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Old 18-03-2015, 04:07   #1
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How much to spend

Hello

Having read the forums for an extended period i have just plucked up the courage to join and hopefully get some answers to life's most important questions

A. Quick intro, I'm a 30 year old expat in south east Asia, having grown up around motor boats and converted to sailing about 10 years ago, I'm now looking at getting my first boat.

Naturally I'm terrified of this, given the size of commitment this represents. However this has been a goal for a long time and one I am only recently Financially able to realize,

I am looking for a lagoon 380. However it represents a huge investment, my core question is how much of my net worth should I spend on a boat?

I wouldn't consider to borrow money to buy a depreciating asset like a boat but buying a boat would be the largest cost I have ever incurred (I don't consider property to be a cost)

Without being overly personal how do people decide how much they can afford? My parents worked up over time from a small motor boat to eventually a fairly large boat and obviously gained Expediance as they went.

I have limited experiance mostly from the annual sailing trip with the boys and and some skippered charters am I being a fool to consider investing a large portion of my cash in a boat?

Am I right on thinking that a lagoon represents a more liquid asset than some of the other classes of cat? And could be more easily sold without taking a complete bath?

Am I being a fool to consider putting such a high percentage of my liquid resources into such an expensive toy without having built up solid experiance first?

I would greatly appreciate any input people can offer I appreciate it's subjective and not entirely a boat based question but I welcome the experiance of those who have made the decision previously and welcome any input on how they decided their boat budget?

Thanks in advance for any help you can offer

Jamjar
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Old 18-03-2015, 04:16   #2
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pirate Re: How much to spend

Welcome to CF..
House's are Assets..
Boats are Sinkholes...
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Old 18-03-2015, 04:21   #3
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Re: How much to spend

Thanks Jamjar

That's exactly why I'm nervous about how much to send on m sinkhole! And why I don't consider property a cost.

i just don't know how normal people decide how much money to send when they set their boat budget....?

Jamjar
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Old 18-03-2015, 04:29   #4
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Re: How much to spend

Quote:
Originally Posted by Jamjar View Post
Thanks Jamjar

That's exactly why I'm nervous about how much to send on m sinkhole! And why I don't consider property a cost.

i just don't know how normal people decide how much money to send when they set their boat budget....?

Jamjar
Welcome to CF.

Here is the deal with buying a vessel. You can get a monohull very inexpensively, and a Catamaran, not so much. Reckon to spend @ $150K-200K for a good used Cat, and prepare to spend another $25K getting it to where you want to be.

There are good cheaper Cats as well as the Lagoon 380.
Catalac Catamarans, An Affordable Cruising Catamaran

Once the money is spent, enjoy the Cat, use as long as you want it and then sell it for what you can get.

Its a hobby/lifestyle. Mostly, keep up the maintenance and safety.
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Old 18-03-2015, 04:35   #5
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Re: How much to spend

Thanks Im happy with the price range it's a case of deciding he much I can afford to spend...

How did other boat owners say I have this much in cash this in investments therefore I can spend the on a boat, I'm budgeting 10% annual maint.

But how do people determine how much they can afford to spend on the boat itself ?
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Old 18-03-2015, 04:43   #6
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Re: How much to spend

Quote:
Originally Posted by Jamjar View Post
Thanks Im happy with the price range it's a case of deciding he much I can afford to spend...

How did other boat owners say I have this much in cash this in investments therefore I can spend the on a boat, I'm budgeting 10% annual maint.

But how do people determine how much they can afford to spend on the boat itself ?
Market value and cash in the pocket.
I too NEVER borrow money for depreciating assets.

Make a choice of how much money you want to spend. Then look at that marque in vessels for sale and determine if you are getting what you would want in quality and equipment for the price in terms of year of build and reviews.

The bottom line is YOUR CHOICE for purchase. If you earn 300K a year and have $200K in cash, just choose what is comfortable for you. Sadly there is NO level at which a vessel is 'better' in terms of price, its down to the quality of the individual boat.

For example, if you want a lagoon 380, mentally fix your your price and go looking. $200K should get you a nice vessel but there may be an exceptional one at $230...... if you want what it has on it, then go haggle.

There is no formula.
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Old 18-03-2015, 05:58   #7
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pirate Re: How much to spend

Quote:
Originally Posted by Jamjar View Post
Thanks Jamjar

That's exactly why I'm nervous about how much to send on m sinkhole! And why I don't consider property a cost.

i just don't know how normal people decide how much money to send when they set their boat budget....?

Jamjar
You Jamjar... Me Boatman...
The best rule off thumb in my opinion is simple..
Don't spend more than you can happily afford to lose..
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Old 18-03-2015, 06:09   #8
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Re: How much to spend

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Originally Posted by Jamjar View Post
Am I right on thinking that a lagoon represents a more liquid asset than some of the other classes of cat? And could be more easily sold without taking a complete bath?
Maybe in today's market. But you're going to keep it for some number of years. Whether or not there will still be a good market for Lagoon's when you are ready to sell it is anyone's guess. Maybe so, maybe not.

The main thing is, if you are thinking that you can't afford to buy it unless you are one day going to be able to sell it quickly, easily, and for a good price, then you can't afford to buy it. You can't count on ANYTHING when it comes time to sell it.

Best to think of the boat as money spent--out the window, never to come back--for recreation, a lifestyle, and life experiences (and how do you put a price on that sort of thing?). Don't plan on getting any of your money back in the end, and you won't be too disappointed. By then the boat will probably have given you things worth much more than any amount of money.
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Old 18-03-2015, 06:33   #9
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Re: How much to spend

Only thing I would add is that in 5 yrs a boat that is 5 yrs old to start with will depreciate less than a boat that is 1 yr old to start with.

Currently Cats are fashionable, and that may continue indefinitely, perhaps the mono hull will go the way of the wooden boat, or they may not. It's a crap shoot, but I do believe that now is a good time to buy a boat as opposed to selling one, but if you buy anything "right" you can always resell it later, right meaning you do your homework and pay less than market price for an item.
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Old 18-03-2015, 06:41   #10
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Re: How much to spend

My office manager, Sharon, has just bought a new car.
I was kind of surprised at what she bought. Expensive, not economical and a bit flash.

So I asked her why. She responded: "Driving is my pleasure. I saved up a long time for a car that I wanted. Is it sensible? Of course not! My husband encouraged me to get something for myself and when he saw it was so happy for me. Its mine. I worked for it and it makes me happy."

She had the cash for it. She loves it. It will lose money.

Same with boats. Make your choice and pay your money.
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Old 18-03-2015, 09:20   #11
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Re: How much to spend

First, I am cheap. I agree with the others in as much as a boat is pleasure. You can spend 10 bucks for fast food or 100 for a meal with some ambiance. It all turns to **** the same way so the experience is what counts.

I buy a boat with good bones and within the my comfort repair zone. I hope to to get what I paid for it plus about 10% of improvements. Sometimes I do better sometimes not. I enjoy the process and the sailing. My boats do not depreciate...someone else already paid that price. But I am willing to do the restoration and modifications to suit me. Those costs are similar to those born by the $100 a plate diner, those who love to go to Vegas and feed the system and those who race cars as a hobby. A boat should be an investment in you well being.
Not the advice of an actuary.
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Old 18-03-2015, 09:42   #12
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Re: How much to spend

I'm with Rbrentp,
I too pay very little for my boats that many others would write off. When working on them despite the frustrations I enjoy the process. Then I get to enjoy them for as many years as I see fit. In the end I'm usually able to sell them for more than I paid. Of course there are the expenses of upgrades that are usually not covered but to me that was the cost of the enjoyment.

Good on you for not borrowing the money for a toy. I always follow that rule. If you haven't spent the time saving, thinking, and dreaming of what you want, how do you know what you want?
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Old 18-03-2015, 11:32   #13
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Re: How much to spend

Thanks to all for the help, it looks like i have made my first mistake in deciding what boat i want and then trying to determine if i can afford it.

Its actually pretty tough to determine exactly how much i should spend on a boat. Yes its subjective and the right answer from a financial perspective is nothing!

but... for those who already have boats i would be interested to know how other people set their boat buying budget?

How did you determine that you could afford to spend $100 on this boat so that you could then look at that range of boats available for $100....

Sorry guys i am finding it very difficult to evaluate how much i can afford to spend on a depreciating asset that would be a significant portion of my net worth. without compromising my financial health.

Thanks for all of the feedback its very useful. I had well under estimated on delivery costs...
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Old 18-03-2015, 11:39   #14
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Re: How much to spend

Quote:
Originally Posted by Jamjar View Post
Thanks to all for the help, it looks like i have made my first mistake in deciding what boat i want and then trying to determine if i can afford it.

Its actually pretty tough to determine exactly how much i should spend on a boat. Yes its subjective and the right answer from a financial perspective is nothing!

but... for those who already have boats i would be interested to know how other people set their boat buying budget?

How did you determine that you could afford to spend $100 on this boat so that you could then look at that range of boats available for $100....

Sorry guys i am finding it very difficult to evaluate how much i can afford to spend on a depreciating asset that would be a significant portion of my net worth. without compromising my financial health.

Thanks for all of the feedback its very useful. I had well under estimated on delivery costs...
I have 200k in cash.
I dont want to spend it all.
I spend 90K and 25K on updating.

I feel happy I have money left.

You really dont get it. Spend what you are happy with and write off 50% in returns. It is a depreciation and if it costs you too much to keep then sell it and move on. Buying a boat compromises your financial health!

You only need both engines to blow and you will part with 15-25K...
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Old 18-03-2015, 12:15   #15
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Re: How much to spend

Jam, I was I was in the same boat as you a few years ago, pretty much decided on a lagoon 380, looked at used, looked at new. Ended up buying a new one. Really happy with our choice and guessing about what the future holds didn't really come into the decision. Looking back we made a great choice for us.
I'd never chartered or owned a big boat before that as I thought that was money down the drain when we couldn't use it a lot, so saved the money and waited till we could get the most out of our investment, which is full time living aboard. So far so good...
So for me, owning a 200k boat that I could only sail 10 weekends a year and the odd week over the Victorian summer want a good option. But owning one to live aboard and travel the world is another thing entirely.
As far as how much savings you need to do it, it depends on your comfort level I guess. For us it was having enough assets to be able to do it indefinitely, for some it's just getting the boat and working their way around the world and worrying about the future later.
So if you're comfortable with dropping 10% a year on your investment for the benefits, then go for it, if not it's probably better to wait till you are. One thing that you really need to do is make sure you have enough in the kitty for any unforeseen expenses and expect the unexpected.
Boat stuff isn't cheap, marinas can charge up to $100 a night and you don't even want to go there but for some reason you have to, so you don't want to be feeling bad about parting with the cash. Other stuff adds up, like insurance 5K, haul outs and storage 5K, miscellaneous bits and upgrades 5K etc.
So my advice would be, if your ready to set sail and enjoy it, it's worth very cent. But if you're still tied to land life and can't get away as much as you would like, it's probably better to sail other peoples boats till you can.
If you want a magic % of assets Vs money invested in a boat, I'd say don't spend more than 30% of your fixed assets ( real estate, cash in the bank etc ) on a boat, but like I said, everyone's comfort level is different.
Good luck. If you have any specific questions on the 380 drop me a line or ask here.
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