To buy or rent my marina berth

[Jimmy_G]

I have been renting my marina berth while I settle into my boating lifestyle, but am now pondering whether I am better off buying one. Annual rent seems to be about 15 to 20% of the cost of the berth, so worthwhile in the long term if affordable.
But also in the mix is whether Marina berths are a reasonable appreciating investment.
I realise that this is a topic that is not clear cut. But I would value educated opinions on this from those who know the market or have good experience with this, to help my mulling over the issue.

regards,
Jimmy G

[Orin]

Originally Posted by Jimmy_G

I have been renting my marina berth while I settle into my boating lifestyle, but am now pondering whether I am better off buying one. Annual rent seems to be about 15 to 20% of the cost of the berth, so worthwhile in the long term if affordable.
But also in the mix is whether Marina berths are a reasonable appreciating investment.
I realise that this is a topic that is not clear cut. But I would value educated opinions on this from those who know the market or have good experience with this, to help my mulling over the issue.

regards,
Jimmy G

I looked into this, and at the time decided against owning a slip. Here, which maybe different than most places the following are generally true - the cost of owning the slip is high. Like $3,000/year or more. If you figured a 30 year loan on the costly investment ($75-200k here) and added the monthly cost of ownership to the monthly payment on that loan - you aren’t much ahead on moorage. However we have seen some appreciation in value in the slips around here.

Other pros - you won’t have to wait in line for a slip, you can rent it out -and probably cover the bills?

Cons - If you get a much larger boat in the future your slip might not accommodate it.

I personally wouldn’t count on a return on investment - especially if you take cost of ownership into account. Unless you have cash - or access to much cheaper HOA dues etc where you are buying your slip. Even then, i would think real estate speculation would probably net larger average returns.

I’d encourage you to do your own research on the cost of ownership, and compare 10 thru 30 year rates + aforementioned cost.

My $.02, from someone who never purchased a slip granted.

[SV Siren]

In my neck of the woods(Michigan, USA) there are several marinas where you can own your own slip, however you still have to pay the marina for dues for maintenance and such. I could not figure this out, as a couple of them have dues close to the same rate per year as renting a slip, right next door at a different marina in some cases. You may wish to look into if there are any costs of ownership of said slip. In the long run, it may be nice to own your own, assuming that is currently is large enough for current, and future boats(2 foot-itis happens )

[Grandwagoneer0]

I own mine. I was able to pay cash. Also, the dues are approx 60% of rental cost. So even if it doesn’t appreciate I can sell(if I want) and at least get my money back. So while I have it I pay cheaper monthly rates. I can also rent it while out cruising and actually make a little money.

[bettJones]

Renting is more convenient, buying is a cheaper option. Yes, you still have to pay service fees, although less than paying rent. Also, one of the disadvantages of buying is the need to buy a larger slot than you need, because you can buy a bigger boat over time. In the case of renting, you simply choose a suitable place. In order to make money on your slot, you will have to make a number of efforts. So the question is, do you have free cash and time to do all this. If not, you can take a loan, but first calculate its payment.

[Jdege]

I've never been able to figure out what you actually own, when you "buy" a slip.

If the marina goes bankrupt, or simply decides to stop operating, what do you actually own?

[Alan Mighty]

Originally Posted by Jdege

If the marina goes bankrupt, or simply decides to stop operating, what do you actually own?

In almost all cases, you own nothing if the marina goes bankrupt etc. You are equivalent to an investor, but with little or no call on anything.

In most cases, what is offered by the marina is a sub-lease limited by time.

The Aus Tax Office regards a marina berth - in most cases - as commercial property. So if you in turn rent your berth out, you need an ABN etc.

That doesn't mean that buying the sub-lease of a berth is not a wise thing to do, it's just that you have to have your eyes open.

Cynics say that owning a residential property for investment - i.e. renting out a house or apartment - is just you subsidising the lifestyle of your tenant(s).

Cynics of that sort would likely say that owning the sub-lease of a berth is either (1) subsiding the marina operator; or (2) subsiding both the marina operator and anyone who rents your berth.

The rational question is always: where can you get your best return on your money, your capital?

Boats are usually, not always, declining investments. So your return is not an increase in your capital, it's more likely something to do with lifestyle.

You can work out for yourself what own the sub-lease of one or more berths does for your capital in the current economic climate. Just check out how else you could invest your money and the likely rates of return and risk.

But of course that is what you do with every one of your disposable dollars, no? What's it to be: a berth or a squashed avocado and coffee?

[Jdege]

Originally Posted by Alan Mighty

In almost all cases, you own nothing if the marina goes bankrupt etc. You are equivalent to an investor, but with little or no call on anything.

Which is why I wouldn't consider a "purchased" marina slip as being capital. It's an expense, not an investment.

[CaptTom]

Originally Posted by Alan Mighty

In almost all cases, you own nothing if the marina goes bankrupt etc. You are equivalent to an investor, but with little or no call on anything.

I can't speak to all cases, or even almost all cases.

In my case, I own a club "membership" which entitles me to the use of "my" slip. The club (marina) is wholly owned by the members.

One benefit over the "dockominium" option is that the club pays property taxes and insurance for the whole marina; each individual slip owner doesn't need to negotiate with the town or the insurance company. And it's a flat-out ownership interest, not a long-term lease. The members directly appoint the board of directors, which hires the management and staff.

I figured a 10-year payback compared to renting, and any residual value after that was money in my pocket. It's now been over 10 years and I'm way ahead. The slip ("membership") is worth more than I paid for it. There are people calling the club office every day trying to buy memberships. And if the club ever were dissolved and sold to developers, my portion would be a windfall. I've even rented out my slip a few times; more money in my pocket.

[bettJones]

Originally Posted by CaptTom

I can't speak to all cases, or even almost all cases.

I figured a 10-year payback compared to renting, and any residual value after that was money in my pocket. It's now been over 10 years and I'm way ahead. The slip ("membership") is worth more than I paid for it. There are people calling the club office every day trying to buy memberships. And if the club ever were dissolved and sold to developers, my portion would be a windfall. I've even rented out my slip a few times; more money in my pocket.

This is a bit unexpected! However, I think that in this case it is very important to calculate the risks, your capabilities at the moment and take into account your desire to have a boat in 5-10 years.

[CaptTom]

Originally Posted by bettJones

This is a bit unexpected! However, I think that in this case it is very important to calculate the risks, your capabilities at the moment and take into account your desire to have a boat in 5-10 years.

You make a couple of good points.

First, it's going to be very hard to find a club like mine, and almost impossible to set a new one up. Any marina put up for sale would find Safe Harbor or some other such entity willing to pay (and then, charge) top dollar. Even our club started life with a developer hoping to make a killing selling dockominiums. Only when that didn't work out did some very smart attorneys who owned slips step in and change over to the club model.

Second, boating isn't for everyone. We have some "churn" by people I call "Clampett owners." As in the intro song for Beverly Hillbillies, someone comes into some money and "folks all say" they should buy a boat. It turns out they're totally out of place in that environment. Some eventually figure it out. Others hold onto the dream, but leave the boat unused and neglected until it's worth nothing. We've all seen those when boat shopping.

I fully intend to own a boat for as long as I'm able. But even so, I could have sold my slip (membership) after the second or third season and still come out ahead. My 10-year break-even calculation assumed no residual value in the slip. Given waterfront property values, that's virtually impossible. It was that rare investment which was truly a sure thing.

[bettJones]

Thanks for the interesting details.

[AA3JY]

Rent..if you don’t like the neighbors one can always move..not so easily if owned..��