Boat Value

[steveh000]

Hi Guys

Sorry if this has been asked so many times before but i cant seem to find a good answer to this on the net, So i thought i would come and ask some seasoned veterans,

Is there a way to calculate depreciation on a yacht. I am looking at buying the lagoon 440 and would like to know in five years time when i sell her what kind of value it will hold. I know there will be allot of variables associated with this so lets say very good condition with regular services and upkeep over the years,

Any ideas ?

[David M]

I would plot a curve for existing similar sized Lagoons showing what they cost originally versus what they cost now.

You can get this data here: YachtWorld.com Boats and Yachts for Sale

There are lots of other variables such as if they were in charter service and what type of layout they have such as an owner or charter configuration, but I think it would give you a sense of how fast that particular boat is going to depreciate.

I would not give the curve too much credence, but I think that's the best you are going to get. There is just not enough of a data set to get any kind of precision...unlike automobiles for which there are hundreds of thousands available to give you a good data set.

The bottom line is that your boat will be worth what someone is willing to pay for it and not what some book, formula or curve says it is worth when you go to sell it.

[delmarrey]

No offence Stevehooo but it's impossible to predict the value of a boat 5 years down the line even if it's maintained 100%. Boats are like money markets. What may look like a good investment now may turn sour with the world activities.

There is little to no money made on used boats. They are for self gratification

[Therapy]

Originally Posted by delmarrey

There is little to no money made on used boats. They are for self gratification

All the salesmen (and women) at the show this weekend told me something different, ie. basically sold for what I paid for it new.

[delmarrey]

used boats!

New boats are profitable if the management is good.

[Tropic Cat]

I would agree with delmarrey, however most cats are made outside the USA. Our dollar is dropping in value making the same boat bought today more expensive than if it was bought 6 months ago.

So, if you're an expert on exchange rates and the value of the US dollar, you can somewhat predict a 100% maintained boats future value.

[Therapy]

Originally Posted by rickm505

So, if you're an expert on exchange rates and the value of the US dollar, you can somewhat predict a 100% maintained boats future value.

That kind of rules me out then.........and everybody I know..........and just about everybody else too I guess.

A crap shoot like the stock market then huh! There are alot of brokers out there that are experts.

[Tropic Cat]

Are you looking at US made boats or European cats?

[fastcat435]

In general your cat will depreciate with 5 % a year if well maintained and not chartered . these are our fiugures that we calculate with and they have worked over the last 10 years. a Lagoon is a popular boat with limited maintenance so she should keep her value reasonable well.

[steveh000]

Thank you for all your answers,

All have been very helpful

Thanks

Steve

[TaoJones]

Originally Posted by steveh000

I am looking at buying the lagoon 440 and would like to know in five years time when i sell her what kind of value it will hold. I know there will be allot of variables associated with this so lets say very good condition with regular services and upkeep over the years,

Any ideas ?

You are correct that there will be numerous variables, Steve, not the least of which will be the fate of the American dollar over that time frame.

The USDX (US Dollar Index) stood at 120.59 at the close of the month of January, 2002. It closed the month of October, 2007 at 76.46. That's a devaluation of approximately 36.5%.

So, if a person had bought a vessel for, say, $100,000 on January 31, 2002, and sold it for $100,000 on October 31, 2007, his boat maintained 100% of its "value," right?

Wrong!

The $100k he received for the sale of his vessel in late 2007 will only buy about 63.5% of what the $100k he spent in 2002 would have bought.

To have the same purchasing power his $100k had in early 2002, he would have to receive almost $158k for his vessel in late 2007. And since the Lagoon 440 is several multiples of $100k, well, you do the math.

Not to be overlooked, either, is the huge opportunity cost of putting $100k into a boat instead of, for example, Norwegian Treasury Bonds or gold.

Of course, buying a boat will never make economic sense, so sell the intangibles hard if you're trying to justify it to your significant other.

TaoJones

[Therapy]

Originally Posted by TaoJones

Of course, buying a boat will never make economic sense, so sell the intangibles hard if you're trying to justify it to your significant other.

TaoJones

Yes of course.
Thank you.
It is difficult for me to follow numbers.
Intagibles are easy.

For myself, I am trying to find out if some of a boat in charter will pay for itself, ie me not having to pay the note some of the time.

If one paid half down, say 250k and put it into charter for 5 years, would it be paid for at the end?

[swabbmob]

TaoJones,
I may be off base, but your response may only be valid when considereing exchanging currencies to purchase an item. You comment, though sounded more like the impact of inflation, which we have not experienced in the US.

Regarding the devaluation of the US dollar, I think that our government and federal reserve are allowing it to drop for the benefit of the overall economy. I would be very surprised if it continued to fall at the same pace for a long time into the future. No doubt about it though, the dollar devaluation just caused the price of Canadian and European boats to skyrocket to the point where most of us can only shop in countries pegged to the US dollar. I would think that will have a beneficial impact on US sellers - more competition for US boats.

[TaoJones]

Originally Posted by Therapy

For myself, I am trying to find out if some of a boat in charter will pay for itself, ie me not having to pay the note some of the time.

If one paid half down, say 250k and put it into charter for 5 years, would it be paid for at the end?

I doubt it, Therapy. You're asking if you can reasonably expect to net $50k/year to apply to the principal balance on your vessel.

Most charter companies don't leave that much on the table for their "owners." And even if it were to happen, don't overlook the expense of refitting your vessel after five years in charter service.

One should keep in mine, as well, that we are heading into an economic downturn, and factor in the effect of that on charter demand in one's chosen cruising grounds.

One of the best websites I've come across that deals with this whole question is The Usual Suspects - Caribbean Sailing Adventures. The site's creator does a very thorough job of analyzing the numbers that must be reckoned with when contemplating placing a vessel in charter.

TaoJones

[Therapy]

Originally Posted by TaoJones

I doubt it, Therapy. You're asking if you can reasonably expect to net $50k/year to apply to the principal balance on your vessel.

Most charter companies don't leave that much on the table for their "owners." And even if it were to happen, don't overlook the expense of refitting your vessel after five years in charter service.

One should keep in mine, as well, that we are heading into an economic downturn, and factor in the effect of that on charter demand in one's chosen cruising grounds.

One of the best websites I've come across that deals with this whole question is The Usual Suspects - Caribbean Sailing Adventures. The site's creator does a very thorough job of analyzing the numbers that must be reckoned with when contemplating placing a vessel in charter.

TaoJones

1 I have sort of noticed that. Car salesmen sort of.
2 I believe that for sure. Got any good stock tips?
3 I read that a long time ago and all the year updates again tonight. I remain confused.

I simply cannot understand numbers or tax terms or theory and a lot of other things.

And I know no one I can trust. <edit> and here I am on the internet!!!

I suppose I should stay away and just find the Gemini. And maybe put it in charter here in Florida (close by) for the 2 years that I think will have to pass before I can leave anyway.

Thanks.