Depreciation

[vt97john]

Hello,

Does anyone have an approximate depreciation rate for used Ranger Tugs (or at least for used boats in general?). In my specific case, I'm looking at buying a R27 pr R29 boats that is at least a few years old. Budget between $110k and $150k. How much per year might a boat like that depreciate while I own it (assuming I take good care of it of course)?

 

[baz]

From new to say 5 years old the depreciation will likely be around at least 30%. After this it will slow down of course and the market value will largely depend on what a potential buyer is willing to pay regardless of what the official depreciation stats are.

 

[vt97john]

From new to say 5 years old the depreciation will likely be around at least 30%. After this it will slow down of course and the market value will largely depend on what a potential buyer is willing to pay regardless of what the official depreciation stats are.

Let's say I bought a 2011 29' classic with AC, Generator etc and in good condition for $160k. Is it safe to say that if I take good care of it, then it would depreciate about 4% per year or so?

 

[JamesTXSD]

This is a tough thing to put your finger on concerning boats with a somewhat limited production like Ranger Tugs or C-Dory. Unlike boats like Bayliners, where you can figure 5% depreciation per year after the big hit in the first three years. Rangers hold their value better. That said, there are a lot of factors at work: of course, condition will be the big item... a boat that has been stored indoors will maintain value better than one that has faded brows and worn out canvas. Engine hours. Equipment - and not just what equipment is on the boat, but how that equipment has evolved (i.e. flat screen chartplotters vs cathode ray tube models). Where the boat is located will be a factor - boats in the PNW have an advantage over a location like ours (deep south Texas), even though there have been Ranger owners here. The general economy will have an impact on resale value.

A banker will look at NADA or KBB to determine a value, and that will be low. A broker or surveyor will look at the market and see what similar boats (if any) have sold for to help determine value. Boats generally are a "decreasing value" purchase. The key is figuring out how much that value will decrease, and all the factors above will play a part. You will lose less of a percentage of purchase price on a well-used boat, but you also have to look at owner satisfaction while you own the boat. There is something to be said for "that new boat smell!"

 

[tugnnaweigh]

Depreciation is simply the difference between what you paid at purchase and what you get at sale keeping in mind the loss comes out of your pocket.

Say you buy at 150k; working backwards to that figure the maximum loan available is likely 80% of the only value guide lenders use, retail NADA valuation (say it NADA’s at 125k so the loan available is 100k) so your out of pocket to close the remaining gap between the two numbers would be 50k.

Then, when you sell in five years at 120k as Rangers tend to hold their value, your loss would be a net 60% on your initial out of pocket and who in their right mind would do that, a purchase where you lose 60% of the cash you put in?

Boat buyers that’s who. All day long.

This can be avoided and it’s all in the numbers: An asking of 150k with a 10% lower offer and the broker taking his fee nets the seller an amount somewhere around 125k which is oddly the NADA quoted above. So find a boat without a broker and offer NADA valuation, heck, find a boat with a broker and offer NADA value.

Then use a lender who finances 100% of NADA so you don’t put a penny into the scow, write off the interest as a second home due to the plumed in toilet and all your cash stays in you pocket!

 

[captstu]

I plotted asking prices for the r25. I’ll email it to you if you pm me your email address


Stuart Bell
Ranger 25: Shearwater
(561) 352-1796

 

[scross]

I agree with Stuart! For any given model, just plot asking prices on one axis and the model year of the boat on the other. You can get a rough idea of the depreciation curve using those data points and a bit of extrapolation.

For discontinued models (RT21, RT25 and RT27 Classic) my sense is that they have stopped or slowed way down in depreciating for now due to steady demand, lack of new product availability and the higher pricing of newer models.

Also, condition, options and maintenance history for the older boats will make a big difference in selling price just as it would for a car.

 

[captstu]

The data is at

http://www.shearwater-sailing.com/index ... rwater-iv/