Budgeting Operational Costs

[Ranger59]

Folks, I'm overwhelmed; thanks very much. I posted this without expectation for a lot of replies, but now as I read the thread through, I'm really grateful for the time and consideration that was put into these replies. Also appreciate the humor .

You've given me a lot to consider and a great starting point. I'm going to start by combining all the line items shown here and then cull it into a list we can tweek depending on what boat we end up with. Seems like a lot of movement on the used market right now so we're trying to get the ducks in a row to be able to strike fast.

Again, thanks very much

 

[Newtrawlerowner]

Budgeting Operations Costs

Hi Folks, New Member here

We're hoping to buy a trawler to live on at least 3 months a year in the Warm Caribbean/Bahamas. We're from the North East US.

Looking for advice on how to plan an annual budget. ASIDE from the cost of fuel, what should I budget for. The Brokers say 10% of purchase price but that's too vague for me.

Assumptions: Dockage for 6 Months year, Haul out once a year, No Crew, Am basic handy (can do most usual boat repairs, some engine maintenance like fluid changes etc)

Is there any spread sheet or resource out there to help plan a budget?

Thanks!

Not much I can add that hasn't already been said but I also had a similar curiosity when I bought my 1st big boat. I live in Colorado and have a boat in Florida. When I bought my 38' sailboat for $180k I figured $2000 monthly budget. 10% would have been $18k. After 5 years of ownership I actually spent about $12k average PLUS travel to and from Florida. I did take it out of the water every hurricane season. This adds to the cost. Insurance started pretty high and came down with no claims and more experience. Just a heads up that the insurance cost was reduced for the months it was out of the water. But I had to ask for the discount.
The last year I owned I had to replace a sail and the strut bushing. That was my most expensive annual cost at $14k.

I sold the sailboat and bought a trawler. This boat was low cost to buy, had lots or deferred maintenance and I expect my expenses to be in the $60k range in the 1st year. I'll spend everything I got selling the sailboat. If nothing major breaks my annual cost will be slightly higher due to fuel cost. I now own a condo and get a slip at a pretty low cost, but all things being equal what I save on slip fees I'll spend on fuel. Because I do 90% of the work myself, I'll get better quality upgrades for the same money.

The thing to remember and has already been said is watch what you spend your money on. Someone had a nice list of what they spent. Track everything you buy. You'll be surprised at how much (or little) you actually spend. Be sure to budget for that unexpected expense and enjoy!!!!!

 

[PM]

My cost estimate of $500 per month has held true for almost eight years. I dock in a small marina on Lake Michigan so dockage runs me about $2,500 a year, year round.

You may spend more for dockage, many people do. There are even cheaper options available to me. A mooring ball in the harbor rents for $500 a year, (not for me) A yacht club up the rived would come in at under $2,000 a year, I am considering it.

pete

 

[Art]

For the 12 years we have owned our Tollycraft; following is a +/- 3% accurate total expense. Sans original boat purchase price and gasoline usage: $64,800

$64,800 -: 144 mos = $450 per mo. = $5,400 per year.

4380 total days at $14.79 per every day of life!

Which Means Owning:

Affordable, capable boat is SIMPLY PRICELESS!!

 

[ksanders]

One thing I will add to the mix...

Under estimating labor hours and parts costs needed to maintain a recreational boat is a huge problem with new and wanna be boaters.

 

[Leo Reise]

I hope this does not sound flippant, but in all the boats we owned, other than a very vague ballpark number, we never had a budget. My rational - it's a boat - it will cost. Some planned - some not so much.

I know in round figures for us, summer slip (6 months) winter storage (6 months) and insurance is $6 K. CSC bottom paint $1 K every couple of years.

Last fall and this spring, $500? (not yet received the bill) for cutlass bearing and engine realigned, $3500 new cushions, and $240 new polisher. $200 in cleaning supplies. Yet to be done, new compass on FB $350, 6 new 10 inch fenders $720, new deck light $60, new head $250, re-pipe the water system (?), and new propane solenoid valve(?).

Also on our list for this year is a new 10-foot RIB with motor & davit system - budget for this was $6 K. (Maybe doable)

What my wife and I decided, whatever expenditures we make should take the following ranking: safety & care of the boat and its occupants; make easier to handle; or make it more comfortable for us on board.

Having said that - everyone has their own approach.

Enjoy your boat!

 

[markpierce]

Most costs are readily predictable. Repair, replacement, and maintenance are not. Most everything on a boat breaks or wears out sometime or another, and it is difficult to determine those happenings. Such costs for me averaged $9,000 a year for the last three years, a three-year high. (This excludes berthage, fuel, taxes, insurance, etcetera. Would be cheaper if I did the work and had the knowledge to do it all.)

 

[SteveK]

Here is a formula I made up to justify my boat spending

What do you normally tip% i.e.: 15%, then B=0.15
(LWL x LWL x 12) + (AGE x 1000) = A x B = average annual costs

My Boat
(36x36x12) + (49 x 1000) = 64,552 x 0.15 = 9,682.80 average annually

Then multiply that average by 3 for the first year, by 2 year two while you make it your boat.

 

[Art]

Here is a formula I made up to justify my boat spending

What do you normally tip% i.e.: 15%, then B=0.15
(LWL x LWL x 12) + (AGE x 1000) = A x B = average annual costs

My Boat
(36x36x12) + (49 x 1000) = 64,552 x 0.15 = 9,682.80 average annually

Then multiply that average by 3 for the first year, by 2 year two while you make it your boat.

Further proof... That:

Angle of the dangle is directly proportional to the hypotenuse of the square!

 

[klee wyck]

Here is an observation which may or may not have much merit since I have not been around that long in the world of these types of boats or this forum.
But, reading this forum and owning these boats as I have, and comparing the experience of many of us on this forum to land based experiences I have had, it seems like boats are very expensive and somewhat relentless to keep.
Now this is expensive and complex equipment in a tough marine environment. You could say the same about ag equipment. Considerable horsepower under a good load, navigation and other complex control electronics, autopilots and guided steering, heating and cooling, etc., etc. Similar in many regards.
Ag equipment seems much more reliable over a longer periods of time with far less cost to maintain in top working condition and readily available qualified technicians that you can afford to call for help when needed which is infrequent.

Not exactly the most common experience in boats perhaps?

Why would that be? Is the recreational marine segment so much smaller that engineering, builds, and support services are that less well developed and penetrated? Are the operators less sophisticated such that this is self inflicted? Less and more intermittent use than ag equipment actually leads to more trouble?
It is not uncommon to get ag equipment to 20,000 hours with very little input on any of the systems.
I have wondered about this many times including whenever one of these boat maintenance cost threads pop up which they do. You hear of new boats that take months of debugging during commissioning and the running joke of things failing so consistently..'' it's a boat". This would not be tolerated in an ag equipment supplier.
Seems strange.....

 

[High Wire]

Trying to tweak numbers before owning the boat will be a challenge. Your first 2 years not much is predictable. Just use good sense and keep a large reserve.

 

[Art]

Here is an observation which may or may not have much merit since I have not been around that long in the world of these types of boats or this forum.
But, reading this forum and owning these boats as I have, and comparing the experience of many of us on this forum to land based experiences I have had, it seems like boats are very expensive and somewhat relentless to keep.
Now this is expensive and complex equipment in a tough marine environment. You could say the same about ag equipment. Considerable horsepower under a good load, navigation and other complex control electronics, autopilots and guided steering, heating and cooling, etc., etc. Similar in many regards.
Ag equipment seems much more reliable over a longer periods of time with far less cost to maintain in top working condition and readily available qualified technicians that you can afford to call for help when needed which is infrequent.

Not exactly the most common experience in boats perhaps?

Why would that be? Is the recreational marine segment so much smaller that engineering, builds, and support services are that less well developed and penetrated? Are the operators less sophisticated such that this is self inflicted? Less and more intermittent use than ag equipment actually leads to more trouble?
It is not uncommon to get ag equipment to 20,000 hours with very little input on any of the systems.
I have wondered about this many times including whenever one of these boat maintenance cost threads pop up which they do. You hear of new boats that take months of debugging during commissioning and the running joke of things failing so consistently..'' it's a boat". This would not be tolerated in an ag equipment supplier.
Seems strange.....

Bill - That's good insite.

One thing I can say is that "WATER" actions and reactions are some of the main culprits for reduced longevity of boat equipment survival. Mostly, in that... land based equipment stays primarily dry and land does not rock n' roll like water does.

Also, saltwater corrosion is a bitch. And, metal eating electrolysis is a demon! Not to mention too often unprotection from the wearing affects of sun, rain, ice, snow, wind as a boat sits exposed for years to the elements.

In addition, Ag equipment is mostly HD metal parts that if kept painted will last and last. Then there is the factor of product use and visitation... that leads to ongoing/accomplished maintenance factors. Many boats sit in the water or stored on land for years on end with little to no attention provided. Ag equipment not so much as most of it has specific seasonal items to accomplish.

Poor build-outs on some boat models are also a factor.

IMO, after over six decades of boating, is that really well built boats last a really long time with little breakdown. Consider that our live aboard well equipped 1977 Tollycraft is 43 years old with only relatively minor repairs needed during those decades. Whereas other boat brands have nearly [or actually have] fallen apart in that length of time. Also, Ag equipment gets many "operational" hours quickly undertaken compared to boats. Well built Ag equipment can still be well functional when 43 yrs old... Poorly built equipment, not so much.

Happy Boating [and Ag equipment] Daze!! - Art

 

[Codger2]

I hope this does not sound flippant, but in all the boats we owned, other than a very vague ballpark number, we never had a budget. My rational - it's a boat - it will cost. Some planned - some not so much.

That's pretty much my take on owning a boat. I certainly didn't know all the costs that I would experience but I knew that to do it right, it was going to be a big number. As most on this forum know, I put a lot of money in my boat every year. I can't tell you exactly how much but I do have (in a 3 ring binder) most every invoice and receipt that I ever spent on this boat. I'm actually afraid to add them all up as I would probably sell it immediately! I do not drink excessively, play golf or belong to a country club. I don't collect cars or do a lot of things other guys like myself do. I own a boat, keep it in good repair and add equipment that I desire & believe me, that's expensive!

 

[Beaverlake]

The observation that costs for a boat, especially an older used boat, are about 3x of “normal” for year one and 2x for year two seems pretty spot on. We have $100-$115 per hour “technician” labor rates in the PacNW. Between the cramped mechanical spaces of a 4788 (it’s only real drawback) and my large 72 year old frame I have to farm out a lot of the work. Our first two years saw one new AC compressor, replaced RIB (w/used), heat exchanger/aftercooler service, new battery bank, upgraded electronics, hull and topsides buff and polish (not severe), and some interior updating. Some surprises, some built in to our purchase expectations. We’re Gawd-awful lucky to have a great slip in Flounder Bay, Anacortes that is $300 under market rate in Anacortes proper. Budgeted, predictable costs run about $1200/mo. Fuel usage is our fun meter. The surprises have been the wet blanket. Like one of the TF members has in the tag line, “Everything on a boat is broken, you just don’t know it yet.”

As for the AG comment think about what we carry around: propulsion system including transmission, AC power grid including generator, in home 120v wiring, DC energy system and grid plus in home DC wiring, navigation and safety electronics, fresh water system (possibly including a desalination system), sewer system, fluid storage for *all* fluids, another boat (the dinghy with *its* systems), “awnings”, “outdoor lighting”, and on and on. And it’s all located in a constantly moving corrosive environment. So not surprising that we have to spend money and it seems like there’s always something that needs looking after. Almost makes me wonder why until we fire up the engines, do the long horn blast, and leave the dock!

 

[caltexflanc]

It all depends on what your standards are for each of seaworthiness, creature comforts, and cosmetics.

Then what the gap is between your standards and the condition of the boat when you buy it (as well as how long it has been since the PO brought a particular system or component up to standard).

From there where, for what how, and how much are you going to use the boat.

Next what are your skills in being able to keep those standards, how much time you have available to deploy those skills, and how much you value your time.

Then, what does it cost to hire skilled trades people to do the things you either can't do, or don't want to do?

Taking all that into account, add 50% at least.

I would have that some sort of reserve for unexpected catastrophe in the form of a blown engine requiring major overhaul or replacement, then round that up.

Only you can answer these questions for you and your boat. Forget most of the noise you hear from people you don't know. If you are a total newbie, then a good surveyor will help get you started in your thinking, as will an experienced boat engine mechanic.

As a side note, like the PO whom I was very grateful to, I kept detailed receipts and records for absolutely everything we spent on the boat and boating, plus a record of everything I did myself. I never, ever added them up.

In my personal opinion, the minute you start trying to squeeze the budget for maintenance, the minute your boat starts deteriorating at an accelerated pace. You can save money by anchoring out or using moorings more, and cooking more of your own meals; we are lucky in that those are things we love to do anyway. To paraphrase Descartes; "We love to anchor out, therefor we boat". Likewise, just slowing down a knot or two adds up really quickly ... the journey as the destination, so to speak. Take some time to enjoy the natural world all around you.

 

[Art]

I herein provide a cautionary note to any newbies who peruse TF:

In my post # 34 - For our boat's minimized cost... I mention "... $14.79 per every day of life! WOW - for boat owning and using that is an extremely low $ expense #!

Now... for new boaters I want you to please realize this minimal $14.79 daily cost is due to my conservative capital expense nature, decades of hands-on experience for knowing how to conserve [boat dollars (that = $1,000 each)] and great luck in some ways.

In other words... for several reasons, it would/could be very easy to have boat costs reach 2, 3, 4 or more X than mine.

Currently to us, in our late 60's early 70's ... pleasure boating is a simple joy upon which we keep costs to a minimum. We also have beach house, classic muscle car, Class-A RV and other fun things. Add to that 3 businesses we care for as well as family/friends gatherings and you can see our lives stay full!

Happy Boating Daze! - Art

 

[ScottC]

There's been a lot of good discussion on this thread. Understandably and predictably, there's no clear, simple and accurate conclusion. There are simply too many variables! So many, in fact, that it might just put off some prospective buyers thinking about getting into the "hobby". Nevertheless, I think a prospective boat buyer trying to figure out how much (new-ish) boat they can afford would not go horribly wrong with ~10% for a "quick & dirty" estimate. It might be a bit low in years 1 & 2, but could be made to work, if improvements are spread over longer periods of time. Yes, yes, yes...I know we can all cite many exceptions - I'm just stating that 10% isn't an unreasonable place to start.

 

[caltexflanc]

I'll just go on record that I don't like the 10% rule, at all, mostly due to the factors I enumerated.

For a more generalized instance, a hull with freshened systems, creature comforts and cosmetics is going to cost more initially than a relatively dilapidated one, but much less ongoing. I suppose if you are going to keep the dilapidated boat in dilapidated condition....

We've typically seen people abandon boats and boating for two main reasons; 1) they quickly figure out that the cruising life is not for them (we know of two instances where people bought a boat and then learned that one of the crew was highly prone to sea-sickness!). This is one reason I continually urge newbies to a lot of chartering first. 2) they have no idea what the burdens are of owning a boat (gee we paid $50,000 for this 40 year old 45 footer and it sure costs a lot more than the $5,000 a year like we were told on the interweb!). An adjunct to this is years go by getting a boat "ready" until time (aging & infirmities) money and/or patience and energy run out. What works out great when people go into the whole endeavor with informed expectations that match reality as it actually is, not what it is "supposed to be".

 

[BandB]

Hi Folks, New Member here

We're hoping to buy a trawler to live on at least 3 months a year in the Warm Caribbean/Bahamas. We're from the North East US.

Looking for advice on how to plan an annual budget. ASIDE from the cost of fuel, what should I budget for. The Brokers say 10% of purchase price but that's too vague for me.

Assumptions: Dockage for 6 Months year, Haul out once a year, No Crew, Am basic handy (can do most usual boat repairs, some engine maintenance like fluid changes etc)

Is there any spread sheet or resource out there to help plan a budget?

Thanks!

You've still really given us very little information. So, I'll give you a spreadsheet approach and create my own assumptions.

Boat-Nordhavn 63, purchased new.
Dockage in NYC 6 months of year, summer season. Haul out once a year in Newport. Boat cruised to South Florida and then Bahamas, then Virgin Islands, St. Marteen and other Caribbean islands. Very little anchoring, mostly dockage. Run quickly from NYC to South Florida, then cruised 1 day of every 3, average 8 hours.

So, depreciation $300,000
Food and beverages-Assuming 4 on board for 6 months eating 50% on board and 50% in restaurants.
So, 90 days of food and beverage for 4-$2000
90 days of fine dining for 4-$36,000
A couple of trips home and back to boat, first class, total of 64 flights, $32000.
Entertainment and sightseeing, including local transportation, 120 days, 4 people-$48,000

Subtotal-$418,000

Insurance, registration, taxes-$20,000
Dockage-180 days in NYC -$68,000
180 days in nicest marinas in South FL, Bahamas, Caribbean-$46,000
Haul out and bottom painting, etc. $4,000

No major maintenance as all under warranty - $0

Fuel-80 days at 48 gallons at $3+-$12,000

Port Fees and clearance-$2000

Subtotal-$570,000

Chart updates and books-$5,000
Satellite for TV, Internet, Phone $50,000

Capital reserve for major rehab every 5 years, major equipment every 10 years. $20,000

Total $645,000

Now, I suspect your number might be closer to $40,000-50,000 or could even be $25,000 but could be $200,000

This is why 10% and other formulas just are dangerous as are the numbers of others. I used an extreme example above but there are others even more costly.

Might be new, rapidly depreciating boat. Might be old boat holding value.

Might be warranty service or might be major repairs.

Might be very efficient boat averaging 4 nmpg and cruising 60 days a year for 6 hours for a cost of $4300 or like us today where we cruised 12 hours and used 1100 gallons but we only paid $1.75 a gallon at home and $2.28 in Canaveral.

You may anchor, you may use marinas. Marinas may be $1 per ft or $8 per ft.

You may dine on the boat or may dine at the most expensive restaurants in town.

You mentioned being handy which is good but others might spend $100+ per hour.

We all want easy answers, but you're going to have to investigate enough to get your own. You need to know the different costs of different boats, the efficiency, and you need to know the costs of dockage in different areas. The rates for one month in one location may be more than a year elsewhere. I can get fuel delivered at home for $1.75 per gallon but I'm likely to pay $4 or more in the Bahamas and in some areas of the Caribbean more than that.

Determine how you want to use the boat and then research prices in the area.

It's just like land life, there are a lot of different ways to do it. When we lived on a lake in NC, I remember one couple I worked with talking about how expensive boating must be and how costly to us. Well, for over 10 years, we never took a vacation to a resort, only hotel other than business travel was one owned by family and they wouldn't let us pay. This couple took a vacation to Disneyworld every Christmas and one to Europe every summer. They would also take weekend trips to NY and Chicago. They spent far more on their recreation than we ever did on our boat. Oh, they also ate out every night of the week and we averaged eating out one night a week.

Much of our life we were actually quite frugal.

One other warning. It's easy for others to spend your money, to tell you what boat to buy without regard for cost. When we first started looking, we had people tell us to only get a Dutch boat and they were pushing Feadship. They were pushing $100+ million boats. But then when we were on an 85' boat in Alaska, our best friend flew in with her mom. Her mom looks and says "What a cute little boat." Turns out she'd never been on a boat smaller than 200' as she grew up wealthy in Spain and her parents' friends had superyachts. There's always someone spending less and someone else spending far more. Just as others will freely spend your money, there are those who will tell you how cheaply they do it. There's another site in which there are regularly those bragging about $5000, then $2000, then $1000 a month and then someone will pop in and say they only spend $500 a month.

I'm just saying, listen to others, but if you don't develop your own budget, then it's not really worth much to you.

 

[RonR]

I bought a 25k boat that sat for 4 years, 7 months later and about 8k in parts and 100's of hours of my time its a 25k boat that works like it should.

Fuel prices some say are the least expensive part of boats, but that really depends on what type of boat and how often your out. Gas is 3.57 a gallon at the dock, I think I have used about 6-700 gallons in the last 3 months and summer is just starting. The Everett dock prices are about 500 a month for a 36' covered, insurance is about 115.00 a month for my 1971 25k boat. Come October it will get parked in the slip till spring and just be a floating weekend spot or mid week overnighter. After this summer most of the bugs will be worked out, but then come the upgrades like electronics that are not older than me.. Or trade it in on a 48'

See how much your willing to spend on a monthly basis, then add 15% to that, then keep a reserve on hand for stuff that decides it wants to fall off.

(after showing horses for 20+ years... boats are cheap!)

 

[BandB]

(after showing horses for 20+ years... boats are cheap!)

My father had a client decades ago whose daughter was an equestrian. She was very good. Now, with his previous CPA he decided like many during that time to set it up as a business and to raise and train and sell show horses. My father then explained two things to him. First, that he was getting the deduction by losing lots of money, that it's really not worth losing $50k to save $20k in taxes. Second, this was a top target of the IRS and this would be his third year of losses and any more he'd fail any audit and would be selected for audit. It was a good thing because it was selected for audit and my father won the case by showing it was intended as a business, lost money, and was then shut down. Still spent a lot of money on his daughter but didn't lose nearly as much.