Resale value

[Looking4Neptune]

Summary: If I buy, liveaboard for 5 years and sell "in the same condition as bought" what should I expect the resale value to be?

Longer version: I am 62 years old and sometime in the next year, planning to retire and purchase a 40 to 47 ft cat, FP, Lagoon or Leopard. Owners version, 5 to 15 years old, in good condition. I will liveaboard for 5 years and make every attempt to keep it in good condition, spending on maintenance as needed. I expect to need to replace some things - who knows what - electronics, engine, rigging, sails, solar, water-maker, AC, canvas... And haul-outs with bottom jobs, engine service, all the usual. I know it is impossible to literally have the boat in the same condition - it will be 5 years older.

My mind-set has been to assume $0 resale value 5 years later - then anything I get is a bonus. But if I do that, I will be looking to buy for less than $250k.

In looking at boats, I find some I could probably deal with in this price range, but what I really want is something more like this:
Remedy
or
Sumaya Sol
This has me thinking - If I spend $100k to $200k more, I will get a boat where I enjoy living aboard more (more space, better initial condition, more ammenities). If I can sell it 5 years later for maybe $100k less than my purchase price, that is probably worth it to me. I know I may spend $100k in upkeep over 5 years and with inflation my $ won't be worth the same in 2023 so I am factoring that in. I have more than enough cash to buy. I just don't want to knock off any more of my retirement 'nest egg' than I have to. I spent 9 months liveaboard on 4 different boats in 2015 and 2016, crossed the Med, Atlantic, some of the Caribbean and the Pacific (Panama to Darwin), so I have some idea what I am getting into.

So, what do you think? Do I go financially conservative and live with something that is OK but not great, or spend more to have a nicer lifestyle and count on getting a good chunk back on sale?

[john61ct]

No one knows the future, least of all the health of the global economy at sale time.

The zero assumption is safest of course.

But perhaps my guess that

spending an extra 100K will increase the odds of getting say 50% of your purchase price back

is not too optimistic.

Keeping in mind that you could easily spend the purchase price over again in fixes and upkeep over five years. Or lots more if bad stuff happens.

Not counting insurance, fuel, slip fees, crew costs etc other living expenses.

[Paul L]

The zero value after 5 years is a ridiculous assumption for planning purposes. So comparing it to a higher cost vessel still leaves nonsense numbers.

[JimsCAL]

Maximum depreciation will be with a new boat. With an older boat in excellent condition, and assuming you maintain that condition, you could lose little or no value. You will not get back any money spent on maintenance or replacing equipment. I used to think the sweet spot was a 5 to 10 year old boat as it has taken the big deprecation hit but is still new enough to not have major maintenance issues. I now like somewhat older boats, mainly because I like the looks and believe the build quality was better than some of the new boats.

[a64pilot]

Well in my planning I assumed a zero return on investment.
Why, cause that could happen, there could be for example some kind of un-insured event that totals the Boat for example.

My plan is similar to what your planning, I planned on five years cruising, and buying a house with zero from the Boat.
You have to have a plan, and I figure if you plan conservatively, you don’t come up short. So far it has worked.
I planned also on worst case scenario on our investments, if they perform as they should based on history, we will continue to increase our net worth, if that happens, great, but I’m not counting on it.
A crash like in 29 hopefully will not happen, but I think it is a possibility.

I was at the Commissary at NAS JAX the other day, the bagger had a Navy Retired hat on. If things go sour, I don’t want to spend my Retirement bagging groceries.
Of course just cause he had the hat didn’t mean anything, but it was disconcerting, he was of the right age.

[NCGunDude]

Are you by yourself or with someone else? Their input should weigh significantly. If by yourself, either option 1 or 2, or somewhere in between. You got where you are by making astute decisions. As someone pointed out, an older mechanically sound boat will depreciate less with proper maintenance. With that in mind, you could go a little higher for the surveyor's term, a perfect boat (sic).

The tough part is going to be finding the right boat. All the best!

[botanybay]

Originally Posted by Looking4Neptune

Summary: If I buy, liveaboard for 5 years and sell "in the same condition as bought" what should I expect the resale value to be?

Longer version: I am 62 years old and sometime in the next year, planning to retire and purchase a 40 to 47 ft cat, FP, Lagoon or Leopard. Owners version, 5 to 15 years old, in good condition. I will liveaboard for 5 years and make every attempt to keep it in good condition, spending on maintenance as needed. I expect to need to replace some things - who knows what - electronics, engine, rigging, sails, solar, water-maker, AC, canvas... And haul-outs with bottom jobs, engine service, all the usual. I know it is impossible to literally have the boat in the same condition - it will be 5 years older.

My mind-set has been to assume $0 resale value 5 years later - then anything I get is a bonus. But if I do that, I will be looking to buy for less than $250k.

In looking at boats, I find some I could probably deal with in this price range, but what I really want is something more like this:
Remedy
or
Sumaya Sol
This has me thinking - If I spend $100k to $200k more, I will get a boat where I enjoy living aboard more (more space, better initial condition, more ammenities). If I can sell it 5 years later for maybe $100k less than my purchase price, that is probably worth it to me. I know I may spend $100k in upkeep over 5 years and with inflation my $ won't be worth the same in 2023 so I am factoring that in. I have more than enough cash to buy. I just don't want to knock off any more of my retirement 'nest egg' than I have to. I spent 9 months liveaboard on 4 different boats in 2015 and 2016, crossed the Med, Atlantic, some of the Caribbean and the Pacific (Panama to Darwin), so I have some idea what I am getting into.

So, what do you think? Do I go financially conservative and live with something that is OK but not great, or spend more to have a nicer lifestyle and count on getting a good chunk back on sale?

Looking at this over time with the following assumption: maintenance to keep vessel in same or better shape...

All improvements add zero value but improve speed of selling.

Price is determined by comps which ends up being BUC or similar as banks won't loan higher.

Looking at values over the years most vessels depreciate at about 7-8% offset by Gov claim of inflation.

Not perfect but not a bad starting point

Don't forget that you lose 6-10% to the broker on top of that. So lost of 50% of purchase price is not far off.

New boats for the first few years are a bit of a different animal but not horribly different if all of the options are treated as upgrades (ie no resale value)

Just my observation, YMMV

[denverd0n]

Originally Posted by botanybay

All improvements add zero value but improve speed of selling.

Not necessarily. In fact, I have seen "improvements" that actually REDUCED the value of the boat in my eyes.

When making improvements, you need to keep in mind what the average person would want, and not get too far off from the original design of the boat.

An example... A while back I saw a sloop for sale with a sort of giant, second-story, patio arch kind of thing added to the back. This was a boat that most would categorize as a racer/cruiser, or maybe as a performance cruiser. I'm sure the owner thought the "back porch" (that's what he called it) was a great idea. In the ad he talked about how nice it was to sit up/back there and watch the sunset. But 99% of the people looking for this sort of performance cruiser design would NOT want that monstrosity on the back! He thought that he had improved the boat and increased its value when, in reality, all he did was to make it so specifically customized to HIS wants that almost no one else would ever want to buy it.

And, of course, I'm sure we've all seen the sailboats out there where the owner thought he was making a great "improvement" by installing a motor with ten times the horsepower of the original. You know, 30 foot sloop, 15k displacement, with a 325hp turbo diesel in it. What was he thinking? That maybe he would water-ski behind his boat!?! And, of course, these guys always think the boat is worth SOOOO much more (and expect to get all of their money back) because of the huge engine.

So, yeah. In general I would agree that improvements can aid in selling the boat. But they have to be improvements that are going to be almost universally desirable for that type of boat. Improvements that don't drastically alter the fundamental design of the boat. You start doing the wrong kinds of "improvements" and you're actually reducing the value of the boat, and reducing its sale-ability, not increasing it.

[LoudMusic]

Originally Posted by JimsCAL

Maximum depreciation will be with a new boat. With an older boat in excellent condition, and assuming you maintain that condition, you could lose little or no value. You will not get back any money spent on maintenance or replacing equipment. I used to think the sweet spot was a 5 to 10 year old boat as it has taken the big deprecation hit but is still new enough to not have major maintenance issues. I now like somewhat older boats, mainly because I like the looks and believe the build quality was better than some of the new boats.

I think we all prefer the products from the era when we fell in love with the hobby. It was that way for me with cars, and seems to be that way again with boats. Though I do occasionally see a modern boat I swoon after.

[barnakiel]

Nobody knows.


Depends on what boat you get. Depends on where the market for such boats is going to be.


If another crisis hits, you will be unable to sell the boat. If people get more credit money available and you chose the right boat, you will possibly end up with a pile of money when you sell and you will sell swiftly too.


There seems to be a well justified drive for mid-size cats. Boats like Lagoon 450 and her likes from the other brands are in fashion and seem to sell and re-sell pretty swiftly these days.


If you think about re-selling, keep one eye on the market ALL THE TIME (=no sailing for you, sorry). Early sellers sell and late sellers either accept huge margins (loses) or else stay stuck with their ageing boats.


Cheers,
b.