How do cruisers pay for boats?

[MicHughV]

it seems to me....that the bigger question is....what do you plan on doing with your $1M boat ???...is it going to be a dock queen or will it actually see some use...??and if it does see some use...local waters or further abroad ??

will you be able to sail and manage it without paid captain/crew, etc..???

it isn't clear to me if your focus is power or sail.....???

these are the things that should drive your selection of a vessel...what do you plane to do with it???

Ft. Lauderdale is stacked to the brim with $1M boats that have never left the dock in years.

[boatman61]

First boat (24ft) cost me £500, 18mths work plus maybe £1500 in yard fees and stuff before I launched her in 1986..
Since then I've owned 13 other boats between 21ft and 39ft, the most expensive being an ex charter 2001 Bene 331in 2006 for $60,000.. all were paid for up front.
Today I'm looking again but funds only stretch to €15,000 if I push it to the edge and minimum work is needed.
They are out there, but it helps if you have a high risk threshold and not obsessed with a complete refit before you sail it, fix as you go..

[Steel sails]

Paid cash for them all started with a couple of Hobbie Cats, then a Hunter 30,
PDQ 36 Catamaran, Freydis 49 Cat and a 2019 Nautitech Open 46. Nautitech cost Around 850k delivered BVI

Open 46 was ordered new from Factory and put into charter program to cover maintenance, insurance and dockage costs which due to COVID hasn’t worked out as planned. Glad I don’t have a mortgage on it and I’m not relying on income to make payments.

I don’t have 10 or 20 Million cash in the bank but boat represents maybe 5% of net worth and I’m still working.

Don’t plan on living on the boat full time but hoping to spend 3 months or so a year on it in a couple of years.

My other hobby is racing vintage cars makes boat maintenance look reasonable!

Regards
Paul

[wingssail]

We purchased this boat with a 95% loan (a Preferred Marine Mortgage).

A cash purchase was out of the question since we had no cash, no savings, no house, and no equity in anything. In fact we had to borrow the down payment.

But we had good jobs.

And we loved this boat. (it was priced at about one year's gross income)

We bought it and moved aboard and applied all of our discretionary income to paying it off and preparing it for world cruising. We had an 11 year plan which included buying the boat, paying for it, upgrading it, and collecting a cruising kitty.

10 years later we burned up the mortgage and cast off the lines.

Financially speaking buying it was probably a terrible decision but 35 years later we are still living, cruising, and racing this boat. Including refits we have paid for it about 4 times over.

Buying it was the best decision of our lives. Buying it when we did instead of saving for it gave us 10 more years of enjoyment of it.

For the OP, I think your decision (cash or loan) should be based on two criteria:

1. How sure are you that this is the boat of your dreams.? Don't sink a lot of cash into a depreciating asset which you might want to sell at a loss in a few years)
2. How do you feel about the opportunity cost of tying up that much capital in a depreciating asset.

[Group9]

We had savings, and I retired from a job with a good pension, at 52, so when we bought our boat, a Catalina 42, we just wrote a check for it. (We owned a 32 foot Islander sailboat at the time, which in retrospect, would have been fine to cruise on, but we thought we needed more room).

We bought it right after the housing crisis and crash in 2009. It had originally been listed for $130,000 (what the owner had paid for it a few months before, right before his wife had a heart attack and canceled all their cruising plans), and had been reduced to $110,000 and then to $90,000. We first looked at it in December, 2008 and then again in April. We offered $80,000 and the owners took it. The BP oil spill occurred about a week later. If we had waited a week, I imagine we could knocked off another ten grand.

We had made a decision that we weren't going to buy more boat than we could just pay for. We didn't want a mortgage payment while cruising.

And, the funny thing is, I look at the boats for sale today, and there are a lot more good deals out there than when we bought.

[elee]

I think if you are trying to assess your personal situation compared to other, you’d probably need more information. I think there are important differences if
1. You are a full time liveaboard vs part time
2. You have are still maintaining a home base on land or not
3. Your age
4. How long you plan on cruising for
5. Purchase price (obviously)

In my situation, I am in my 40s and plan on buying a boat cash to sail around with my family for 2 years. I’ll take the depreciation hit and sell returning to work.

[MicHughV]

The problem with boats..is that they become love affairs...old..new...fancy...decrepit....it don't matter...

I have posted this before, but it bears repeating.

This old Danish wooden fishing boat pulled into our marina one time, some years ago. From where it came, I could not tell you. It had a beast of an engine in it, a relic of some make. It reeked of fish from end to the other. It was around 50' long I seem to remember.

I have no idea how old this boat was....80 years....maybe more...I would not have given 2c for this thing.

A friend of mine came to visit me one time, and happened to see this boat and asked to see it.
So we went together for a looksee.

Once aboard, everywhere I looked, I saw nothing but a very old aged relic of a vessel that had reached the end of the road.

My friend thought otherwise. For reasons beyond my ability to properly describe, he fell in love with it. He would run his hand over some or other part of this boat and his eyes lit up. More than in love, he was smitten, and in front of my disbelieving eyes, he bought it.

The boat was removed to another yard and some time passed before I saw it and my friend again.

Let me tell you, that boat had been transformed into a thing of beauty. It obviously required a mountain of blood, sweat and tears and coffer full of $$$. It was emblematic of a labor of love.

Whatever it was, my friend saw something in this boat, which I couldn't. That boat simply called his name.

And so it is with boats. Boats will reach out and touch you in a manner which defies logic.

[Tillsbury]

I can't understand why anyone would buy a depreciating asset with borrowed money. Unless perhaps you knew you only had a few years left to live in which case do what you want! The only possible exception I can think of is to borrow to buy a cheap car to get to work, as it will be worth the interest. Otherwise I only buy cars and boats and other toys with cash. The boat I have is easily good enough for what I want to do with it (especially once my future wishlist of improvements has more progress). It probably represents 10% or so of net worth (more than it did when I bought it, because divorce)

I covet a newish Discovery in the high 40 foot range (not far off a million) and I was idly wondering exactly how much I would need to win on lotto to buy one. It would have to be at least $5m, probably more, before I would be comfortable spending that kind of money.

The point is, I already have a perfectly good boat that does everything I ask of it very well. Almost all of the upgrade cost is going to be for the very slight improvement in my life that comes from having a slightly better boat.

Tl;Dr: buy the boat you can comfortably afford that will do the job you need it to. Spending twice or five times or ten times that amount will only get you a little bit more boat.

[mvweebles]

If you plan on truly cruising, monthly payments of any sort are your enemy. Nothing will tie you down more than needing money. This is why the average age of cruisers is 50-ish or more - it takes a while before your net worth gains enough critical mass that you have stuff that's actually paid-off.

Finding a percentage of net-worth is difficult because it is so unique to each situation. I know a guy who bought a $75k boat and sunk $200k into a refit that resulted in a boat worth no more than $100k. His thinking was he could afford a ridiculous loss once or twice in his life - might as well be a boat vs a divorce. Hard to argue that logic, but I'm sure his accountant is banging his/her head against a wall.

My dearly departed father liked to say "Never let your possessions possess you." If you're Jonesing for a boat you can't afford, that will be your destiny. As Rick the Mouseherder used to say: "A small boat and a briefcase of cash beats a large boat tied to the bank any day."

Peter

[Chotu]

Originally Posted by Tillsbury

I can't understand why anyone would buy a depreciating asset with borrowed money. Unless perhaps you knew you only had a few years left to live in which case do what you want!

You didn’t buy your boat right if you lost money.

I’ve had 5 boats now. I’ve always broke even or came out ahead on the trade. Present boat is a special case so I won’t count it.

On the loan boats, I had the expense of interest basically, as my loss.

I had one of the first Mini Coopers in the USA many years back. I bought it, used it for 3 years and sold it at a profit.

So, I don’t count boats as this huge depreciating asset most people think of them as. You just have to know what you’re doing.

[HeinSdL]

Originally Posted by Tillsbury

I can't understand why anyone would buy a depreciating asset with borrowed money. Unless perhaps you knew you only had a few years left to live in which case do what you want! The only possible exception I can think of is to borrow to buy a cheap car to get to work, as it will be worth the interest. Otherwise I only buy cars and boats and other toys with cash. The boat I have is easily good enough for what I want to do with it (especially once my future wishlist of improvements has more progress). It probably represents 10% or so of net worth (more than it did when I bought it, because divorce)

I covet a newish Discovery in the high 40 foot range (not far off a million) and I was idly wondering exactly how much I would need to win on lotto to buy one. It would have to be at least $5m, probably more, before I would be comfortable spending that kind of money.

The point is, I already have a perfectly good boat that does everything I ask of it very well. Almost all of the upgrade cost is going to be for the very slight improvement in my life that comes from having a slightly better boat.

Tl;Dr: buy the boat you can comfortably afford that will do the job you need it to. Spending twice or five times or ten times that amount will only get you a little bit more boat.

Depends on one's priorities in life. If sailing is an after-thought then indeed to borrow money to do so would be odd.

I can only speak for myself and for me sailing + ownership of the boat I own is a central theme over the course of my life. My boat was 10 years old when purchased and in the absence of any event which would shorten my plan, she will be 40 -50 years old when time to sell, so that's a lot of depreciation. By borrowing money I was able to purchase earlier allowing me to do most of the learning in a relaxed way while still in a job with kids still at school and with my wife being able to slowly get familiar with sailing/cruising. So for me it made sense in order to get going with my plan. And I am actually surprised I am not in a huge minority here.

I also would like to respond to some comments stating that once you have more money you'd want to upgrade one way or the other. I also hear this at my work ("if you work longer you could afford a bigger boat"). Granted I have a very acceptable boat already (thanks to borrowing to buy it) but even a lottery win of a couple of 10's of millions would not mean another boat. If indeed I find getting the genoa on deck by myself becomes a struggle I would even consider something much smaller. But I would not trade in my current boat just because I had the money.

So that's where borrowing again makes sense: if it allows you to buy your last boat straight away avoiding a lot of re-learning, again fixing all those things not done by the PO, etc. This of course does not apply if you're new to sailing. In that case get a Laser first, then crew on OPBs and then buy your final boat. (Edit: and when crewing on OPBs, start on the foredeck and work your way aft.)

[Group9]

Originally Posted by MicHughV

The problem with boats..is that they become love affairs...old..new...fancy...decrepit....it don't matter...

I have posted this before, but it bears repeating.

This old Danish wooden fishing boat pulled into our marina one time, some years ago. From where it came, I could not tell you. It had a beast of an engine in it, a relic of some make. It reeked of fish from end to the other. It was around 50' long I seem to remember.

I have no idea how old this boat was....80 years....maybe more...I would not have given 2c for this thing.

A friend of mine came to visit me one time, and happened to see this boat and asked to see it.
So we went together for a looksee.

Once aboard, everywhere I looked, I saw nothing but a very old aged relic of a vessel that had reached the end of the road.

My friend thought otherwise. For reasons beyond my ability to properly describe, he fell in love with it. He would run his hand over some or other part of this boat and his eyes lit up. More than in love, he was smitten, and in front of my disbelieving eyes, he bought it.

The boat was removed to another yard and some time passed before I saw it and my friend again.

Let me tell you, that boat had been transformed into a thing of beauty. It obviously required a mountain of blood, sweat and tears and coffer full of $$$. It was emblematic of a labor of love.

Whatever it was, my friend saw something in this boat, which I couldn't. That boat simply called his name.

And so it is with boats. Boats will reach out and touch you in a manner which defies logic.

That was beautiful. And, so true.

[Mickeyrouse]

I worked, saving 70% of income per year. Paid cash. About 15% of net worth allocated to boat. Retired at 52.

[valhalla360]

Originally Posted by Paulihno

Much ink has been spilled about the costs of cruising, but surprisingly little financial detail around boat purchasing. I have the great misfortune of being completely in love with a boat that costs ~$1M (and not much less used). And I'm sort of amazed how many people are on the water with boats this expensive and twice this much.

Not a new subject. Lots of discussion on boat prices and how to pay for them.

I think your confusion is very few (yes, there are exceptions but pretty rare) $1M boats are out cruising.

There is often a joke around marinas, that the more expensive the boat the less it gets used.

Yes, you can finance boats but there is a lot of truth to the idea that if you have to finance, you probably are buying more than you can afford.

[Pelagic]

Paid Cash simply by not spending money on stupid stuff
Amazing how much money you can save if you prioritized !