Question: I grew up in a family that loved recreational vehicles. Boats, RVs, all that stuff–between my parents, uncles and aunts, and grandparents, it seemed like someone in the family had every possible type of just-for-fun vehicle. I’m already thinking about what I want to get for myself when I graduate, but my friends here are shaking their heads about it. My buddies–particularly the ones with an interest in finance–say these sorts of vehicles are bad investments, because they lose their value fast after you buy them. I don’t know if that’s really the point (I don’t plan to re-sell my ATV or boat, anyway), but I did want to see what the experts had to say about it. Are these really bad investments? Can maintenance costs and resale value make recreational vehicles a bad idea?
Answer: Your friend is right that most vehicles–including the recreational sort–decrease in value over time. That’s just the reality of wear and tear on moving parts, experts say, and vehicles that are used for hard work or play can see their values drop more quickly than lightly used cars. But, of course, that’s not the whole story.
Recreational vehicles, like all vehicles, may decline in value over time. But how fast that happens is product of the care that you put into your vehicle, the professionals at WheelArea say. Regular maintenance and a proactive attitude toward repairs and upkeep can make a huge different in the life of a recreational vehicle–and to its sale price at any point during that life. Your friends are right that this upkeep is pricey, and there are other expenses (for boats, you’ll need things like dock space, winter storage, and insurance, which costs an average of 1.5% of the boat’s insured value per year). But being smart about maintenance can also help you fend off larger and more costly problems–ameliorating the high maintenance costs issue you mention.
And your investment in your recreational vehicle could easily be informed by the nature of vehicle values. The used boat dealers at Boat Crazy tell us that many boat buyers, including a lot of first-time boat owners, find the sweet spot in price and value on the used boat market. When more aspirational types snap up the latest models, nearly new boats end up on the used boat market, providing a way for some savvy purchasers to get more bang for their buck.
Not that the buyers of brand new boats, ATVs, RVs, and other vehicles are getting ripped off: they’re getting exactly what they want. As you smartly point out, the resale value of these vehicles is not the primary reason to get them. They’re luxuries, not investments, and while you can do a lot to help them hold their resale value, their primary value comes in what economists call utility: the joy you get out of them.
An ATV, RV, or boat might not be the first thing you want to buy out of college. The average age of a boat buyer is 53, reflecting the high cost of this luxury purchase. On the other hand, millennials pushed RV sales up 3.6% in 2017! If you budget properly and recognize these things as the luxuries that they are, there’s no reason to consider them a drain on your finances. They’re an expense, of course, but if they are smartly managed, they won’t become black holes in your budget.
“Recreation”, which is to say: a refreshing exercise of the organism, because it was in immediate danger of overindulging itself in the uninterrupted monotony of daily life and growing indifferent.” — Thomas Mann