Owning a Boat is EXPENSIVE!

[CaptainFredGreenfield]

UPDATE 1/6/09 - Please see page 16 of this thread for an updated cost figuring schedule with 3 seperate scenarios posted. http://www.sailnet.com/forums/buying...ensive-15.html

Thought I would post this here, it may help those looking to buy a boat think about all those other costs involved.

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Everyone who ever wanted to buy their first boat has gone through the same thought:

"I'm going to buy this $10,000- $30,000 boat, and take my friends and significant other out at least several weeks per summer."

You believe you will go out for several weeks.

But realistically, how many days will you, your SO, your friends, or THE WHOLE GANG be able to break away to go sailing? Is it a few weeks or a few weekends?

What about winter? Are you in a climate where you can even imagine sailing in anything less than peak summer weather?

What about maintenance? Slip fees? Insurance?

SEASONAL WEATHER AFFECTS THE NUMBER OF DAYS YOU CAN ENJOY YOUR BOAT

If you own your own boat, car, train, plane etc. you are faced with issues related to seasonal conditions. If you only envision balmy summer breezes and pleasant evenings, sailing or motoring along placid waters... remember a couple of things:

Unless you live in the tropics, the seasons will change, but still, the tropics have their own set of issues like hurricanes or tropical storms. Winter will come and with it a set of conditions that many times cause people to lose interest in "taking a trip in my boat this weekend. " If you are beyond 35º north or south of the equator, you may want to consider what has to happen to sailing vessels and power boats when October rolls around in the north or May, "down under", it may be time to put away the golf bats and put the "yacht" on the hard, where it may be less expensive, but not available to use.

Taking seasons into consideration along with job related time constraints and family duties, HOW MANY (wonderful/warm/sunny) DAYS A YEAR WILL YOU BE ABLE TO ENJOY YOUR FLOATING DREAMBOAT? 30? 60? ...I wonder!

DON'T FORGET DEPRECIATION

Assign 30% depreciation for the first year on a new boat, 20% for the second year (Or the first year on a used boat ) and 10% (of the original price) for each year thereafter. At some point the depreciation will taper off, but the maintenance will escalate to make up for it.

FIGURING THE COSTS

Lets put the total cost of your sailing vessel or power boat down on paper.

A used, 25 to 30 foot, 10 to 20 yr old boat, bought at a realistic price to value, with good enough equipment (sails/engine/batteries/bottom paint/etc) to get by for a while, berthed at a normal marina will pencil out something like this, over a 5 yr ownership.

5 Yr Ownership

$20,000 PURCHASE PRICE

EXPENSES__________________________

- $4,000 first year depreciation

- $3,200 first year $300 per mo. slip rent + $200/yr liability insurance (possibly add electricity) Not including live aboard fees if you are planning to do that.

next 4 years

- $8,000 next 4 yrs depreciation/maintenance

- $12,800 next 4 yrs slip fees and insurance

__________________________________

$28,000 TOTAL EXPENSE

+ $20,000 ORIGINAL PURCHASE PRICE

__________________________________

$48,000 TOTAL to own this boat for 5 yrs.

That's approx. $9600/year if you don't sell it.

If you do resell it after 5 years for $14,500 resale value (private sale/no commission)

then $33,500 non-recovered expenses/depreciation divided by 5 yrs = $6700/year

*The numbers I use are based on my personal experience (I have owned dozens of power and sailing boats, ) and are also based on my observations of other boat owners. You may wish to challenge any of my numbers by up to 50% (I know that you know a guy...) but the costs, even at half of my forecast) are eye opening. Just think, what if "your guy" and I are both wrong and you buy a boat with unseen issues? WHAT IF THE NUMBERS ARE DOUBLE?

SOME ANALYSIS

I CAN FLY ALMOST ANYWHERE AND STEER A SAME SIZE OR BIGGER (BARE BOAT) CHARTER BOAT IN SOME PRETTY NICE PLACES (FOR A WEEK AT A TIME YEAR-ROUND) AT LEAST TWO, MAYBE THREE TIMES A YEAR. FOR THAT YEARLY AMOUNT. If I talk another person or couple into splitting the charter fee......maybe I can go more often or we can hire a bigger boat. Imagine the simplicity and convenience of it all. Chartering offers you the opportunity for year round fair weather adventure. You can pick your cruising ground, pick your season, enjoy, take some pictures, return home and plan your next nautical safari.

So remember next time you are having that dream... unless you can get some serious usage out of your sailboat, and can stomach the thousands of dollars it will take to own a sailboat yearly, maybe you don't need to own a sailboat after all!

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Anyone have any thoughts to add?

[N0NJY]

So remember next time you are having that dream... unless you can get some serious usage out of your sailboat, and can stomach the thousands of dollars it will take to own a sailboat yearly, maybe you don't need to own a sailboat after all!

Yeah. Why the hell do any of you bother to dream, or do?

I don't get it either.

[norsearayder]

ill keep my boat...most of my money ive spent on wimin and boats ..the rest ive wasted...but realy all hobies can cost money& if u love what ur doin then continue on...life is short enjoy it while u can rayder

[sailingdog]

Just curious, what's your point???

If you can't afford a boat...don't buy one...

BTW, your analysis is probably a bit off, since no used boat is going to depreciate from $20,000 to $16,000 in a year. Let's assume that the boat is a 30' LOA Benehuntalina. The boat would cost new, somewhere north of $90,000...and for it to be selling for $20,000 it's got to be at least six years old—since it has depreciated by over $70,000. I don't see a six-year old boat dropping $4,000 in value over a year...

[CaptainFredGreenfield]

Originally Posted by N0NJY

Yeah. Why the hell do any of you bother to dream, or do?

I don't get it either.

Its meant to provide some advice and insight to those who have a dream to do it, have been sitting at their desk dreaming it, but don't see or know about all of the other costs associated. I'm just sick of seeing people neglecting their boats, coming down to the dock twice a year, trying to get their wife to come down but since they've been neglecting their boats they spend all their time trying to get the thing to run and get her clean, in the meantime throwing away money on slip fees and insurance and after a couple of years selling their boat at a loss after throwing away a few G's.

I think if you go into it with a different mindset you might be able to get some some real use out of your boat in the first couple of years and settle into a nice life of occasional or regular boating!

I've seen enough boat abuse to last for a lifetime, I'd rather dreamers simply look at it a little more practically before blowing tens of thousands on a boat only to find out they're not ready.

[chucklesR]

Boat depreciation averages, 6 percent year one, 3 percent per year after for 5 years, then it depends on maintenance and market, it's not a straight line.

A well maintained boat, bought cheap and fixed, doesn't depreciate at all.

Gemini's bought new in the 80's sell for more than the original price today.
Go figure

That per BoatUS.

[CaptainFredGreenfield]

Originally Posted by chucklesR

Boat depreciation averages, 6 percent year one, 3 percent per year after for 5 years, then it depends on maintenance and market, it's not a straight line.

A well maintained boat, bought cheap and fixed, doesn't depreciate at all.

Gemini's bought new in the 80's sell for more than the original price today.
Go figure

That per BoatUS.

Thank you for this. As I said, I've based my numbers on what I've seen.

I think you might be misunderstanding, the depreciation costs also assume a certain amount of maintenance/gas/diesel/other expenses to make up the difference.

In other words, if you don't spend it on maintenance, you will see it in depreciation, due to neglect. If you think a 20k boat with no maintence doesn't depreciate to 14k, it certainly does.

I just saw this in a 1970 Coronado I just bought for very little due to the fact that the guy bought it, his wife and boy decided not to continue to go sailing with him, he TOTALLY neglected his boat (Palmer engine now no-operational, the thing was filthy inside in and out), so I bought it for VERY undermarket.

On the flip side, there are a number of classic boats which actually sell for more than their original sales prices, like the Northwest 21 which I designed.

[Delirious]

I don't smoke, use drugs or buy drinks at a bar so I figure I save enough to afford the boat. :-D

Buy used. Pay cash. Maintain it yourself.

Where do you get that a 20 year old boat depreciates $4,000 per year? Are you going to sink it after five years or try and sell it? A 20 year old boat has ZERO book value, anyway (A new vehicle has a five to seven year book life - not sure about boats). But even so. If you buy it for $20K today and take care or it in 20 years it may be worth $40K at the cost of capital in 2028. So it appreciates. Certainly should hold its own.

[TxLnghrn]

Captain,

I'd go back to accounting class.
If you expense your depreciation, you cannot compare the sale price to the original asset price plus the depreciation expense. The way you are demonstrating the math, the depreciation is being counted twice.
If you are going to depreciate 12k off the asset (way too high, but for the sake of argument I'll give it to you). You would then have to compare your theoretical sale price of $14500 to the depreciated value of 8k. So you actually demonstrate a net $6500 gain on the sale.
You are showing an estimated expense (slip/insurance) of 16K for a net loss of $9500 over 5 years. That works out to a annual cost of $1900. If you can fly and charter a boat 2-3 weeks a year for $1900 I want to meet your travel agent.
Of course, this doesn't take into account tax advantages if you establish an LLC, or can document enough nights on the boat to list it as a second home.

Michael

[CaptainFredGreenfield]

Originally Posted by sailingdog

Just curious, what's your point???

If you can't afford a boat...don't buy one...

BTW, your analysis is probably a bit off, since no used boat is going to depreciate from $20,000 to $16,000 in a year. Let's assume that the boat is a 30' LOA Benehuntalina. The boat would cost new, somewhere north of $90,000...and for it to be selling for $20,000 it's got to be at least six years old—since it has depreciated by over $70,000. I don't see a six-year old boat dropping $4,000 in value over a year...

Hey, I want to know more about that Telstar in your sig!

Regarding your post...

I think I said plainly what my point was above. I want for dreamers and people reading my advice blog to prepare themselves before they commit to their dream and have it go upside down quickly, like I see all the time in SoCal marinas. I've seen it for decades... its always the same story: they don't understand the costs or the commitment and they bail within a year or two, especially when the wife starts complaining about her mall money going to waste on their "mistress".

The numbers are approximate but close to real I think.