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Old 01-29-2014, 02:13 PM   #1
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Depreciation: Some interesting Math

As long as you can afford to buy new, according to my math, despite the commonly held assumption, the depreciation on a new coach could be less than for a used one. How so? Admittedly, my sample size is very small and may not necessarily apply to other manufacturers and years. Anyway, here's what is found.

I used a Newmar Essex as my example (as that is what I am interested in) over a period of five years and NADA low retail less 10% for pricing.

Example One: A new coach
Current SRP $682k, possible dealer discount 25-30%, giving an actual cost of $477k-$511k. According to NADA, the low retail (-10%) after five years is $281K which is 47% of the SRP in 2009. So, assuming a value of 47% of todays SRP in 5 years time, that gives a value of $361K (still following me?) A depreciation in actual terms of $115k-$150k.

Example Two: A six year old Essex (2008)
NADA low retail (-10%) is $255k. So for the same five year period of ownership, the value of an eleven year old coach (2003) is $87k, again low NADA -10%. A depreciation of $168k.

In conclusion (for this example) it would appear that it is a myth that a new coach loses the most when it comes to depreciation. The true mathematicians and statisticians out there will no doubt drive a bus (no pun intended!) through my calculations, but I was surprised at the numbers. Anyone care to offer their opinion or even experience?

Andy.
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Old 01-29-2014, 02:22 PM   #2
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How do you know what the low retail is going to be on a new coach in 5 years?
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Old 01-29-2014, 02:25 PM   #3
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What I was about to say

bad assumptions or statistics...

Worked with SAS programming years ago and found with the right sample size you can make even the most stringent stats say what mgmt wants
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Old 01-29-2014, 02:26 PM   #4
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Quote:
Originally Posted by topdownman View Post
How do you know what the low retail is going to be on a new coach in 5 years?
I don't. You can only go on what info/stats are available at the present. Figures are probably at least as accurate as Fed or Bank of England forecasts!
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Old 01-29-2014, 02:36 PM   #5
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seems in my yrs, initial depreciation is a big hit, during a time period 2-4 yrs levels off/depreciation is lower rate, as the 5+ yrs following wear/tear comes into play thus excelerating the depreciation.
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Old 01-29-2014, 02:39 PM   #6
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My last two I bought new so it's no surprise to me.
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Old 01-29-2014, 02:42 PM   #7
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Your math is interesting. No one purchases a New MH with the thought of valuation when they sell it. Most people know that a MH is NOT a good Investment.
Now take that 5 yr old MH and try to sell it for $361 K. NO Way! There are to many solid built New MH out there that are less than $361,000. It has been my experience that when you drive off the lot in a Brand New Mh you'll loose at least 50% of the Suggested retail Price. If you get what one would call a "Deal" which is you paid less than sticker price you will still loose at least 35% of that price. At 5 years it takes two things for you to sell it. First, someone that wants a 5 yr old MH for the price you are asking. SECOND, that person having the CASH and or the Credit to finance it. Because at $361 K that person will need at least 25% down, that's $100 K. that same Person can go and buy a NEW MH with a mfg. suggested retail price and appear to get 100% financing with virtually nothing down. Forget the NADA book or any other so called Blue book valuations. Just look through the ads where people are trying to sell used units. look at the listings in RvNet, lazy DaYS, North TRAILS RV AND MANY OTHER mh SELLARS. I just looked at a 4 year old Newell for $199 K and it was indicated they would be willing to take offers. Four years old and price down to less than 25% of suggested Retail Price. When it comes to used MH it is a Buyers market if you do your home work. We shop till we find a dealer or a owner who is willing to really deal. Even then I expect that I'll sell it for less than I paid for it, even if I sold it the next day. Safe travels.... ed
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Old 01-29-2014, 02:48 PM   #8
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Rule of thumb from a former RV sales guy - subtract $10K per year on average coaches - Fleetwood line for example. My coach at 5 years old = $125K-$50K= $75K
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Old 01-29-2014, 02:56 PM   #9
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Quote:
Originally Posted by EDALLSAILS View Post
Your math is interesting. No one purchases a New MH with the thought of valuation when they sell it. Most people know that a MH is NOT a good Investment.
Now take that 5 yr old MH and try to sell it for $361 K. NO Way! There are to many solid built New MH out there that are less than $361,000. It has been my experience that when you drive off the lot in a Brand New Mh you'll loose at least 50% of the Suggested retail Price. If you get what one would call a "Deal" which is you paid less than sticker price you will still loose at least 35% of that price. At 5 years it takes two things for you to sell it. First, someone that wants a 5 yr old MH for the price you are asking. SECOND, that person having the CASH and or the Credit to finance it. Because at $361 K that person will need at least 25% down, that's $100 K. that same Person can go and buy a NEW MH with a mfg. suggested retail price and appear to get 100% financing with virtually nothing down. Forget the NADA book or any other so called Blue book valuations. Just look through the ads where people are trying to sell used units. look at the listings in RvNet, lazy DaYS, North TRAILS RV AND MANY OTHER mh SELLARS. I just looked at a 4 year old Newell for $199 K and it was indicated they would be willing to take offers. Four years old and price down to less than 25% of suggested Retail Price. When it comes to used MH it is a Buyers market if you do your home work. We shop till we find a dealer or a owner who is willing to really deal. Even then I expect that I'll sell it for less than I paid for it, even if I sold it the next day. Safe travels.... ed
Thanks for the feedback. I'll definitely be taking my pencil sharpener with me (for the seller!) when I go MH shopping. Your point on selling a $200k coach privately is well made. I struggled last year to sell a Harley privately and that was only $20k. Andy.
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Old 01-29-2014, 03:16 PM   #10
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Quote:
Originally Posted by EDALLSAILS View Post
Your math is interesting. No one purchases a New MH with the thought of valuation when they sell it. Most people know that a MH is NOT a good Investment.
Now take that 5 yr old MH and try to sell it for $361 K. NO Way! There are to many solid built New MH out there that are less than $361,000. It has been my experience that when you drive off the lot in a Brand New Mh you'll loose at least 50% of the Suggested retail Price. If you get what one would call a "Deal" which is you paid less than sticker price you will still loose at least 35% of that price. At 5 years it takes two things for you to sell it. First, someone that wants a 5 yr old MH for the price you are asking. SECOND, that person having the CASH and or the Credit to finance it. Because at $361 K that person will need at least 25% down, that's $100 K. that same Person can go and buy a NEW MH with a mfg. suggested retail price and appear to get 100% financing with virtually nothing down. Forget the NADA book or any other so called Blue book valuations. Just look through the ads where people are trying to sell used units. look at the listings in RvNet, lazy DaYS, North TRAILS RV AND MANY OTHER mh SELLARS. I just looked at a 4 year old Newell for $199 K and it was indicated they would be willing to take offers. Four years old and price down to less than 25% of suggested Retail Price. When it comes to used MH it is a Buyers market if you do your home work. We shop till we find a dealer or a owner who is willing to really deal. Even then I expect that I'll sell it for less than I paid for it, even if I sold it the next day. Safe travels.... ed

I would sure love to buy a couple dozen 2009 newell's for $199,000! lol

Jim
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Old 01-29-2014, 03:26 PM   #11
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Depreciation on new vs used, both also depend upon what was the actual total purchase price in relation to either Retail (new) or NADA (used).

We've actually done pretty good on purchasing our two Used RV's in relation to NADA (And when I say NADA, I'm looking at the the bottom price point.). Our Bounder we bought at about 35% below NADA, as the seller had to move it because they had already purchased a new coach. Gas prices were sky high, and still climbing, during the three months I saw this rig for sell by the original owner. (A neighbor, who when I inquired and heard the price said thanks but no thanks. He cam knocking on my door two and half months later - and said 'What will you pay me for it?' He was shocked, and said no way and walked back down the street. The next day he and his wife were back at my door, and said 'OK' to my price. (The wife said 'Move it!, and he did!). Our second coach and current coach, was about 30% below NADA low price point. This time, due to the economy and people needing to 'get out from under'. It was truly a Buyer's Market, and I actually feel I paid a 'fair' price - not near as 'killer deal' as I know others had been able to find. But, it was the right coach for us, so I paid a bit more then what I probably should have for that time. Last comment on this purchase, was that it was about two years earlier then I had planned. When I realized how much coach we could get within the same budget price point we had 'mapped' into our retirement planning - we pulled the purchase forward.

So, for these two coaches. Both used, the actual post purchase 'depreciation' was not as severe as most. The Bounder I sold 4 years later, for 95% of what I paid for it. The Country Coach, or current rig - has now after three years depreciated perhaps 6-7%.

Both of these were unique situations, but are real world examples of how 'fickle' depreciation can be.

For sure. It always comes down to 'What will a buyer pay vs what a seller will sale for...' - this is regardless of NADA prices!

And, I do not look at RV's as being investments - they are a hobby or way of life, that we are willing to pay for...

Best to all,
Smitty
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Old 01-29-2014, 03:39 PM   #12
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Starting to get a better feel one for what 'street' prices are, or could be. Hopefully it will still be a buyers market when I am ready to buy!
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Old 01-29-2014, 04:30 PM   #13
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you better never buy a boat

RV and Boats have a lot in common. My boat sold for 235K new and I bought is at 10 years old for 47K. My MH sold for 200K and at 10 years old I bought it for 38K.

Now my boat an 1982 42 foot is worth 10K and my MH worth about 32K . When and if my MH is 30 years old it will be worth scrap. Never buy a toy and expect anything but an expense for enjoyment.
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Old 01-29-2014, 04:46 PM   #14
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Originally Posted by Smitty77 View Post
And, I do not look at RV's as being investments - they are a hobby or way of life, that we are willing to pay for...

Best to all,
Smitty
Whatever you buy that your going to have fun with.......will depreciate.
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