5 Mistakes When Buying A Yacht
Don’t Make These 5 Mistakes When Buying A Yacht.
To understand the value of a broker, you need to understand the process required to buy a yacht:
1 - Use A Trusted Source to Budget Year 1
The most popular regret I hear is a new owner who didn’t grasp the depth of their annual running cost. Frequently, buyers front-load their focus on the costs involved with the asset purchase — deposit, mechanical survey, interest rates and closing costs — leaving minimal thought to the equally-important running costs that will come calling each month. Good friends suggest a 10% running cost compared to purchase price. Great friends will link you with someone with experience on a similar boat so you can get the real story.
Your year 1 budget can be separated into two categories: Asset Purchase (fixed) and Vessel Maintenance (variable). Although maintenance varies based on your use strategy, someone with similar experience with a similar yacht (friend, peer, broker, experienced captain) can accurately break down and estimate your monthly expenses and maintenance costs. Call this financial Jedi your “Trusted Source”. As long as your Trusted Source has experience with a yacht of a similar size and a similar engine package, you should get a budget you can count on.
Costs to consider: Captain, First Officer/Mate, Deck Hand, Chief Stewardess, Dockage, Storage, Insurance, Financing, A La Carte Washing, Waxing, Bottom Cleaning, Bottom Paint, Professional Management (Proactive Check Ups & Washing), General Maintenance (Annual Services & Repairs), Fuel Consumption, Road/Water Transport and Upgrades.
2 - Quote Insurance Before You’re Locked In
If you’re currently in a closing and have yet to quote insurance, cover your ears. Horror story incoming…
A buyer contracted and accepted a beautiful $3,000,000 yacht, quoting insurance a few days before closing. Back when insurance was dependable, this practice was normal. Unfortunately for this buyer, the insurance market has turned upside down. The boat was to be used in Florida and had quint outboard propulsion. The insurance quote? $130,000 a year.
To be fair, the $130,000 number can be in the clouds for a number of reasons: docking location, owner’s boating history, intention to charter, past claims, and more. But either way, this should teach you an unforgettable lesson. No matter what your safety record is or how long you’ve been boating, don’t head to the insurance office with your pants down. Get your quote before you’re locked into the deal.
3 - Go See Something You Don’t Like
Today’s digital world can be misleading. We fall in love on Instagram. We do our research on YouTube. We cement our interests before real world experiences. Before you allow your subconscious to make its decision, challenge yourself to see something you wrote off. You want a Vanquish VQ58? Go see a Princess F65. You like the Wajer 77? Go see a Horizon FD75. Worst case scenario? You confirm your assumptions and can buy with confidence. On the other hand, you may see a brand, model or even a single feature that can change the way you search for your next yacht.
4 - Someone’s Good Captain May Not Be Your Good Captain
Captains are a wild bunch. The best of the best can range from an old salty beer drinker to a crossfit-crazed health nut. Its impossible to “judge a book by its cover”, so we may look to friends and peers for referrals. Tread lightly.
Captains have an important and complex role in our ecosystem. The good ones run a boat well, the great ones do their operational job while managing the emotions and relationships surrounding your friends and family. For this reason, the bright referral of a trusted friend may not be as guaranteed as you think. Interview each Captain on a clean slate; a referral is a phenomenal asset, but not something you should based a job offer on. The first way to ruin your boating experience is by trusting a Captain you fail to have a good working/personal relationship with, and the only way to truly judge a Captain is how they treat your boat and your family while under pressure.
A good referral should get them in the door, but put some extra effort into making sure they are the right fit for you.
5 - Be Ready to Sell, Even If You Won’t Sell
This is my mantra, and the last point for a reason. Whatever you’re buying next, commit to keeping it “sales-ready” during your ownership for 3 reasons:
Increase Usage - A clean, turnkey boat will keep you excited to enjoy it. You’ll be more likely to take spontaneous cruises, plan big moments, and maximize the purchase you’ve made.
Decrease Big Bills - Being Ready to Sell means you’re participating in Proactive Maintenance. You may spend a little bit more up front, but this will limit surprises to the budget.
Maximize Resale - Sales readiness means the market sees your boat at its best. Anyone making a spontaneous offer will have to throw top dollar. You won’t be taking massive survey credits during closing, and you won’t have big bills looming over your head if you do eventually decide to sell. Accepting a mid-range condition means you’ll need to accept a mid-range sales price, and survey credits never favor the seller of a beat up boat.
Feeling good about your yacht purchase depends on the level of preparation you do before signing the dotted line. Starting with these 5 suggestions will leave you in an advantageous position coming closing day. For a deeper dive into strategizing your next purchase, write me an email or DM me on Instagram.
About the Author
Reed Nicol is a licensed yacht broker with experience in all corners of the marine industry. He’s worked as an executive and sales director in yacht manufacturing and distribution, has started and managed commercial charter operations, and managed notable refits. Read more about Reed’s marine journey, his love of helping 1st time boaters and his entrepreneurial spirit here.
Reed Nicol [Licensed FL Yacht Broker #11926]
201-264-6356 | Reed@RNMarine.com
