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Old 10-04-2021, 09:08   #1
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How do cruisers pay for boats?

Greetings CF world. Long time reader with a question.

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.

My financial advisor says to "buy appreciating assets, lease depreciating assets." But a representative of a large builder gently suggested to me that if I can't afford to buy the boat in cash, I shouldn't buy it. (Counterintuitive and sort of cool coming from the company..)

Would love to understand:

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?

I understand this is totally subjective, but still appreciate any input!
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Old 10-04-2021, 09:24   #2
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Re: How do cruisers pay for boats?

I bought the only boat I would/will ever own second hand with 75% financing. Advantage for me was that I could spread the cost of buying over the first decade of ownership while getting to know the boat inside out and while still being in a job watching the kids grow up.

But that is now almost done (last child almost done with school), boat paid off, etc, so my wife and I are getting to the point whereby we can responsibly do some more extensive cruising.

At the time, I googled as long as was needed to find someone/something to lend me the cash and then had to jump through some hoops to get it done. I was surprised it was actually possible to borrow cash to buy a boat but who was I to argue? Whether that same lender (or any) are still so keen today I would not know. I suspect not.
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Old 10-04-2021, 09:33   #3
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Re: How do cruisers pay for boats?

Quote:
Originally Posted by Paulihno View Post
Greetings CF world. Long time reader with a question.

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.

My financial advisor says to "buy appreciating assets, lease depreciating assets." But a representative of a large builder gently suggested to me that if I can't afford to buy the boat in cash, I shouldn't buy it. (Counterintuitive and sort of cool coming from the company..)

Would love to understand:

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?

I understand this is totally subjective, but still appreciate any input!
You probably need to fall out of love with that boat.

There are plenty more fish in the sea!

Yeah, that's what they tell you when that perfect girlfriend breaks up with you, but you will find another.

I've had about 12 boats and none cost $1M but I had tons of fun with all of them.

I bought two new and financed them both (paying them off early), but they were only $7,500 and $10,700 beach cats for racing back in the 1990's and early 2000's.

The first 6 were power boats I used for fishing when I was a teenager. These were pretty much bought with cash, and the old cruising boat I have now was bought with cash.

The thing is many times the boat is sitting someplace not being used so having a payment plus slip fee for something you aren't using is a hard pill to swallow.
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Old 10-04-2021, 09:33   #4
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Re: How do cruisers pay for boats?

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Originally Posted by HeinSdL View Post
I bought the only boat I would/will ever own second hand with 75% financing. Advantage for me was that I could spread the cost of buying over the first decade of ownership while getting to know the boat inside out and while still being in a job watching the kids grow up.

But that is now almost done (last child almost done with school), boat paid off, etc, so my wife and I are getting to the point whereby we can responsibly do some more extensive cruising.

At the time, I googled as long as was needed to find someone/something to lend me the cash and then had to jump through some hoops to get it done. I was surprised it was actually possible to borrow cash to buy a boat but who was I to argue? Whether that same lender (or any) are still so keen today I would not know. I suspect not.
First - Thank you! This is helpful perspective, especially as I'm at a similar stage as you were when you purchased.
Second - Compliments on your choice of vessel
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Old 10-04-2021, 09:37   #5
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Re: How do cruisers pay for boats?

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Originally Posted by thomm225 View Post
You probably need to fall out of love with that boat.

There are plenty more fish in the sea!

Yeah, that's what they tell you when that perfect girlfriend breaks up with you, but you will find another.

I've had about 12 boats and none cost $1M but I had tons of fun with all of them.

I bought two new and financed them both (paying them off early), but they were only $7,500 and $10,700 beach cats for racing back in the 1990's and early 2000's.

The first 6 were power boats I used for fishing when I was a teenager. These were pretty much bought with cash, and the old cruising boat I have now was bought with cash.

The thing is many times the boat is sitting someplace not being used so having a payment plus slip fee for something you aren't using is a hard pill to swallow.
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!
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Old 10-04-2021, 09:53   #6
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Re: How do cruisers pay for boats?

We bought our boat in 1992 for $32k; financed about $10k of that and paid it off within 5 months or less. We're still sailing the same vessel. Our budget doesn't run to servicing a boat mortgage of any kind.

The other item to consider when looking at the purchase price of the boat is the insurance that will be needed; if you're financing it, insurance will not be optional. It seems that current insurance in the US runs anywhere from 2% to 6% of the value of the boat every year. Maybe less with a boat of that cost level? Not sure.
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Old 10-04-2021, 10:08   #7
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Re: How do cruisers pay for boats?

Most people I speak to seem to make a 6-figure $ purchase via a home equity loan. For myself, I aggressively dump every dollar I can into retirement accounts. I borrowed against some of that. Iím a fortysomething worker drone.

In my early thirties, I bought a low 5-figure $ cruiser by borrowing. It cost somewhat more to do that, but I had a nice small cruiser in my thirties, rather than needing to wait a few years. No regrets.
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Old 10-04-2021, 10:10   #8
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Re: How do cruisers pay for boats?

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Originally Posted by anotherT34C View Post
Most people I speak to seem to make a 6-figure $ purchase via a home equity loan. For myself, I aggressively dump every dollar I can into retirement accounts. I borrowed against some of that. Iím a fortysomething worker drone.

In my early thirties, I bought a low 5-figure $ cruiser by borrowing. It cost somewhat more to do that, but I had a nice small cruiser in my thirties, rather than needing to wait a few years. No regrets.
Illuminating re HELOC. I am also a worker drone. Thank you.
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Old 10-04-2021, 10:10   #9
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Re: How do cruisers pay for boats?

Bought our first boat cash, 27' sloop to see if sailing was for us. After 2 years we sold and moved up to our current boat that we have sailed for 21 years. We did finance but it is important in my opinion to dabble with boat ownership before committing to a big debt and overhead.
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Old 10-04-2021, 10:13   #10
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Re: How do cruisers pay for boats?

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Originally Posted by BCCLover View Post
We bought our boat in 1992 for $32k; financed about $10k of that and paid it off within 5 months or less. We're still sailing the same vessel. Our budget doesn't run to servicing a boat mortgage of any kind.

The other item to consider when looking at the purchase price of the boat is the insurance that will be needed; if you're financing it, insurance will not be optional. It seems that current insurance in the US runs anywhere from 2% to 6% of the value of the boat every year. Maybe less with a boat of that cost level? Not sure.
I see a lot of conflicting info online about insurance costs, and need to explore this further. 3% of a 1M vessel is $30k/yr or $2500/mo -- seems.. ahem.. a bit steep.
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Old 10-04-2021, 10:17   #11
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Re: How do cruisers pay for boats?

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Originally Posted by Tomodore View Post
Bought our first boat cash, 27' sloop to see if sailing was for us. After 2 years we sold and moved up to our current boat that we have sailed for 21 years. We did finance but it is important in my opinion to dabble with boat ownership before committing to a big debt and overhead.
Sounds wise. I grew up racing dinghies and I think I will forever be haunted by the feeling of the wind and waves until I assume ownership!
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Old 10-04-2021, 10:19   #12
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Re: How do cruisers pay for boats?

We fell in love with a new design (Bavaria Vision 42 before it was even in production) and started a five year plan to save up to pay in cash. Lucky for us, we were able to get aboard one of the first ones to come to the US. We fell out of love quickly. The overhead height sounds great, until little ole me can barely touch the overhead grab bars, certainly not hang on. At the same boat show, we went aboard a used boat that was in great condition and cost about what we had already saved. That particular boat was too big for us, but it got us looking around at used boats and we are still in love with Sea Story with our seventh anniversary coming up in a couple of weeks. It was a very large percentage (75%?) of our brokerage account at the time, but our retirement accounts were larger and we knew we would keep working for awhile, so that may not be a useful metric. We have also put in nearly twice the original cost in maintenance and upgrades over the last 7 years (well, including the two big pending upgrades: solar/lithium and a watermaker).

We have once again fallen in love with a concept - the Sirius Yachts line. But we have agreed to cruise what we have for awhile and see how the finances (and desires) pan out over time.

In the US, a boat loan counts as a mortgage, so some people go that route if they can get a low enough rate and have enough income to make the deduction appealing.

Million Dollar Boats are pretty big and all the costs associated with your boat are not linear. By getting a similar build quality in a smaller boat, you can save a lot of money over time, above and beyond the initial price.
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Old 10-04-2021, 10:20   #13
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Re: How do cruisers pay for boats?

As another 40 something worker drone, I sunk everything I could in investments and debt repayment. (During my 30's as well) At 43 I retired. I had an amount in my plan that was necessary to be invested that allowed me to live of the interest.
Anything above that number was the purchase/refit fund.
We purchased with cash, and have been living aboard for 2 years now. So far so good
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Old 10-04-2021, 10:27   #14
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Re: How do cruisers pay for boats?

We sold our house and put 20% into buying our boat. Starting our fourth year living abroad now.
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Old 10-04-2021, 10:41   #15
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Re: How do cruisers pay for boats?

In 2000 I had a job and an income and equity in a house. I financed with 20 percent down a boat that cost about the same as my annual income. I paid it off in about 7 years. I didnít encumber my house. I didnít borrow from retirement savings. I bought a boat I loved then that is capable of cruising anywhere and I still love it. After retirement my wife and I lived aboard and cruised for three years then came back to our house due to family and health reasons. We still enjoy the boat and cruising locally.
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