How Depreciation Affects Your RV’s Value
Just like vehicles, RVs, travel trailers, 5th wheels, and motorhomes all lose value the second you drive them off the lot. Travel trailers and 5th wheels seem to hold their value a little bit longer because they don’t have the motor and mechanics that motorhomes have.
On average, if you are buying a brand new travel trailer, you are going to lose about 20% of the value in the first year alone. And in the first 5 years, you can expect the following depreciation to occur.
- Year 1: 20.50%
- Year 2: 23.25%
- Year 3: 28.33%
- Year 4: 32.17%
- Year 5: 39.37%
However, higher quality and more popular designs might hold their value much longer than more cheaply made RVs. If you are trying to decide which travel trailer to buy, we suggest doing some research to find the travel trailers that are well built.
How Much is My Travel Trailer Worth?
There are a variety of travel trailers today, with the smallest ones being foldable designs called popups, which can be towed by smaller vehicles. Then there are the travel trailers that range in size from 8 feet long up to 40 feet in length, with the most common sizes ranging between 18 and 25 feet. And the largest travel trailers are referred to as 5th Wheels, which need to be towed by powerful trucks.
Travel trailers can range widely from barebones to fully loaded. Some travel trailers interior features include multiple rooms, modern technology, and so much more. Many feature slide-out rooms and porches and come with modern creature comforts built-in, such as bedrooms, bathrooms, dining rooms, kitchens, Wi-Fi, TV, etc.
With so many options, it’s tough to determine exactly how much your trailer is worth. You can go to NADA.com get a close estimate. After the initial loss, the depreciation should not go down too much more in the coming years. By the 8th or 9th year of owning your travel trailer, the value will have dropped to 50% of the cost.
5 Factors that Cause a Travel Trailer to Lose It’s Value
We all like to buy new and shiny things. Travel trailers are no different. We decided to buy a brand new one because it’s going to see a lot of highway in the next few years.
If you are like us and decide to buy brand new, we want to help you keep the value of your travel trailer as high as possible. Five factors can cause your travel trailer to lose significant value, and we want to help you avoid them.
1. Exterior Damage, Dents, and Blemishes
Superficial damage, such as dents or dings from hail or road debris, will reduce the value of a travel trailer. Be mindful when turning corners, parking your trailer next to a tree, and pulling into a campsite.
Other exterior blemishes such as fading, discoloration or chipped paint can also decrease a travel trailer’s value. Just like a car, it needs to be washed and waxed regularly to help keep it protected from weather and sun damage that can occur. Check out our article called How to Clean the Outside of a Camper Trailer for some great tips to keep your travel trailer looking brand new.
2. Water Damage
Travel trailers that feature indoor plumbing for kitchen sinks, showers, or toilets must have some form of onboard water tank or tanks. Unfortunately, these tanks can leak and cause damage. Indicators of a water leak include mold, mildew, rust, and rotted wood. You need to make sure that you keep an eye on your tank(s) and your under sink plumbing so that you don’t cause your trailer to lose it’s value sooner than necessary.
Exterior seals and caulk failure is the other major cause of water damage. It is imperative to constantly check for leaks after rain because your travel trailer’s caulk and seals will crack as the travel trailer bounces and moves when you travel. You can look and feel around for water leaks or have a pressure test done if you know you have a leak but can’t find the source. Check out our article called Should I Pressure Test My RV for Roof Leaks? for more info.
3. Condition of Appliances
Many of the newer travel trailers have appliances of convenience such as stoves, refrigerators, and microwaves. You will want to make sure all of these appliances are work correctly to keep the value up on your trailer. Otherwise, you will only be hurting yourself when you try to sell your trailer. The buyer will want the cost of purchasing new RV-specific appliances taken off of asking price.
4. Did the Trailer Receive Regular Maintenance?
If you bought your trailer brand new, it should have come with a maintenance schedule. We need to take ours in yearly to have a once over and make sure everything is good to go. A well-maintained trailer with a documented service history will likely demand a higher resale price. So, if you are buying used, make sure you ask for the maintenance documentation. If they don’t have it, you may want to reconsider purchasing that specific trailer.
5. Improper Storage
Don’t let your travel trailer rot away over the winter! If you’re not a full-time RVer, it is essential to make sure you store your trailer correctly during the off-season. Leaving your trailer outside will not only expose it to damaging UV rays and lousy weather, but cold critters may find their way in to keep warm.
If you park your trailer in a storage lot, it is a good idea to go out and check on it, at least once a month. Our trailer is in a lot about 10 miles from us, and we go out and check on it regularly to make sure no field mice have made themselves at home, to make sure the tire covers are still in place, and there isn’t any other damage.
It’s a good idea to cover your RV, keep it under an RV port or garage, or pay for it to stay in storage over the winter. You should not use a regular blue tarp to cover your trailer because they cannot breathe properly and will allow moisture to build up in your rig, in turn reducing its value.
Sometimes, life happens and all of a sudden our summer travel plans change and the RV needs to be stored for the summer. In many ways storing your RV in hot weather can do more damage to your RV than storing it in winter weather. Check out our article called 25 Essential Tips for Storing an RV in Hot Weather for more info.
Travel Trailer Depreciation Schedule
As you already know, travel trailers lose most of their value just by driving it off the lot and within the first year, just like purchasing a new vehicle. We are going to break it down for you here.
Year 1: 20.50%
As soon as you complete the purchase and drive it off the lot, the value of your trailer is expected to depreciate over 20 percent.
Year 2: 23.25%
Not much difference in the first and second years. First buyers loss, second buyers gain!
Year 3: 28.33%
On a $30,000 RV, the next potential owner just saved themselves over $8,000.
Year 4: 32.17%
Year 5: 39.37%
Once again, when you are using depreciation to make an informed purchase, you should be aware that the expected breakdown rate is up to 80% at this time.
Wait for 5 to 8 Years to Save on the Depreciation
Unfortunately, depreciation is just a fact of ownership. If you are looking to purchase a travel trailer, you can let others carry the most substantial part of the burden and buy a used RV. Turn what many people consider to be a disadvantage to your advantage.
By the five year mark, there will be an expected depreciation of almost 40%. When you are purchasing something as expensive as a home on wheels, that is quite the discount.
Rent Out Your Travel Trailer to Offset Depreciation
It can be a big purchase to buy a travel trailer. And, unless your lifestyle or retirement keeps you on the move all day every day, that trailer could be sitting collecting dust when not in use. Instead of collecting dust, you could be collecting dollars.
There are many reasons RV owners should consider making their RV work for them. Depreciation, insurance payments, and storage fees add up quickly. Even as a full-time RVer, the cost of RV life can be daunting and scary.
Since depreciation is so significant in the first year of purchasing a travel trailer, why not rent it out when you aren’t using it. By renting your trailer out, you could be putting that extra money you are making towards your principal balance. By putting that extra money towards your principal, you can help pay down your loan faster, in turn helping with the depreciation.
Some statistics show family motorhomes go unused 90% of the year. Similar to a home or room rental, there is a way RV owners can list their motorhome or travel trailer to potential renters. Websites like Outdoorsy.com allow people to market and rent out their RVs to earn extra money.
On sites like these, visitors can do one-stop shopping and view hundreds of options in their neck of the woods. Many people are looking to enjoy the same RV adventures without the commitment of actually buying one.
Rather than worrying about storage fees, you might consider the benefits of renting your trailer to families wanting that unique adventure abroad in a home on wheels away from home.
“Coincidentally… As a person who not only likes to save money but make money, I see a huge opportunity to capitalize on this demand,” Liz Wilcox tells us in her blog. “Renting out my Class C motorhome for just a few weeks a year can help offset the interest I’m paying and the depreciation of the value of my rig. As someone who financed a 10-year-old RV, this is a huge incentive. I can only imagine how much I’d make if I didn’t live in it!”
If you are looking to offset your travel trailer’s depreciation, many owners say that watching the money roll in is much better than watching the money rolling out.
Thanks for reading this article and we would like to know your thoughts on your travel trailer’s depreciation. How long have you had your trailer and how much has it depreciated? Would you consider renting out your travel trailer to help offset the depreciation cost?
Please leave your thoughts or suggestions in the comments section below.
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