How much to pay for someone else's improvements?

[Dockhead]

Originally Posted by Zzmeyer

An unrelated cruisers forum got me thinking. A member had a Cal 46 sailboat for sale for $250,000. He got pounded for it as a number of us noticed that the average asking price for the eleven other Cal 46 was $70,000. His listing said he'd put $500k in a total refit. So, he is really only asking to get about 40% on the dollar what he put in to it. Years ago I did a similar thing. I bought a Kettenberg 38 for $18k, totally refitted it for $75k and after sitting on the market for a year or so ended up selling it for $18k. My son is looking for his first offshore boat. I've suggested he look for an older boat that has a relatively high asking price. Perhaps it's been repowered, rerigged, or rewired. Now if he had the time and desire I'd probably suggest he get a fixer upper, but he wants to go sailing and buying used is his only economic option. In the housing world there are lots of studies as to what improvements get what kind of return. Is there such thing for boats? What do you think are the best ROI improvements, or perhaps of more interest to my son, the worst ROI - let someone else fix it first.

How can you spend $500k on a Cal 46? Really? I just don't believe this is a fact.


Repower: $30 000 (at most)
New mast and all new rigging and sails: $60 000 (at most)

Complete refurbishment of the interior: $15 000 (at most)

Recore a soggy deck: $10 000 (at most)
Peel and re-gel coat hull: $25 000 (at most)

Completely new electrical system: $10 000
Completely new plumbing including sea cocks: $8 000
New tanks: $20 000
New electronics: $20 000


Total less than $200 000, and no one would do it that way with a Cal 46. $500k? I'm not buying it.

[john61ct]

But again, no point pursuing that path, don't want to validate the premise that is even relevant.

The money the PO spent has no bearing on the price negotiation from the buyer's POV.

Only the time & money that spending has actually saved the buyer - that value will vary with each prospect, as will willingness to pay even for that.

Just put in your offer and stand firm, be ready to keep looking elsewhere if the seller is being stubborn. As time passes if it remains unsold maybe they'll get more realistic.

If someone with deeper pockets snags it, doesn't mean that redefines "market value", the silly-high purchases are what balance out the good bargains.

[Dockhead]

Originally Posted by john61ct

But again, no point pursuing that path, don't want to validate the premise that is even relevant.

The money the PO spent has no bearing on the price negotiation from the buyer's POV.

Only the time & money that spending has actually saved the buyer - that value will vary with each prospect, as will willingness to pay even for that.

Just put in your offer and stand firm, be ready to keep looking elsewhere if the seller is being stubborn. As time passes if it remains unsold maybe they'll get more realistic.

If someone with deeper pockets snags it, doesn't mean that redefines "market value", the silly-high purchases are what balance out the good bargains.

Well, to look at it another way -- just try to find a boat with $500k (or even $200k) of recent improvements, THAT YOU WANT TO OWN, for $70k -- you won't.


When I was in the market to buy a boat, 10-11 years ago, with the better part of a million dollars burning a hole in my pocket, I couldn't find a good deal on an Oyster to save my life. Although the Great Financial Crisis was in full swing, there were simply no deals, and sellers were not negotiating price at all. All the boats I looked at were knackered -- not one had been extensively refit and all of them needed a lot of work. Finally I had a contract on one, but the deal fell through because the survey was a horror show and the seller would STILL not negotiate the price.


I finally bought my boat, the Moody 54, and paid every penny of the full asking price, which I was surprised again to find was absolutely non-negotiable, and I was lucky I didn't hesitate, because I later ran into one of the other buyers, who had been willing to pay more than the asking price and just missed putting in his bid by a couple of days. The boat was 8 years old and little used and apparently in good condition, but zero refit or upgrade work, and I soon had a cascade of systems to replace.



MY POINT IS THIS: All the improvements in the world, don't change what boat it is you are selling. Or the lack of any improvements. Some boats are in demand, with more buyers than sellers (Oyster, Moody, etc. less than 10 years old); some boats are not in demand, with many more sellers than buyers (35 year old Cal 42s).





It is easy to say -- buy one of those boats someone has just spent $100k on -- but not many people are selling right after spending $100k, and even less are selling a boat which you want to have. There is absolutely no free lunch in a market for an asset that constantly demands investment, and yet constantly loses value. A yacht is truly a hole in the water you etc. You should never spend money on a boat, whether it's acquisition price or upgrades, which you cannot afford to just throw away. And any upgrades you do -- do them for yourself, not for any future buyer.

[john61ct]

Well put, and yes marques with a following have different market conditions. Location and season can have a big impact too.

My point was just, don't fuss too much as to the actual numbers on what the seller has spent, focus on the **value to you** as buyer of that spending.

[Dockhead]

Originally Posted by john61ct

Well put, and yes marques with a following have different market conditions. Location and season can have a big impact too.

My point was just, don't fuss too much as to the actual numbers on what the seller has spent, focus on the **value to you** as buyer of that spending.

That's sound. And if you can talk yourself into loving a manky old boat which is not much in demand among buyers, one which was irrationally loved by a seller with deep pockets, you MIGHT find something approximating a "bargain", which in the boat world means losing money at a slower rate and/or in smaller chunks.

[john61ct]

“The heart wants what it wants”
— Emily Dickinson

[hellosailor]

"$500k? I'm not buying it."
What, you've never seen bed linen advertised at 1200 thread count? When in fact that really only means 4-ply thread at the usual 300 count, the maximum that can be woven?

Perhaps the standing rigging was bespoke tailored by a Swiss ski lift corporation, and the floors redone by the finest marquetry inlay workmen from Italy.

Or the PO was a total rube and managed to get ripped off that much. Unlikely, but.

Everything is a matter of whether it matters to the buyer. "Brand new Delco sealed maintenance free batteries!" sound good to some poor rube, but they're just overpriced, and if they haven't been kept on charge, dead anyway. The worst chemistry for someone who knows DC systems. "Brand new (insert brand name loft) sails!" Sure, great, did they get the cheap "coastal" package? Or tri-radials? If they aren't what the buyer wants, they're worthless. If there's new rigging (by a pro) and the right new sails, that's a fast ten grand the buyer won't have to spend, so it adds to boat value. Same same with everything.
Someone occasionally on the forum sold a boat in St. Augustine last year, a very over-the-top equipped boat, everyone said "That'll never sell no one wants that". Yeah, sold in about 90 days for what he was asking, because a like-minded buyer was out there, and wanted a boat that really was THAT small and THAT fancily equipped.
Sellers just have to realize, years before they think of selling, that what is perfect for them, may be worthless to the general market.

$500k in improvements...Yeah, the 24k gold head fixtures and faucets must have pushed it over the top.

[Dockhead]

Originally Posted by hellosailor

. . .Someone occasionally on the forum sold a boat in St. Augustine last year, a very over-the-top equipped boat, everyone said "That'll never sell no one wants that". Yeah, sold in about 90 days for what he was asking, because a like-minded buyer was out there, and wanted a boat that really was THAT small and THAT fancily equipped.

Originally Posted by john61ct

“The heart wants what it wants”
— Emily Dickinson

Originally Posted by hellosailor

Sellers just have to realize, years before they think of selling, that what is perfect for them, may be worthless to the general market. . . .

Indeed. And it's one big reason why most people don't change boats nearly as often as they change cars. You make all the investment to get the boat the way you want it, and knowing that it is not likely that anyone will pay you much of anything for that investment, you want to keep the boat long enough to get your money's worth out of those improvements by using them yourself.


I have a lot of money in my boat and no good idea how much I will get back out when I sell. I don't think there's another Moody 54 in existence which has had so much money invested into it, which is not a good sign for my future ROI. But at least I've gotten 10 years of good hard sailing and great adventures out of her -- that's the real ROI.



The people I feel sorry for are the ones who fix up their boats and then let them sit unused, not the ones who lose a pot of money in their boats

[Toccata]

Personal experience
Toccata a Jarkan 39', I have spent 200k getting her to as new. The big ticket item was the labour to refinish/repaint the whole boat inside and out. New everything. Advertised initially for 120, haven't sold her yet at 70K!!
Old racing yacht, but very capable ocean cruiser. (Advertised here on CF, but still haven't worked out how to edit the price)
Lesson: A specialised/Unique/One off yacht does not have the "market appeal" of a name brand despite a massive overspend. The new owner will have an absolutely wonderful base to start with their idea of a perfect yacht.
The replacement for Toccata is "Quiet Achiever" a Savage Oceanic 46. 1997 build, in the era of teak everywhere. I can't believe I'm heading down the same path, removing the teak veneer, then glass over and a spray finish to lighten the interior.
It has done 20 years cruising so every system is worn out. New Wiring, Plumbing, Sails, Electronics required to prepare for another journey.
What's the lesson? Wait and look and keep looking and know what you're looking at. You will eventually find a boat that someone has done this to and buy the one someone else is quitting after the refurbish.
The broker tells me that buyers want name brand, late model boats they can get finance for and easily quit if they change their mind about "enjoying sailing"
Just my 2 bobs worth

[William parr]

Originally Posted by Zzmeyer

An unrelated cruisers forum got me thinking. A member had a Cal 46 sailboat for sale for $250,000. He got pounded for it as a number of us noticed that the average asking price for the eleven other Cal 46 was $70,000. His listing said he'd put $500k in a total refit. So, he is really only asking to get about 40% on the dollar what he put in to it. Years ago I did a similar thing. I bought a Kettenberg 38 for $18k, totally refitted it for $75k and after sitting on the market for a year or so ended up selling it for $18k. My son is looking for his first offshore boat. I've suggested he look for an older boat that has a relatively high asking price. Perhaps it's been repowered, rerigged, or rewired. Now if he had the time and desire I'd probably suggest he get a fixer upper, but he wants to go sailing and buying used is his only economic option. In the housing world there are lots of studies as to what improvements get what kind of return. Is there such thing for boats? What do you think are the best ROI improvements, or perhaps of more interest to my son, the worst ROI - let someone else fix it first.

I sold cars once and there is a wholesale book we used for buying used vehicles,and when some came in to sale are trade we gave them book value on the condition of vehicle sometimes they would have added things to it and I would tell them go take it off and put oringinal and will give you same price,Point being market value is market value.But anything is worth what some one will pay(boats)

[a64pilot]

Originally Posted by William parr

I sold cars once and there is a wholesale book we used for buying used vehicles,and when some came in to sale are trade we gave them book value on the condition of vehicle sometimes they would have added things to it and I would tell them go take it off and put oringinal and will give you same price,Point being market value is market value.But anything is worth what some one will pay(boats)

There is an NADA book for boats, but it’s ridiculously undervalued, you can’t buy a boat for that.
I believe sold boats data to be more relevant, and any Broker can get you that.
As long as the data is actual sold price and isn’t open for people to lie about, I don’t know if it is or isn’t.

[bobfnbw]

I have to disagree about the whole boat depreciation thing. New boats.... yes. Old boats that have been poorly maintained....yes. But after a while, if properly maintained, some boats do sell for more than they cost to build. And after a while the depreciation slows down to nothing. Not for big production plastic boats. Not for ferrocement, or rusted out steel boats. But there are boats out there like that.
I sold my Nor'Sea 27 for more than I paid for it. I didn't put much into it, just kept it up. She was in Bristol shape when we bought her. Still great when we sold her. ~62K if I remember right. Didn't use a broker either. Sold it on a Nor'sea forum.
My last boat... not so lucky.
My next boat, already picked out, at least the type. They sell for ~50-60K USD. The cost of a new one was ~22000 british pounds in 1976 dollars. Sure one today has had a lot of work put into it, if used much. But so would a house that old. And a house would require big time financing over 30 years, taxes and insurance that here in Texas would double your payment. Don't keep it up and the value off it doesn't go up much. Try to sell it... takes a long time. Unless the real estate its on is worth a lot.
Not saying boats are a good investment.
But if you buy one that has finished depreciation, from a owner that has owned it for a long time, maintained it, and you then live aboard and continue to use it and maintain it, you might just find that in the end, it wasn't as expensive as you thought it would be.
For me, the purchase price and some upgrades must be something I can walk away from. If it doesn't sell, or wrecks, I can hopefully get my money out of the years of use. Sitting in a marina or boatyard, paying those fees... paying someone to maintain or upgrade it.... not good for the plan.
Its why I am boatless now, can't stand to see it sitting in a marina while I pay for it, and insurance and use it just a few times a year. Seen many people in that situation.
In the end you pay what you pay. If you find a boat that lifts your heart, and its something that you can swing financially, go for it and don't look back. Some boats will not sell for much less, or even more than the asking price. Some you can't give away.

[letsgetsailing3]

Seems to me that there are a lot of boats available at the 20-25 year point.

All looking like they need new rigging and sails, and with a risk of needing something done about water tanks, fuel tanks, engines, or chainplates. Some have had a bottom job in the past three years.

Many look well-cared for, or at least the interior isn't worn out. Most look like they haven't been used in a while. All about the same listing price, but none selling very fast.

[Ruso]

https://lapazyachts.com/product/46-cal-2-46-3/
She is still available if anyone wants to jump on the deal of the century.
"we have invested over $600,000 (documented) during the past 12 years." - documented.. must be truth...
Very common for the Sea of Cortez market.. Listed overpriced hoping someone won lottery and the money burning his pockets. Still sailing (absolute minority) or on-hard (absolute majority) - hoping to sail it next year.

[letsgetsailing3]

The reality is that it matters now how much money the seller put into it.


What does matter is the condition of the boat, and how it is equipped.


But I do understand the seller wanting to frame the sale from their perspective.