A friend asks "How much boat can I afford?"

When people are talking about boats for a couple of millions and up, my advice use to be that they should buy a yacht for half the amount they can put aside for yachting. Then the interest of the remains may cover the annual running costs.

But yachtbrokers often tell them to buy for more than they have and cover the rest with charter income...

This may sound insensitive, but I think it is kind of a dumb question.

What one can afford for a hobby is really a function of how much do you like it and how much do you have available to spend (or willing to forgoe).

Allow me to take a crack at this from another direction.

Posit, instead,: "How small a boat can I get by with and still realize 93% of the satisfaction I might feel with something approaching wretched excess in view of available funds?"

Are we going to putter around Lake Washington on just sunny days with the missus and the pooch?

Are we, instead, going to invite Aunt Marge & Uncle Joe to join us in a trek up to Coal Harbour to see whether or not 'outmywindow''s aerie really exists?

You don't need much to have a whale of a time. The late Tom Fexas, a gifted designer out here on the Right Coast, used to lament the passing of his boyhood family boating on beloved Long Island Sound on smallish, uncomplicated boats, compared to present-day craft sporting bowthrusters and grandiose navionics packages.

If your friend a) has no need to impress the Jones's and b) is comfortable on the water (i.e., been through a rough patch or two), then he already knows how much boat he really 'needs', IMHO.

For many of us I think the equation would depend more on income flow than net worth. Easy come, easy go. But unless it's a liveaboard, I would not be comfy with more than 15% of my worth tied up in something that can catch fire and sink. Though I know a few folks who have certainly exceeded that. As goplay said, this is a very personal decision. I also agree with Loren, much better to undershoot than overshoot!

Kelly

I agree as well since people with a lot of money normally has more things that needs attention and their boats are little used. Also, it happens that the only fun for the owner of larger yachts is when his waverider is launched...

I have a small motorsailer which I have used two days this summer and an even smaller hardtop boat which I have used a little more, but my best memory this summer is from when I was rowing my 8 foot inflatable around the island for half a day...

Businessmen sometimes make the error of looking at toys as "investments".
If it's personal use then it's a toy. Toys are for fun. One way to look at the money spent on toys is flushed money. It's gone. Don't even consider any residual value or potential resale. If you approach it that way then the toy is just straight out enjoyment, not another potential stress source.
Perhaps conservative, but I've never had a single regret about any toy that I've ever purchased. When I've wanted to play with something that I didn't have the money for I just rented it.
Stash the cash that it'll take to maintain the toy for whatever period that you think that you'll use the toy and consider that flushed as well, even though the amount is still earning for you

Just one old guy's take on it.

How Big?

Good comments, There is a saying that has proven itself over and over again.
"the size of the boat is inversly proportional to the pleasure recieved"
My boat is really just a fancy kayak rack.
To pick the apropriate size vessel, create a "mission profile".
For me a boat begins to loose points when its size restricts where I can go.
The smallest boat that meets all the needs is the best and the most likely to be owned for the long term.

owners

I was discussing this with my old boss a while back as we were putting figures together looking at the pros and cons of owning older yachts (classics) over newer yachts.

But generally I would say that the cost of running a yacht can be between 10-20% of it's value (depends on size, age, etc) so if he wants a $400,000 yacht can he afford $80,000 a year plus the repayments on a loan?

How much to keep her?

That figure seems a bit high.
Talking to guys at Hinckley yacht services, they said 10 to 20 % INCLUDING the cost of loan/lost income etc. and I have to say even keeping my boat at HYS and using the full service package. I have never spent even 10%. This does not include interest but does include dockage, insurance, fuel, repairs, inside winter storage, preventative maint. and upgrades. In 1999 my boat cost 700,000. and cost to own has been 35,000. to 50,000. per year over the last 8 seasons. Again this does not include the cost of money.

The 10% figure is normally used on crewed yachts and is an average of costs over 5-6 years including a refit including paintjobs and where some decoration, carpets and such are replaced. As you can imagine, an uncrewed boat is cheaper, a boat that needs restoration is more expensive.

So the general 10 percent is just this, a general figure of running costs and mainly used for yachts 80 feet upwards...

This however is not the same discussion as the original posters 10 percent of your wealth..

Gross Investment Theory

Quite a few years ago, Mike the Yacht Broker used to take out a single page ad in one of the major marine magazines. Occasionally, between his boats listed for sale, he'd include an editorial of sorts, one of which parallels this thread's content, more or less.
It was titled Gross Investment Theory, and from memory (I have repeatedly implored Mike to come up with a reprint in the form of a poster), it went something like this:

Mike is walking down the docks with a client who, after a fashion, exclaims, "What gives with the high prices of all these boats?"
Mike turns to the client, looks him in the eye, and proceeds to tell him that most owners tend to add up the price that they bought the boat for, plus all the fuel they bought last season, the crazy dock rates they paid at those fancy marinas, the high cost of insurance... that huge bill at the boatyard...the new curtains... captains fees, gifts to the grandchildren...

And then, Mike tells him, "Those owners then look at the boats on the market similar to theirs and loudly bray how much better their boat is in comparison."

He adds, somewhat tongue-in-cheek, "And you, not being privy to all this information, would certainly have no idea why these boats are so expensive."

How much are you comfortable with?

Boat cost VS 10% of wealth.
I have to say that I wouldn't be comfortable going beyond 10%.
This is a question that salesmen sort of dance around. Of course they want to sell the most boat but they also want the deal to go smoothly. Michael, the guy who sold to me said "some people borrow the money and when they sell they have only paid for the part of the boat that has been used". I guess that I am a true yankee and just don't like to borrow.

You have to look at this as a total recreational expense. The cost to own is an ongoing thing and while top notch service will preserve some of the value in the boat its a loosing battle. Every 8 to 10 years you are buying the boat all over again. Yes I know that every 3 to 5 years the average owner trades up. So far I am happy with my boat and after 8 years it's almost new!

I am now 57 years old. Since I was a kid I have been a boater, from kayaks, sail and power boats; small and large. The cost of boating can not be answered in percentages. Look at worth, as in worth to your quality of life. The best time my kids ever had has been boating; me too. There is an element of health, well being, and inner peace, that no other function or place on earth can match.

I have always found it very important to be my own master. That is why I have been looking at the Horizon 68 but nothing larger. Boating on the west coast of Canada and the U.S. is all I have ever needed. The cost of operating is reasonable when compared to other costs of stress relief like taking extended holidays with airport delays, security and limitations as to what you can take and bring back. Pushing away from the dock with all you need to relax is worth it every time.

The business side of it works well as I have never brought the boat back into port until the deal is done. It doesn’t hurt to charge a few expenses to the company either. A boat can be a great marking tool after all. Put a cost to that.

Life is short….make the most of it…!

Well said Don. Welcome to YF!

Don Greer
Agreed & well said. Grew up on my family yacht and best, most relaxing fun, ever. As for the deals - that's an intersting and new angle to convince my wife we are in need of an upgrade. Do you think the bigger the boat the bigger the deal?. Kind regards
N

10%?

I assume the 10% operational/maintenance cost must fluctuate wildly, especially in the 60 foot range! If 2 people went to buy boats and 1) bought a semindisplacement pleasure boat capable of and 2) went and procured himself a nice displacement hull with a hull speed of 9knts.

Would I be correct in saying that the faster boat would have higher tendencies for failures, breakdowns and maintenance?

I am new to boats but well versed in cars, I had a road car and a race car both cost the same, they were even the same make, but 1 cost 10times the other to operate. Can the same logic be applied here?

I apologize in advance if the car/boat comparison upsets experienced boaters!

Afford

In the early 70's I used to do some entertaining on my boat with clients, indeed I had proof of contracts signed for business within weeks of the trips out, the tax man at an audit...said..no way man..not deductible, boats are not necessary for business, clawed it all back, all I wrote off was fuel, a bit for crew and food and booze...so, be careful, check with your accountant, there are bullitens issued by CRA which covers the issue.

30 years ago, personal cars could be writen off as company expense. Not any more! Boats are an even weaker case.
The bottom line here is- If you can't afford to loose it, don't spend it!

I've had 11 seasons now with the same boat and enjoy it more and more each year.

It's not the size of the boat, it's the motion of the ocean.