a few rules…

Three quick rules that I’ve found to be true regarding boats and boat restoration/rehabs.

  1. Any money you spend on improving your boat will not add resale value in terms of return down the line when you want to sell it.
  2. All boats have a reality value which seldom conforms to their asking price.
  3. Your personal labor on your boat (aka sweat equity) can increase the value of your boat but only up to but not more than its reality value.

Now, I’ll be the first to admit that these rules tend to fly in the face of perceived wisdom but they all are based on simple math of the 1+1=2 sort and in 99% of the time seem to stand up.

More on the subject soonish…

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4 thoughts on “a few rules…”

  1. Hi Annie,

    In this case value = the cost that the boat will sell for on the market.

    My experience is that improvements of the sweat equity sort make a boat easier to sell but that buying stuff is more of a not so much sort of thing. The market value for a CAL 34 in good shape is at most $15K and any money I sink into a project that exceeds $15K is not going to raise the price a buyer will spend. So, If I buy a CAL34 for $5K and spend $15K to fix it up I'll still wind up selling it for $15K.

    The problem in our consumerist world is the answer to everything is just to throw money at it. Sadly they also don't bother to tell you that everything has a reality value and spending that exceeds it will not, in fact, add to its value.

    Anyone who has built a boat or two knows that what you can sell your boat for is seldom the same as what you put into it. The profit for most of us is in the work itself and the satisfaction.

    I once received a very long and angry letter from the owner of a Loose Moose 2 (the second one built) because he'd found that he could not sell it for anything close to his investment in the project. In the end I heard he sold it for pennies on the dollar but was quite vocal in blaming Phil and myself for, apparently, forcing him to build what was to become a financial disaster.

    Anyway, the point being just to do the math before one spends money.


  2. Hi Bob,

    One of the exceptionally lucrative returns on a boat seems to be cosmetics.

    In my (vicarious) experience, I've seen a paltry investment in "putty and paint, to make 'er what she ain't" pay off big-time.

    Some friends of ours purchased a series of sound-but-cosmetically-challenged vessels. They'd immediatley hang a For Sale sign asking twice what they paid, non-negotiable. They then set to work painting. Often, they'd turn her around within the week. Worked their way up to their dream boat (an aluminum, Colvin SPRAY) and promptly retired.

    Took them about two years and 5 turn-overs, starting with a 26ft skipjack. Cash outlay of about $2K (for the first boat) plus $200 (total paint)… all this in the early 90s.

    Not bad return on investment!

    Dave Z

    PS… It must be said that they also moved aboard with their adorably cozy and nautical, personal belongings, whose ambiance definitely helped the sale along. The new owners were sometimes taken aback by the trim but vacant interiors they left behind… romance was not part of the bargain!

  3. You're right!

    Fact is I know a guy who buys boats then gets rid of all the accumulated garbage and cleans them up which, in most cases, is all that's needed to be able to sell them for double the price paid.

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