If you dream of hitting the open road with a house on wheels, you may be thinking about buying an RV, or recreational vehicle. It's an especially alluring idea these days.
According to the RV Industry Association, between 9 million and 10 million people in the United States own RVs—1 million live in them full time. And the demand for RVs has substantially increased in the wake of the coronavirus pandemic.
"Not only are we hearing from RV dealers across the country that their sales are up compared to last spring, but new research shows that 1 in 4 Americans intends to take some kind of RV-related action in the next 12 months—such as taking an RV trip, buying or renting an RV, even visiting an RV dealership," says Craig Kirby, president of RVIA.
Plus, he says, 20% of respondents are more interested in RVs as a recreational travel option in the aftermath of COVID-19.
Part of the draw of RVs is that they allow people to vacation with their families without risking exposure to COVID-19 by boarding a plane or entering a hotel.
"We are also hearing that people [now] are more likely to stay close to home on vacations and take road trips," Kirby says. "An RV trip is the logical extension of that trend. Still able to stay close to home and drive, but also able to bring your bed and food along with you."
And the good news is that even in light of recent demand, there is plenty of inventory at RV dealerships to meet interest, according to Kirby.
But is RV life as dreamy as it sounds? Well, here are the factors to consider.
If wanderlust is fueling your decision, an RV can help cut costs associated with traditional travel. With an RV, you don’t need hotels or plane tickets, and the ability to cook your meals means you’re not bound to expensive restaurant fare.
In fact, studies show that a family of four (two adults and two children) saves between 21% and 64% by vacationing in an RV rather than booking plane tickets and hotels.
And if you want to live in an RV full time, you'll enjoy additional savings—like an absence of property taxes, lawn care costs, and other homeowner headaches. In addition, the ability to just move on if you don’t like the weather, your neighbors, or the scenery is priceless.
Like houses, RVs come in a wide range of prices depending on their size and features. According to RVIA, the cost of an RV can range from $6,000 on the low end for folding camping trailers and truck campers to between $60,000 and $500,000 for motor homes. You can also buy previously owned models at a significant savings.
GoRVing.com has a tool that lets you explore various types of RVs and their costs so you can see what you can get for your money.
While it may be tempting to buy the biggest RV you can afford, consider how much space you really need.
“Many newbies buy too much RV in size, drive-ability, park-ability, tow-ability, and maintain-ability,” says Janet Groene, author of the blog SoloWomanRV and book “Living Aboard your RV." “Remember that you are now maintaining your own plumbing, water and sewer supply, gas supply for your stove and furnace, your own electrical systems, and all the expenses that go with vehicle maintenance.”
Another ongoing cost of full-time RV life? Fuel. RVs typically get between 10 to 20 miles per gallon of gas. How far you’re driving, how big your RV is, and the price of gas are all factors that will affect the amount you spend on gas.
As with any vehicle, you’ll need insurance on your RV. The average annual cost for full-time RV insurance is $1,500, but that can vary substantially depending on the type and size of your RV. Note, however, that most policies won’t cover the belongings inside your RV, so you may need to take out a separate policy for them.
In general, RV repairs are more expensive than automobile repairs. How much you will spend on repairs depends again on factors such as the age and type of your RV as well as how many miles you put on it.
But even a new RV isn't immune to problems.
“Just because it's new doesn't mean your RV won't need repairs,” warns Becca Borawski Jenkins, a full-time RVer since spring 2017. “After three years on the road, I haven't met a single RVer who bought a brand-new RV who didn't have some sort of mechanical or structural issues arise in those first few months.”
Instead of taking off for lands far away right away, she suggests starting out by taking short trips before you jump into full-time life on the road. That way as issues arise, you can bring it back to the dealer, and many of the issues may be covered by the warranty.
“Buying your RV early and testing it close to home will ultimately save you time, money, and stress," says Borawski Jenkins, an editor at FinanceBuzz.
You can’t just park your RV at any old place, and most of the time you’ll want to find an RV park with amenities such as power and water. Prices can range from $35 to $100 a night. Even at the low end, those costs can add up. For example, $35 a night for 365 nights comes to $12,775 annually.
Groene says while it’s less expensive, and sometimes even free, to stay at government campgrounds (e.g., state and national parks and forests), they typically have fewer facilities, and there is usually a limit on how long you can stay.
She also notes that “boondocking,” a term referred to parking for free, is dangerous at best and increasingly illegal.
Taxes are included in the rates you pay to stay at commercial campgrounds and RV resorts. You're also responsible for paying state income tax and sales tax in states that charge them.
Note too that even if you live in an RV full time, you still must have a physical address, which determines the state where you pay income tax and insurance, vote, and exercise many other legal rights and obligations.
While homes typically appreciate in value over the years, the opposite is often true with RVs. So you have to consider what it means to you to have what is likely your largest asset steadily depreciate over time.
“While a house and land generally continue to appreciate, RVs begin to lose value the moment it's driven off the lot," Groene says. “Many people spend far too much on an RV, often one that is far too big and complex for them to drive and maintain. But by the time RV owners are ready to hang up the keys, the nest egg that was their home on wheels is worth little or nothing.”
RV life is full of amazing opportunities and presents many perks financially and otherwise. It’s not, however, without speed bumps (both literal and figurative), and you should carefully consider and weigh your options before making this investment.