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A friend asks "How much boat can I afford?"

Discussion in 'General Yachting Discussion' started by BenSeattle, Sep 21, 2007.

  1. Norseman

    Norseman Senior Member

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    Same in this camp.

    Had the same boat for 12 years and don't want no bigger boat even if I can afford it.

    Bought the boat for $40K (Avatar Picture on the left)
    Put $70K into it for maintenance, repairs, upgrades, safety and comfort stuff etc.
    Surveyed @ $60K recently, so yes, boats can go up in value, but it will cost you..:D

    We enjoy the solitude and beauty of the Exuma islands for weeks at the time, far away from any civilization and noisy neighbors.
    No difference if the boat was twice as big...It would only cost more to maintain, operate and insure.

    I ran a 70 Johnson for a guy some years ago and would not trade even if offered an even deal.
    Every day there was some maintenance headace on the Johnson and I spent far more time at the dock calling various contractors and experts to get the thing fixed. Then when it was ready, something else broke: The plasma TV would not go up or down with a button push, the dishwasher came a flying in 4' to 5' waves, the crane for the dink broke, the chillers did not chill, the navigation package had bugs...Etc, etc..:rolleyes:

    When I take my cutter to the Exumas the goal is to never pull out the tool box and although I have not been 100% sucessful, we have always made it back and never needed help over 25 Bahamas cruises and another 30 Florida Keys trips.

    Simple and bullet-proof boats are far more enjoyable than some luxo cruiser needing a full time maintenance staff to leave one expensive marina for the next expensive marina.;)
  2. MaxPower

    MaxPower Senior Member

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    Agreed. But you STILL need to pay for it.

    I would say 10% of your net worth ... & that should include the cost of the boat, the financing, maintenance, crew, fuel, etc.
  3. NYCAP123

    NYCAP123 Senior Member

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    Most boats are financed these days. So I don't believe the "% of net worth" formula applies so much anymore. It's more a matter of what % of your nestegg (assuming you have one left these days) you're comfortable parting with for the DP and what % of your disposable income you feel comfortable parting with for operating costs. Then add at least 10% to those figures for the surprises. It's a very individual thing. Everyone should also understand that they will most likely be upside down on the value and have a good reserve, because it could cost a lot to get out from under as many have found these past few years. The expenses don't stop just because you stop using it.
  4. leek

    leek New Member

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    Agreed and would like to add a few thoughts;
    Personally I have never financed a boat. I bought what I could pay for cash, period.
    Buy quality, well proven boats, take care of them and keep them for a long time. Think carefully about how you are going to use this and what boat makes the most sense for your purposes. You will still probably lose money but less than if you buy cheap boats that are not well recieved in the market.
    The annual operating expenses for the boat (5-7% of purchase price based on my experience (I do most non skilled maintenance)), need to fit in to the operating budget for my household.
    My income from investments and from whatever work I do need to cover the majority of my expenses (I don't mind eroding my total net worth slightly but not significantly) including the boats. I am 55 and recently retired CEO of private company so that may help you understand viewpoints...
  5. ScrumpyVixen

    ScrumpyVixen Member

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    Rather like the concept of not borrowing to buy a boat and paying for the owning and running costs out of disposable income.

    Boats can be hard to sell - it can take 12-18 months to sell when things turn, and you can't turn the costs off while you are waiting to sell it.

    A $1,000 goes nowhere when something needs to be fixed or replaced on a 35+ foot boat, so if you cant pay that out of your monthly cashflow without worrying about it, don't do it. It kills the enjoyment if you are worrying about the the next problem.

    Like the advice about buying a simple boat, alot less to go wrong, and you get the same amount of pleasure being out on the water as another boat with Plasma TV's.

    Pay cash, and keep it simple. Buy a 2 or 3 year old good quality mainstream boat, and that will hopefully run reasonably reliably and appeal to a larger pool of buyers when you want to sell.
  6. Highlander

    Highlander New Member

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    When buying a used boat, think about the honeymoon period.
    The first 5 years of a boats life are the least problematic. The first year a little less so.

    Buying at 5 years is almost the same as buying new, after repair and upgrades.

    The 2 to 3 year point is a sweet spot.
    You still get some time to enjoy before things start wearing out or failing.

    Once you own a boat its still cheaper to fix it than trade it. That can go on for a long time.
  7. MaxPower

    MaxPower Senior Member

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    oh i don't know about that ... it really depends upon the dealer who's taking it in as a trade-in ...i got a REALLY nice fella ... took in TWO boats AND a jet-ski as a trade in ... at MY prices...

    IMHO, he's the best dang dealer in the region ...
  8. NYCAP123

    NYCAP123 Senior Member

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    On a trade they take with both hands, and they're always nice until you reach your credit limit. The only way he did it 'at your prices' was if your prices were lower than he was planning to give you already. Salesmen give nothing away, but they do give you the warm fuzzies (until you max your line). However, it can easily take well over 12 to 18 months to sell on your own, especially if you want top dollar. We looked at a nice boat 4 or 5 years ago. It's still for sale.
  9. jdpeterson

    jdpeterson New Member

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    Depreciation

    Unless I missed the reference in this thread, asset depreciation may go along ways towards getting the expenses up from 10% to 20%. If the yacht is purchased as a personal item, nobody cares about depreciation; it just gets less valuable as it ages. If it's purchased by a Corporation or other business entity, you'll be forced to account for the depreciation and cough-up that cash on a regular basis.

    Of course, your mileage may vary; make sure you talk to your accountant and tax attorney before making an assumption that may later tend to not be true.
  10. NYCAP123

    NYCAP123 Senior Member

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    Don't forget about 3yearitis. One can easily dump 1/3 of original purchase price about that time.
  11. YachtPhoto1

    YachtPhoto1 New Member

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    OMG The Deals ARE Out There

    Like many of you, I like to walk the docks and look at the "foresailers", as in what's for sale. And as many of you may have noticed, there is absolutely no shortage on boats/yachts for sale.

    My cousin, on the Left Coast, had the CA$H to purchase a boat with, but had no idea what she really wanted, or just how much she might get out and use it. That being said, she went looking and looking and looking.

    She thinks, "OK, is it the 50' one I can spend a few weeks aboard or something under 40' that I might just spend a nice, long weekend aboard"?
    Turns out that the under 40' tended to fill the bill.

    As she and her boyfriend tour the brokers, she sees the one that shouts out,
    "Take me home...let's make a deal"! The boat was like brand new inside and out. I got the call to come and take a look and give her my thoughts. As we boarded and looked around, I'm getting the good vibes.

    Long story short, she made an offer the owners could not refuse, and she has been a very happy cruiser. Thus, life can be good, with the right sized boat, and the right amount of CA$H spent.

    Cheers!!! :cool:
  12. NYCAP123

    NYCAP123 Senior Member

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    I'm in the process of helping a client find a 37-43' Express Cruiser. Even considering what I've seen over the past 3 years, I'm amazed at the number of boats on the market in that range. I also have a client selling one in that range and he's asking a ridiculously small price and heavily negotiating from there in order to be competitive. He'll take a big hit. It's a very good time to buy if you've got cash. You can even get a good slip almost anywhere. Unfortunately, I don't see the new boat market going anywhere until the inventory of good used boats begins to dwindle. At least the big boats seem to be selling.
  13. YachtPhoto1

    YachtPhoto1 New Member

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    Have Boat--Will Float...

    Yes, no doubt about it...CA$H talks and most people hear it loud and clear
    if they truly want to walk away and then take a nice CRUISE...well, maybe not!!

    CHEERS!! :cool:
  14. zudnic

    zudnic Senior Member

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    Id rather figure out the mission and find suitable for it. Than work out the budget and what I'm comfortable spending. Family started with 40 Mainship trawler in 1980's. Grew up in a house on a beach near Vancouver. So we seldom used that over night, day trips fishing mostly. Ended up moving down to 22 Boston Whaler revenge with small cuddy. Us kids (3 brothers) rarely wanted to leave home and mostly wanted to water ski. Downsized again into 17 Sea Ray run about. Since I've gone into jet boats mostly. Tired of being freeboard challenged, so moved up into Donzi 22 Classic. Decided to go with bigger go fast boats--still want a mid eighties Cigarette 38 flat deck or 41 Apache 6 pack race set up. But racing around wave crushing gets boring and with a work project coming up in the Dominican Republic has me thinking live aboard and also winter escape with a fun tender get both worlds.......... I'm kind of going back to my youth early teen years type of boating.
  15. Rolf

    Rolf New Member

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    It's quite simple. If you can afford to rent it, you can afford to own it.
  16. Only4Her

    Only4Her New Member

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    Percentage of net worth has little to do with what he should spend.

    Some have a net worth totally fluffed up with "assets" that have little to do with their actual value. Each person should look at their cash, cash flow and liabilities as well.

    If your so-called "net-worth" $20mil but your income is $600k a year and your liabilities are $500k a year, and cash is $1mil then your an idiot to buy a $2mil boat, actually your an idiot to buy a $600k boat. You are too close to the edge with that high of expenses. Buy a boat after you sell some of your so-called "assets". You know.... that $10mil dollar "ranch" in Texas that is so valuable... LOL

    If your "net worth" is $10mil, with $500k in cash, $2mil in free and clear home, and $3mil in AAA investments. Further, your income is $600k and liabilities are only $200k, I say go for it. You obviously don't live on the edge with everything financed.

    Age and income variables would create more scenarios but I don't want to write 20 paragraphs :D

    Many could technically could have a new or nicer boat, but it could end up to be financially devastating if something were to happen to income, which seems to be happening a lot lately. It's worth the $ to see a financial consultant to advise.
  17. Only4Her

    Only4Her New Member

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    Your joking, right?
  18. NYCAP123

    NYCAP123 Senior Member

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    Heard of a guy rcently who rented an Escalade...by the week for a year because he had lousy credit. He could have bought 3 outright. So yes, he's not far off. It's more a matter of whether you'll use it enough to make it pay off. If you want a boat for two weeks a year, rent. If you want to use it for 2 months a year, now your on the buy border.
  19. Capt J

    Capt J Senior Member

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    You have got to be kidding. I could afford to charter a 165' MY for a week or two. But that's about all I could afford. I couldn't afford the maintanence and crew costs for more than a month, let alone purchase a yacht like that.
  20. Only4Her

    Only4Her New Member

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    OK, but that SUV is an extreem case of renting... and cars and boats are pretty far apart in valuation. My guess is many guys here have boats worth more than a Ferrari 430, but not many people who may rent that car can afford to own one...

    I think renting a boat for a 10 day cruise (which I think 7-10 is typical), doesn't mean you can afford that boat. That could be like ALL of a family vacation fund...

    Now if the poster (Rolf) was insinuating that if you can afford to rent it indefinitely or for a crazy amount of time (like your friend with the SUV)... we'll of course you could afford it. It would be cheaper.