The Finances Behind RV Ownership

We've been traveling in our motorhome for about two and a half weeks heading up to Alaska and having a fantastic time. Consequently, I've been thinking a lot about the financial aspects of RV ownership and would like to share my thoughts about the issue. While there are certainly other issues behind the decision to own (or rent) an RV, for now at least, I'm going to focus on the monetary side of it.

Like any other form of travel, the expenses of RV ownership vary dramatically, depending on many factors. So, much of this post will be providing a framework for how to consider the finances involved and not a clearly defined answer for how much you might spend on it and whether it will be less costly for you than mainstream travel.

Variable Costs

The costs of owning and using an RV can be split into two types: variable costs and fixed costs. Variable costs are those that are directly related to how much you use your RV, while those that are fixed are, well, fixed.

By far the biggest variable costs with RV ownership are fuel and campgrounds. Besides these, most maintenance expenses are variable, and you may pay for connectivity while traveling in an RV.

Fuel costs while RVing can be substantial. In my experience, the decided majority of those towing an RV and those driving large motorhomes get between 8 and 11 miles per gallon. With the average cost of gasoline in the U.S. currently being $3.58 per gallon, this works out to an expense of about $.33 to $.45 per mile driven. However, those towing very small RVs and those in smaller motorhomes can achieve 15-20 miles per gallon, reducing the cost per mile to $.18 to $.24. We average about 17 miles per gallon in our relatively small motorhome, which is partly due to us rarely driving at more than 60 miles per hour and usually 50-55.

Though there are some campgrounds that cost over $100 per night, most cost between $30 and $70 per night. This is mostly dependent on the location of the campground, but the type of campsite affects this as well (e.g., 50 amp, 30 amp, or 15 amp service; full hookups vs. partial). From what I've seen, the cost of a campsite at a campground with full hookups (i.e., electricity, water, and sewer at the campsite) will generally be 20-30% of the cost of a moderately priced hotel in the same area. For instance, campsites with full hookups around West Yellowstone in August of 2023 are around $70-$90 per night, while moderately priced hotels in the area are $250-$400 per night.

That said, it is far from necessary to stay in a campground while traveling in an RV, certainly not every night, and many campgrounds are far less expensive than those above. There are countless places around the country, particularly in the West, where you can 'boondock' (i.e., park your RV overnight outside a campground and without hookups) for free. Some of these include U.S. national forests, parking lots, and roadside pullouts. And many campgrounds in national parks, national forests, and state parks only cost about $20-$30 per night, though most of these do not offer hookups of any sort.

On our current trip to Alaska, we've only spent $105 in total on campgrounds during our first 17 nights of the trip. We spent two nights in inexpensive campgrounds with full hookups and three nights in campgrounds without hookups. The rest of the time, we've stayed at roadside pullouts, a boat launch, and parking lots where overnight camping is permitted. We can go two or three days without refilling with fresh water and dumping our holding tanks, and so far on this trip, we've been able to do this for free at gas stations, many of which offer this for free when you refuel there, and municipal sites. In some areas of the country, you almost certainly have to pay to dump your holding tanks, but the cost for this is usually only $10-$20.

During our multiple month long trips to Colorado and New England last year, our combined cost for campgrounds and dumping our holding tanks averaged under $20 per night, and we expect that this will average no more than $10 per night for our trip to Alaska.

Near Fraser, British Columbia

Most of the maintenance associated with an RV is variable; the more you use it, the more you'll spend on maintenance. This includes things like repairs, engine maintenance for motorhomes, and the like. The amount spent on maintenance varies tremendously, depending on the type of RV, its age, and how much maintenance you do yourself. Towable RVs will have substantially lower maintenance expenses than will motorhomes, for instance. As a very rough estimate that is dependent on the factors above, I would say that the annual maintenance costs for a towable RV typically range from an average of $500 to $3,000 and about double that for a motorhome.

Lastly, you might need to upgrade your cell phone plan and/or pay for Wi-Fi in certain areas while RVing. Now that we live full-time in an RV, we pay a flat fee for Starlink service, which has generally worked very well in even remote areas.

Fixed Costs

By far the biggest expense for most RV owners is the cost of buying the RV and the depreciation they experience along the way, though it's smaller for most RVs than many expect. The amount of depreciation in the value of an RV is again dependent on many factors, most prominently the type of RV and its age followed by its condition and amount of use. One expert estimates that travel trailers and fifth wheels, which represent about 90% of all RVs, depreciate about 20% immediately after they are bought new and subsequently only lose roughly 2% of their initial value in year thereafter before settling at a few thousand dollars if everything is still in good working order. Since they have engines, motorhomes depreciate more quickly, about 20% immediately after being bought new and 3-4% annually after that.

As such, depreciation expenses can be significantly reduced simply by buying a used RV rather than a new one. Further, a patient buyer who knows what they're doing can often buy a used RV, use it for several years, and then sell it for approximately what they paid for it or even more. I personally know many who've done this, and we expect that when we sell our motorhome later this year that we'll roughly recoup both the purchase price and the amount we spent on upgrades over the last two and a half years.

Insurance on RVs is, in my view, remarkably affordable. The cost for liability and collision coverage for our motorhome, with a market value of about $60,000, through Progressive is only $400 annually.

A great many owners must pay to have their RV stored. Where we usually reside, the cost of an outdoor, gated parking space is about $60 per month.

Costs of Traveling via RV vs. 'Mainstream' Travel

Those familiar with business concepts have likely heard of the break-even concept. It's commonly used to determine how many units of product must be sold for a business to break-even (i.e., earn zero total profit). If the business sells fewer units than the break-even point, it's losing money; it must sell more units than the break-even point to earn a profit.

The same concept can be used to compare how much an RV must be used to be less costly than more traditional means of traveling (e.g., flights, car rentals, hotels, restaurants). In most situations, the variable costs of traveling via RV are much lower than those of traditional travel. However, the fixed costs can be substantial and must be 'overcome' for RV travel to be more affordable.

Let's look at a couple of examples to get a very rough idea of how much an RV must be used on an annual basis to break-even with the costs of traditional travel.

I'll assume that a couple of RV travelers are staying almost exclusively at campgrounds with full hookups, so the average cost per night is $50. They travel an average of 140 miles per day at 10 miles per gallon, resulting in fuel costs of about $50 per day. They eat breakfast and lunch in the RV, costing them little or no more than if they were eating at home, and spending $40 per day for dining out. Maintenance costs average $20 per day. So, the total cost per day of traveling via RV is $160.

They bought a used RV for $25,000 and lose $1,000 per year in depreciation. They spend $200 on insurance and $1,000 on storage fees. So, the fixed costs of owning the RV are $2,200 annually.

By comparison, a couple of mainstream travelers fly to their destination at a cost of $1,400; the cost of the flight is fixed, so I'll assume that the length of this trip is a week, resulting in an average per day cost of $200. They rent a car at a daily cost of $50, spend $10 per day on fuel, $80 per day on dining out, and $200 per day hotels. So, the total cost per day for them is $540.

Traveling via the RV saves $380 per day compared to mainstream travel but has $2,200 of fixed costs. Therefore, the break-even point with traveling in the RV is a bit under six days per year (i.e., $2,200/$380 = 5.79 days). Traveling in the RV longer than six days per year will result in savings of about $380 per day.

However, this isn't exactly an apples to apples comparison. The RV must be driven to the destination, which will usually take significantly longer than flying. Many RV owners don't like to drive more than about 300 miles in a day. Traveling coast to coast in the U.S. can easily take a week or longer. The additional time it takes to travel to the desired area will increase the break-even point. A 1,200 mile distance to travel that could be done in two days of mainstream travel (i.e., one day going and another returning) might take eight days of RV travel. The additional six days of travel would add roughly $1,600 of expenses (i.e., the $140 per day plus $600 for additional fuel costs), lengthening the break-even point by a little over four days to about 11 days annually.

Final Thoughts

This analysis makes it fairly that lengthy trips, two weeks or longer, taken at least annually in an RV are significantly less costly than a mainstream type of traveling. But traveling only a week or so in an RV every year is not likely to result in much savings.

However, there are many factors at work behind the decision to own and travel in an RV. Many people want a more 'hands off' approach to traveling and don't want the additional effort that RV travel necessarily entails. Others want more spacious accommodations. Some don't like driving long distances. And there is certainly some additional risk that comes with owning and maintaining an RV as opposed to simply paying someone else for use of their living space, vehicle, etc. Conversely, there are many places where traditional means of travel simply aren't practical. On our current trip up to Alaska through northern British Columbia and the Yukon, we've noted that outside of a very few modestly sized towns, there are exceptionally few places to stay or eat; RV travel is certainly the preferred means of traveling through such areas.

I hope that this will help you or someone you know to better consider at least the financial aspects of RV ownership.