Buying a Yacht as an Investment???

[maxingout]

Originally Posted by Bash

Dave! I see this was your 2,000th post. A shame they won't give you another star.

Of course, you're right as usual. Thanks for all you contribute to our conversations.

It's amazing how fast time flies and how the posts add up over the years. It's would be nice if every post you make would add a day to your cruising life.

[Ran645]

Wow! This is the first time I've ever posted. Didn't expect such a quick response. Thanks to everyone! I really enjoy the forum and have gained a lot of valuable insight from reading through the threads.
I'm a prairie boy from central Saskatchewan ( Canada) . Just got interested in sailing so took a couple courses on the west coast last summer. Loved it. I'm going back to take a couple more this year. You guys are very inspiring!
Thanks again,
Randy

[savoir]

Originally Posted by sailful

I bought a sailboat and it has been a great investment! I'm constantly investing in Volvo Penta, West Marine, the insurance company, the fuel company, the marina, etc. EVERYBODY is getting rich. (Except me). There should be a tax credit for buying a boat.

I hope they all sent you a Christmas card.

[Bash]

Originally Posted by maxingout

It's amazing how fast time flies and how the posts add up over the years. It's would be nice if every post you make would add a day to your cruising life.

Well, I'm happy if a few of my posts have added a day to someone else's cruising life.

There's a point when I stopped noticing the number of posts and started paying attention to thank-you notifications. I'm up to six hundred something, and that's what keeps it going on a bad day. Maybe someone out there won't be dragging tonight because one of us advised a more appropriate anchor?

[rgscpat]

A sense of humor is a wonderful thing. And it's easier to keep going when I see other people finding a way to spend money even faster than I do!

[Dockhead]

Originally Posted by Ran645

I have been looking at some of the plans and projections some of the Charter/Sailing school companies have listed. If you buy a yacht and add it to their fleet you can, apparently, not only supplement your loan payments, but even make a few dollars! Makes me wonder if a guy had some GIC's that were only getting 1.5 to 2 percent, should you pull them out, buy a boat and sit back waiting for your investment to pay you 6 to 15 percent instead. An added bonus would be, you would still have the boat after the charter agreement ran out.
Is anybody doing this sort of thing?
Thanks for any input.
Randy

For an investment, buy real estate (and very carefully!). Buy cheaply something which is inherently good (location, location, location), finance it well, improve its condition, rent it out well, then sell it when the market goes up. Now that's investment.

Then for fun, blow the money you made in real estate on a boat. That's boating, something completely different and kind of the opposite of investment, as close to the opposite as you can get, probably.


"Investment" and "boat" don't generally belong in the same sentence. Boats are holes in the water you throw money into. Putting a boat in charter will not pay you 6 to 15 percent, because unlike real estate, a boat is a depreciating asset, with the useful life -- speaking in finance terms now -- of probably more than half of the content of the asset by value of 10 years or less. In charter, wear and tear and depreciation will be much faster still.

To say that another way -- you will spend tons and tons of money on a boat -- it can easily be 5% or even 10% of its original cost every year -- generallly a lot more than it costs to keep up a house, but your boat will be going down in value every year, not up. And every 10 years or so you're in for a major refit where you'll spend a big proportion of the value of the boat (without, however, increasing the value of the boat by what you spent!). Now there are some flukes -- for example, the cost of building boats went way up during the 2000's, so many well maintained boats held their values for a while -- but generally speaking they go down and only down in value; they are not like houses which over the long term, despite bubbles like 2008, do go up in value.

[Coops]

Like most folks so far I have never considered yacht as an investment, not in financial terms anyway, more a completely stupid and irrational thing to do with good money. However, in terms of pleasure gained from the throwing of money at these depreciating, floating, cash eaters, I am well in front..

Never regretted yet the thousands that I have lost on 'em.

Coops.

[Dockhead]

Originally Posted by Coops

Like most folks so far I have never considered yacht as an investment, not in financial terms anyway, more a completely stupid and irrational thing to do with good money. However, in terms of pleasure gained from the throwing of money at these depreciating, floating, cash eaters, I am well in front..

Never regretted yet the thousands that I have lost on 'em.

Coops.

LOL! +1

Ain't that the truth. Among the most pleasant ways to waste money known to man, right up there with young mistresses . . . but make your choice consciously and early, because unless you're Bill Gates or Richard Allen, you won't be able to afford both!

[David_Old_Jersey]

Whilst I agree that a Boat as an Investment is an oxymoron - nonetheless the buy to charter model does have merit in the right circumstances (the key seems to be if you were going to be chartering a boat somewhere foreign to you for many weeks a year, every year anyway - plus you add a cash value (to own time) for someone else taking care of the boat 24/7 and making her good to go for when you step off the plane so those costs get factored into the deal).

But all that really about reducing your boat expenses (losses!). Always a chance that "you" will make money at the end of the deal (I am sure some have), but that likely as much about luck than judgement (market timing and probably exchange rates).

As said, if Charter companies could make money out of owning own boats (bought new) then they would.

[denverd0n]

Originally Posted by David M

There are other investments in this world with a lesser certainty of losing money than owning a boat.

Fixed it for you, David.

Seriously, though, for the OP... what DOJ said. If you are going to be spending many weeks (and therefore many thousands of dollars) every year chartering anyway, then you may end up money ahead to own a boat with a charter company. That's the only way that you can possibly rationalize it as an "investment."

[avb3]

Originally Posted by Ran645

Wow! This is the first time I've ever posted. Didn't expect such a quick response. Thanks to everyone! I really enjoy the forum and have gained a lot of valuable insight from reading through the threads.
I'm a prairie boy from central Saskatchewan ( Canada) . Just got interested in sailing so took a couple courses on the west coast last summer. Loved it. I'm going back to take a couple more this year. You guys are very inspiring!
Thanks again,
Randy

Nothing wrong with being a prairie boy... welcome from that province to the west of you, at least in the summers. Winters are now being absorbed in Florida sun.

Mind you, the last visions I had of Saskatchewan looked something like this, two weeks ago, in the Estevan area.

More wonderful snow driving - YouTube

[sww914]

Yachts are as good an investment as horses. High upkeep costs, rapid depreciation, high insurance rates, and they can go away quickly from a very small mistake.
You know the old joke, how do you make a small fortune on horses? You start with a large fortune.

[hellosailor]

Randy, it is not that you CAN make money, but that you MIGHT make money.

If putting a yacht into charter service was a sure thing, the charter companies wouldn't be asking other people to put up their money and take the profit home. They'd be taking out commercial loans and keeping all the profit for themselves.

Yes, it is that simple. In all investing there is some risk. the higher the potential return, the more risk of losing it all. That's the way the market goes.

Whether you can make money chartering depends on your own tax situation. If you don't have an accountant already--odds are you're not in the right situation. If you have one, ask them first. Then IF the economy stays good, IF the charter company books full use of the boat, IF a lot of things happen, maybe you make some money.

If you put your purchase money into a bond fund or an etf, you'll probably make way more with way less risk. Probably. If you hump your butt advertising your boat and help make sure it is chartered out 100%, maybe you make more on your investement. Ergh, job.

No magic there.

[Budawang]

Well, sailing has been likened to standing in a cold shower ripping up hundred dollar bills. However, if you live on a boat then surely the financial equation is a lot different. Of course, you won't make money but you could end up spending less than you would living in a house. Here in Oz with our inflated house prices, a run of the mill suburban bungalow can easily cost $500K. The total cost of home ownership could easily run to $30,000 per year. A ten year old boat, past its peak depreciation period, could cost a lot less than that. Of course, the lifestyle provided by each form of habitation is so different it's apples and oranges.

The reality is that neither a house nor a boat can usually be considered investments, except in periods of asset price inflation.

[Tomm0]

If you bought an old boat whose depreciation had plateaued then invested some effort in improving it, and some limited dollars, you may get back more than the input costs... Maybe.