This is a guest post from our friends over at Go RV Rentals.
First, here’s a little background. In March 2013, my son, Adam, was 17 years old and needed to tour some colleges. A couple of the schools were in Arkansas, so we decided to take a week to do some RV camping in the Ozark Mountains and visit the college campuses. I spent two days in February 2013 doing Google searches and calling RV rental dealers trying to find an RV rental for our trip planned over Spring Break. Many of the dealers were sold out of their limited inventory, and others were not pet friendly, which we needed. I was on page 2 of Google search (yes, the place dead bodies are buried), frustrated with having to make so many phone calls. Eventually, we booked an RV, and it occurred to me that it had been quicker and easier to book a family vacation to New York City than find an RV rental in my own hometown! That was the “aha” moment, and the idea for Go RV Rentals was born.
Approximately one year later, we created a website with numerous RV rental listings from multiple dealers where you could quickly find an RV rental in one search. Since then, peer-to-peer rentals have emerged as the primary source of RV rentals, and we’ve become an affiliate partner of Outdoorsy, featuring even more RVs across the USA and Canada.
Now to the main topic of this article.
RV Rental vs. RV Ownership
I’ve been doing RV rental marketing since 2014, and some recurring comments and questions come up from potential renters. One comment that seared into my brain was a woman who, after getting a quote, exclaimed, “That’s more expensive than a friggin hotel!” Well, maybe, but maybe not. It really depends on which hotel and which RV. What many people don’t consider is the alternative vehicle/transportation costs and meal costs when doing the math. For example, if you’re renting a motorhome, you won’t have airfare, car rental, or wear and tear costs on your personal vehicle. Also, you can save money by preparing and eating meals in the RV versus eating out at restaurants. Finally, in the RV, you can pretty much go where you want, when you want. Think wildlife, waterfalls, sunrises, and sunsets — priceless!
Some frequent questions we answer are: Why would I rent an RV versus buying one? Or why would I rent out my personal RV to people I don’t know? You could simply answer it’s cheaper, and I want to make some money when my RV is otherwise not being used. However, there are some fundamental economic realities that provide a more in-depth understanding. Basically, my friends, it comes down to the high cost of owning an RV.
RV Monthly Costs
To begin with, the transparent monthly cost to own an $80,000 RV includes
- the monthly payment of $759 (principal and interest 8% over 15 years)
- $100 for insurance
- $33 in property taxes
- $75 for storage
- $200 for maintenance/supplies.
This totals $1,167 per month or $14,000 per year. Not cheap — definitely a luxury item for most people!
Besides the obvious monthly costs, there is a huge hidden cost of owning an RV, which is depreciation. RVs are a depreciable asset and eventually will decline in market value to near $0 though it may take 20+ years. Generally, the RV price depreciates 13% when you drive it off the dealer lot. Then it depreciates 7% for years 1 – 3, then 6% for years 4 – 6, and then 5% for years 7 – 10. The result is the RV has lost 30% of its value after 3 years and over 50% of its value after 10 years.
Here is an example calculation assuming the purchase of a Class C motorhome:
|Market Value Day 1||13%||69,600|
|Market Value after 1 year||7%||64,728|
|Market Value after 2 years||7%||60,197|
|Market Value after 3 years||7%||55,983||30%||Decline|
|Market Value after 4 years||6%||52,624|
|Market Value after 5 years||6%||49,467|
|Market Value after 6 years||6%||46,499|
|Market Value after 7 years||5%||44,174|
|Market Value after 8 years||5%||41,965|
|Market Value after 9 years||5%||39,867|
|Market Value after 10 years||5%||37,874||53%||Decline|
|Hidden Cost ($80,000 – $37,874)||42,126|
In our example, the hidden cost is $42,126 for the first 10 years. Most RV owners use their RV only about 20 days per year, meaning that it sits idle 95% of the time. So, if you take the annual cost to own an RV of $14,000 and add the average annual hidden cost of $4,213 ($42,126 divided by 10 years), you get $18,213. Divide that by the 20 days of usage, and the RV owner pays $911 dollars per day of usage. Wow, that’s friggin expensive!
This is why we strongly advocate renting an RV versus buying one since the average cost to rent a Class C motorhome is only $201 per day, according to our recent RV rental price study. Wow, that seems friggin cheap when you consider all the pros and cons! This example also illustrates why many RV owners rent out their RVs to other people in order to defer the high cost of owning one.
Why Rent or Rent Out
By renting an RV, one avoids the high cost of RV ownership and a long-term financial commitment. You only pay for what you need! Furthermore, the RV owner can reduce the cost of ownership by renting it out. Think about it!