a fairly high interest rate, we do recommend shopping around to find the lowest rate you can.
We also recommend looking into potential tax credits and deductions. If you rent your RV, you may be able to deduct a portion of ownership costs as a business expense, and those who live in their RVs full-time or part-time can write off interest just as they would mortgage interest. It might also be possible to qualify for certain tax credits if you purchase your RV new.
Why Consider Investing in an RV?
RVs aren’t inexpensive. So why consider an RV investment? There are actually a number of reasons one might be interested in owning an RV. Obviously, the biggest reason is that RV ownership gives a person access to the RV lifestyle, something that comes with freedom, community, and a whole lot more.
The Pros of RV Investment
Wondering what other benefits you might glean from an RV investment? In this section we will list all the awesome pros of owning an RV and jumping feet-first into the world of RV camping. If these benefits appeal to you, buying an RV could be the right move.
Freedom of RV Travel
First on our list of pros: the freedom of RV travel. There is something magical about hitting the road in your own home-on-wheels, and the freedom to travel in comfort at your own pace, sleeping, eating, and showering wherever you see fit. When you have an RV, you can sleep in the middle of the woods, on a sandy beach, or in a parking lot and have absolutely everything you need.
Sure, you might need to make campground reservations sometimes, but traveling by RV is much less rigid than other forms of travel, giving you the chance to fly by the seat of your pants, go off the beaten path, and take detours when something catches your interest.
Honestly, it’s hard to put a price on this kind of freedom, and if this is the kind of thing you’re after, you’re going to love RV travel.
Low-Cost Travel
On top of providing more freedom, owning an RV also makes travel a whole lot more affordable. Never again will you have to pay for an expensive hotel room. In fact, if you prefer, you can pay absolutely nothing for lodging by choosing boondocking instead.
Moreover, you’ll have a kitchen with you wherever you roam, meaning you can skip expensive restaurants and fast food. Plus, plane tickets will never be a part of your vacation budget again.
This ability to travel on the cheap means you can take more trips while spending less money. How awesome does that sound?
The RV Lifestyle
The world of RVing is an amazing one. Yes, the RV lifestyle makes it possible to travel freely and on a budget, but being a part of this lifestyle also means joining a whole community of people who love RVing just as much as you do.
Being a part of this community is wonderful. Nearly every RVer we’ve ever met has been kind, welcoming, and helpful. Fellow RVers will help with RV problems, offering tools, skills, and knowledge whenever they can. They will invite you to campfires and become your best friend over a weekend of camping.
Yes, access to the RV lifestyle and the community that comes along with it is definitely a major perk of owning an RV.
Potential for Rental Income
It is also possible to make money by owning an RV. That’s right, you can have all the benefits mentioned above and bring in a little money to boot! All you need to do is rent your RV out when you’re not using it.
This might seem a little intimidating, but it doesn’t actually have to be difficult at all. You can choose to list on RVshare on your own and join the world of peer-to-peer renting, or you can take advantage of RV rental management and add your rig to another company’s rental fleet, allowing that company to rent your RV to others in exchange for some of the profits.
Either way, you’ll be making some extra money when you aren’t using your rig yourself!
The Cons of RV Investment
Still not convinced? Want to know what you might not like about owning a trailer or motorhome? It’s definitely a good idea to look into the drawbacks of RV ownership as well. We’ve listed the biggest cons below.
RV Financing
As mentioned before, RV loans don’t typically come with great interest rates. This is because RVs are considered luxury items. While you can attempt to find the lowest interest rate by shopping around a bit before taking out a loan, it’s unlikely you’ll find anything under about 6%, even if your credit is excellent.
On top of high interest rates, RV loans tend to have rather long terms. This might seem nice because of the lower monthly payment, but because RVs depreciate quickly (something we’ll discuss shortly), a 10-year loan may not be the best idea, as you’re likely to find yourself upside-down on the deal.
Costs of RV Ownership
The biggest drawback of owning an RV? The cost. In addition to your RV loan payment, you’ll also have to pay for RV insurance. If you can’t keep the RV in your personal yard, you’ll also have to pay for RV storage, which can be pricey. On top of all that, you’ll need to pay for replacement parts when things break, as well as typical maintenance items such as tires.
When you add all of these expenses together, the cost of owning an RV can get quite high. We recommend shopping around to find an RV that is well within your budget, as well as insurance and storage that you can afford. We also recommend doing maintenance and repairs yourself whenever possible (YouTube is infinitely helpful for this).
Taking these steps can bring costs down, and when combined with rental income can make ownership more feasible financially.
RV Depreciation
We mentioned RV depreciation above. This is a very important factor to consider when contemplating RV ownership. You see, new RVs depreciate incredibly quickly the moment they are driven off the lot. This means you won’t ever be able to turn around and sell the RV for what you paid.
A used RV will hold its value a little bit better, but unlike a house, it will still depreciate over time, meaning you will almost never get back what you put into the rig financially. You can reduce the effects of RV depreciation by buying a used rig that is in good condition, keeping up with maintenance and repairs, and making sure to sell when the market is good.
Challenges of RV Living
RVing is tons of fun, but it does come with some challenges. Trailers and motorhomes have a tendency to break. Usually, the things that break are nothing major and can be repaired with a little elbow grease and some tools, but it can get tiresome to have to make small repairs every time you head out on a trip.
On top of those small issues, RVs can also have big issues. Sure, you can invest in a warranty, but even if you don’t have to pay for the repairs, you will still have to wait for them to be completed, which means postponing any travel plans or rentals you may have had on the books.
If you live in your RV, things can become even more challenging as you navigate things like receiving mail, maintaining relationships, funding your adventures, and juggling real life with fun. Still, many find that the benefits of traveling in an RV far outweigh the challenges that came along with it.
Is RV Ownership a Good Investment?
We’ve talked about the benefits and the drawbacks of owning an RV, but the question remains: is RV ownership a good investment? The answer is simple but perhaps unhelpful: It depends.
First, we must say that an RV is NOT generally a good financial investment. The exceptions to this rule include certain rare vintage RVs that gain value when kept up, as well as those RVs that are used as rentals and are able to bring in more than they cost.
All that said, even an RV that is not vintage and is not used as a rental can be a good lifestyle investment, even if not a financial investment. For instance, if you plan to live in your RV full time or spend good amounts of time in the rig experiencing RV travel, then yes, it is a good investment. Will you go RV camping every weekend from spring through fall? If so, an RV investment might be a good idea.
Of course, RVs can be pretty pricey, interest rates can be high, and trailers and motorhomes do depreciate relatively quickly. Additionally, you will need to keep up with maintenance and pay for things like storage and insurance on top of the RV loan. Therefore, if you won’t be actively using your RV on a regular basis, it really doesn’t make a lot of sense to own one. In these cases, we recommend renting an RV for the occasional RV camping trip or vacation and leaving ownership to others.
FAQs
Still have questions? We get it, there’s a lot to know about RV ownership in order to determine if it’s the right path for you. Below are answers to some of the more frequently asked RV investment questions.
Is owning an RV cost effective?
Owning an RV is cost effective in some cases. If you use the RV often to take budget-friendly trips, it can pay for itself over time. Renting the RV out will help balance things out even more.
Does it make financial sense to buy an RV?
As mentioned above, it can make financial sense to buy an RV if it’s something you’ll use regularly, and especially if you use it to pursue business ventures. Still, it is important to shop within your means and take related costs into account when budgeting. It’s also important to realize that the RV will lose value, meaning it isn’t a financial investment, but rather an investment in a lifestyle.
What is the average lifespan of an RV?
Most RVs last between 10 and 30 years. You can extend the life of your RV by keeping up with regular maintenance and staying on top of repairs. If you are meticulous about caring for your rig, it could last even longer than that 30-year estimate.
Do RVs lose value quickly?
Above, we talked about RV depreciation. It is true that RVs do tend to lose value quickly. However, it’s also true that buying the right kind of RV and taking good care of it can reduce the effects of deprecation by quite a lot.
Is an RV considered an asset?
Most things you can sell for cash can be considered an asset, and in that respect, an RV is an asset. That said, if you finance your RV, it would be considered a debt rather than an asset. Additionally, an RV is considered a depreciating asset, making it less valuable over time.
There you have it, everything you need to know about RV ownership in a nutshell. Weigh this information carefully, keeping your finances and schedule in mind.
If you feel RV ownership is for you but aren’t sure you have the time to travel or camp often, make a plan to list the RV as a rental or have a rental company rent it out for you before you ever make the purchase. This will help ensure you get the most out of your RV investment while still allowing you to join the thousands who have found joy in the RV lifestyle. Happy camping!
