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"You make your money buying the boat, not selling it."

9K views 38 replies 26 participants last post by  mark2gmtrans 
#1 ·
"You make your money buying the boat, not selling it."

These are the words of the guy who owned the boat we sailed over the weekend. He's owned about half a dozen boats over the years, and something like 70+ cars.

I didn't ask him to qualify the statement. I thought it spoke for itself. Just wondering how those who have bought and sold one or more boats feel about the validity of that statement.
 
#2 ·
I don't know what that means.

A wild guess is that he has lot taxable income, buy a boat is another tax write off. Use the boat as business, all the loss is tax deductible. The net gain is from the income tax he saves.

The beauty of our society. It takes lots money to make lots money. Don't fight it, embrace it. :D
 
#19 ·
The realtor would say, "why are you haggling over such a small amount..."
Reminds me of when I bought a new car several years ago. Got the same line from the car salesman. "It's only $200 difference. Why would you want to lose the deal over that small of an amount?"

"Hm. Good point. So you don't think that $200 is worth losing the deal over?"

"No. Of course not."

"Well, I'm very glad to hear that. And glad to hear that you will accept my offer rather than lose the deal over $200."
 
#5 ·
The guy is probably right. Still, most of us do not buy and sell boats every few years so it probably does not matter that much. And who buys a boat to make money???
In general, like a fair deal and will not try to haggle down a price just to save a few bucks. It's bad karma IMO. Treat others like you want to be treated.
 
#6 ·
I'm guessing he is saying buy right. Look at the boat very carefully and make a very wise decision to purchase the right boat and it will be a wise investment. You can buy the same two boats, I'll just pick an Ericson 35 as an example. I see them around at $27,000 in nice shape. You might get one needing work for $15,000, or one with new sails, engine, radar, rigging and lines, EPIRB, Liferaft, etc, etc for $35,000. IMO the $35k boat is a far better investment than the $15k boat, but it would be hard to imagine paying more than twice as much for the "same" boat.
 
#7 ·
I took it to mean most asking prices are too high, far more than the boat is actually worth. If you buy high, you have to sell high or you'll take a serious hit. Buy low and you can sell low and sell more quickly.

I've done a lot of research on what certain boats are worth and have had some feedback from the broker about list vs. sell prices. There's quite a gap. He also mentioned how sellers tell the broker what they want to list their boat at and the brokers agree just to get the listing. Then time goes by and no one is offering anything close to that price and reality sets in and the price drops.
 
#8 · (Edited)
He also mentioned how sellers tell the broker what they want to list their boat at and the brokers agree just to get the listing. .
That is very true and a common tactic for some brokers. If a broker is honest and tells the seller what the boat is really worth, some less honest broker will not and end up with the listing. Much better, at least short-medium term, from the brokers perspective to get the listing and let reality play out over time.

Once the broker has the listing, in 99% of the cases it means payday, maybe not today or next month but eventually the price will be right and a sale will occur.
 
#11 · (Edited)
I like to think about the money I pay for a boat as "parked" not spent. I am, or was, a marine surveyor. I have owned boats for the past 50 years. I never purchased one to "make money" on one. I have been cautious so I wouldn't loose money on one. I do most of my own work, from structural repairs to painting to electronics to engine installs. I like doing it and I know it is done correctly. If I could afford to pay to have these things done at a premium yard, I could find something else to do with that time but I don't have the means.

The real cost of a prospective purchase is something you can get help understanding if you can find an honest buyer broker. Brokers don't just list boats. They also represent buyers in the purchase of boats. They know the market. They know the boats. As much as I hate to admit it;) some of the best money I have ever spent was on a top professional (read lawyer). A few hundred dollars to get good legal advice is a true value. The same is true of a top professional buyer broker. It needs to be someone you can trust, of course. Someone you have gotten to know and who is known by others you know and trust.

Buying smart doesn't necessarily mean buying cheap or "low". A good boat will return your investment. More importantly it will be a good boat!:) You want to enjoy the thing! Every day you spend sailing and not repairing comes off the top.;)

Down
 
#13 ·
Spot on in my opinion. When you buy you need to screw that price down to the lowest possible no matter how much that may offend the sensibilities of the broker or the seller. As was essentially mentioned earlier in the thread every dollar you knock off the buying price is money to be invested and interest to be earned. Alternatively it gives a boost to the cruising kitty.

When we were negotiating price of our current boat two things were said ...

1. You are trying to buy a boat not make new friends.

2. At the end of the day if you think you paid too much and the seller thinks you paid too little then the price was probably spot on.
 
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#15 ·
Sooner or later your going to just have to "BUY IT".....write the check, finance it, your not getting any younger and it's already the 4th of July....how much more money you going to save or make by waiting?
 
#16 ·
Yes, you should buy right. But, lets not take this too far. In its extreme, it is a good reason not to buy at all.

You should be comfortable that what you pay is fair. You will lose money, particularly on care and feeding. I've heard plenty of stories of proud owners who got all there money back when they sold. They fail to disclose the new sail inventory, since they bought.

Before the example of people that swear they got their money back are posted, I'm sure there is a valid one. The point is, some win the lottery.
 
#17 ·
Okay, I'm going to go against the grain here ... I didn't buy a boat to make money, I bought it to sail and live on. For me in my situation, there were less risky and easier ways to make money. And when we negotiated our current boat, we realized that price was just part of the equation. We negotiated things in addition to dollars: timing of the sale, improvements and extras, and so on. We found the boat in March but wouldn't have the cash to buy it until August when some funds matured. The seller wanted the money from the sale for grad school and was delighted to have part of the summer to continue to play with the boat. And during that time sellers did many upgrades without affecting the price (confirmed with survey), things like bottom paint, new AC system wiring, new bimini and all new upholstery in my choice of fabrics. Worked out to be a good deal, and good karma deal, for both. We needed that karma as we emailed numerous times with questions.
 
#18 ·
People who buy a boat want to own a boat. The reasons for doing so vary, but the desire needs to be there. But buying a boat is often like buying a car, wear and tear and the elements break them down and they depreciate. The man I quoted has bought many of both. I think his comment was about reducing your out of pocket costs, not a statement about how to get rich.

Until last night, not one boat we've looked at had an asking price more than its original selling price. The man with the quote is smart enough to know most boats depreciate over time, thus my take on what he meant by the quote.
 
#20 ·
The selling price is much more of a fixed price so unless your lucky and find a sucker you are going to get what your boat is worth. If you are going to make money you have to do it at the end that you control - buy a boat for less than it's worth.

Most of the time it's a neutral situation - you buy and sell at what the boat is worth.
 
#21 ·
Not sure I understand the original quote. And while driving a hard bargain in buying a boat is not a bad thing, many boat sellers want their boats to go to nice people and will get offended by an overly arrogant attitude. Some will make the deal anyway, but some others might not - especially if deep down they don't really want to sell (wife is making them, not ready to admit that their health is declining, etc.).

I am convinced that I could have gotten my boat for $2000 less than I paid. But the owner had just lowered the price by $4000 (I was monitoring the boat and called he second I saw the price reduction) and was holding firm on the price. I thought the boat would sit on the market for a few months longer at his listing price, but it was the beginning of the season and I would be losing out on prime sailing season. (I had also looked at other specimens of the same model which were not in as good a condition as this one.) So I paid the extra money so I could start sailing.

It's very important not to let your ego get the best of you. You'll always save money by walking away. Keep walking away and you'll save lots of money, because you'll never buy a boat. Sooner or later you find a boat that you love enough that you'll be willing to pay a little more to get the deal done and start sailing (or start refitting, if it's a project boat).

You can haggle for a couple weeks over $200 in price difference, but that's two weeks of not being able to sail. Once you start dealing in boat bucks, you'll realize that two weeks of sailing is worth a lot more than $200.

I also think that anyone who thinks he'll sell a project boat for twice what he paid for it may be deluding himself. It happens, but not often.
 
#22 ·
What he was saying was 100% correct. You shop around and purchase a boat at 30%-50% below its real value and when you sell it you can sell it at 20% below its real value and come out ahead. When you purchase at or close to real value and sell it close to real value, (real value being what it will actually bring when sold, not some NADA type value) you will invariably lose money.

That being said you cannot place a value on the joy you get when using it. Anyone who tells you that they are earning a great deal as an amateur buying and selling boats is either a professional boat dealer skirting the dealer laws, or is not being totally honest. I was a partner in a high volume truck and heavy equipment business for over ten years, and I ran into people who fell into those same categories fairly often. While it is possible to purchase cars, trucks, boats, or recreational type vehicles and do work yourself to bring them up to a better condition for sale and make some money, by the time you factor in your time, tools, and other equipment it is far better to just either become a real dealer and do it full time or just count what you are doing as a hobby and not worry so much about the bottom line in dollars and cents. Place the value on the joy of owning the boat and you will do far better, and you will not stress yourself unnecessarily about the money you spend on repairs and maintenance.

Boats require more maintenance than almost any other type of transport vehicle, with the possible exception of aircraft, and the results of a failure in either one are often deadly. A boat as an investment surely better be a cargo ship, because if you are not hauling a tremendous amount of cargo for money you are not going to see a lot of return on that investment.
 
#24 ·
...You shop around and purchase a boat at 30%-50% below its real value and when you sell it you can sell it at 20% below its real value and come out ahead...
Once in a great while someone needs to unload a boat extremely fast and will accept a low price. But it's very rare, and if you're looking for a specific make or model of boat, the odds if finding that boat for 30-50% below market value are extraordinarily low. It's really a fallacy to think any boat can go for 50% below its "real value." Unless the owner is truly under duress, why would he accept 50% below market value, unless he knows there's something fundamentally wrong with it? Why not wait a little longer for someone who will pay its real value?

When a boat sells for any price, it becomes a data point for the boat's real value. If you think you got a boat for 50% of its "real value," then as soon as the sale is logged on soldboats.com, its "real value" for future sales of sister ships has dropped for future purchasers.
 
#23 ·
Ask your broker for a historical sales record of same boats over the last 5 years. I did not realize this but it helped a lot in my purchase strategy after I realized I could request it. Brokers have access to a "MLS" system that the public does not. I could see the asking price, selling price, and time boat spent on market. It does not of course take into consideration condition but you'll get the general idea. Immensely helpful!
 
#28 ·
ahhhh ... I know this one.

It is better to buy a boat which someone has already spent money on than to buy one which you intend to "fix up". It's the same as classic cars ... the money spent restoring/upgrading them is only fractionally recovered in the eventual sale. It is thus much better to spend a bit more money on one which is already fully tricked out, than save a bit up-front but spend lots of time and money making it "just right".

Ask me how I know this ;-)
 
#29 ·
In our search we ran across a boat that appears to have been originally listed in 2007. It looks like the same owner. The original asking price was high (no surprise there!) Then he dropped it 20% after a couple of years. Then another 5% and has stayed there since.

This is pure speculation but this could be an example of an owner who bought at or close to asking price. The manufacturer is highly regarded and the boat looks in great shape but even at today's price it's still about 20% higher than comps.

Maybe the quote would better be rephrased as "You reduce the cost of owning a boat on the buying end, not on the selling end."
 
#30 ·
In our search we ran across a boat that appears to have been originally listed in 2007. It looks like the same owner. The original asking price was high (no surprise there!) Then he dropped it 20% after a couple of years. Then another 5% and has stayed there since.
I don't think anything that has happened in the last 6 years is indicative of long term values. In this time people have sunk their boats to avoid paying marina fees, have had their houses foreclosed on and parked their multi-million dollar jets to avoid paying the insurance.

If you wanted to sell any asset 2007 was the time to do it. Probably 2011 was the best time to buy anything as it looks like prices are going up. I still think the prices are fairly depressed compared to long term valuation and it is still a buyers market.
 
#32 ·
Julie - I suggest that you completely ignore asking price when deciding what to offer. Some boats are worth asking price. Those are the ones that will sell quickly - so quickly that you rarely see them on the market unless you have perfect timing. On other boats, the owners are dreaming. Those boats may go for asking price, but only after the owner reduces his asking price significantly.

There really is little correlation between asking price and selling price, and little way to predict how flexible a seller will be. If he has just lowered his asking price by a significant percentage, he is much less likely to come down further. OTOH, if he's had it at a high price for a year without lowering it, and offer of 20-30% below asking should not be insulting or surprising. It all depends on market conditions and seller motivation.

You need to just get an idea in your head what a boat is worth to you and negotiate to that price. If the seller isn't willing, then move on to the next boat.
 
#33 ·
personally im not convinced you can make money on used boats... I have herd of people selling boats for more than they are worth, but I haven't actually seen it or experienced it first hand. I think the point that he is making is buy in smart and right and you wont take a beating later-on. as much as I have tried to make good choices when buying boats, I have never made a profit, they take forever to sell, and the slip rent while waiting on this has always made the ordeal that much more of a pia. but I always seem drawn back into boat ownership
 
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