An RV can be a wonderful asset for a family. Owning an RV means you’ve always got somewhere to go on the weekends, whether it’s up to the lake or across the country. An RV means enjoying the sights and sounds of nature with all of the amenities of home.
Yet, RVs aren’t cheap. A new RV will likely cost more than your car. Add in the fact that you need a truck with a pretty hefty tow package to transport some of the larger RVs, and they can seem out of reach for many people.
One way around the high cost of the RV is to purchase one together with friends. This distributes the cost out across several families, making it much more affordable. If you decide to do this, there are some things you’re going to have to think about ahead of time.
1. Determining the budget.
When you’re investing in an RV with friends, you can often expand your RV budget beyond what you otherwise might consider. A 5th-wheel and a vehicle to tow it might run you upwards of $100,000. The overall budget will, to a large degree, be determined by how many people are investing in the RV and in what proportions.
It’s that area – the question of proportionate use – that you’re going to have to address next.
2. Determine the division of time.
Just because you’re buying a $100,000 RV among five families doesn’t mean you’re each going to pay $20,000. The fact is that one family might want to use it more than another, while another might want to use it less.
Let’s suppose that you want to be able to travel one month out of the spring or summer, and one month during the winter. Your share of the RV might be 2/12. Another family might want to use the RV for three months out of the year, and their share would be 3/12.
If you live in a temperate area where you’re not likely to use the RV during the winter (except perhaps for an occasional trip) you might agree to assign a higher value to the summer months. In this system, you’ll assign a weighted value to specific times of the year. May through September might each be worth 3 points; December might be worth 2 points; the remainder of the year might be worth 1 point per month. That gives you a total of 23 points. Thus, the purchase price would be a 23-way split, parceled out according to schedule.
3. Set up ownership.
This can get a little bit tricky. In an ideal world, everyone who is contributing to the vehicle will jointly own the vehicle. Depending on where you live, that may not be an option.
You have a few choices to make here. You can:
- Put the RV in one person’s name. This can obviously cause some potential problems, as legally no one has a right to the vehicle but this person. If you have a falling out, you can lose your investment.
- Create a jointly-owned legal entity to own the RV. There are a number of legal entities that you can create that allow you to own the RV. Trusts and partnerships both come to mind. You may be able to talk to your local attorney about other options.
- Allow a third party to own the RV. If you have access to an impartial third party, they may be willing to hold ownership, mitigating disputes.
This is one of the key areas for potential discord, so don’t brush over it.
4. Handle registration and insurance.
This will depend, of course, on who (or what entity) owns the RV. The RV will need to be registered with your state DMV, and you’ll need to obtain proper insurance. Here again, how the insurance policy is written matters. Make sure you explain to the insurance agent exactly how the RV will be used, and that the policy you get covers all of the potential drivers.
Joint ownership of an RV can be a wonderful thing. It can give you all of the luxury you’d want from an RV for only a fraction of the price. However, you need to be careful about how you set things up, especially when dealing with friends. The last thing you want is a dispute about the RV to interfere with a long-standing friendship.