Question Regarding Boat Depreciation

[Island Time O25]

Originally Posted by valhalla360

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.

My early 80s 36 footer was priced new at $80K. New Catalina 36s were then going for about $45-50K. Today mine, assuming similar condition, would not fetch as much as that Catalina would get, simply for the fact that everyone knows Catalina and they are still in business and my make is very regionally known and even then less known among the perspective buyers of boats of that vintage. Interestingly enough, a few years back, the surveyor put a replacement value on it, if new, at about $320K-350K which actually came out to the same ratio with replacement values for Catalinas (about $200K-$220K) as the price ratio between them was back in the early 80s, when new ($80K to $50K). According to him this was all based on the quality of the build and the cost of building/buying a similar new boat today.

[belizesailor]

Originally Posted by valhalla360

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.

Yes, if you factor in inflation (which in theory could go either way, but rarely does) then the loss is likely greater.

Also, oil prices. Fiberglass is petroleum product so oil prices affect materials cost.

Bottom line: buying a boat is a bad financial decision no matter how you slice it. How much are the other potential benefits worth to you in $s?

[belizesailor]

Originally Posted by 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. [emoji3]

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.

[DMCantor]

We bought a small Beneteau in 2008 for $65,000 or so. We need to sell it now, and I think we'll be lucky to get $18,000. Depreciation is real!

[akprb]

Stick with popular models over 6 or 7 years old and you'll do fine. Maintain it well.

Side note we purchased for 330, sold 10 years later in a different country for 250. Less than 700/month in depreciation for the experience of a lifetime, wouldn't change a thing and life DOES pass.

[sailorboy1]

Originally Posted by m2244

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?

No

But to be safe you should figure 100% loss and be happy when you get some money back instead.

[CampDavid]

No simple answer. If you are an astute buyer the answer might be zero. The depression of owning a 4o ft boat is not big issue. It is expense of upkeep. Figure 10 percent a year. A owning a good 40 ft boat is 100 k plus. It will cost 10k a year to operate and insure. Maybe 15 percent in the loss of its capital cost of three years.

Yachts have always been for the wealthy

Sent from my SGH-I337M using Cruisers Sailing Forum mobile app

[Mithril Bham]

Originally Posted by 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.

Has a Passport 42, 30 years ago. Loved it. Where can I find a Passport 40 that floats for under 5K?

[TrentePieds]

Why would anyone buy ANYTHING at "sticker price" in today's world?

What drives inflation in the Vancouver market is simple population pressure. So it is in Toronto. And in Tokyo. And in Bombay. You gotta have somewhere to live. You don't gotta have a boat. What you find to live in is determined by the spec-building oligopoly. The whole notion of "highest and best use" is macroeconomically dysfunctional. The "trickle down economics"-trip is eyewash for "I matter - you don't!"

But there is no discernible oligopoly in regard to boats (though of course there is in regard to availability of moorage at marinas), so you can focus on value in USE rather than on value in trade and avoid the entire "depreciation" trip. In days of yore when "capital cost allowance" was still a tax consideration for yacht owners, in the days when owning a yacht in the charter trade was a way of having your cake and eating it too, depreciation could not be ignored. Since the tax loop-holes have been closed buying new or near new has no particular merit. Unless you get off on lighting your see-gars with hundred dollar bills :-)!

I suspect that the people the OP's wife has been talking to have a fairly reasonable grip on financial realities. Could the OP's grip on them have been distorted by the dream we all share?

TP

[Vander Woestijn]

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.

[TrentePieds]

Graag gedaan :-)

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 :-)

TP

[rickdamico]

Seriously? I hope you're not thinking of your new boat as some type of financial investment, or even considering it financially wise. My current boat a Beneteau 323 was 145,000 when I bought her 11 years ago, today I'm trading her in for a new Beneteau 38.1. Trade in value for the 323? 63,000.

Why am I doing this, because I'm a sailor, and being out there contributes to my sanity, and contentment. It's who I am. I'm not much of a DUYer, I don't like fixing things, so I'm happy I'm able to make this purchase from an amazing dealer who provides the best service you'll find anywhere.

And, of course, I can't begin to tell you or even value the dollar amount of pleasure and wonderful memories we've had over the last 11 years on our little island on the sea.

[wcrosby]

Originally Posted by m2244

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.
.

I have a Jeanneau 409 that I bought in 2013 and put into a charter program (short Northern season of 12 weeks). I'm depreciating the boat according to IRS schedules of 10 years -- and hoping to get depreciated value when I sell it at the end of this charter season.

I basically assumed that I've lost about 40% of value -- but I've also had the use of it for 5 years, and gotten five years of charter income from it.

[Lake-Effect]

Other considerations when considering a boat's 'depreciation' - fungibility, which means how quickly an asset can be exchanged for value. It's of little use to know 'depreciation' when you later find there's no market for your boat when you hope to sell it. Who can predict the boat market 5 years from now? It's easier to buy a boat than to sell one, usually.

I totally consider that a boat is strictly a discretionary purchase... but for those of us who love it, it's a great use of discretionary funds.

The good news is that it's not necessarily a rich person's hobby. Micro-cruisers like ours (19' to 22') can be had for $2k+. Our total annual cost of owning and using a boat is less than what the average smoker pays for smokes in a year. There currently seems to be a small flood of good condition boats in the 25' to 30' boats, in the range of $4k to $15k. And of course, you can spend more to get bigger/newer/nicer.

[barnakiel]

Short method: Type any long production run boat into yachtworld, select 5 y.o. ones, then 8 y.o. ones, make averages, compare. Bingo.

Long answer: past 5 years, value loss slows down. I would make a wild eduguess of 15% per 3 years, give and take 5%.

We have had our boat for 15 years now. We can re-sell her at what we paid for her (in nominal, not adjusted, terms). The trick is she was 20 y.o. when we got her.

b.