Too Good to be True? Hidden Costs
I am considering upgrading to a boat about 40 feet in length. I notice there are many used boats on the market, which seem undervalued. What am I getting myself into?
- In the Market
Dear In the Market,
This month, we have another excellent question, with a long answer….but I’ll do my best to keep it short.
“So, you want to buy a boat?” A wise old salt questioned me years ago, “I thought you were smarter than that. The purchase price is just the initiation into the club; and the lower the initiation, the higher the dues.” Okay, we are all crazy about boats, but the old adage remains: our happiest day is when we buy or sell one.
Let’s get started: You want to upgrade; bigger and/or newer is not always better. Ask yourself what your current boat won’t do that the dream boat will do and what you really will do with the dream boat. Really be honest, take a little “truth serum” (as I will shortly) – its not very probable that you will actually go to Catalina every other weekend this summer. After your soul searching, it is reality time.
What will it cost me? The first reality check is to identify difference between replacement and market value (or what it costs for a new one vs. what a used one sells for). This will give you a rough idea of the difference in the “initiation vs. the dues” cost of ownership. The typical annual maintenance will set you back 5-10% of the replacement cost of the boat. Don’t forget to account for insurance, slip fees, fuel, and of course - a well-stocked bar. Remember, the greater the difference between the replacement and market value -the greater your maintenance costs.
Time now to check her out. After 20 years of running a boat yard, one of the lamest lines I have ever heard goes something like, “It was such a great deal! The seller said there was no need for a survey.” To that I say, “[KRABBY’S REPLY UNANIMOUSLY CENSORED BY EDITORS]!” In other words, you must, absolutely, have a complete and thorough survey by an experienced marine surveyor – BEFORE YOU PURCHASE THE VESSEL. Remember in last month’s column, about getting your boat ready for a cruise, hire a rigger, mechanic, etc. – you will need these folks in concert with your surveyor to inspect your prospective new yacht.
Start with the big ticket items like the rig, and engine first. Any issue here is a potential deal breaker, resolve this first before you waste time and money on the rest of the survey. Then complete the hull inspection inside and out of the water.
My truth serum is wearing off, so I am off to the bar for another dose, but let me leave you with this parting thought: Don’t fall in love at first sight. Take your time to complete the process. It will be well worth it in the end when you enjoy your new yacht.