The big lie about boat ownership is that they will retain their value. Nothing could be further from the truth. However...they should retain some value...if well maintained. Looking for some advice about which boats retain the best residual and which ones are slow to depreciate. I know that there will be comments like...how can you put a price on the joy of sailing and so on. I am looking for some real truth to buying smart. Comments on buying new VS buying used and their expected slide in value after purchase. Thanks
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What do you want to do?
Do you want to sail? Where? Race, daysail, cruise - how long? What is your budget? How many people do you want to take with you? Give us your specific concern, and maybe we can comment. David Lady Lillie
Do you want to sail? Where? Race, daysail, cruise - how long? What is your budget? How many people do you want to take with you? Give us your specific concern, and maybe we can comment. David Lady Lillie
Sailboat Ownership
Actually, they do hold their value pretty well. If you own it long enough and have the foresight to buy a popular model/brand you'll be able to sell it for more than you paid. There are plenty of Catalina 30's selling for more today than they did new. Inflation plays a big role in that replacement cost can rise over time, which, "floats all boats". Recent strenght in petrolem derived products (fiberglass, etc.) caused many mfgs. to boost prices dramatically last year. Of course condition plays a vital role in any used boat's value regardless of age. A fixer upper can be economical but only if you do most of the work yourself. My opinion is to buy one two to four years old in the best condition you can find, maintain it well, and you likely won't get hit much at all. These boats should sell at a decent discount to new on priciple, but they are for all practical purposes new. But I will add that looking at the initial price of a sailboat and thinking its the most important cost factor in the sport is a bit like thinking the cost of golf clubs is a big deal when playing that sport. There's not a moment to lose....buy a boat and get out there!
Actually, they do hold their value pretty well. If you own it long enough and have the foresight to buy a popular model/brand you'll be able to sell it for more than you paid. There are plenty of Catalina 30's selling for more today than they did new. Inflation plays a big role in that replacement cost can rise over time, which, "floats all boats". Recent strenght in petrolem derived products (fiberglass, etc.) caused many mfgs. to boost prices dramatically last year. Of course condition plays a vital role in any used boat's value regardless of age. A fixer upper can be economical but only if you do most of the work yourself. My opinion is to buy one two to four years old in the best condition you can find, maintain it well, and you likely won't get hit much at all. These boats should sell at a decent discount to new on priciple, but they are for all practical purposes new. But I will add that looking at the initial price of a sailboat and thinking its the most important cost factor in the sport is a bit like thinking the cost of golf clubs is a big deal when playing that sport. There's not a moment to lose....buy a boat and get out there!
Hole in the Water
I have a 1984 issue of "Sail" magazine with a review of the Hinckley Sou'Wester 42. The article stated that the boat retailed for about $450,000. At Yachtworld.com there are a couple of the same model for sale at about the same vintage. one for $300,000 and one for $365,000. That's pretty amazing, if you ask me. If you consider that $450,000 in 1984 dollars is worth about $1,000,000 today, it's not as amazing, I suppose. That's probably the absolute best you can do in terms of a new boat holding its value, at least in terms of percentages. But the plain truth is that a high-end boat, purchased new, is going to hemmorage a huge pile of money over its life.
I have a 1984 issue of "Sail" magazine with a review of the Hinckley Sou'Wester 42. The article stated that the boat retailed for about $450,000. At Yachtworld.com there are a couple of the same model for sale at about the same vintage. one for $300,000 and one for $365,000. That's pretty amazing, if you ask me. If you consider that $450,000 in 1984 dollars is worth about $1,000,000 today, it's not as amazing, I suppose. That's probably the absolute best you can do in terms of a new boat holding its value, at least in terms of percentages. But the plain truth is that a high-end boat, purchased new, is going to hemmorage a huge pile of money over its life.
purchase price is only a small part of the cost
of boat ownership. If you buy an older boat that was well maintained and you keep it in good condition it should not lose much or any value. Smaller boats seem to do better than older boats. We bought a Macgregor 26 for $8000 and sold it 7 years later for $6500. Maintenance was bottom paint and wax once a year. We used the water hose to clean it inside once a year. All plastic boats are the cheapest to keep. Outboard engines are also much cheaper than inboards. Looking around it is hard to beat a Catalina 30 for the money. But if you are realistically going to mostly daysail a catalina 22 with an outboard is hard to beat. But if you buy an Island Packet 42 new it will depreciate more in the first year than a catalina 22 costs. When we bought we calculated that the boat would be a total lost for purposes of planning finances. Replacing a diesel can easily cost $12,000 and a boat without a functioning engine is not worth much. At $200 plus a month slip fees,$1000/year insurance and good boats often taking over a year to sell we figured that this was a good approach. Tom Tom
of boat ownership. If you buy an older boat that was well maintained and you keep it in good condition it should not lose much or any value. Smaller boats seem to do better than older boats. We bought a Macgregor 26 for $8000 and sold it 7 years later for $6500. Maintenance was bottom paint and wax once a year. We used the water hose to clean it inside once a year. All plastic boats are the cheapest to keep. Outboard engines are also much cheaper than inboards. Looking around it is hard to beat a Catalina 30 for the money. But if you are realistically going to mostly daysail a catalina 22 with an outboard is hard to beat. But if you buy an Island Packet 42 new it will depreciate more in the first year than a catalina 22 costs. When we bought we calculated that the boat would be a total lost for purposes of planning finances. Replacing a diesel can easily cost $12,000 and a boat without a functioning engine is not worth much. At $200 plus a month slip fees,$1000/year insurance and good boats often taking over a year to sell we figured that this was a good approach. Tom Tom
value
I bought my Macgregor 26D new in 1988 at a cost of $14,000.00. Today I suppose I could get $7,000, or maybe $8,000. But then I would just have to turn around and start all over again.
I bought my Macgregor 26D new in 1988 at a cost of $14,000.00. Today I suppose I could get $7,000, or maybe $8,000. But then I would just have to turn around and start all over again.
Inflation and opportunity costs
Other than the obvious costs, when buying my Mac 26s recently, I also looked into inflation and opportunity costs as well. Current inflation rate is at about 3%, so, roughly, your reoccurring costs will increase 3% next year and, hoping on Federal Reserve, will increase at about the same rate (but no more) going forward. Opportunity cost is what you could have earned by investing the money instead of buying the boat. Current S&P index annualized rate is about 10% in long-term, which is one of the good estimates for the opportunity cost. Assuming that: - you pay $10,000 for the boat today - registration, insurance, maintenance, slip, etc. adds up to $2,000 a year - inflation is 3% and opportunity cost is 10% a year - you will sell the boat 10 years from now for the same $10,000 ("keeping the value") Using a financial calculator, the boat actually costs you today about $26,000 for the initial cost plus all costs over time adjusted by the inflation and opportunity cost. The $10,000 you supposedly get when selling the boat in 10 years today is worth about $5,000 when adjusting for the same opp. cost and inflation. So, the whole transaction of buying the boat for 10,000 and selling in 10 years for 10,000 costs you 26,000 - 5,000 = 21,000 TODAY. Do you still want to buy ?
I did, because, although more difficult to quantify, benefits are very real and significant. What bothers me is that I have to buy a car soon…
Other than the obvious costs, when buying my Mac 26s recently, I also looked into inflation and opportunity costs as well. Current inflation rate is at about 3%, so, roughly, your reoccurring costs will increase 3% next year and, hoping on Federal Reserve, will increase at about the same rate (but no more) going forward. Opportunity cost is what you could have earned by investing the money instead of buying the boat. Current S&P index annualized rate is about 10% in long-term, which is one of the good estimates for the opportunity cost. Assuming that: - you pay $10,000 for the boat today - registration, insurance, maintenance, slip, etc. adds up to $2,000 a year - inflation is 3% and opportunity cost is 10% a year - you will sell the boat 10 years from now for the same $10,000 ("keeping the value") Using a financial calculator, the boat actually costs you today about $26,000 for the initial cost plus all costs over time adjusted by the inflation and opportunity cost. The $10,000 you supposedly get when selling the boat in 10 years today is worth about $5,000 when adjusting for the same opp. cost and inflation. So, the whole transaction of buying the boat for 10,000 and selling in 10 years for 10,000 costs you 26,000 - 5,000 = 21,000 TODAY. Do you still want to buy ?
I did, because, although more difficult to quantify, benefits are very real and significant. What bothers me is that I have to buy a car soon…Used
A good well maintained used boat WILL hold it's value surprisingly well, much better than your vehicle. As Randall said, a Catalina 30 is a good example. Buy used, that way the boat is broken in all the bugs are worked out. You'll save lots by not having to buy things that may not come with a new boat, but things you need or want...bimini, dodger, anchor/rode, fenders, PFDs, instruments, AM/FM/CD, air cond, and more. I'm on my second Catalina. Had a C25 for four years and sold it for $250 less than I paid for it. Last year bought a C320, which surveyed out at more than I paid, meaning I could sell it now for what I paid for it last year. Here are some sites with boats for sale: www.sailnet.com/boatsearch www.yachtworld.com www.catalinaowners.com www.boatus.com www.ablboats.com www.boats.com www.sailboatlistings.com/
A good well maintained used boat WILL hold it's value surprisingly well, much better than your vehicle. As Randall said, a Catalina 30 is a good example. Buy used, that way the boat is broken in all the bugs are worked out. You'll save lots by not having to buy things that may not come with a new boat, but things you need or want...bimini, dodger, anchor/rode, fenders, PFDs, instruments, AM/FM/CD, air cond, and more. I'm on my second Catalina. Had a C25 for four years and sold it for $250 less than I paid for it. Last year bought a C320, which surveyed out at more than I paid, meaning I could sell it now for what I paid for it last year. Here are some sites with boats for sale: www.sailnet.com/boatsearch www.yachtworld.com www.catalinaowners.com www.boatus.com www.ablboats.com www.boats.com www.sailboatlistings.com/
Sergo
That was a very informative economics class you gave. I am considered thrifty by some of my acquaintances, but I do spend money on my boat. I've owned older boats that required some money and time to fix up. I enjoy working on boats. I also have learned many things that a lot of other people will never know, but it may not make a difference, because they'll just pay someone else to do their work anyway. There has to be a line drawn on when someone quits pinching their pennies, and spends a little money to enjoy our short lives. As far as resale value of a boat, I think they hold their value much better than automobiles. I lok at it this way. You buy a boatfor X dollars, and after having enjoyed it for years, sell it for X dollars or more, which means even if you adjust for opportunity lost, you've recouped some of the cost.
That was a very informative economics class you gave. I am considered thrifty by some of my acquaintances, but I do spend money on my boat. I've owned older boats that required some money and time to fix up. I enjoy working on boats. I also have learned many things that a lot of other people will never know, but it may not make a difference, because they'll just pay someone else to do their work anyway. There has to be a line drawn on when someone quits pinching their pennies, and spends a little money to enjoy our short lives. As far as resale value of a boat, I think they hold their value much better than automobiles. I lok at it this way. You buy a boatfor X dollars, and after having enjoyed it for years, sell it for X dollars or more, which means even if you adjust for opportunity lost, you've recouped some of the cost.
Boat Values...
I now own my sixth used boat in 30 years of sailing. My last one was totaled, and insurance paid me for the price I paid for it, by Hurricane Isabel. When I got around to selling the other four boats, I got at least what I paid for them, or more. All of them were in better condition when I sold them than when I bought them. Buy a new boat? I don't think so....
I now own my sixth used boat in 30 years of sailing. My last one was totaled, and insurance paid me for the price I paid for it, by Hurricane Isabel. When I got around to selling the other four boats, I got at least what I paid for them, or more. All of them were in better condition when I sold them than when I bought them. Buy a new boat? I don't think so....
thin Ice
This is a very sticky topic and frankly owning a boat cannot be FINANCIALY justified,,,,But it can be life justified. I had a 30' C&C that I sold a while ago.....I traveled a lot then and began to ask the financial question...How much does it cost me to own this boat.?...well I calculated my yearly expenses, divided it into the amount of times I actually used the boat, and unfortunately in those years the total was about $1000.00 per outting...needless to say I was shattered and sold the boat not long after. If you love to sail,,,,,never perform that calculation.....if you worry about the $...invest it in a second home.
This is a very sticky topic and frankly owning a boat cannot be FINANCIALY justified,,,,But it can be life justified. I had a 30' C&C that I sold a while ago.....I traveled a lot then and began to ask the financial question...How much does it cost me to own this boat.?...well I calculated my yearly expenses, divided it into the amount of times I actually used the boat, and unfortunately in those years the total was about $1000.00 per outting...needless to say I was shattered and sold the boat not long after. If you love to sail,,,,,never perform that calculation.....if you worry about the $...invest it in a second home.
using Sergo calc
I would extend it a bit. Divide by the number of years (10) and then divide by the number of times (say 15 and most will never come close to that) you may take it out a year and that will give you what you pay per day of use ($21,000 / (10 * 15) = $140 per sail). Then ask yourself is there something else you would like to do for a day that would give you the same enjoyment for that amount of money? Now if you go with a boat that you will do some cruising on too, like say a vacation, then that changes the calculation a bit. Say you take a two week sailing vacation every other year, then you need to subtract the cost of that vacation from the cost of a normal vacation and add that value to the value of the boat. When I was looking at boats, I wanted a boat I could take vacations on. I figured that if I took a sailing vacation every other year, that the money I would save (airfare, hotel, etc...) would pay for at least a 3rd to half of the boat purchase price in my lifetime (I also don't like to sale stuff so I bought a boat I would be happy with for a long long time). Now if you buy a boat and you also use as your home (live aboard), then that will give you a lot more value for your money and you will need to adjust your calcs to include rent/mortgage money you will save. Don't under estimate the maintance cost (I did). Just parts alone cost a ton because it's not a high output like car parts. They need to make a lot more profit off each sale then a car part because they don't sell as many. Note: bad thing about buying and selling numerous times is that you loose money on sales tax. Summary: Figure out what you want from sailing. There are lots of different uses, live aboards, short term cruising, medium term cruising, long term cruising, day sailing, weekend sailing, so knowing what you want to do before you buy is a must (can charter to find out what you want before you buy). Next, do the full calculations to figure out the cost benifit factor and see if it's right for you. You may find that there is something else you can do for cheaper that you enjoy just as much.
I would extend it a bit. Divide by the number of years (10) and then divide by the number of times (say 15 and most will never come close to that) you may take it out a year and that will give you what you pay per day of use ($21,000 / (10 * 15) = $140 per sail). Then ask yourself is there something else you would like to do for a day that would give you the same enjoyment for that amount of money? Now if you go with a boat that you will do some cruising on too, like say a vacation, then that changes the calculation a bit. Say you take a two week sailing vacation every other year, then you need to subtract the cost of that vacation from the cost of a normal vacation and add that value to the value of the boat. When I was looking at boats, I wanted a boat I could take vacations on. I figured that if I took a sailing vacation every other year, that the money I would save (airfare, hotel, etc...) would pay for at least a 3rd to half of the boat purchase price in my lifetime (I also don't like to sale stuff so I bought a boat I would be happy with for a long long time). Now if you buy a boat and you also use as your home (live aboard), then that will give you a lot more value for your money and you will need to adjust your calcs to include rent/mortgage money you will save. Don't under estimate the maintance cost (I did). Just parts alone cost a ton because it's not a high output like car parts. They need to make a lot more profit off each sale then a car part because they don't sell as many. Note: bad thing about buying and selling numerous times is that you loose money on sales tax. Summary: Figure out what you want from sailing. There are lots of different uses, live aboards, short term cruising, medium term cruising, long term cruising, day sailing, weekend sailing, so knowing what you want to do before you buy is a must (can charter to find out what you want before you buy). Next, do the full calculations to figure out the cost benifit factor and see if it's right for you. You may find that there is something else you can do for cheaper that you enjoy just as much.
Remember the 80's
Back in the 80's there was a period during some rather hefty inflationary times where a used boat sold for more than it's new purchase price!! I heard this was true for say a Catalina 30 bought new and sold just a few years later at a higher price. It's all relative though!
Back in the 80's there was a period during some rather hefty inflationary times where a used boat sold for more than it's new purchase price!! I heard this was true for say a Catalina 30 bought new and sold just a few years later at a higher price. It's all relative though!
Fun Dollars
It is a dollars and sense thing!!! We like being on the coast and a seafront hotel room starts at over $100/night. If we sleep on the boat 4 nights a month we have saved money!!!! Then we use the boat for vacations for 2-3 weeks a year. Again renting a beachfront house starts at $1500/week so there is another $4500.00 saved. Since we usually eat on the boat while at the beach we save $50+ for dinner and $15/breakfast. Renting a sailboat is at least $100/day and can be a whole lot more. So add up 4 days /month plus 15 days vacation and you have $6300/year +. BUT the bottom line is how often you use the boat. So many ownership costs are fixed and must be paid even if you never look at the boat. $5000/year doesn't look bad if you have 100 days of use= $50/day but if you use the boat 12 days a year it is $416/day!!! It is far better to be in a small boat wishing for more room than to have a big boat that is breaking the bank. Tom
It is a dollars and sense thing!!! We like being on the coast and a seafront hotel room starts at over $100/night. If we sleep on the boat 4 nights a month we have saved money!!!! Then we use the boat for vacations for 2-3 weeks a year. Again renting a beachfront house starts at $1500/week so there is another $4500.00 saved. Since we usually eat on the boat while at the beach we save $50+ for dinner and $15/breakfast. Renting a sailboat is at least $100/day and can be a whole lot more. So add up 4 days /month plus 15 days vacation and you have $6300/year +. BUT the bottom line is how often you use the boat. So many ownership costs are fixed and must be paid even if you never look at the boat. $5000/year doesn't look bad if you have 100 days of use= $50/day but if you use the boat 12 days a year it is $416/day!!! It is far better to be in a small boat wishing for more room than to have a big boat that is breaking the bank. Tom
Then....
Couple of years ago, a friend of mine with a nice old 25-ft C&C went to the Annapolis Boat Show with his wife. On impulse, he bought a new Beneteau 33 for around $100k. Then he started making mortgage payments on it. Then he started looking around for crew as he wasn't comfortable single-handing a boat that size. Then he noticed that everything from lines to electronics cost much more than the C&C. Then he noticed he was not sailing as much as when he had the C&C. And then the light bulb went on his brain. Then he sold the newish Beneteau (for a $15k loss) and bought his old C&C back from the guy he sold it to! He now sails more, saves more, and is much happier with his good old boat.
Couple of years ago, a friend of mine with a nice old 25-ft C&C went to the Annapolis Boat Show with his wife. On impulse, he bought a new Beneteau 33 for around $100k. Then he started making mortgage payments on it. Then he started looking around for crew as he wasn't comfortable single-handing a boat that size. Then he noticed that everything from lines to electronics cost much more than the C&C. Then he noticed he was not sailing as much as when he had the C&C. And then the light bulb went on his brain. Then he sold the newish Beneteau (for a $15k loss) and bought his old C&C back from the guy he sold it to! He now sails more, saves more, and is much happier with his good old boat.
Amazing...
.. that ropes and "electronics" cost less for a C&C than they do for a Beneteau. I gotta get me one of those C&C VHF radios.
.. that ropes and "electronics" cost less for a C&C than they do for a Beneteau. I gotta get me one of those C&C VHF radios.
boat as vacation home
In the midwest we have some boat owners who use their boat and slip at the nearby lake as a low cost vacation home. First, they buy a decent small cruising boat suitable for an inland lake, say a Catalina 25 or something similar. Then they store it at a marina with slips, better yet if it is a yacht club. They arrive at their boat on Saturday morning, spend the day on the boat, and then sleep on it Saturday night. Others in the yacht club do the same, so Saturday night is a time for socializing and group barbecues. Sunday morning and early afternoon is again spent on the boat, after which it is buttoned up for the week and the couple drives home. They key to making this work at low cost is that a suitable inland lake cruiser can be bought used for under $20,000, and with this regimen it is possible to get in 15-20 weekends of use per year.
In the midwest we have some boat owners who use their boat and slip at the nearby lake as a low cost vacation home. First, they buy a decent small cruising boat suitable for an inland lake, say a Catalina 25 or something similar. Then they store it at a marina with slips, better yet if it is a yacht club. They arrive at their boat on Saturday morning, spend the day on the boat, and then sleep on it Saturday night. Others in the yacht club do the same, so Saturday night is a time for socializing and group barbecues. Sunday morning and early afternoon is again spent on the boat, after which it is buttoned up for the week and the couple drives home. They key to making this work at low cost is that a suitable inland lake cruiser can be bought used for under $20,000, and with this regimen it is possible to get in 15-20 weekends of use per year.
Do the math...
Any topic that involves depreciation calculations or statistics are certain to generate lots of pious head-shaking from people who haven't done a lick of math before coming to their conclusions, and I know it isn't easy math, but you guys are just dreaming if you think boats OR cars hold their value well, or that there is any significant difference in their depreciation. Look up the price of current mid-range new models, such as your typical Catalina or Hunter or Tartan, and see what they go for just 5 or 10 years later. And after 15-20 years most of those $180000 beauties are down to about $30000 IF they're reasonably maintained (BIG if). I'm not going to do the project, but anyone who wanted to comb through NADA or yachtworld.com to survey prices would probably find that depreciation curves for NON-PREMIUM cars and boats would not show any real difference (hint: no matter how much you love your Catalina or Camaro, Hinckleys or Mercedes are premium and yours is not)...
Any topic that involves depreciation calculations or statistics are certain to generate lots of pious head-shaking from people who haven't done a lick of math before coming to their conclusions, and I know it isn't easy math, but you guys are just dreaming if you think boats OR cars hold their value well, or that there is any significant difference in their depreciation. Look up the price of current mid-range new models, such as your typical Catalina or Hunter or Tartan, and see what they go for just 5 or 10 years later. And after 15-20 years most of those $180000 beauties are down to about $30000 IF they're reasonably maintained (BIG if). I'm not going to do the project, but anyone who wanted to comb through NADA or yachtworld.com to survey prices would probably find that depreciation curves for NON-PREMIUM cars and boats would not show any real difference (hint: no matter how much you love your Catalina or Camaro, Hinckleys or Mercedes are premium and yours is not)...
Some do hold their value
A fellow at our marina has a Catalina 320 that he bought new in 1993 for around $ 60,000. I think it would bring near that used even though it is 12 years old.
A fellow at our marina has a Catalina 320 that he bought new in 1993 for around $ 60,000. I think it would bring near that used even though it is 12 years old.
Quality of life
Having thought about these issues from time to time, I have come to the conclusion that I love sailing so much that I don't care. In fact, I love being on my boat even when I'm not sailing. I even enjoy working on it. This is my fourth boat in 30 years. I paid 100K for it. And just knowing that I can go there and enjoy it is worth every penny. I would hate to be laying on my death bed and think..."I wish I would have just bought that boat that I really wanted!"
Having thought about these issues from time to time, I have come to the conclusion that I love sailing so much that I don't care. In fact, I love being on my boat even when I'm not sailing. I even enjoy working on it. This is my fourth boat in 30 years. I paid 100K for it. And just knowing that I can go there and enjoy it is worth every penny. I would hate to be laying on my death bed and think..."I wish I would have just bought that boat that I really wanted!"
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