When does a boat become 'old and uneconomic'

[GrahamM376]

the important equation is your annual expenditure against the value you get from the boat - plus, of course the imponderable of the opportunity cost - what else would you do with the money (including the present capital value) that would give you greater perceived value.

I have mixed feelings about the boat these days. Got to the point where annual maintenance is a chore and in effect the boat has become a floating caravan. Cost isn't important, it's already passed its main depreciation age. Getting a bit tired cosmetically down below but I just can't be bothered scraping off around the galley and chart table and revarnishing. If I did sell, what would replace it as I don't want to sit in an apartment or villa all day.

 

[William_H]

The first premiss that "A boat becomes uneconomic" is missing out on the end of the premiss. I ask "uneconomic" for what?
Now if you were running a yacht charter business then there is a pretty clear standard of condition required by customers and competition. Then clearly a boat can become uneconomic to maintain to that high standard compared to the cost of selling and replacing new. But as pointed out in so many posts for us mere mortal private pleasure boat owners the standard of condition demanded is a variable. The cost of maintenance can also be a variable if you do it yourself and depending on whether you enjoy doing the maintenance. To confuse any decision it is also a pain to sell a boat and purchase another. On the other hand if you pay to have all maintenance done and you demand perfection of condition then yes a boat will quickly become uneconomic compared to buying a new one.
Now these comments a re all based on a well built GRP hull. If you go wood or metal the condition could deteriorate to a point of uneconomic to just keep it floating.
So uneconomical becomes a matter of personal preference or emotional decision and for me will never come. I have had the boat for 35 years I enjoy the maintenance, costs are small and my son will slowly take over the boat as he loves it as much as I do. olewill

 

[jordanbasset]

I have seen some 30 year old, some times described as quality boats, in terrible condition and some 30 year old ''AWB'''s in pristine condition and vice-versa. It depends on the TLC they have received during their life. I do suspect the more expensive boats do get a little more TLC on average and so do look a little better on average as people want to protect their investment and can do the work themselves and or can afford to get it done

 

[JumbleDuck]

All this, and the posts so far illustrate the point I made at the beginning - the important equation is your annual expenditure against the value you get from the boat - plus, of course the imponderable of the opportunity cost - what else would you do with the money (including the present capital value) that would give you greater perceived value.

And whether you even have the money in the first place, For many people it's not a matter of "What shall I do with that spare £100k?"

 

[Momac]

I think a lot of owners who party on board, either for pleasure or business purposes, might not agree. A weekend cottage in a posh area of the coast probably costs a lot more than many boats do.

The boat opposite me has not moved for over year. Nor has its owner or anyone else spent more than 10 minutes on it.
Thats what I mean by 'not used'.

 

[Tranona]

I have mixed feelings about the boat these days. Got to the point where annual maintenance is a chore and in effect the boat has become a floating caravan. Cost isn't important, it's already passed its main depreciation age. Getting a bit tired cosmetically down below but I just can't be bothered scraping off around the galley and chart table and revarnishing. If I did sell, what would replace it as I don't want to sit in an apartment or villa all day.

The start of the slippery slope, Graham. At some point you are going to have to face the fact that the boat will lose value dramatically or be impossible to sell (two sides of the same coin!). Uncertainty about post Brexit for Brit liveaboards in the Med - particularly new ones - won't help.

Decisions, decisions!

 

[Tranona]

And whether you even have the money in the first place, For many people it's not a matter of "What shall I do with that spare £100k?"

I thought I had made that quite clear at the beginning. There is no one answer to the original question, because we all have our own expectations and circumstances to consider.

However, there are many people who do, at some time in their life, have such sums available and do have those choices. Otherwise how would boatbuilders exist if nobody could afford to buy their products? Problem for many, though is it comes at the wrong time of life to take full advantage of the freedom it offers.

The main point I was trying to make was that if you do have that choice, over a longish period of time the overall cost of buying an older, cheaper boat is unlikely to be significantly different from buying a new boat. The big advantage of a new boat is that you can to an extent control costs by good maintenance and not messing it about whereas buying an older boat often means putting right all the things previous owners have done before it is to your liking. I apply the same principles to my cars. For the last 25 years I have only bought new cars, and run them for a long time. Our current cars are 2003, 2004 and 2005 and all three have been mostly trouble free, perhaps because they are always serviced as per book and anything doubtful is replaced.

 

[GrahamM376]

The start of the slippery slope, Graham. At some point you are going to have to face the fact that the boat will lose value dramatically or be impossible to sell (two sides of the same coin!). Uncertainty about post Brexit for Brit liveaboards in the Med - particularly new ones - won't help. Decisions, decisions!

It will still sell OK, 376s are still in demand but obviously in common with all similar age boats are a depreciating asset. Being based in EU could be good when selling post Brexit as (hopefully) existing VAT paid boats should retain their status whereas anyone bringing a boat over from UK to base permanently may have to pay it. No problem with my status, have residence in Portugal.

 

[JumbleDuck]

However, there are many people who do, at some time in their life, have such sums available and do have those choices. Otherwise how would boatbuilders exist if nobody could afford to buy their products?

Loans, traditionally.

The main point I was trying to make was that if you do have that choice, over a longish period of time the overall cost of buying an older, cheaper boat is unlikely to be significantly different from buying a new boat.

It's an interesting idea, but I am not wholly convinced because (a) owners of old boats may well be perfectly happy with imperfections and shabbiness (b) a lot depends on whether you want or need to employ people to do any work needed and (c) you admitted that you were ignoring the opportunity cost of sticking £100k into a devaluing asset.

I apply the same principles to my cars. For the last 25 years I have only bought new cars, and run them for a long time. Our current cars are 2003, 2004 and 2005 and all three have been mostly trouble free, perhaps because they are always serviced as per book and anything doubtful is replaced.

I do precisely the opposite. Buy 'em old but in reasonable nick, after the depreciation has levelled out, then run 'em into the ground with routine servicing but no major expenditure and scrap 'em when higher costs loom. My VW Golf has been trouble free, and for the 100,000 miles I have done in it it has depreciated by about £1,000 (that's what it cost me and the scrappy will give me £25 after it has launched the Drascombe this year) and cost £1,000 in maintenance (excluding consumables like oil and tyres). That's a total cost over 100,00 mile of perhaps half what it would have cost me to drive a new one off the forecourt.

The killer is to buy them when they are just old enough for the bills to be coming in (4 years, say) and at the same time just new enough for the depreciation to be signficant.

 

[Little Dorrit]

A friend once told me 'If you're going to fly it, float it or procreate with it, you're better off renting it' Except he didn't use the word procreate.

 

[adwuk]

A friend once told me 'If you're going to fly it, float it or procreate with it, you're better off renting it' Except he didn't use the word procreate.

And did you listen to his advice?

 

[ghostlymoron]

You can't justify the expense of a boat in purely financial terms. You can't put a value on the pleasure that owning a boat brings. Chartering doesn't bring the same pleasure although it's probably much cheaper. It's like Ratty says in wind in the willows "there's simply nothing like messing about in boats".

 

[Tranona]

Loans, traditionally.



It's an interesting idea, but I am not wholly convinced because (a) owners of old boats may well be perfectly happy with imperfections and shabbiness (b) a lot depends on whether you want or need to employ people to do any work needed and (c) you admitted that you were ignoring the opportunity cost of sticking £100k into a devaluing asset.


.

Loans - traditionally - but not now. Most finance houses have withdrawn from the boat finance business and the tightening of rules on mortgages has meant borrowing against the equity in a house is no longer as easy as it was.

It is true that owners of older boats have the discretion to not spend on keeping their boats up to scratch, hence all the clapped out unsaleable boats potential buyers here moan about. Graham is an example of somebody just starting that downward path for his boat. For many people the fixed, non discretionary annual expenditure is the biggest proportion of their total annual cost, and it is the same whether you have a new boat or an old one (although not the same for everybody), and particularly not the same in all parts of the country. However, the majority of boats are kept in the parts of the country where such costs are high, for all the reasons often debated here.

Once again, although one can generalise, individuals find their own compromise and for some doing all their own work is both desirable (they enjoy it) and feasible, but for others it is neither. For example, you just employed somebody to fit your new engine, whereas I fitted my own, and enjoyed doing it. However I am no longer physically capable of doing as much as I used to and part of the calculation for buying a new boat included minimising the amount of physical work I have to do so that I can spend more time actually using the boat.

Opportunity cost is a tricky beast, which is why it is best left out of the equation. In strict monetary terms (the most common measure) it is currently close to zero on a risk free basis. In a more general sense that is, what alternatives are more valuable to you, it becomes more variable, personal and difficult to quantify. It also changes according to your circumstances. So, if the big C had not got me in 2009, I would still have a boat in the Med and would be spending 3 months of the year in New Zealand or travelling. Those options are no longer open to me, so I have a new boat which will hopefully give me 8-10 years of trouble free pleasure.

It is the enormous increase in personal wealth of a large section of the population in the last 30 years that has opened up all this choice and you can see it in so many ways - second homes, boats, collectors cars, travelling, continuous home extensions and updating, conspicuous consumable expenditure etc. This is not a time or place to discuss the rights or wrongs, nor whether it will continue - that is for the Lounge, but it is here, real and underpins the boating world.

 

[JumbleDuck]

Loans - traditionally - but not now. Most finance houses have withdrawn from the boat finance business and the tightening of rules on mortgages has meant borrowing against the equity in a house is no longer as easy as it was.

When I bought mine I investigated a marine mortgage. It was entertaining, because the less you want to borrow, the lower the loan-to-value ratio needs to be. So I'd say - to the website - "Can I borrow £20k towards a £24k boat" and they'd say "No, because if you only want to borrow £20k it has to be no more than 75% of the purchase price."

"OK", I'd reply, "What about £18k towards a £24k boat". "No", they'd say, "because if you only want to borrow £18k it has to be no more than 60% of the purchase price". And so it went on, until at about £10k (I was just doing it for fun by then) their system said "We don't deal with fiddling small change" and refused to quote.

It is true that owners of older boats have the discretion to not spend on keeping their boats up to scratch,

It's not a matter of not keeping up to scratch, just that it costs a lot more to keep a new boat looking new than it costs to keep an old boat looking pleasantly aged.

hence all the clapped out unsaleable boats potential buyers here moan about.

There is no such thing as unsellable boat, just unrealistic prices. Well, mostly. But even that steel hulk in Falmouth is probably worth 50p to somebody. Anyway, it's the sellers who moan, not the buyers. There has probably never been a better time to be a buyer.

Graham is an example of somebody just starting that downward path for his boat. For many people the fixed, non discretionary annual expenditure is the biggest proportion of their total annual cost, and it is the same whether you have a new boat or an old one (although not the same for everybody) ...

Only if once again you ignore financing costs. The fixed, non-discretionary interest or loss of interest on £100k is actually quite significant.

Opportunity cost is a tricky beast...

Perhaps, but the notion that anyone who is anyone has a back pocket with £100k floating-around money in it is a tad fanciful.

It is the enormous increase in personal wealth of a large section of the population in the last 30 years that has opened up all this choice and you can see it in so many ways - second homes, boats, collectors cars, travelling, continuous home extensions and updating, conspicuous consumable expenditure etc. This is not a time or place to discuss the rights or wrongs, nor whether it will continue - that is for the Lounge, but it is here, real and underpins the boating world.

It underpins the boating world in just the same way that the mugs (your opinion may vary) who buy new cars underpin the motoring world. Many people quite logically choose not to buy new; many people quite logically don't even consider it. Your decision sounds very sensible, but only in your situation.

 

[Little Dorrit]

And did you listen to his advice?

Sadly not.

 

[Tranona]

It's not a matter of not keeping up to scratch, just that it costs a lot more to keep a new boat looking new than it costs to keep an old boat looking pleasantly aged.



There is no such thing as unsellable boat, just unrealistic prices. Well, mostly. But even that steel hulk in Falmouth is probably worth 50p to somebody. Anyway, it's the sellers who moan, not the buyers. There has probably never been a better time to be a buyer.



Only if once again you ignore financing costs. The fixed, non-discretionary interest or loss of interest on £100k is actually quite significant.



Perhaps, but the notion that anyone who is anyone has a back pocket with £100k floating-around money in it is a tad fanciful.

Lenders lost their shirts in 2008-10 as they discovered that boats were no longer near liquid assets, particularly when a large number of customers defaulted at the same time. Minimum loans now seem to be £50k and loan/value ratios typically max 60% plus interest rates are relatively high, reflecting the risk attached to the business. Hence little lending against boats.

Dispute that it costs more to keep a new boat up to a high standard. Need for replacements and upgrades is far less over say 10 years and if you start as you mean to go on it is easy. If you let an older boat go, it slips away easily and you end up with multiple items needing replacement and big cosmetic work. That is what buyers complain about - boats turning out to be heaps even though the description is good as the owner still sees the boat as his pride and joy of many years ago.

Not fanciful at all. £100k is not a lot of money, although it may be true that not everybody has the discipline to avoid spending the money they earn rather than saving it. Nationally the saving ratio is historically low and lower than in many other developed economies. Everything I have except for a small amount from my parents (most went straight to the grandchildren) I have earned, invested and saved, starting from nothing. Of course this may not be possible in the future as much of personal wealth of the current mature population is based on property - I bought my first house at the age of 22, and generous (contributory) pension schemes.

Appreciate that others make different choices as they prefer current consumption to future. They may well be right as savings often only become available for consumption late in life.

 

[GrahamM376]

It is true that owners of older boats have the discretion to not spend on keeping their boats up to scratch, hence all the clapped out unsaleable boats potential buyers here moan about. Graham is an example of somebody just starting that downward path for his boat.

One of the drawbacks of living aboard away from home is that pressure is brought to bear not to do some of the smelly jobs, such as sanding off and varnishing. Maybe you have price figures for new boats Bav, Benny, etc. from 13 years ago. At that time, we paid £66,000 for the 376 and could have bought a new basic boat for a similar price. We've since spent approx £20,000 (new engine, windlass, radar, gantry, dinghy and outboard, solar, chart plotter, heater etc) but most of those costs would also have been add-on costs (except the engine) for a new boat. Our boat is worth (judging by recent sales) £45 - £50k but, how much would the new boat be worth now, had we bought one 13 years ago?

 

[adwuk]

Sadly not.

And therein lies the problem. In matters of the heart, my Mrs and my boat, economic rules aren't applied.

 

[JumbleDuck]

Not fanciful at all. £100k is not a lot of money, although it may be true that not everybody has the discipline to avoid spending the money they earn rather than saving it.

And at that point I give up on this one. You're just being silly now.

 

[Focused1]

100k not a lot of money!! Thats crazy! I could buy a boat and sail round the world for that! In all seriousness you buy what you can afford, i cant afford a new boat otherwise I obviously would. I have had 2 boats now, both old, both needing lots of work, brought the boats for a good price and done every single bit of the work myself apart from antifouling, someone does that cheap and theres not a lot to be learned from antifouling. My friend has a almost new bavaria and it falls to bits everytime he goes on a trip. He spends much more than i do maintaining his boat.