13 Apr Buying a Boat? Here is what you should know to make your purchase worry-free.
It’s almost that time of year! The time you consider which boat to enjoy on the water this season. Executive Yacht C.E.O. Derek Mader goes through some common mistakes buyers often make, and what to avoid when purchasing a new or used boat. The good thing is, you are not alone. You can always reach out to our team of experts for advice and mentorship throughout the buying process.
Price is what you pay, value is what you get.
It’s important for new boaters to know that price isn’t always the defining factor. Depreciation costs over time can differ from boat to boat and must be taken into serious consideration. For example, a vessel purchased for 15% less than another when new depreciates an additional 30% over a given period time. This results in a 30% loss in value retention compared to a higher priced vessel that only depreciated 15% over the same period of time, due to its position in the marketplace.
So even if the initial price to pay is bigger, the higher priced vessel would cost you less over time thanks to its greater value retention. A savvy broker will be able to walk you through smart ownership structures and investment opportunities in boats that retain their value.
When it comes to used boats, depending on the age of the vessel, you need to consider the price based on a variety of factors, such as usage, saltwater, even why the vendor is letting the boat go. Often if it’s priced too low, there has to be a reason. Finding out why is very important, so unexpected problems don’t fall on the new owner.
Don’t forget your survey
It’s shocking how many people don’t get both a mechanical and structural survey of the vessel before they buy. This step should be taken seriously no matter how old the boat is, because you need to make sure the craft is as it’s being presented. An experienced boat dealer will dig deeper for you and help you navigate the vessel’s true worth.
Your due diligence should not stop there. The concern over liens has certainly become more prevalent in the last ten years. Ensuring the vessel has zero liens makes sure new owners are not going to have to hold any outstanding debt attached to their vessel, and any future owners are free and clear. This is one of our top priorities as yacht brokers. We always bring our experience into play and support our buyers by working through the banks and other financing avenues.
Avoid common budgeting mistakes
Just as when investing in a home or a car, there are a lot of extra expenses to take into consideration when buying a boat. The cost of fuel, insurance, and storage should be factored in among other hidden costs. One safeguard, for example, is to hire the proper people to winterize your boat, to keep expensive mistakes at bay and de-stress the situation. This is why we continue to work closely with our buyers, who have access to perpetual after-sales consulting and support.
Your boat has a personality. Be sure it’s a good match with yours!
Buying a boat is an intimate purchase. When we work with our clients, we ask a lot of questions. We try to understand their own lifestyle needs in the process, and we caution against buying a boat just to entertain their guests and friends. So put your needs first and foremost in the acquisition.
“Just make it your own. Make it personal. Plan in advance and enjoy the process” adds Executive Yacht’s sales executive Gerald Mader. “This process of buying, fine-tuning to meet your needs, and upgrading is addictive, and ultimately, that’s what boating means to some owners after all.”
And remember, despite the “Old Wives” tales about changing the name leading to bad luck, many vessels on the market have changed names to suit the owner’s personality!
But beware of over-personalization and too much bespoke
A long-term relationship with your boat may not even be a realistic goal. The average boater owns their boat for just 1.5-2 years, North America wide. So be cautious of extreme personalization, because if your boat goes on the market, the next prospective owner may not necessarily like the overly bespoke style you have chosen. You want to positively re-market the vessel down the road without too many extremes. That’s why we always advise our clients to tailor their vessel in a personal, yet timeless, manner.
Thinking of boat sharing? This might not always be right for you
When it comes to sharing the ownership of a boat, the biggest challenge is the limited number of weekends and holidays available. Your fractional investment should make sure there are reciprocal opportunities in different places, possibly in southern or other warmer climates where the membership can be utilized year-round.
Alternately, putting your boat in a charter fleet can lower the overall cost of owning a vessel over a year, although most boaters increasingly value their privacy and flexibility over revenue generation.
Insuring a vessel means knowing its owner
Relevant questions need to be asked to ensure your insurance coverage is adequate. What is the usage of the boat? Will it be in salt or fresh water? Will there be hurricane exposure? Has the owner had a vessel before and how experienced are they in operating it? Every situation is different, and this is what an insurance agency will look at. Selecting the right insurance agency is of the essence. At Executive Yacht, for example, we leverage our stellar global network of top insurance partners to make sure the right questions are asked to protect our clients and their investment.
Education is everything
Attend a boat show when you can. Not only is it a fun event to experience, but also a unique opportunity to learn from experts in the field. In addition, you can start taking boating courses and training to prepare for your life on the water.
At Executive Yacht, we always encourage boaters here in Canada to join their local “Power and Sail Squadron”, which offer numerous courses in things like navigation training, and safety preparedness. And we highly encourage all family members to participate. If someone were to get hurt or something were to happen, it is important that at least two people on the vessel are prepared to get back to safety and navigate the boat with a certain amount of proficiency.
A yacht purchase has to be a fun process, a reward. Alleviate the stress; plan ahead and hire professionals to do the jobs you don’t love. At Executive Yacht, we bring more than 30 years of experience and an infinite passion for making our clients’ yachting dreams a reality. Contact us today to embark on your own boat ownership journey.