How to Buy A New BIG Boat

With the worst of the recent economic storm seemingly over, and before new boat prices begin the predicted climb skyward (to say nothing of possible inflation), now is a very good time to be thinking about your Next Big Thing -- and, of course, that would be a large yacht. But even if you just got your annual multi-million dollar bonus from Goldman Sachs, it takes more than money and enthusiasm to find the right boat, and best boat for your needs. It is very easy to make a mistake, and our guess is that about 50% of the buyers usually do. There are a lot of people out there with hundreds of boats to sell you, but chances are there are only a few that are truly right for your specific and very individual needs. How to find the right one, and once found, how is the best way to go about buying it?

 

The best way to start planning the purchase of a big boat is the old fashioned way -- with a pencil and paper.

1. Define the Boat’s Mission. Before you start looking for a new boat, sit down and define the boat’s mission on a piece of paper. Is it for long weekends with the grandchildren, extended cruising with your honey, big game fishing in Costa Rica with the guys, entertaining clients out in the sound on sundown cruises, a moveable in-water vacation condo for family and kids, a floating glitzy layer cake tied up behind your house to impress friends, or whatever. This boat is going to cost a lot of money – maybe more than your house – so you want to get it right the first time. Errors will be costly.

2. Decide What You Can Afford. Again, it sounds obvious, but getting this matter right can spell the difference between enjoying your boat-owning experience and being in a constant state of aggravation and worry. Beware that you can under-buy as well as over-buy, and either way you will not be happy and getting the boat right on the second pass will cost you dearly.

We’re also talking about figuring out what your annual operating expenses will be. Talk to the local marina. Talk to your insurance broker and tell him what size and type boat you have in mind and where you want to take it. Bake in the cost of entertaining and travel to and from. If you are going to have crew, be realistic about this expense. Create a budget for repair and upgrades to equipment.

Figure out how much you can afford to lose on depreciation. Boats are a depreciating asset, just like automobiles. A Kiplinger Report we read recently said that the top 10 cars for holding value were worth from 62% to 69% after three years, and from 42% to 46% after five years. Yachts are not so easily quantifiable. They also last longer and after a certain point, more or less flat line in value, unlike cars, which after 10 years are usually worth next to zip.

The value of a used yacht is probably more influenced by the price of the same model new than is an automobile. We know one man who has owned literally dozens of large motoryachts who figures that large motoryachts will be worth 50% what he paid after 10 years.  That is with 2%-3% inflation of the sort we have seen in the U.S. for the last 25 years.  (Read "Inflation -- Perfect Storm for Consumers.")

3. Describe the boat. Write it down. How fast do you want it to go? How many people do you want it to sleep? What watersports do you want it to be able to handle? What kind of sea conditions do you expect to encounter? What style do you want? Will it have a flying bridge, be an express or have an enclosed sky lounge? How many heads do you want?

Most people buying large boats have owned several boats before and have some pretty strong ideas about what they want, nevertheless, we urge you to write it down, because when you are moving up, it is easy to forget things.  First time boat buyers buying a large yacht should talk to as many owners as possible -- and take notes. 

Now, meld the mission of the boat (#1) with the description (#3) with what you can afford (#2). Use BoatTEST.com boat tests to check on new boat prices. Many don’t have prices listed because the builders don’t like to give them out because that is the dealer’s prerogative. Check our “Boats for Sale” section to zero-in on pricing quickly.

4. Which will it be, New or Used? In a survey that BoatTEST.com conducted several years ago among owners of all size powerboats, 28% of the people said they would only buy new, about 32% would only buy used, and 40% said they might buy new or used. If you are the kind of person that wants everything your way, and to be virgin, then admit it to yourself and only look at new boats. Likewise for those who think used is the only way to go. For the people in the middle, who could go either way, ask yourself why you like new, and why you like used. Isolate the specific reasons for those preferences.

Can you mitigate your preference one way or the other? For example, the last two years have been open season for the 40% who could go either way but usually bought used because of depreciation or they could not stand to think of someone making a profit. Going the other way, if you usually buy new because you are concerned about the engines on a used boat, you might consider buying a service contract, or re-powering, to mitigate your fear of a used boat.

On each boat test or review on BoatTEST.com there is a button that will take you to all of the boats for sale that we have in our 170,000-listing database. All of the listings are current. This will give you an idea what the used boats are selling for in most cases.

5. Determine the Equipment You Must Have. It is easy to get carried away when outfitting a new boat. Money you spend on electronics and many other desirable pieces of equipment will increase your pleasure, but they will not increase the value of the boat much when you go to re-sell it. Stripped down boats, or the basic model will depreciate less. For used boats, if you can get everything on your equipment wish list, that could save you a lot of money (but make sure it works).

6. Research your options. This is the slow part – but it is also the fun part. Take the boat at the price and size you have described and find all of the models that fit that description. Of course we recommend that you start with BoatTEST.com, because that’s exactly why we created the site. We have in-depth tests or reviews on 1,300 boats. Find one that is close to what you want then use our comparison feature to compare the specifications of other boats in class.

Be careful to note the beam and the displacements of each model, as these are the two most important dimensions that will give you insight into the character of the boat. And, keep watching our newsletter as we are adding new reviews every couple of weeks. Make a list of the brands and models that fit your mission statement and that are in your price range.

7. Keep an Open Mind. One of the biggest mistakes that all buyers of boats make is to jump to a brand or model too quickly. Because we all like boats and most of us have serial love affaires with them, it is easy to go for the first pretty face we find. Resist that temptation. The chances are that there are a number of other good candidates for your affection that deserve your attention. Some might even appear to be wallflowers at first glance, but once you get to know them, you will discover their charms and appeal.

Again, use BoatTEST.com’s search engine under “Any Type”, and scroll down to the type you want, then click on “Go.” That will give you a list of every boat that we have in our database of 6,000 models that fits that criteria. We urge you to investigate brands that you are not familiar with to learn what they have to offer. You may be surprised at what you find. What you don’t want to happen is to buy a boat, only to tie up next to someone a month later who has a boat that you never considered, but that you like more than your own. (It happens all of the time.)

8. Don’t Delegate Decision-Making. Even if you plan to have a captain, don’t delegate the buying decision to him, even though he may know more about boats than you do. We see this all of the time in the larger motoryachts, particularly in those over 80.’ As the owner, you must know why you are buying the vessel. You must know why you have selected the engines and the major items of equipment. Remember, you are the one who created the yacht’s “Mission Statement,” not the captain. It is your money you are spending in pursuit of your happiness – not your captain’s. In fact, chances are the paid captain’s mission is quite different than yours.

We feel much the same way about yacht brokers. Some have very little experience and virtually all of them have an ax to grind. One obvious ax is to sell you on the boat where they are going to make the most commission. Another is that they have another deal that is contingent on selling the boat they are showing to you.

Years ago, before the Internet, brokers were a great help in finding the boats that were available, as it was their job to keep track of boats on the market. Now, you can discover virtually every boat available by going or BoatTEST.com’s 170,000 classified listings, or visiting other sites such as Yachtworld.com in the U.S., or Boatshop24.com in Europe, or Boatsplus.com in Australia.

9. Get Spouse/Partner “Buy-In.” The surest way to disaster is to keep your spouse or partner out of the decision-making. You don’t want your other half to feel left out of the buying process because that could sabotage your whole project. Our advice is to bring your honey in right from the beginning. If you are really clever, you might even pretend it is her/his idea. (“Didn’t you always want a place on the water, honey?”)

Because you are the one making the lists, writing things down, thinking things through, doing the research, you will be able to nudge your partner in the direction you want to go. The videos which appear on BoatTEST.com are an excellent way to introduce a partner to a boat you are thinking about.

10. Talk to Everyone. When it comes to boats everyone has an opinion. Ask questions. Listen. There is a lot of baloney out there but there is also a lot of experience and knowledge. In particular talk to people who have owned the brands and the models that you are considering. Generally, boat owners do not trash the brand they own so don’t expect criticism. You must probe into areas that you care about, such as performance, sea kindliness, customer service, electrical reliability, quality of construction, etc. We have found if we ask specific questions about how an owner likes certain aspects of his boat, we will get an honest answer.

Check out the “Owners’ Reports” we have on each brand. The link is in a red box at the top of each test or review.

11. Zero-in on Four or Five Boats. After doing your research you need to narrow down your list of models. By carefully examining all major aspects of the boats you will find attributes of one boat and another that disqualify them from consideration. That’s a good thing. Now you are getting down to your “Short List.” If you find that you have disqualified all but one boat, add back a boat or two. You’ll see why later.

12. Check-Out the Builder and the Dealer. If you are buying a new boat you need to know the character of the builder. (See BoatTEST.com article on this subject...) Will it stand behind the warranty? Is it they likely to still be in business in five years? Is it dedicated to boat building or are its principles more interested in maximizing profit, and taking their company public or selling it to someone else?

Depending on the size of the boat and where you live, the dealer can be critically important to the enjoyment of your new boat. All large new boats will have things that need to be repaired or changed. After a month or two of operation you will want to take the boat back to the dealer with your “punch list” of things to be looked after. You want to make sure your dealer has a good reputation for aftermarket service.

Remember, many of these fixes might be coming out of his pocket – particularly if it is an imported boat. And as most large boats are now imported from the Far East or Europe, you are very much dependent on the integrity and culture of the dealer or importer, because the factory may not reinburse him for warranty or "punch list" repairs.  Choose carefully. The lack of builder support for warranty work has hurt the reputation of builders both in the Far East and in Europe.

13. Be Prepared to be on Your Own Hook. As we saw last year, even some of the biggest names in boating can go into Chapter 11 or Chapter 7 without warning. Happily, last year’s crop of failing high profile builders were purchased by properly capitalized concerns and all seem to be standing behind existing warranties. However, builders of large yachts, which may only build three or four boats a year, are not easily sold. When they go, they usually go Chapter 7 and are gone as far as a new boat buyer is concerned. If someone does buy the yard, typically the new owner is buying assets only and no liabilities, that includes the warranty on previously sold boats.

Buyers of imported boats must look to the importer and the engine maker for warranty recourse. Make sure your paperwork is squared away on these issues because serious problems on big boats often take big bucks to fix, which can mean the profit that the builder, importer, or engine maker thought he had on your boat, just evaporated.



If you end up on your own hook it is not the end of the world,  if you have selected a good boat and the engine warranties are in place.  After all, most buyers of used boats receive no warranties.

14. On New Builds Consider an Escrow Account or Performance Bond. For new builds you will want to make sure that your down payment and any progress payments are protected. In the megayacht business, every decade there have been a few owners who had to buy the yard that went out of business in order to get their boat finished. Even on smaller boats, yards can go out of business and a buyer who had given a deposit might discover that money went into finishing someone else’s boat.

We hate to use the “L” word, and rarely recommend it in matters to do with boats, but this is one area were we do advise buyers to seek the council of a good lawyer. For everyone’s protection, you must know where your money is and what is being done with it.

If a boat yard owner resists you on a performance bond, escrow account or some other legal arrangement that assures that your money is protected, you just discovered all you need to know.

15. Have Even a New Boat Surveyed. This is going to be a controversial suggestion because the experience, knowledge and understanding of surveyors spans the horizon from sublime to ridiculous. The industry is rife with stories of how cantankerous know-it-all surveyors have killed both new and used boat sales. This is another reason why the owner must educate himself about boats, their proper construction and outfitting. Nevertheless, a truly good surveyor, for a very reasonable fee, can put one’s mind to rest about a new build.

Chances are that you have selected a production boat because the company has a good reputation, and it’s staff probably knows more about how things should be done than most surveyors. If on the other hand, you have selected a boat builder because it was the low-cost bidder, or the builder is new, or exceedingly small, you will be wise to arrange with the builder to have an appropriate surveyor look in on the build from time to time during construction.

Custom boat builders are notoriously cranky. They will not like someone looking over their work, particularly if it is another prima donna. On custom builds this needs to be ironed before the contract is signed. On production builds, our advice is to have a surveyor inspect a late model sistership to see if there are any major issues that need to be discussed in advance. Once the boat is built, if it is a large motoryacht it should be surveyed before taking title. Remember, the boat will be surveyed when you put it up for sale, and you don’t want any surprises. 



One more caveat:  A surveyor's job is to be nit-picky.  Just because he has found "problems" or "potential problems" doesn't mean these issues are necessarily important enough to kill the sale.  Every large motoryacht can be found to have deficiencies if one looks hard enough. 

16. Make the Decision, You’re Not Getting Any Younger! Having gone through all of the above, you should now know what boat is best for you and be comfortable with the builder and the dealer or brokerage firm. Because you have your budget, because you know your boat is going to depreciate, because you are prepared to take care of problems yourself if you are left high and dry, you can now move forward with alacrity.

You are not getting any younger, and we are not saying this to be cute. Every week we receive reader mail from boat owners who have put their future boat-buying plans on hold because of health issues. Don’t be one of those people who looks back when it is too late with regrets about what might have been. As Malcolm Forbes said when he commissioned his famous 150’ Highlander, “Life is not a dress rehearsal.” Enjoy it while you can.