Question Regarding Boat Depreciation

[m2244]

***Alert***
Pain in the @ss question
***Alert***

I realize this sort of question is not cut and dry.

However, my wife and I had a bit of an edgy discussion earlier today and it became clear that I need to better understand this financial aspect of boat ownership.

Is there a rule of thumb for discussing how much of a loss a person might expect after owning a sailboat for say 2 or 3 years? (initially a pre-owned boat) I don't mean slip fees and upkeep expenses, simply purchase price vs selling price.

To be a little more specific, I'm thinking something between 35 and 40 feet, live-aboard, maybe 5 or so years old.

Part of the problem is she has people telling her things and the discussion turn into a bit of a tail chasing session (and not the good kind ).

[rwidman]

A 5 year old boat will continue to depreciate. Like a car, a boat can't be considered an investment. The older the boat, the less depreciation but what you get for it a few years down the road is pretty hard to predict.


You can get a rough idea by looking at boat listings on the Internet.

[Steadman Uhlich]

Ron hit the main point.

Another way to look at it is that after a boat is 10 years old, the next buyer will be considering the possible need to refit some aging things like standing rigging (usually said to be safe for about 10 years), running rigging, rubber hoses, plumbing, or items like rubber gaskets, batteries, canvas, sails, cushions, mattresses, and obsolete electronics.

Even if a boat is rarely sailed or rarely leaves the dock, the marine environment (sun plus salt air and salt water) will cause deterioration.

[skipmac]

To make a very rough generalization, boats depreciate logarithmically. From new to one year the value will drop a LOT. From 10-11 years the value will drop a little.

I found the bill of sale in my 1984 Pearson when I bought it in 2008. I paid almost what the PO paid who picked it up almost new (factory repo after a few months) in 1985.

Will also depend a LOT on which boat. A Lexus or Mercedes will hold value a lot more than a low end Chevy or Kia. Same for boats.

[Cheechako]

After 6-7-8 years I don't think it will depreciate in value much... if it's a boat people want... and if you keep it up.. Used boats I was looking at 20 years ago aren't much different price now really. The key is to buy at a good price when you buy though.
However, improvements you do, things you add.... will likely be 0 value when selling.
So:
Purchase Price
+ moorage insurance and routine maintenance
+upgrades or improvements
= cost.
Selling price
- brokers fees
=recoup

20 years ago I was looking at Passport 40's. They were about $135k-$140k. Today they are maybe $5k less.

[Eder]

Buy a decent used boat like an Island Packet and likely it will be worth the same after 5 years.

[Jim Cate]

20 years ago I was looking at Passport 40's. They were about $135k-$140k. Today they are maybe $5k less.

While true, this statement conveniently ignores inflation.

The main thing that determines the sale price of older boats is their condition, not their specific age. If you buy a well maintained older boat, and then continue to keepup the maintenance, there should be little depreciation. BUT, that maintenance will be kinda costly to do, especially when it comes to major items like rigging, sails and engine. That money is spent to avoid depreciation, but comes from the same pocket in the long run.

Short answer is that boat ownership is not inexpensive. Many of us feel that it is money well spent!

Jim

[Cheechako]

Originally Posted by Jim Cate

While true, this statement conveniently ignores inflation.

The main thing that determines the sale price of older boats is their condition, not their specific age. If you buy a well maintained older boat, and then continue to keepup the maintenance, there should be little depreciation. BUT, that maintenance will be kinda costly to do, especially when it comes to major items like rigging, sails and engine. That money is spent to avoid depreciation, but comes from the same pocket in the long run.

Short answer is that boat ownership is not inexpensive. Many of us feel that it is money well spent!

Jim

Very true about depreciation... OTOH, anything I invested the $ in 20 years ago is worth tons more than the Passport has depreciated! So if I dint buy the Passport the 1997 $135K is worth a lot more now.

[Steadman Uhlich]

Originally Posted by Cheechako

Very true about depreciation... OTOH, anything I invested the $ in 20 years ago is worth tons more than the Passport has depreciated! So if I dint buy the Passport the 1997 $135K is worth a lot more now.

Your example and the OPs question and Jim Cates comment got me thinking about the impact of inflation.

Using an online inflation calculator, if in 1997 a buyer purchased a NEW boat for $135k then today that same NEW item would be priced at $205,066.26 because of inflation.

So, if today we find that USED boat with a price of $135k on it today, it has lost $70,000 in "same dollar value" or, adjusted for inflation compared to an identical NEW boat.

That is $70,000 decrease in value over a 20 year period.

Of course those are just numbers, and it is only money.

[Cheechako]

Originally Posted by Steady Hand

Your example and the OPs question and Jim Cates comment got me thinking about the impact of inflation.

Using an online inflation calculator, if in 1997 a buyer purchased a NEW boat for $135k then today that same NEW item would be priced at $205,066.26 because of inflation.

So, if today we find that USED boat with a price of $135k on it today, it has lost $70,000 in "same dollar value" or, adjusted for inflation compared to an identical NEW boat.

That is $70,000 decrease in value over a 20 year period.

Of course those are just numbers, and it is only money.

.... or did you gain that 70k because you bought in yesterdollars? :>) haha. It's money you never had so can you "lose" it?
At any rate, once you start talking $ vs boats you are in big trouble. However, I do sometimes now ask myself "If I buy this $2400 thing for my boat and use it 20 times a year for 3 years of boat ownership, That will be $40 each time I use it. Worth it?" It has saved me a lot of money....

[Steadman Uhlich]

Originally Posted by Cheechako

.... or did you gain that 70k because you bought in yesterdollars? :>) haha. It's money you never had so can you "lose" it?
At any rate, once you start talking $ vs boats you are in big trouble. However, I do sometimes now ask myself "If I buy this $2400 thing for my boat and use it 20 times a year for 3 years of boat ownership, That will be $40 each time I use it. Worth it?" It has saved me a lot of money....

I understand.

Money has different value to diffferent people.

My comment is no criticism.

I think having the boat would be more fun.

[belizesailor]

Older good boats which are well maintained tend to depreciate to a plateua and stay there for a long time.

Example, I bought an older boat (84 build I think) in the late 90's...sold it about 8 years later for a little more than I paid for it (very little, $5K to be exact).

However, I spent a LOT of money on the boat in between. Factor into your decision that whatever you spend on the boat during your ownership is lost (including upgrades).

[Stumble]

Originally Posted by belizesailor

Older good boats which are well maintained tend to depreciate to a plateua and stay there for a long time.

Example, I bought an older boat (84 build I think) in the late 90's...sold it about 8 years later for a little more than I paid for it (very little, $5K to be exact).

However, I spent a LOT of money on the boat in between. Factor into your decision that whatever you spend on the boat during your ownership is lost (including upgrades).

That's pretty much my take on it. After 10 years a boat is pretty much done depreciating from its new value, from there on out it's all condition depreciation. Good maintenance can halt it at that point indefinatly, a couple of years of doing nothing can accelerate it.

With a few notable exceptions like race boats, and steel hulls.

[valhalla360]

Originally Posted by belizesailor

Older good boats which are well maintained tend to depreciate to a plateua and stay there for a long time.

Example, I bought an older boat (84 build I think) in the late 90's...sold it about 8 years later for a little more than I paid for it (very little, $5K to be exact).

However, I spent a LOT of money on the boat in between. Factor into your decision that whatever you spend on the boat during your ownership is lost (including upgrades).

That's the problem. When you start talking in decades, inflation and maintenance become major components of the cost equation.

We sold our first boat for more than the brand new sales price but it was 30yrs old and new equivalent boats were almost 10times that price.

[Island Time O25]

I have still a different take on it. I look at my boat on a mooring in a scenic harbor as a movable oceanfront vacation home with 360deg ocean views. And whatever it cost to purchase, maintain, upgrade, etc. is infinitely less than such a vacation home would cost in our area. And I definitely spend more time on the boat than most of my friends who own homes on Cape Cod for which they are probably paying each year more that the boat will cost me in 10 years, incl. the purchase price. And none of their summer homes are even on the water. People with summer homes on the water on the Cape would not want me as their friend anyway.