For decades, camping has been ranked as one of the most popular pastimes in the country. Because staying in an RV is the most common way to go camping, RVs have similarly skyrocketed in popularity.
While RV travel might stir thoughts of vacations, family reunions, and off-the-grid adventures, an RV–be it a travel trailer, a fifth wheel, or a fully-souped-up Class A motorhome–is used for more than just cross-country travel and carting brothers, sisters, and cousins to the campfire cookout. RVs are also a go-to for remote workers who want to live a nomadic lifestyle and make money on the road.
However, as RVs have increased in popularity, so has the cost of purchasing and owning one. Additionally, like any type of vehicle, RVs depreciate in value year after year. As such, many people are wondering whether or not an RV is actually a good investment–or if it’s just another toy that will eat up your income.
Evaluating RV Ownership as a Financial Decision
Regardless of what you plan to use your RV for, purchasing and owning one is a huge financial decision. RVs can cost anywhere from $20,000 on the low end to upwards of $1,000,000 for high-end motorhomes. There are also ongoing maintenance costs associated with RVs, which means it’s important to understand exactly how much money you’ll be investing into your recreational vehicle.
Understanding Depreciation and Value Retention
An RV starts to depreciate the second you drive it off the lot. In fact, the value of your rig goes down by an estimated 21% as soon as you leave the dealership. From that point on, the value will continue to diminish year after year.
According to J.D. Power, an RV loses up to 38% of its value after five years and up to 50% after ten. The rate and speed of depreciation will vary from one RV to another, but these numbers are general rules of thumb.
Exploring Tax Benefits and Credits
One of the ways that you can mitigate the cost of a new RV (so it makes more financial sense for your family) is to look into tax credits. Depending on what you plan to use your RV for, you may be able to write off all or part of the cost.
Here are a few examples of certain tax credits and deductions:
- The sales tax on your new RV
- The state or municipal property taxes you typically pay
- The interest applied to an RV loan or mortgage if you took one out
- Business deductions, such as if you live and work in your RV or use it as a rental
While some people may qualify for these tax credits, they are often a drop in the bucket compared to the total cost of an RV. However, they can make a small dent, so be sure to talk to your accountant to see if you qualify.
Comparing Costs: RV Road Trips vs. Traditional Vacations
One way to see if your RV is a good financial investment is to compare the cost of vacationing in an RV to a traditional vacation. With a traditional vacation, you need to consider booking fees, flights, car rentals, lodging, and much more.
On the other hand, when traveling in an RV, your only costs are gas and campground fees. In most cases, these are far less compared to the costs of traditional vacationing, and your savings may even eventually outweigh the cost of buying an RV.
The True Cost of RV Life
Now that we’ve examined a few arguments for and against buying an RV, let’s break down the true costs that RV owners face.
Breaking Down the Purchase Price
The initial cost of buying an RV includes more than just the purchase price. You also need to consider RV insurance, taxes, dealer fees, registration, and the cost of your mortgage, which is often the only way that people can afford a new rig.
All in all, the average cost of a new RV is anywhere from $20,000 to $200,000 for a towable trailer and $75,000 to $750,000 for a motorhome. However, you can easily spend into the seven figures for a luxury motorhome or up to half a million dollars for luxury fifth-wheels and toy haulers.
Ongoing Maintenance and Unexpected Repairs
In addition to the upfront cost, you also need to think about regular maintenance costs and potential repairs and issues you may face. As with a new car, a motorhome will require regular oil changes, inspections, tire changes, and more.
While travel trailers don’t require oil changes or engine repairs (as they’re not motorized), you will need to maintain the tires, axles, electrical system, plumbing system, and more. Depending on your living situation, you may also need to pay for RV storage when you’re not using your rig.
Other Costs to Consider
Beyond the obvious costs of purchase and upkeep, here are some of the other expenses to consider with RV ownership:
- Varying campsite rental fees
- Fuel costs
- Maintenance and repairs
- Insurance
- Propane for cooking and heating
- Dumping and sanitation fees
- RV park memberships
- Internet and connectivity fees
- Campground electricity
Perks of the Full-Time RV Lifestyle
While there are certainly a number of costs involved in responsible RV ownership, there are just as many (if not more) benefits you can experience firsthand.
Perk #1: Freedom to Explore Remote Locations
The biggest advantage of owning an RV is that it allows you to explore new places in luxury (for the small price of gas and campground fees). From the most remote national parks to busy cities and oceanside campgrounds, there are RV parks and camping opportunities all over the country.
For instance, one day, you can stay in Yellowstone National Park, and the next, you can stay in the comfort and convenience of downtown Jackson Hole! The world is your oyster when you’re traveling in an RV.
Perk #2: Accommodations for the Whole Family
Another advantage of traveling in an RV is that you can live and travel with your whole family. There’s no need to carpool or rent multiple hotel rooms when you have a rig that can accommodate your entire crew. Whether you have a family of three or six, there’s an RV out there that can fit everyone.
Perk #3: Empowers You to Embrace Remote Work on the Road
Thanks to an increase in remote job opportunities, working while traveling in an RV is more popular than ever. Speaking as someone who has done it themself, there’s nothing like being able to go wherever you want to and not be held back by housing or work restrictions.
Deciding Between New RVs and Used RVs
Even though there are many advantages to owning and traveling in an RV, there’s no hiding the massive costs involved. One way to save money is to buy a used RV–rather than splurging on a new one.
However, it’s important to remember that although used RVs are cheaper than new ones, they’re also more likely to have issues and require repairs. Plus, you also won’t have as many modern upgrades and amenities with a used RV as you would with a new one.
Financing Your RV
Because of the massive upfront cost of a new or used RV, not everyone can afford to pay them off right away. Luckily, you have the option to finance your RV with an RV mortgage or loan. You can do this either directly through the RV dealership OR by going through a third party, such as a bank or credit union.
Financing is a great way to buy a new RV without completely depleting your savings account. However, as with a mortgage on a house, it’s more expensive in the long run, thanks to the interest rates and fees you’ll incur with a loan.
Is Buying an RV Cost-Effective?
We’ve broken down pretty much every aspect of buying an RV. Two things we haven’t looked at, however, is if it’s cheaper to rent an RV rather than purchase one.
Evaluating Rental Fees vs. Ownership Costs
If you only plan to go on one or two short RV trips, renting an RV is much cheaper than buying one. While the total cost will vary depending on who you rent your rig from, how far you’re going, and the type of RV you rent, renting is typically a fraction of the cost of buying a new RV.
However, if you plan to travel for several weeks or months at a time or go on repeat trips, buying an RV can be just as cheap as renting. Additionally, you can always resell your RV when you’re finished with it, whereas you don’t have that option if you rent one.
Final Thoughts
If you decided that buying a new or used RV is a good financial investment, then congratulations on being a new RV owner! In addition to investing in your financial future, you’re also making a bigger investment – spending time with your family and making memories with them.
However, once the excitement of buying and using your RV wears off and you need somewhere to store it for a season, consider using Neighbor for assistance. Neighbor is a peer-to-peer marketplace offering safe and affordable RV storage to thousands of customers across the country. By choosing the right storage option, you can ensure that your RV is ready to go when you want to embark on your next camping trip!
