I live in sunny Florida. Years ago, a friend of mine was talking about ways to increase income one afternoon. I was young and had accrued a bit of savings and wanted to either invest it or rehab something and sell it for a profit. My friend is a realtor and per his advice I decided to avoid the housing market as it wasn’t very lucrative locally at the moment.
He suggested something on a smaller scale but large enough to make a decent profit. Sound logic, so I began my research. Being a 15-minute drive from the Atlantic Ocean it hit me…boats! So, I had my goal. Find and purchase a small boat for a small amount, repair it and sell it for a profit. Simple, right? Wrong.
Now, I had no trouble finding an immense amount of options for purchase. That wasn’t a problem at all. For starters, I’m not a nautical person much at all. I do have a decent amount of smarts when it comes to buying and selling though or so I thought. I believed that any old boat would do but that’s not the case and that was also my first mistake as well.
There is a vast world of different styles when it comes to boats and each of them have a different rate of depreciation and value. I failed to compare the current market for used boats against the age and model that I was purchasing. Dumb, in retrospect. So, the boat I purchased, and it was a bargain, was an older Sea Ray Cruiser that was in okay shape. It needed some repairs. Upholstery, gauges, new anchor, railings, etc. So, I took a chance.
The engine needed some minor work, routine maintenance mostly. No problem. Okay, two problems. One definite, the other not so much. My mechanic told me that upon inspection it appeared that the engine’s oil had not been changed like it should have been causing stress to the engine. It also appeared to have been over-revved as well, so there might be some issues with the transmission shifting through the gears. Nice.
The definite problem was the carburetor. Turns out, it was busted and the engine wasn’t receiving fuel properly. Great but not a disaster. I had not expected to replace the part but did so with a new part quickly. My mechanic was on the money and I hated him for being right! An open water test shortly after servicing with my mechanic confirmed his suspicions. The engine began to miss shifts and slip gears. It wouldn’t hold third gear at all.
Inspection returned the inevitable. The transmission was shot. So, now, I’m in the hole for a new carburetor and a new transmission. Not only that but during the transmission ordeal, the propeller hub was somehow damaged so, make that the carburetor, the transmission and a new propeller and hub.
Always take a mechanic with you when you’re investing your money into something like this. Whether it be a house, car, motorcycle or boat, if you’re investing, make sure you inspect every critical element. I envisioned small repairs, technical and structural but my young and naive brain did not expect major engine and mechanical issues. This proved to be a huge mistake.
Long story short, by the time everything was complete, I was well in the hole as it pertained to my potential profit margin. After new seating, wheel, gauges and paint it was ready for the open market. This is where depreciation comes into play. After three months on the market and many interested parties looking it over only to pass, it quickly dawned on me that there were newer and more technically advanced models out there. What really hurt my chances were the repairs I had to make. Had I not had those expenses, I could have priced it at a more reasonable price.
I eventually sold the monster. I took a loss. Not a bankrupting loss but one that left me pretty down on myself.