buying new vs used

[schoonerdog]

if you had the money to buy used or new, and the new boat would be to exactly your specifications (colors, equipment, everything), and you would be able to make sure that you knew how well everything was treated... how much of a discount would you need to forego that new boat and buy a boat that was two or three years old (where you didn't know how well the boat had been treated, you would have to change things to your tastes, etc).

[ess105]

A couple of years ago I went out and got as many prices as I could on used and new Lagoon 410s and I plotted this on a graph. If I remember rightly, the boats were all in the 0 to 4 year old range. The overall trend was down 6% per year of boat age. There was a lot of variation due to the amount of options on each boat but the trend was there. I think this is a reasonable guesstimate.

Bear in mind, this does not mean the boats are depreciating by 6% a year. This number could be just as easily explained by the boats becoming more expensive by 6% a year and 0% depreciation. The right answer may be somewhere in between.

I voted for 15% meaning I would expect a 2-3 year old boat to be 15% cheaper than the same model new today (not 2-3 years ago).

[douglas family]

2 to 3 years old is to new for me !!

[schoonerdog]

I've sold a cat as well as buying and around 5% depreciation is typical down to about half of their replacement value, which matches your figures. So a person who is planning on buying a new boat and sailing it around the world and selling it in 3 years is looking at say a 500k cat originally, selling it at a price of around 15-20% less and adding a 10% broker fee on top, so around 30% less than their original buying price. So that 3 year trip costs about 150k in just boat depreciation, plus they have to absorb the costs of the marina they are keeping it at till it sells in about 6 months, plus giving it the bottom paint and once over to put it in show room condition...

[Desert Sailors]

Dang.... anything less than 10yrs old would be new for me, cars, boats or otherwise..

[Pblais]

The market seems to take age into account quite accurately. Yes, older boats cost less but they have actually depreciated as well. Lots of factors effect the used market including supply and demand. It would be a mistake to assume any factor that applies to all used boats. Rules of thumb are interesting but rarely specific. You are only buying one boat not all of them. As boats become far away they will cost you more to bring them home and close the deal. Even these factors seem to play out in the supply and demand market factors.

New boats are built to order so you almost always have to take a few things you would not want and add a few on your own as new items in any used boat.

[schoonerdog]

Paul, that's actually the point of this poll, to look at this from a demand side. We already know from a supply side what people want, everyone wants the price they bought their boat for 3 years later. I think demand side dictates the used boat market and psychology plays a big factor regardless of the make of boat, which is what I'm trying actually trying to see. The psychological negative of getting a "used" anything seems to be
about 20%, even if in real terms that 2 or 3 year old boat might be almost identical to the new boat (even factoring in depreciation of some limited lifespan items like sails), which means a savings of 150k to the buyer of a slightly used catamaran 42-44 ft catamaran that probably only has around 10k to 20k of wear and tear. I think this is also why the vast majority of many makes of cats go to charter, this rapid depreciation can break even financially if a vacationer is willing to pay $300 per day per person with the cats being a floating hotel resort(perhaps that's why some of them are starting to look like floating hotels). For expensive owner directed boats, probably there is only a world wide market for 6 or 7 of these to be produced a year, because most people would simply could never want to take that sort of financial hit unless they literally had so much money the loss of a hundred thousand here or there doesn't really matter. For those new catamaran buyers, they have a "price inelastic demand curve", which is a fancy term for they will pay just about anything because they have the money and they want it. There's definitely been a huge upward shift in prices for many new larger catamarans competing at the top end because manufacturers have realized that increasing the boat price 200k simply doesn't make any impact on their demand. Those people buy their boats at huge mark ups in a supply driven market, and then sell them for huge losses in a demand driven market where a different psychology comes to play, those who are looking at what they can get for X amount of money instead of "I simply want to get that". For used boat buyers all used boats are in competition, "why pay 100k more for this 42 ft boat when I can get that 45 ft boat which is only 2 years older for the same amount of money". In Italy you could get a used ferrari for dirt cheap because the people who could afford them only wanted new. Brokers of course will tell potential new boat buyers that they can get the same price 3 years later because supply backlog, but if there really is a supply backlog, producers will make bigger factories to accomodate it and it will disappear.

Wow, that was long....maybe I'm the only one interested in this, but I do find it fascinating...

[Limpet]

Clearly the bubble in the real estate market popped and housing prices have been falling ever since. Especially out in CA. But I'm wondering if there has been a related slow down in the large cruising boat market.
I asked this question of a broker recently and he said there were fewer buyers. Has anyone else seen evidence of a slow down?

[The_Bean]

We have just had the same scenario. We found a 2 and a half year old Cat that was immaculate, but needed a few mods added for our cruising needs and when one looked at everything, a new one was the way to go. Not only do your get to choose everything the way you want it... BUT... all your warranties are in place. This has given us peace of mind. There is nothing worse than spending a heap of money on something... which to you is new... only to find that a week later the radar goes faulty, the VHF gives up the ghost or the watermaker does not work.... and they are all out of their warranty period. The cost to get it all back up and working.... plenty!! This would leave a sour taste in my mouth for sure.
If... on the other hand the used cat has everything you need and everything appears to be working properly.... you can be saving some money. Basically it comes down to what you need and how much you are willing to spend.

[schoonerdog]

Limpet,

I've heard from more than one broker how the boating market follows the real estate market. Back in the early 90s there was a slight down turn in the housing market and you could realistically get a boat for 60% of the BUC value. I think this real estate market is just beginning a downturn and it will be going on for the next several years and boat values will proportionately fall. Many people use home equity (or inflated home equity) for buying boats and when money gets tight, they sell the boat before defaulting on the home (and home defaults are beginning to soar).
In the end it will be a good thing because boat producers will have to become lean again and those buying boats will have good options.

[schoonerdog]

I think Admiral btw is the best value for the money for new catamarans. Good blue water take me anywhere boat for a reasonable price.

[Tropic Cat]

MarineMax Cuts Full-Year Profit Forecast; Shares Fall (Update6)
By Heather Burke

Jan. 8 (Bloomberg) -- MarineMax Inc., the largest U.S. recreational boat retailer, said full-year profit will fall as it spent more on marketing to combat slowing vessel sales.

Bloomberg.com: News

[David_Old_Jersey]

I was not going to respond to this thread cos' I did not initially understand the question......

The boat being "second hand" did not even register as a consideration. IMO the boat is either good enough or it is not. Age is a factor, but by no means the overriding one.

And for me answer is obviously second hand because their is far more £££ value to be had..........as long as you have confidence in your own ability or can afford to get things not 100% right (or a combination of both ).

Unless a builder has come up with a 45 foot boat that fits in a 20 foot berth that also has a kingsized water bed that converts into a seagoing cot then I would be surprised if someone could not find a second hand boat that would meet their own needs that was far far cheaper than a new custom built boat. IMO a modified production boat would not be in the same ball game.

The only "problems" to finding a second hand boat that meets everything you need are time and cost.......and accepting that resale value may not be ideal.

Of course if was not sure of what I was buying (whether a boat or something else) I would be sorely tempted by buying new, not because it is not second hand - but for the feeling that if it is broke someone else will fix it under warranty and feeling sure I had not bought someone else's problems.

New Boats???....... where's my lottery ticket

[Pblais]

But I'm wondering if there has been a related slow down in the large cruising boat market. I asked this question of a broker recently and he said there were fewer buyers. Has anyone else seen evidence of a slow down?

I have a neighbor that now sells trailer-able power boats. Since he also sells cars he can do the whole finance and package the whole works so it is just like buying a car. He thinks he is doing OK but he is new at it. The things I do here are that the low end of the market reacts to the current economic trend. The high end never has been much different. The big used boat market in the middle is full of a lot of variables as it includes the widest cross section of people. They have some money and a large interest. The price does matter but the market is not small. The prices relative to new boats are different by a great degree but also within the whole used market so you can generally find the price point that matches your budget but not always find the boat that you want.

The people that can deal with what they want and what they can afford are not in a bad position, but getting there is not always the easy part. Buyers and sellers tend to work out some arrangement but I don't think it comes down to a specific number. Some boats are more commonly found and so the price is easier to set and accept. Others that are less common have a wider range.

I think for the most part brokers do not set the market nor control it. When the market is working well buyers and sellers are making deals. Any broker that has been in the business long and makes a living knows that. It's not unlike the real estate market where 90% of the properties are sold by 10% of the Realtors. It does not matter what a buyer and seller agree to - if they close the deal.

Bottom line is don't buy a boat you don't like or you can't afford and and don't accept an offer you can't live with. If everyone lived by those rules the market would work as well as it can.

[muskoka]

I just went through the process of mulling over 'new vs used' and decided to purchase used.

We've just bought a used 40' cat of mid-2004 vintage. I know for a fact (I know the local dealer) that we're paying 75% of what the Owner paid and about 70% of what a new 2007 model would cost.

We're saving + $120K by not buying new - a reserve more than adequate to deal with 'wear & tear' incurred by a lightly used 2 1/2 year old boat (this boat has only 50 hrs on the engines!).

I can't imagine any rationale by which purchasing new would make any financial sense. But then, I also refuse to purchase new cars or new houses.

I've heard it said that the only people who should buy new are those who can pay cash. I agree with that!

Cheers

PS - I think the health of the real estate market is very much correlated to yacht & luxury car prices. We bought our first yacht here in HK just after the big crash in '98 and the asking price was reduced by 35% over the few months we'd been looking at boats.