When evaluating a budget for a used boat, think of the price in terms of what a new boat costs, for this puts the matter of cost in its proper perspective. Since the choice is between new and used, the difference in cost must be a factor in assessing what it will cost to own a used boat. There is a reason why a 10 years old boat is devaluated 50% or even more: its called wear and tear. It has a serious worth of lost value, which the most part of this amount would be required to bring it back to tiptop shape.
The next important consideration is how much can be spent for refurbishment.
The biggest mistake that most used boat buyers make, is to grossly underestimate the cost of putting things in order, even if they don’t plan to do all that much. A common example is someone who buys a ten-year-old 44 feet sailing cruiser for 200000 Euro and then thinks it only needs another 10000 euro to get it in shape. This, for a boat with a replacement cost of 200000 Euro (considering a price of 400000 when it was new). Obviously, 10000 is not realistic at all, and if that’s all he can afford, he can’t really afford the boat anyway.
From experience, we know that even late model boats require a certain percentage of purchase price to repair defects, engine overhaul, rigging, canvas, upholstery, carpet, upgrade electronics and all the other things that new owners usually attend to. This depends on size and value, but for a 8 to 10 year-old well-kept yacht could typically be about 10% of the price. For a 15 years old boat, that amount rises steadily, mainly because of increasing deferred maintenance, meaning wear and tear that stays worn and torn. By the time the vessel is over 15 years old, deferred maintenance reaches the point where the entire boat may need refurbishing, and we’re no longer talking about 10% but 20% of the sale price, even more.
A very good rule of thumb for estimating refurbishing costs is to allow at least 10-20% of the purchase price for a boat in average condition and up to 50%, or more, for one in poor condition. These numbers assume that most the expenses go to engine, machinery, various systems and interiors. However, more extensive refits require even more (such as repainting and major interior renovations or new equipment additions) and are not beyond the bounds of being a reasonable investment. Ultimately, it all depends on the replacement cost, purchase price and how far you want to go toward making the yacht look and function like new.
That’s the reason why buying an older vessel and only allotting a 10% repair budget is not always quite realistic. In that case, you own a boat that is still on the downward slide and your deferred maintenance and costs only continue to escalate as things break down and deteriorate at an ever-increasing rate. And if you can not afford it, this is not an enviable position to be in. It can really take the pleasure out of boating. If you’re looking at a larger boat than you would ordinarily consider, just because it is older and the price is lower, you need to re- consider of something smaller.
Many refits got off-track because the owner became distracted with luxurious interiors and fancy items while neglecting a pair of worn out engines or other important systems. When an engine goes “bang” the owner comes up short because he spent all his money elsewhere. For this reason it is imperative to schedule all work by priority. For example, restoring major systems to reliability must always come first, before considering cosmetics and amenities.
A TIP: A short use of the boat (after purchasing) will help you to put things in priority, easier.
A last word about budgeting: if your budget it tight, allow a part of your total budget for the unexpected. No matter how well you plan, there will always be an unexpected problem. If no problems arise, you can buy the electric winch will make your life easier on board or even Valentino signed plates for the galley.
Get good advice, hire the right people, plan carefully and the end result will be a project customized to your own satisfaction and, definitely, one which you can be proud of.
We, at YD YACHTS, always take into consideration these issues above when advising the sellers for what is the reasonable asking price for their boats.
A fair purchase price makes always the difference!!!!
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