New vs Used depreciation--critique my analysis

[Waiter21]

What will the MH be worth in 3 to 5 years. Rather than trust NADA, Look at the For Sale ads. You should be able to find similar units to what you're interested in.

This will give you an idea of what the market place is, what the options are, and expand your knowledge as to price and availability.

Knowing this information will be your number one asset when you sit down at the negotiating table.

Look in RV Trader, PPL, Camping World, etc, etc. for units similar to what you're interested in buying new.

Identifying whats important to you could save you considerable money; i.e. If climbing up a mountain at 65 mph and a smooth ride is important to you, then you'll be disappointed if you buy a MH on a gasser chassis. However, if these things aren't that important, you could save tens of thousands of dollars by looking at the same floor plan but on a gas chassis.

The more you can remove emotion out of the equation, the better deal you will make - Do NOT get emotionally involved, always be prepared to walk away.

[Boomertx]

Just remember that the dealer is NOT using the "free" NADA guide to value trades or sell prices. They are using the subscription only NADA and other services like Mannheim. The free NADA guides are funded by dealerships . . . so who's favor do you think they represent?

[89sandman]

If you search and buy a used unit right your depreciation in 5 years can be next to nothing, but that is if you are a smart buyer and know your market and willing to invest time in finding a excellent buy. You will never have that chance in the new market, you will loose. You don't have to buy used from a dealer and there are deals out there because of one reason or another you can get in a unit for below low book if you invest the time. Know your market, know which units sell easily at average book, and invest the time searching the web for the perfect deal. They are out there, I buy one almost every year and make money selling it the end of season or if I like the unit the end of the next.

[TexasTom]

Originally Posted by Steve Lutz

I'm trying to evaluate the costs of buying new vs. used. I've never owned an RV so my analysis may be flawed. Tell me where I got it wrong...

In looking at the new coaches on the dealer lot (Discovery 40D or 40E) the new cost appears to be roughly $209K for a 2017 or $223K for a 2018 with similar features (LXE model with motion satellite, exterior TV, etc.). I then looked at class A coach values based on NADA as well as values using a common RV depreciation schedule. The two sources actually work out to be fairly close in setting depreciated values.

I'm also looking at a very nice 2015 40E with an asking price of $189,900 This seems to be in the general range of coach values whether I use the NADA values or the depreciation schedule.

I used all the above numbers to run a depreciation analysis on the cost of owning the coach for five years, be it a new 2018, new 2017 or the 2015 slightly used coach. I was actually surprised at what I found.

In five years, the 2018 coach has an expected value of +/-$160,00, giving me an out of pocket cost of about $63,000. This based on using the $223,000 new price minus the $160,000 captured resale value. The 2017 coach has a slightly lower entry price of $209,000 but in five years it will actually be six years old, giving it a value of about $145,000 and an out of pocket five year cost to me of $64,000 (209,000 - $145,000). The 2015 will be seven years old in five years. The anticipated value then is roughly $120,000. With a starting cost of $190,000, my out of pocket expense for the used coach is about $70,000 ($190k - 120k),

If my analysis is generally correct, it is actually $7,000 cheaper over five years for me to purchase a 2018 coach or $6,000 less on the 2017 vs. purchasing the used coach. Even if I talk the 2015 owner down 10-15K from their $189k asking price, it seems like the better option remains to buy new (full warranty, tire/battery life, etc).

What am I getting wrong? This seem totally counter-intuitive to what I expected to find.

Thanks!

I like your approach to the analysis. Another aspect to consider, if you're looking only at numbers, is the difference in the cost of the capital to acquire the MH.

For example if you shell out $223 instead of $190 for a coach, then you have to come up with an extra $33 up front. In a 5% environment I think over 5 years that would come to a bit over $7, which would then suggest the numbers are about equal?

[Boomertx]

Originally Posted by TexasTom

I like your approach to the analysis. Another aspect to consider, if you're looking only at numbers, is the difference in the cost of the capital to acquire the MH.

For example if you shell out $223 instead of $190 for a coach, then you have to come up with an extra $33 up front. In a 5% environment I think over 5 years that would come to a bit over $7, which would then suggest the numbers are about equal?

Taking that a bit further . . . $223K invested at 7% which don't forget is COMPOUNDED results in about $310K after 5 years. Getting a loan at a decent interest rate, which is NOT compounded makes a big impact on all the above calculations. I. E. Your out of pocket, should you pay cash, is actually the difference between what you paid minus what you sell for AND the lost investment opportunity of about $90K, not even counting the income tax deduction for interest paid on your "second home".

Sometimes all this makes my head hurt so bad . . . just want to say "heck with it" buy something and hit the road . . . but I also have "analysis paralysis"

[janstey]

Don't forget sales tax, interest rates (new vs used) and down payment. Also insurance cost.

[Wundertaker]

Originally Posted by winniman

One thing is for sure. You are never going to get a great deal from a dealership. Its how they make their living. I prefer to shop privately, and hope to find someone getting out for the right reasons. Usually its because of age and or health. You stand a better chance of minimizing your losses going private used, then buying new. You just have to wait for the deal to come up, and you may not get all the options you want. Otherwise be prepared for the big hit in the first five years of ownership. Im thankful for all those who have taken the big hit. That way it opens the doors for us to follow and not lose big money. Good luck on your decision and happy camping.

I agree with Mr. Winniman. For me, finding the "right" 1-4 year old unit(s) in case of fiver and TV situation is the way to go. In addition, we all can compute the numbers to result in the answer that gives us our justification to act on what we "really want".

Also, look at the MSRP's on RV's in general. If you have a Class A with an MSRP OF over $300k and they offer it to you for around $200k, then "Houston we have a problem here"! It upsets me to no end seeing the majority of these RV's so grossly over priced in the first place. Remember, "it's not about the money, just the amount"!!! At $200k, the selling dealer is still making a good profit and they want the customer to think they got a steal of a deal...um....not really. The prices are so artificially inflated it's ridiculous.

Lastly (for now), one of the main reasons I go with 1-4 year old units, including my cars, is that, and I'm speaking of RV's right now...is that there is one Important Certificate that automatically comes with every New Motorhome and Fifth Wheel delivered. The more technologically advanced and/or the more bells and whistles the more valid this certificate is. What Certificate is this you say? Well, it's a Certificate that cannot be seen, felt, or smelled, and will certainly not be explained to you by the sales person that you're positive is "only looking out for you"...um...until the sale is consummated for sure! This Certificate is good for 1-2 years of Unlimited Frustration and Angst due to the many unknown and highly frustrating things that will go wrong, breakdown, improperly installed or wired, and or premature failure with your new Top O' The Line ride or abode. This Certificate also carries a no money back guarantee but does provide you with the definite possibility of numerous days, weeks, months (circle one or more) in your awesome dealers parking lot waiting for those pesky parts to show up for installation and/or repair.

In closing, sorry to be so cynical here but have heard way too many horror stories over the years to deny this Certificates true existence. Have followed this philosophy for a few decades and have not had any truly bad experiences. I've discovered that Private Sellers are typically way more honest and forthright than a salesperson who only wants to complete the sale. Just sayin'...

[Steve Lutz]

Originally Posted by Wundertaker

I agree with Mr. Winniman. This Certificate also carries a no money back guarantee but does provide you with the definite possibility of numerous days, weeks, months (circle one or more) in your awesome dealers parking lot waiting for those pesky parts to show up for installation and/or repair.

In closing, sorry to be so cynical here but have heard way too many horror stories over the years to deny this Certificates true existence. Have followed this philosophy for a few decades and have not had any truly bad experiences. I've discovered that Private Sellers are typically way more honest and forthright than a salesperson who only wants to complete the sale. Just sayin'...

No worries. I appreciate the candid feedback.

[CWSWine]

Wundertaker ---

There is another side of the coin. We trade in our 5er that was a nightmare. The slides only work when it was at the dealers. Plumbing and wiring nightmare with floor water damage with soft spots, belly was flood several times from plumbing not installed properly. The dealer took it sight unseen as a trade in. We bought a brand new Discovery 40D and so far not one warranty claim with 91 days camping and 7800 miles. Who ever buys my old 5er is going have their hands full with repairs -- of coarse the dealer my fix all the problems before he sells it LOL

Some people trade in to dump thier problem RV!! I normally keep cars and RV till they become a money pit and some of them became a money pit from day one when out of warrenty.

[Wundertaker]

Originally Posted by CWSWine

Wundertaker ---

There is another side of the coin. We trade in our 5er that was a nightmare. The slides only work when it was at the dealers. Plumbing and wiring nightmare with floor water damage with soft spots, belly was flood several times from plumbing not installed properly. The dealer took it sight unseen as a trade in. We bought a brand new Discovery 40D and so far not one warranty claim with 91 days camping and 7800 miles. Who ever buys my old 5er is going have their hands full with repairs -- of coarse the dealer my fix all the problems before he sells it LOL

Some people trade in to dump thier problem RV!! I normally keep cars and RV till they become a money pit and some of them became a money pit from day one when out of warrenty.

Totally understand Mr. CW... Vast majority of MH's and 5ers, not to mention TT's have numerous Quality Control/Manufacturing Issues in the first 12-24 months. This is exactly why I'd rather allow someone else who "has to have NEW" deal with all those joys (not really) and get the rig to where is should have been on delivery day.

That's also the reason that I only buy from "private sellers". I've discovered that they are much much more honest and will tell you what's wrong with their item if you ask them the right way. I've had great luck and have met some awesome folks that I still stay in contact with today. This way I don't have to worry as much about someone who has all kinds of serious issues with their unit, trade it in to a dealer, and the salesman lies his/her way to another person who may have saved up for years to buy their dream of a used unit because that's all they can afford. It's just me but I have serious issues with that tactic used so often by unscrupulous, insensitive, and downright misleading sales folks at the dealerships. And yes, there ARE GOOD SALESPEOPLE, but they are infinitely outnumbered by the one's referred to above.

Good Travels, Good Times, and Be Safe...EVERYONE

[trackeer]

Like the thought process and the idea of rationalizing a frivolous purchase, no offence folks I've done it many many times now.

NADA, is simply BS, it's a source for comfort you might be able to sell your dare I say investment with minimal loss, the real world, trade value is Wholesale forget the Options, your 190K NADA MH might bring 135K on the lot.

Private sale, hmmmmmm, I've owned many rec vehicles when you start selling things for 70K plus the market suddenly shrinks, hence why most folks can sell older RV's on places like Craig's List and why most just trade up to dump the late model they bought by mistake, in the boating world it's called 2 footidis.
It's always easy to roll over the mistake into a newer and better mistake.

New Vs Older, I'd say that's a toss up, if the older is late model and well equipped, low miles, and you can finance it at a reasonable rate, could be, keeping in mind because the MH is older doesn't mean the issues were addressed as they arose.

I have a 15 Excursion, it's heading to Fleetwood in October for issues, sadly most dealers could care less about repairs, didn't say all, but many. These things are full of quality issues and bad assembly, Build them Fast, folks are waiting. Course, that doesn't mean all of it's on the Manufacture, many of the things that make these things work come from many resources, if they break can't blame the RV Builder, just a matter how they support the problems.

So, Used Vs New, I'm a new type of guy, like my bed that only we slept in it, don't like the thought of smokers, BIG furry drooling Dogs, or perhaps a pack of unruly kiddo's, New may mean a trip to Fleetwood but, at least they are taking me in, so Kudo's to them, even better they fix the issues, used well make sure you calculate any potential cost into your interesting equation, could be nodda could be substantial, just never know.

Enjoy the Ride it's one way.