RV living vs room rental

[polaran]

Hello ERE! I've periodically read Jacob's blog for years, but am new to the forum. I'm living and working in a university town for the next 3.5-4.5 years and am considering my housing options for that time. I'm mulling a few options:

1. Stay in my current house. I pay $500/month (including utilities) for a room rental in a 3/1 house. It's a small house that feels a bit crowded at times, but is generally fine. I'll be away for field research for part of the summer and may be able to sublease my room to save on rent during that time. The owner is one of my housemates and the price is likely to be stable for the next few years.

2. Purchase and live in a travel trailer or 5th wheel. There's a very small (10 sites) mobile home park that has a vacancy for $175/month with full hookups. Water/sewer/trash included in rent, electric and internet are billed by the local power company. I've been viewing RVs for sale over the last month to get an idea of what I'd want and how to properly assess their condition. I would budget about 10-12k to purchase a well-maintained older trailer. I'm also trying to make sure there's no "gotcha" to the park - it's in a nice area, priced far below others in town (which run $400-500/month for sites), and doesn't have large numbers of crime reports from what I can find online. I've visited it once and all of the trailers look like they've been there for a long time, people have unlocked bikes outside, and it seems like a place I'd be willing to live. None of the current residents were around for me to chat with.

3. Purchase a house and rent out a spare room. A fixer-upper SFH would run me $140,000-180,000 and I could rent a spare room for ~$500/month + half of utilities. I can afford the 20% down payment for a house in this range and have helped family with DIY renovations before, but would strictly avoid any place with structural/foundation issues. Estimated monthly payment for a $120,000 mortgage with tax and insurance is about $675 (high property tax area). I will say that this is the least likely option for me to pursue as I'm almost certain to move away from the area in a few years and would not benefit from appreciation after subtracting closing costs. Having a long term rental property as a source of semi-passive income is attractive, but may not be worthwhile given the perils of long distance landlording or dealing with PM companies. A down payment would also take up most of the funds that I have available outside of retirement accounts.

4. Rent an apartment - not considering this, they're too expensive in my area and almost all disallow dogs.

Commute times are about the same (5-15 minutes by bike) for all of these options, and while I'd prefer to live alone it's not a huge factor. I'd love to get some input on which makes the most financial sense from others with a FI-oriented mindset. The RV idea seems like it should save the most, but it will continue depreciating after purchase and a major appliance failure or repair could wipe out the rent savings.

[Scott 2]

Your current room rental sounds good to me. Low hassle factor, I presume. That's a significant time benefit, which is probably more valuable on the path to FI than absolutely minimal housing expenses. Makes it easier to find energy to cook, shop insurance, buy used, work on the side, etc.

[George the original one]

1) $27000 spread over time, little cost recovery, low risk of inflation, no repairs
2) $21450 with $12000 up front(*), likely $10000 cost recovery when done, risk of new trailer park owners/inflation/repairs
3) $28000 down payment(**) + $36450 - $27000 = $37450 at low end of range, good chance of 80%-100% cost recovery, highest hassle, inflation works in your favor, repairs don't work in your favor

(*) $12000 is 2 years of rent in #1 or, in a bond fund @ 6%, can generate $720 per year.
(**) $28000 is more than all the rent of #1 or, in a bond fund @ 6%, can generate $1680 per year.

[polaran]

Thanks for your input! The cost of utilities (electric/propane/internet for trailer, all utilities for purchased house) wasn't included in my initial numbers. When I calculate it out with estimated utilities and routine RV maintenance (not factoring major repairs) for 48 months, I get the following numbers:

1. $24,000 for current room. I can also subtract $1,000 this summer since a labmate will be in town during the time period when I'll be away and has agreed to pay full price for my room. Similar arrangements when I'm away in the future may be possible, but I won't count on them. The house has several additional perks - free produce in the warmer months from housemate's gardening hobby and mature fruit trees, low hassle dogsitting (we both travel frequently for work and watch each other's animals except during the rare times when both of us are away), and I live in an awesome converted attic bedroom. Downside is that current 3rd person is moving out and it could continue to be a revolving door of people who I may or may not enjoy living with. The owner is considering converting that room to a guest room/office and not renting it out, but this isn't certain. My rent would remain the same if she did so.

2. $27,120 for a $12,000 RV with assumed monthly costs of $50 electric, $20 propane, $40 internet, $20 maintenance (roof sealing, winter prep, etc), $10 laundry. I don't have a great frame of reference for how realistic the utility assumptions are, except internet. If I can sell it for $10,000 without major repairs, that drops to $17,120. There's some extra hassle in having to clear all of my belongings out, find somewhere else to stay, and sell it at the end.

3. $49,920 for a $150,000 house with $30,000 down and assumed monthly costs of $80 electric, $60 W/S/G, $150 repairs/maintenance and $590 monthly rental income with shared utilities. If I kept it as a rental after moving away, I could expect the house to cash flow $200-300/month at current local rents with 1 month/year vacancy, slightly higher maintenance costs ($200/month), and 10% of rent charged by a property management company. I suspect rents will be increasing steadily d/t low housing stock and minimal prospects for new building, but it's difficult to predict long term. If I kept it as a rental long term, it would take 6-10 years to recoup the additional costs of owning while here, with potential to benefit from appreciation when I eventually sold.

I'll most likely stay where I am, but I enjoy the process of running the numbers, weighing non-monetary benefits and considering less conventional options rather than defaulting to status quo.

[Laura Ingalls]

What is the climate?
Rv living gets hard when it gets below freezing

[polaran]

Pacific northwest - rainy and slightly above freezing for most of the winter, occasionally dropping into the 20s.

[Laura Ingalls]

Hmm
Doable, but some cold mornings

[jacob]

Rain sucks in an RV ... unless you find it soothing living inside of a snare drum.

If it's an older model, you'll spend time fighting/finding leaks. This also sucks.

RVs are best for dry and temperate climates.

[polaran]

Thanks for the input. A few recent developments have me still seriously thinking about the RV option. Do any of you have experience with the "arctic" insulation packages and whether they're really helpful for PNW temperatures (usually 35-45, sometimes in the 20s for a few days at a time)? There are a few used trailers around that have the extra insulation, but they're generally slightly newer and more expensive ones

[SimpleLife]

Rain sucks in an RV ... unless you find it soothing living inside of a snare drum.

If it's an older model, you'll spend time fighting/finding leaks. This also sucks.

RVs are best for dry and temperate climates.

This. $500 a month for a regular room in a regular house with utilities included where you have ZERO responsibility for repairs, etc. is cheap. I'd pay $300 a month just for utilities living alone...Factor in property taxes and maintenance, and you're coming out basically living really cheap, and it forces you to be a bit of a minimalist. Bonus if you can bike/walk/transit everywhere you need to go including work.