Depreciation/Maintenance ???

[Lightfin]

Cap Lar said, "boats don't really appreciate. they may sell for more than original, but thats inflation. the words you want to hear from the surveyor are " her depreciation is over, now its maintenance" i think 20 years is average age needed, but not based on anything other than my own number crunching. "


Does this "20 year" end to depreciation apply to multihulls too?

From my observation (rather limited), it appears the multihulls may "bottom out" after about 10 years.....??????

[BC Mike]

Has to depend on the quality of the boat and the soundness of the hull. Some boats will last a long time and are quite solid. Others may have incremental deterioration. A good boat not maintained will also lose value. And lastly depends what gear the boat has. My boat cost $28000- new in 1979. A US 30 cost about $36000- Today my boat would sell for a high of $27500- and a low of $22500-. A US 30 sells for about $22500-. My boat today has more gear on it than in 1979. A boat like mine with two sails and a lot of neglect might sell for $12000-. Peoples opinions of boats change. The US30 is a faster boat than mine. My boat is better in rough weather. New the US 30 with the wider beam was more appealing. Used my boat with an easier motion is more appealing. Also maintainence issues factor in. If one boat has very few problems it will hold its value. Boats like mine have never had a blister problem.
Michael

[delmarrey]

The good Cats go fast!

Cats have not really been in production all that long. Anything over 10 yo was either custom made or just the start of a production series.

So, it stands to reason that the older Cats are going to depreciate quickly due to the more modern designs.

Give'm another 10 years, we'll see!

In reality, a boat is only worth what one is willing to pay for it.
Some are a fool’s paradise.

Over & standing by........................_/)

[Jeff H]

I am not sure that over the long haul multihulls will have less depreciation than monohulls. I have asked a number of surveyors who have surveyed multihulls what have they been seeing. The reports have been disconcerting. The opinion seems to be that the production cats are being pretty lightly engineered and constructed. Multihulls have much higher stresses than monohulls. The surveyors have reported an alarming amount of stress cracking at high stress areas on comparatively new Multihulls. The surveyors thought that it was pretty unusual to find a monohull with the kind of flexure cracking that seems to be nearly universal with multihulls, but if you did, they would be greatly depreciated relative a more soundly built boat.

I am not sure that this quite that cut and dry. While the current crop of Multi's do not seem to be holding up all that well, which would suggest a more rapid depreciation after 10 or so years out, it is not that simple. There is a comparative shortage of supply relative to the demand for cats and new construction costs rising pretty quickly due to the ramp up in crude oil cost. So contrary to the former discussion, that would seem to suggest that Multihulls should hold their value pretty well.

At some level I see this as being somewhat like what happened with the J-30's. The J-30's continued to be a competitive one design class long after many great boats of thier era (anyone remember the Kirby 30) had become simple asterisks in the anals of sailing history. As a result they held their value for a very long time after they were built. But early J-30's had a lot of coring problems. As these problems became more widespread in the fleet, J-30's seemed to drop pretty quickly in price from the mid-$30K range to the low $20K range, even on boats that were essentially sound, on the theory that it was only a matter of time before even a good boat sooner or later developed core problems.

I fear that it may be the same for Cats. If the surveyors are right, that a large percentage of the multihull fleet will develop a pattern of stress failure, then the value of the current crop of multi's could drop precipitously at some point 10 or 15 years out.

Jeff

[ssullivan]

This worked extremely well for my monohull purchase. I did the math by plotting depreciation curves for various models I was looking at. I plotted them over a 20 year history (if possible) and watched where the curves flattened out.

My current boat was right at the bottom of its curve, and was the newest boat I could afford that fit my needs while also meeting my requirement of being at the bottom of the depreciation curve. In the 6 months I have owned the boat, I have seen other Hirschs (that are two years older than mine) on Yachtworld increase a few percent in asking price.

To put real numbers behind it, I picked it up for $80K while asking prices on Yachtworld for the same model (but 2 years older) are at $115K. The actual boat I bought surveyed at $120K.

One other thing I learned was to make offers. Don't be afraid to move onto the next boat. It's a buyer's market right now. People are having a hard time making ends meet, paying for increased energy costs, astronomical housing prices, etc... If someone won't come down to what you think the boat is worth, talk to the next person. Only if every boat rejects you are you offering too low a price.

Hope that helps. It was my strategy in buying this spring, and I feel I came away from the experience with a deal.

[Jeff H]

One minor comment, I don't think that you are correct in assuming rthat this is a 'buyer's market' right now. In fact it seems to be a pretty strong Sellers market. Here is why I say that:

There are roughly a dozen models that I track to see see what is happening in the marketplace. What I am finding is that boats are seem to be moving quite quickly and at slightly increased asking prices. Boats that have been on the market for years suddenly are sold.

There are a lot of buyers entering the marketplace with an hurricane insurance check from last year's Florida hurricanes and a need for normality. That will only increase over time as this years hurricane victims go out to replace the boats that was lost along the Gulf Coast.

Despite the weather, the Annapolis Boat Show claims very high sales compared to the prior years.

Brokers tell me that they have had a hard time finding enough reasonably clean boats to meet the demand so even rough boat are selling.

Boat interest rates are still very low compared to even 5 years ago.

Respectfully,

Jeff

[ssullivan]

Hi Jeff,

You could very well be right. I hadn't checked into the market since purchasing the boat in the spring (before the hurricanes).

You are probably more in tune with the market right now than I am.

Just as a side note though... brokers tend to say lots of things to make you scared that you will never find the right boat at the right price. They want you to fear losing the boat so you get that deposit in. At least that was my experience.

But I agree 100%... you are more in touch with the market than I am at this point... if it's a seller's market, it's still good to use the depreciation curves, but I suppose the offer scenario would need to be a little different than what I described.

[capt lar]

Sean, I think you are correct when describing the New England used boat market. It is off a solid 15% over one year ago. Jeff H. is correct about Annapolis. Their market is hot. A boat (lets say Sabre 36) that might have fetched 100k last year in MA will now sit or sell for low eighties. Have the same boat with a broker in MD and he is not worried about finding a buyer. ( I know this holds true for Bristol 35.5 right now as well) Again Jeff H. is correct, there are a lot of buyers replacing boats lost to hurricanes. Maybe MD in general is stronger economically than other parts of the country. The high end market is also strong. Moral of the story is try to understand local markets and be willing to put some miles on the car.

The cat question is an interesting one, and I think Jeff H. hit all the major issues. There aren't enough older boats, and the designs are changing so fast, there have not been any large production runs to follow for enough years to really know, but I suspect time will show that fatigue becomes an expensive issue and depreciation will accelerate. The cost of restoration and even structural modification could easily become a much larger number that could dramatically affect published book values. No one knows what may show up after 15 or 20 years. Survey by someone that has done a lot of cats will be key. We have gained tremendous advantage thru technological advances made over the past twenty years, but boats are still built for a price to meet the market. Who knows what the result of the compromises will be this time around ?

Capt. Lar