Want to Sail the High Seas? What You Need to Know About Renting vs. Buying a Boat
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The allure of sailing is inescapable in a nation surrounded by water. But does it make more financial sense to buy a boat or rent it?
With so many islands to explore around Singapore and the allure of having the freedom to travel by sea, owning a boat in Singapore can seem like a luxurious way to relax from the hustle and bustle of the city. With plenty of news about new superyachts and expensive charters, boats have become a status symbol for the ultra-wealthy. But how much does it really cost to own a boat? And is it more feasible to just rent a one instead? We explore the costs of yacht ownership below.
Costs of Owning a Boat
Owning a boat is extremely expensive and because it’s a depreciating asset, you’ll rarely get back what you paid for if you decide to sell it. Because of the high price of new yachts, most people tend to get second-hand yachts. For instance, while we found that the average cost of a new yacht is S$1,219,884, the average used boat costs S$683,783 but can cost as low as S$67,500 (less than a car in some cases). Of course, there are many things that can affect the price of the boat, and even some used boats can cost over a million dollars. Typically, the price will depend on the size of the boat, the age, the interiors, and other specifications like technologies used for the boat and labour costs.
Approximate Cost of Owning a 40-50′ Yacht
In addition to the upfront cost of the boat itself, you will also need to account for insurance, maintenance, gas, berthing, licensing and registration costs. A common rule of thumb suggests that you should budget 2% of the original sale price of a new yacht and 7-10% of the purchase price for a second hand boat per year for upkeep. However, boats older than 15 years will require much more maintenance (roughly 14% of the purchase price). Other estimates suggest annual expenditures of up to 20% of the boat’s purchase price. That said, there’s no definitive formula to how much you should expect to spend per year on maintenance as it depends on your individual circumstances and the condition of the boat. Lastly, are you hoping to have a crew? In this case, you can expect to spend an additional S$35,000-S$70,000 in salary costs per year for a 50 foot boat or S$300,000 in salary for a 4-person crew for a 70+ foot boat.
Costs of Yacht Rentals and Charters
Renting a yacht can be surprisingly cheap if you split costs with a large group of people. For instance, if you charter a yacht for the standard 4 hours with a group of 5 people, each person will only pay an average of S$72-S$87 per hour depending on the day of the week. Some charters also allow for groups as large as 30, so if you want to host a large birthday party or a company outing, then the cost declines to an average of S$19 per person per hour. Of course, if you plan to charter a boat for just yourself and your spouse, then the costs will proportionally increase. Overall, the average price to charter a standard yacht for a day in Singapore is S$1,660.
If you want to increase the duration of your rental, some charters will let you pay extra per hour (average of S$292 per hour). If you want to do an overnight stay, some companies will let you do a 2D1N or 3D2N stay for S$5,000-S$8,000. Of course, there is also a luxury super-yacht charter that can cost a few hundred thousand dollars for a week. A few people in the yacht business recommend that prospective owners actually try renting out a boat for a week or so before committing to a purchase to see if it’s something they want to commit to.
Convenience & Affordability of Renting vs. Freedom of Owning
As we’ve seen, buying a boat can cause significant upfront and annual costs. It will also take a while for you to recoup those expenses even if you charter your boat on the weekends. For instance, renting out your 40-50′ second hand yacht every weekend (Saturdays and Sundays) charging the average prices discussed above will lead you to recoup the purchase cost after 18 years. That’s not even including the maintenance, repair, renovation and berthing costs you’ll need to pay every year.
However, renting a boat every weekend can also add up significantly—roughly S$37,034 per year. If you want to do week-long trips on luxury yachts, then you may end up spending hundreds of thousands of dollars in costs per year (at this point it will be cheaper to just buy the boat). In this case, really committed sailors can potentially opt for a smaller, simpler boat in the price range of S$200,000-S$300,000. The annual costs will be less than renting a boat (S$22,894-S$32,894 per year) and you can charter it out a few times a year to help recoup the purchase costs. Furthermore, owning a boat gives you freedom to go wherever you want, whenever you want. So just like owning a car, the true value of owning a boat provides something that is hard to quantify.
Buying a Boat is Complex, So Due Diligence is Key to Saving
If you are committed to buying a yacht, then it’s imperative that you plan out your budget carefully. If you need to take out a personal loan to fund your purchase, then carefully compare interest rates to make sure you are paying as little as possible on interest rates. You should also stick to boats you know you can afford, since personal loans are generally capped to your monthly salary or a limit of S$150,000-S$200,000. It’s also important not to forget about maintenance costs and to take into consideration the state of the boat you purchase. While an older yacht can entice you with the low prices, the repair and maintenance costs may end up being significantly more than you bargained for. Lastly, it’s good to compare yacht club memberships and berthing rates. Some marinas can give you discounts of 20-30% if you commit to berthing there for 2-3 years. Others may give you discounts on getting your license as well as perks for being a member. As with any expensive purchase, it’s important to save where you can so you can maximise your value without cutting important costs.