Is a $100k Loss on a $400k Boat in Two Years About Right ?

[capcook]

Kinda bummed.... for a 2 yr cruise plan, if I were to buy a 3-4 yr used CAT for US400k (say an Orana or Dean) and we go sailing for 2 yrs then sell the thing, I figure just the boat will cost us nearly US$ 220 per DAY or about $6,600 per month if you assume an opportunity cost on the money of about 5%... This assumes one would lose about 25% of it's value in the 2 year period and $20k in R&M... clearly these CATs have depreciated by at least 25% or more in the first 2-3yrs of their life... One can buy 2-3yo $600k-700k CATs all day today for $400-500k... that's a 16% - 30% haircut....

So I guess the question is how reasonable is the assumption that a 2-3yo US$400k CAT would lose another $100k over the next 2yrs...

I guess if one keeps the boat one never has to know how much one is losing....

[pressuredrop]

its only money, you only live once, keep crunching your numbers and obscure terms or get out there and have some fun

[roverhi]

The big hit for depreciation on most items is in the first couple of years and typically in the first 15 minutes as you leave the dealer's docks for the first time. You may not lose all that much in the two years you'll be gone. The biggest thing will be keeping the boat in 'Yacht' condition given the wear and tear of 24/7 living aboard and cruising. Big difference between a boat that has been out and about to one that spends most it's time in a marina collecting bird droppings.

What's the insurance on a $400,000 boat for ocean passages?? Imagine the 'Cruising on $500 a month' crowd would be deep in the negative cash flow hole just for the insurance. Way more fun to self insure for hull insurance and carry liability for the real screw ups. Of course, most people wouldn't sleep well not carrying full coverage on a boat that expensive.

[DotDun]

It's a market and tied to the overall economy, not unlike the real estate market. You might lose money or make money.

[Cotemar]

Wow, if I used your math, I would never own a boat.

[boatman61]

Look at it this way... how much would a 2yr vacation staying in quality selfcatering premises as you travel round the world cost you plus air, rail, taxi, ferry, car rental costs and see how it compares.. at least this way at the end you still got something.. even if its only a $300K boat.... $hit Happens...

[Wand]

Originally Posted by capcook

Kinda bummed.... for a 2 yr cruise plan, if I were to buy a 3-4 yr used CAT for US400k (say an Orana or Dean) and we go sailing for 2 yrs then sell the thing, I figure just the boat will cost us nearly US$ 220 per DAY or about $6,600 per month if you assume an opportunity cost on the money of about 5%...

Get used to it - boats'll cost you everything you've got. Cheaper in the long run to buy an aeroplane imo.

On the bright side, if you've got a lazy $400K then your money tree can surely grow more. The real question is not whether to buy a boat, but what the hell else could you spend it on.

Sorry, I don't suppose any of that ramble helps...

[David_Old_Jersey]

I think you are in the ballpark - will depend on how you count that loss. Might get yer cash back, but have spent $50k on maintanence (in addition to what you would have needed to do if sat in a marina 24/7). or that figure could be $10k - and you only get most of your cash back.........

........my take is it is a bit of crap shoot, outcome will depend on events outside of your control - but sounds ballpark. Of course you then have to leave............£££ / $$$

[Heart of Gold]

This is why I never do the math. I started to once and then realized I couldn't afford it. I think my friend Pete had this in mind when he named his boat Tia Fewca meaning... This Is Another **.... Endeavor We Can't Afford

[cabo_sailor]

When I bought my first boat I kept a meticulous log of what I spent on it. After a few months I stopped doing so because it was so dang depressing.

[Cotemar]

This says it all.

[Boracay]

A quick search on Yachtworld of cats from 45' to 50', 2009-2011 (2 yr old?) and 2004-2008 (4 year old?) suggests that a 2 year old 45 - 50' cat is going to cost closer to $1mil than $400K. Some serious pencil work could give better figures.

My rule of thumb before I purchased was that the boat would cost 25% of good condition value p.a. so using that as a guideline your 2 yr. old $700k cat is going to cost more than $350k for 2 years, plus selling brokerage.

Only you can work out what it is that you want , but assuming a 4-5 year old cat is in your price range then you'd be looking at a loss of well over over $220k.

Another quick search of Moorings Brokerage suggests that a 5-6 year old 47' Roberson and Caine Leopard may be in your price range, allowing for necessary repairs/upgrades/modifications to put it in cruising condition. This is given as an example only as it is a major purchase and you need to rely your own inquiries.

This is a big boat. Do you really need something that big?

[capcook]

Originally Posted by Heart of Gold

This is why I never do the math. I started to once and then realized I couldn't afford it. I think my friend Pete had this in mind when he named his boat Tia Fewca meaning... This Is Another **.... Endeavor We Can't Afford

Ha, I think you are right... I guess if you keep doing the math, you would end putting off this kind of lifestyle change and work til you drop or end up saving a big nest egg just to hand it over to the Nursery Homes and Hospitals... so stop figuring and start spending is probably the what one just has to do...

The $400k is for a decent 45 Dean or 44 Orana...3-4yo wouldn't want anything bigger, not that I could really justify or afford it anyway..

Thanks all for your comments...

Cheers

[Doodles]

Originally Posted by DotDun

It's a market and tied to the overall economy, not unlike the real estate market. You might lose money or make money.

Dream on ....

[sailorboy1]

Originally Posted by capcook

Kinda bummed.... for a 2 yr cruise plan, if I were to buy a 3-4 yr used CAT for US400k (say an Orana or Dean) and we go sailing for 2 yrs then sell the thing, I figure just the boat will cost us nearly US$ 220 per DAY or about $6,600 per month if you assume an opportunity cost on the money of about 5%... This assumes one would lose about 25% of it's value in the 2 year period and $20k in R&M... clearly these CATs have depreciated by at least 25% or more in the first 2-3yrs of their life... One can buy 2-3yo $600k-700k CATs all day today for $400-500k... that's a 16% - 30% haircut....

So I guess the question is how reasonable is the assumption that a 2-3yo US$400k CAT would lose another $100k over the next 2yrs...

I guess if one keeps the boat one never has to know how much one is losing....

You are doing finanical math and are going to make yourself crazy. But I wouldn't go with assumption of the boat costing you $100k value in 2 years if you are buying it NOW. The market is probably still near bottom so you could get a good deal and if the market improves a little (which it is) the boat may not take such a big hit.

What are 4-5 year old cats selling for now, that is the price you are going to get in a couple of years on your now 2-3 year boat.

But in the end owning boat is like buying any non-investment item, you are losing money!