Out with the New, in with the Old
Buying an Old Boat over a New Boat
August 3, 2015
If you’re purchasing your first boat or trading up from your current boat to a larger one, one of the first things you’ll consider is whether you should buy a brand-new boat or a pre-owned one. A lot of the people buying yachts over 30 feet tend to be long-time owners or they will have previously owned a smaller boat—which they may have purchased brand new. But when it comes to buying a sizeable yacht, a used one can actually be a good investment compared to a new one.
There are three important things to consider when deciding between a new or used boat.
1) Price: what you pay to acquire the boat
2) Cost: expenses that occur after you own the boat
3) Value: what you get out of your ownership
If the cost will be more than the price, then you’re not getting the right value out of your purchase. There are a few other factors you’ll need to consider in order to accurately determine the value of a particular boat.
Price tag: Any boat 40 feet or over naturally carries a heavy price tag and the cost of ownership is also much higher. A brand-new 2015 42-foot Sea Ray Sundancer will cost you around $730,000. On the other hand, a pre-owned 2005 42-foot Sea Ray Sundancer can be had for $200,000–$240,000. That is a substantial difference in price and a major factor to consider when buying a new boat. Of course, if you want extensive custom features or your taste calls for the most recent design, style and equipment on the market, you won’t find that in a boat that was built 10 years ago. But you can always remodel it. This adds another fun element to your boat ownership experience—spending more time with your boat on weekends working on your own refit project. You can’t do that on a new boat; the warranty becomes void.
Warranty: A brand-new boat is any owner’s delight. It’s shiny, glossy and it smells new. You don’t have to deal with breakdowns and issues that—many would argue—are built into the package with a used boat. The dealer’s warranty covers all the hassles and that, one might assume, takes away a lot of the headache. But beyond the gloss, some factors still compromise the value of a new boat’s warranty. First, while everything is indeed covered under the warranty, warranty management itself is far from hassle-free. Second, many used boats will also come with transferable warranties. And finally, the warranty will not prevent steep depreciation.
Depreciation: The moment a boat is towed from the dealer’s shop, it is hit with 25–30 percent depreciation. The boat’s value then drops another 10 percent after the first year or two of ownership. Of course, the exact rate of depreciation varies with size, make and market conditions. But regardless, those are big numbers. Used boats will already have experienced the largest portion of depreciation, and after the first year or two, the average annual depreciation on a used boat would typically drop to 3–4 percent for the next 10 years or so. Those numbers clearly demonstrate why used boats are a great value. It’s no wonder that statistics show used boats dominate the buyer’s market.
Market: Around 80–90 percent of the boats sold in the US each year are used boats. Boats in the 2–5-year-old range tend to be the most preferred. There are three key reasons for this. First, their styling is still relatively current and won’t look dated. Second, they’ve already suffered the major part of depreciation. And third, any problems that arose during their dealer-warranty period have already been fixed.
Tried and tested: Yes, that’s right. A used boat has already been “tested.” It has at least a few engine hours on the clock, and any issues that may have cropped up will already have been taken care of.
With these factors in mind, you’ll see that buying a used boat offers great value, especially when you’re buying a yacht that is 30 feet and over. If you find the right model for you, consider getting it pre-owned. Of course, you’ll need to thoroughly check the boat’s history and get it surveyed, but if you can find the right boat, you won’t be “buying someone else’s headache.” In fact, you’ll be buying yourself and your family a great deal of joy for a very good price.