How do cruisers pay for boats?

[Paulihno]

Originally Posted by Full

Hey man,

I don't have a sailboat yet, but I've been in the market for one for a while. After talking to many experienced folks here, I decided that I would need at least a season of dinghy sailing first. What I'm saying is, consider my experience level before 'considering' my advice.

Sailboats depreciate like watermelons. The minute they touch the ocean, they lose a great deal of their value. Which is good and bad. It's bad, because this fact makes sailboats horrible investments, especially production monohulls; it's very good news, because this means that you can buy a used one for a very reasonable price.

If you think that a million dollar is a huge amount of money, then it means you shouldn't buy a million dollar sailboat. This doesn't mean that your dreams won't come true; they will come true, just not in a million dollar sailboat. Just take a look at what kind of monohulls you can buy with 50 grand; I bet you'll find something that will put a big smile on your face.

Cats are expensive, even as used. I want one, but the more I investigate, the more I see a monohull in my future.

You tell me how much my new plan will cost - A used Sunfish to a used Catalina 22 to a used Catalina 375...

If I had 10 millions in my account and some money coming in every month; losing a million wouldn't hurt. My plan up there is a ten year plan for a little fraction of a million.

I might be terribly wrong, and someone here on CF will correct me with pleasure, possibly using a series of mean words, and we will both learn.

Have fun, life is short,

Full.

Thanks. The 1M is not a big deal. I'm really interested in whether those who buy outright have, say, 3, 5 or 10x the value of their purchase in net worth. (And in my initial comment -- whether those buying 1-2M boats have 10-20M in the bank)

Re: dinghies -- check out Lasers

[Chotu]

Originally Posted by Wander4Wonder

is that where the epoxy quote in your profile came from? the reaction?

Very much so. I paid a steep price for this boat.

[lyl]

Originally Posted by Paulihno

Thanks. The 1M is not a big deal. I'm really interested in whether those who buy outright have, say, 3, 5 or 10x the value of their purchase in net worth. (And in my initial comment -- whether those buying 1-2M boats have 10-20M in the bank)

Re: dinghies -- check out Lasers

My dear friend, if a million is not a big deal for you, then it means that you've already figured out the %90 of the sailing business; rest shall be easy.

My honest opinion, even though you have 20 million in your savings, your sailboat shouldn't cost more than 100k. Anyhow, it's not my place to give this advice to you; you obviously have made much better financial choices than me in life. You're asking this question, but I think you've already known the answer - way better than anybody else here.

Let's say you have 5-6 million in your savings, a tiny low expense condo, and money coming in every month (retirement or partnership in a business or work at home or a blog or whatever.) If the money coming in every month covers all of your monthly expenses, including maintenance, repairs, and marina costs, then you are good with a 500k sailboat. Living on board, you have additional costs, but on the other hand, many of the living on land costs go away - no car expenses, no utility bills, no house repairs, no nothing.

[CassidyNZ]

We were lucky to be in a real estate market that was rocketing up at a time when we were looking for our next boat. In addition my hobby was home renovations and adding significant value to the existing property then buying down on the next property that is undervalued due to its poor condition. Reset back to start.

We traded one home for another and the money that fell out the bottom of the process paid for the boat. All our previous boats were also paid for in cash, have never borrowed money to buy a boat.

Our present boat is most likely our last and when we end the cruising thing we’ll probably sell it for whatever we can get and stay home in what is more than likely our last (mortgage-free) home.

[lyl]

Originally Posted by boatman61

Never buy a boat you can't afford to lose..

OP, more importantly, listen to this man.

[Simi 60]

All boats we have had have been cash buys
3 monohulls,
1 catamaran
Two catamarans (33 and 50ft) that were trickle charged as we built them
The vessel we are currently cruising full time was pretty much a distressed sale and at a heavily discounted price.

Pick your time, make silly offers, have the cash on hand and pull the trigger when you find the right one.
Don't spend more than you are prepared to lose

[mglonnro]

Originally Posted by Paulihno

This is my instinct and orientation. But I wonder if people who *could* buy outright are choosing to finance. instead. (is it me or is leasing cars more popular today than ever before? Seems like using leverage to finance depreciating assets is more common now)

Of course!

It is exactly like you said, and it makes terrific financial sense to finance the boat if you can get a good return elsewhere on "your own money". (And that is sort of the setup I have myself, as well.)

It could be possible, obviously, to do it the other way around: finance the investment and put your own money in the boat. In practice, the boat financing (with the boat as collateral), would be or should be cheaper, however.

[mglonnro]

Originally Posted by WoodenKetch

Nobody needs a $1M boat, you can do the same thing on a boat 20% the price, and almost the same thing on a boat 5% of that cost.

The advertising department doesn't agree with you!

[elee]

I signed a contract for a new catamaran when I hit my financial independence number. (In an ideal market, I would have bought used, but that's another story).

I will be paying outright.

When I take delivery, the price will be approx 20% of my total net worth. Passive income should theoretically cover full time cruising expenses with the family, but I will be flying back to work a couple weeks here and there as a buffer.

As an aside to a previous response, I got a rough insurance quote for a new cat, and it is 1-1.5% hull value for the Bahamas, Eastern Carib, and out of the box during hurricane season.

[cwjohm]

I am in the target area you claim i.e. approx $1m per purchase. I am on my fifth boat.

Put simply I am a hard nosed financial person and investor who assiduously tracks the numbers. Most dont, so I would expect many on this forum will not agree with me.

Sailing is a luxury pure and simple, and makes no financial sense whatsoever, hence the old joke about how to become a millionaire. Start with 2 million and buy a boat!

In short it is like anything in life. You get what you pay for. People will stick to what they can afford and of course they will state that the boat they can afford will meet their needs, but ask them if they won the lottery, would they see the value in a better boat and mostly they will reply in the affirmative.

Despite the inevitable protests that will follow it will cost you approx 10% of purchase price to run the boat assuming you include depreciation which will be your biggest cost.

Yes, I know many who mitigate cost by working on their boats as a de facto job thereby saving considerable funds. You can also mitigate costs by staying out of marinas, but I would make sure you take your partner out in a sustained blow even in a protected anchorage before making the assumption that this will be part of your lifestyle and marinas will not factor in.

I always pay cash and would not allocate more than 5% of my net worth to a boat. IMO you need a land base to come back to when you can no longer sail and you need a nestegg to insure that you can survive at that time.

However, you will not get an answer to your question on cruisers forum because the answer totally depends on you, your needs and your lifestyle. Do you define cruising as "continuous maintenance in exotic places", or do you call the experts whenever a problem occurs. Can you survive on a basic diet or do you like to eat out? Do you need air con? Are you a power hungry user with 5 laptops and an induction hotplate and oven. Do you want to buy new with the big depreciation hit, or older with the maintenance burden. Many, many questions that only you can answer.

[parachute]

Originally Posted by Wander4Wonder

It would be interesting to survey the forum as to % financers vs cash buyers on their present boat.

I bought our boat for cash, do not do an equity loan on a house it has compound interest, the cost paid will increase every year.

[Wayne hoath]

I’m not sure it will be terribly helpful to know what others paid as a proportion of their wealth. Most won’t say anyhow. Everyone has their own tolerance to risk. Only you know yours. If you can afford a $1m boat go for it.

[Fore and Aft]

Cwjohm even if I won lotto I would not change boats. I feel comfortable and competent with our 32 footer. I actually wonder if the owners of some of these bigger boats with crew realise what they are missing out on?
I agree about missing out on marina's not being feasible for some people. Lots of anchorages are so crowded the marina is often a better option.
Definitely working on your own boat might save you money. But not everyone is a tradesmen and I have seen plenty of boats where it would have been better if the owner had never done the work himself.
Start with 2 million and end up with 1 million is probably close to the mark depending how long you keep the boat. Maybe even less if you neglect the maintenance, wear out the engines and trash the interior with countless parties!
Cheers

[Dogscout]

1. Did you buy outright or finance? Bought Outright
2. If bought outright, roughly what % of net worth was purchase price? a hair under 3%
3. If financed, how much down? N/A

I retired at 52 years old with a part time agreement with the company I used to work for. They'd ask and I would agree on short assignments. Things got interesting when the EX decided to get a boyfriend. I shopped yachtworld, sold the house, came to Europe in Spring of 2019 and bought a 12 y/o, 43 ft mono. Covid has changed my plans somewhat but I will keep enjoying this life for a few more years. I told myself I'd give it 5 and if I liked it I would keep going, if I didnt I would sell it where it sits and go back to land.

What else you gonna do?

[Belezar]

Originally Posted by cwjohm

I am in the target area you claim i.e. approx $1m per purchase. I am on my fifth boat.

Put simply I am a hard nosed financial person and investor who assiduously tracks the numbers. Most dont, so I would expect many on this forum will not agree with me.

Sailing is a luxury pure and simple, and makes no financial sense whatsoever, hence the old joke about how to become a millionaire. Start with 2 million and buy a boat!

In short it is like anything in life. You get what you pay for. People will stick to what they can afford and of course they will state that the boat they can afford will meet their needs, but ask them if they won the lottery, would they see the value in a better boat and mostly they will reply in the affirmative.

Despite the inevitable protests that will follow it will cost you approx 10% of purchase price to run the boat assuming you include depreciation which will be your biggest cost.

Yes, I know many who mitigate cost by working on their boats as a de facto job thereby saving considerable funds. You can also mitigate costs by staying out of marinas, but I would make sure you take your partner out in a sustained blow even in a protected anchorage before making the assumption that this will be part of your lifestyle and marinas will not factor in.

I always pay cash and would not allocate more than 5% of my net worth to a boat. IMO you need a land base to come back to when you can no longer sail and you need a nestegg to insure that you can survive at that time.

However, you will not get an answer to your question on cruisers forum because the answer totally depends on you, your needs and your lifestyle. Do you define cruising as "continuous maintenance in exotic places", or do you call the experts whenever a problem occurs. Can you survive on a basic diet or do you like to eat out? Do you need air con? Are you a power hungry user with 5 laptops and an induction hotplate and oven. Do you want to buy new with the big depreciation hit, or older with the maintenance burden. Many, many questions that only you can answer.

Pretty much the above. You can’t price quality of life.

But to your question, I fit your criteria. Insured and used, my outlay costs are semi protected. I financed a portion (60%), but that was more about cash management. I paid most of it off within a year. My insurance costs are nothing like you said. A little over $5k per year. I will say the following, the opportunity cost of a the money tied up in a boat in that price range could pay for a lot of charter time. And if you don’t live on it most of the time, dockage, management and maintenance will be significant costs.

I own an airplane, too. I bought used, so my depreciation hit is mitigated, similar to the boat. Between the boat and the plane I have 10% of my net worth in depreciating assets. The joy of flying and the journeys I can go on are priceless. It makes no financial sense. That’s not the point. Why do we sail? Why do we “fill in the blank” when all we need is basics to get by? Life is short. Do be wise, but don’t let life slip away. You can’t spend it when you’re gone.