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Old 17-06-2019, 19:31   #16
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Re: financing

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Originally Posted by Sparx View Post
Let me recommend a yacht mortgage broker. Mr Dunford found us a useful loan and was easy to work with. His contact info is below.

Robert Dunford, Jr (203) 944-6555
rpdunford@tridentfunding.com
Thank you!
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Old 17-06-2019, 19:34   #17
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Re: financing

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Might I suggest that we stick to things we know. Your theory about how banking works is dead wrong. Also, your understanding of the leverage concept used by the OP is also flawed. This is not the forum to explain it to you.
Thank you so much for saying that. I really appreciate it.
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Old 17-06-2019, 19:59   #18
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Re: financing

Scarlet,

for the second part of your question there is a database out there, Soldboats.com, that contains actual sales data vs. initial and intermediate asking prices. Accessing it isn't always easy, but if you have a buyer's broker they should have access (and should already have offered you the information). If you don't have a broker maybe you can befriend someone with access. How useful it is depends on how many of your intended purchase (or comps) are out there and how often they change hands.
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Old 18-06-2019, 05:33   #19
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Re: financing

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Scarlet,

for the second part of your question there is a database out there, Soldboats.com, that contains actual sales data vs. initial and intermediate asking prices. Accessing it isn't always easy, but if you have a buyer's broker they should have access (and should already have offered you the information). If you don't have a broker maybe you can befriend someone with access. How useful it is depends on how many of your intended purchase (or comps) are out there and how often they change hands.
This is great. I didn't know about this site. We do have a buyer's broker. I sent the request over to her.
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Old 18-06-2019, 07:45   #20
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Re: financing

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Originally Posted by BigVee View Post
Might I suggest that we stick to things we know. Your theory about how banking works is dead wrong. Also, your understanding of the leverage concept used by the OP is also flawed. This is not the forum to explain it to you.


I understand I know it’s not that simple, and I am no financial expert.
However I understand enough to know borrowing large sums of money on the theory that investments will due to their higher yield more than pay for it is foolish, you may get lucky, but if you do that’s what it is, luck, not that your smarter than others.

It makes as much sense as borrowing 1 Million at 4% to “invest” it, make 12% and live off of the 8% difference, what could go wrong ?

We have had that plan and others posted here, to include the I can make 20% returns, I can prove it, it’s not hard.

A fellow Officer bought my house in Richmond Hill Ga., but he was much smarter than I was, I was foolish and had a conventional loan, being a smart guy, his loan was one that he only paid interest, and that 20% down? Another loan. His master plan was he was going to live in a nice house for very little money, and of course since houses always appreciate when he sold it, he was going to make a nice profit.

The extra money he had freed up allowed him to buy a new SUV for his Wife etc., and live a much better standard of living, cause he was smart, all of it on credit of course, don’t spend your cash when you can spend others for less.

I never checked, but am pretty sure he lost his behind in 2006.

I’m afraid that if your counting on your investment income pretty heavily, that we have another event coming, but as I’m no financial expert that may just be an old man worrying, but that worrying has kept me solvent when I watched other smarter people get hurt in the .com bubble, the housing crunch etc.
All smarter than me of course
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Old 18-06-2019, 09:40   #21
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Re: financing

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Originally Posted by a64pilot View Post
I understand I know it’s not that simple, and I am no financial expert.
However I understand enough to know borrowing large sums of money on the theory that investments will due to their higher yield more than pay for it is foolish, you may get lucky, but if you do that’s what it is, luck, not that your smarter than others.

It makes as much sense as borrowing 1 Million at 4% to “invest” it, make 12% and live off of the 8% difference, what could go wrong ?

We have had that plan and others posted here, to include the I can make 20% returns, I can prove it, it’s not hard.

A fellow Officer bought my house in Richmond Hill Ga., but he was much smarter than I was, I was foolish and had a conventional loan, being a smart guy, his loan was one that he only paid interest, and that 20% down? Another loan. His master plan was he was going to live in a nice house for very little money, and of course since houses always appreciate when he sold it, he was going to make a nice profit.

The extra money he had freed up allowed him to buy a new SUV for his Wife etc., and live a much better standard of living, cause he was smart, all of it on credit of course, don’t spend your cash when you can spend others for less.

I never checked, but am pretty sure he lost his behind in 2006.

I’m afraid that if your counting on your investment income pretty heavily, that we have another event coming, but as I’m no financial expert that may just be an old man worrying, but that worrying has kept me solvent when I watched other smarter people get hurt in the .com bubble, the housing crunch etc.
All smarter than me of course
You are arguing two different scenarios. Your friend had no actually money, everything was on credit. If your financial net worth is a negative value and you keep borrowing more and more, of course you will get buried.
Scarlet's situation is different. They have the money invested, more than enough to cover the loan, and money coming in monthly. Borrowing against your own assets is a relatively safe gamble. Yes still a gamble, things can go wrong.
Just as using your invested money to buy the boat can go wrong. If you withdraw at a low point, you lose the chance for it to grow back. You would also have to pay a lot of taxes if you withdraw enough to buy a catamaran all at once.then of course your amount invested is lower, which means less growth.
There is always more than one way to do things. Scarlet's plan makes sense to me, her and others.
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Old 18-06-2019, 11:34   #22
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Re: financing

I'll only add this to the discussion.

You most likely can finance a boat with your investments, people that purchase 8, 10, 12 million dollar yachts are most likely doing just that. Of course, they can all be chartered for $60,000 a week, so most of their expense become write offs........

Here's my take though. When you factor in all of the other costs of ownership, making that loan payment every month would probably make me jump ship..........

Slip fees, insurance, haul-outs, bottom paint, bottom cleaning and every other bolt and nut that needs to be replaced on a regular basis, Adding say, 1600.00 a month (250,000 loan, 5%) for the loan payments, would have my boat in the "sell" category.

We decided to plunge in and pay cash. I still have to pay for all of that other $h!t, but, makes the monthly expenses look oh so much better......
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Old 18-06-2019, 12:14   #23
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Re: financing

It is very easy to imagine a ROI that would justify such a course. One example is Greek govt bonds purchased during last Greek crisis (27% roi if I recall well). Or a seaside Italian bar in most any popular Med location (say Palma de Majorca).



If you can borrow at less % than you make on your investment portfolio, do it.


No brainer.


b.
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Old 18-06-2019, 12:16   #24
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Re: financing

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We bank with Navy Credit Union, and they don't offer loans... but I'll call around and see what I can find... Thanks for the suggestion. I hadn't thought of checking with them.
I used to be a member at the University Credit Union in Miami. They offered loans at very competitive rates, with most of their customers financing cars, although boat loans were in their brochure. When I talked to them, it turned out that they meant small motor boats; they called my 34 foot Beneteau a yacht. However, they funded it and everything went smoothly, both when buying and selling five years later.

Nevertheless, I would not borrow money to buy a cruising boat again - this is a very effective way to tether yourself to a day job, which is contradictory to the purpose of having a cruising boat, in addition to risks articulated by A64pilot.
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Old 18-06-2019, 12:38   #25
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Re: financing

I have always been amused on the majority of sailing/cruising forums when questions are asked. You get more theory on why you "shouldn't" than answers to the question you asked. It is really not our business to supply information we were not asked for. If asked what our OPINIONS are on something like financing the door is open to let it go. If no, answer the question and keep the thread on point.

To Scarlet: You state you have a buyers broker already. If you do, and that broker cannot answer the questions you are asking....get a new broker. Anyone who wants to make a sale must have those answers, or not be successful.

My last purchase was financed through a motgage broker and was serviced by Bank of America. I talked to someone recently that had financed through B of A as well, but I do not know any particulars.

The boat is worth what you/or someone else is willing to pay for it. Lots of comparisons to make to determine the price of your boat lust. Again, if you trust your broker they can supply comparisons...which they should already have supplied if you have found the boat.
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Old 18-06-2019, 13:08   #26
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Re: financing

In boat owning, I found having no loan allowed me to have liability only insurance most of the time. Depending on the boat, it's use, operating area, loss insurance ran 10-25% of the cost of the boat. Even now for me it's a difference of many thousands a year.

To operate a liability only boat does rely on your ability as a boat handler and captain.



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Old 18-06-2019, 13:27   #27
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Re: financing

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My husband and I are interested in a particular boat, and are discussing cost, financing, etc. So I have a few questions.

We have the cash to pay for the boat, however, our ROI in our investments is much higher than interest rates right now, so it makes sense for us to take out a loan, and if the markets slow down, or drop, we will take cash out and pay off the boat.

I don't know if it's the same in the US, but for us, our cheapest loan would be a line of credit with home equity as security. Much lower interest than a conventional car/boat loan.


btw I'm no market whiz; our financial advisor is telling us to gird our loins for the coming downturn. Mmmmm, loins...
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Old 18-06-2019, 13:36   #28
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financing

In order to borrow money at any kind of decent interest rate, you have to have assets to cover that loan.
You can say it’s all on credit, but it’s not, because those assets are of course what is leveraged to get the loan, those assets are at risk.

Your decision, but I’ve seen many “lose” those assets, look at how many houses and boats are foreclosed on to get an idea, although most lenders don’t like boats as assets.

Not so much of an issue for those that are still working and plan to for years, but it’s an excellent way to trap yourself into not being able to Retire, and of your not Retiring, what’s the big Catamaran for?
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Old 18-06-2019, 14:36   #29
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Re: financing

To the original OP...
Do you have a home mortgage? Often you can refi at a pretty good rate that comes in less than your investment return. We let Schwab manage our whole portfolio and regularly get about 4.5 to 6% per year with only one or two loss years in the last 20 or so. Our home mortgage has LOTS of equity so we recently refinanced with an interest only ARM for 5 years at 3.25% percent. If interest rates go up a lot we can simply pay off the whole loan without too much pain to our portfolio, fortunately. If interest rates remain below about 5% we can simply refi again.
As somebody else suggested, work with a mortgage broker. I understand most are no-cost to the borrower.
Good luck!
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Old 18-06-2019, 14:39   #30
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Re: financing

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Have you not seen the stock markets?!?! in 2017 we got 12% return..2018 we were over 13% and this year to date, we are 8.6%. still double the current interest rates on boat loans. There is no better time in history to invest than now. If you like, I'm happy to give you the name of our financial planner.... and I'm sincere on that offer.

Wow. Such confidence and condescension. Is it the late 90s again? I'm sensing the same "irrational exuberance" as Alan Greenspan called it at the time.



Have you not seen the ~20 year real (including dividends and inflation) returns in the market after those great returns in 2017 and 2018? The last decades S&P index fund returns have really brought them up a lot ... to ~3.4% compound annual growth rate. Buyer beware in a bubble.



https://dqydj.com/sp-500-return-calculator/
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