We’re not financial advisors, but we do have life experience that is relevant to this question. We wondered the same thing when we considered purchasing our camper and living in it full-time.
An RV is always a poor financial investment. This is a hard truth. Depreciation will eat into the value of your RV the moment you take it off the lot. You can expect to take a 20-25% hit in value if you buy new, or maybe more. Used RVs can offer a much lower initial loss, but the value of your RV will always go down, making them a poor financial investment.
Over their average useful lifespan, you can expect a well-maintained RV to lose up to 80% of its value. You’ll experience most of this in the first three years. As much as 50% of your new RV’s value will disappear by its third birthday.
I want to clarify that we are talking about market depreciation in this article, not government (tax-based) depreciation. If your RV purchase was for business purposes you need to consult your local tax code, or an accounting professional, to determine the correct depreciation rate. Please don’t use depreciation numbers you find on the Internet for your tax returns. The calculations are different and you could end up in a tight spot.
We’re looking at this issue from a purely market perspective. You can see from the table below that a new RV loses most of its value in the first three to five years. After that, the rate of depreciation slows but doesn’t stop.
The key takeaway here is that the most financially responsible approach would be to buy a three to five-year-old RV that has been lightly used and well-maintained. These units are not difficult to find and can minimize the impact of depreciation on your camper. It is also possible that your new RV can provide other financial benefits that can offset or even eliminate the loss to depreciation.
If your definition of an investment is purchasing something that increases in value over time, then an RV is a very poor investment. However, if you define an investment as purchasing something that generates cash flow, then there are a couple of other things we need to discuss.
Can I Save Money with an RV?
Despite the guaranteed depreciation of an RV, there is a bright silver lining. Your camper will decrease in value over time and will never stop costing you money to operate and maintain. Of that, we are certain, But if used regularly, it can result in excellent savings and potential cash flow.
We’ve always been full-time RVers, so our experience is based on using our camper as our primary house. In our case, it should prove to be a good investment over time. There will soon come a point when our RV has saved us more in rent payments than it costs us to own and operate, including depreciation.
At this point, we expect it will be paid for and have depreciated about 50%. The remaining residual value will provide us with an asset that will continue to generate free cash flow for as long as we choose to live in it. Much like living in a house without a mortgage, I will consider it a good investment.
If your camper use is part-time, for a long summer vacation or regular weekend getaways, you’ll need to do the math. Does the cost of owning and operating your RV present an attractive option for these activities? If your family takes a destination vacation every year then you may find the overall cost to own a modest family RV may be cheaper.
You can unlock an incredible amount of low-cost activities once you have an RV. It may even allow you to vacation more often, or for longer periods, and stay on budget.
Can I Earn Money with an RV?
There’s another angle to approach the financial aspects of RV ownership. The key to savings with an RV is regular use. The more it gets used, the more financial benefit stacks up. For those of us that live in our campers full-time, we’re maximizing the use of the unit and maximizing our returns.
For the vast majority of their lifespans, most RVs will be sitting unused.
But I understand that most people won’t choose to be full-time RVers. Many will buy an RV with the hopes of spending a couple of weeks using it on vacation once or twice per year. Maybe there will be a couple of weekend outings. Call it three to four weeks per year of use, 20 to 30 nights. For the vast majority of their lifespans, most RVs will be sitting unused.
It’s hard to maximize the use of your RV when you only have 30 nights or less per year to enjoy it. The thing to realize is that it doesn’t have to be you who uses the RV. There are several different ways you can earn income from your RV.
I wouldn’t go into details about any of them, but I want to get you thinking that for the 91.8% of the time your RV is sitting unused, you could be using it to generate some cash flow.
You can rent out your RV to family and friends. Websites like RVesy and Outdoorsy have entire systems built around monetizing unused RVs to generate income for owners. Some enthusiasts have built entire businesses around this model.
Airbnb is another great way to generate revenue from your RV if you have some land where you can park it for others to enjoy. (Note: most RV parks won’t allow you to rent out your RV while it’s on their site). They’ve even added a ‘Camping’ category because this is becoming so popular.
Is Owning an RV Worth it?
This is the big question. When you consider all the costs of an RV including the purchase, financing, taxes, depreciation, maintenance and operating costs, it’s easy to see how an RV can be a drain on financial resources. Many people rightly wonder if the return is worth the investment. The answer is different for each of us, but there is one other thing we need to consider.
Most questions about investment involve the financial cost, but if you look at an RV as a place to invest your time, it may prove to be one of the greatest investments you could make. The opportunity to spend time with your family, time with your friends, time with yourself and time with nature is not something that can have a value attached. It’s truly priceless.
It’s a lot like a MasterCard commercial. Do you remember those? The commercials would show a list of the different costs associated with an activity. The last line item would be the experience, and the cost shown would be ‘priceless”. That’s RVing.
The opportunity to spend time with your family, time with your friends, time with yourself and time with nature is not something that can have a value attached. It’s truly priceless.
You can focus on the money and there’s almost no way you can make it add up. It’s going to cost you money to own and enjoy an RV. It’s unlikely you can offset all the costs without added effort and stress. But the experience of RVing is one of the few things in this world that is truly priceless.
We’re biased, but there is nothing better than investing your time in an RV lifestyle, building relationships and exploring the outdoors. The costs involved to own and operate an RV are a small price to pay for these incredible experiences.
