Yacht Buying Guide Tips For Pleasure Boat Shoppers

Yacht Buying Guide:
Tips for Pleasure Boat Shoppers


Owning a yacht can be a costly affair. It's not just about the initial purchase, which can be very expensive indeed, but also about maintaining your yacht in tip-top shape. Ask any long-term owner of a yacht or a small boat. He has all sorts of stories to tell you about the cost of keeping and owning a yacht.

The biggest decisions that a yacht owner makes, aside from the initial purchase, is how to keep the cost of long-term ownership well within your financial means.

In fact, this is one of the most important factors to consider if you want to keep yachting a pleasurable experience for you, because face it, it is hard to enjoy yachting when you realize how much of a drain on your finances it has turned out to be.

Whether this is your first time buying a yacht or you are simply making a considerable step up in size, consider the following important points to help you make the right decision and get the most out of your purchase.


How much does it cost?

The initial cost is one of the critical factors in keeping the total cost of your yacht within your financial means. As such, the initial cost of your purchase bears much consideration, and should be balanced with such other factors as how much the yacht could cost in the future.

The latter is something that many boat buyers often overlook. When you buy a boat, you always think about the "now" rather than the hereafter. What if you suddenly need to liquidate, would the vessel cost as much when you have to sell it later?

We all know that every new purchase you make depreciates. Take, for example, a car. The moment you drive it out of the dealership, it loses 25% of its value immediately.

Now, while a yacht may not depreciate at such an alarming rate, there is still that depreciation value to think of. If, in the future, you suddenly have to sell, you are sure to take a serious hit.

There is nothing worse than having to liquidate only to find out that your liability far outweighs your equity. That is why banks often require at least a 20% down payment on financing. The down payment gives them adequate cover in case of repossession, which happens more often than you think.

This becomes even more important if you have decided to purchase a used vessel. In 1992, bank repossessions hit an all-time high, majority of which were older vessels.


Quality first; quantity second.

These days, many consumers opt for price and quantity rather than quality. This is most unfortunate since you can never tell a product's quality by its price alone. And bigger doesn't always mean better.

A common mistake that many first-time buyers make is to buy the biggest vessel they could find for the least expense. This is just wrong on so many levels.

First, remember that yachts float on sea water. Second, sea water is one of the most corrosive liquids on earth. And third, yachts are exposed to all the worst elements: sun, ice, snow, rain, rough oceans, lakes, bays, etc. To make it short, yachts go through the most hostile conditions.

If you want your yacht to last a long time, quality, therefore, comes first. Instead of buying the biggest yacht for the least cost, buy the best quality you can get with what available money you have. That should be your primary consideration.

The marketing fads of today too often call for the sacrifice of certain aspects in boat building. Thus, it is not uncommon to find a yacht that is perfect in terms of appearance and style but not in function and safety.

It does not help that the more inexperienced boat-buyers prefer stylistic appearance over substance. In an effort, therefore, to get more people to buy their boats and yachts, boat builders are increasingly turning to designers of fashion in order to give first-time boat buyers the illusion that they are keeping up with the Joneses if their yachts feature the latest in stylistic gizmos.

Yet, this is a costly mistake to make. Because once the years have passed and the trend today has gone out of style in the future, what is left of the showroom glitz and glamour that you bought is rot and rust. And rot and rust it will for that is bound to happen, no matter how rich and elegant your yacht is, under the harsh effects of the sea.

So how do you know if what you are buying is going to last? The best way to go about it is to go down a boat yard or the marina and have a look-see. For the most instructive place to see how boats look like after the years have taken their toll, this is the place.

But, what should you look for? The rule is to look at the yacht's hull number on the stern because that's how you can tell its age.

And now for some tips:

* Check the finish.

It is likely made of gelcoat. If so, then see if it has turned chalky after only a number of years.

* Check the fancy graphics.

Is it taped-on or painted? If the former, look for signs of peeling. If the latter, check to see if the paint has faded.

* Check the molded plastic parts.

Look for cracks, signs of chipping, and broken parts.

* Check the window moldings.

Are they painted? Be sure also to check the metal under the paint for any signs of corrosion.

* Check the hardware.

What is it made of? The ideal is stainless steel as this is the most durable. The cheapest is cast aluminum. And the worst is "pot metal" parts that corrode badly after only a few years. Also, check the paint on the hardware, if any, and see if some of the paint is coming off in some parts.

* Check the rub rails.

Are the rails distorted or loose? Are they all bent up or corroded in various parts? Watch out for cracks, particularly along the hull-to-deck joint. If these flaws are present, the yacht is likely to leak. Leaking could cause excessive damage to the interior of your yacht.

* Check the outsides of the window frames.

Are they smeared with caulking? Are they made of aluminum specifically designed to withstand marine conditions? Or are they made of aluminum for regular recreational vehicles? If the window frames are weak, this could lead to leaking.


Consider your option of new or used yacht carefully.

New or used? There is always that question to consider when buying a yacht. Many first-time buyers are quick to decide on a new one while experienced boat buyers have long discovered that there is much value in used yachts and boats as well.

The choice is hinged on many different factors, not least of which is how much the boat will weigh in for value in case of a hard sell in the future. In most cases, boaters get better value dollar for dollar with a used yacht than with a new one.

But this is not saying that you, as a first-time buyer, should never consider a new purchase at all. Do not limit your option to only used boats when there is a brand new yacht out in the docks which you feel has better quality and a better price quote.

To help you decide, consider the following tips:

* Track the depreciation curve.

If you have some experience buying cars, then you are familiar with the depreciation curve of most new purchases. As mentioned earlier, the minute you drive out of the dealership, your car loses about 25% in value.

With yachts, the depreciation curve is less steep compared with that of cars. Still, value depreciates and the deeper the curve is, the more you are likely to lose in the future.

It has been observed that a boat's depreciation curve flattens out sooner if it is of high quality. This means that boats of higher quality lose less value compared with vessels of lower quality as years go.

To illustrate, let's take a high quality vessel and compare it with its low-end counterpart. In the beginning, both vessels, regardless of quality, will depreciate quickly.

But while the low quality vessel continues to lose value for years to come because of leaks, damages to the interior, and countless other effects of "aging," the high quality vessel starts to flatten out in only six years. This means that its annual loss of value after six years is only a few percentage points.

In conclusion, whether or not you buy a new or used boat, the most important thing to consider is quality, because with quality you lose less value in your purchase.

* The longer the boat is owned, the less annual cost becomes.

For first-time boat-buyers, this means holding on to your new purchase at least until the depreciation curve flattens out. Now, if you invested in a high quality vessel, that means in five or six years' time.

But if quality was not on top of your priority list when you made your purchase, the waiting period could be longer than six years and by then, you would have already lost a lot in terms of value.

Why the waiting period? Because you are not likely to get a good price if you sell your yacht when its depreciation is still in full swing. On the other hand, if you wait until the annual cost of maintenance has stabilized (and that only occurs after the depreciation curve flattens out), you can quote a much better price for your yacht.

Just consider the original cost of your yacht against the anticipated resale value. But do not be surprised if the residual value turns out to be much lesser than the original cost of buying your yacht, because you can never expect to get value for value when you resell.

So what does all this mean? Simple: if you are planning to own a yacht for keeps, then buying a new one is a good idea. But if you are anticipating a resell in the future, then you are better off with a used yacht.



Of course, quality and price are not the only considerations when buying a yacht. There are other factors that bear much weight in the decision-making process. Factors like power options (gas or diesel?), cost of ownership, marine surveys, yacht surveys, etc. must also be taken into account.

But ultimately, the questions that a boat-buyer will need to go back to again and again is the questions of price and quality.