How do cruisers pay for boats?

[Na Mara]

Do like me and leave him the boat in your will.

[bensolomon]

Earlier in the thread, C Patom-Gay said, "I learned is that we are all boaters and we don't judge by the size of the vessel. The quality of the seamanship and how a boat is maintained ... most definitely we judge."

That is a great statement. Along those lines, I spend more than 10% of the purchase price on maintenance between bottom paint, pre-emptive engine maintenance and the last few years has been a new shaft seal, jib furler, forestay, running rigging, canvas, new fridge. But, all of it improves my quality of life on board for both sailing and living.

So, bringing it back to the original question, make sure there is enough money for maintenance. There are the things you see, and those that things are waiting in surprise.

[Junk Viking]

1) Less work on upkeep
2) You get treated better by poor locals and get closer to them
3) Same size equipment will provide better safety (think anchor gear, winches etc).
4) Easier to handle manually = less dependancy on mechanical aids that will fail at the worst possible time.
5) You'll be forced to think harder and pick a better laid out boat with less waisted space.
6) You can afford a better quality boat, perhaps even a blue water metal boat in stead of a production plastic fantastic.
7) Smaller is actually structurally sturdier.
8) You can modify the boat to your needs with less fear of loosing value
9) It's less risky to leave the boat for a while while travelling or working.
10) Less € for maintenance / marina / haul-out / land transport etc.

I vastly prefer boats in their 30's.
Big enough for storage and 4 people if chosen or fitted out right.
Small enough to reap the benefits of all points above.
Preferably a little quirky looking boat so nobody would want to steal it, and unique enough to get cruisers and locals alike interested to talk to you.

Just my 5 cents based on 2 years in the Caribbean and 2 in the med.
And based on somebody who likes to mingle high and low.


I fought myself hard to stay small and I'm rather proud I didn't fall into the big boat trap.
I'm sure somebody will chime in with the advantages of bigger and point out where workload is the same.

[OkiMike]

Boat: $75k
Financed with 10% down
Paid off in 3 years as liveaboards while working full-time.

In an ideal world I never would have financed but we had to as we had a narrow window when moving back to the US to get a boat and be liveaboards with the money we had. The alternative would have been to start a home mortgage and be trapped in that cycle or rent for X years while we gained our footing but lose all that equity.

Ours is the ONLY a situation I’d recommend taking on a mortgage for.

As others have said the boat price is only the beginning. Our liveaboard fees are $1350/month (Seattle) and we’ve replaced probably about $50k worth of old systems, rigging, canvas, etc that needed attention at the same time as we paid off the loan. We still have about $20k left worth of upgrades to do before we can take off next year (water maker, various engine parts, SS davits/pulpit/solar arch, new solar panel, etc), but at least she’s paid in full and we have no more debts.

It never ends. Be careful and be true to yourself.

[sgl]

Wife and I will be buying a $ 400K cat over the next year and will become full time liveaboards. That's half of our net worth. Before everyone jumps on this telling me how irresponsible this is, some context:

- We will keep working. We are part owners of the business, only need our laptops, and have already spent 6 months in Panama over the past 18 months and were just as productive. So while there's no guarantee, we should be able to keep a paycheck for a few more years at least.

- Total income for the 2 of us is $ 180K / yr. We've established residency in Panama a couple years ago and are cutting ties with the US this year (no home or address in the US, no minor children). With the foreign earned income exclusion and Panama only taxing income from Panamean sources, we'll be saving around $ 35K in state and federal taxes, just have to keep contributing to SS / medicare.

- We'll be living on a $ 72K / yr budget, about half dedicated to boat expenses, half to live on. We've been living on 50% of our after-tax income for years to make this happen, so that won't be an issue. Still leaves $ 90K / yr in savings.

- We have sold all material possessions. No debt, no obligations.

- We're 45 and are our youngest is turning 18. I am not including college savings in our net worth, so she's taken care of. We don't want to wait until past 50. Who knows what could happen before then.

- We need a comfortable place to work from. A monohull won't work, particularly for my wife - she can't live full time on a keelboat. That doubles the cost of the boat right there, but still beats living in the suburbs.

We're definitely taking a significant risk, and of course putting half of our net worth in a depreciating asset is a little crazy. But now that it's just the 2 of us, even in a worst case scenario where we lose everything we put in the boat and need to come back to land to start over and make half of what we are making now, so be it. It'll still be worth it. We've been planning this for 7 years.

[Chotu]

Sgl: I like your plan. Yolo!

[sgl]

Originally Posted by Chotu

Sgl: I like your plan. Yolo!

Thanks! We're sooooo excited...

[JimmyDarci]

SGL - We like your plan. Thinking outside box and balancing the depreciation with significant cost of living savings and tax savings. The fact that you have given your business a dry run from Panama already is also a good sign. Definite entrepreneurial spirit in this plan. Good luck and let us know how it goes. We will be running south for three or four months at a time starting this fall. Balance of captaining a few charters for existing guests that want to sail down south and Bahamas and also working remotely from boat. No end to possibilities for the determined.

[Statistical]

SGL at the start of your post I was that is reckless by the end of the post I was that is not reckless. Atypical for sure but seems like you put a lot of thought into the plan.

One potential gotcha is the poorly written "foreign income exclusion". It only covers income while a resident of a foreign country not while traveling between countries. For 99% of US expats that is not a material difference but for cruisers it can be. Make sure foreign residency and proof of that is ironclad although given the level of detail in your plan you likely already have.

[jcarr]

A friend just published this book on how to generate money while cruising, that can help pay off a loan.

https://www.amazon.com/Sailing-Cruis...F1XWttuYgnrLq8

[sgl]

Originally Posted by Statistical

SGL at the start of your post I was that is reckless by the end of the post I was that is not reckless. Atypical for sure but seems like you put a lot of thought into the plan.

Yeah there's a lot of risk involved for sure, but it's risk we can somewhat control. The alternative of waiting another 5 to 10 years and missing on the opportunity because of external factors we can't control would be worse.

Originally Posted by Statistical

One potential gotcha is the poorly written "foreign income exclusion". It only covers income while a resident of a foreign country not while traveling between countries. For 99% of US expats that is not a material difference but for cruisers it can be. Make sure foreign residency and proof of that is ironclad although given the level of detail in your plan you likely already have.

I've actually contacted a CPA specializing in expat taxes. We're only going to use the physical residence test for the period starting with our departure (May 23rd) and file our taxes before the extended expat deadline of June 15 2022, giving us a partial exemption for the tax year 2021.

Starting Jan 1st 2022, we will be using the bona fide residence test as residents of Panama. According to the CPA, if our boat is registered in Panama, and since we already have permanent residency there, a local ID (cedula), and a driver's license, that's enough to provide proof of residency even if we travel to other countries for most of the year. As bona fide residents the 35 day limit traveling between countries and within the US will no longer apply, we'll be a lot more flexible. We'll just need to count the days spent in the US during the year and pay taxes on that of course, but we won't have to keep track of every arrival / departure / time at sea when travelling abroad.

[Macrophylla]

Originally Posted by sgl

Wife and I will be buying a $ 400K cat over the next year and will become full time liveaboards. That's half of our net worth. Before everyone jumps on this telling me how irresponsible this is, some context:

SGL, this is genius and reminds me of a couple of conversations I've had recently with my father about "this crazy damn plan" that the wife and I have. We're three years behind you in the process but planning something similar.

Net-net of convos with my parents was the Andy Dufrane quote from Shawshank "Get busy living or get busy dying" If you've got a safety net in 401k/pension to rely on in old age, and your health and future earning potential is good, then you've just got to figure out how much of a hit you can take and survive.

To use the OPs scenario

20% down on $1M boat - $200k
One year of ownership/maintenance (10%) - $100k
Worst case/hate cruising/sell in a bad market one year after acquiring (40% hit to value - loan balance) ~$200k

So if you can take a $500k hit without losing sleep, then go for it. If you can't, adjust your sights accordingly.

Worst case your $500k will have bought some amazing stories and life lessons.

It would take a heck of a disaster globally to realize that 40% single-year depreciation. If you've shopped used boats recently you probably already realize this.

[sgl]

Originally Posted by Macrophylla

20% down on $1M boat - $200k
One year of ownership/maintenance (10%) - $100k
Worst case/hate cruising/sell in a bad market one year after acquiring (40% hit to value - loan balance) ~$200k.

Honestly a big part of our plan is to NOT finance anything. Whatever we'll have in cash is what we'll spend, the reason being that I'd MUCH rather take a pay cut, work less, and keep enjoying the boat life than having to lose a ton of money, be forced to sell and go back to land because my income changed and I can't afford the payments.

I would strongly advise against financing that boat or have any remaining debt to pay off unless there are disposable assets outside of retirement accounts and the home / boat you're living in to pay that off easily if $hit hits the fan. I'm hoping our income will stay the same over the next 5 years, but our plan would still work with half our income.

[Simi 60]

Originally Posted by sgl

.

- We need a comfortable place to work from. A monohull won't work, particularly for my wife - she can't live full time on a keelboat. That doubles the cost of the boat right there, but still beats living in the suburbs.

There is always option C.

Our mono has a lot more space than a $400k cat (probably more than a $1m + cat)
It has immense storage capability and is unnafected by weight
And has a lifetime worth of maintenance and running costs built in with the price difference at purchase.

You need to find running and maintenance costs on top of purchase price.

[malbert73]

Originally Posted by Simi 60

There is always option C.

Our mono has a lot more space than a $400k cat (probably more than a $1m + cat)
It has immense storage capability and is unnafected by weight
And has a lifetime worth of maintenance and running costs built in with the price difference at purchase.

You need to find running and maintenance costs on top of purchase price.

Agree on looking at monos. When you compare apples to apples in effective size (40-45 cat = 55 foot mono approximately) and price range there are a lot more options on used market in monos with live aboard comfort.
In essence look at some 50-60 foot monos that cost the same as a 40-45 cat and you’ll see pretty nice liveability and likely less upfront costs

For example a top end build yacht for 389k:

https://www.yachtworld.com/boats/199...or-54-3555217/

Or more modern:

https://www.yachtworld.com/boats/199...au-62-3169620/