Reply
 
Thread Tools Display Modes
 
Old 03-09-2015, 08:19 AM   #21
FF
Guru
 
FF's Avatar
 
Join Date: Oct 2007
Posts: 16,525
"not counting depreciation nor time on boat while not operating."

Time on the boat while NOT operating is probably 90% of most boat use.

This is good time as little wears out just sitting.
__________________
Advertisement

FF is offline   Reply With Quote
Old 03-09-2015, 11:33 AM   #22
Guru
 
MYTraveler's Avatar
 
City: West Coast
Country: USA
Join Date: Apr 2014
Posts: 850
That 10% rule is frequently cited, but in my experience it is nonesensical. For example, my cost may be twice what someone would pay today -- should my maintenance cost be twice? I doubt it. So, frequently the rule of thumb is adjusted to be 10% of current value, but that doesn't make any sense either -- why should maintaining a 5 year old boat be 1/2 the cost of maintaining the same boat when it was new?
Setting those issues aside, IMO and IME it is way high if you are only trying to maintain a boat. Conversely, if you are buying a boat that needs repair and replacement, those costs could easily exceed the 10%. Similarly, a lot of money can be spent on upgrades of otherwise functional systems, but I would not include those costs in maintenance since they are entirely elective. My annual maintenance costs (so, excluding dockage, insurance and fuel, but including bottom cleaning, washing and waxing and preventative maintenance and repair) are not 1% of my original cost.
__________________

MYTraveler is offline   Reply With Quote
Old 03-09-2015, 12:35 PM   #23
Guru
 
AusCan's Avatar
 
City: Adelaide
Country: Australia
Vessel Name: Kokanee
Vessel Model: Cuddles 30 Pilot House Motor Sailer
Join Date: Jul 2012
Posts: 2,095
I would say 10 -15% of purchase price would be close to the mark for a 20 year old boat in fairly good condition. A new boat would be a little less, and a 20 year old boat in poor condition might be 50% for a few years, due the both the lower purchase price and the required catch up maintenance & repairs.

I bought a low cost 30 year old boat in perhaps below average condition, and the first year was about 20%, the second year about 50%, but now hopefully expect to see the maintenance costs reduced significantly after replacing most of the big dollar items such as engine, gearbox, rigging, fuel tanks, windlass, prop and wiring upgrade.

I may even get to that 10% figure, but I probably just jinxed myself by posting this.
AusCan is offline   Reply With Quote
Old 03-09-2015, 01:04 PM   #24
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 13,146
Here's where those numbers originated and why they really don't apply to most trawlers.

Just using this as an example to understand where they came from and why they're so misleading.

Take a 130' Yacht. Twin engines, twin gens. Purchase price $24 Million

Fuel $600,000
Engines and Gens Maintenance $60,000
Annual reserve for rebuilds $130,000
Maintenance, Paint, Deck, Interior $110,000
Maintenance, Tenders and Watermakers plus reserve for replacement $20,000
Hydraulics-Thrusters, Stabilizers $30,000
Dockage $170,000
Crew costs, including medical, fringes, food, travel, uniforms, and day help $700,000
Communications $75,000
Cost of entertaining guests $140,000
Insurance $160,000
Property Taxes (putting it in California) $300,000
Administrative costs $50,000

Total $2,550,000...Without California taxes $2,250,000

Now, that's where the old saying that it would cost 10% of the purchase price to operate it came from. Like passing any saying around the room, over time it became maintenance and it was applied to other type boats and people without crews and DIY maintenance and it's at that point terribly wrong. And boats like trawlers that use 4 to 15 gph versus the example above at 130-160 gph.

What I would suggest as the key elements of annual costs are those shown above but they must be calculated for each boat.

1. Fuel
2. Engine and Gen Maintenance
3. Reserve for major maintenance and rebuilds
4. Painting and any deck or interior maintenance
5. Cost of maintenance and replacement of tenders, watermakers, appliances.
6. Cost of maintaining stabilizers, thrusters, flopper stoppers.
7. Dockage
8. Crew costs (don't apply generally but could be cost of delivery captain or shipping)
9. Communications
10. Food and spending money while cruising
11. Insurance
12. Taxes and Fees

The most overlooked cost is major work such as rebuilds since that requirement is just every few years and some are lucky enough or use their boat little enough to never require.

Most overestimated I think is fuel. People estimate a lot more movement than they have in reality and at speeds they don't normally go.

I think 5% is more than most will encounter, but I'd advise anyone to just look at it category by category.
BandB is offline   Reply With Quote
Old 03-09-2015, 02:19 PM   #25
Guru
 
AusCan's Avatar
 
City: Adelaide
Country: Australia
Vessel Name: Kokanee
Vessel Model: Cuddles 30 Pilot House Motor Sailer
Join Date: Jul 2012
Posts: 2,095
Band B - It also can apply to a 30 foot boat.
Now that I have addressed the major problems on my boat, this is a rough expectation of my costs for the next year.

1. Fuel $500
2. Engine and Gen Maintenance $300
3. Reserve for majors $1000
4. Painting etc $200
5. Tenders, watermakers, appliances. $250
6. Stabilizers, thrusters, flopper stoppers. & sail rigging $100
7. Dockage $2600
8. Crew costs $0
9. Communications $0
10. Food and spending money while cruising $0 (no more than staying at home)
11. Insurance $700
12. Taxes and Fees $0

Total $5650 (11.5% of purchase cost - $49,000)

I'll likely spend at least the same amount again on improvements, but these are discretionary costs. This is often where the cost of boat ownership blows out.
AusCan is offline   Reply With Quote
Old 03-09-2015, 02:20 PM   #26
Scraping Paint
 
City: -
Country: -
Join Date: Oct 2007
Posts: 13,748
Citing a percentage of the price of a boat when it was new isn't of any benefit because of the changing value of the dollar. It's an apples to oranges comparison.

In 1998 we paid in dollars well over twice what our boat had cost new in dollars in 1973. Did that mean the boat had appreciated in value? Of course not. In 1998 the same make and model of boat sold new for over three times the number of dollars that we paid for our then-twenty five year old boat. Our boat had depreciated A LOT from the day American Marine loaded it new on the ship in Singapore for its journey to its buyer in SFO Bay.

If we had been led to believe that the ownership cost of our boat in 1998 dollars would be in the neighborhood of ten percent what the boat had cost new in 1973 dollars, we would have been horribly dismayed when the bills started to come in. In fact, had we budgeted our boat purchase based on this ownership cost, we would have quickly gotten underwater with the ownership cost and possibly have had to sell the boat or make severe adjustments to the rest of our living expenses.

Instead we were given as a VERY rough rule of thumb the figure of ten percent of the purchase price in 1998 dollars. Apples to apples.

And as it has turned out, over the years the ownership cost of our boat has proven to be in that ballpark with an upward creep to account for the increased cost of labor, parts, materials, fuel, moorage, and so forth. The one thing that hasn't gone up is insurance thanks, I believe, to our having an excellent broker (Anchor Marine).

So giving a prospective first-time boat buyer a ROUGH ownership cost figure to be aware of as he or she determines their boating budget is only meaningful and easy for them to grasp if it's in the "same money" their purchase price will be in.

Has the ownership cost been the same every year? Of course not. Some years not much happened outside of moorage, insurance, and routine maintenance stuff that we did ourselves. Other years we needed a new prop shaft and new cutless bearings on both shafts, or better, stronger shaft couplers, or new motor mounts on both engines, or new custom-fabricated exhaust systems on both engines, or the main deck regrooved and reseamed. This year we're having new cushions and backs made for the main cabin and we need the dinghy motor overhauled.

But on average, that ten-percent of the purchase price of the boat figure our broker gave us the day we walked in with a "we're considering getting a cruising boat of our own, what kind of cost would we be looking at?" question has been remarkably accurate.

And even if it hadn't been accurate, even if it had proven to be somewhat higher or somewhat lower, that's not the point. The point is that he let us know right off the bat that boats like these cost a fair amount to own, we immediately got a sense of what boats like this cost to own, and we immediately understood that we needed to be aware of this and allow for it in our boating budget.

So we did and as a result we bought a boat we liked that hasn't exceeded the amount of our disposable income we are willing to spend on boating.
Marin is offline   Reply With Quote
Old 03-09-2015, 03:28 PM   #27
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 13,146
As Marin says, the key is to be conservative in your expectations and prepared for costs on the high side. Then if it's better, great. Just don't underestimate what it costs to maintain a boat properly. If you do, you find yourself skipping or putting off needed maintenance and then ultimately all the needed work piles up and in an amount you just can't afford.

I know we go overboard as typical for me, but we maintain complete financial statement on our boats, just no income. However, we accrue rebuild expenses and show it as a liability building. We also depreciate just to remind ourselves of the fact it's losing value and to replace it one day down the road with a new boat would be expensive. It's whatever method helps you individually.

I hate to see when the cost of ownership suddenly becomes a shock. I look around at all the reclamation projects that are stopped along the way over finances and dreams unfulfilled.

If you make a good estimate of costs of ownership and find you can't afford it, then find another way. It can be a cheaper boat. We have friends for whom it became chartering as they only get a couple of weeks, a couple of times a year. If the cost of a boat is more than you anticipated then the boat can easily become a source of stress rather than pleasure.
BandB is offline   Reply With Quote
Old 03-09-2015, 04:21 PM   #28
Guru
 
City: Hotel, CA
Country: Fried
Join Date: Sep 2011
Posts: 8,328
Quote:
Originally Posted by BandB View Post
As Marin says, the key is to be conservative in your expectations and prepared for costs on the high side. Then if it's better, great. Just don't underestimate what it costs to maintain a boat properly. If you do, you find yourself skipping or putting off needed maintenance and then ultimately all the needed work piles up and in an amount you just can't afford.

I know we go overboard as typical for me, but we maintain complete financial statement on our boats, just no income. However, we accrue rebuild expenses and show it as a liability building. We also depreciate just to remind ourselves of the fact it's losing value and to replace it one day down the road with a new boat would be expensive. It's whatever method helps you individually.

I hate to see when the cost of ownership suddenly becomes a shock. I look around at all the reclamation projects that are stopped along the way over finances and dreams unfulfilled.

If you make a good estimate of costs of ownership and find you can't afford it, then find another way. It can be a cheaper boat. We have friends for whom it became chartering as they only get a couple of weeks, a couple of times a year. If the cost of a boat is more than you anticipated then the boat can easily become a source of stress rather than pleasure.
Well said, I've attempted to convey this exact thought in past years and got my butt flamed pretty good for it. Not by regular contributors but by new wannabe boat owners who took offense. There's no shame in smaller boats or chartering as an option. My brother charters a crewed vessel annually and gets great enjoyment without ongoing ownership costs. Picking locales, styles(motor yacht or sail), size etc is nice too.

We chose a small boat not because we could not afford larger, rather because it best fit our defined mission. We have started the initial baby steps in defining the mission for our next boat and it promises to be different but not necessarily bigger. The folks that spook me are the ones looking for maximum size at minimal cost which can too often be a recipe for disaster for a newbie to boating IMO. I've had plenty of face to face, PM, email and phone contact with folks expressing some form of regret over their current boat choice. "If we had only ______"(started smaller, chartered, shopped more, been more aware of ongoing costs) are all very popular themes.
__________________
Craig

It's easier to fool people than to convince them that they've been fooled - Mark Twain
CPseudonym is offline   Reply With Quote
Old 03-09-2015, 05:09 PM   #29
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 13,146
Quote:
Originally Posted by CPseudonym View Post
Well said, I've attempted to convey this exact thought in past years and got my butt flamed pretty good for it. Not by regular contributors but by new wannabe boat owners who took offense. There's no shame in smaller boats or chartering as an option.
This is a common issue every boat purchaser faces too. Those who decide 160' vs 200', production or custom, face the same issues. For everyone there's a level that is beyond their needs and means.

We chartered for quite a while as part of our decision process. It's especially great if you can charter the same boat you're thinking of buying.

We lived on the lake before moving to Florida. The boats that were most frequently repossessed were bass boats. These were fishermen who started out thinking a nice $30,000 bass boat but ended up with an $80,000 one. Then left with none and destroyed credit.

Outside of a very few multi billionaires, there is no one who doesn't have financial limitations. We used those words saying, "We don't need it and honestly we can't afford it." Could we have afforded the boat in question? Yes, but...the but is something else we had in our plans would have had to be eliminated. Every sales person has a strong bias and incentive toward talking you up to something more expensive. The most honest and fair ones do a good job of tempering that, but it's still there. I laugh watching some of the home buyers on television shows. They give the realtor a range. Does the realtor ever start at the bottom end of that range? No. Always the upper end and often trying to stretch that higher.
BandB is offline   Reply With Quote
Old 03-09-2015, 09:58 PM   #30
Guru
 
Pgitug's Avatar
 
City: Punta Gorda, fl
Country: Usa
Vessel Name: Escapade
Vessel Model: Nordic Tug 37 2002
Join Date: Jan 2015
Posts: 989
I think these guys are being too careful with their advice. The annual budget is very simple to figure out. Only the owner knows his boat well. So pencil out, on the high side, what you think the cost will be. Take a few days to think about your list, then add what you may have missed. Got the number? Multiply that number by Five. There you have it.
Pgitug is offline   Reply With Quote
Old 03-09-2015, 10:31 PM   #31
Guru
 
angus99's Avatar
 
City: Signal Mtn., TN
Country: US
Vessel Name: Stella Maris
Vessel Model: Defever 44
Join Date: Feb 2012
Posts: 1,384
In my limited experience, current maintenance costs depend on how well you or the PO took care of PM to date and how much of the work you will perform yourself. Docking depends somewhat on where you boat, how well you negotiate and whether you have a covered slip at a boutique marina or a mooring ball out in the sticks. Taxes are location-dependant. Fuel depends on how much you run the boat and whether the Saudis are flooding the oil market or withholding in any given year. Insurance depends on how much risk you can tolerate and how big a deductible you can absorb.

Don't forget to factor in the age of the boat and whether you paid $40K or $400K for it.

All of these variables add up to making a rule-of-thumb percentage for annual ownership costs meaningless, IMHO.
angus99 is online now   Reply With Quote
Old 03-10-2015, 01:38 AM   #32
Scraping Paint
 
City: -
Country: -
Join Date: Oct 2007
Posts: 13,748
Our broker told us that he used to try explain to first-time, prospective buyers all the variables that go to ownership cost of a particular boat in answer to their question of "how much does it cost to buy a boat." He said he quickly found that it was way too much for them to comprehend and take in at that stage of the game. So he began using the "ten percent" rule instead and found that everybody (including us) immediately grasped the concept of ownership cost and was much more comfortable and thus receptive to the whole boat buying process.

Given his continuing success at selling pretty expensive boats, often to people getting into this kind of boating for the first time (like us), it has always struck me as a very smart approach to making sure his customers knew exactly what they were getting into right off the bat.
Marin is offline   Reply With Quote
Old 03-10-2015, 07:35 AM   #33
FF
Guru
 
FF's Avatar
 
Join Date: Oct 2007
Posts: 16,525
I believe the 10% figure came from wood boats , 1900 to 1950 , where a yard built the boat and would maintain it .

A good portion of the budget was for long term maint. Wooding to repaint costs more than a coat of fresh on haul, and before launch.

Long term refastning , and a new engine every 7-8 years was part of the drill.

Todays plastic boats are far lower in maint .And direct sea water cooling no longer eats the blocks.

Dockage , fuel, insurance yacht club bar bills were never part of the 10% rule of thumb , just maint costs.
FF is offline   Reply With Quote
Old 03-10-2015, 10:12 AM   #34
Guru
 
hollywood8118's Avatar
 
City: Port Townsend Washington
Country: USA
Vessel Name: " OTTER "
Vessel Model: Ocean Alexander Europa 40
Join Date: Nov 2009
Posts: 1,482
Quote:
Originally Posted by FF View Post
I believe the 10% figure came from wood boats , 1900 to 1950 , where a yard built the boat and would maintain it .

A good portion of the budget was for long term maint. Wooding to repaint costs more than a coat of fresh on haul, and before launch.

Long term refastning , and a new engine every 7-8 years was part of the drill.

Todays plastic boats are far lower in maint .And direct sea water cooling no longer eats the blocks.

Dockage , fuel, insurance yacht club bar bills were never part of the 10% rule of thumb , just maint costs.
But the systems on the 1950 boat were dirt simple also, just look at the costs to repair all the pumps on a newer tech boat, not to mention all the electronics. My annual costs on my Ocean Alexander run 15% - 20%.. dockage alone eats up 10%

HOLLYWOOD
hollywood8118 is offline   Reply With Quote
Old 03-10-2015, 01:48 PM   #35
Scraping Paint
 
City: -
Country: -
Join Date: Oct 2007
Posts: 13,748
According to the broker we worked with to find our PNW boat-- and we have since heard the same thing from surveyors--- annual ownership cost includes every cost associated with a boat except finance payments if the boat is financed. Finance payments are excluded I assume because they eventually go away.

So moorage, electricity, insurance, maintenance, upgrades, repairs, materials, state registration fees and so forth are all included.
Marin is offline   Reply With Quote
Old 03-10-2015, 02:14 PM   #36
TF Site Team
 
Baker's Avatar
 
City: League City, Tx
Country: Texas
Vessel Model: Carver 356
Join Date: Oct 2007
Posts: 5,630
Quote:
Originally Posted by markpierce View Post
Thinking about it.... costs about $120 an hour
I thought this was a hilarious...as this is how I read it. And it is likely to be more true than not.

Just thinking about it(boat) costs $120 an hour!!!!!!!
That should scare the hell out of any newbie!!!!
__________________
Prairie 29...Perkins 4236...Sold
Mainship Pilot 30...Yanmar 4LHA-STP...Sold
Carver 356...T-Cummins 330B
Baker is offline   Reply With Quote
Old 03-10-2015, 03:00 PM   #37
Scraping Paint
 
City: -
Country: -
Join Date: Oct 2007
Posts: 13,748
Quote:
Originally Posted by markpierce View Post
I don't believe a percentage of value is a good estimate of ownership costs. Compare similar, equal-sized boats, one purchased new for $250K compared to a used one acquired for $80K. Ownership costs wouldn't be three times higher for the newer boat (except for property taxes.)
You are correct, of course. The "ten percent" average has always been explained to me as being a useful awareness tool for someone buying a used boat, the type most first-time boat buyers tend to be looking for. So the 70s, 80s, 90s vintage boats.

And again, it's always explained as being a VERY rough estimate that is useful only for the purpose of injecting a sense of reality into what is often the euphoria of buying a boat for the first time.

You could simply say to the prospectve buyer, "Don't forget that a boat is going to cost you money to own and operate every year," but you know the next question will be, "How much?"

Since at this stage of the game the broker doesn't even know what particular boat the buyer will end up getting serious about, the easy and at least vaguely accurate answer is the percent of purchase price.

As the buyer starts focusing in on one or more particular boats, a more accurate estimate of their ownership costs can be worked up. But it's important right at the outset, according to the brokers I know, to get that sense of reality imbedded in the prospective buyer's mind so they don't start trying to bite off more than they can chew only to be disappointed later.
Marin is offline   Reply With Quote
Old 03-10-2015, 03:07 PM   #38
TF Site Team
 
Baker's Avatar
 
City: League City, Tx
Country: Texas
Vessel Model: Carver 356
Join Date: Oct 2007
Posts: 5,630
Marin, please see my above post for the new "awareness tool"!!!

Just thinking about a boat cost $120 an hour. That should do it!!!
__________________
Prairie 29...Perkins 4236...Sold
Mainship Pilot 30...Yanmar 4LHA-STP...Sold
Carver 356...T-Cummins 330B
Baker is offline   Reply With Quote
Old 03-10-2015, 03:18 PM   #39
FF
Guru
 
FF's Avatar
 
Join Date: Oct 2007
Posts: 16,525
But the systems on the 1950 boat were dirt simple also

Not really , a 50 would have heat & hot water (Way Wolf) ,refrigeration , AC or DC usually open frame motor and belted compressor, autopilot (Wood Freeman) .

Washing windshield wipers and powered capstan or windlass and powered dink hoist.VHF or SSB . and a motot gen (instead of inverter) for house gadgets.

No win fi , or electronic toys , just a Zenith world radio.
FF is offline   Reply With Quote
Old 03-10-2015, 04:13 PM   #40
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 13,146
Out of curiosity I had to check our actual numbers. All operating costs including reserves we're building for major work=8.2%. Now, add in depreciation and then you're at 12-13%.

Are we being too conservative projecting? I don't think so. For instant we have a reserve for dinghy/tender replacement. I doubt there are many here who haven't had to replace one. They definitely won't last as long as the boat.
__________________

BandB is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off





All times are GMT -5. The time now is 10:25 AM.


Powered by vBulletin® Version 3.8.8 Beta 4
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Search Engine Optimization by vBSEO 3.6.0
Copyright 2006 - 2012