Will You Go Broke On A Boat? - 1999 Viking 60 SportYatch

[fgarriso]

I hate to say it, but your just one break down from going broke. One serious break down from going bankrupt and still having a bank note.

DON'T DO IT!

 

[El Dorado]

Thank you for the patience, having access to the Freedo boat club sounds like the most reasonable first step. That way you can build up 100hrs of experience with a licensed captain for preparation in the insurance department.

 

[READY]

That is an excellent idea. A great way to dip your toe in with no long term commit or huge up front investment.

 

[El Dorado]

That is an excellent idea. A great way to dip your toe in with no long term commit or huge up front investment.

Appreciate it, I would've never known the service existed, thank you all.

 

[Snapdragon III]

I would say don't do it. In every case, I would say don't buy a boat unless you can afford to pay cash for it. Also, you need to really drill down on what is available, and how much it will cost for insurance that covers Hurricanes on PR.

 

[El Dorado]

I would say don't do it. In every case, I would say don't buy a boat unless you can afford to pay cash for it. Also, you need to really drill down on what is available, and how much it will cost for insurance that covers Hurricanes on PR.

Yes understood on the burden of just getting coverage and I need to a few years to work on that. But how do most yatch owners finance $2million dollar plus vessels? During low interest rates, they could just borrow against their assets, which made sense.

Doesn't it make theoretically more sense to get a loan, if you can write off the interest expense?

It will be achievable to have a monthly income to cover something like this, but to pay in one lump that could mean savings of 20 years? Is that really necessary if it was treated as the primary residency? That is another struggle to deal with.

 

[mvweebles]

There's an old saying that banks like to lend money to people who don't need it. A boat is lousy collateral and will result in an expensive loan with lousy terms if you can even find a lender.

While I know a lot of owners who would be hit hard if their boat was lost, I don't know anyone who's boat is their top asset. They have access to capital secured by other assets if desired.

Peter

 

[Snapdragon III]

Yes understood on the burden of just getting coverage and I need to a few years to work on that. But how do most yatch owners finance $2million dollar plus vessels? During low interest rates, they could just borrow against their assets, which made sense.

Doesn't it make theoretically more sense to get a loan, if you can write off the interest expense?

It will be achievable to have a monthly income to cover something like this, but to pay in one lump that could mean savings of 20 years? Is that really necessary if it was treated as the primary residency? That is another struggle to deal with.

In my personal experience, everyone that I know that bought a 2 million dollar boat could easily afford to pay cash for it. They might not have due to some tax reason, or something, but it wasn't because they didn't have the cash. I had one friend with a boat that was valued right around 2 million, used (it was 3.5 new), and his insurance was $50K a year!

 

[Action]

But how do most yacht owners finance $2million dollar plus vessels?

As stated above. Wire transfer the CASH.

Doesn't it make theoretically more sense to get a loan, if you can write off the interest expense?

A purchase of <$300,000 primary residence, sure. And that is how you are thinking about this purchase.
This isn't house with some added monthly expenses. This is more like a serious monthly or on going expense that happens to be relatively low cost to get into. A 25 year old yacht that has depreciated significantly in value. But the maintenance does not stop. It gets more expensive.

It will be achievable to have a monthly income to cover something like this, but to pay in one lump that could mean savings of 20 years? Is that really necessary if it was treated as the primary residency? That is another struggle to deal with.

This is why it is necessary to have pre-purchase inspections. To know what is obvious to a trained eye that will be immediate problems to address.

 

[Capt Pappy]

This disclosure will keep me sleepless for the next week and it is not even my finances:

"Here’s the scary, but workable part. As people are well aware nowadays, most families don’t have $100k saved up in cash. Neither do we, so this was going to be approached from a rent to own and then to financing, until a down payment could be achieved. Which wouldn’t make the monthly payments too terrible (looking to be under $3,000 if interest rates come down)."

Admittedly, I am new to the forum and while owning boats for 40 years, none larger than 28'

But this seems like a very costly vessel --- where one should have several hundred thousand in cash, perhaps even $500k on hand, before taking the plunge?

we are very nervous about costs while considering something like an older Kha Shing 36' for $70,000 and popped onto this section to see about what we could be getting ourselves into!

 

[sledge]

We are talking about a boat that can do 22 kts if you can afford the 125 gallons per hour. Granted, you can slow down to 9kts and it’s probably a 1 gallon per nautical mile boat. I am assuming that you will still be in the MAN’s allowable operating window. Big diesels like these have minimum temperature and RPM requirements which some times doesn’t allow for economical running.

This issue of fuel burn in my mind blows away any other concerns that have been raised. You would need a dedicated bank account just for fuel. If you compare to say a trawler, this thing could easily burn 40 times more fuel or worse...

 

[dannc]

This issue of fuel burn in my mind blows away any other concerns that have been raised. You would need a dedicated bank account just for fuel. If you compare to say a trawler, this thing could easily burn 40 times more fuel or worse...

Yep.

Four decades ago, we stopped at the fuel dock with my dads sailboat. I think we filled up for $20-40. A sport fisher next to us spent $400. Diesel price back then was likely .50-.75 a gallon. I would bet it would cost around $2,500 for that sports fisher to buy the same amount of fuel at today's prices.

 

[Action]

A distant relative lives in Jacksonville. Loves to fish.
He would tell me about trips he made with 4 to 5 other buddies out in his neighbor's sport fisher.
Dropping $500 each for fuel is what they do to get where they want and do what they want. Then get back in short order. It is a far far different use than going out on a sailboat.

They had the means and the desire. They just didn't have a lot of time. So they would do this kind of trip every 4 to 6 weeks.

 

[socalrider]

Yes understood on the burden of just getting coverage and I need to a few years to work on that. But how do most yatch owners finance $2million dollar plus vessels? During low interest rates, they could just borrow against their assets, which made sense.

Doesn't it make theoretically more sense to get a loan, if you can write off the interest expense?

It will be achievable to have a monthly income to cover something like this, but to pay in one lump that could mean savings of 20 years? Is that really necessary if it was treated as the primary residency? That is another struggle to deal with.

Interest on home loans is relatively low to start (say 6% now) , so with your tax write-off if you're in a high bracket, you can get that effective interest rate down to 3-4%, which is below even T-bill returns. So it can make sense to take out a home mortgage even if you have the means to buy with cash.

A boat loan, on the other hand, is probably going to be more like 8+% these days which makes the math tougher, particularly if you include the effect of taxes on the returns you're expecting.

Much much more importantly, as discussed, you don't have enough money to afford that boat. If you're looking for a liveaboard trawler for three people you should probably look for something in the 40' range where you can pay cash with repair funds in reserve. If I were in your situation I'd be looking for a good Taiwanese Trawler like the CHB 41 I have, or a Defever, Marine Trader, etc. for $50-75k. And I agree with the boat club idea as a good first step.