Annual maintenance cost

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.

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.

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 said:

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.

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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

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.

markpierce said:

Thinking about it.... costs about $120 an hour

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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!!!!

markpierce said:

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.)

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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, please see my above post for the new "awareness tool"!!!

Just thinking about a boat cost $120 an hour. That should do it!!!

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.

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 said:

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%.

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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?

Donsan said:

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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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.

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

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.

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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

dannc said:

Does maintenance mean all expenses to maintain the boat including insurance and does it include OPERATING expenses?

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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.

BandB said:

I doubt there are many here who haven't had to replace one. They definitely won't last as long as the boat.

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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.

Marin said:

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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And it's motor too?

BandB said:

And it's motor too?

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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.