Depreciation of second-hand yachts

[Vid]

I'm beginning to think seriously about getting a smallish, older coastal cruiser as a first boat (something in the £15-25k range like an Elizabethan 29 upto a Moody 30 or Nicholson 32). Assuming that I maintain the yacht in proper order, am I likely to experience much, if any, depreciation over a 5 year ownership period? Would it be more likely with an equal cost but newer and less renowned (eg Jeanneau Fantasia if that's not being too unfair).

Another option would be to go for a newer yacht and charter it out, the income off-setting the additional loan costs, but then what would be the result after 5 years of chartering?

Thanks for any thoughts.

 

[tcm]

Depends on your use of the boat, IMHO. The charter boat option is quite diferent from outright ownership - none of your niknaks on board and no casual weekends here and there. Expect engine hours to be towards 1,000 per year (!) and sails etc needing replacement.

At the 15-25k level - chosen carefuly I think you're right that they don't depreciate much. They're cheaper in france or spain - we meet happy chaps who buy in spain and sailem back to sell in the uk.

 

[AndrewB]

In the past, GRP yachts over 10 years old have seen very low rates of depreciation, if properly maintained. The best boats in this regard tend to be those which are well known and were saw a respectable production run when originally built.

However ...

(1) The last few years have seen the influx of some very low priced new production-line yachts from builders such as Bavaria and Beneteau. A large fall in the price of new boats now is bound to affect the future second hand market.

(2) Some yachts acquire a cachet at certain times - the Contessa 32, Fisher yachts, Rustler 36 spring to mind. Second-hand examples sell at a premium compared with others of similar specification. If fashions change such yachts may not hold their value so well.

 

[Guest]

in the past, we have seen low rates of nominal depreciation (ie in £ notes) and even appreciation. however, this has been in a higher inflation environment, so you can expect in the future to get rather less in £ for your boat than you paid for it. how much depends on the condition, the equipment, and above all the popularity of the model concerned.

after all, there is no rational reason why cars should depreciate and boats not do so. they both wear out - boats simply take longer.

i suspect the answer to your question is to buy a slighlty scruffy popular boat cheaply , apply some tlc, and sell in the uk at a higher price.

an accountant would say that chartering is almost always cheaper than owning, but british industry is run by accountants and look where thats got us!

if this is your first boat, buy something easy to re-sell. you are unlikely to hit the bullseye first time round. so no one offs, home builds etc



<P ID="edit"><FONT SIZE=-1>Edited by howard_easton on Tue Apr 30 19:24:06 2002 (server time).</FONT></P>

 

[david_e]

I feel (I don't, like many others actually know) that you could suffer a bit more than nothing on a yacht in this price bracket. They will be quite old and in 5 years, significantly older. We are only just into the new millenium and a 1990 yacht is thought of as 10 years oldish. There is no logic to this just human perception. Give it 5 years and anything with '70 in it will seem ancient. This will be exacurbated by the influx of new cheap imported boats ageing and being sold off putting further pressure on those boats down the line between yours and these (and there are plenty of them about).

Then again you might not, the dep on £15k should be less than £25k but it does depend on what you buy. Stick to a main stream boat as others suggest.

 

[BigLes]

If depreciation is a concern have you thought about a boat share. A half share will have the depreciation liability. Equally maintence and running costs are halved. I know one or two people who have shared quite successfully.

 

[jonjo]

Renovation costs for that 30 year old Nich 32 (or similar) will far outweigh the issue of whether you maintain value or instead suffer some depreciation in absolute pound note terms.

I am beginning to loose count of the boats I have seen of this age and there are many terrible examples that will immediately gobble up another £10k before they become fun to own.

From my experience I am beginning to see a pattern of 70 something owners retiring from yachting and who somehow fail to see that their yacht has become tired looking, under equipped and marred by a collection of 10 - 20 year “luxury” bolt-on gadgets that now have to be ripped out.

My advice to the original poster would be to buy something smaller, newer and of a popular design. Gain experience with this then trade up.

 

[halcyon]

Wonder if the market will split, traditional, ie boats with sailing / racing qualities, and modern ie appearance / trendy.

With the growing number of new first time buyers, and the growing number of cheap new yachts what you buy is getting more important. You buy a 10 year old Janneau today, in 5 years you start looking at a 15 year old Janneau, and a 5 year old Bavaria, which is your new marina based owner going to look at, particularly as money spent on a first boat grows.
On the other hand the person that buys a Nich 32 is not going buy a Bavarian, so the market for traditional boats may well remain constant as it is a limited pool of boats.



Brian

 

[ParaHandy]

There is a v. good booklet published by RYA called Buying yr 1st Boat ..or similar title.. and if it's no longer in print you are welcome to my copy of it. It covers all the points you raise and more. The book confirms howard_easton's advice which is to buy the scruffier boat and apply tlc.

Boats of that age mostly appreciate in *real* terms and, if you look after it, you may indeed get your cash back (ignoring mooring costs, maintenance etc etc etc!).

 

[chippie]

I think it is easy to under estimate how much time it takes to do that tlc.
If it is mainly cosmetic you may be ok. I have found that just trying to keep ahead of the routine work quite a challenge.-You know, the weekend work that has been so well planned has to be cancelled because of the weather; and then the next weekend too!
I have found that I have tended to go sailing and only doing what has to be done , and leaving the rest for the (now imminent) refit.

 

[jonjo]

> On the other hand the person that buys a Nich 32 is not going buy a Bavarian,
> so the market for traditional boats may well remain constant as it is a limited
> pool of boats.

The pool of boats might be constant but will market demand remain that way? The type of 40 something person who tip-toed with reverence around a boat show Nicholson 35 in 1973, is now retiring from sailing.

Today's 30/ 40 something is more likely to select a yacht design based on a recent charter holiday experience in the Med. (humour opportunity!)

 

[tcm]

Re: Humour opportunist

Oho, my choice of sailboat will be based on a charter holiday will it?

In that case it wil be wide, and have as much white plastic as possible. The primary cockpit equuipment will be drinks holders, as well as little blue cushions. It will have an autopilot, which won't work. |It will have two buckets on board, and three very worn warps each 3-5 metres long. The tables will be worn, but the navigation table will be pristine. The whole of the saloon and rooms will be lined in teak-like wood, only the occassional dent and dodgy varnish confirming that it is indeed real wood veneer. If the bimini is down, then I'll know that the cover itself it worn thru by not using the topping lift. I won't go on a sea trial, but I will count the spoons very carefully before purchase.

 

[billmacfarlane]

Isn't it amazing how times change ? Not that long ago a 29-32' boat was regarded as a good size cruiser now they're regarded as smallish.
If you plump for an oldish Nick 32 , Contessa etc. , regardless of what you pay for her , I'd expect you'll have a lot of tlc and maybe more to do . A very thorough survey will be needed to identify the cosmetic and/or necessary work which will obviously add to your budget. Whether you can recoup this cost in 5 years time is debateable. You might have to put it down to running costs. You should sell the boat OK as this type of boat has a niche market .
Buying a Jeanneau should reduce your maintenance costs but due to the state of the market , I'd expect a bit more depreciation , but whether the total cost including maintenance differs by much I'm not so sure.
I personally wouldn't look at the charter option. The value of the boat will probably half in 5 years and regardless of the maintenance already done , you'll be looking at a boat a lot older than a typical 5 year boat.
What I find interesting is that you talk about costs etc but not a shred about what style of sailing you enjoy and type of boat you actually like. You can't really compare a Nick 32 against a Jeanneau 28 , they're chalk and cheese. Wouldn't it be better to concentrate on the type of boat and style of sailing you like , choose 2 or 3 models to look at , then make a choice based on your budget ? Boats aren't really an investment more of a glorious folly really , and whatever style of boat you go for , the eventual money difference will not be great , so why not go for the boat you like ?

 

[jamesjermain]

The influx of cheap, new boats is having an impact mainly on the nearly new market of other, popular production models and there are many owners who bought two or three years ago who are finding the hoped for resale value of their boats is higher than the cost of the equivalent model new.

Also suffering badly are the former 'blue chip' models such as popular British designs from the eighties and nineties.

Early eighties and seventies models, except those which tend to attract a premium, will probably hold their value on the basis that there's nowhere realy for them to fall. But beware, you may not lose much in resale value but you will have to spend a lot on maintenance and refurbishment. I incline to jonjo's view rather than ParaHandy's. The belief that there was a golden age of boatbuilding and everything from the sixties and seventies was 'properly designed and built' is simply not true. Production boats from this era LOOK incredibly badly built and finished to the eye of someone used to today's computer cut joinery. Original equipment will be very tired and inefficient and there is likely to be a lot of stuff on board which is well past its sell-by date will have to be replaced.

You may be lucky and find such a boat which has been completely overhauled - professionally - and fitted with up to date equipment. Even so, there is no getting away from the fact that the underlying structure is now 30 to 40 years old and won't last for ever.

JJ

 

[zefender]

Re: smarter charter ..

And the inflatable won't stay that way for more than about two hours - just enough to produce wet bums returning from the taverna.
The outboard (if you're lucky enough to have paid the for this optional extra) will rip the skin off your fingers as you furiously, and vainly try to start it.
The main engine will drink more oil than fuel
The log will ALWAYS be stuck (charterer inevitably says that it will clear itself once clear of the harbour)
The cockpit speakers won't work
The rain forest growing on the keel and undersides will be explained as a new form of insulation
The shower will be one of those silly black plastic bags - sorry 'solar showers'
The anchor chain will make hands and clothes an interesting morrocan hue
The fridge will pack up after about 3 hours use
The welcome bottle of wine will bring you back to Domestica wasn't just a household cleaner
The sails will have a flabby/flappy quality about them
The cockpit lockers will have 10 flippers - each of them different
The depth sounder will have been offset to 4 metres below the keel

...oooh I'm missing it already!

 

[zefender]

Re: New for old?

Sorry about the above thread drift!

This month's issue of PBO has an article about someone who bought an old Sadler 34 and spent an awful lot of money doing it up - apparently to 'new' standards. My own view is that it just looked like a smart old boat, but still.. They claim however that in, say 5 or ten years time the Sadler will prove to be a better buy than a new boat. I'm not so sure. I think the 'classics' like the Contessas and others will always have a following but times do change and tastes these days are firmly in the space/accomodation camp. I'd be surprised if this reversed in future years. I'm also not convinced that depreciation levels on the new 'europrod' boats will be as bad as many predict.

 

[ParaHandy]

The problem with a post like this is that you don’t know the boat-fixing skills of the poster. A brief resume would help eg run a motor-bike (knows about engines, maybe), painter & decorator (should be OK with grp), can sew buttons on shirt (OK with upholstery), can programme video (OK with gps) etc

My friend has a Nic32 with a blue hull. It is a gorgeous boat. But, there’s a cunning and devious skill to keeping her afloat. This boat is kept up North and living in the South, I (willingly) get the job of finding spare parts for it – not often I have to say but when they are required, very difficult eg B&G circa 1975 analogue wind indicator or Watermota gearbox parts. My point is it can be done and at surprisingly little expense but a lot of time.

So, Vid, take JJ’s advice and sling out all the gear that’s past it’s sell by date. Somebody will be grateful for it! But, you don’t have to. In fact, I think such advice misplaced as modern gear is both over sophisticated for a small yacht and can become redundant remarkably quickly (which I think is a disgrace but "good" business) and within your 5 year time span.

 

[bedouin]

Re: New for old?

The problem with 'europrod' boats is that they are built to a certain formula and so they are all essentially very similar boats. What is more they have been so successful that there is very little alternative until you get to premium brands (v expensive).

Unless you take the view that the modern boats are in all respects better than the classics of the 70s and 80s then there will always be a demand for that style of boat. That means that anyone who wants the handling of a 'classic' will be forced to buy secondhand - which should keep s/h prices stable, it may even cause a modest rise in value.

 

[Vid]

Many thanks for all your thoughts and valuable suggestions. To provide a little more information I am relatively new to sailing and am looking to progress beyond current dayskipper level. I guess I need a small, simple yacht on which I can learn the essentials and hopefully get some useful experience of skippering, different conditions, responsibilities for boat maintenance etc. that I find difficult to get without boat ownership. I anticipate modest sailing to begin with but over the course of a few seasons work up to include cross-channels and foreign shores as I progress through the qualifications. I like the idea of a larger older boat as one that will provide a vehicle to take me through this as I don't want to be on a continual upgrade path that could result from selecting a newer smaller one.

I suspect the answer is to go for the renowned design (ie with a reputation that will last) in the best condition I can afford, and then improve it over time, budgeting for others to do the work as well as myself. It may work out as expensive as going for a £50k boat now, but hopefully it will be worth it!

Thanks again for all the contributions.

 

[LadyInBed]

I had my last boat, which was also my first sailing boat for seventeen years. I didn’t buy it because it was a popular easily sold make, I bought it because it was robust for it's size (22ft) and suited my foreseeable needs. When my family and I finally outgrew it (literally), wanted a new challenge and had the money, I traded up. Incidentally, I got about £500 more than I paid, which isn't bad over seventeen years.
It took about three years to decide and find what I wanted and I expect to keep this boat probably for the rest of my sailing days.
The point is you should buy a boat that suits your needs, not as an investment. If you are not sure what you want, then you need to set down your parameters, look around lots more types of boats, then start looking at the boats of the type you have decided on. As you would with a car, and you don’t expect to sell that in five years at a profit. That’s where people went wrong with houses a few years back.