Motorhomes: how to make money from caravans!
Motorhomes can cost well over £45,000, brand new. But could it be a savvy investment instead of a luxury toy?
Do you dream of the open road? Crave the spontaneity that only a motorhome offers? If so, you're not alone. The trouble is motorhomes can cost over £45,000 new and more than £20,000 for a second-hand top model.
Even if you’re able to fork out that much on your new toy, would you use it enough to feel the expense was justified? However much you think you’d use it, the average owner gets out in their motorhome just four weeks a year.
Alistair Hilton, of motorhome sales and rental company Motorholme, warns that not only do many people fail to use them as much as planned, but the vehicles also devalue hugely.
“Depreciation is a bit of a killer. They buy it, don’t use it as much as they thought and they’ve lost £10,000 in the first year,” he explains.
But some people rent their motorhomes out when they’re not using them, in order to offset the cost. Could this be a way for you to finance your dream?
Earning cashback on your lease
Motorholme Ltd used to run a buy-to-let scheme whereby it sold you the vehicle and then helped you with the marketing required to let it out to holiday makers.
However, that’s now been scrapped. Instead, it offers customers the chance to lease a motorhome for between £490 and £570 a month plus VAT.
These renters sign up for three years and can use the vehicle whenever they want, but allow Motorholme to rent it out when they aren’t.
As renting one of the vans for one week in the summer costs the same as a full month’s rent under the scheme, customers could potentially offset their entire annual cost by letting other people use the vehicle between June and August.
However, they never own the motorhome and there’s no guarantee that they’ll be able to earn enough cashback to offset their costs.
Hilton says: “If we don’t let it out for you then the worse case scenario is that it has cost you £6,000 a year. Compare that to the first year’s depreciation of around £10,000. And, although we won’t guarantee to let it out, the season lasts March-October. You’re likely to reduce your costs even if you don’t entirely offset them.”
It’s easy to see what Motorholme get out of this arrangement: a guaranteed customer for three full years, potentially allowing the firm to invest in more motorhomes. But there’s no guarantee for customers and you could end up paying the full amount.
This is one route to consider, but could you go it alone with your own motorhome?
This is certainly not an easy way to make a quick buck. If you’re privately renting out your vehicle, then there’s a lot of work involved. A quick search on a few classifieds websites showed plenty of private individuals letting out their motorhomes, like Kerry from Cambridge who advertises her 2004 Peugeot motorhome at £100 a day.
But there are also a number of companies that operate as agents for private individuals looking to lease their motorhomes, and this could really simplify it.
One such agency is Lazee Dayz. Spokesperson James Weston admits that the market is a bit more subdued than in previous years and suggests people don’t buy a motorhome hoping for an easy investment.
“I’m not going to lie; it is a bit bumpy at the moment because the economy is bad. In previous years, we could get motorhomes let out all the time, but people seem to have less money this year.”
His advice is buy a popular model, suitable for a family of up to five, and to ensure your motorhome is advertised in as many places as possible. “It’s best to advertise it with a few agents and, between us, we will get it out. You might not always make money on it, but it will keep costs right down. Potentially, the motorhome will pay for itself,” he explains.
Location, location, location?
Do you need to live in a tourism hotspot to make a buy-to-let motorhome work? Motorholme’s Hilton says that’s far from the case: “There’s this misconception that people need to live in the Cotswolds or Lake District or somewhere, in order to find customers.
“But people renting motorhomes want to start where they live, so that they can pack the vehicle up with their things before they set out. So, it works best if you live in a city or town, somewhere where you have lots of potential customers.”
Of course, it’s not enough to buy a van and start charging people to use it. You need to consider what sort of insurance you’d need.
You may be able to get your insurer to extend your cover or tailor your policy to include leasing, but you’re likely to pay through the nose for that kind of risk. After all, you wouldn’t just be insuring against damage to the vehicle - you need to provide cover in case your customers injure themselves because of a fault or trip hazard. However, if you go through an agent then this could be taken care of for you.
For example, Lazee Dayz insures your vehicle during the time it’s leased, separate to your policy. Customers pay around £800 a week (depending on the model) and £200 of that pays for an insurance policy with Aviva. The agent then charges you 25% of the remaining £600 – so you could potentially earn £450 a week.
You’d still want to double check that this wouldn’t invalidate your own insurance; it’s always best to ask the insurer before something happens.
The open road
Setting up a buy-to-let motorhome on your own is an expensive investment and there’s no guarantee that you’ll see a return or even offset your costs.
Clearly some people are making money, but they’re putting in hard work marketing their vehicles, not to mention cleaning up after customers. I have a friend who cleans hotel rooms and some of her stories make me queasy – you run similar risks by renting a motorhome.
However, if you just want to offset some of the costs, then this could be a great way to do it. Just make sure you’re fully covered and compliant before the first customer rolls away in your forty-grand van!
Would you consider a buy-to-let motorhome? Do you lease your vehicle out now? Share your experiences with the writer and other readers in the comments below.