By Kathryn Casey
Contributor of Priceonomics
If you’re thinking about buying a boat, buying a used one is a great way to save money. Boats depreciate very quickly so you can pick up one for a great deal by letting someone else eat that cost. While boating is pretty costly, hopefully you can use the Priceonomics price guide for boats to look up the fair market price and get a good deal on a boat. To kick off the guide, Priceonomics contributor Kathryn Casey has put together a boat buying guide below.
Image credit: TW&W.
So, you think you’re ready to buy a boat? It’s a dream of many, and for the lucky, it becomes a reality – but the decision to take the plunge (haha, boater humor!), is a big one. And purchasing a boat is a major investment, as most boat loans and finance options are much longer than cars – think 15 years.
The Economics of Boat Ownership
What’s more, the average yearly expenses of boat upkeep run about 10% of the purchase price. So that $30,000 boat can easily end up costing you $3,000 a year, and that’s probably on the low side! Aside from the obvious, gas (which is always more at a marina), there’s insurance, which can run anywhere from $300 to even $600 or $1,000/year, depending on the type and value of your boat, docking fees of approximately $1-$5/foot, per night, or about $1,800/month for a 20” boat – and even more if you’re in high end real estate – think San Francisco, Lake Tahoe, etc.
You’ve also got to register your boat. This generally isn’t too expensive, about $25.year. And of course, just like everything else, your boat starts to depreciate the moment you take it off of the showroom floor. Estimates suggest that a $20,000 boat looses 20% of it’s value in the first year, 15% in the second, 14% in the third, and so on. So, in order to help counteract that depreciation, you’d better maintain that boat – but that will cost you to. Oil changes, filters, wax, pumps – maintenance costs can be as low as $40 a year for an oil change to upwards of $1,000 if you need to hire a mechanic or do any serious repairs.
Obviously, a boat is no small investment. So, before you get ready to pull up that anchor and set sail, here are some things to consider when buying a boat.
The Different Types of Boats
What will you be using the boat for? Boats generally fall into 3 categories: Cruising, fishing, and water sports.
Cruising boats are generally used for pleasure, relaxation, entertaining. Think pontoon boats with BBQs on the decks and luxury watercrafts with sleeping quarters. Cruisers can also tow skiers, and are often great for families, though depending on how many people you plan to take aboard, size, costs, and extras can bring you into a pricey range.
Fishing boats, as you may expect, are designed with one thing in mind - bringing fish aboard. Therefore, they usually have larger amounts of open deck space, and less seating capacity. While many fishing boats do offer enclosed cabins and sleeping quarters, these will also increase the price range you’ll be considering.
Water sport boats are made for those who want to waterski, wake board, or pull that crazy uncle behind them in a tube at 50 mph. They are designed to pull our water toys at high speeds. Many have open bows to enjoy the wind in your hair as you hit the next wake, and can often come with pricey extras, like sound systems and mounted racks for holding all of those toys!
When will you use a boat?
Perhaps going hand-in-hand with the question of what will you use the boat for comes the next consideration: Where will you use the boat?
If you’re considering taking your new boat into the ocean, consider the special care a saltwater vessel needs. The ocean elements can wreak havoc on your boat, so be prepared to put some extra time and effort into clean up after your trips out to sea. Also, if you plan to venture any distance out into the ocean, you need to consider a larger craft, one that can withstand the waves and battering of the ocean currents.
Where do you store a boat?
Once you’re done using the boat, you have to, of course, consider Where will you store the boat? Many folks choose to store their boats in marinas, either at freshwater lakes or salt water harbors, but slip rental fees can easily exceed those of a decent home rental, that is, if you can find a location that is convenient and has space available. And if you are hoping to save money by storing your boat in your own garage, you’d definitely better put some thought into this next question.
How big of a boat should you buy?
In the boating world, size really does matter. As I said before, if you’re planning on venturing out into vast lakes or sail the seven seas, you’d better buy a boat equipped to handle it. Many ocean boats are also specially designed not to roll in the event that they hit a large wave. And all safety concerns aside, the bottom line is that you need to be able to hold all of the people you want to take out on your new toy. If you plan to use your garage as your storage unit, you need to make sure the boat isn’t much longer than your average sedan, otherwise, you may have to invest in a really nice boat cover as it sits outside on your driveway.
Should you buy a new or used boat?
And of course, once you have all of your fields narrowed down, there’s still one final question – new or used?
Sure, you may think that unlike cars, most boats don’t get nearly the hours and use logged on them to make it a risky used purchase – but think again.
New boats are easy. Just drop them in the water and go. But be sure you have a great warranty, and also be sure to work with a dealer who understands your needs, both on the water, and financially, so that you can be truly satisfied with your purchase.
If you opt to buy used, you probably won’t have the peace of mind that comes with a warranty, or any guarantee on the upkeep and maintenance of your new watercraft, so all of that savings you got by not purchasing brand new could very well be sunk – so to speak. With this in mind, it’s smart to consider having a marine surveyor check out the boat before you sign on the dotted line. Just like a home inspection, this will help to point out any issues or minor details that could become larger expenses down the line.
Owning a boat is a great thing! It can provide hours of family fun, or days of peaceful solitude out on the open sea. But it’s also a major purchase, and one that shouldn’t be jumped into with careless disregard. Before you button up those life jackets and get your fishing lines hooked, be sure to take the proper steps to ensure that you can enjoy many years of seaward fun on the boat that’s right for you!
If you would like to avoid the financial stress or the hassles of owning and maintaining a yacht check out what the benefits of our alternative to outright ownership.