Boat Financing for out of state Boats (Mexico specifically)

[LA-Sailor]

Hello everyone,

I live in Los Angeles and have been browsing boats in the Pacific Northwest and along California (bluewater capable). Looking at monohulls in the 80k range. I have around 20-30k right now for a downpayment. The stinker is- I look down a little further south and see the same boats, rigged out much better and typically cheaper in Mexico. It's hard for me to justify paying 30% more for a boat in SF that doesn't have near the amount of gear as some of these other boats in Mexico.

I have a fantastic job in LA and an amazing credit score. My hope was to buy the boat in Mexico this summer, bring it back to LA, spend 2-3 years working to paying it off and upgrade various systems, then head out to the South Pacific. Low and behold the 3-4 boat financiers I've called ONLY finance boats in the US. No Mexico, Europe or anything (typically where there are better values I feel. Even the Mexico broker was unsure of any lenders that help in Mexico).

Does anyone know if any loan options or ideas that could help me out? I'd rather be spending my time learning the new boat than slaving away in an office and browsing Yachtworld all day. I want to get out and experience the world ASAP!

Thanks for your time everybody. Any and all ideas welcome!

Cheers!

[tomdidit]

If you have the income and the credit score you should go to your bank and ask them to show you why they are your bank. If you are putting down 40% on an asset that is truly $80K they should have an instrument that will work for you.

[cpt_757]

Most of bank does not finance, older boat, usually no more than 7 years old, maybe 10. If you have a good credit, go line of credit, almost same rate as bank's boat loan.

[cpt_757]

Or, Personal loan.

[LA-Sailor]

I agree- the banks won't finance boats older than 7-10 years. Haha- I don't think they get it or understand our passion. (Or maybe they do- these aren't the best of investments).

Would you recommend a personal loan? Do they want to know what I'm buying? I saw a 1996 Beneteau (So 20 years old, no go for banks)45ft for around 100k BRISTOL condition in Mexico. I loved the boat- but no one will help me finance it. I'm getting desperate in thinking if I can negotiate with the owner and have them bring it to San Diego. That way it's in a US State and someone would help. The same boat is 180,000ish in the SF area. I'm clueless what to do...

[cpt_757]

I do not think a bank will ask you what kind of boat you're gonna buy if it's personal loan or line of credit.
I am not sure about buying a boat from Mexico, maybe complicated.
How about from Canada? Better to buy local, transportation cost will be not cheap unless you sail back from.

[Dave22q]

I believe that nobody will make a loan based on something that is not even in the country. You might get a loan on an older boat based on your personal credit but the rate will be closer to a personal loan then a mortgage or even an auto loan.

[Cheechako]

I wonder if where the vessel actually is will come up at all? I sold a boat in carribean, all the paperwork was done in the US. There wasnt a loan involved though. No one ever asked where it was. Typically they don't want you taking to boat offshore with a loan on it though in the load documents.
Regarding cheaper boats in mexico or other parts of the world, Be careful, things are not often what they seem. I guess that applies in the US too!
It seems many I hear about are very rough. Of course there must be some that are fine shape, but it just seems like when someone buys, or looks at, a boat sitting in the rio dulce etc, they comment it's pretty bad shape.

[LA-Sailor]

The last buyer walked away because he was an incredibly busy guy and couldn't make it down for the sea trial from Alaska. He had survey done and it turned out immaculate (aside from dog scratchings on salon floor- but I could live with that).

I totally get I could wait 2-3 years and save up the 80k in cash and head down to Mexico and buy it straight out (The 'smart' thing to do, but I'm okay paying a few thousand in interest to learn the boat now). But thats 2-3 years wasted not learning the boat I would be out cruising on. I have an O'Day 28 now. Not something I want to be living on for the next 10+ years.

There's GOT to be some sort of way. I know very wealthy people who sell their luxury yachts with offshore brokerages so they can avoid sales tax, etc. There's got to be a creative way a US lender would help a guy who wants a boat 250miles off the US coast.

[Dave22q]

The intensity of your need means nothing to a lender. The assurance you will pay off the loan is everything. That most likely requires both a good credit record and local assets that cannot sail away. A cautious lender (and most are) might require a lien on enough assets so you cannot sell out and disappear.

[grantmc]

Originally Posted by LA-Sailor

My hope was to buy the boat in Mexico this summer, bring it back to LA, spend 2-3 years working to paying it off and upgrade various systems, then head out to the South Pacific. Low and behold the 3-4 boat financiers I've called ONLY finance boats in the US.

Why don’t you just save up the money and then go looking? Over and above the obvious, that very few financiers like their security being in another country, the added costs of boat ownership wont assist your plans; quite the opposite. Or, alternatively, just buy a boat you can afford.

Boats aren’t like property, they depreciate, usually quite dramatically. So you’re 80K boat will only be worth what? 50-60K in 3 years.

But worse, they all need a heap of maintenance, most would expect 10% annually but let's pick a lower figure, say 5%, that's $4K per annum. Annual antifouling will soak at least half of that up, given the size of boat you're looking at. Even when you do it yourself, means costs for lifting in and out, cradle hire, water blaster, paint and tools obviously. Even for my little 26 foot boat there’s no change out of $1,000 and I do it myself.

Also you’ll have the costs of mooring and insurance. Maybe you're planning to live on it, you don't say, but obviously that would make the economics quite different. You'd really buying a beach front apartment, not a boat.

And why ‘upgrade various systems’? Why buy a boat that doesn’t even meet your requirements. That doesn’t strike me as the wisest idea. Derrr.

Nor do upgrades add squat to a boat’s value. Down the track it may be a factor in a boat’s attractiveness to potential buyers when you go to sell. But those upgrades by then will be old and the ocean environment is so very harsh.

And as for this:

Originally Posted by LA-Sailor

I'm getting desperate in thinking if I can negotiate with the owner and have them bring it to San Diego. That way it's in a US State and someone would help. The same boat is 180,000ish in the SF area. I'm clueless what to do...

Like you think someone with a boat in another country will move it to SF (at great expense) in the hope that a maybe buyer without enough money might be able to borrow the balance. Yeah right, like any of that’s gonna happen.

You ask what to do, and I hate to rain on your parade. And from the little you’ve said in your questions and comments it appears you know little about boats or sailing. So here’s my two cents worth:
Buy a boat you can afford. Buy it where you live. Join a yacht club. Go sailing, you know like every weekend. Spend time hanging out with boat people, especially the guys and girls in the yards. Look over their shoulders and learn about boat maintenance, sailing, real boat values, what boats are good etc. Undertake whatever courses there are locally to learn about navigation, weather, and seamanship etc. Read books about sailing adventures. Do occasional 2-3 week long trips in your boat. Also volunteer to crew on a few ocean trips (with friends is best). After 2-3 years you’ll have learnt much and be in a much better position to know what you really need in a boat. Also you’ll have saved the money for an ocean cruiser. Also you’ll feel competent to take (and risk) other people’s lives out into the briny blue.

As an aside I notice quite a number of people looking at boats in other countries and finding boats that are seemingly much cheaper than the equivalent in their own locality. If such boats were real bargains everyone would be off to buy them, sail them back to their own country and sell them for vast profits. The reality is typically quite the opposite. The real problem: they’re f**king boats.

[LA-Sailor]

GrantMC, (and everyone else), bullseye! Thank you so much for your openness and honesty. You're absolutely right (aside from me not knowing anything about sailing- but anywho).

I think the gigantic need to purchase a boat ASAP comes from living on this small Oday 28. I had a small apt in LA and the ODay for weekends. Had to leave the apt and move onto the boat 'temporarily'. After a year tho- with skyrocketing LA rent- it seemed WAY more economically feasible to purchase a boat and make payments. I can buy a 40ft boat for 80k, $600 slip and $600 boat payment (I'd pay it off with extra $$ quicker) is still WAY cheaper than a $2,000 studio in LA. Why throw money away on rent? So I work this job and make great $, so I'm saving a lot, but my living situation drives me crazy.

Haha- I agree with your assessment. Buying boats in Mexico, bringing them up to California and selling for a profit is hogwash. These are massive depreciating assets. Good food for thought. I'll pump the brakes and continue due diligence in the search.

(I still welcome any other opinions on the matter. Thank you again everyone!)

[grantmc]

Ok, given you want something bigger to live on, that I understand. My suggestion would be to buy a boat to live on. I've no idea of your market, but here where I live, you can get very big old shitters built in concrete really cheap. 40-50 footers go for 15-20K tops, no one wants them. Then, when you are ready to sail the world buy the boat you need then. In the meantime save, save, save.

Who knows what your circumstances and aspirations will be in 3 years. Assuming you have the same plan at that time, would it not make purchase decisions and options easier to be walking around the dock with $80K in your back pocket to spend on the boat you need?

Me thinks too that most people who buy a boat to sail the world, and then spend years pulling it to bits (sorry I'm supposed to write 'refitting' aren't I), supposedly to make improvements (and add many many expensive extras) never actually leave the dock. Some do, sure, but not many. And I'm always left when I hear of this wondering well why did you buy that boat if it wont do what you want it to do?

I like the advice of these old salts: we wanted to sail, not build. Do read their article carefully, they make a lot of sense.

[cpt_757]

Where can you live aboard in LA area for new application?
Also, live aboard slip fee is not same as regular slip fee, usually run about 150% or more of regular slip fee, maybe..


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[sailpower]

Is the boat USCG Documented?

Why not add in the price of the delivery to the purchase price and close in San Diego? You pay a little more but still get a deal.