Struggling to understand the rule of thumb for boat depreciation

[Imagineou812]

It’s easy !!! When you are in the market to buy, they’re worth aLLLLLLL the money that you have times 3 !!!
But when you’re in the market to sell , they’re not worth anything !!! Welcome to yachting !!!

[jim King]

In terms of depreciation tables, it really only applies if you have the boat in charter and are using it as a business. We have a Leopard 45 in charter with Sunsail and depreciate it in various ways. One is a rapid depreciation which helps keep us in the red and not need to pay taxes on the monthly check from Sunsail. By this method we will end up paying taxes on the boat if and when we sell it at an after depreciation profit. you may be more interested in knowing what your boat is worth at the end of each year and I think previous quotes have nailed it with "whatever the market will pay" You may even make a profit on it if inflation hits and new boat prices go up. As for insurance, you will probably keep the same cost each year.

[Clivevon]

What rule of thumb is that?
Boats are not like cars. Unless you are talking about mass produced average white boats (AWBs) which are 5 years old or less. Otherwise they are all likely to be quite individual in some way. Imagineou812 said: " It’s easy !!! When you are in the market to buy, they’re worth aLLLLLLL the money that you have times 3 !!! But when you’re in the market to sell , they’re not worth anything !!! Welcome to yachting !!!"
That sounds about right.

[joelhemington]

Originally Posted by kmd314

Hi like many threads I am new to sailing and am pondering centre cockpit bluewater cruisers circa 39-43ft, with max budget of $145k.

I have found a 1979 swan that could be a contender but, am struggling to understand the rule of thumb for boat depreciation. The boat was refurbed 2012 to do another circumnavigation so most of the kit onboard is now 10 years old. It passed to current owner 4 years ago for circa $115K and now they asking around $90k for her. I know swans hulls are solid glass and she will need a re-fit but, I am struggling to understand how the value is ascertained in a 42 year old boat as there doesn’t seem to any definitive guides?

As opposed to real estate which tends to appreciate, all boats depreciate especially in the first ten years. High end boats like a Swan will depreciate less and eventually level out (sort of). At 42 years old I think you've hit that leveling out spot with this one. Unlike a lot of older boats, a Swan is always worth refitting and once done, you'll have the boat you need for those blue water adventures. Understand that your budget is not going to allow you to consider a lot of the newer high end cruisers. I'd get the Swan and be happy I found her.

[MJH]

Sailboats are a luxury and only worth what someone is willing to pay. That said, every boat is different. You should decide what you want to do with this dream and then begin looking at boats, lots and lots of them. With used boats, you can only buy what is for sale. A search this month would reveal a selection...next month the selection will most likely be different.

Your valuation of the sailboats you have viewed will lead you to the answer of how much you are willing to pay for it.

High production boats will have more direct comparisons to consider than those of limited production...but you may very well like the latter better and willing to pay the extra for it.

Again, boats are a luxury. The value to you is what you will spend. And don't discount an older boat if it meets your desires...you would be cheating yourself of one of life's greater pleasures.

Good luck.

~ ~ _/) ~ ~ MJH

[StoneCrab]

I don't necessarily agree with those who look at the age of something and assume that it needs to be ripped out, replaced or refurbished. How it was maintained along the way is far more important than age.

How the boat sails is far more important than what amenities have been installed.

If you start with a poorly configured boat or a bad hull, everything could be brand new and you'd still have a miserable boat.

I'd recommend starting with a hull that meets your mission, has a great reputation and then evaluate the systems as needed.

Once you start the refurbishment process it is like hiring a divorce attorney. There is no end to the expense.

There is no perfect boat. Even new boats have imperfections.

[rmhutch59]

The one rule you can always count on is; when buying new, they loose 25% of their value the day you take delivery.

[ranger58sb]

Originally Posted by Shrew

There is no rule of thumb for depreciation. Maintenance slows the freefall, but ultimately the market and how much someone is willing to pay will dictate the market value. There is no formula.

Originally Posted by kmd314

Thanks for the feedback, it now makes sense why I couldn’t find any structured comparison guides

And in today's "Covid-market" (?) boats have been appreciating, at least in many sellers' minds.

Not uncommon recently: Seller determines a likely asking price (usually higher than actual selling price after negotiation)... and then adds $100K to it. Just because. Inventory is low, buyers are sometimes offering full price, etc.

I'd say a combo of market supply/demand... and sometimes greed.

-Chris

[mglonnro]

A straightforward way to estimate depreciation is to

a) list all the components of the boat
b) figure out realistic technical lifetimes for all components
c) estimate the cost of replacing the components at their end of life

There are obviously a lot of market economic (magic) factors that affect the end result, but the system above would offer a kind of technical depreciation estimate.

Easier said than done, of course. For new mass-produced and highly standardized boats, certainly maybe possible..

[goboatingnow]

Never use investment and boat in the same sentence and you’ll be fine

[StoneCrab]

KMD314,

So with all this feedback, what is your takeaway?

There is a variety of answers, many funny or snarky but reflective of the market and experiences. I am wondering how you read this and boil it down for yourself?

Give us your feedback.

[Island Time O25]

With a 40+ year old Swan the real deal killer may be the teak deck. If it's original it will most likely be teaky-leaky so figure on spending at least $20-30K to properly remove it and reglass the deck. Perhaps significantly more given the current materials and labor markets.

Realize that buying a 40+ year old boat you're essentially buying the hull, assuming it has no structural issues. Everything else will either be old, iffy or customized to PO's tastes which may or may not allign with your tastes or your subsequent buyers.

And as previous posters noted your offer must be in the amount which you can comfortably lose as finding insurance a 40+ year old boat for liability only will be a major PITA, never mind hull replacement value, etc. Ask me how I know.

OTOH, sailing a well found 1979 Swan should be quite a pleasurable and rewarding experience, much more so than sailing most 1979 (fill in the blank) boats. So calculate how much it is worth to you.

And as far as refitting 40+ year boat - it can never be finished, it can only be stopped.

[goboatingnow]

I would really be wary of very old boats , ie 40+. the Hull may ( or may not ) be perfect , but everything else will be “ tired “ or on the point of failure. Even high quality brand name boats use largely “ generic “ marine equipment and this will all be on the process of failing. Given the age you’ll be unlikely to get spares and it will all have to be replaced.

There’s nothing worse then a whole string of failures everytime tine you go sailing so you’ll need to comprehensively replace systems that even look tired if not actually failing.

The last thing you need if you want to sail is a “ project “ boat

I sailed very old HRs etc , that had spect long periods underused. Even passage required major repairs. Quite dispiriting and extremely costly once away from base.

[mglonnro]

Originally Posted by StoneCrab

I don't necessarily agree with those who look at the age of something and assume that it needs to be ripped out, replaced or refurbished. How it was maintained along the way is far more important than age.

Indeed!

Still, sailboats are filled with components that really do degrade and really do have to be either replaced or refurbished at some point.

Sails, for example. In my own depreciation model, I'm using a conservative 5 years as the "technical life" of a (budget) cruising laminate jib. It might last a lot longer (being adequately efficient at doing what it's supposed to do), but, on the other hand, it might delaminate and be "too expensive to repair" even sooner than that.

So, if the sail is bought for $X as new, what would it be worth after four years to the prospective buyer? Or after six?

I think it's not pointless to ask the question and one might even attempt to answer it

(And yes, the sail should obviously be regularly serviced/maintained to get a decent technical life out of it.)

[CarlF]

People forget to factor inflation. In the '80's any good broker would tell you that he could sell your boat for what you paid for it - but inflation was running 7%+

That's one reason that boats from the 1970's and 1980's often sell for about the same price today.