Owning a yacht is a luxury which few can afford and typically, the well-heeled and deep-pocketed are looking to expand their fleet of leisure toys instead of looking to flip a yacht for profit.
Yachts do depreciate in value but most of the depreciation occurs within the first few years of ownership. High-quality yachts hold their value better than smaller boats which are not very well maintained.
As with many high-value items, frequent maintenance and care help to keep its value at a premium. The value could change by as much as 30% if it is kept in good condition thereby increasing its resale value.
Yacht Cost Of Ownership
The decision to purchase a yacht usually comes on the back end of the desire to embark on more luxury themed leisure activities and not an investment expected to pay off fiscally.
Not only does is the cost of a yacht exorbitant, but the total cost of ownership could also prove to be cost-prohibitive if all elements are not considered prior to purchase.
A yacht that is older but which has been kept in great condition and has had some upgraded features can command a few million, versus an older model with no updates which could sell for a measly six figures.
New superyachts, defined by their length of more than 80 feet, could be sold for tens of millions of dollars.
Maintenance costs along with a full-time crew, fuel, and dockage fees could cost up to 20% of the purchase price of the boat on an annual basis.
For a yacht with a price tag of $10 million, the upkeep can be estimated at $2 million annually.
The monthly recurring costs vary based on the size of the yacht and the crew complement necessary for smooth operations aboard.
Salaries and associated costs such as training, gear, insurance, and benefits also increase drastically based on the size of the crew.
Return On Investment
Unless you will be living full time on your yacht all year round, it would be kept moored and empty for the time when it is unoccupied.
Some owners enter into a letting arrangement for private charters to others who wish to vacation in sophisticated luxury without the shackles of a huge investment.
If you have purchased your yacht via a marine mortgage or other leasing options, private charters are one way to have the boat pay for itself as well as earn additional residual income.
During the busy season, a 205-foot yacht with a $3.5 million annual operating budget can charge up to $425,000 (all-inclusive) per week for a charter.
Fractional ownership also allows for a type of time-sharing of the yacht where multiple investors split the costs and benefits of owning the boat.
Within the first few years of ownership is when the boat will most depreciate in value and the pace is much slower than that of a car.
A general guideline is that one may expect the yacht to depreciate by about 10% within the first year and 6-8% in the ensuing four or five years. Thereafter depreciation will typically taper off at a nominal level.
A used boat, therefore, retains its value as the depreciation level is lower than a new one.
Resale Value
Whichever the choice in ownership, the crucial point in retaining the value of the yacht is care and maintenance.
Owners generally retain their yachts for between three and five years, and needs for routine repairs typically kick in at around five to seven years.
Repairs should be done efficiently and done to a high standard, refits should be undertaken promptly, and routine maintenance should be scheduled and performed as necessary.
If the boat is kept in pristine condition, its value could even increase by up to 30%.
On the other side, the intangible gains far outweigh the financial benefits of owning a yacht.
Considering the innumerable hours spent soaking up the sun on the deck, communing with nature, and spending time with friends and family away from the noise and pollution of the “real world”, owning a yacht can prove an invaluable investment.