Estimating Potential Capital Loss on Sale of FT

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Estimating Potential Capital Loss on Sale of FT

July 07, 2016, 12:34:40 pm

As you all know by now, I have a lot of questions as we plan for retirement and our next RV. My 9-5 life as a Certified Financial Planner keeps me focused on things financial....in case you haven't guessed. So I have another question for you'all to opine on.

I think we all know that most every vehicle is worth less when you sell than when you bought. The exception being the muscle car I didn't buy in 1968 that now sells at Barrett Jackson auction for $1 million! Our previous used $55k diesel truck/5th wheel sold for about 30% less when we sold it 5 years later, excluding the cost of operation during the time we owned it.

As I plan for retirement I obviously plan to spend (not invest) up to $100k for a FT....either a cherry like Dave's that's pretty much ready to go....or a less expensive rig that I'll spend back up to $100k to get where I want it. So, is my 30% loss after 5 years on my future FT a reasonable estimate of the capital loss I'd expect so using my $100k expense might return $70k on resale....ignoring normal maintenance and usage costs during that 5 year period?

My concern is that I see used FT's listed for $40k that appear to be in reasonably good shape although not up to the cosmetic level of Dave's. A 60% loss is a bigger pill to swallow.

Randy

Re: Estimating Potential Capital Loss on Sale of FT

Reply #1 – July 07, 2016, 12:49:28 pm

Too few Foretravels out there to really tell,don't look at it as a loss,when you go to Disney world do you look at that as a "loss of
financial security" ,get one and enjoy it,keep it maintained and you will have a good resale value.What percentage you will get
back is impossible to predict.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #2 – July 07, 2016, 12:58:11 pm

We think of our Foretravel as a longer term investment. After having it 6 years, we looked to getting a bit newer coach. a 2003 specifically. the cost to trade up ended up being about the same as a factory restore so we decided on that,

so now ( a few years later) we are probably over the real value, but we still enjoy the coach and plan to for many more years.

Cheers,
Chuck

Re: Estimating Potential Capital Loss on Sale of FT

Reply #3 – July 07, 2016, 01:00:44 pm

Quote from: floridarandy – July 07, 2016, 12:34:40 pm

So, is my 30% loss after 5 years on my future FT a reasonable estimate of the capital loss I'd expect so using my $100k expense might return $70k on resale....ignoring normal maintenance and usage costs during that 5 year period?

Who says you have to sell it after 5 years? If you buy the right one, why not keep it? We bought our "Last Coach First"...and plan to drive it until we can no longer physically deal with it. The purchase price looks less intimidating when amortized over 10-15 years.

Also helps if you call it a "Hobby"...a expensive, time-consuming hobby. Lets you feel better about all the cash you pour into it!

Cheers,
(another) Chuck

Re: Estimating Potential Capital Loss on Sale of FT

Reply #4 – July 07, 2016, 01:08:32 pm

Agree with impossible to predict.

If interest rates are low and diesel is low prices are firmer. If the economy is bad and diesel is high prices are softer. Timing, maintenance, and conditions will have a great influence on value retention.
I bought Foretravel for the quality, and I bought an older Foretravel to minimize the depreciation since so much of the depreciation had accrued to the previous owners.
Slide room models in the 2000 - 2001 years are probably going to hold value better than none slide units of older vintages as a percentage of acquisition cost. But since Non slide units are already almost fully depreciated and your initial purchase costs are so reasonable that total depreciation might well be less on a non slide unit.
Most of us have older Foretravels because we Think the total value proposition (which is to say cost, utility, enjoyment and maintainability) is better than any other option.
Said another way we believe in the value proposition of these old coaches.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #5 – July 07, 2016, 01:19:48 pm

Five percent a year probably is a good number.

You have the right idea when you said spend.

"You pay for everyone of your pleasures and if you paid less it probably was not as much fun , was it?"

That was my recurring comment to customers as the Foretravel ca store sales manager long ago.

My personal plan is to spend the money to bring our coach up to good condition then drive the "good" (money) out of it.

Bought better tires, shocks, and top of the line gel batteries for their longer life.

Hoping to get more than 15 years use minimum.

Dave's coach would seem to be the coach all done ready to drive the good out of it.

Biggest difference I see in his is the much more powerful motor he ended with with his cummins specialized knowledge.

The ability to pull the Rockies in sixth gear towing is a fantastic plus and for the right future buyer may lessen your depreciation.

Boys are boys and these are adult vehicles and the value is somewhat proportional to the driving experience.

Trust me as I made my living somewhat by the power to weight ratios in coaches that the ones that sailed up the hills were worth much more money to knowledgable buyers.

Dave's coach from what he wrote me will pull away from almost all the other u320's.

You may think this is not needed but after the first drive in mountains you will remember the more power comment.

Safer not to play with the trucks in and out of the slower lanes on the long grades.

If I was that price range buyer and liked the floorplan his coach could be a very good buy as in the future someone will pay fair for a good running coach. Trust me.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #6 – July 07, 2016, 01:20:19 pm

Randy, I see your problem as the profession you are in.
This is not a "negative or positive" thing like an investment unless you are in the Business of buying/selling them. Owning a coach for recreation is a life style so you cannot worry what an item may be worth down the road It is to use and enjoy, not store in the garage and keep it shiny hoping in 25 yrs someone will give you a good return.
You are a Financial Planner not an RV Dealer so use that knowledge to invest in Non-lifestyle things the same as you most probably tell your clients. At the end of the day you relax with your coach, and worry about why it will not start (or something else) just like the rest of us

By the way as I said before Dave's is not all cosmetic it is the real thing inside and out.
JohnH

Re: Estimating Potential Capital Loss on Sale of FT

Reply #7 – July 07, 2016, 01:29:01 pm

Not sure if this is going to help you at all but my last (first) FT cost me about $500 per month ( not payments but everything, including windshield washer & update/upgrades), when all said and done at the end of 33 month of ownership. Take that divide it by amount of days/nights used .........
Math can get you no where with this adventure, but foot on the pedal and eye on the road will get you to some amazing locations.
When i sold it, it was all done and in top shape, so had i kept it another 33 months it would have cost me +/- 250 per month, maybe.
When done right, I think they cost less than 6K per year and it keeps going down as you own and enjoy it for longer.
So i guess, my guess is if you keep a 100K FT for 5 years I would not expect you to lose more than 25K & depending on how good of an owner you are + the market conditions maybe even less than 25%
Good luck

Re: Estimating Potential Capital Loss on Sale of FT

Reply #8 – July 07, 2016, 01:37:58 pm

We've had our FT coming up on 11 years and will probably continue another 4 or 5 years. When that is done and we begin to seriously get out of full timing and out of RVing we believe that just putting the title under the wipers and leaving the key in the ignition will still leave us ahead considering all the nights we've lived in the coach and all the many places we've been able to see because of the life-style. We'll be far ahead of most if not all of our friends. Maybe I'll post where I'm going to leave it...maybe

Re: Estimating Potential Capital Loss on Sale of FT

Reply #9 – July 07, 2016, 01:39:57 pm

[quote author=lgshoup link=msg=238493 date=146 When that is done and we begin to seriously get out of full timing and out of RVing we believe that just putting the title under the wipers and leaving the key in the ignition [/quote]

+1

My Dad believed in giving away "things" he no longer had a use for. He referred to that act of passing on as, "throw the jellyroll out the window".

Re: Estimating Potential Capital Loss on Sale of FT

Reply #10 – July 07, 2016, 01:49:55 pm

Quote from: lgshoup – July 07, 2016, 01:37:58 pm

Maybe I'll post where I'm going to leave it...maybe...

Re: Estimating Potential Capital Loss on Sale of FT

Reply #11 – July 07, 2016, 02:36:31 pm

Agree with previous posters, many factors to consider. Having said that, I would say that based on your question and the price range you are considering, the FT would be your best option when considering potential depreciation over a five year horizon.

If you really are concerned with depreciation, buy a 1997 - 1999 in the 50k range............................imo, one of the best coaches on the road that will hold its value forever.

The used foretravel is a Certified Financial Planners dream investment!

Re: Estimating Potential Capital Loss on Sale of FT

Reply #12 – July 07, 2016, 02:42:58 pm

Quote from: propman – July 07, 2016, 01:29:01 pm

Not sure if this is going to help you at all but my last (first) FT cost me about $500 per month ( not payments but everything, including windshield washer & update/upgrades), when all said and done at the end of 33 month of ownership. Take that divide it by amount of days/nights used .........
Math can get you no where with this adventure, but foot on the pedal and eye on the road will get you to some amazing locations.
When i sold it, it was all done and in top shape, so had i kept it another 33 months it would have cost me +/- 250 per month, maybe.
When done right, I think they cost less than 6K per year and it keeps going down as you own and enjoy it for longer.
So i guess, my guess is if you keep a 100K FT for 5 years I would not expect you to lose more than 25K & depending on how good of an owner you are + the market conditions maybe even less than 25%
Good luck

I guess I expected most of these responses...and all of you are correct. Over nearly 40 years of camping I've always thought I ended up "ahead" when enjoyment, memories and "hotel/restaurant" costs were considered. My "dollars in vs dollars out" question started with a belief that the 25% Propman suggests was probably in the ballpark from my past experience.

I also think Tim's analysis of depreciation on slide vs non-slide is probably correct.

No, good Lord willing I don't expect to sell in 5 so that was just an assumption to get things rolling.

Truth is that the most interesting thing about FT is the fact that there are so many of you here with rigs that are 10-20 years old. Its a testimony to how their built, cared for and loved as 2nd and 3rd owners. I fully expect to add myself to that list. Because they're so different from peoples quality expectations (per Gadget Guy's current posts) its probably more a function of educating buyers to why they should want a FT. Dave's recently sold coach is an example of something so nice it should have sold in days....but it took time and the right place to showcase it to sell it.

In the end from my perspective income is far more important than capital....but its capital that buys the toys if you want to live debt free and I want a bunch of toys...so its simply allocating the capital so you can "do it all". I'm not planning on any return on invested capital during retirement. Still good for young people to buy and take risks in the market for the long run, but after managing money and safeguarding peoples financial lives for over 30 years I really don't want to take any investment risk after I retire....no CNBC....no Wall Street Journal...no looking at monthly statements.

Thanks to all.

Randy

Re: Estimating Potential Capital Loss on Sale of FT

Reply #13 – July 07, 2016, 03:34:49 pm

Randy,

I'm glad you are thinking. When we approached retirement our plan included an adequate travel budget. We like to travel, been to Hawaii 27 times. Then we reallocated resources and bought a FT. Accounting for everything including the money not invested elsewhere we have to work at using up our travel budget. And we travel 5-7 months a year. So for us it has been a great investment in us

Depreciation on a 2001 coach is 1.5-2% per year today. The early 2000's with a slide held value quite well but I think they will slip a bit in the next few years.

If you buy a coach for personal use it is considered a second home for tax purposes. Just like your fixed home you can spend money on it for improvements that increases the basis value. Maintenance doesn't count but improving the headlight does. New tires, a new refrigerator to replace what was there, new furniture ... they don't count. A new satellite dish does. Your tax person can help with what does and what does not. it is the same rules as your house. So you spend $100,000 on the coach and do $25,000 of capital improvements over time and then sell it for $75,000. For tax purposes you have a capital loss of $50,000 which can be used to offset capital gains on the sale of other assets. There is no magic here, just follow the rules.

Almost anyone will tell you that there are probably not many accountants or financial planners who will buy a coach. That side of the page never makes much sense. Leave all of your money in safe investments and stay home. The other side of the page lists all of the places you will visit, the time elsewhere that is somehow so special where ever you are, the time together. What is all that worth? This side of the page will always show the value of the adventure surpassing the cost. All of this value is out there waiting for you to come and scoop it up, go get it! No need to wait till you retire in five years. The best coaches out there now will just be five years older and the pool of coaches in five years that are the same age as those today will be much smaller.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #14 – July 07, 2016, 03:55:08 pm

Quote from: Roger & Susan in Home2 link=msg=238518 date=146792008 I'm glad you are thinking. Your tax guy can help with what does and what does not. [/quote

It was a "TAX GAL" that kept us honest and helped more than we could imagine! Before I retired, she would enable us to take the coach to "conventions" and write the whole trip off. She even suggested, we could eat out, and write that off, as well!
If one is in that enviable situation, a boss CPA is a must!

Re: Estimating Potential Capital Loss on Sale of FT

Reply #15 – July 07, 2016, 05:14:21 pm

Well the Tax part is ok for you USA people but for us Canadians it is not a 2nd home so no deductions. We pay more to begin with ($ to $).
I pay cash for things like this (do not want to make payments on an RV for heavens sake) and get on with it. The trade off is that you pay a lot more for health ins' so it equals out.
Owning an RV is NOT an investment, unless you buy them at rock bottom price and fix up.
JohnH

Re: Estimating Potential Capital Loss on Sale of FT

Reply #16 – July 07, 2016, 05:20:32 pm

Re: Estimating Potential Capital Loss on Sale of FT

Reply #17 – July 07, 2016, 07:38:47 pm

A motorhome is a depreciating asset...period...there is no math that can account for a style of living. Some people spend a great deal of money fixing a retirement home. This motorhome thing is NOT that in the least. Expect to have much less residual value than the amount of acquisition and repairs. If you need to do the math, then please figure out how much money you'll need enjoying the heck out of life in the places you will be visiting and the wonderful folks you will be meeting. Trust me these are a bunch of great folks out there. When you're ready to hang up the keys, do just that and carry on with the next adventure.

Unfortunately I am like you. I am very much financially savy and like to cross the t's and dot the i's when it comes to retirement planning. As such, the coach we own (Forrest as we lovingly named him) will be with us until we hang up the keys for a smaller unit down the road. What we are able to get for him moneywise is immaterial as that amount is zero in my financial plan. And your plan should assume the same. Then, if you do get some money for your coach, you'll be money ahead in your plan. Trust me, you'll sleep better at night if your plan is written this way. Good luck and happy planning. But don't plan too much beacause you know what they say about the best laid out plans of mice & men.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #18 – July 07, 2016, 08:03:23 pm

Two thoughts.
Life is too short not to have a Foretravel.
And anytime, measured days, months, or years with one is priceless.

I got my purchase money back on my 93 after 2 years of pleasure. A best guess of values today, of our 98 after 3 years, is I might get almost all of it's purchase price. But both coaches are on the long flatter out run of the depreciation line.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #19 – July 07, 2016, 08:29:47 pm

The only motorhomes I have bought were fixer-upers do to price difference from ready to go ones. The current one I paid $45,000 with new house lifelines and engine red tops, residential refrigerator, air ducts extended, flat screen TV's and thermostat upgrade. I have put around $6,000 in it for 8 air bags 2 new front tires, all fuel lines, filters all coolant, oil and transynd along with all filters and air drier kit. Repaired dash air with new compressor and expansion valve. replaced many gas springs and fixed bay latches. All I have left on my list is 4 rear tires and I am finished bringing it up to standard. I don't care how much I will sell it for as I will use it until I can no longer drive and repair it. Because I do all my own labor I can afford to maintain it.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #20 – July 08, 2016, 10:43:04 am

Quote from: Tim Fiedler – July 07, 2016, 01:08:32 pm

Most of us have older Foretravels because we Think the total value proposition (which is to say cost, utility, enjoyment and maintainability) is better than any other option.
Said another way we believe in the value proposition of these old coaches.

We completely agree. We bought our 1995 U320 almost four years ago and plan to keep it for many more years. We're sure it has "depreciated" over those years but we have really enjoyed using it and have no near-term plans to sell it and so in reality there has been no real depreciation--just real enjoyment from owning it!

Re: Estimating Potential Capital Loss on Sale of FT

Reply #21 – July 09, 2016, 09:57:53 am

About two years ago when I was researching 2000-2005 Foretravels with slides, asking prices were dropping at least 10% per year.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #22 – July 09, 2016, 07:50:26 pm

Not your exact circumstances but I had a CPA go over the differences with me between buying a gas or diesel coach.

Covered two columns on a yellow legal pad with the various costs of each.

After thirty minutes or so I reached across my desk and gently wrapped my hand around his with the pencil in it and said

"This is a want. Not a need. May as well get what you want the first time."

He looked and me and laughed and thanked me for explaining it to him with a smile on his face and he bought an ORED 300 cat 36' and was really happy with it.

Re: Estimating Potential Capital Loss on Sale of FT

Reply #23 – July 10, 2016, 12:03:50 pm

Experiences are an investment. We have a finite amount of money in our building fund, so it feels uncomfortable just a tad to spend $2000.00 on transfer switches and generator this week.
Then again we aren't paying rent, or a mortgage so it actually offsets in two months of full time housing. Even after our barnominium is completed every dime I spend on Big Blue for PM is an investment in future experiences NOT resale. A close friend and Foretravel mentor has recently been diagnosed with cancer. None of us know how long we have, I am convinced that positive happy memories for us and our young daughter are PRICELESS. Our coach sold to us for $50,000.00 We have already spent close to $10,000.00 and there's a lot more maintenance that P O "differed" to address. We will see it through and insist on enjoying life with our beautiful old Foretravel! The reality of losing chunks of money when we sell some day is irrevelant as we bought our last coach this time. The $10,000. + we lost with our 280 was part of a steep learning curve.
My advise is to buy the best coach in the best condition you can afford then spare no expense on PM all systems asap . Address "wants" as you feel comfortable affording and enjoy every journey!

Re: Estimating Potential Capital Loss on Sale of FT

Reply #24 – July 11, 2016, 03:57:13 pm

Still haven't seen a lugggage rack on a hearse.

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