Originally Posted by WindwardPrinces
On a related note, does anyone here know of any analysis of boat depreciation?
I'd guess it's model dependent, but I'd also guess that there is a generic lifecycle model for sailboats in general.
I'd be interested in what it would look like for Island Packets.
I'd guess they depreciate rather quickly initially, and then more slowly until their value sort of stablizes and is determined by whether all the components are working. Anybody have a general timeline?
Cruising boats are a little like houses, and a little like helicopters, and less like cars in this regard. They consist of a hull
which is usually very long lasting and very low maintenance
to which however are attached a multitude of different systems with varying useful lives, some of which are used up according to time and others according to hours, in different proportions.
Like a house, the useful life of the whole collection is nearly unlimited. But unlike a house, there is no real estate -- so no inherent residual value. What this means is that there is a point at which, and this point comes surprisingly quickly -- it makes no sense to invest in renovation
, as the value afterwards will be less than the cost of just the renovation
. This is somewhat less the case with desirable old boats like Swans or Hinckleys or Little Harbors, and is dramatically much the case with more ordinary production boats.
This is the main reason why cruising boats are so often money pits. Buy a 10 year old boat which has not had a major refit
, and you will start replacing systems one after another, and doing other kinds of renovation, and the costs mount up. I made that mistake with my boat -- which was 8 years old, and in very good condition, lightly used with few hours and miles on it, but put back into intense use, the systems started failing one after another, and I have spent probably $150k on various renovations and replacements
over the six years I have owned her.
I love my boat, and I probably haven't lost
all that $150k, as she is holding her value very well, but I will never do that again. I would only ever do one of two things in future: (a) buy new; or (b) buy a boat which has recently undergone a high quality refit
by a loving, well-financed owner (and not a superficial "fix it up to sell" refit).
Based on my experience, new boats are a great deal. Not only financially, but once reasonably shaken down, a new boat will allow you to spend less of your cruises fixing things, which will increase the quality of your cruising. And this is coming from a person who never buys new cars, for example, or new houses. If I ever have another boat, I will have it built new. Unlike real estate, boats have no inherent value except the thing itself. And unlike cars, boats aren't engineered to work basically without repairs
for a certain lifetime, allowing you to buy into some part of that lifetime with a reasonable expectation that the remaining balance of that lifetime will be nearly as trouble free as the first part was.