How Has Current Economic Conditions Affected the Cabin Versus RV Decision?

How has the shift in economics affected the RV lifestyle? That question was posed to me by a reader after reading my recent article about purchasing a Fannie Mae foreclosed recreational property. This is an interesting question because the answer will be different for almost every person. The best I can do is relate the changes that have affected me over the past 30 years, because in reality the lifestyle has evolved considerably from what it was back in the 80's.

As a young adult I had visions of retiring someday and becoming a full time RVer. Considered a member of middle class society, this goal early in life was considered modest and something that could be easily attained, if I so chose.

During the 70's, 80's and even well into the 90's the price of an RV suitable for long term living was something most couples could afford, especially once the nest became empty and the day to day cost of raising a family was no longer a burden.

Using myself as an example, at age 45 in 1995 we sold everything and hit the road. Our new rolling apartment was a 36' Dutchman travel trailer purchased for $14,000. The equity in our stationary life was more than enough to cover this expense plus the $15,000 or so for a new Ford diesel pickup to pull it.

By the way, prior to quitting my middle class job I was earning almost $20 an hour with my wife also earning about $10 an hour. Combined this was over $60,000, a good solid middle class income.

We left town and never looked back. Sure there were times we didn't have health insurance due to lack of work but over all we traveled, switched jobs as needed, and lived comfortably without much concern.

Jump ahead 16 years, the year is now 2011. How has the economic conditions of the present affected our decision to invest in a recreational cabin and forgo long distance travel?

First issue is our overall health. At ages 60 and 55 we are living with multiple health issue that were of no concern before. Diabetes, hypertension, and arthritis are words that have become part of our personal vocabulary. Any notion of living without health insurance would quickly lead to financial ruin.

In 1980 my health insurance provided such complete coverage I didn't know what it was like to actually see a Doctor bill, it was just taken care of. My spouse was equally well covered at no additional cost.

Today we pay $5,000 a year for my wife's insurance to cover me, but there's a catch. It would be considered major medical coverage as until I've spent an additional $3,000 they don't cover anything. As bad a situation as this is, risking no insurance would be just plain foolhardy.

Secondly the cost of an RV trailer and truck to live in. 1995 had $29,000 more than adequate for the purchase of both units new. Today the truck alone will run you $35,000 to $40,000 and a travel trailer will be closer to $30,000. That's an increase of about 120%.

Fuel, 1995 prices averaged about $1.00 a gallon. Today diesel fuel is over $4.00 a gallon. That's a 400% increase. Moving say 3,500 miles to a new location will run you $1,400 compared to $350 16 years ago.

Staying at Walmart while you travel in many places is still free. Lets face it, sooner or later you need to spend some time at an actual RV campground. 1995 a nights stay at most moderate campgrounds averaged $12 to $14 a night. A weeks stay probably had you paying for 5 nights with 2 night free. Today most places are $35 a night. Again an increase of over 100%.

Lets move on to employment. In 1995, because we were far from retirement age, we needed full time employment to maintain our lifestyle. Because we tended to stay in one location longer than most Rvers we managed to nail down better than average paying jobs usually in rather short order upon hitting town. Of course these jobs paid a fraction of our past careers but we usually averaged about 50% of our previous income. $30,000 a year for two people was adequate at the time. Jump ahead 16 years and the job opportunities of the past have disappeared. Sure you can work for a campground and maybe earn minimum wage beyond the hours required to cover the expense of your camping spot. Beyond these very low paying positions there is no opportunity for someone new to town with no connections to get them in the door.

The middle class life has dried up and disappeared, especially for anyone who could be looked at as a transient.

As you can see the numbers just make the notion of striking out blindly into the unknown a perilous situation at best. For most it will be such a dramatic downgrading of lifestyle the dream of a nomadic life has disappeared from their radar, it's become a dream the average person will just give up on.

Of course there are ways to downsize and reduce the cost of full time travel. Van dwelling is an option that many consider acceptable. Smaller RVs, self built from second hand cargo vans can still get you on the road at a much lower cost. Because I'm comparing what was then and what is now this article is aimed more at supposedly middle class America and the dream of becoming comfortable full time RVers in their retirement years. That means real RVs with real amenities.

So with the RV dream crushed, why the jump into recreational property? Why buy a cabin?

In many parts of the country we are in the midst of a rather unique situation that has great financial potential for those in a position to act on it. Fannie Mae foreclosed properties are everywhere, and in their effort to clear the books they are priced at dramatically reduced prices.

Seeing the writing on the wall some 10 years ago, we chose to abandon the use of credit in our day to day life. The beauty of this decision is, with our greatly reduced income, our lifestyle actually improved. We no longer donated a large portion of our income to the banks as interest on loans.

Come along this once in a life time opportunity to pickup investment property at about $.50 on the dollar, it was time to change our direction.

I'm not a financial wizard but I know when I can make money in the long run. In 1990 I purchase an almost identical property and upon selling it 4 years later I doubled my money. This recent cabin purchase is at just about half of what the same thing cost me 20 years ago. I will have a year around home suitable for a comfortable retirement that's located just far enough from the big city to make it secluded, relaxing, and a return to nature environment. Looking 10 years down the road, no matter what the economy does I won't lose money and stand to gain many times over my original investment.

Nothing depreciates faster than an RV. The time to invest in an expensive RV with ridiculous operating costs is past. Normal people just can't afford it anymore. The time to invest in stationary property is here, but it won't last long. When the current flood of foreclosures gets bought up prices will start to climb again. It's truly an opportunistic market if you know what your doing.

These facts I've presented pretty much explain the reasoning behind replacing the dream of living a mobile lifestyle with a sticks and bricks structure that will suit us well in our later years. Of course the motor home will still be parked close by and occasionally we will still do some wandering.