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Anytime you buy any item you are making an investment. You are putting your hard earned dollars down to get an item in return.
For smaller purchases we rarely think about how good of an investment the purchased item is. For larger purchases it is often one of the first things you will think about!
Since most houseboats will be one of the most expensive items that you will buy (probably second only to a home) it’s quite natural to wonder about whether a houseboat is a good investment.
Whether a houseboat is a good investment depends on if you are speaking solely in monetary value or if you are also speaking about the time and fun you can have while on board.
When speaking in pure monetary value a houseboat is not a good investment as it will lose value over time. Just like with a normal boat or other recreational vehicles, your houseboat will slowly lose value over time.
Used houseboats will normally depreciate at around a 5% rate while a brand new houseboat will lose 15-20% in the first year after you purchase it.
If you want to learn more about depreciation of a houseboat you can read another article I have written about it by clicking here.
Since a houseboat will depreciate then looking only at the dollars and cents a houseboat is certainly not a very good investment. However, if you are purchasing a houseboat to live on board year around instead of purchasing a far more expensive house then it could become a good investment.
Let’s take for example two hypothetical people who both have a one million dollar nest egg for retirement.
George is getting ready to retire and wants to live on the water he finds his dream home overlooking a gorgeous lake or river that is for sale for $500,000. George pulls out most of his retirement money and buys his dream home!
Jim is also getting ready to retire and just like George loves the water. Rather than spending 500k on a waterfront home he instead buys a houseboat for $50,000 that he can use to quite literally be on the water every day!
Let’s examine how both of these scenarios will play out over the following ten years.
Each year George and Jim pull out 3% of their retirement funds each year to live on.
Since George spent 500k on his dream house his yearly income is $15,000 from his retirement fund.
Jim on the other hand only spent 50k on his houseboat so his yearly income is $28,500.
Over ten years George collects $150,000 from his retirement while Jim collects $285,000 from his. In ten years time George decides to sell his dream home.
Since it is a higher priced home for the area George’s home only appreciated by 2% per year giving him a home worth $610,000! Even with such a low appreciation that is still a good investment as George made $110,000 over 10 years. When George goes to sell his home he realizes that he has to pay 6% commission on the sale leaving him with only $573,400 after commission. After selling his house he will have $1,223,400. (Assuming he’s didn’t spend any of the yearly income)
Jim’s houseboat on the other hand has depreciated at 5% a year and after ten years is only worth around $30,000. So after selling his houseboat that is a “bad investment” he will have $1,265,000. (That’s assuming he’s didn’t spend any of the yearly income as well.
So after ten years with our hypothetical George and Jim, Jim will actually have MORE money than George even though the houseboat was a “bad investment”!
Of course this example is quite simplified and if George’s house appreciates at a faster rate then he would come out on top, however it is also possible that he will have to sell his dream home during a market downturn and could even lose money over a ten year period.
If you are purchasing a houseboat for purely recreation it will never be a good investment though. Houseboats will always lose value over time and will have running and upkeep costs. Since many people often forget to take them into account when making a purchase a houseboat can not only not be a good investment but it can turn into a bad one quite quickly.
Another thing to consider when thinking about a houseboat as an investment is what would you do with the money if you hadn’t bought the houseboat. If you would have spent it on a car, a vacation, or other short term things then a houseboat might not be a good investment but it could be a better investment than those alternatives.
Boats, RVs, ATVs and other recreational vehicles and vessels should only be purchased when you are at a point in your life where you aren’t worried about the items losing some value but are more concerned about making memories with family and friends while on board.
Any money that you spend making memories is a GREAT investment as long as you can afford to do it. For most people if you are concerned if a houseboat is a worthwhile investment you probably aren’t at a place where you should buy a boat.
If you aren’t careful a houseboat can quickly become a money pit. When you add up the running costs, dock costs, registration, insurance, storage costs, and more, you can quickly get in over your head.
Make sure to figure out all of the costs of your boat before deciding if a houseboat is a good investment for you and your family.
If you need some help figuring out expenses I wrote an article about houseboat expenses that can be found here.