Cost of Living Aboard - Maintenance

[seaparrot]

I realize that that there are innumerable factors involved how much it costs to live aboard. I keep reading that some people do it on a few thousand, while others spend 100k. And so forth.

My husband would love to ditch our apartment and move to a boat, and I am rather intrigued by the idea. I love the water and travel. I grew up a home schooled kid so naturally I could picture raising a child, at least for a time, in an unconventional environment. We already live comfortably in 850 square feet, one of which is a bedroom we have reserved in case we have a child.

So we're trying to figure out whether this would be possible and would it would require.

I think I know how to estimate how much we'd spend on ordinary living expenses. I know how to look up slip fees. I even like to think I have an idea of what boat I'd love to find -- a 42' kadly krogen, probably an older one since under 250k in purchase price is more realistic for our income level.

The problem is that I have absolutely zero idea how to estimate the yearly cost of maintenance and repair of a 40' power boat (or a sailboat for that matter). I have not owned a boat before so I just haven't seen the bills or had the opportunity to go . I keep reading that it costs 5-10 percent of the boats "value" to maintain her properly. Do they mean 5-10 percent of the cost of one of the boats new, every single year? The 44' kadly krogen is something like 650k I think, and that's the closest thing to the old kk 42s. So does that mean we'd have to have 30-60k available every year just to keep the boat in repair? (Laugh if you will, but I had rather been hoping that costs might not exceed what we currently drop in rent for our waterview apartment -- $1700/m.)

Any insight about what liveaboard on a boat of this sort really costs would be helpful. I know how variable this stuff us, but I am trying to get an idea of which general financial ballpark we have to be playing in before it becomes feasible.

Oh, and we live in Annapolis, MD.

[GordMay]

Greetings and welcome aboard the CF seaparrot.

Originally Posted by seaparrot

... I'd love to find -- a 42' kadly krogen, probably an older one since under 250k in purchase price is more realistic for our income level...
... I keep reading that it costs 5-10 percent of the boats "value" to maintain her properly. Do they mean 5-10 percent of the cost of one of the boats new, every single year? The 44' kadly krogen is something like 650k I think, and that's the closest thing to the old kk 42s. So does that mean we'd have to have 30-60k available every year just to keep the boat in repair? (Laugh if you will, but I had rather been hoping that costs might not exceed what we currently drop in rent for our waterview apartment -- $1700/m.)

Any insight about what liveaboard on a boat of this sort really costs would be helpful. I know how variable this stuff us, but I am trying to get an idea of which general financial ballpark we have to be playing in before it becomes feasible.

Oh, and we live in Annapolis, MD.

The oft-quoted maintenance cost of 5 - 10% of “value” refers to the purchase value, in your theoretical case about $250,000.
Under that proposition, an annual investment of about $12,500 to $25,000 is expected to maintain the boat in the same condition in which she was purchased. This rule of thumb expenditure generally excludes improvements, accident repairs, and dockage (which might be quite expensive in Annapolis).

[seaparrot]

It is VERY encouraging to read that they are talking about 10 percent of the used purchase price when citing value. That is far more easy to envision, financially.

Ultimately we'd love to break even or save money over the costs of an apartment/condo, especially considering that boats are depreciating assets.

I just ran across a copy of "The Essentials of Living Abroad a Boat" by Mike Nicholas which breaks down some of th expenses. Seems helpful.

Anyone have suggestions for other books, blogs, etc. that one can use to research the costs?

My husband's heart is set on doing this someday, and I'm the financial planner in the family. So I'm trying to create a notebook of data I can use. We're just launching our careers, so I figure we have resources and time to plan possible scenarios, provided I can find reliable data.

[ColdNorth]

Originally Posted by GordMay

The oft-quoted maintenance cost of 5 - 10% of “value” refers to the purchase value, in your theoretical case about $250,000.

...Are you sure? That was always my thought too, but it never really made sense to me; considering the life (and ownerships) of a single example vessel, and assuming selling prices based on 10% declining balance depreciation:

Owner 1: New boat 0 years old sells for 230k, maintenance = 11.5 to 23.0k / yr.
Owner 2: Used boat 5 years old sells for 125k, maintenance = 6.3 to 12.5k / yr.
Owner 3: Used boat 10 years old sells for 88k, maintenance = 4.4 to 8.8k / yr.
Owner 4: Used boat 15 years old sells for 45k, maintenance = 2.3 to 4.5k / yr.
Owner 5: Used boat 20 years old sells for 25k, maintenance = 1.3 to 2.5k / yr.

In those 20 years, if one were to use 7.5% of purchase price (split the difference), a total of 180k would be spent on maintenance, but nearly 50% of that would be spent by Owner 1 in the first 5 years when the boat really shouldn't require any maintenance (short of the basics), and less than 10% of it would be spent by Owner 4, when many major (engine/structural) issues are far more likely to appear.

It just doesn't make sense to me that the cost of maintenance would decrease over the life of the boat...?

[hellosailor]

Seaparrot, some creative searching on the web should turn up some of the many threads in many forums that have been posted about the costs of maintaining a boat. Part of the wide variation in costs depends on how you plan to use the boat. If you stay docked--you don't need sails. If you motor, you need fuel. If you sail regularly, you may need $5000 every fifth year for a basic acceptable set of sails. Or, half or double that, depending on your purposes.

Likewise there's bottom paint and scrubbing, in areas with lots of growth you may need a diver every two weeks to keep it clean--if you want it clean so it sails well. In some places, folks repaint annually, others claim they can get two or more years between hauling to repaint.

Some folks ignore the rigging, others will say it has to be replaced at ten years or else they can't rely on it.

Yard bills, insurance (marinas will require liability coverage, but some folks want to insure their boat while others risk losing it)...plenty of variables. Once you find the threads about them, you can make up your own list of "minimum/maximum/personal" to see how they add up if you go with the bare minimums or something more.

[s/vfootloose]

A lot has to do with the condition when you purchase it, how much work you can do yourself. It's a lot like a house. If you have a dripping faucet and fix it yourself it's .25 hire a plumber it's 100.00. If you have a lot of toys and have all thumbs and hire out all repairs it's expensive keep it simple do your own work not nearly as much

[GordMay]

Originally Posted by ColdNorth

...Are you sure? That was always my thought too, but it never really made sense to me ...
... It just doesn't make sense to me that the cost of maintenance would decrease over the life of the boat...?

Indeed.
I'm not suggesting that the proposition makes sense, just defining to what the 5 to 10% figure refers.

[Pblais]

Ultimately we'd love to break even or save money over the costs of an apartment/condo, especially considering that boats are depreciating assets.

Boat costs do not equate to real estate prices / costs. Hoping and wishing are not a financial strategy. The only thing worse is needing and wanting but not by much.

In the end it depends on the appartment / condo more than the boat. Everthting is a depreciating assest or the whole economy is down the drain. Boats depreciate in real terms like nothing else. As a percentage they are a terrible investment. They always lose money.

[seaparrot]

Originally Posted by Pblais

Boat costs do not equate to real estate prices / costs. Hoping and wishing are not a financial strategy. The only thing worse is needing and wanting but not by much.

In the end it depends on the appartment / condo more than the boat. Everthting is a depreciating assest or the whole economy is down the drain. Boats depreciate in real terms like nothing else. As a percentage they are a terrible investment. They always lose money.

I agree -- perhaps I was unclear in how I worded the statement. I meant that since the boat is a depreciating asset and is a bad long-term investment, we are limited in how much money would could sink into living aboard. To remain financially secure, we'd need enough spare cash to invest elsewhere. We simply can't accidentally stumble into repair and maintenance costs so high that the boat is all we have....

Hence why the idea of spending 50k on maintenance scared me!

[seaparrot]

Originally Posted by GordMay

Indeed.
I'm not suggesting that the proposition makes sense, just defining to what the 5 to 10% figure refers.

I read in the book mentioned above that most cruisers have about 100k in equipment that needs to be repaired or replaced about once every ten years. Hence he said to plan on spending an average of 10k per year in keeping up to speed on. He was not including things like repainting, winterizing, etc. in that number.)

I have no reference point to know if this is accurate, but the explanation makes general sense. It'll be interesting to read and watch over the next few years to see if other's experiences square with this model.

Of course that amount would go up, I'd think, if one started loading a lot of expensive equipment into it, since pricey electronics tend to break down...

[George Wade]

Originally Posted by Pblais

Boat costs do not equate to real estate prices / costs. Hoping and wishing are not a financial strategy. The only thing worse is needing and wanting but not by much.

In the end it depends on the appartment / condo more than the boat. Everthting is a depreciating assest or the whole economy is down the drain. Boats depreciate in real terms like nothing else. As a percentage they are a terrible investment. They always lose money.

I agree that boats are an expense: like interest payments on a mortgage, or rent. You have to pay maintenance and upgrades too.

I hope to manage this by working 10 times more efficiently out of doors, on the ocean, than ashore: that is just my personality. It is possible as long as the net does not get taken over by hackers, too. I can live on board a $50,000 used multihull yacht whereas a house would be 5 ~ 10 X that. Better review writing paper letters against the day the net goes down for an unforseeable future.

Many personal variables that can't be known until done.

[Ex-Calif]

Don't underestimate the boat costs. There are big things and small things. Big things include, mast, engine, sails, standing rigging, electronics. You need to accrue for these expenses as they will all come due with time.

Small things are in the world of woodwork, stainless, sheets and lines, running rigging. Some of these things are due every month. The sea and the weather take a severe tool on untended maintenance items.

Recurring expenses include docking/mooring, insurance and so forth.

I don't think a +42 foot boat is cheaper than a $1,700 condo in the long term. A friend recently replaced two sails on a 41 footer and spent $20,000.

You can skip some of the maintenance and then the boat is worth less.

[GordMay]

Let’s be careful to differentiate between “maintenance” costs and “ownership & operating” costs.

[David M]

Be sure to find a marina that allows liveaboards. Some marinas charge more for liveaboards.

I don't know about your area but around the SF Bay more and more marinas are banning them or severely limiting the number of liveaboards. The marina I am at has banned them. Sneakaboards always eventually get caught. In the long run there is no way to hide that you are living on your boat.

[Pblais]

I hope to manage this by working 10 times more efficiently out of doors, on the ocean, than ashore: that is just my personality.

I've never wanted to work more efficiently. It serves no purposes of mine. Any plan that requires you be 10 times more effective seems optimistically challenged. I would need to be one lazy person to be sand bagging it that much. Personality has it's price too.