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Old 26-02-2020, 00:27   #1
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Buy and sell in 2 years

Guys,

I'm still looking for my perfect boat, and one thing isn't clear for me, hence this thread. My plan is to buy a solid blue water cruiser 45-50ft, refit it if needed, cruise it for 14 months and sell it as quickly as possible (to get the money back). Obviously I want loose as little money on this operation as possible. My budget is up to $250k.

Now, my concern is what's the optimal strategy here. Obviously I can't buy anything new. Should I target top brands (Oyster?) but 25+y old? Should I buy something cheaper (North Wind?) and younger? Or maybe a custom design? Is it more optimal to buy a yacht in poor condition, do a major refit and try to sell for a higher price, or should I look for something after a recent refit?

Any advice is welcomed! Also, if there's already been a similar thread, please point me there - I couldn't find it.

P.S. If this changes anything I'm from Europe and plan to sail Med and Caribbean and back.
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Old 26-02-2020, 00:37   #2
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Re: Buy and sell in 2 years

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Originally Posted by fgrzadkowski View Post
Guys,

I'm still looking for my perfect boat, and one thing isn't clear for me, hence this thread. My plan is to buy a solid blue water cruiser 45-50ft, refit it if needed, cruise it for 14 months and sell it as quickly as possible (to get the money back). Obviously I want loose as little money on this operation as possible. My budget is up to $250k.

Now, my concern is what's the optimal strategy here. Obviously I can't buy anything new. Should I target top brands (Oyster?) but 25+y old? Should I buy something cheaper (North Wind?) and younger? Or maybe a custom design? Is it more optimal to buy a yacht in poor condition, do a major refit and try to sell for a higher price, or should I look for something after a recent refit?

Any advice is welcomed! Also, if there's already been a similar thread, please point me there - I couldn't find it.

P.S. If this changes anything I'm from Europe and plan to sail Med and Caribbean and back.
Buy something that's in decent condition or you'll spend more time fixing it than sailing it.
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Old 26-02-2020, 01:34   #3
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Re: Buy and sell in 2 years

If it needs a refit...expect the entire cost of the refit to be lost. Plus you may lose some depreciation on the base price.

Small and simple would be the way I would go. It doesn't sound like you have a lot of background, so odds are you are going to take a big hit and the higher the starting price, the more you will lose.
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Old 26-02-2020, 05:40   #4
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Re: Buy and sell in 2 years

In terms of owning a yacht I'm a total newbie! You're correct!

I can't go much below this size as there will be 5 of us cruising, so I think going below 45ft will be much less comfortable...

Re refit, I've noticed that for older yachts (20-30y) asking price depends more on the state of the yacht rather than age. So it would seem that refit could increase the value, no?
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Old 26-02-2020, 05:52   #5
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Re: Buy and sell in 2 years

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So it would seem that refit could increase the value, no?
Toooo funny.
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Old 26-02-2020, 05:54   #6
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Re: Buy and sell in 2 years

What does it cost you to live on land for 18 months to 2 years... thats what you are saving.
Buy a ready to go yacht, sail it, and sell it at a depreciated value, or refit it after your adventure... and lose money on the deal still.
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Old 26-02-2020, 06:12   #7
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Re: Buy and sell in 2 years

Do you have some thoughts which brands would keep their value well to minimize depreciation?
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Old 26-02-2020, 07:00   #8
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Re: Buy and sell in 2 years

You are making this too complicated.

The only definite here which determines how much you “get back” is ——- what (how little) you pay for it.
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Old 26-02-2020, 07:11   #9
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Re: Buy and sell in 2 years

Many yacht listings languish for longer than you plan to even own the boat so be careful. Consult an experienced Broker ideally in the area you plan to eventually sell the boat. Establish which boats can be reliably priced / valued because they frequently change hands and don’t have to much of an inventory overhang. This may give you some indication of the boats that are the most “liquid”. Then consider the condition of the boat.
I think the “received wisdom” of the community seems to be that $1 invested in a refit raises the value of the boat by $0.10 assuming you sell immediately on completion of the refit.
Assuming that view is at least directionally right then you should look for someone who has just done what you plan to do – buy a boat and refit it for cruising – but then had a change of plan and needs to sell. A freshly refitted “blue water ready” boat is probably a more important criteria than a particular brand or model.
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Old 26-02-2020, 07:14   #10
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Re: Buy and sell in 2 years

If you are hearing a tend in the answers so far, do NOT plan on getting your money back. If you do a "major" refit, you will waste time and lose more money. I am doing what would best be called a "medium" refit on a 54 foot boat, and the owner has a not unreasonable budget of $200K.

You might try reading this article... https://fetchinketch.net/boat_though...-should-i-buy/

Your "budget" should not be for initial price of the boat, but rather for the amount of money you think it will cost you to buy and maintain it for 2 years, and then subtract from that what you expect to sell it for at the end of that. I am wondering if you have thought of it that way, and if so... what is that number?

The boat market is a harsh one for sellers. A boat in the best condition does not get much of a premium over one that is average. The best advice to get as much money out as possible is be sure to have a boat in good cosmetic condition, without major flaws, priced low so it sells fast. A few months in carrying costs will chew up what every bit of premium you think your special boat is worth.

We are not trying to discourage you from your plan, there is nothing wrong with the concept, just help you with the financial reality of it to be sure it will work within your means.
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Old 26-02-2020, 07:55   #11
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Re: Buy and sell in 2 years

Quote:
We are not trying to discourage you from your plan, there is nothing wrong with the concept, just help you with the financial reality of it to be sure it will work within your means.

All of this is super helpful and lets me build some intuition. Thanks a lot!
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Old 26-02-2020, 08:09   #12
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Re: Buy and sell in 2 years

Maybe a comment from someone that has bought fixer uppers and ready to go boats.

100% agree that you will not recoup the costs on fixing up a boat UNLESS you get really, really lucky, find a high end boat that needs a lot of cosmetics and a motivated seller that wants out asap. Sometimes happens in divorces, estate sales or owners in dire financial straits. But to get one of these you would probably have to wait and shop for a long time and maybe never find the right boat.

Second, if you do end up with a boat needing a lot of repairs, upgrades, recovery from deferred maintenance, etc it is a guarantee that it will take twice as long and cost twice as much as you or even a professional estimates. Also be aware that if you pay a boat yard to do all this it will end up costing a huge chunk of money that you will never, never get back, especially if you are an absentee customer and just call in instructions. You will always come out better being there onsite to supervise. Not that the yards are all trying to rip you off it's just that the process will be much more efficient with an interested manager watching.

By the way, replacing or upgrading electronics and other items that age or are consumables is to be expected unless you get that very rare animal, a boat that is ready to go (not sure if that really exists).

Bottom line, the best you can do is look for a pretty good deal on a good quality boat that has a good reputation and brand name recognition in the market. This is where a good broker can help a lot. I emphasize "good" broker as there's a lot of not so good ones out there. Spoken by a former yacht broker.
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Old 26-02-2020, 08:26   #13
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Re: Buy and sell in 2 years

To minimize losses on two years of ownership, get a boat with a popular name brand and drive a hard bargain on purchase price.

You want quick turnover on a commodity boat. A big cost is carrying costs if it takes two years to sell it.

Popular brands priced right have the best chance of selling quickly, and the prices are more consistent, with lots of sales data available.
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Old 26-02-2020, 09:51   #14
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Re: Buy and sell in 2 years

Unless you will be personally providing the labor for the refit, Youre not going to get a full return on investment..



You make your money when you buy the boat, not when you sell it. Have you ever sailed and maintained a 45 foot sailboat? Where are you planning on sailing? You can find some really good buys on 38 foot to 40 foot catamarans that will accommodate your crowd nicely.
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Old 26-02-2020, 10:09   #15
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Re: Buy and sell in 2 years

Good comments all around above.

Most boats take considerable time to be sold, they don't turn over real fast Note that to improve the turnover rate brokers are utilized so as to move the market along. The standard broker commission will be 10% of the sale price, which is commonly split between the selling broker and the buyers broker if the buyer employs a buyer's broker.

So figure 10% of the thence depreciated value of the vessel will be gone due to the commission.

If you paid sales or use tax, or worst much higher VAT upon the purchase, figure that value to be an expenditure paid to the government and not anything you can recoup upon your resale.

Your goal should be oriented to actually sail the boat, not the Sale the boat.

When one calculates the cost of each Sail, the $$$ involved per outing is rather shocking when one adds in the upgrades and maintenance costs which do not provide a return on the investment other than the use of the boat such provide for operating the boat. 10 cents on the dollar for upgrades and refits is a reasonable return.

Typically boats depreciate in value overtime, figure in the range of about 5% per year for a middle age boat, more during the first couple of years if purchased new, e.g., 10% per annum. Some boats are backlogged as to their production versus ordered status and those can retain value because the boat is in demand but the supply is one to three years out.

Add in marina costs, operating costs, insurance, etc. and the depreciation of value and the sale commission and then divide by the number of days of use then one begins to get a sense of the cost per sail.
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