Depreciation......

[DavidUK]

I know it's not an exact science, but I hoping some established narrowboaters could give me an idea of the rate of depreciation on, say, a new 64foot boat costing £90000, over one, two, three and five years? Assume the boat is well maintained

 

Any thoughts on this would be appreciated

[alan_fincher]

Well if it's 64 feet, I think you would find it worse than most others.

 

Too long to be "go anywhere", but not having that much space over one that is short enough, will reduce your potential second hand marketplace considerably, in my view.

 

Also at £90K you are really into the territory that you are having a boat built to your spec, and where you have probably asked for a lot of things you consider important, but which may not be those that someone who has that kind of money would have come up with as their major "box tickers".

 

Many of the boats built at that kind of price, (or often more), come onto the market with optimistic second-hand prices, but quickly do less well as it becomes apparent that they are (say) a reverse layout design, with a walk through bathroom, and a gas free galley. (Note: I'm not saying any of these are desirable, but anyone who has close to £90K to spend will probably have decided they either do or don't want such things, and will not want to compromise to a boat that doesn't match their thoughts).

 

A forum member currently has a fairly new boat advertised on here at £79K. They had difficulties with the builder going bust, but even had they not, I'm sure that price, even if attained, is a big big loss on their new build costs.

 

My view is only buy a bespoke £90K (or greater) boat if you are pretty confident you will not be selling in the type of time-scale you mention. If you were to, however nice you may think the boat is, I'm sure you will not be geared up to just how much the experience will have cost you.

 

(Now awaits the usual counter of someone saying "I had one that cost me about £90K, and sold a year later for £100k!" - maybe, but I'll wager very rare!)

Edited September 11, 2009 by alan_fincher

[Athy]

Our 45 footer cost just over £80k new in 2006. Now valued (by ABNB) at £60k. But depreciation slows down thereafter.

[Gary Peacock]

You have to be realistic if it's outside the 50-57ft bracket it will be a risk! Less than 50ft then it's going to cost a lot to build in relation to it's size and perceived value over 57ft and it's size can make it an Albatross being considered too big.

 

Weird expensive and exactly what you wanted is a big NO NO on the resale market.

 

Also a cheap hull with an expensive fit out is always a cheap boat.

 

While an expensive hull with a nasty fit out will often always be an expensive boat!!!

Edited September 11, 2009 by Gary Peacock

[David Schweizer]

Based upon our 52 ft Narrow boat, any boat from a good builder will eventually be worth more in pound terms than when you bought it but not in real terms. Our boat cost £20,000 in 1982 (yes it was a lot in those days) fifteen years later it had depreciated and recovered to £20,000. Twenty seven years after it was built, it is now estimated to be worth something between £28,000 and £30,000.

 

A sister boat from the same builder, a year older and ten feet shorter sold earlier this year for £25,000, and it had not been re-fitted inside or had the engine re-built. I believe that it's original sale price in 1981 was £16,000.

Edited September 12, 2009 by David Schweizer

[tomsk]

You have to be realistic if it's outside the 50-57ft bracket it will be a risk! Less than 50ft then it's going to cost a lot to build in relation to it's size and perceived value over 57ft and it's size can make it an Albatross being considered too big.

 

Weird expensive and exactly what you wanted is a big NO NO on the resale market.

 

Also a cheap hull with an expensive fit out is always a cheap boat.

 

While an expensive hull with a nasty fit out will often always be an expensive boat!!!

 

 

I was going to post, but this sums up the situation as I see it far more economically and with far more practical understanding of the market mechanics than I could lay claim to..... Off to wipe the brown stuff off me nose now.

[deletedaccount]

I bought my 2 year old 58ft boat for what I estimate as about 2/3 of the original build price. It had been on the market for 6 months at 80% of the price when I came along. I'm basing the original price on someone else's two year old quote from the same builder.

 

eta: It's a decent specced cruiser set up for CCing with only a slightly unusual layout internally, having a single cabin as well as a double. Trad layout with forward saloon. Obviously built with a family in mind I'm not sure how this would be reflected in the price.

Edited September 12, 2009 by deletedaccount

[alan_fincher]

I bought my 2 year old 58ft boat for what I estimate as about 2/3 of the original build price.

Sounds about what I might expect.

 

Was it originally at the type of price point the OP talks about? - I distinctly get the impression that above a certain initial price many depreciate significantly faster than slightly cheaper boats, (but it is just an impression!).

 

I'd like to think David's logic extended to the idea that if someone were to pay £90K for a new boat today that it would one day be saleable for more, if inflation and loss of interest on the money were ignored. I suspect those days are long since gone, somehow!

[DavidUK]

I appreciate my original question might have been misleading. I was merely using those figures hypothetically. What I was trying to calculate is the rate of depreciation on new boats. Am I right in thinking that you'd be looking at roughly 10% in year one and 10% in year two, followed by a leveling off of depreciation? If this is approximately correct I would deduce my best bet is to look at buying a boat of two years old as opposed to new

[alan_fincher]

Am I right in thinking that you'd be looking at roughly 10% in year one and 10% in year two, followed by a leveling off of depreciation?

I think most people selling after one and two years would be rather lucky to lose amounts as little as 10% and 20%.

 

If you are happy with a 2 year old boat, (and I very certainly would be!), I'd be expecting to buy at less than 80% of the cost of an equivalent new one., probably quite a bit less!

[DavidUK]

I think most people selling after one and two years would be rather lucky to lose amounts as little as 10% and 20%.

 

If you are happy with a 2 year old boat, (and I very certainly would be!), I'd be expecting to buy at less than 80% of the cost of an equivalent new one., probably quite a bit less!

 

 

Thanks for that Alan. I'm trying to work out what is the optimum age of the boat to buy. Sounds like a two year old boat would represent pretty good value(all things being equal)

 

NB. Earlier in the thread someone mentioned hull quality. I understand the rationale, but how is hull quality gauged, and can it be only be done by an expert?

[alan_fincher]

Earlier in the thread someone mentioned hull quality. I understand the rationale, but how is hull quality gauged, and can it be only be done by an expert?

Probably even that question can start another forum war!

 

You don't say what type of boat you are after, and that to some extent dictates who's shells you might wish to consider for quality.

 

The most expensive tend to be boats with traditional engine rooms forward of a boatmans cabin, often with a vintage engine. They however usually bring the penalty of being deeper drafted, so are not to everybody's taste, even if they could afford them. The owners of these argue incessantly about which builder does it best, but few in that league do it badly. A lot has to do with if the boat looks right to you, as bow styles vary a lot - some I really like, some I couldn't live with, even if I had the cash, but none will rust away or sink unexpectedly!

 

For a shallower drafted boat, (probably modern) engine at the back, loads of builders are respected. Jonathan Wilson, Tim Tyler etc are much praised, but there are so many it's hard to say. Some shells may be excellent quality, but carry a builders distinct style in say bow shape - you may, or may not care that your boat is (say) instantly identifiable as a "Reeves" boat, because no other looks quite the same.

 

Probably best if you find something you like to do as others do, and put a post on here saying, "I've seen a boat with a 2 year old shell by Bloggs and Co - what experience do forum members have of this builder, please". Some may be prepared to tell you by PM that Bloggs and Co are a bit naff, even if they don't want to post openly!

 

Some will criticise the slightly "lower market" volume builders, but you don't built hundreds and hundreds of boats without being reasonably good at it, and a lot of customer recommendation.

 

Provided it wasn't a real "budget" job, I think you have to be quite unlucky these days to buy a shell only a couple of years old, and get a bad one. However you should alaways pay for a full hull survey, (yes, always!), however good the builders reputation. Any can produce a "Friday boat", and a survey often provides enough negotiating points that you get at least the cost of the survey taken off the agreed price, and often more.

[deletedaccount]

Sounds about what I might expect.

 

Was it originally at the type of price point the OP talks about? - I distinctly get the impression that above a certain initial price many depreciate significantly faster than slightly cheaper boats, (but it is just an impression!).

 

I'd like to think David's logic extended to the idea that if someone were to pay £90K for a new boat today that it would one day be saleable for more, if inflation and loss of interest on the money were ignored. I suspect those days are long since gone, somehow!

 

From what I've seen the more expensive the boat, the quicker the plumment in price. This could well be because at the price some people want for their second hand boats you could go out and have one designed and built exactly how you want it. Maybe not quite as swish, but I can certainly see the appeal of doing so. If someone wants 70k for their 90k boat they're effectively attempting to sell it for what it cost new minus tax.

 

My boat was built and fitted out by RLL so I guess it's kinda midrange. I'm placing the original price at about 68k two years ago, but as I said that's a guess. There's a boat built by the same builder, same size and similar age on the market at the mo for 78k and it looks like they are trying to sell it close what they originally paid for it, or possibly even more. That may well be because it's on a transferable resi mooring though. Oh, and mine's much nicer on the inside than theirs

 

If I sold mine tomorrow I'd expect to get what I paid for it, as I think it was a fair price. I don't expect it to lose much value until it's another five years old. I doubt it could ever be worth more though!

[Lady Muck]

. That may well be because it's on a transferable resi mooring though. Oh, and mine's much nicer on the inside than theirs

 

There are some 'buckets' that come up for sale in London quite often, say late 1970's early 80's - T&G owner fit out yet the price is over £100k because you can transfer the mooring. I think alot of that is wishful thinking though, they don't seem to sell, probably because the type of person who wants a liveaboard in London doesn't have £100k in cash - no one will lend you £100k to 'buy' a commodity that is never going to be yours to own (I'm talking about the rented mooring here, not the boat). Infact the man we bought our boat from tried to overinflate the price, because it included a (rented) mooring, but everyone who wanted to buy wanted to buy with a marine mortgage (which we have done), no-one had £75k in cash and the marine mortgage people will only lend the value of the boat, not the bumped up price to take into account the mooring. So we paid what the boat was worth.

[Naughty Cal]

I know it is a slightly different (or very different) market but we bought Cal (GRP sports cruiser) last year for 38k. She was 6 years old at the time and her original price was 55k. So in 6 years she has lost just 17k or under a third of her value. Not bad when 17.5% of the original cost was VAT and would have been lost as soon as the original owner signed for her. A year on the cost of a similar specced boat of the same age is still around 38k (much helped by the fact that Sealine have stopped making 25ft boats). Some boats hold their value better than others.

[NB Alnwick]

I know it is a slightly different (or very different) market but we bought Cal (GRP sports cruiser) last year for 38k. She was 6 years old at the time and her original price was 55k. So in 6 years she has lost just 17k or under a third of her value. Not bad when 17.5% of the original cost was VAT and would have been lost as soon as the original owner signed for her. A year on the cost of a similar specced boat of the same age is still around 38k (much helped by the fact that Sealine have stopped making 25ft boats). Some boats hold their value better than others.

 

Very few R W Davies boats have sold secondhand for much less that their original purchase price.

[Naughty Cal]

Very few R W Davies boats have sold secondhand for much less that their original purchase price.

 

Makes them a good buy then, if you can afford one of course. That was my point.

[Gary Peacock]

Thinking about this things changed about eight years back when the boom years began to come to an end.

 

When builders had long waiting lists relatively new boats were worth very good money we used to loose orders because we couldn't build a boat within two years so the potential customer would snap up a two or three year old example that was on the market for very nearly the same cost of a new build.

 

Folk didn't use to talk depreciation but rather it would cost you XYZ to build the same boat today and then would often sell it for very nearly what they paid for it.

 

I think those days have gone for many reasons besides the obvious saturation of the nearly new market simply due to the numbers of boats churned out in recent years.

 

The silly gin palace things are their own worst enemy they cost a fortune to build and are very individual so when they come on the market the only people with silly money to spend would rather go directly to the builder to have their own silly gin palace thing built with probably very little if any waiting these days to have it built.

 

Another pearl of wisdom, residential is what sells used boats not welded on washers and "It looks a bit like a XYZ". If the boat works right residentially it will sell! You only have to look at the number of posts on here from people who want to live on a boat.

Edited September 14, 2009 by Gary Peacock

[David Schweizer]

Very few R W Davies boats have sold secondhand for much less that their original purchase price.

 

Edited:- because I misread Alnwick's original post.

Edited September 14, 2009 by David Schweizer

[Lady Muck]

The silly gin palace things are their own worst enemy they cost a fortune to build and are very individual so when they come on the market the only people with silly money to spend would rather go directly to the builder to have their own silly gin palace thing built with probably very little if any waiting these days to have it built.

 

My favourite of these is one that was on ABNB which had a huge 'parrot room' onboard, huge great cabin with built in parrot cages. I think it was gas free as well.

[Machpoint005]

The rule of thumb for a full size boat (ie 58 to 60 ft) always used to be that it loses half its value in ten years. Although current climate is unusual, I'd think the rule was still about right in the longer term.

[Chertsey]

At what point does depreciation stop and inflation kick back in?

 

My first narrow boat was a 1986 32" R&D. Very nice little boat, needed painting, fitout a bit tired.

I paid (effectively, once the previous owner had paid for delivery) £16,500 in February 2005

 

In late 2007 I put it on the market with an asking price of £25,000, which was fairly quickly offered. Even after the purchaser had faffed about getting me to change various bits, I reckon I got £22,000. In the meantime I had made a few cosmetic changes to brighten up the interior, blacked it, and had it shotblasted and primed.

 

It's been on the market again twice since then, both times with an asking price of around £25,000.

[NB Alnwick]

At what point does depreciation stop and inflation kick back in?

 

In simple business accounting, 'depreciation' is usually taken as the sum you need to put aside in order to replace an item of essential equipment (with new) when it is worn out. So the two items - the falling value of the original equipment and the increased cost of a replacement are linked.

 

If we were to apply this philosophy to boating we should, ideally, put a sum aside every year to cover the cost of major repairs and eventually, complete replacement.

Edited September 14, 2009 by NB Alnwick

[swissarmywife]

My favourite of these is one that was on ABNB which had a huge 'parrot room' onboard, huge great cabin with built in parrot cages. I think it was gas free as well.

 

OMG, I've looked everywhere for one of those! Is it still available?