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Old 03-10-2015, 04:39 PM   #41
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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%.
The depreciation of 4-5% means you are only counting on a 20-25 year boat life. The boat life seems a little low if you maintain the boat well. What made you decide to use that rate?
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Old 03-10-2015, 05:08 PM   #42
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The depreciation of 4-5% means you are only counting on a 20-25 year boat life. The boat life seems a little low if you maintain the boat well. What made you decide to use that rate?
Actually I gave a couple of different boats, different lives. A higher performance sport boat I gave a 20 year life. Others we give 30 year lives. Can a boat last longer? Yes. But at 30 years the cost of a rehab may be more than it's value. We do leave it with some residual value. Actually the best way would probably be using a declining balance method of depreciation as a new boat loses value much faster in the early years than it does later.

We actually look occasionally at the value of the boat used. As was noted earlier some older boats actually appreciated in value. But if we paid $2 million and two years later it's only worth $1.6 million then there's an extra $400,000 cost of those two years (that's one argument people would use to say you should buy used). But in that example, the true depreciation is 10% for those two years.

Depreciation is definitely a factor to consider in deciding what boat and new vs. old vs. older and even builder. We tend to say we'll never sell it, but eventually they all get sold.
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Old 03-10-2015, 05:47 PM   #43
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To the OP, thank you for starting this thread. I have been meaning to start a thread on this topic for a few weeks but have been too busy.

Part of the problem with this question is the meaning of "maintenance."

Does maintenance mean all expenses to maintain the boat including insurance and does it include OPERATING expenses? I dont' think it should and these should be separate line items in the budget.

In Leonard's "The Voyager's Handbook" she uses the 10% number but ONLY applicable to fixing things on the boat. Not insurance, not operating expenses, not docking fees, etc. Just fixing Da Boat.

On their website, there is a PDF called Cost of Cruising that looks to be pretty close to what is in the latest book, Articles

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The smallest, simplest boats take, on average, somewhere around $1,000 per year to keep them sailing safely.At the other extreme, brokers selling boats over 50 feet say you will need to budget an amount equal to annual depreciation – on average about 10 percent of the cost of the boat per year over the course of a ten-year voyage – to maintain the boat’s resale value. While many cruisers we know with complicated boats between 50- and 60-feet scoffed at that in their first few years when their boats were brand new or newly refit, most of them came around to that point of view in the fifth or sixth year after a major overhaul. Our three crews spend between 25 and 30 percent of their total budgets on boat-related expenses.
Given that Leonard and her partner have sailed around the world a couple of times, I have to give great weight to their experience but their numbers seem high to me. 10% or even higher depending on docking expenses, for all operating expenses minus financing makes sense to me.

There are discussions on the same topic on the Cruising Forum where there are people with spreadsheets of cruising expenses on a variety of boats. I don't think any of them are near 10% per year JUST TO MAINTAIN the boat. People on TF and CF who talk about maintenance costs seem to be 1-3% of the boat value.

My dad and I had a long chat about his maintenance costs for the 33 foot sail boat he owned. Best we could tell, he spent 2-3% a year but he did most of the maintenance work himself. However, we think he got ripped off on a transmission repair, and if that had been done correctly, would have gotten his expenses under 2%. We also think these are high numbers AND the numbers include damage from a lightning strike. However, he did not replace his sails and if he had kept the boat another 4-5 years, he almost certainly would have needed new sails. Having said that, the cost of the sails would have only added another couple percentage points over a 10 year period and would not be close to 10%.

By the way the previously mentioned website is a wealth of GREAT information as is her book. HIGHLY recommended.

Later,
Dan
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Old 03-10-2015, 06:29 PM   #44
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Does maintenance mean all expenses to maintain the boat including insurance and does it include OPERATING expenses?
No. Maintenance costs are the costs involved in servicing and maintaining the boat. Most people would probably include repairs with that.

Ownership cost is what the last part of this discussion has been about and it includes moorage, insurance, etc. and maintenance cost.

Some maintenance costs can be forecast. For example engine and transmission servicing which will be spelled out in the manufacturers' operating manuals. X-amount of oil, y-number of filters, and z-time intervals.

Other things, like cutless bearings that wear out, shafts that drift out of alignment, motor mounts that slowly collapse until they need replaceing, alternators that eventually crap out and need overhaul or replacing, radios that die, all march to their own drummer. These things are very difficult to predict with any accuracy other than to say that at some point they will happen if one owns a boat long enough.

And obviously maintenance will vary greatly with the condition and past treatment of every boat.

Of course the maintenance cost will also vary with who does what to the boat. If an owner has the capability and desire to do a lot of the work him or her self--- change the engine oil, overhaul the toilet, replace missing deck plugs on a teak deck, rebuild leaking windows, and on and on--- this person's overall maintenance cost will be lower than the person who does all their maintenance with a cell phone.

I think annual ownership costs are actually easier to average because there are some big numbers in there that tend to smooth out the curve over time. Moorage, insurance, fuel, haulouts and bottom paint every x-years, and so forth. Expense spikes like new exhaust systems, new motor mounts, rebuilidng a generator starter to name some that we have experienced certainly do happen. But they tend to be dulled by the years when there aren't any big spikes.
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Old 03-10-2015, 06:39 PM   #45
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I doubt there are many here who haven't had to replace one. They definitely won't last as long as the boat.
Probably depends on the dinghy. A fabric dinghy, for sure you are correct. We have a Livingston hardshell and like the cockroach, I expect that thing will still be alive and well when the next ice age arrives.
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Old 03-10-2015, 06:57 PM   #46
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Probably depends on the dinghy. A fabric dinghy, for sure you are correct. We have a Livingston hardshell and like the cockroach, I expect that thing will still be alive and well when the next ice age arrives.
And it's motor too?
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Old 03-10-2015, 07:09 PM   #47
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And it's motor too?
Probably not, although there are some amazingly old motors on some of the dhingies I see around here. We know one person who uses still uses a Seagull on his dinghy.

But replacing a motor every 20-25 years is a lot less expensive than replacing the dinghy along with it.
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