Advice to a newbe - SailNet Community
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post #1 of 16 Old 03-04-2013 Thread Starter
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Advice to a newbe

I had a fellow contact me about a boat he was looking to buy.
After we saw the boat it was clear that it would require too much work.
At the time he was looking in the $3,000 range of boats.
He then sent me an email saying he was upping his budjet because he figured he could get a better boat.

This is what I sent back to him.
Do you agree with my advice? What would you have told him?

"Your general idea of spending a bit more and getting a better boat will pay off easily.

The way it works is that you can usually get pretty close to what you pay for a boat when you sell it in a few years later as long as you keep it up.
Any money you put into it however during the interim is not recovered.

For example if you buy a 3k boat and put 3k into and you sell for 3k you are out 3k plus a lot of time.
If you buy a 10k boat and put 1k into it and sell it for 10k you are only out 1 k and a lot less time and get to sail a much nicer, less smelly boat.
You have 10k of your money tied up in your boat but at least it is not lost."

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post #2 of 16 Old 03-04-2013
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Re: Advice to a newbe

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Originally Posted by davidpm View Post
For example if you buy a 3k boat and put 3k into and you sell for 3k you are out 3k plus a lot of time.
If you buy a 10k boat and put 1k into it and sell it for 10k you are only out 1 k and a lot less time and get to sail a much nicer, less smelly boat.
You have 10k of your money tied up in your boat but at least it is not lost."
[/I]
It is really dependent on the age of the boat. and has it reached the bottom of the price yet. Say you buy a 1985 F150 truck for $500, a few year later, you can still sell for $500 provided you can keep it running.

This only true the 3K and 10 K of boat are the same kind of boat say C25. Otherwise why would a 10K boat can sell 10 K a few years later.


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post #3 of 16 Old 03-04-2013
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Re: Advice to a newbe

I'm not sure that the buy/sell ratio of 1:1(on purchase price alone) is a universal truth.

Perhaps it is amongst those boats that have 'bottomed out' on the depreciation scale, and maybe for some strongly popular/timeless designs like certain Catalinas, Sabres, et al. I'm sure it's more likely to be true at the very bottom of the market, say $5K and under...

Ron

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post #4 of 16 Old 03-04-2013
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Re: Advice to a newbe

Tell him buy the boat that is mostly already what he wants. Pay below market value and sail it. It's not so much an investment concern as what do you want to do with the boat. If it serves that well you'll get back close to what you paid, but more important you won't own something that can't be sold.
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post #5 of 16 Old 03-04-2013
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Re: Advice to a newbe

Yes it's true. If you buy a boat for $5k, and put $2K into it, six years later you can sell it for $5K, just what you paid for it.
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post #6 of 16 Old 03-04-2013
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Re: Advice to a newbe

Some of you may remember that a few years ago I did A LOT of research on selling prices of Catalinas in the 25-36 foot range. By and large, those boats all sold at their new selling price. For example, a 1990 boat (20 years old at the time) was less money than a 1995 boat (15 years old). But, on average, both boats were selling at the base price that they had sold for when new. Of course, they had a lot of upgrades and accessories, so those came "for free" (sometimes worth nothing, sometimes not).

My point is that for well maintained Catalinas (and I suspect other popular production boats from builders still in business) there is no "depreciation." You pay less for a used boat because the boat sold for less x years ago. If you buy one of these boats and maintain it, you can count on selling it for about the same price, but you will be out the maintenance money.

So your advice was "on the money" if the boat is a well-respected production boat. YMMV may vary with out of business boat builders (especially due to parts availability) and/or other less respected designs.


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post #7 of 16 Old 03-05-2013
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Re: Advice to a newbe

David, I think your advise is spot on given what I've seen, but it really is market driven more than anything else.

The only way I'd consider resale value of a boat at all is if it was a total rehab or a quick flip. As a hobby, this is expensive sure, but you get your money back in hours of pleasure, not on resale.

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post #8 of 16 Old 03-05-2013
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Re: Advice to a newbe

If you are in the 3k - 10k range, my advice would be to forget about reselling a boat before even buying it, and instead focus on what you want in a boat to best suit your sailing objectives, then take into consideration the ongoing costs of storage and maintenance for different types and sizes of boats. Some 3k boats will be easier and cheaper to maintain than some 10k boats, and vice versa. If you get a few grand back on resale, then great, but that should not be driving the purchase of a boat at this price range.
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post #9 of 16 Old 03-07-2013
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Re: Advice to a newbe

You gave him good advice, david.

Part of my "So you wanna buy a boat" newbie speech:
Boat budgets 101:
I.You can buy cheap and work hard to make the boat better.
2. You can work hard to make more money to buy a better boat.
Before buying a boat, be honest with yourself.
If you're handy and cheap, 1. will work for you. if you aren't, see 2.

don't worry about brands, or size, or resale value, or anything else until you determine what you want in a boat, how you intend to use the boat, and how much money you have to invest in your first year of boat ownership.

Once you know what you need and what you want, then you can determine what a realistic budget is. can't make your own "disposable income" budget fit your boat budget? then you have to decide to defer your dream, or change you wants and needs list, or a little of both.

Yeah, sure you could borrow money to buy a boat. But remember, you're a newbie- you don't even know if you and your family are going to like this long term, and it is foolish to make a long term financial commitment to a short term infatuation.
There is a reason why some of us are on our second wives.

Speaking of spouses, that is another reason why borrowing to go boating is a bad idea.
Boats can sometimes make or break a marriage. If he/she dislikes the rocking and heeling and yawing and yelling, the fact that 239 more monthly payments are attached to it just becomes a bigger bone of contention and things can get real ugly real quick.

Regarding resale value- who cares? Buy cheap, enjoy for a few seasons, sell cheap. My rule of thumb is that if you didn't pay above the market you probably won't get hurt too bad when you sell. and if you don't pay more than low five figures on a good old boat, even donating the boat to charity after several seasons of fun will cost less than an annual one-week charter in the BVI.

One advantage to buying old cheap boats is that they are at the bottom of their deprciation curve. You may not get all, or even most of the money back from any upgrades you make, but you won't lose much on the hull either. Plus, without a whole lot of cash involved, you're less trepidatious about drilling holes into the deck to install gear.

Lots of great boats are available for short money, and if you're willing to get a dirty for a few weekends, there are even more boats available needing a little help. Don't be afraid to invest in 2 things- tools and a good survey on a boat you like, no matter how cheap it is. Following a good surveyor around the boat and peeking over his shoulder will give you real insight into your new potential pride and joy... and often you can use the surveypor's recommendations to reduce the asking price by an amount greater than the survey cost, making the survey essentially free.
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Last edited by bljones; 03-07-2013 at 08:58 AM.
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post #10 of 16 Old 03-07-2013
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Re: Advice to a newbe

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Originally Posted by bljones View Post
......
Yeah, sure you could borrow money to buy a boat. But remember, you're a newbie- you don't even know if you and your family are going to like this long term, and it is foolish to make a long term financial commitment to a short term infatuation.
There is a reason why some of us are on our second wives.

Speaking of spouses, that is another reason why borrowing to go boating is a bad idea.
Boats can sometimes make or break a marriage. If he/she dislikes the rocking and heeling and yawing and yelling, the fact that 239 more monthly payments are attached to it just becomes a bigger bone of contention and things can get real ugly real quick.

......
That's a great point and another reality.. "Maybe she/he will grow to love it"... "Well, I'll just sail with friends, or alone".... or even worse: "We'll buy a bigger boat and it will be better".. All ideas/thoughts/plans that generally are doomed to failure for all the reasons cited. It would be interesting to know the actual statistics on who was the winner in the 'choose the boat or choose me' sweepstakes.

Ron

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".. there is much you could do at sea with common sense.. and very little you could do without it.."
Capt G E Ericson (from "The Cruel Sea" by Nicholas Monsarrat)
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