Depreciation curve and age related maintenance costs

[tonyh1]

Excuse the niaivity but this is probably an issue many of you already covered.

In our on going quest to find the perfect weekend comfortable live aboard weekender / motor cruiser, we have upped our budget with the intention of getting a bigger boat.

Depreciation seems to be eye watering on newer boats and this has got us looking at older craft where the depreciation curve starts to level off. Of course the worry then is that the upwards age related maintenance curve swallows up (and more) any perceived depreciation savings.

Question then ... Is there a sweet spot? An age where large scale depreciation has ended but large scale age related maintenance has yet to manifest itself or is it then just down to luck?

Been looking at Trader 41 / Nimbus 37 on the trawler style and older Sealine F33 / F34 / Statesmans, older Fairlines and similar.

still probably a long way off yet but inching our way along and picking up knowledge along the way.

Thanks in anticipation.

 

[kashurst]

I take a view of 7 to 10 years. depreciation is mostly (hopefully) over. as long as the boat has been well maintained - and thats the key. Most of the major brands have volvo engines in the UK, so chances are whichever boat you pick the engine model will also be in many other brands and models. You will read on here loads of horror stories about "green anchors" (volvo) or expensive caterpillars, carp outdrives and blown gearboxes. but a well maintained and respected boat will last for years and years - as long as its maintained properly.
Thing to do is think hard about what you really want to use the boat for and how far you want to travel, then find a selection of models/makes that will fit the bill. Narrow it down and then take your time and find a really good example. Try and pick the version with the bigger engines if there was a choice from the manufacturer originally. Sounds a bit mad but the bigger engine has an easier life on the whole and fuel consumption won't vary dramatically unless you are planning on hammering along.

Engine hours can be misleading - a 5 year old unloved and unused boat with 50 hours may sound great but could be a time bomb and need quite a lot of resurecting to get back on form, but a well loved and carefully used one with a 1000 hours will most likely do another 2000 - 3000 hours easily. Boats work best when they get used regularly

Oh yes - travel -- look far and wide for the best example. It might cost you £1K to move a boat from one end of the country to another but it will be well worth it to get the best example you can find.

What ever you decide keep some money to cover the inevitable "surprise". and get a really good engineer/surveyor to go over it. I'm on my 4th boat so far and none have been less than 7 years old with less than 700 hours. My first boat was 25 years old with 1600 hours. bit tatty but never broke down. I have had one big bill in 12 years for a £2K5 gearbox that a better surveyor would have spotted on inspection but lesson learnt.

 

[alt]

Are you looking at fly-bridge only or would you consider sports cruiser?

I used to buy smaller boats at about 6 years old, when the boats got bigger I was happy buying 10 year olds, provided they were in good condition. As luck had it for me, current boat is pretty immaculate (previous owner never slept on it or cooked) apart from 2 small gelcoat scratches the size of a penny

 

[Deleted User YDKXO]

My personal rule is buy at 5yrs old and sell at 10yrs old. Most 5yr old boats are virtually new if they have been well maintained but by then depreciation should be levelling off. By 10yrs old, even though the major oily bits like engines, gearboxes and generators should still be going strong, ancillary components will be starting to fail and require replacement. In the present market, unless you're very fortunate, boats will depreciate at any age albeit slowly for older boats but in order to minimise depreciation, buy a popular model from a mainstream manufacturer

 

[crazy4557]

I've just bought a 12 year old Fairline that's not been regularly used for a few years and experiencing a few teething problems and niggles like both alternators failing, electrical gremlins, stuck float switches etc etc but I bought with the knowledge that these issues can be rectified fairly easily although a bit of hassle.
Point is, I bought an older cheaper boat and my depreciation will be minimal but the hassle factor will be high so yer pays yer money and takes yer choice.

Get yourself a good engineer who will ease the pain, and your wallet

 

[Nigelpickin]

If you look at the banks and what they will offer, (loan to value and repayment schedules), that should give you an idea of the best and worst case scenario from a depreciation point of view...

For example, if the bank will offer a 75/25 loan to value on 12 year repayment terms then you can assume that they see their exposure is mitigated by the 25% 'deposit'.
I think thats about right, you could see 12 month old bank repo 800k boat laid up on a yard on offer for around 600k and not be too surprised. The premium paid for a new boat is mahoosive!

Then you should be going down by around 10% per year until the curve relaxes at around year 10....so said 800k boat might be selling for 250k to 300k in year 10.
What I don't know, (as I have never had an older boat), is how much the cost increases for preventive maintenance, replacements and repairs. I suspect that is is too variable to track and obviously nowhere near the cost of depreciation as described above. I agree with Deleted User regarding the 5 year sweet spot, I've had 4 boats from new and felt that the subsequent owner has been very fortunate to have me run their boat in for them!

But you can't beat that new boat smell

 

[Deleted User YDKXO]

Then you should be going down by around 10% per year until the curve relaxes at around year 10....so said 800k boat might be selling for 250k to 300k in year 10.

I was going to write that you are being a bit pessimistic there but actually I think you're not far off although there'll be a few new boat purchasers on here who might take issue with your figures. In the present market, generally you should be able to buy (and I mean buying price not asking price) a 5-7yr old boat for around 50% of its original new purchase price and then you're probably looking at 5% pa depreciation from there. That all goes to show that boats are a lousy investment and a new boat is a really lousy one

 

[Bandit]

I bought my boat at 6 years now 12 I am making a point of being proactive about maintenance in most areas and keeping on top of the rest, but fact is I paid half the cost of a new one at the time , new prices and spec have gone up, and now approximately it would cost 3.5 times value of boat now to replace it but a replacement would do the same job as current one so its worth spending the increased maintenance and repair on it because its a fraction of the depreciation cost and s fraction of the capital tied up.

 

[blueglass]

By 10yrs old, even though the major oily bits like engines, gearboxes and generators should still be going strong, ancillary components will be starting to fail and require replacement.

that certainly echoes my experience. Regular maintenance will reward you with many years of service on engines and gearboxes (generator another matter for me with lots of problems) but those freshwater pumps, bilge pumps, battery chargers,etc etc seem to have a definite cut off point and although relatively cheap to replace, can be a big hassle factor.

 

[tonyh1]

This is really useful stuff guys. Thank you for the input.

 

[gravygraham]

Looking at your original question Tony, I'd hazard a guess this sweet spot you seek is merely the crossing point of the downward depreciation curve and the upward maintenance curve. If, as I'd suggest they rarely do, these two lines run vaguely parallel with each other that'd be your period to own said boat.

Trouble is, if you buy ahead of the lines' crossing point you get the high purchase cost followed by low(ish?) but increasing maintenance costs, and if you buy after the crossing point you get a less than high purchase cost and bearable but increasing maintenance costs. As I think someone else mentioned, this crossing point is different for each manufacturer, model, and engine set-ups.

Enjoy your boat shopping though. It's almost as much fun as ownership.