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Old 01-29-2017, 12:44 PM   #1
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Calculating Depreciation

I am having trouble understanding how to calculate depreciation on a new motorhome. Checking the different forum folks seem to use similar numbers but apply them differently. For example, some use MSRP as a base and others use Sales Price. Some say there is a depreciation once you drive it off the lot but it isn't clear if this is already included in their first year depreciation. Could someone help clear this up by completing the following:

Value
$400,000 MSRP
New 2017 $288,000 Sales price -28%
Driving off the lot $xxx,xxx -xx%
1 yr old 2018 $xxx,xxx -xx%
2 yrs old 2019 $xxx,xxx -xx%
3 yrs old 2020 $xxx,xxx -xx%
4 yrs old 2021 $xxx,xxx -xx%
5 yrs old 2022 $xxx,xxx -xx%

Thanks for your help.
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Old 01-29-2017, 12:50 PM   #2
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Quote:
Originally Posted by jlazar View Post
I am having trouble understanding how to calculate depreciation on a new motorhome. Checking the different forum folks seem to use similar numbers but apply them differently. For example, some use MSRP as a base and others use Sales Price. Some say there is a depreciation once you drive it off the lot but it isn't clear if this is already included in their first year depreciation. Could someone help clear this up by completing the following:

Value
$400,000 MSRP
New 2017 $288,000 Sales price -28%
Driving off the lot $xxx,xxx -xx%
1 yr old 2018 $xxx,xxx -xx%
2 yrs old 2019 $xxx,xxx -xx%
3 yrs old 2020 $xxx,xxx -xx%
4 yrs old 2021 $xxx,xxx -xx%
5 yrs old 2022 $xxx,xxx -xx%

Thanks for your help.
I don't know how this is figured...........but if someone can answer your question...........it will make you go ........WOW
http://rvbuiltfortwo.com/rv-depreciation/
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Old 01-29-2017, 01:54 PM   #3
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On autos it is from MSRP. That is something that hurt big 3 for years since their average selling price was lower than some other brands.
I would assume given the much lower volume motor homes are figured the same. With all the options on some it could easily become a maze and I think dealers do use that to their advantage.
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Old 01-29-2017, 02:02 PM   #4
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I suspect you'll find there's a significant different between annual depreciation from an accounting perspective vs the impact of vehicle age on vehicle prices. There are specific formulas for depreciation from an accounting perspective (Straight Line, Sum of Years, Double Declining Balance, Accelerated Cost Recovery System (ACRS), Modified Accelerated Cost Recover System (MACRS). However, there is no formula for calculating what hit you'll take for simply driving a coach off the lot. That's simply what the market will bear.
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Old 01-29-2017, 02:02 PM   #5
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I doubt that there is a hard and fast rule on this, it would depend how each particular coach holds it's value.
You may have to back in to this information. Find a coach that was about the right value 5 years ago, and see what it books for now, and do the same with a 4 year old coach and a 3 year old coach etc etc.

It's a fairly common statement around here that you should be able to buy a coach for about 25% (or more) off retail. So you KNOW that it will lose that much or more in the first year. After that my GUESS is that you're looking at something in the neighborhood of 15 to 20% per year (note that would be 20% of the previous year's value, not 20% of 400k each time).
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Old 01-29-2017, 02:11 PM   #6
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Here is a thread from the Entegra section..........some shocked folks...... Entegra Coach values
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Old 01-29-2017, 04:26 PM   #7
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I did a similar exercise to this recently with Nada. I put my my coach in for from 2001 to 2005 and the average retails dropped by between 2800-3000 each year, not how this works for whosesale.
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Old 01-29-2017, 08:21 PM   #8
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I'm really curious......once you figure out what numbers to use, what value will the information provide, other than a write off number if used as a business.

The variable that you'll never be able to calculate will be the economy. Another recession and the numbers go out the window. I'm not trying to be a smart a$$, but interested in what you're trying to figure out.
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Old 01-29-2017, 08:35 PM   #9
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For me it's all about how much I would need to have (either save or finance) to purchase a newer coach in 3 years time.
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Old 01-29-2017, 11:00 PM   #10
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I am trying to use it as a tool, along with NADA and the big dealers like NiRVC and MHSRV, to decide what a private seller should be expecting. Many private sellers seem on the high side (as expected). The question is how high. Understand all the other variables that come in play.
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Old 01-29-2017, 11:12 PM   #11
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I think trying to calculate the depreciation in the way that you are looking at it is a shot in the dark. I think the best way to figure this out is to look at it historically.

What I mean is take a look at a what a 5 year old coach sold for and compare it to the MSRP. Do this for a 4 year old, 3 year old coach, etc., etc.

There is no value what someone is asking but only what the price is when it sells. PPL motorhomes lists the price the coach sells for on their website.

If a coach is traded in the price a person gets is going to be significantly lower than if they sell it in a private sale or maybe in a consignment shop. This may also effect how you view depreciation as the end point may be variable.

Good luck with your calculations. As other have said once you figure this out I hope you are sitting down :-)

Stuart
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Old 01-29-2017, 11:49 PM   #12
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Depreciation will only occur if you sell the MH, and then it will be based on many factors including the deal you originally negotiated in the beginning, and most importantly three things, the economy at the time you try to sell it, what the market will bear for the brand, size, and type of MH you bought, and how well you maintained the MH. When we bought ours we looked at two used 2013 models of the same MH, with less amenities, that were actually selling for more than what we paid for ours brand new. I know one for sure sold for the listing price, and most likely the other one did too. Both sold within days of us buying ours new. Two years after we bought we saw our same MH being listed for about $6000(which sold within days of being listed), more than what we paid. So either we got a great deal or the calculations fell into the market at the time for the type, brand, size ect.

I'm not sure what you are trying figure, but you get what you pay for. A seller on the "high side" of what you figure may have taken excellent care of their MH and it will be worth the price for a lot of reasons. A seller at the lower price could be a problem in the waiting. Rather than worrying about depreciation, find the MH you want, in the condition you want, and negotiate the best deal you can. People worry way too much about depreciation, rather than getting what they want to begin with, which ultimately will save you money and bring you more enjoyment.
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Old 01-30-2017, 12:04 AM   #13
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I've been preparing monthly financial statements for my personal finances for the last 20 years. My financial reports summarize income and expenses - and depict my resulting net worth. The reports are purely for my use - and help me keep a watchful eye on our spending. I use a straight line depreciation calculation (using a 20 year horizon) - to recognize that the value of my coach decreases with the passage of time. It has no bearing on taxes (my stuff is purely personal - there's no business involved). It's simply my way of systematically acknowledging that the value of my asset is shrinking a bit every month.
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Old 01-30-2017, 12:29 AM   #14
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I do the same thing, and have been doing so for my whole adult life. I don't figure the MH or any of our toys into the calculations, as I figure that is money, already spent, for personal enjoyment. The calculations that really mean anything to me are our houses and other appreciating investments. I guess if I were to figure in the toys, that would just add a little, but nothing to depend on as they are not appreciating items.
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