How To Make Money Renting RVs

A very clear statement up front: Your Mileage May Vary!

Way back in 2010, I purchased my first RV. It was towable and we really liked it. I never even thought of renting it out. I kept that RV for about 3 years and sold it along with a lot of other items related to it. When it was gone we were missing the experience so the family decided to try renting an RV.

The first experience was with Cruise America. I’ll just go ahead and say it didn’t go well. Their RV rental model is just ok, but the units were bare bones basic and mine had problems. The place we rented it from wasn’t friendly either. The next year we rented directly from General RV. That was a much better experience, but it was pricey and they were far away. My brain got to working up a plan and decided I could rent mine out…if I bought one.

One year later, I bought my first drivable motorhome. I was excited about the prospect of starting my own business again. I had dabbled in stuff in my 20’s and nothing every really panned out. I also still had (and still have) a full time job so it was going to be a hectic 5–9 setup. I knew if this was going to work at all, I needed a registered business LLC.

The first mistake many people make when renting their RV is not filing to rent as a registered business. On the surface, there is no need to actually have a registered business, but there are a whole lot of benefits to having a LLC entity. As soon as a person files for the LLC, they are given a Tax ID number, which is extremely useful for:

1. Setting up a business bank account
2. Linking any social media where you may earn income
3. Setting up your motorhome on 3rd party sites for rentals
4. Obtaining commercial insurance to rent privately

While I waited for all the documentation to show up in the mail and for direct deposits to be verified, I needed to draw up business plan and/or spreadsheet. I had worked one up before, but now I needed something official. It needs to include maintenance, expenses, income, taxes and payments.

Vetting out the basic costs for me to show a basic win for the year:

Payment on RV — $4,922

Insurance — $2,857

Expenses — $1,350

The insurance sounds expensive. Most RV personal policies are under $1,000 per year. Except, this is commercial insurance. Commercial insurance is expensive and the cost is directly related to how much I state my RV is worth. I used MBA Insurance which is one of the largest motorhome insurance companies in the country. They provide each business owner a pre-defined and written contract which allows me to provide the renter with insurance while they are renting from me. I don’t sell insurance, but it allows me to extend my coverage to renters while the motorhome is in use. The commercial policy allows me to privately rent to customers without having to pay 3rd party fees.

Expenses included setup of the website, hosting charges, as well as oil changes and misc. features I added to the rig that made the interior nicer to renters.

A basic grand total of $9,129 is what I would need to make in one year to reduce my basic costs to $0. That amount of money sounded out of reach, but I quickly found out the money can come in fast.

I listed my RV on every site I could and as part of my expenses, I started my own site on WordPress. I had never used WordPress previously, so it was a big learning experience. I spent tons of hours spent after my day job getting it right and learning how the internet really works with search engines. Then, after about 3 months of prep, I went live!

Checking on my kids baby monitor every five seconds when they are newborns seems pretty normal. I was checking my website just about as much. I didn’t get much sleep for a week. There were a lot of bugs and little things that needed to be updated and worked out on all the places I was listed. Then my first request came in. A 21 day rental request! They also wanted to drive across the country. Wait, what? Should I let my brand new motorhome take its maiden voyage for a 6,000+ mile trip? I hadn’t even used it yet!

The answer to that is of course, yes. I started a business and had to somewhat separate myself from the emotional side of things. There were a lot of nerves handing off keys to a stranger. That first renter returned almost $5,300 for the 3 weeks. I was stoked! With the first rental I’ve made all my RV payments for a year. Upon the renter returning, I noticed there would be a lot of cleaning required before it was ready to go back out. Here is where things go sideways from what other renters tell me and other rental units I have been in.

The definition of clean…appears to be the most subjective definition of any word in the English language. I have been in some rental units that are not clean and are given to renters anyway. I keep mine as clean as I can within reason and my reviews show it. No renters have ever complained about the coach being dirty. However, that level requires myself or my wife (or if we hire out) to spend about 2–3 hours top to bottom. That time gets factored in at the end of the year for maintenance. Which brings up the next point about maintaining the running gear and exterior.

I was a mechanic for 7–8 years before my current profession. I have enough tools to do just about any mechanical job including welding. I have a compressor and air tools. I would not profess to say I’m a great wood worker, but I can get the job done. Maintaining the RV at my house was and still is critical for profitability. I wrote in one of my other articles (whether someone should rent or purchase an RV) about the importance of living near a RV dealer. Something is going to go wrong. If the problem cannot be fixed at home, the RV is going to the dealer, the unit will be down for at least one week and will likely cost a minimum of $1,000 in repairs.

As an example, this past year my electric steps stopped functioning. The cause ended up being the renter stepping out onto the steps before they fully came out, but I could not diagnose that until they were long gone. Very long story short the repair cost me $130 and about 3 hours of my time. I called a dealership recently and they wanted $962 for the same repair.

Saving a lot of money on repairs helped to make the balance sheet look better at the end of the year. Total revenue was just over $12,000! I also started the rental season in June so I missed out on a few potential rentals. The next full year in 2017, my total revenue was just a tick over $25,000. For 2018, income dipped a bit to $16,000. For the last two seasons, things changed. I have been significantly more busy with my main job and have been travelling more often so my revenue has not been as strong.

In the first year I spent approximately 130 hours maintaining, cleaning and working on the RV.

So, how much was I charging for rentals? I started at $270 a day. That included 100 miles per day of mileage and included insurance. I ended up dropping that to $230 a day and it stayed there for 3 years. I constantly check the competitive sites and pricing to make sure I’m on the same planet for pricing. Recently I have dropped to $198 a day as my rig is not brand new, though it still looks like it inside and out. Thankfully, RVs have not changed much in 20 years so my 2016 looks just like a 2020 and also a 2009.

The great outcome has been that the RV is paid off. Also, the 3rd party rental sites now offer insurance as part of their rental fees. Therefore, I do not need to carry commercial insurance and can carry personal RV insurance for when I use it for personal business. However, not being able to book people privately has really changed my business model and I’m not sure I like it. I have to refer people to the 3'rd party sites where they can look up any RV that is nearby.

The RV now has almost 70,000 miles on it and is 5 years old. There is still plenty of life left in it and should be good for rental purposes until at least 150,000 miles if I maintain it properly. To bring it all back; I bought mine new. Thinking back on the situation now, that probably wasn’t the best idea. However, I didn’t want to take a risk on a used motorhome until I could get a much better feel for the industry and how motorhomes age and when parts start to break. Now, I would feel much more confident in purchasing a used RV. The numbers work out pretty well if a person were to expand the business to 5–10 units and had the property to keep and maintain them. With 10 units to maintain, that would become a full time job. With a proper functioning 10 unit operation and not including any additional capital expenses (buildings, etc); one could potentially expect a mid 5 figure income with a 5 year payoff around $200,000 (selling all the units). Can you make money doing this? Yes. Is this a good idea for someone who lives in a city, in an apartment, who doesn’t work on cars? Probably not.

Even with that last point, there are still options. Many rental agencies are now taking on consignment units. You buy the RV and hand it off to a company that will rent it out for you. They take 50% of the rental fees, but you still get paid. You can also use it when you want to. Being in Michigan, I am exploring the consignment option for the winter down in the southern states.

And again, Your Mileage May Vary!