Struggling to understand the rule of thumb for boat depreciation

[john manning]

What depreciation??

If you look up the cost of a yacht sold new in the 1970's you generally find the price of that same yacht now (in good condition) is higher.

I am old enough to remember when yacht prices rose above $1000 per ft of length.

[David M]

A boats value is the highest price at which someone is willing to pay for it. It really is that simple.

[merrydolphin]

Agree with many. There really is no rule of thumb.
It has more to do with the condition and equipment of the specific boat.
Boats of good reputation will hold value better. Also, supply and demand have a lot to do with it. EG: I bought a 1981 Kelly Peterson 44 ( one of the latest years of the boats production.) the original owner was a mechanical engineer and had specified increased scantling in stress areas. I paid $92K in 1993. The boat was well equipped and I upgraded from that. I full time cruised the vessel for 7 yrs. . I ended up selling the boat for $132K. Why? Because it was in great shape and really well equipped for serious cruising. They were in demand at the time and very well respected good performing cruisers.
I have owned and sold 5 serious cruising boats and made a good profit on 3 of 5. Keeping each for 5-8 yrs. For similar reasons as above. Great shape, well equipped with current gear, and were respected and in demand design/manufacture at the time.
Rule of thumb? Good luck with that one.

Note: The reasons that I didn’t make a profit on 2 were that one was purely market timing. I bought right at the top of the market just before the recession and then sold at the worst of the resession, and even then only lost about 20% and sold it in a month while many were taking yrs. The other was impatience and age. Didn’t have the energy and ambition to put into it. Lost about 12% on that one. So clearly of 5 boats over 30 yrs. I made money. ( not including what I put into them over the years of use. )

[sv Stella Maris]

Buy a Moody 42. Our cruising friends are currently in Mexico performing a major refit. They sailed her from the US East Coast and she’s currently on the hard in Mexico an hour from the US New Mexico border . Family still aboard, PM me for an introduction. Their plans to finish may work with your plans to begin. And within your budget.

We sailed the whole Antilles with them for 9 months.

[Dave9111]

I agree... no rule of thumb.

Be aware that the best time to buy a boat is when no one else wants to buy a boat.

That time of course depends on where the boat is located, but it can be pretty obvious. No one wants to have to wait until the next "season" to sell their boat. And no one wants to pay for storage on a boat they no longer want. Even more so, no one wants to open up a boat after storage so they can sell it. That is even more true if the boat is remote from their residence.

[Katapult Mike]

Originally Posted by Island Time O25

And as far as refitting 40+ year boat - it can never be finished, it can only be stopped.

Wisdom for the ages there.

[goboatingnow]

Originally Posted by double u

somewhere in this thread:
"...On the other-hand... I've never had a boat I didn't sell for more than I paid for it 10 years later...."
please elucidate...!

As a general rule it’s a myth /lie

Anything AWB will be bought for less then the owner paid for it.

Trust me on this after owning 8 boats

[goboatingnow]

Originally Posted by goboatingnow

As a general rule it’s a myth /lie

Anything AWB will be bought for less then the owner paid for it.

Trust me on this after owning 8 boats

Sorry I meant MORE

[boatpoker]

The world has gone mad ! I simply don't know how to place a Fair Market Value on boats we survey anymore.

[Nomad57]

It makes me wonder what causes these market swings. In 1993 (a depressed market), I saw a 1986 Monk 36 (Taiwan trawler) listed in GAM for $125,000. This type of boat was at that point in time my ultimate objective. Five years later, these boats were selling for $250,000. One owner was quoted as having said, "I was offered so many American dollars I just couldn't say no".

Nomad

[marshmat]

Originally Posted by boatpoker

The world has gone mad ! I simply don't know how to place a Fair Market Value on boats we survey anymore.

That screenshot is mad, man.... I'd have multiplied 18 tons by the going rate for scrap steel, added a high-hour Detroit 4-71, and rounded up to $10k. Shifting the decimal point would not have occurred to me in my wildest dreams.

[clamcake]

The only time you need to be concerned with depreciation is when you buy new.

If you are looking for a used boat and are considering financing, here is how most banks handle it:

1. They do not use Bucnet or the survey. They look at the low retail value shown on NADA without ANY consideration of options, equipment, etc.

2. Next comes insurance. If you cannot obtain a policy that covers the loan amount, you will have to come up with more money for the down payment.

The insurance companies are the real problem right now. I have seen them reduce "value" by as much as 50 to 70%.

If you are to simply determine the rate of depreciation over time, go to NADA and run the boat for each year it was in production. It isn't perfect, but you should get a general sense.

Finally, you need to understand the demographics of today's sailboat owners. The last in-depth study was shocking. The AVERAGE age of a sailor five years ago was 56 years old. They did not provide the median age. It would be even more alarming if they did.

This means that it is a dying pastime and prices will continue to drop.

Sad, really.

[DanielI]

Originally Posted by clamcake

1. They do not use Bucnet or the survey. They look at the low retail value shown on NADA without ANY consideration of options, equipment, etc.

I just went to the NADA website and put in my boat, purchased a year ago, and it came up with a number with 10% of what I paid. Don’t know if that means anything. Of course, there is more sales history for Catalina 30s then for most boats.

[clamcake]

I did not read the entire thread so do not know what you are sailing.

With that said, try a similar model from your manufacturer. Also, a boat that is close in quality from a different builder.

In a previous life, I started a yacht financing subsidiary for a large national bank. Things were a lot easier then as there we still quite a few manufacturers building decent numbers.

Obviously, that has changed. In fact, there is next to nothing coming out of the Hunter, Catalina, etc. factories. Dead as a doornail and it will not change.

There is a stark reality to all of this. There is not a big enough market to maintain prices. There are pockets that are doing okay right now due to covid, but that will end eventually.

I have a friend that recently purchased a Shannon 39 cutter. It is literally a piece of art. It sold for over $600K new in 1998. He paid $88K and it needs nothing. Sails, electronics, inboard...all new. It did need a bottom job.

There was one post that I saw that was the best advice. Take the asking price and deduct the cost of any work, sails, electronics, rigging, etc.. Then deduct 5% from that price. It is a tried and true formula and in most cases should line up with the NADA values.