Boat as an investment?

[Alex_V]

I know, that is an oximoron thing to say. All boats are a depreciating asset, but still.

I guess what I am looking for is a type of a 34-45 footer that was already stabilized in value. And with reasonable upkeep will hold its value better then others. My 88 Catalina 27 would always be worth what I payed for it, unless I sink or burn it down. What about slightly larger ones that should keep the value well?

What are your thoughts? Will something like a 80ish Kelly Peterson 44 be a better "investment", I am really using this term freely, then lets say a 2005 C&C 99.

Not sure if this was discussed already, I did search first.

[belizesailor]

Absolutely an oxymoron. An investment is something that at least has the potential to appreciate...by definition that aint a boat...high cost to carry + depreciation = significant loss with near certainty.

That said, a well maintained used boat will depreciates less than new, or maybe not at all. Example, I sold my last boat for about $5K more than I paid for it...that was not appreciation or profit...it was just in WAY better condition than when I bought it. I spent more on the boat over my 6 years of ownership than I paid for it originally!

I think the answer to your question is "yes", same principal for a larger boat.

[nautical62]

Making a profit, not only means your boat needs to increase in value, but it has to increase in value enough to cover insurance, storage and maintenance, or has to generate the income to cover these things.

I've read of some people who are able to purchase a boat cheap, typically because it needs work they are capable of doing, which they do, go cruising and sell it at a profit. I think that's rare however.

That said, I'm sure there will be some people who buy hurricane damaged boats cheaply, fix them and make a profit.

[Hoosiersailor]

Alex,

I think I understand more of what you are asking. At what point in their life do boats stop or at least only minimally depreciate?

[Shrew]

Your 'investing' in the lifestyle. The experience is the return on investment. The boat is an expense which is part of that investment. Buying a used boat may or may not be more cost effective. While the principal cost has somewhat stabilized (It will more than likely continue to decrease over time), the maintenance costs will still be greater.

Here is our formula:

P = Purchase $
S= Sell $
M = Maintenance $
T = Time (y=Year; m = Month; d=Day) e.g. Td

((P - S) + M) / Td = [Total cost per Day]

It's the old "For the price of a cup of coffee" economics. If it's cheaper than I could travel using hotels or restaurants, cheaper than a cruise, cheaper than a charter......then it's a pretty good deal and investment in the lifestyle was a value.

[Dockhead]

As others have said, boats have practically zero chances to be an "investment". They lack the land value element of house values, so they do nothing but depreciate, while demanding constant investment in upkeep.

Boats are pure consumption -- be clear about that before buying one. Don't invest money into a boat you can't afford to be spending, and for God's sake don't buy one on credit. Make a sober allowance for the costs of upkeep.

That being said, of course some boats will cost less to own than others. Normally the cheapest boat in the best condition, will lose less value than others. The best buy in a boat is nearly always one into which the previous owner has just invested a huge sum in a major refit.

One more thing to keep in mind -- a cheap boat means less to lose. So far so good! But beware the principle that a boat can very easily have negative value -- costing more to put into decent shape, than it will be worth afterwards. Avoid boats which are getting close to this condition, no matter how cheap they are!!

[Alex_V]

Using a term "investment" was more of a joke, I am pretty realistic what boats are.

Just curious what models can have a better forecast to hold their value. Probably older "proven" models. I am guessing an older island paket would retain better value then a two year old Catalina 315.

I am considering a C&C 99 or 110, but a gut feeling tells me something older will loose less value. Assuming usual storage / upkeep. Making money is definitely out of question.

[Dockhead]

Originally Posted by Shrew

Your 'investing' in the lifestyle. The experience is the return on investment. The boat is an expense which is part of that investment. Buying a used boat may or may not be more cost effective. While the principal cost has somewhat stabilized (It will more than likely continue to decrease over time), the maintenance costs will still be greater.

Here is our formula:

P = Purchase $
S= Sell $
M = Maintenance $
T = Time (y=Year; m = Month; d=Day) e.g. Td

((P - S) + M) / Td = [Total cost per Day]

It's the old "For the price of a cup of coffee" economics. If it's cheaper than I could travel using hotels or restaurants, cheaper than a cruise, cheaper than a charter......then it's a pretty good deal and investment in the lifestyle was a value.

I think this is a sound analysis!

However, if you do the math, you'll see that owning a boat is practically never cheaper than hotels, cruises, or charters!

My Dad used to always tell me -- "If it flies, floats, or f***s -- rent it!"

From an economic point of view, this is absolutely right! But while your wallet may like it, your heart may not always want to be floating, flying, or the other thing, with something rented -- therefore we buy boats!

[Alex_V]

Originally Posted by Hoosiersailor

Alex,

I think I understand more of what you are asking. At what point in their life do boats stop or at least only minimally depreciate?

Yep, thats exactly what I am researching. There are always exceptions to the rule. My Tiger 800 (motorbike) is a steadily depreciating asset but once it hits a low point it will stay there, also my TZ250 doubled its used price that I payed 5 years ago.

So where is that sweet spot where you minimize the loss in value?

[Hoosiersailor]

I have looked at this before. If you can take maintenance out of the equation just to see how a seaworthy/reasonable condition boat holds it's value I look back at old issues of magazines with classifieds. I mean you never know exactly what condition the boats are compared to what they are today but it gives you an idea.

48 north has online issues back to 2012 so you can see how the market values compare 5 years later. If that is what you are looking for.

https://48north.com/

[Alex_V]

Originally Posted by Hoosiersailor

I have looked at this before. If you can take maintenance out of the equation just to see how a seaworthy/reasonable condition boat holds it's value I look back at old issues of magazines with classifieds. I mean you never know exactly what condition the boats are compared to what they are today but it gives you an idea.

48 north has online issues back to 2012 so you can see how the market values compare 5 years later. If that is what you are looking for.

https://48north.com/

Yeah, would be interested to see how things changed in 5 years.

[Dockhead]

Originally Posted by Alex_V

Yep, thats exactly what I am researching. There are always exceptions to the rule. My Tiger 800 (motorbike) is a steadily depreciating asset but once it hits a low point it will stay there, also my TZ250 doubled its used price that I payed 5 years ago.

So where is that sweet spot where you minimize the loss in value?

The difference between a motorbike and a cruising boat, is that a cruising boat is comprised of a multitude of different systems and elements, all with their own useful life and their own upkeep requirements.

You can leave a Tiger 800 in the garage and pay basically nothing to keep it ready to use any time. Maybe hoses and tires deteriorate due to time rather than miles and that's about it. So the value of the bike is mostly all you need to know.

A boat, on the other hand, is constantly deteriorating and losing value due to condition. Note well the guy above who said he sold his boat for somewhat more than he paid, but meanwhile he had spent more on maintenance, than he paid for the boat in the first place!! That's very typical.

So new boats depreciate faster, but for the first few years you are within the useful lives of all of the systems, so there is relatively little expense on maintenance. But after a few years, you start replacing or overhauling systems one after the other. Unlike the case with the motorbike, the value starts to depend much more on the condition of the different systems, not the age. So theoretically, depreciation has stopped or slowed down, but that does NOT mean that cost of ownership is necessarily much less!!

When I bought my own boat 8 years ago, she was 8 years old and in good condition. She is probably worth about what I paid for her -- in nominal pounds sterling (less in dollars). But I have spent more than a hundred thousand dollars on maintenance and upgrades in the mean time!! Not counting huge amounts of my own time on work I've done myself!

So the fact that the nominal value (and don't forget inflation) is more or less the same, it doesn't mean I haven't lost money! And that is absolutely typical. Even a good case -- in many cases, the boat will be worth less, even though you've been spending lots of money.

But I haven't "lost" money; I've "spent" money -- and there's a big difference. Boats are consumption. If you have a passion for sailing, it's the best money you could ever spend. Just don't make any mistake about it -- you've spent it, and you'll never see it back.

[Lake-Effect]

Originally Posted by Alex_V

Yep, thats exactly what I am researching. There are always exceptions to the rule. My Tiger 800 (motorbike) is a steadily depreciating asset but once it hits a low point it will stay there, also my TZ250 doubled its used price that I payed 5 years ago.

So where is that sweet spot where you minimize the loss in value?

It's a valid question, but honestly there are more important criteria for selecting the best boat. Basically, the boat should fit as close as possible the sort of sailing/cruising you want to do, and the boat should make you happy in every way possible.

Making retained value a higher priority means compromising on those much more important aspects of boat ownership. The boats with the lowest depreciation aren't always great boats, let alone the right boat.

I believe that with most boats it's not depreciation but the ongoing costs (maintenance, mooring/docking) that are the biggest money losses.

If you REALLY want to sail alot AND maximize savings, buy a smaller $3k boat and sail the paint off of it. Replace as needed. Charter when you want the big boat experience.

[Dockhead]

Originally Posted by Lake-Effect

It's a valid question, but honestly there are more important criteria for selecting the best boat. Basically, the boat should fit as close as possible the sort of sailing/cruising you want to do, and the boat should make you happy in every way possible.

Making retained value a higher priority means compromising on those much more important aspects of boat ownership. The boats with the lowest depreciation aren't always great boats, let alone the right boat.

I believe that with most boats it's not depreciation but the ongoing costs (maintenance, mooring/docking) that are the biggest money losses.

If you REALLY want to sail alot AND maximize savings, buy a smaller $3k boat and sail the paint off of it. Replace as needed. Charter when you want the big boat experience.

Excellent advice, especially the last paragraph

[Alex_V]

Originally Posted by Lake-Effect

If you REALLY want to sail alot AND maximize savings, buy a smaller $3k boat and sail the paint off of it. Replace as needed. Charter when you want the big boat experience.

Well, completely agree. I have had a cheap old Catalina 27 on a lake for about 5 years, and sailed with friends on their boats in ICW, and off to Cuba before.

I am contemplating some big changes (house/job/country of residence), and if I was to spend alot of money (to me) on a bigger boat and things don't work out its nice to have something that didn't loose 30-40% of its value in a year. I suspect some buying choices are better then others financially.