Boat depreciation

[Refueler]

My tip when shopping for a boat is to look with your head, then buy with your heart. A boat that ticks all the boxes, but doesn't have that something that makes you want to be aboard isn't the right one. The right boat somehow winks at you and says "buy me", even if she does need a bit of TLC. Having said that, a project boat is a bad idea unless you want to spend all your time and far more money than you expected working on it instead of sailing.

Something I have said for years ... a boat can tick all boxes - but at end of day - its that inner feeling ... can you live with it ..

Good example is last year ....

Locally is a good boat 31ft .... sensibly priced but I know seller will accept offers. It would do all I want ... but I just could not get inner voice to say yes.

Went over to Sweden and looked at a couple of boats ... 31ft and 33ft ... both again not so bad on price ... ticked the boxes ... but still that 'inner voice' was not saying yes.

Returned to Sweden couple weeks later ... stepped onto the boat ... I just KNEW I was going to buy it ... it literally did not matter if there were things to do .. my 'inner voice' just screamed at me .... YES. The two guys with me who had looked at the others .. without any prompting or comment from me - thumbs up ..... took about 3 mins flat .... but of course dragged out the discussion on price etc. Payment was made that day ... and we stayed on board ready to sail back across Baltic next day.

Regretted ? No Way !! OK - so electrics is a mess ... self-tacker jib needs sorting ... short piece of mainsail leech stitching has frayed .. needs 240v installed ... swap out old heater ... but the boat itself is A1.

 

[john_morris_uk]

... and we stayed on board ready to sail back across Baltic next day.

Regretted ? No Way !! OK - so electrics is a mess ... self-tacker jib needs sorting ... short piece of mainsail leech stitching has frayed .. needs 240v installed ... swap out old heater ... but the boat itself is A1.

Congratulations on your boat purchase. And the items you mentioned that need sorting sound like everyday maintenance and upgrade to me. We live on our boat some of the year and it’s pretty well sorted but I’ve still got a far longer list than that of things to do! Whatever boat the OP buys will need a list of things sorting/improving in my experience.

 

[crown22]

Don't forget loss of interest on the money you spend to buy the boat and pay for mooring repairs etc.Im a boat owning Accountant unfortunately.

 

[Baggywrinkle]

Anyone trying to make a sensible business case for owning a boat is delusional ... the only question you need to ask is can I afford it.

The old saying still holds true .... "If it flies, floats, or fornicates then it's cheaper to rent it."

(PS: That's the politer version)

 

[fjcruiserdxb]

I've been following boat prices for quite some time now and have many boats marked on some of the popular buy and sell sites. I've noticed in the last few weeks that there have been a lot more price reductions than at the same time last year. I don't know if it's a short-term thing, but it's certainly starting to look like it's becoming more of a buyers' market now than it was around the post-COVID boom time.

Same here but only been following since last August. Never saw the crazy prices before. As for where I am looking, prices are 10-20k more than elsewhere. Not selling though. May have to pospone buying till 2025.

 

[V1701]

You'd have more choice if you looked at boats from mid to late 80's on, designs from the bigger manufacturers not very dissimilar to todays, i.e. double aft cabin & aft head. Some of them might have replacement engine/newish sails/standing rigging/electronics so potentially could be a better proposition than a 20 year old boat with original everything...

 

[fjcruiserdxb]

Don't forget loss of interest on the money you spend to buy the boat and pay for mooring repairs etc.Im a boat owning Accountant unfortunately.

I'm not an accountant but I am with you on this. For those who claim depreciation is an accounting tool, they need to understand the meaning of opportunity cost. I am retired and don't want to overpay. Seems many think running costs are just what you pay to run/maintain your asset. Depreciation is a big part of it especially when you buy a newer boat, hence my first post.

 

[fjcruiserdxb]

You'd have more choice if you looked at boats from mid to late 80's on, designs from the bigger manufacturers not very dissimilar to todays, i.e. double aft cabin & aft head. Some of them might have replacement engine/newish sails/standing rigging/electronics so potentially could be a better proposition than a 20 year old boat with original everything...

Thanks but sticking to newer boats.

 

[Tranona]

I'm not an accountant but I am with you on this. For those who claim depreciation is an accounting tool, they need to understand the meaning of opportunity cost. I am retired and don't want to overpay. Seems many think running costs are just what you pay to run/maintain your asset. Depreciation is a big part of it especially when you buy a newer boat, hence my first post.

You cannot consciously overpay (or even underpay). At the point of buying you can only decide based on the value to you at that point. You have no control over what will happen to prices in the future, particularly in these turbulent times. There was a time in the past as mentioned earlier when boats held their capital value (in nominal terms for years. this was because there was a growing market, cost of new boats was rising and inflation (late 70s-90s). That was followed by a long period of low interest rates and inflation, falling costs of new boats and rapidly expanding supply. In this period (2000-2016 or so) new boats did lose capital value quickly - up to 50% in the first 5 or 6 years. Since then the market has changed again and in the last 5 years, prices of new boats have risen by over 30% in real terms and demand has plummeted, particularly in the sub 40' sector. As a consequence boats up to 10 years old are both in short supply and selling for close to their original purchase price. Part of this is of course the covid effect, but that is now mostly out but the fundamentals have not changed, particularly in the UK as we can no longer buy used boats from the EU. The UK market is now effectively a closed market so supply is limited to what is currently here.

In the sector you are looking at it is even worse. See my post#4. I bought 2 new boats, both popular Bavaria models. The first one in 2001 which lost value over the 15 years I owned it and I sold at the bottom in exchange for a new 33 in the last year before new boats started rocketing in price. The final invoice from the factory was just over £100k. I sold it 2 years ago for £90k, one of 4 similar boats that sold at the same time for similar prices. There is currently a similar spec boat but a year older for sale asking £95k and another 2 years older and not quite as good spec asking £85k. To put this in perspective a new similar boat will cost more than £180k. We are back in the late 20th century scenario, for similar reasons - inflation, higher interest rates and limited supply. Structural changes in the industry mean that costs are rising at a greater rate than general inflation (much greater from 2016-2021).

Rather than talking about whether you are "overpaying", suggest you concentrate on minimising running costs over the period of your retirement and ownership of the boat. That was my approach when buying the 33 - maximise my enjoyment out of the boat in the expected period of ownership (5-10 years). Buying new made sense and residual value was really not considered - neither was opportunity cost. I had the money and the boat was worth more to me than the money sitting in the bank earning 2%. (of course things have changed a bit since then). So my advice is buy the best boat you can with all the key expensive bits in good nick. You may have to do a bit of updating when you buy, but you will discover that new bits are out of proportion to value of the boat and it is better to pay more for the boat with better gear. A 5 year old one owner boat like mine was a bargain as virtually nothing went wrong. However things were starting to need attention - windlass seized, wind instrument failed, engine muffler needed replacing, just had a new mainsail etc. But the buyer got a bargain that would give trouble free service for another 5 years before a new round of replacements .

Good luck with your search

 

[jamie N]

I find it difficult to relate the idea of financial sense, and boat ownership. The overhead of any boat can be simply trebled by a jammed reefing line, leading to a written off mainsail, or whatever. Loads of dosh. Then the decision, is it financially viable to replace the sail, furler, mast, taken against the cost of a replacement boat.
If that's the way that you're thinking, you're not really ever going to enjoy your relaxation as it equates to worrying about going faster depreciating the antifoul quicker.

 

[MisterBaxter]

The sweet spot is the boat that you can comfortably manage (in terms of some combination of time and money) to keep sufficiently well maintained that it doesn't lose any value through your ownership.

 

[fjcruiserdxb]

You cannot consciously overpay (or even underpay). At the point of buying you can only decide based on the value to you at that point. You have no control over what will happen to prices in the future, particularly in these turbulent times. There was a time in the past as mentioned earlier when boats held their capital value (in nominal terms for years. this was because there was a growing market, cost of new boats was rising and inflation (late 70s-90s). That was followed by a long period of low interest rates and inflation, falling costs of new boats and rapidly expanding supply. In this period (2000-2016 or so) new boats did lose capital value quickly - up to 50% in the first 5 or 6 years. Since then the market has changed again and in the last 5 years, prices of new boats have risen by over 30% in real terms and demand has plummeted, particularly in the sub 40' sector. As a consequence boats up to 10 years old are both in short supply and selling for close to their original purchase price. Part of this is of course the covid effect, but that is now mostly out but the fundamentals have not changed, particularly in the UK as we can no longer buy used boats from the EU. The UK market is now effectively a closed market so supply is limited to what is currently here.

In the sector you are looking at it is even worse. See my post#4. I bought 2 new boats, both popular Bavaria models. The first one in 2001 which lost value over the 15 years I owned it and I sold at the bottom in exchange for a new 33 in the last year before new boats started rocketing in price. The final invoice from the factory was just over £100k. I sold it 2 years ago for £90k, one of 4 similar boats that sold at the same time for similar prices. There is currently a similar spec boat but a year older for sale asking £95k and another 2 years older and not quite as good spec asking £85k. To put this in perspective a new similar boat will cost more than £180k. We are back in the late 20th century scenario, for similar reasons - inflation, higher interest rates and limited supply. Structural changes in the industry mean that costs are rising at a greater rate than general inflation (much greater from 2016-2021).

Rather than talking about whether you are "overpaying", suggest you concentrate on minimising running costs over the period of your retirement and ownership of the boat. That was my approach when buying the 33 - maximise my enjoyment out of the boat in the expected period of ownership (5-10 years). Buying new made sense and residual value was really not considered - neither was opportunity cost. I had the money and the boat was worth more to me than the money sitting in the bank earning 2%. (of course things have changed a bit since then). So my advice is buy the best boat you can with all the key expensive bits in good nick. You may have to do a bit of updating when you buy, but you will discover that new bits are out of proportion to value of the boat and it is better to pay more for the boat with better gear. A 5 year old one owner boat like mine was a bargain as virtually nothing went wrong. However things were starting to need attention - windlass seized, wind instrument failed, engine muffler needed replacing, just had a new mainsail etc. But the buyer got a bargain that would give trouble free service for another 5 years before a new round of replacements .

Good luck with your search

Thanks for the historical perspective and advice. Much appreciated.

 

[john_morris_uk]

The sweet spot is the boat that you can comfortably manage (in terms of some combination of time and money) to keep sufficiently well maintained that it doesn't lose any value through your ownership.

In addition to reminding yourself that the pleasure you get out of boat ownership has to be paid for.

 

[WoodyP]

There's a phrase used in various projects. Sunk Costs.
Once you have spent the money, forget it. Anything you get back is a bonus.

 

[Bobc]

Thanks but sticking to newer boats.

Look on the bright side. At least boat aren't as bad as horses for upkeep and depreciation. We have both.

 

[jamie N]

Maintaining the value of any boat can only ever be evaluated against other boats of that type or class, and as such be valued against 100% of a concours example, such as with cars, where 'fashion' dictates the price. With a Jaguar Mk2, from being a banger, through to rough examples now starting at £26,000 but the mint condition cars typically £70,000; the concours-ready cars £100,000.
As a car, any Toyota Yaris has greater comfort, performance, braking & handling and is nicer to drive and far safer, but that's not the point, it's the owning of the Jag which costs the money, and with the fickleness of any market, it might fall like a stone as people flock to buy a 2015 Hybrid Yaris (parked on my driveway). The £100K Jag will still be worth the top end of a price at £5k and the rough at £1k though.
As the Bish states, it's the pleasure derived from the boat that counts, be that the pleasure of a broad reach on a sunny day (I don't talk from personal experience), or varnishing, wiring, varnishing or sailing before varnishing again....... .

 

[Graham376]

I gave up considering depreciation many years ago. I paid £66k for our boat at 16 years old, cost when new £73k. Cash purchase so no finance cost to take into account, just loss of bank interest. Have spent around £25k over the past 20 years on upgrades, additions and replacements. Seem to be advertised at around £56k now, but brokers fees will be deducted. One very basically equipped boat sold privately here for €66k last year. Big difference in value of pound over 20 years so, should that be taken into consideration? Just buy a boat and enjoy it

 

[ylop]

Don't forget loss of interest on the money you spend to buy the boat and pay for mooring repairs etc.Im a boat owning Accountant unfortunately.

It’s a wonder any accountant ever owns a boat! There must however be an equation that accountants can use to translate the financial cost to the enjoyment and produce a smiles per pound index.

I'm not an accountant but I am with you on this. For those who claim depreciation is an accounting tool, they need to understand the meaning of opportunity cost.

Then you need to take your smiles per pound index and consider the alternative uses of your money and if they would produce more smiles, or indeed if taking two years to find the optimum priced perfect boat means that you miss out on to years of smiles and since time is never reversible, that is the real opportunity cost!

I am retired and don't want to overpay. Seems many think running costs are just what you pay to run/maintain your asset.

Blunt question - what else will you do with your money? When you are on your death bed will you remember the fun, adventures, etc you had or think well my retirement was not very exciting but my kids will have a bit more cash?

Depreciation is a big part of it especially when you buy a newer boat, hence my first post.

Depreciation is really hard to predict / factor in for boats. My boat is now on its fourth owner. If you ignore the VAT its first owner paid, then it’s actually grown in value over 20 years although not by enough to outgrow inflation. Of course to do that it’s had to have investment in things like new standing rigging, electronics etc. If it had been neglected and no ongoing replacement programme it would be worth less.

 

[Chiara’s slave]

Depreciation is doubly complicated by the vagaries of fashion too. Anyone who bought a CO32 10 years ago is probably laughing. Your general purpose AWB, not quite as good, worthy though the boat might be. Some boats just don't depreciate, either because of classic status, or very short supply and high popularity. Maintenance though, is crucial to that. We got ours well below the market rate because of a lack of maintenance. Of course, we've now spent most of what we saved.

 

[Refueler]

I'm going to upset a few here .....

I have read a few what I term 'Cheque Book' replies .... which only confirms what I have noted over the years - the move from 'Practical Boat Owner' willing to knuckle down and sort - to the 'Cheque Book' solution.

Next - this conviction that 5 - 10yrs you have to replace so much ... Not everyone is pushing their boats hard .. racing or whatever. A boat built for cruising is generally over-engineered, survive many more years than 10 going about its business of cruising very nicely thank you.
My 25ft'r has rigging over 20yrs old ...
The running rigging - I only replaced due to chafe on genny sheets - that was over 20yrs old when replaced ..
Mainsail still same I bought with the boat .... maybe a touch more roach from use than when new ... but she still sails well with it .... I replaced the genny because the UV strip shredded and when removing - I damaged the sail.
Would my lack of replacing gear devalue the boat ... I very much doubt it ... of course those who ask how old are items may try to get price reduced - but then I would walk away ... my price would not be based on trying to be same as market - which I regard as often fantasy land- but priced reasonably ...

Depreciation in boats ? If a production line boat - churned out like hundreds before it and after ... then yes of course .... but a boat built to order or not such a 'Henry Ford' production line job will be what people will pay ... and there are many examples of such commanding APPRECIATING prices.

At end of day - boats are what people will pay. There is no Parkers Guide for boats as in Cars. Trying to say there is - is only talk and no real basis.