There are plenty of people who love going for cruises. Well, who doesn’t? Seeing the stunning scenery from a cruise ship or sailboat with the people you love while sipping a glass of fine wine, is truly relaxing.
That’s why cruise getaways are very popular among vacationers. However, there are some people who want to take it to a whole new level by having their own boat. If you’re a boat owner, you know that owning a boat is a expensive affair if you approach it the wrong way. But with some commonsense rules it can be inexpensive and simple. If you’re buying your first boat, the following article could help save you a lot of money.
One of the most significant considerations is keeping the total cost of your acquisition well within your financial means. One of the most overlooked things when purchasing a new boat is what the vessel will be worth a few years later.
We all know that the we drive a new car out of the dealership, it immediately loses 25% or more of its value. And although the immediate depreciation rate of most new boats is not quite so bad, the owner of a newer vessel is going to take a serious hit in the event that he has to abruptly sell.
There’s a good reason why banks want a 20% down payment on financing. One of the worst positions you can be in is to have to liquidate and finding that your liability is more than your equity. This is especially significant if you’re purchasing a second-hand craft . Bank repossessions hit an all-time high in 1992 and the bulk were older rather than newer vessels.
We seem to be living in an age when price and quantity are more vital to consumers than worth. First time buyers in particular are often more interested in finding the biggest size craft for the least cost. This is a mistake. Boats float in a very corrosive fluid: sea water. Added to the corrosive effects of sea water are the effects of sunlight, ice and snow, rain and the rough conditions of oceans, lakes, and bays.
Increasingly, boat builders are succumbing to marketing fads, sacrificing quality for appearance, style over security and function. More and more builders turn to designers of fashion in an effort to snare the inexperienced into keeping up with the Joneses with the latest stylistic offerings.
There is no more educational exercise than by taking a tour through a marina or boat yard and observing what boats look like after they’re a few years old. Their age can be easily determined from the hull number on the stern. Take a look at how those glittering showroom finishes are holding up in the real world.
Has the gelcoat turned chalky after only a few years? And what about those fancy graphics? Is the paint fading or is the taped-on feature striping peeling? How about molded plastic parts: are there numerous plastics that are cracked, chipped or broken? Look out for plastic trim and particularly window moldings.
Are they painted and is the metal under the paint starting to corrode? Look at the hardware. Is it quality stainless steel, or inexpensive cast aluminum or “pot metal” parts that are corroding badly? Is some of the hardware painted and the paint starting to come off?
This is one of the best ways that I know of to find out how any particular builder’s models will hold up over time. Remember that inferior materials such as molded plastics, vinyls, plywood decals, cast aluminum and other painted metals can rapidly degrade, and once degraded cannot be restored. Poorly constructed boats are a lot like particle board furniture: once it deteriorates, there’s no bringing it back. The costly investment turns into a painful loss.
Remember that the reason why worth boats like Hatteras, Tiara, Bertram and Viking cost so much is because of the quality materials that go into their construction. There’s a good reason why they don’t put interiors on the exterior! A 20 year old Bertram can still be easily resold because its excellence components have not turned to dust. If you want to avoid taking a big hit on resale, remember that the glitz and glitter today is less significant than how your purchase will look at the time you go to sell.
Reflect on your option of new or used carefully. There are very good values to be had in used boats. More first time buyers acquisition new boats, while experienced boaters more often buy second-hand . And with good reason. Experienced boaters know that there is better value dollar for dollar in many used boats than new ones.
They’ve already had the experience of taking a big hit in depreciation , along with the high cost of financing involved in a new boat purchase . To help decide which is right for you, consider the following.
A general rule of thumb is that a new boat acquisition works out better for the owner who keeps a boat longer than the average four years, or at least through the bottoming out of the reduction curve. Obviously, the longer a boat is owned, the less the annual cost becomes.
However, that doesn’t help much as far as residual value is concerned unless we reflect on the original cost versus anticipated resale value. Once we do this, we understand that what they told us was really true: boats, like automobiles, are not an investment but a major expense. If you plan to only own the craft for a few years, or you anticipate that there is a chance you may have to sell, by far a second-hand boat will be your better value.
With used boats, don’t make the oversight of equating low hour meter readings with good engine condition. For the most part, engine hours mean little because engines deteriorate over time. Engines that are little second-hand , gas or diesel, are often in worse condition for the lack of use. Also, don’t succumb to the myth that marine diesels last for thousands of hours. They don’t. The average time between major repairs is around 6-7 years.
Or, if you want to put it in terms of hours, around 1500 hours. Marine engines deteriorate rapidly in a salt water environment. Good boats with bad engines can turn out to be a good buy when comparing price differentials against a newer boat acquisition , particularly for smaller boats, and boats with gas engines where engine replacements are easier.
Many buyers find that they can get a good buy in a boat with clapped out engines and rebuilding or replacing them. If you don’t mind the trouble, it may be worth making the price comparison. If the price works out, you end up with a boat with new engines, a real comfort to any boat owner.
In addition to acquisition price, interest and reduction , the cost of ownership includes maintenance and repairs, something owners rarely reflect on . For new boats, maintenance is low for the first three years or so. But after three years costs start increasing significantly. Regardless of type, major machinery will often require major repairs in years 5-7. There’s a reason why warranties expire when they do, and that’s because that’s when the breakdowns begin to happen.
If you buy a new 40′ motor yacht and sell it after 3-4 years, annual maintenance is likely to average around 4%. The longer you own it, the more it will increase as things wear out and breakdown. The first big hit usually comes when an engine or generator goes bad somewhere between 5-7 years.
Obviously, if you own the vessel this long, suddenly the annual average takes a big leap. If you’re buying second-hand , then you have to be prepared for this, whether it’s an unexpected blister repair job, or some other problem that’s not covered by insurance. Of course, with a used boat, that fifty or hundred thousand you saved off the new price more than makes up for “big bill.”
Don’t be too quick to condemn an otherwise good boat that has a major problem such as a bad engine. If you’ve done your homework and have researched more than just a few boats, you know what is available and at what price. If you can get serious defects repaired cheaply, you’ll probably end up with a better boat than the next one you look at.
· Make excellence a major consideration. Don’t try to get the biggest vessel that your budget will allow. Better to take a step down in size and a step up in excellence.
· If size is a major consideration, seriously consider second-hand versus new as a means of staying within your budget.
· Look beyond elegant interiors, luxurious upholstery and racy designs: the beauty may only be skin deep.
· Calculate the full cost of ownership, including reduction , interest, insurance, dockage, fuel and repairs. Figure maintenance as an annual percentage over the period of ownership.
· Seriously consider gas rather than diesel for boats under 35′ for which you don’t expect to get much use.
· Once you’ve decided on several potential, take a tour of a marina or boat yard and see how the products of those builders hold up over the years. Talk to their owners and see what they have to say.
· Consult a surveyor before you buy. Most surveyors will be glad to help you make a choice.
· Take the time to find the best surveyor in your area.
· Make your purchase decision only after you’ve read the survey report.
· reflect on the advantage of getting major machinery or parts overhauled or replaced based on a reduction in price.