How do cruisers pay for boats?

[rlaribee]

Not coming from wealth and choosing a profession in the nonprofit world, high ticket items were never an option. So I had to find alternative methods to engage in my several passions. Here is how I pursued sailing/cruising:

First boat: Hunter 25 - Traded something I no longer wanted but couldn’t sell. Had an absolute blast.
Years later I sold it for $5k

Second boat: Pearson 26 - Paid $1100.00.
Really enjoyed that boat.
Years later I sold it for $3k

Third boat: C&C 27 - Paid $7000.00 cash.
So much fun
Years later I sold it for $7k

Current boat: ODay 28. - Paid $7000.00 cash.
This is the bet yet Love this boat!
I love sailing — almost as as I love living łdebt free.

[Mark Marsden]

The question and answers so far are about financing to pay for the capital costs. But has anyone paid for the boat by using the boat eg youtube videos, book writing, guests, training, transport etc? I guess the last three would have insurance and customs implications. Occasionally I see people doing eco-projects, possibly paid. Or is that small income defraying some running costs?

[Sofa King Fishy]

Cash. Paid &120k with a $150k all in budget.

[bensolomon]

I bought my current and first boat 9 years ago at a cost of $50,000. Paid 40% up front, and used our credit line to finance the rest over three years.

At that time, was still saving for three kids college funds, mortgage, life's expenses, etc., so needed the cash flow, but wanted a boat. She was the boat we could afford. I loved this boat as soon as I stepped aboard, and so did the admiral. She is sound, and holds all of us plus two dogs.

Not even close to a $1M vessel, so might be apples and oranges by comparison. We still have our home, and will keep it since it's almost paid off, and plan to cruise off and on with this boat that I have gotten to know.

[RedneckRedcoat]

Bought our first boat 1989 Bayliner 2455 cash for $2500 sold it for $4500 cash. New to boating

Bought our current boat Cal 227 for cash $5500 selling it as we speak for $5500. New to sailing.

Buying our next boat 2002 jeanneau 40 DS $85000 cash. We will be moving onto it in June full time live aboard.

You don’t have to buy brand new and your still going to need to work on it if it’s new.

I have just spent the last 2 years getting rid of every loan and credit card we have so we can go full time cruising. My advise , buy a newer but used boat and enjoy it without having to pay for it every month. Why put the burden of a loan round your neck when you coulda pay for it In full.

[Amapola]

We've never financed a boat and never purchased a new boat. Our last boat a 48' trawler cost 9% of our net worth at the time of purchase.

[mglonnro]

Originally Posted by Mark Marsden

The question and answers so far are about financing to pay for the capital costs. But has anyone paid for the boat by using the boat eg youtube videos, book writing, guests, training, transport etc? I guess the last three would have insurance and customs implications. Occasionally I see people doing eco-projects, possibly paid. Or is that small income defraying some running costs?

Over here it's not extremely uncommon that people try to recover some of the costs by doing day charters with guests. If you are able to sustain some income related to the boat, you might be able to save on taxes (we pay VAT 24% on new sailboats) by forming a company to own it.

[thataway41]

In over to 60 years of ownership of boats over 29 feet, I have taken a loan only once. That was when I was just starting private practice of medicine, and had also just purchased a home. That loan was paid off in 2 years (I had 50% down from the sale of my previous boat.)

I consider any boat a hobby expense. (All be it a very important relaxing hobby.) Once I sold my house to buy a boat, which was to be our living and traveling home for 4 years.

The percent of net worth is a variable number. Today I would not buy a boat which cost more than 10% of my net worth. In the past, I owned boats which were close to 50% of my net worth. In those times, the boat was my home and mode of travel.

We have built boats and we have restored older boats. It was rare to buy a new boat. Overall we kept a specific "kitty" for boat purchase and maintenance. Overall we have probably broken even and that kitty has grown.

[nofacey]

Most world cruisers piloting big boats out there didn’t have a house and a boat.

[garychurch]

Paulihno...

I bought a $1 million plus boat. Working through a broker we found financing at 75% of surveyed value.

Just for info consider annual boat costs about 10% of boat value.

Insurance is about 1% of boat value.

1. How many bought their boat outright vs. financed
2. Those who buy outright, what % of net worth did you allocate to it
3. Those who financed, how much do people put down

[joelhemington]

Originally Posted by Paulihno

Thank you! I should have mentioned my plan is for full-time liveaboard cruising, so I'm not really factoring full time marina fees. (been down this path before and it gets scary in places like NYC!) I appreciate your perspective!

In the first place, full time cruising/live aboard is not really a thing. For every day at sail, you'll spend at least eight on the hook or in some marina waiting on a weather window. And if you think NYC sounds scary, L.A., is not much better, about the cheapest place around here to pick up a mooring ball is Catalina Island (which is a tough commute). Mexico and the Sea of Cortez would be cheap but don't even think about Cabo.

[jalmberg]

It’s easy: work your whole life, buy inexpensive boats while you are working to build experience, then buy a boat you can afford for retirement. That’s kind of a joke, but in my case, the most expensive boat I owned before retiring was $5k. I cruised thousands of miles in that boat, and even wrote a book about it. After retiring, my wife and I sold our house and took up full time cruising in a 40’ steel ketch that we paid cash for. The boat represented about 5% of our net worth, so we could invest the other 95% to provide income for the rest of our life. Keeping our expectations in line also allowed us to retire 5 years early. Buying too much boat is the biggest error we see people making. You don’t need every modern convenience or every gadget to be happy. The reverse might even be true. Go simple.

[lestersails]

Originally Posted by flightlead404

I've never understood the logic behind leasing depreciating assets.

It can make sense if the lease payments are tax deductible if the boat can be set up as a business, no?

[C Paton-Gay]

Paid cash ... never a loan. Particularly if you are thinking of sailing offshore. Too limiting. Also, I made a decision to self insure offshore and only insurance for a Marina when absolutely necessary. Mine cost in your range plus another 30% for refits in the first 2 years. As my mother used to say; Cut your coat according to your cloth and don't get ego seduced by other yachties. One thing 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. Hope that helps.

[Tigue]

Yes, highly subjective. It all depends on your love of the water and what your willing to sacrifice to enjoy it.

I'm fiscally conservative and agree with the Large Boat builders comment. That if you have to borrow money to buy it then you shouldn't own it. And the reason is that boats depreciate very fast and the cost of ownership (maintenance) is high. Then if you add on the interest (regardless of loan or lease) you are paying for this depreciating asset then it is possibly the worst investment from a financial stand point that you could ever make.

You can offset this to some extent as a live aboard because you have to pay rent some where. But the delta from a $1m appreciating asset (home purchase) vs a $1m depreciating asset (boat) is huge.

However you might be able offset this also as an emotional investment not an economic one. That's a life style choice.