Catamaran Depreciation Questions?

[Seadog54]

We are looking to sell-up and sail away and are in the process of detailled planning. We have chosen a short wish-list of Cats which fit our criteria. Some are truly well out our price bracket, now!? But, if we can calculate how much year on year that the main production cats depreciate we could end up buying more boat for our bucks so to speak. The wish menu is from Lagoon, Fontaine Pajot, Broadblue. Can anyone suggest an annual depreciation rate as these cats seems to hold their market value quite well?

[dan360]

Well as you have many owners in this forum you may get the rose tinted spectacles version as we all like to imagine our boats retain their value :-)

That said, I do think that Cats retain their value pretty well. I personally have 10% depreciation, and 10% maintenance built into my budget. I think over time depreciation will decrease as a percentage and maintenance will increase.

[David M]

Like all things new, you take your greatest depreciation hit in the first year and then the slope of the depreciation line very gradually starts to get closer and closer to level. If you are sensitive to the cost of depreciation but don't want to buy an old worn out boat then I would consider purchasing a boat no younger than about 7 years old and no older than about 15 years. I think that is the sweet spot between the cost of depreciation and the cost of having to do major replacements and major maintenance.

[SearenitySail]

Originally Posted by David M

Like all things new, you take your greatest depreciation hit in the first year and then the slope of the depreciation line very gradually starts to get closer and closer to level. If you are sensitive to the cost of depreciation but don't want to buy an old worn out boat then I would consider purchasing a boat no younger than about 7 years old and no older than about 15 years. I think that is the sweet spot between the cost of depreciation and the cost of having to do major replacements and major maintenance.

David M makes some good points. You have chosen manufacturers for which there should be a good supply of boats (at least with Lagoon and Fountaine Pajot), so finding a boat shouldn't be an issue.

Of course you will probably get some posts regarding their pedigree and suggestions for more performance oriented, and/or less mass produced, boats. As with all boats, you have to decide both your price point and what you intend to use the boat for.

Other factors that affect depreciation are whether the boat was/is in charter and whether it is an "owner's" model. I think you especially have to consider his last statement if you are considering a boat coming out of charter.

One reason it is difficult to measure depreciation is there is usually a large difference between BUC Value/Blue Book Value and market value. I know for a fact that two Lagoon 35s like mine sold within the past 6 months for about twice the BUC Value. Another presently for sale will likely do the same. (A possible explanation for this, though, is that the supply of "smaller" catamarans (under 38') is somewhat limited--except for the Gemini cats.)

Marshall

[ty.gregory]

David M. I trust your opinion immensely, but I’m a bit confused by your 7 to 15 year old “Sweet spot” recommendation. Maybe I am just not sure what you consider “major replacements and major maintenance.”

After seven or so years, isn’t it time to replace things like sails, electronics, rigging, etc? Some have said that it is better to get an older boat (14-20 years old) where someone else just did the major replacements and maintenance.

This is a subject that concerns me, and I would appreciate hearing more details about all this.

Thank you,

Ty

[Palarran]

I agree with David in regards to the sweet spot. Also, given that you purchased the boat at the correct price, you will find the more you spend in maintenance and upgrades the less you will have in depreciation. I am estimating my total maintenance, running costs, and depreciation at 10% per year right now. So I need to use the boat for a minimum of 4 weeks per year to be ahead of what it would have cost to charter a similar cat.

[ArtM]

I've heard 10 years, which falls in the middle of David's range. About that time, the previous owner would have been forced to replace all the 7 year maintenance items, and the 15 year items still have some life on them.

In the kind of cats that you are looking at , though, things are different. For one thing, there is a constantly large supply of ex-charter boats - these boats go on the market at 4 years of age - and a very small, but maybe growing selection of older boats belonging to cruisers and "wealthy" owners, who tend to hold their boats very dearly.

Prediction: The ex-charter owners will be forced to lower their price considerably in order to sell into a glutted market, and an increasing fleet of older cats will bring more and more affordable boats

[ArtM]

Theory is different than practice.

In practice, you will find several boats that roughly meet your price/condition requirements (after you have downgraded your expectations 3-4 times).

When that happens, you will simply choose between them. You will not have an infinite selection.