Economics of boat buying: New or Old?

[ArtM]

I've given this a lot of thought in the past, and came to this conclusion. It's a pay now or pay later proposition.

A used boat is not a "used boat", but rather a collection of used parts, each at a different stage of wear.

A new boat is no different, except that none of the parts are showing any wear.

Roughly, the pricing of OLD boats can be seen as a function of the ongoing cost to maintain, and the fact that some parts of the boat will always be old e.g. the Hull, the interior, etc will always be "old" short of a major renovation, which is never cost effective.

A BRAND new boat has different problems, as often the manufacture has purchased lower-quality parts in some areas that will have to be replaced much sooner than expected. Still, on the balance, you can expect a new boat to have almost NO ongoing costs in the beginning, and gradually increasing costs the longer you keep it.

This is a potential problem if you have a long term loan and insurance because it means that your total operating cost will keep going UP every year.

With a boat that has already experience most of it's wear, and has already had many replacements, the ongoing cost can be seen as "fixed". If that boat can be purchased for cash at the beginning, then you have a chance of predicting and perhaps moderating the ongoing operating cost. The cost of value depreciation will be much less as well if you're starting with a much older boat - e.g. 30 years old.

[Pelagic]

Originally Posted by Muckle Flugga

D) If you are careful this is a buyers market where you can get some of the best boats ever built by human hand for a tiny fraction of their original price, but EVERY BIT as good as original, and often better, with many superb mods and excellent kit which would otherwise cost you $$$$.
.

This would be my choice, finding a well built and well cared for boat (with good bones)....that has stood the test of time, surveys well and will retain its value if you look after it.

[Muckle Flugga]

Originally Posted by Moreorless

Margaret Mead, a well known sociologist once said, "we need seven different spouses in our lifetime" and although I am not a sociologist, I do think we need at least ten different sailboats during our sailing career. I have bought ten new boats over the past fifty some years, each for a different need or reason. I think Margaret would have been proud of me.

I have lived entirely in a profusion of boats and boating area--the Pacific Northwest with its many sounds, bays, coves, islands marinas and beautiful shorelines. One cannot help wanting a boat as I did when I first starting teaching in 1956. My wife and I, both in our early twenties, bought a Cal 20 and we sailed from one end of Lake Washington to the other, from one end of Puget Sound to the San Juan Islands. We had a one burner portable stove, and water by the gallon containers. A compass and charts. We didn't know better and had a grand time.

The next boat five years later was a Pearson 27 and we got all our money back on the Cal. The Pearson was basic, didn't have anything and we had to buy sails and a bow pulpit as we went along. For me it was a terrible boat--she and I never got along. So we traded it in (for our purchase price) on a Ranger 29 (with an inboard engine--wow!) and we cruised farther but I also started racing. Got to go faster so we traded the 29 in (full credit) on a Ranger 32 (three quarter ton measurement rule) with 7 winches, and at one point eleven sails. It was truly a race boat. But that boat didn't like me but it loved my wife. She taught sailing on it for my university for three years in the summer. PE 407. But it was not a cruising boat and we live in a wonderful cruising area so we sold it, a bit of a lost. She was sad, I was happy.

We found a new boat on Lake Union that had a very low price. Turns out it was a Septre 36 that had been reprocessed from a marina by the bank. The bank just wanted its money back and we obliged them. Really nice boat, great sailor and perfect for crusing and racing but it was hull number one and things just didn't quite fit. Later versions of the boat were beautifully made, but not this one. We kept it five years.

Our next boat was the Hunter Legend 40. The dealer took the Scepter in for full price once again (remember the price had been low) and he said we'd make money if we chartered the Hunter 40. Irrationality fell over my eyes and we bought it. It was a great sailing boat but even better charterer. People like it....and they broke stuff. I did learn how to fix just about anything but I began to dislike the boat. Another divorce was in the makings. At the end of our five year chartering contract we turned the boat in for almost full price on a Hunter 32, really a cat boat with a small jiblet. Very nice boat inside but i couldn't get her to sail. And it was terrible at races, we always came in last. So once again, we traded it in (for full price) on a Hunter 35.5. One of my all time favorite boats.

The 35.5 had a bulb keel with wings and we could not point worth a darn but we were always near the front of the fleet and the marks. And downwind we were exceptional, passing boats on port or starboard. Once in the five years that we had her we won boat of the year against good competition. She was a fun boat to sail.`

But my first mate died that New Years from a stroke and my wife and I decided to go back to cruising. So we traded the 35.5 in on a brand new Hunter 380 that the dealer had just got in. Hunter by this time was really putting boats together well and they were well designed. The Hunter 380 became one of my all time favorite boats and we cruised on it extensively. I had gotten tired of racing and I wanted to cruise, but I wanted to cruise in comfort....showers, hot water, ease of sailing with a roller furling main and jib, open stern (ease of getting in the Avon--I was getting old); it was a wonderful boat, a floating condo and we kept it for nine years, the longest we ever kept a boat. I bought it for 129K and sold it for 121K. It had become too big for me; I couldn't jump down to the docks to tie her up like I had when I was younger. Age was catching up to me. But I still loved that boat. We cruised the San Juan Islands, the Gulf Islands and Desolation Sound. In fact the first day of my retirement was in Nanaimo (BC, Canada) at the Dinghy Dock Pub. What a celebration!

But as I mentioned the 380 became too big for me and I was getting into single handling. So we order from the factory a 2009 Hunter 27 which fits my needs perfectly. And Hunter discounted the new boat for being a loyal customer. It has the sugar scoop stern for easily getting on and off, furling main and jib (and I have the incredible WinchRite power adapter for doing all the work), a marine head, a Webasto hot air furnace (needed in the northwest), custom made companionway doors, and like the last two boats, a three blade Max prop. I looooolve that prop. I power better and smoother, I back like I'm going forward, and I sail faster.

I'm in my eighties now and I still use the boat several times a week but in winter we don't leave the dock. It is my man-cave. I listen to music, read on my iPad, nap (I'm an expert at napping). Sometimes we have drinks on board before going out for dinner. It has a two burner stove but I only make coffee or tea.

For now this is the best boat of all times for me. Margaret, you were correct, I needed more then seven spousal boats, but then I changed a lot over eight decades. I'm not the same guy I was when I was twenty one. It is also interesting how much boat design and building have come over the years. Yeah, I do have my eyes on a new boat but I doubt if I will buy it. My present boat fits my needs.

I hope this provides a different viewpoint. Ten new boats over my lifetime. And we either took a small loss or in some cases actually made some money. It has been fun.

What an absolutely charming, wonderful sequence. Thank you for that, I read it over an early breakfast and it made my morning! Will be thinking of it and smiling as I make my way down to work in the boatyard. Cheers mate!

[exMaggieDrum]

My first of all: I really, really appreciate and like your attitude and approach to this difficult, and emotional, process. I never had, and won't unless I win a gig lottery, the funds to buy a new boat, so that has colored my thinking. But I started with my first boat way larger than "recommended". I didn't, and don't still, have the time to work my way up from smaller boats to one which will take me and the Admiral across oceans. We did take our first 42' boat from WA to NZ, so it worked out for us.

Originally Posted by Alimenos

First of all, a deep-hearted thanks to all who have contributed. I devoured all your replies with the utmost interest.

I would like to add some things to the discussion and maybe clarify my viewpoint a bit.

1) Experience is overrated and there are other avenues to wisdom and knowledge. In fact in some cases it is best to avoid learning by doing and instead learning by analysing, thinking and reading.

To give an example: John Kretschmer in "Sailing a Serious Ocean" gives a story where he once lost a new ship he was delivering due to a faulty through hull fitting and the bilge pumps being clogged by construction debris.

I really would rather not learn something like this through experience and opt for other avenues of acquiring tidbits of knowledge like this.

Experience is overrated but it does change how, IMHO, you approach your first boat. I suggest you take some baby steps, which may be short-lived or hurried up, but which will give you experience with yourself and with your boat. I had zero experience with my boat but I had a clear, rational, approach to develop my experience without losing the boat or any crew.

2) Of course new ships have birthing problems but in the vast majority of cases as far as I have understood, these are of a completely different magnitude and nature than the hidden lurking problems in the second hand market. Surveying a new boat and an old boat do not seem to have the same difficulty while the range of potential problems seems to increase with age.

There can be significant, e.g. lose the boat, problems lurking in new boats. More than one new boat has lost a rudder, lost steering otherwise, lost a motor, had a boat sinking leak, etc. The roots of the problems are not from worn parts, but wrong or poorly installed parts. I've worked in boat building shops and in boatyard maintenance/upgrade shops. Mistakes are common. Workers come in with hangovers and get sloppy. The right experience isn't available and a sub is asked to put in the stern underwater vanity lights (me). It was a difficult job and almost impossible to inspect to see if it was done right with the sealant properly done. I did it right but it would have been easy to do wrong. This was on a $5M yacht. I was very experienced with other things (electrical) and really did understand how to do this job, but it could have been different.

3) "How many sports have you gotten into where the equipment which you first chose, & or was appropriate at the outset, would have served you for a lifetime of doing everything related to said sport?"

Our first boat is still going around the world and should last longer than I will. It was a 1978 boat.

I can halfway relate to this point. I do have some objections though. Firstly sailing isn't a sport for me. It is more of a way of life, or even life itself. The nights in my apartment I dream of the sound of the waves hitting the hull to be able to sleep. If I am sad, I think of sailing close winded to cheer up. So, not exactly a sport.

Secondly, I could take the beat of getting a "startup" bicycle to get into cycling and then discarding the value and getting something better and more fitting. Ships are a bit more costly though.


It seems that in all aspects of life, going through many choices to find what you like tends to be more costly than knowing what you want from the get-start. To paraphrase the old adagio: Think twice, buy once.

Also from an economic perspective, changing preferences creates an economic penalty to the bearer of said preferences.

If you plan on cruising soon, buying learner boats is a non-starter.

4)Losing money (from having to sell the boat) is hardly my concern. What I am trying to find is how to get the best bang for my buck, how to maximize my use value in the longterm, given that my preferences are known and set.

5) Reading Moreorless's story made me think: I REALLY want to avoid all that. "I did learn how to fix just about anything but I began to dislike the boat." & "Irrationality fell over my eyes and we bought it."

Trust me, you're going to do this whether you like it or not. You are right IMO about a lot of things but pretty off on this. New boats are a starting place. And you will be absolutely gobsmacked as to how many more essential items you will have to put in or on your new boat. Much of that you can hire out for the labor. But you'll have to do most of the selection. And then, as stuff breaks or needs adjustment, you will have to roll up your sleeves and learn the hard way, not having had the experience of working on things on the boat before you left.

I am not interested in sailing as a means to becoming a lifelong broker. I also don't like to go through stuff. I drive the same car 12 years now and feel perfectly comfortable with the idea of not getting another one at least until electric cars become the norm. Know thy self and know your needs. Also forecasting and preparing for the future seem like useful traits.

You can do this.

6) The Lagoon Guy. I read his initial post. I could not help but observe the subjective, unorganized and sentimental nature of his post. Honestly, I can in no way relate to him. His post looked much more a cry than an attempt to a reasonable forum discussion. He might be right, he might be wrong, he might have something to say but he hasn't made a good job of organizing and presenting his thoughts somewhat coherently so there might be errors or omissions from his part which didn't make the story cut. Thanks but I won't go into that story.


The question, as far as I am concerned is: Given that one has known and set preferences what kind of boat (age wise) should he be looking into in order to maximize his longterm use value?

As a disclaimer, I have to admit that (in case it isn't screaming out loud) that a) I am an economist b) as such I am hardly inconvenienced by completely unrealistic assumptions.

Once more, I appreciated all the replies and found some pieces of advice extremely useful. Hope that more replies will come!


A Ship might be safe in the harbor, but this is not what ships are built for.
Cheers everybody!

Go for it!!! You'll either get the experience before you leave or after but you'll get it. You can't plan and buy your way to it. You'll just have to do it - good and bad. I don't mean this in a denigrating way, at all, but right now you are an arm-chair sailor of the first magnitude. And what you don't know and/or appreciate can change your life forever. But you'll make it and you'll have a blast (in between repairs and upgrades on your new boat).

[Alimenos]

Originally Posted by exMaggieDrum

I don't mean this in a denigrating way, at all, but right now you are an arm-chair sailor of the first magnitude.

Sorry mate, but this is quite offensive.


denigrate |ˈdɛnɪgreɪt|
verb [ with obj. ]
criticize unfairly;

armchair
noun |ɑːmˈtʃɛː, ˈɑːm-|
• [ as modifier ] lacking or not involving practical or direct experience of a particular subject or activity: an armchair traveller.

Originally Posted by Alimenos

I have acted as a skipper for friends in some charter boats.

I strongly suggest you improve your reading skills or your vocabulary.


As for my sailing experience I am a Greek Licensed skipper with 2000nm under my belt, half of them acting as a skipper. Lacking experience? Surely! I want more of it!!! Inexperienced? Maybe. First class arm-chair sailor? I hardly think so but to each his own.

[Cap Erict3]

Originally Posted by Alimenos

Sorry mate, but this is quite offensive.





denigrate |ˈdɛnɪgreɪt|

verb [ with obj. ]

criticize unfairly;



armchair

noun |ɑːmˈtʃɛː, ˈɑːm-|

• [ as modifier ] lacking or not involving practical or direct experience of a particular subject or activity: an armchair traveller.









I strongly suggest you improve your reading skills or your vocabulary.





As for my sailing experience I am a Greek Licensed skipper with 2000nm under my belt, half of them acting as a skipper. Lacking experience? Surely! I want more of it!!! Inexperienced? Maybe. First class arm-chair sailor? I hardly think so but to each his own.

Ya know 2000 miles is an easy 4wk sail. It isn't ur fault ur young.

I find the sailing is the easy part.

Hopefully your boat choice will work out.

Fair winds.

[exMaggieDrum]

Originally Posted by Alimenos

Sorry mate, but this is quite offensive.


denigrate |ˈdɛnɪgreɪt|
verb [ with obj. ]
criticize unfairly;

armchair
noun |ɑːmˈtʃɛː, ˈɑːm-|
• [ as modifier ] lacking or not involving practical or direct experience of a particular subject or activity: an armchair traveller.




I strongly suggest you improve your reading skills or your vocabulary.


As for my sailing experience I am a Greek Licensed skipper with 2000nm under my belt, half of them acting as a skipper. Lacking experience? Surely! I want more of it!!! Inexperienced? Maybe. First class arm-chair sailor? I hardly think so but to each his own.

Sorry mate, I think I was perhaps over the top saying "of the first magnitude" but I 100% that I did not intend to denigrate in the exact sense that you give. It seems that is what I did do. My apologies.

However, IMHO your skippering experience has not prepared you for your stated goals. You, will IMHO, get the experience you need by doing and not by analyzing. Even the very best sailor with 100,000nm would not be able to find all the flaws in a new or old boat. But they understand that they will have to deal with those. My reaction was to your intent, and atated surety that you will be able to do so, to get the perfect boat. You did denigrate the good advice of several other posters implying that you will do a better job than they, obviously, could not do.

We don't need to debate this. I am sorry I offended you. I used an overly harsh adjective phrase. I am not sorry that I said what I did otherwise. But it's no skin off my nose as sailing life has a way of humbling even the most cocksure inexperienced "skipper". It is a self-leveling lifestyle. When you get more experience you will find that your perfect boat will start breaking the moment you take off. It is a very sad reality, and frankly, it is why so many otherwise really good cruisers quit. It got to me and I had a boat that was prepped to the nth degree. But I expected that. My intent was to prep it so that I would have fewer problems, not none at all.

But, hey mate, go out and show me wrong, and feel free to rub it in my face after a couple of years out and about and I will sincerely suck it up and apologize profusely. If you can do that you should write the next book so that we can all find out how to do that.

I do wish you fair winds, good seas, a good boat, and many happy years cruising. Other than the one comment you didn't like that is what I tried to say before.

[Curious Sailor]

Do what we all do.. Jump in head first, worry about it later... Lol

"A tough decision is only tough until it's made...."

[Octopussy]

The other thing really worth considering is whether or not your going to have to get a note/mortgage on the boat. I am assuming you'll need to if you buy a new/ nearly new boat.

That will seriously limit where you can go in said boat. Furthermore, if you tell the bank you're planning on living aboard, they will likely NOT give you a mortgage. They typically want to loan to land-based people with stationary assets (i.e. collateral).

If you can pay for a used boat, and spend cash to fix it up... you'll be free of a whole host of secondary constraints that you may not be considering right now (including insuring a boat with a significant mortgage... which may also limit you from leaving the contiguous 48).

Cheers,
O
_________
Follow the adventure at:
S/V Octopussy

[Skip JayR]

I think all is said... I'd like to answer such a question little bit more radically:

"On first day you overtake a brand new boat, the value drops down 40%". Its like you buy a brand new car, e.g. you get a Mercedes for 40 Thousand Dollars, as soon you have first 1000 kilometers on the clock, its just 60% worth.

Why ? Because the market is overflooded by used boats. Remember, that we live in a capitalistic system, mostly in this world. That means customers are daily trimmed to buy new things, even they dont need it urgently just to keep the economcial system running.

So if you proof your own understanding about "life time" and your own investment in working daily for bread and butter, it just would be totally nonsense to throw away 40% of your invested life time to work for the sales prize of a new boat.

But its more dramatically. As most people buy the boat privately, its their net income. Let us make an examplle, very simply as I suppose you dont live in a country like Oman where life is "tax free" even with cost free health care system.

In many countries we have an tax rate of 25-35%... so lets take 30% as the average, hypotetically.

... and lets take a sales prize of 200,000 US dollars for a new monohull boat, not a big one, but big enough to go offshore on high seas safely, with fully safety equipment and enough space on board.

200,000 US dollars = new boat inclusive VAT, e.g. lets take 19%
The real value of this boat net is 162,000 US dollars. Thats what you get in real values, on the day of buying.

On 1st day as owner, the value will fall 40% = 80% loss, so the rest value is 120,000 US dollars. That means you made an effective loss related to the material you bought (hull, rigg, sails...) from 162 down to 120 Thousand = 25.925 %.

Sounds bad, right ? - In other words you worked for 80,000 for nothing good. Just loss of your life time. Even you would earn 40 US dollars net = 70% (so you'd have to get paid 57.14 US dollars inclusive tax) having a good paid job as engineer or software progrmmer, it would be 2,000 working hours.

As in most countries of Western world where people can think about such a luxury to change their life style for "living on a boat" with 180 hours working time per month, you'd have lost already 11.11 months. E.g. in Germany we calculate 163 hours per month it would even be 12.27 months, more than one year of life time, being destroyed from one day to the other overtaking a new boat.

So a loss of 2,000 hours x 57.1428 US dollars = 114,285.60 US dollars inclusive tax payment, effectively. That means in real your boat costed you 234,285.60 US dollars (rest value 120 KUS$ + loss of working hours incl. tax). As soon you own it, it has a rest value of 120,000 US dollars. The real big loss is much higher than the prize dropped down 40%. Effectively it is 48.78% ! Now you understand why I call "boat buyers" of brand new boats fools. I think only people who never had to work hard for the cents can throw out (or shall I say drown) their money so quicklyout of the window.

Does that makes sense ? I would say: No... only fools buy new boats as mentioned, the boat market is overflooded with good boats in good conditions. Not because the boats are in bad conditions, very often you will experience the situation, that the boat owner has to retire, and he likes to downsize or even has to give up his hobby because of aging.

I met many boats astonishingly (20% of all boats I looked after) where the boat owner became sick, or even demised... and now the widow, his wife or the children must sell the boat. You can find great boats, if you have little bit patiency.

To get the right boat can take you some time to look at. Dont wonder if you have looked at 40 boats after 1-2 years till you get what you wanted.

The argument that you get something for a new boat is nonse... as every boat must be refitted over times... the salt water and ultra violet light are very aggressive.... all boats are destroyed over time quickly. Most people start with first little refits after 2-3 years, the bigger refits latest come after 5-6 years.

So its more smart to take a used boat of the original size, 10-15 years old, and the former owner already did all the modernisation. Mostly it is not being paid by the potential buyer, as it is normal standard. So easily you can get a boat for 70-80,000 US dollars which would be newly 300-400,000 US dollars... equipped newly at a value of 150-200,000 US dollars.

Watch a cool "living on the boat" project documented fully by a Danish software programmer... he made it very smart... he started small but with the target to expand later to a bigger boat. You can learn a lot from such guys... he bought a sweet cosy boat at a reasonable prize. All videos are in ecellently English.
https://www.youtube.com/user/madsdahlke

Its one of the smartest "living on a boat" projects I have noticed these days... you find some more infos about this boat, the S.Y. Obelix (Model:Albin Ballad) on the blog site: S/Y Obelix

[monte]

Jay your post shows zero real world experience in buying new cars or yachts. Perhaps just regurgitating the myth your uncle told you. Really..40% loss as soon as you drive it off the lot?

[Skip JayR]

Originally Posted by monte

Jay your post shows zero real world experience in buying new cars or yachts. Perhaps just regurgitating the myth your uncle told you. Really..40% loss as soon as you drive it off the lot?

Monte, you let trick yourself so easily ??? use your brain before you talk buffing and yealing around.

An "exaggerated formulation" - as I used it - shall make clearn the situation. Naturally, I have never seen a boat owner who overtakes his "new baby" and sells it next day.

But I have seen many boat owners who dont have the time to use it, so maybe in 1st year they sailed around 2-3 weeks.. and after first year they recognize that it was a very wrong investment. They then will get max. 60% of the prize they paid. So is the reality.

But maybe you are one of these naively guys an owner/broker can trick to say: Here is a boat, now in its 2nd year/season, originally costed 200,000 - never used... and you are willing to pay still 180,000.

That we could call foolish, too. So it does not work.

[monte]

Hehe yes, maybe I'm one of those guys

[malcolmlj]

My experience is that the great divide in boats is not new or old, but mass produced to a price or low volume to a quality.
Compare Scandinavian built blue water yachts to French mass produced marina to marina designs.
The comparison will make my point stunningly clear.

[Windsurfer]

For what it's worth, 9 months ago I was unable to find a lightly used (1-3 year old), 3 cabin, 40 foot sailboat on the west coast of U.S. One did come up, in L.A., one year old, but sold for a discount over new (280 vs 300, approximately) but sold before I was able to get my act together.

At least in this narrow situation, there is no glut of used sailboats, and the boat in question held its value. I have had a similar experience with my 2006 Toyota Tacoma. Traded it in for about what I paid two years later.