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Old 15-04-2017, 13:16   #31
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Re: Question Regarding Boat Depreciation

As several here have mentioned the market value of well maintained boats seems to taper off at five to ten years of age. Well maintained is the operative phrase.

I have an extremely well maintained Newport 41, Hull No. 5 built in 1969. I bought it in 1978 and could probably sell (in nominal US dollars) for what I paid for it. It's been through three major overhauls, re-engine once (that engine overhauled once) new sails, new wiring, up-graded electronic and instrument, new rigging about every ten years as mentioned and many one-of-a-kind improvements in general.

I say nominal US dollars because in today inflation adjusted dollar it wouldn't even be close to what I paid. It's our money that depreciates not the boats.
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Old 15-04-2017, 13:35   #32
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Re: Question Regarding Boat Depreciation

I hear The Donald has decided that the US$ is "overvalued". Whoopee! It could be a fun ride :-)!!!

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Old 15-04-2017, 14:06   #33
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Re: Question Regarding Boat Depreciation

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Originally Posted by belizesailor View Post
Except real estate has the potential to appreciate....boats dont.

Your moveable oceanfront property wont appreciate, but if the other non tangible benefits have strong value for you then...who cares.

I think of this when people want to max out their purchasing ability on a boat...like a bright shiny new cat. Better strategy I think is take half of that budget and buy a good used boat that meets your needs. Take the other half and buy real estate. In the end the appreciation has the potential to offset the depreciation and you may end up where you started financially.
I bought a house a mile from the beach in pinellas county in 1995 for X dollars so 22 years later it was appraised at x+20k. the taxes I have paid on it since 1995 is about X so the price I paid I then paid again in rent from the town. My "profit on paper" has been negative X-20k. plus upkeep. If I had bought a boat instead I would be in same position of x dollar to buy and x dollars in upkeep over 22 years but I would have enjoyed it more.

I should have bought a boat.
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Old 15-04-2017, 14:50   #34
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Re: Question Regarding Boat Depreciation

mww44's original post:: "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 )."

You guys worked long and hard to earn your money, now you want a boat (maybe). Look at the quote below, I think this guy's on top of his game!


Quote:
Originally Posted by Vander Woestijn View Post
Lit my see-gar with a regular ol match.. contemplating this informative thread.. which I take from it all; a yacht was never nor will ever be a good financial investment.. you buy into a dream to make it a reality, and expect in return a great life style, but no tangible financial gains.. infact, expect continuous expenses regardless of your sailing goals or frequency. I agree and convinced now to halt my new boat acquisition! .. it makes allot more sense to instead go for a decade old cat in a decent condition.. will cost 1/2 as much as a new boat, and the savings can be parked in a good financial instrument that'll pay for the boat's upkeep, or at least break even over time. Things a bit clearer going forward now..again, thanks an excellent thread.
It is why we have so many threads on CF about how to involve the womenfolk. Lots of good ideas there, some written by men, some by women.

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Old 15-04-2017, 15:34   #35
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Re: Question Regarding Boat Depreciation

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Originally Posted by parrotsailor View Post
I bought a house a mile from the beach in pinellas county in 1995 for X dollars so 22 years later it was appraised at x+20k. the taxes I have paid on it since 1995 is about X so the price I paid I then paid again in rent from the town. My "profit on paper" has been negative X-20k. plus upkeep. If I had bought a boat instead I would be in same position of x dollar to buy and x dollars in upkeep over 22 years but I would have enjoyed it more.

I should have bought a boat.
Real estate, nor any other investment, is guaranteed...but you'd think a mile from the beach woulda done better! Depends an awful lot on the local hood.

By contrast my home in Florida worked out well. I bought a house on a canal lot in Bradenton, FL about 1998...sold it in 2004 for almost double what I paid for it...shoulda bought two! Housing/Mortgage industry imploded not long after...I think the bank took it back from the new owner. Real estate prices in Florida have rebounded to near pre crash levels...I could have bought it back after the crash and doubled my money again on the same house! Opportunity missed.

As Ive lived and cruised thru Central America Ive left a bread crumb trail of real estate behind me. Ive doubled my money on most, broken even on one (and was damn glad of that...came very close to losing the whole thing), still have a piece in Belize and in Guatemala...both roughly doubled now on paper at least. Very low cost to carry in both countries (unlike some USA venues, like Austin TX, where property taxes are painfully high...as you say "renting from the town", but rents are high there too so multifamily properties still work). Recently bought in Panama...lots of upside here I think...economy is booming.

Low overhead (undeveloped land) or income producing properties (multifamily) tend to work out better as investment properties.

Ive never done worse than break even on real estate...makes up for all the $$$s Ive pissed off on boats!

Ive also never bought relatively expensive boats, or cars, I just cant bring myself to put that much cash in a known loss.

Anyone wanna buy a place in Belize...with 75' of dock space for your depreciating asset?
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Old 15-04-2017, 15:54   #36
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Re: Question Regarding Boat Depreciation

We pay about £3000 a year to keep our 37' in Greece. That is yard/lifting/launching and insurance. I do my own maintenance.
We have over the past 10 years had about 100 weeks holiday on her. We don't use marinas much and eat out about once a week. That makes our holiday cost about £350 a week. A week in a hotel (cheap) would cost £500.
Sod the depreciation, enjoy life while you can, you're a long time looking at the lid.
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Old 15-04-2017, 17:24   #37
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Re: Question Regarding Boat Depreciation

In 1958 I was offered a double corner lot with a duplex on it in one of Vancouver's most desirable neighbourhoods for $6,500. Today that property is worth 6.5 Mil. Shoulda bought the property. Oh well...:-(!

In 1948 my father built a luvverly liggle house in a well tended garden. Land and construction costs totalled DKr.28,000. In 1972 I walked past it squiring my aunt who lived two blocks away. "Who lives there now?" sez I. "Dunno", sez she, "but I do know that it sold recently for 650 thou". Oh well... :-(!

As always, Europe was 25 years ahead of "America" :-)

Aux armes...!

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Old 15-04-2017, 17:57   #38
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Re: Question Regarding Boat Depreciation

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Originally Posted by sailorboy1 View Post
No

But to be safe you should figure 100% loss and be happy when you get some money back instead.
My wife has a family history of long life and she has a fear of running out of money before she runs out of time. Her question was similar to the OPs. If we spend $60000 on a boat and use it for 5 or 10 years how much will we be able to sell it for?" We sat down with our money guy and my question to him was "If I throw away $60K will she starve to death?" When he assured her that she could live past 100 with no issues I said "With a lot of luck we may get most of it back but even with bad luck we'll get at least something." Coming up on 7 years and it's going to be around for awhile yet. I think it is worth about what I paid for it but counting what we've put into it we will be lucky to get 50% of what we spent on upgrading it. This is electronics, paint, A/C, canvas type upgrades but not counting slip fees, fuel, car rentals and other cruising type expenses.
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Old 15-04-2017, 21:37   #39
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Re: Question Regarding Boat Depreciation

As a simple rule of thumb, you can assume you will get HALF of what you paid. It doesn't matter if you own it for 5 years or 5 minutes. You'll get half. Yes, there are plenty of exceptions, but on average, most people, most boats...HALF. If you get more, good for you!

Also, many people make a big math error. They take the amount they paid, then add the cost of all upgrades, and think that is the new value of the boat. Reality is the rule of thumb above. Adding equipment might make the boat easier to sell, but won't change the price.

Do I sound harsh and unrealistic? Yes. But its a buyers market out there. There are tons of old boats for sale. Many sellers would be happy to get half.
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Old 16-04-2017, 07:46   #40
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Re: Question Regarding Boat Depreciation

different type of construction between new and old boats even if they are the same brand and type


old dollars vs new dollars


the depreciation rate typically used and accepted by banks and insurance companies is usually based on 2 to 3 percent per year. this is typically used on one off where there is no comparison or the vessel is unique.


otherwise you can go to soldboats.com and see what boats sold for over the past year. you can then extrapolate the depreciation rate.


having done this several times, the depreciation rate comes out as stated above, about 2 %
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Old 17-04-2017, 09:36   #41
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Re: Question Regarding Boat Depreciation

Quote:
IMO no-one should put more money into a boat whether to purchase or to maintain than he can walk away from with a smile on his face :-)
I share this opinion. I won't put in more than I can afford to lose. My limit is about $10K. Someone else's limit might be 10 or 20 times that. But if I lose $10K, I'm still smiling about the experience. Personally, I would not be smiling so much if I lost $100K.
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Old 17-04-2017, 13:43   #42
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Re: Question Regarding Boat Depreciation

When you follow CF for a while you begin to appreciate that the distribution of members when plotted on an axis of "ability/will to spend (on a boat)" is quite binary :-)

We often get inquiries from newbs who in their first few postings make it manifest that they are not aware of the monetary and non-monetary demands that a boat makes. They then get responses from members having the time of their lives at the high-spending end of the spectrum, and get all sorts of advice on what is "necessary" in order to cruise - meaning, by and large, to cross oceans. Nothing wrong with the advice offered, and let me hasten to add that I always enjoy reading it. It just seems to me that newbs are an inappropriate target for such advice, even though they often ask for such, either explicitly or implicitly, in their inquiries.

Cruising is not everybody's cuppatea, and can, IMO, be embraced and adopted as a "lifestyle" only very slowly. If a newbie DOES go slow, the probability that he (and his/her family) will come to love cruising is much greater than if he goes charging in, spending money right, left and centre on things that are NOT necessary equipment in a newbie's boat except in his imagination.

The key to a successful transition from lubber to sailor is, IMO, to stay at the low-spending end of the spectrum for a considerable time even if you have the financial capacity to operate at the other end. Get a cheap (but sound) SIMPLE boat to which you can add embellishments to suit your "style" as your style develops. There are many members of CF who know how to cruise "for cheap". Stay in waters that your cheap, simple boat is fit for in its given state at any given time. Expand your geographic range of operation as your experience expands. Be constantly aware that the malign effects of marketing, of "the yachting press" and of boat shows will impede your progress toward becoming a sailor by distracting you from the essentials.

Go that way, and if it then turns out that you (or you family) really "don't like the rocking", then give the boat to a charitable organization - even to PBS ;-) - and walk away with a receipt for taxation purposes and that beatific smile on your face :-)

Cheers

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Old 17-04-2017, 17:43   #43
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Re: Question Regarding Boat Depreciation

Easy to see why members of this forum never buy a boat.
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Old 18-04-2017, 11:20   #44
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Re: Question Regarding Boat Depreciation

A few things I think about:

The population wave of baby-boomers selling their yachts is in gear. There is no similar surge to replace that, hence a steady downward pressure on used yacht values.

One big reason I sail is to visit reefs, and they are disappearing fast.

Storms seem to be getting more intense. One in Guam a few years back recorded 208 kts., a record.

Island crime is on the rise in many regions.

Is this enough to keep me from buying that nice used cat? Maybe. Well maintained along the way, it still won't be worth much at the end.

Yeah, yeah, chicken little, but I still think about the fun I could have with the 150k I will lose on the rig vs the fun out there on the water for say, 10 years or so.

The rough math. At 20k/year to cruise and 15k/year depreciation on vessel (including maintenance etc). That's 35k/ year we could engage land travel. For our retirement budget it isn't an easy call. I like the idea above of putting half the assets in dirt and half in das boat.

Math could be way off, but would rather over estimate the costs than to cry at the end. And yes, all my aforementioned postulates could be wrong. We didn't understand the true costs of yacht ownership with the first one (who does) and still had a blast.

I suppose we could buy a lesser yacht, but my wife has a set of minimum standards for comfort and entertaining. My minimums are safety and sail ability. Adds up to about 200-250k for the right cat. Apologies for stream'O'consciousness.
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Old 18-04-2017, 12:25   #45
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Re: Question Regarding Boat Depreciation

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The population wave of baby-boomers selling their yachts is in gear. There is no similar surge to replace that, hence a steady downward pressure on used yacht values.
This is reality! Who buys boats and for that matter old muscle cars and superbikes? Generally speaking, its old white haired guys trying to capture that last memory of their youth. I can assure you, the number of young people replacing them are few and far between. My son (26) is from a new age of minimalist. They may buy up some of the old boats for a cheap place to live and a little adventure, but their lowered buying power and lack of interest will continue to take its toll on resale prices. And we will also start to see a rush of older people selling their boats before their value disappears for good.

This general lack of consumerism from our youth, outside of iPhones and video games, is going to start hitting harder as the last of the big time spenders dies off. With a world economy based on consumerism, you have to hope globalization will take up some of the slack, but I don't see anyone outside the US buying things like we have over the last 30 years. And being over 60, I can honestly say, my indiscriminate buying stopped a good 10 years ago. I'm now overwhelmed by the clutter and finding it has no real value to anyone but me.

There is a very serious glut of boats out there. Just drive anywhere along the Florida coasts or the Chesapeake Bay and you will soon understand the problem waiting for us as a society. What do we do with all these fricken boats? Thinking that even a popular boat will have some value 10 years from now is dreaming, IMO.

On a positive note. I realize I'm only going to be in this for a short time, but I fully appreciate the lower prices this glut is generating. Although nasty cosmetically, I bought some solid boats for almost nothing that for the most part just need a good cleaning. I am upgrading parts and equipment for next to nothing thanks to other boats being parted out. This same "parts" phenomenon is also helping me restore some old British motorcycles and it also eliminates some of the competition when I go to sell. A win, win for me personally. I just need to make sure I sell soon, while there are still buyers for this lifetime accumulation of junk! I need to beat the rush of fellow baby boomers unloading house and storage units full of CRAP, I mean treasures!
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