:max_bytes(150000):strip_icc()/GettyImages-2005132550-dda35cd08efe4fe1abe1b63386a5fc04.jpg "What Size Yacht Can You Afford?")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2005132550-dda35cd08efe4fe1abe1b63386a5fc04.jpg)
The word “yacht” often brings up an image of luxury living on a sleek boat in the sea. We don’t want to take the wind out of your sails, so to speak, but even a mountain of money won’t necessarily have you swimming with the truly wealthy yacht owners. For example, Tiger Woods purchased his 155-foot superyacht, “Privacy,” for $20 million—and that’s cheap by swanky yacht standards.
If you are thinking about investing in a yacht, the first question to ask yourself is: How big of a boat can you afford to buy?
Key Takeaways
- Not all yachts are supersized and prohibitively expensive, like the luxury yachts used by wealthy.
- It is possible to rent (barefoot charter) a yacht or lease one with a group of friends.
- Just because you own or lease a yacht doesn’t mean you can drive it. You need a captain’s license.
- Other expenses that come with owning a yacht include insurance and hiring a crew and/or a captain.
Calculations and Qualifications
It can be tough to take out a boat loan if you don’t meet specific criteria. For example, unless your debt-to-income ratio is below 40%, you’re not likely to hear a resounding yes from the loan officer.
Plan to put at least 10% down on your yacht and pay somewhere around 5% APR for 10 years. That $100,000 entry-level yacht (a used one would be around 30–35 feet long) is going to incur monthly payments of nearly $1,000 after you make your $10,000 down payment.
There’s also another $1,000 to $1,500 (or more) to spend on life jackets and other necessary equipment when you purchase a yacht. Then there’s the question of who drives it.
Can You Drive a Boat?
Are you qualified to operate a larger boat? If not, you’ll have to pay for a captain’s license or hire somebody to operate it for you. In addition, yacht insurance will be north of $600, and a slip rental will set you back a couple of thousand per year.
Annual maintenance costs amount to about 10% of the yacht’s purchase price. For a $100,000 yacht, that’s $10,000 a year.
To know what you can spend, do the math in reverse: You need to have 55% to 60% of your income available for other needs outside of your yacht. The rest is the absolute max you can spend.
Alternatives to Buying a Yacht
Maybe buying a superyacht just isn’t in the cards for you. If you don’t want a smaller recreational boat, though, you might want to consider a bareboat charter. It’s like a lease. Just like with a car, you won’t be the owner, but you can rent the yacht for a certain period of time.
This could be very short-term—for a yachting vacation—or long-term. For higher-priced vessels, splitting the costs among multiple people could make the price more reasonable. You as the charterer are responsible for nearly all fees, including fuel, boat insurance, port fees, etc.
There are also shared leasing arrangements. In these situations, you pay a monthly fee to a boat club and gain the use of any vessel in the fleet. You still have to pay for fuel and some costs, but the pricing is much more reasonable than trying to purchase the yacht on your own.
How Much Does a Boating Club Membership Cost?
Some clubs offer an initiation fee that can go well into the thousands, as well as a monthly fee of a couple hundred dollars.
How Big of a Boat is a “Yacht”?
The word “yacht” is about as clearly defined as a financial advisor, and you’ll get wildly different answers on what size boat earns that title, depending on whom you ask. By some definitions, you can be a yacht owner with a 20-foot boat.
How Much Does Yacht Maintenance Cost?
The average annual cost of operating a yacht is 10% of the purchase price.
The Bottom Line
Owning a luxury yacht takes a lot of money. But for those who earn a higher-than-average income, renting or leasing a vessel, teaming up with friends, or joining a boat or yacht club can make the price comparatively reasonable.
As with any equipment-heavy hobby, the costs are often higher than you think, so you’ll want an emergency fund in place for those unexpected expenses.