Budgeting

caltexflanc said:

Really? So your new Nordhavn costs double or triple (or whatever the selling price difference) to maintain to your standards than say a 15 year old 47 foot boat of similar configuration, from a second tier builder ? Why is that?

Click to expand...

I think Marin already covered most of what I would say, but .....

I'll reiterate that the 10% cost is NOT every year, year in and year out. Most years, at least for me, have been significantly less. I do nearly all my own maintenance and repairs, and the annual costs are more in the low single digit % per year. I also agree that for many expenses, there is little to no relationship to the value of the boat.

What I've found with my boats is that I spend a bunch in the first year or so getting the boat the way I want it. So that's going to be close to a 10% year. The next few (hopefully many) years of ownership are just moorage, cleaning, regular maintenance, insurance, etc and are probably 1-3% years. For a while, you will seem to be way ahead of the game. I sure though I was. But when you sell the boat, I think it's all likely to catch up to you. Your last year will be a 20% or much more year with 10% for sales commission, and whatever difference between your purchase price and the sale price.

So the 10% isn't an annual cash-flow number, but I think it's a reasonable budget for life-time cost of ownership.

The other thing that I think is particularly important is to be sure your budget can handle surprises, because you are likely to get one or two along the way. This is why even in the low-cost years, you still need to be planning on 10% annually, and perhaps even bankrolling whatever you have not spent. A major repair can be required at pretty much any time creating a 10% to 30% year in the blink of an eye. If you are not prepared to deal with that, then you can quickly find yourself in trouble.

I think we all hope to operate at well under 10%, and should celebrate when we do. But I'd rather be celebrating being under budget, than be in a pickle because I need to replace a transmission or HVAC system or engine and have that destroy my finances. And I think this is especially important for new boaters who are likely unaccustomed to the costs that can crop up.

And back to what I think was one of your points... does the cost really track to boat value? It's imperfect, for sure. Insurance, moorage, and some portions of maintenance will track boat size/value. But others won't. I also think it's generally true that the more someone spends on a boat, the more likely they are to be paying other people to work on the boat rather than do it themselves. From what I've seen this is where you can spend a lot, or not very much at all depending on your preferences. At $100/hr you can spend a lot of money very fast on repairs and maintenance. If I were to hire out all the work on my boat, it would easily cost 5%-7% per year. Thankfully I don't do that, so expect it will cost 2%-3% per year, maybe less.

Just for kicks I sketched out the numbers for my Grand Banks which recently sold. Over my ownership, the boat cost me the equivalent of 8% of it's value, per year. So I came out ahead of my benchmark, probably because I did nearly all the work on it myself.

DIY homeowners and DIY boat owners = waste not, want not... for cash that is! lol

Lots of good comments on here.

Twisted Tree makes a good point about spending a lot at first to get the boat how you want it.... we are five years in and still working on that part of it. For example, last year we spent several boat bucks redoing the galley how we want it.

I love that sedan in Huntington Beach but right off the bat I see things I would want to change... however there is nothing wrong with it how it is. Living with it the way it is is much cheaper than making it exactly how you want it. Do you HAVE to have certain electronics or custom mattress or WHATEVER?? Only you can decide that.

And of course others have pointed out that it is the unexpected stuff that really hits you in the wallet. Our adventure to the yard last year was about 15% of the purchase price just by itself. Most years, again to TT's point, are nowhere near that... again unless we choose to spend money on changing things that are fine as we are but we want to change.

If you love boating, love the boat, take care of the routine maintenance (DIY or pro) and have the reserves for the occasional big ticket items, you will make it work!

I may have missed it, do you have a boat now? you certainly have good taste.

Art said:

Didn't I also read on another thread that your nice old woody gets around 20 MPG? You seem to be the star economy guy on TF... Less than couple boat bucks a year and you're set ta go!!

Click to expand...

Yeah, that was me. While Tortuga will get around 20 mpg I generally cruise at a speed where I get closer to 15-16 mpg. My total budget for both boats will come to about $15K this year ($8K of that is marina fees). Given my use of the boats that is about $150 per day. Last year I did an extra $5K of work on the sailboat and the year before I did about the same on the old woody. Boating is not a cheap hobby.

The main value of the "10 percent of the cost/value of the boat per year for every year you own the boat" guideline is not so much to provide a truly accurate figure that one can count on. There are simply too many variables that affect ownership cost to predict them accurately.

The value of that percentage number is awareness.

A lot of potential boat buyers look at it as being like a car or truck. You fork over a bunch of money and then basically you just use it for years and years with little expense other than fuel, insurance, and the occasional servicing.

But boat's aren't like that. There are very real costs that never stop, like moorage and insurance. But the big bugaboo is that unlike most vehicles, boats are full of surprises. This is partly due to the fact they live in a very unfriendly environment. Things corrode, rust, rot, crack, eggshell, oxidize, and split.

Boats are generally not used as regularly as a vehicle, so they sit for long periods of time and that encourages the failure of components like seals and gaskets, Teleflex cables, and other things that get stiff or brittle with disuse. And, unlike most vehicles, stuff likes to live and grow on boats. Barnacles, weed, algae, mold, bugs, all sorts of things.

The point being that a boat, at least one that lives in the water and not on a trailer or lift, is not just sitting there waiting for you to come back to it and drive off. It's actively deteriorating in some manner all the time.

Keeping up with the deterioration takes time and effort and parts and supplies and someone to do it, all of which cost money.

The real value of telling a potential buyer about the "10 percent rule" or maybe it should be 15 percent today, is to make them very aware that there will be an ongoing cost of owning that boat after they plunk down the cash or set up the financing to buy it. What that cost is will be determined by all the variables the buyer will encounter once he or she starts using it. But I think it's very important that a person goes into a boat purchase with their eyes wide open as to the reality of what they're getting into financially.

If they don't their boating experience can very easily become a bad one.

Marin said:

The only thing that makes the annual ownership cost worth the money is the value, mostly intangible, that one gets from being a boat owner. Slow, fast, showroom condition or well used, the value of a boat is realized by what one does with it, not by the actual dollar value of the boat.

Click to expand...

One of the intangible values we accrue is about having our own "stuff" with us whenever we go someplace. Stuff has various dimensions -- for us the physical parts are clothing, bed linens, cooking utensils and food and so forth, the two cats and their box <sigh>, tools, etc. -- and one of those is the comfort of familiarity, or perhaps better expressed as "known quantity." (To the extent maintenance surprises can be managed, from a "known quantity" like a boat.)

A surprising intangible has become a kind of intellectual income... from having to fix stuff from time to time. Fifty years of my previous professions didn't much prepare me to be a diesel mechanic, plumber, electrician, sanitation engineer, HVAC guy, etc. so I'm having to learn everything, mostly on the fly. Which in turn seems to be keeping my brain active. Some people think mental exercise is a good thing, and I suspect it's helpful for me.

That last would be better if some of the physical parts didn't hurt so much afterwards, sometimes.



-Chris

Marin said:

The main value of the "10 percent of the cost/value of the boat per year for every year you own the boat" guideline is not so much to provide a truly accurate figure that one can count on. There are simply too many variables that affect ownership cost to predict them accurately.

The value of that percentage number is awareness.

A lot of potential boat buyers look at it as being like a car or truck. You fork over a bunch of money and then basically you just use it for years and years with little expense other than fuel, insurance, and the occasional servicing.

But boat's aren't like that. There are very real costs that never stop, like moorage and insurance. But the big bugaboo is that unlike most vehicles, boats are full of surprises. This is partly due to the fact they live in a very unfriendly environment. Things corrode, rust, rot, crack, eggshell, oxidize, and split.

Boats are generally not used as regularly as a vehicle, so they sit for long periods of time and that encourages the failure of components like seals and gaskets, Teleflex cables, and other things that get stiff or brittle with disuse. And, unlike most vehicles, stuff likes to live and grow on boats. Barnacles, weed, algae, mold, bugs, all sorts of things.

The point being that a boat, at least one that lives in the water and not on a trailer or lift, is not just sitting there waiting for you to come back to it and drive off. It's actively deteriorating in some manner all the time.

Keeping up with the deterioration takes time and effort and parts and supplies and someone to do it, all of which cost money.

The real value of telling a potential buyer about the "10 percent rule" or maybe it should be 15 percent today, is to make them very aware that there will be an ongoing cost of owning that boat after they plunk down the cash or set up the financing to buy it. What that cost is will be determined by all the variables the buyer will encounter once he or she starts using it. But I think it's very important that a person goes into a boat purchase with their eyes wide open as to the reality of what they're getting into financially.

If they don't their boating experience can very easily become a bad one.

Click to expand...

What he said!

Pineapple Girl said:

Lots of good comments on here.

Twisted Tree makes a good point about spending a lot at first to get the boat how you want it.... we are five years in and still working on that part of it. For example, last year we spent several boat bucks redoing the galley how we want it.

I love that sedan in Huntington Beach but right off the bat I see things I would want to change... however there is nothing wrong with it how it is. Living with it the way it is is much cheaper than making it exactly how you want it. Do you HAVE to have certain electronics or custom mattress or WHATEVER?? Only you can decide that.

And of course others have pointed out that it is the unexpected stuff that really hits you in the wallet. Our adventure to the yard last year was about 15% of the purchase price just by itself. Most years, again to TT's point, are nowhere near that... again unless we choose to spend money on changing things that are fine as we are but we want to change.

If you love boating, love the boat, take care of the routine maintenance (DIY or pro) and have the reserves for the occasional big ticket items, you will make it work!

I may have missed it, do you have a boat now? you certainly have good taste.

Click to expand...

Thanks for the nod of approval, Jennifer. It won't be the one in Huntington Beach, but close. Perhaps one out of the Seattle area as it would likely be set up more for our waters...like a good heating system, since I cruise year round.

To answer your question, no, I'm boatless (and restless) right now. Since the 60s, I've had either a bike or boat (hence Hawgwash) sometimes both. I got away from the sea the last few years to ride seriously, knowing my days at that were more numbered than boating. I have salt water in my veins so it's time to get back where I really belong.

Being an avid and pride filled boater in the past makes me aware of the cost and that a financial investment it is not. But heaven costs money and I'm good with that. My next boat will be a substantial step up and I just wanted to confirm that at least logically I'm thinking straight.

I've been working with the theory that if I put 200k into a boat that has been well cared fore and stash 100k, that should see me through 5 years. At this stage of my life, I've pretty much broken the remaining time into 5 years at a time.

The feedback here has been first rate and very much appreciated.

I think I'm ok.

Marin said:

The main value of the "10 percent of the cost/value of the boat per year for every year you own the boat" guideline is not so much to provide a truly accurate figure that one can count on. There are simply too many variables that affect ownership cost to predict them accurately.

The value of that percentage number is awareness.

A lot of potential boat buyers look at it as being like a car or truck. You fork over a bunch of money and then basically you just use it for years and years with little expense other than fuel, insurance, and the occasional servicing.

But boat's aren't like that. There are very real costs that never stop, like moorage and insurance. But the big bugaboo is that unlike most vehicles, boats are full of surprises. This is partly due to the fact they live in a very unfriendly environment. Things corrode, rust, rot, crack, eggshell, oxidize, and split.

Boats are generally not used as regularly as a vehicle, so they sit for long periods of time and that encourages the failure of components like seals and gaskets, Teleflex cables, and other things that get stiff or brittle with disuse. And, unlike most vehicles, stuff likes to live and grow on boats. Barnacles, weed, algae, mold, bugs, all sorts of things.

The point being that a boat, at least one that lives in the water and not on a trailer or lift, is not just sitting there waiting for you to come back to it and drive off. It's actively deteriorating in some manner all the time.

Keeping up with the deterioration takes time and effort and parts and supplies and someone to do it, all of which cost money.

The real value of telling a potential buyer about the "10 percent rule" or maybe it should be 15 percent today, is to make them very aware that there will be an ongoing cost of owning that boat after they plunk down the cash or set up the financing to buy it. What that cost is will be determined by all the variables the buyer will encounter once he or she starts using it. But I think it's very important that a person goes into a boat purchase with their eyes wide open as to the reality of what they're getting into financially.

If they don't their boating experience can very easily become a bad one.

Click to expand...

Well said Marin

Scott and Malina