Please explain purchasing a slip

[Duke 239]

Doing some retirement planning. Aiming for an ice-free base of operations and a 50 foot trawler. I’d like to hear from folks who purchased a slip, and those who looked into it and decided not to, and anybody with an opinion, really.

How does this compare with simply paying for a slip in a marina? Are they all going the “condo” route? Question for lawyers, is this a real estate investment, I.e. am I buying real property?

 

[Sailor of Fortune]

Not sure if its a "Fee simple" purchase... The only exposure I have to owner "owned" slips is at The Conch House in St Augustine, Fl.... A friend bought a 60' slip in early 2000, or so. Lived aboard, happy as a clam. Bought a house in the neighborhood, and moved off the boat.... Hurricane around 2003 or so did extensive damage to the marina and his slip was basically gone. Marina collected insurance and started rebuilding the Marina slips, rather than the owners slips... They wanted him to pay monthly dockage at marina while they rebuilt their slips, but not his "owned" slip.. he moved his boat to Comachee Cove rather thatn cave to to their demands. When I still lived in Boston, Ivaguely remember slip purchases worked out very well for people at Spinnaker Island in Hull,Ma. I have no first hand knowledge of that though. Slip ownership is probably like any real estate ownership... Location = demand..

 

[Action]

The Real Estate answer depends.

If the slip that is purchased includes the land under the water, it is Real Estate.
If the slip that is purchased is only connected to land via the pier and the land is owned by the marina, it is not Real Estate. You are buying the slip and the right to use the water.

No matter what, a purchase, locks in the cost of the slip with the right to sell when you want.

 

[Woodstock]

When we started looking to purchase a 40-50' trawler/cruiser about 7 years ago we looked for slip availability near our home in SE North Carolina. All the marinas in our area had wait lists from 1-2+ years so nothing available. A few months later a 50' privately owned (deeded) slip came on the market in one of our local marinas so we purchased it and rented it out until we purchased our boat two years later. It was part of a Safe Harbor Marina (slips 20% private, 80% SH marina) so we pay a monthly SOA (slip owner association) fee to cover maintenance, dredging, etc. It has worked out very well for us but privately owned slips are becoming increasingly rare near us so our (accidental) timing was good.

 

[mvweebles]

I own one slip and have long-term lease rights on another.

In 2013, we bought a condo that had a deeded 25-ft slip on the ICW in St Pete Beach FL. The marina has seven slips total and site atop land controlled by the Florida Dept of Environmental Protection (as does all land on the ICW). But the slip is part of my deed to the condo and I pay $0 in maintenance fees to the HOA, though I am responsible for all maintenance costs of my slip. A few years ago, I purchased the slip next to mine from a neighbor and reconfigured the two 25-foor slips into a single slip that will fit Weebles, out 36 foot Willard. The FDEP is firm about assuring boats do not overhang the lease envelope so 36 feet is a max. Once Weebles arrives, I will have $0 monthly slip fees, but I did have a sizeable one time cost to reconfigure the two slips. Obviously.l, with no monthly costs, the business case is pretty solid. Plus the residual value of an ICW slip.

I also have a long-term lease at Pier 39 marina in San Francisco. That is rented out and I make a lbout $125/mo above the monthly fees. The slip is worth about $10k so not a great deal, especially since the monthly management fees to the marina rise in a similar way as slip fees do.

In both instances, resale is constrained. In the condo, slip has to be sold with the unit or to another condo owner, so no way to go to open market. With the lease, having an end date - even decades out - gives buyers pause. It's difficult to sell. Something to think about if you ever think you'll want a different boat or want out of boating.

Peter

 

[Ka_sea_ta]

It depends on the state, we purchased a slip in a condo marina about 20 years ago. We own a percentage of the uplands (parking lot and club house) as well as same percentage of the dock structure. We also own the square footage of our slip (basically the water between the fingers.


The state owns the land underneath the docks and we pay an annual lease fee to the state DNR. The portion of the marina and uplands we own are treated and sold as real estate. We pay property taxes and the DNR lease fee on that portion.



Our annual cost of the DNR lease and taxes is about 3.5k a year. Like all real estate it's location and availability. As an aside our slip value has appreciated 10 fold since we bought it.

 

[tiltrider1]

Sometimes you actually get to buy the ground under the water. Most the time you own the slip but join a co-op that owns the shore line and lease the ground under the water. Sometimes you own the actual slip but you join a co-op that leases the under water ground and the shore line ground. Sometime you get own the shore and lease the under water ground.

It is important to know which option the slip involves before purchasing the slip.

 

[ranger58sb]

My thought: A purchased slip is like a waterfront home... and isn't (to us) worth the premium usually attached. And we might decide (have done, a few times) we want to move elsewhere.

I might think differently if our overall budget was friendlier.

-Chris

 

[Mac G]

Some are set up as condos others are coops.
Very important to read the documents (Declaration, By-Laws, etc) and understand what you are buying and what the rules are.
Some bylaws are more prohibitive than others.
Some "owned" slips that are otherwise in a working marina surrounded by rental slips can be treated like second-class citizens by staff and management because the marina is not making any money on you.
Often in those situations the marina is trying to actively get rid of and wean out those owned slips to regain total control over the whole operation.
Have seen that where a marina went 100% condo many years ago but now is less than a fraction due to one entity gobbling up as many as possible to recreate a rental marina.
The concept is good if you find an area where you want to stay-put and use as your home base.
But need to do your homework on the personality of the operation.
Talk to existing owners, prior owners, folks from nearby and neighboring marinas to get the true story and unfiltered facts on what you are getting yourself into.
Is parking included? How many spots? Are there lockers on land for gear?
What are the monthly HOA fees? Are all their dock permits (DEP or whomever) in good order? How much are the annual taxes? Etcetera etcetera
Need to perform some serious due diligence to make sure you are buying a dream and not a nightmare.
But if all checks out, then go for it.
It would be nice to know you have your own spot for life.

 

[PhilPB]

We own our deeded slip/lot . The submerged land is ours and we pay property taxes as well as association dues to run the place. The marina is governed by an HOA and the association owns and maintains the seawall, finger docks, pilings, parking lot, common area, etc. The cost to carry/own the slip is about 1/4 of the price to rent one. Our marina has 24hr security, onsite staff (marina manager, office worker, dock hands) showers and laundry if needed, and is located in a very nice area.
For us, this was the only viable option for affordable dockage. Plus it is considered a hurricane hole and get a discount from insurance as well as not having to move the boat to a safe area (on the hard) during a hurricane.

 

[mvweebles]

...
Often in those situations the marina is trying to actively get rid of and wean out those owned slips to regain total control over the whole operation..

This is a good point. When we were in Mazatlan recently, there was an older couple who had lived aboars their Californian 42 for over 20 years. They purchased their slip long ago when the owner of the marina was trying to raise capital. I asked him about it and he said it just doesn't make sense anymore because the marina fees keep going up, and they really want the slip back.

The bottom line is the financial business case for owning a slip is directly proportional to the maintenance and management fees charged by the marina. As described above, I own two slips - one at each end of the spectrum (one with high marina fee, and owned outright with zero monthly fee). The one with a monthly fee is a dog. The zero fee one is a highly covered hedge

Peter

 

[O C Diver]

I own my slip. The marina basin was originally dry land. So each slip owner owns the submerged property under their slip. As such, we get to pay property tax to the county / state. There is a condo association that owns the land, buildings, walkways, docks, pilings, and everything else. We pay quarterly fees to the association to cover all costs and each owner pays their slip electric. All in it use to cost me about $5,400 plus electricity for my slip annually.

After hurricane Ian, each slip was assessed $20K for repairs (joys of ownership). In addition, dock insurance (damage to docks, not liability) is no longer available. So we're now building much larger reserves ($1,200 additional per year).

All in, my slip costs me about half of what an annual rental would be. The big upside is that it's mine and I have a place to keep my boat in one the nicest most protected marinas in the area. Don't half to worry about Safe Harbors buying the marina, the costs becoming exorbitant, or the area becoming crime infested.

Ted

 

[Don L]

The whole marina thing was already playing into my getting out of boating. I feel if you can do it buying a slip makes a lot of sense. You know you have a place to come back to, you can rent it out when no using etc. AND unlike everything else in boating since they aren't building new marinas a slip appreciates in value.

 

[PhilPB]

The whole marina thing was already playing into my getting out of boating. I feel if you can do it buying a slip makes a lot of sense. You know you have a place to come back to, you can rent it out when no using etc. AND unlike everything else in boating since they aren't building new marinas a slip appreciates in value.

We were rather fortunate. I found the slip advertised on Craigslist. The guy that owned the slip had bought a bunch of them in our county over the years and was liquidating all of his holdings when the new administration came in and he was afraid of paying a lot in taxes. It worked out very well for us. Not including the interest we could be making on the money we used to pay for it, our cost annually is about $7000~ish. It is hard to find slips for sale around my area.

 

[CaptTom]

Do the math. For me it was simple. I started with the premise that I'd be a boat owner for the foreseeable future. The cost of buying (a co-op type membership) my slip and paying annual dues showed a break-even point of about 10 years compared to renting. And that assumed no resale value.

Well, it's been more than that now. Every year now I'm pocketing the difference. If I ever sell I'll get a lot more than I paid. Basically free money. I even made a few bucks for a couple of years when I was able to rent a smaller slip for my boat and rent my slip to someone who needed the bigger one.

I want to take this opportunity to put in a plug for the whole concept of member-owned clubs and similar arrangements. As marinas all become luxury resorts catering to the yottie crowd who rarely actually use their boats, we face an existential crisis. A club, co-op or dockominium association, owned by the boaters, seems to be the only other option.

 

[PhilPB]

Doing some retirement planning. Aiming for an ice-free base of operations and a 50 foot trawler. I’d like to hear from folks who purchased a slip, and those who looked into it and decided not to, and anybody with an opinion, really.

How does this compare with simply paying for a slip in a marina? Are they all going the “condo” route? Question for lawyers, is this a real estate investment, I.e. am I buying real property?

In our case:
Renting a slip, or even getting on a list to do so is incredibly difficult.
In our marina the rents continue to increase 10-15% per year.
It is a real estate investment although that wasn't the intent initially.
It is like buying a condo, In our case

 

[Endeavor GB 32]

We own a 38' slip in a 300 slip condominium marina in Blaine, WA. Unusually for WA state, the HOA owns the tidelands under the entire marina so we pay no lease fees to the State. It is 100% owned by the individual slip owners, so no competition with a "marina," and well managed by an elected board. There is a full time professional manager plus paid staff, and the maintenance/upkeep meets or exceeds public marinas in the area. Our monthly cost, roughly 50:50 split between capital reserves and operating budget, is about half of what the monthly slip rent is at the municipal marina a stone's throw away. We do pay real estate property taxes to the state, about $150 per year. There is about a 3 to 4 year wait list for slips this size in northern Puget Sound. Our slip value has appreciated about 75% in three years. We are very glad that we made this purchase.
Regards,
Scott

 

[LenBuchanan]

I know that this is not an 'ice free' area, but we own our slip in Muskegon, MI. The marina is a private association, that originally was dry land and was built and owned by the 'Coles Garlic Bread' company, just up the hill from us. (Great baked bread smells in the morning)
We pay property taxes to the city of Muskegon. We own a 50' slip. We pay roughly about $3200/per year. However we have a small playground for kids, landscaped green space, beach, a clubhouse and patio with professional kitchen, grills, gas fire ring, free pump-out for owners and gas/diesel dock with 10% discount for owners. We only have 63 slips. Our fee pays for upkeep, harbormaster, marina help, dredging, etc. We do not pay for electricity or water usage. We can sell whenever we want and the rates have doubled since we purchased our slip in Jan 2017.
The municipal marina not far from us is renting 40' slips for $3400. We were there when we owned a sailboat. Just docks and bath/showers. Nothing else.

 

[Duke 239]

Thanks for all these testimonials, very helpful!

 

[Seevee]

There are some slips available for purchase out there. However, as mentioned a above there's a LOT of issues to deal with. What do you really own, purchase price and annual expenses. And the risk of your rights taken away from you.

There's a few in my area, just a half mile from me... priced from ~$200k up, and the one's for 50 footers are much more. Don't know of the annual fees or what you really own, but I do know that the management and rules suck and a lot of the benefits (like access to a pool and rec area have more limitations and hassles) I know a few boaters there that are not happy.

I could argue strongly to just buy a waterfront house, even if the cost is 3 or 4 times as much. You get ALL the rights of your slip that cannot be taken from you, and no additional costs. And if you don't want to occupy the house you can rent it out and most likely be way ahead of the game of renting or owning a slip elsewhere.
I've had a few waterfront properties and they paid off handsomely.

 

[Action]

I could argue strongly to just buy a waterfront house, even if the cost is 3 or 4 times as much. You get ALL the rights of your slip that cannot be taken from you, and no additional costs. And if you don't want to occupy the house you can rent it out and most likely be way ahead of the game of renting or owning a slip elsewhere.
I've had a few waterfront properties and they paid off handsomely.

This idea has a lot of merit in my opinion.

 

[O C Diver]

There are some slips available for purchase out there. However, as mentioned a above there's a LOT of issues to deal with. What do you really own, purchase price and annual expenses. And the risk of your rights taken away from you.

There's a few in my area, just a half mile from me... priced from ~$200k up, and the one's for 50 footers are much more. Don't know of the annual fees or what you really own, but I do know that the management and rules suck and a lot of the benefits (like access to a pool and rec area have more limitations and hassles) I know a few boaters there that are not happy.

I could argue strongly to just buy a waterfront house, even if the cost is 3 or 4 times as much. You get ALL the rights of your slip that cannot be taken from you, and no additional costs. And if you don't want to occupy the house you can rent it out and most likely be way ahead of the game of renting or owning a slip elsewhere.
I've had a few waterfront properties and they paid off handsomely.

I had considered this prior to buying my slip in a condo harbor marina. For me, the ultimate decision to not buy a waterfront home revolved around security and monitoring. Depending on the marina situation, one of the very nice features is security personnel walking the docks and harbor master or dock hands casually checking on boats. Situations change over time and safe neighborhoods can be targets for criminals. It's also very nice to have people walking the docks several times a day checking on boats.

Ted

 

[READY]

There have been many good responses and in summary I think the decision depends upon many factors, some known and some unknown. For me in 40 years of boating I have changed boats and locations many times so it might not have worked out financially and certainly would have limited my flexibility. If you know you are staying in one place with one size boat and ownership is available the math might work in your favor.

I would offer up an option to investigate.

If you can join a yacht club with a marina that may offer some of the benefits of slip ownership (lower cost, no massive increase in lease, minimal up front Investment) without some of the challenges or risk of ownership (such as an asset you may find difficult to sell).

In San Diego our yacht club rates are about 60% of the lowest cost marina rates. But depending upon slip size the wait list can be long.

I have paid an absurd amount in slip fees over the years but looking back it is not clear there was a time where I could have purchased and come out substantially ahead given some of the risks (including special assessments) vs investing the money elsewhere.

 

[slowgoesit]

I could argue strongly to just buy a waterfront house, even if the cost is 3 or 4 times as much. You get ALL the rights of your slip that cannot be taken from you, and no additional costs. And if you don't want to occupy the house you can rent it out and most likely be way ahead of the game of renting or owning a slip elsewhere.
I've had a few waterfront properties and they paid off handsomely.

This is what we recently did. We purchased a dock that had a house associated with it. Actually, we got 3 small docks, suitable for 35' boats, and one long, 175' linear dock with 6' of water. The house . . . well, it needs work, which we are in the process of doing, which is cutting into our cruising time, but in the long run, it will be time and $$ well spent. Anyone want to rent dock space?

 

[READY]

@slowgoesit
if that slip is in CA, sign me up!

 

[slowgoesit]

Ken, LOL! Unfortunately for you, it is in central Florida, fresh water, but a day's + travel either East or West to get to the either of the large lakes of bitter water . . .

 

[DDW]

I looked into this in SF Bay. There is one marina here (Emoryville) which is privately owned slips. The management have kindly posted the complete history of over 30 years now, how much the HOA dues have increase, how much each slip has sold for each time it has sold. From this one can calculate that the total cost of ownership is about a wash with renting a slip in the area, or even one in that marina from a private owner. That is what you might expect in an "efficient market". SF Bay is distinctly different than many other boating areas, no moorings, few on-the-water houses, very limited marina expansion (1 has been built in the last 40 years, while several have gone in the same time).