Should You Buy a Yacht as an Investment?
The decision to buy a luxury yacht should not be looked at as a financial decision, but a lifestyle choice. Owning a yacht, and spending a lot of time on it, should be something you really want to do. Keep in mind that you can expect to spend at least 10% of the cost of your boat on upkeep and maintenance every year. However, we are often still asked about the investment potential of buying a motor yacht.
Unlike automobiles and more conventional boats, a luxury motor yacht does not necessarily automatically depreciate in value. Some manufacturers and models are more in demand than others due to the known quality of the brand, and the reputation of the designer and/or marine architect. A skilled yacht broker can advise you, if you are looking to purchase a yacht more likely to hold its value at resale.
I rarely would advise purchasing a yacht strictly as an investment, for example, as you might buy real estate. The market for luxury yachts if far more complex than real estate. Ultimately, it is a market based on high-value assets that do tend to depreciate, unless they are properly maintained, and yacht maintenance can be very expensive.
Maintenance Costs and Expenses of Owning a Luxury Yacht
Still, that does not mean that buying a motor yacht is an automatic “money pit” either. There are ways to choose your investment wisely, and ways to offset, or minimize your operational expenses.
One of the best ways to minimize the maintenance and operational costs of your motor yacht is to invest in a professional yacht management company. In addition to protecting the capital you invested in your yacht by making sure it is properly serviced and maintained, a reliable and vetted yacht management firm can save you about 30% on your dockage and other operational costs. In addition, a yacht management company such as our sister company, Florida Yacht Management, can make your boat available as part of a charter fleet.
Chartering your yacht is another way many motor yacht owners choose to offset operational expenses. Generally speaking, putting your yacht into charter should pay for dockage, routine maintenance, and insurance. Also, if you are considering selling your boat as a return on your investment, a yacht that is available and marketed for charter, has a higher profile relative to one that is only available for private use. A prospective buyer of a motor yacht is likely to “take her for a test-drive” on charter first.
There are pros and cons to chartering, and not all owners will gain the same benefits of making their yachts available for charter.
How Do You Value a Return on Investment?
In financial circles, investments are discussed in terms of initial investment and Return on Investment (ROI). To borrow another term from financial advisors, “what is the bottom line?” Can owning a luxury yacht be a good investment? I’d say “yes,” keeping in mind however, that there are different kinds of “investments,” with different kinds of “ROIs”.
Owning a yacht may not always be the best financial investment, but it can be an investment in your mental and physical well-being. There are few things more relaxing than enjoying the stress free times out on the open waters aboard your own crewed yacht. Then there are the other, incalculable returns on investment. Buying a yacht can be an investment that pays off in more time with your family, with your friends, and enjoying some of the vacations and experiences of a lifetime!
Understanding the pluses and minuses of buying a motor yacht can be complex. If you would like to benefit from our expertise in these areas, or if you have any questions or comments about this blog post, do not hesitate to contact our Sales Specialists, or call us at 954-900-9988.