ROI/Sweat Equity v. Reality

I recently was forced to face a truth. I've "invested" hundreds of hours of labor fixing-up a 35 year-old trawler. Mechanically the boat is in decent shape with 12 year-old functioning electronics. My hours were spent sanding, varnishing, painting, waxing, sewing, etc. She looks good, regularly receiving positive comments from passers-by.

How much value would you think improving the appearance, inside and out, added to the boat's value?

My experience was jolting forcing me to reevaluate everything.

Any value added by your efforts will make it more sale able, but don’t expect it to add $$ to the selling price. It’s still an old boat! I just think of the 1000’s of hours I’ve put in as my hobby and a labor of love.

Let me add a comparative reality. I bought my boat when I was 55 and spent 2 years in a refit. Atleast half the work was done by Sean. When I started looking for a boat (5 years before I bought mine), I had an expectation on how old I could be before I would age out (based on parents health and longevity). Simply, every year I looked or spent in refit was 5% off my cruising time. As it was, I over estimated by 5 years.

Bottom line: For most of us, cruising after 50 is the reality. The end is coming whether you want it to or not. Spending years searching and refitting may be eating into your years of cruising.

Ted

Only have hundreds of hours into it? Value is what someone is willing to pay for it or what your insurance company is willing to value it as. I have unknown hours of labor put into mine, added tens of thousands of dollars in upgrades and repairs but it's value hasn't gone up incrementally, nor was I expecting it to.

I started with a $20,000 boat, put many of thousands of dollars and many many hours into and still have $20,000 dollar boat. Hopefully when I go to sell it the prospective purchaser will look at all the big projects they won't have to do, and it will sell a bit more quickly. Although the more work and money we put into her the less we consider selling her.

Solo_Nomad said:

I recently was forced to face a truth. I've "invested" hundreds of hours of labor fixing-up a 35 year-old trawler. Mechanically the boat is in decent shape with 12 year-old functioning electronics. My hours were spent sanding, varnishing, painting, waxing, sewing, etc. She looks good, regularly receiving positive comments from passers-by.

How much value would you think improving the appearance, inside and out, added to the boat's value?

My experience was jolting forcing me to reevaluate everything.

Click to expand...

As a guy who seriously over-improved my boat, I wish I had a better answer for you. Any boat has a cap of value. No matter what you do, you cannot exceed that cap unless you manage to find a PT Barnum 'sucker.'

Pictures??

Peter

A boat is not an investment so the whole concept of ROI for a boat is a fallacy.

A boat is a money sink. We need to understand and accept that reality. How much money vs sweat equity vs time we dump into our boats is determined by our own preferences and realities.

Some of the projects I do on the boat can be difficult and at times frustrating, but I enjoy the process (such as adding solar). Some jobs are relatively mindless but are activities that give a pleasant feeling of satisfaction (changing oil or anodes). Other jobs on the boat are physically hard for my body, are not enjoyable in any way, so I grudgingly and infrequently pay to have them done (washing and waxing).

Very few of the things that we do in the boat actually increase it's value. All they do is slow down how quickly the boat depreciates.

Bottom line, all money spent on the boat I just consider as entertainment expenses. In some ways it is the same as a Netflix subscription. As long as the perceived value exceeds the cost, I will continue to do it.

There are so many answers to this question and it all depends.

Did you buy during Covid when prices were stupid high and now you are selling with prices back to normal?

Did you take 5 years to do the work and forgot to calculate that the boat is 5 years older and possibly older than the average bank will lend on?

Were you comparing apples to oranges. Meaning you think your boat is just as valuable as the one with stabilizers, watermaker, and bow thruster even though yours doesn’t have these options.

These mistake aside, there is often only a 15% price difference between the top of the market and the bottom. Boats at the top of the market are usually the best value and the ones at the bottom are usually the worst value.


Comodave would be the expert on fixing up boats and then selling them.

Boats can be either, but a lot fewer ever have a positive ROI.

If you want a boat to satisfy your boating want/needs.... it may or not be a good choice for ROI no matter what you do to it.

I have had a couple friends who made pretty good money flipping boats with everything from a good detailing to major refit... but they got started thinking fixing an old boat, using it while having it up for sale would be profitable...they wound up finding out there is a certain formula that rarely included them actually liking or wanting to use the boat.

Consider another POV. What is a refit boat worth to YOU. If the boat was purchased for very little as a fixer upper and you got the interior and exterior up to par and then refit with new electronics, lithium, Inverters, autopilot etc to the point that the boat is fully mission capable and then compare those costs vs a new or newish boat ( that still may not even have the same capability) then what are you saving? After all, most of us are buying a tool that we hope to be capable of carrying out a particular mission. I often question my route of buying the fixer upper and doing all work myself. But the alternative of a new or newish boat, to meet my mission criteria, would be very very expensive and probably still require much of the electronics and systems updates. This would make achieving the mission out of reach. I still have a couple of years until the boat needs to be done (55 now) so I'll be patient. I'll have about $20-25k into the boat that I paid $20k for. But it will be very very capable. That's my ROI. Atleast this is what I tell myself..lol.

Solo_Nomad said:

How much value would you think improving the appearance, inside and out, added to the boat's value?

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Zip. Might make it more easily or quickly saleable, not a bad thing.

Mechanical improvements -- if the boat also looks good -- might add a bit more to the buyer's perceived value, mostly because it might be thought to maybe eliminate some of the work a buyer might expect to have to do with a boat of a given age. Wouldn't necessarily add a huge amount, but might allow you to list it at or closer to the top of the likely market for that particular model.

In our case, "ROI" is about psychic income -- with "income" varying between positive or negative depending on how much we enjoyed our last cruise (was decent) or how frustrated I might be during the most current upkeep project (PITA, as we speak).

Edit: My labor is NOT free. OTOH, if I've learned something from it, the education might at least partially make up for the loss of that time I could have spent doing something more enjoyable. Like Happy Hour on board during a pleasant sunset... or some such.

-Chris

My boat is an entertainment expense and my labor is free. I have no regrets, until the day I sell it, then I will wait until the day comes where I will buy another and start the cycle again.

I read the OP's post slightly different. He came to the uncomfortable conclusion that Original Price + Upgrades = Resale Price doesn't work. A boat that shows and performs well will sell more quickly and for more money but that's about it. On the plus side, it's why buying a boat in good condition is often the cheapest way to own a boat.

Peter

Solo_Nomad said:

I recently was forced to face a truth. I've "invested" hundreds of hours of labor fixing-up a 35 year-old trawler. Mechanically the boat is in decent shape with 12 year-old functioning electronics. My hours were spent sanding, varnishing, painting, waxing, sewing, etc. She looks good, regularly receiving positive comments from passers-by.

How much value would you think improving the appearance, inside and out, added to the boat's value?

My experience was jolting forcing me to reevaluate everything.

Click to expand...

Awesome! Thank you all for the thoughtful responses. I bought the boat for, what I believe, was a good price just before CoVid. Recently, it was valued 40% higher than purchase price which was a bit lower than I expected after all the work. However, I've only spent a couple thousand on supplies, no systems' upgrades. I'm deciding whether to enjoy the boat now that I'm done with the work accepting that the value is only going down from here or sell the boat, take the 40%, and move on.

Anyway, thank you for the comments.

I do 90% of the work on my boat myself, partly because I am poor, partly because I am cheap (not a good combination) but mainly to gain knowledge. I like to be able to fix broken stuff in remote places when I need to do it, and there is no better way to gain that knowledge than to do it yourself.

We bought our boat well below current value and have done a lot of upgrades, but I am under no illusion that if I added up everything I have spent, even with relatively low labor costs, that we would come out anywhere near even if we sold it tomorrow.

To be fair, most houses, despite what many people think, are not that much better. I hear people say all the time "we bought our house for $250K 10 years ago and sold it for $500K. We made $250,000!"

Uh, no. You paid mortgage interest, realtor commission, property taxes, repairs, upgrades, homeowner's insurance, HOA fees...the list goes on and on. We built our house in Florida 24 years ago and have lived here the entire time. It's worth about $300K more than our initial investment, but when I added up all of our sunk costs we are barely breaking even.

It's a great place to live though, and we raised our family here. I look at boats the same way.

These are a couple of dockside trueisms I have encountered over the decades.
If you want to make money working on a boat, it has to be someone else's boat.
"It's worth more because it has a new engine". Yeah, well try selling it without one.

I just tell myself that quality time hugging a diesel is priceless.
The fact that you are realizing an increase in value over purchase price on an older boat is a rare thing, congratulations!

I have never lost money on a boat. My current boat we bought at a good price and have put 1/3 of the initial cost in improvements and repairs and should get double that and the original cost back.

It really depends on the improvements. Most of mine were cosmetic, a few mechanical.
All work was done by myself to yacht quality standards with the best materials I could find.

It really depends on the workmanship.

I have been fortunate. I would never buy a boat to make money.

40% increase in value! Well done, expecting more was foolish.

PhilPB said:

Only have hundreds of hours into it? Value is what someone is willing to pay for it or what your insurance company is willing to value it as. I have unknown hours of labor put into mine, added tens of thousands of dollars in upgrades and repairs but it's value hasn't gone up incrementally, nor was I expecting it to.

Click to expand...

Unrealistic expectations based on my years of flipping houses. A hard lesson which now leaves me to either rekindle my passion for cruising or selling the boat.
Thank you for sharing your insight.

Solo_Nomad said:

Awesome! Thank you all for the thoughtful responses. I bought the boat for, what I believe, was a good price just before CoVid. Recently, it was valued 40% higher than purchase price which was a bit lower than I expected after all the work. However, I've only spent a couple thousand on supplies, no systems' upgrades. I'm deciding whether to enjoy the boat now that I'm done with the work accepting that the value is only going down from here or sell the boat, take the 40%, and move on.

Anyway, thank you for the comments.

Click to expand...

Quickly put it up for sale, if you can get 40% above purchase price then you made money, a good ROI.

Every time I sell a boat I am thankful that I did not have to pay for my labor. Then I start to regret all the improvements no one wants to pay for. It is a labor of love and I have never expected to profit from it.

I don't look at "sweat equity" as a investment item, I look at it more as a learning thing.

Yeah, the dock rate is $140/hr and well worth it at my dock for sure.

But the stuff I can do myself I like to do even it it causes my advil intake to rise. If I didn't do it I wouldn't see it and also know how it works. I've had this boat for over 2 years now and I still haven't seen ALL of it.

Next thing to fix is the dingy davit on the stern. Still haven't visited the stern bilge.

Solo_Nomad said:

Awesome! Thank you all for the thoughtful responses. I bought the boat for, what I believe, was a good price just before CoVid. Recently, it was valued 40% higher than purchase price which was a bit lower than I expected after all the work. However, I've only spent a couple thousand on supplies, no systems' upgrades. I'm deciding whether to enjoy the boat now that I'm done with the work accepting that the value is only going down from here or sell the boat, take the 40%, and move on.

Anyway, thank you for the comments.

Click to expand...

Who valued it at 40% higher value?

Often survey valuations are pretty high over what boats sell for. The pricier the boat, maybe the valuation can be accurate as the costs during the time to sell it may be small compared to the selling price. More inexpensive boats, the maintenance, storage and insurance costs can eat into that 40% valuation very quick if the boat doesn't sell right away...so what happens is the less expensive boat owners start dropping below that valuation pretty quick.

Was not 40%, more like 25%.
But does not take into acct insurance, dockage, fuel, etc.

I invisioned wild times and lots of visitors. Got the wild times but few visitors. The boat has been great and still is. There is no ROI calculation for a waterfront home that is mobile.

When it is no longer fun sell and sell quickly.

The only item related to my boat that is considered an investment is the boat slip it sits in.

What would you have done otherwise with those hours?
Any other hobbies?

Choices said:

Was not 40%, more like 25%.
But does not take into acct insurance, dockage, fuel, etc.

I invisioned wild times and lots of visitors. Got the wild times but few visitors. The boat has been great and still is. There is no ROI calculation for a waterfront home that is mobile.

When it is no longer fun sell and sell quickly.

Click to expand...

Well said.

Did you enjoy the satisfaction you got from viewing your completed efforts? Did you enjoy learning something new while doing all that?

If so, win, win.

rgano said:

Did you enjoy the satisfaction you got from viewing your completed efforts? Did you enjoy learning something new while doing all that?

If so, win, win.

Click to expand...

My answer is yes & yes.
Now I get funny looks from friends and family when I tell them I enjoy working on the boat.

Now, my wife is taking advantage of me by asking me to fix the lawnmower on my free time.

There is a very basic thing she is missing here.....

We improve our old boat because we like to, the improvements make it better for us, my wife is agreeable and also loves the boat. We understand that every improvement is for us and no one else. Most everyone has a hobby that in all honesty wastes money. Some of those hobbies are solitary endeavors that don't bring a couple or families together. Having an old trawler as our 2 or 3 season seaside cabin brings us together. I will never take out the receipts and add them all up. Just last week I removed an operable refrigerator and stove and put in much better ones. Its quality of life mixed with a bit of bougieness