Boat Financing Help For Liveaboard

[vicpr25]

Hi Everyone!

I'm new to boating/sailing and to the forums. I've been researching and reading about getting a boat for living aboard, either a monohull or preferably a catamaran. I work for the government in an agency as a computer engineer. Thankfully I can perform my job completely remotely (just need internet connectivity). I have been working there for around 8 years and finally, I got to a low six-figure salary. So now I'm at a point of either getting a catamaran for a few years (now that I'm still a little "young") or getting a house (which I'm not in a rush to get, since I don't have many responsibilities/family). So for the time being here is my current plan & a few questions:

A few info:

1. I'm currently saving for the down payment. I don't have a lot of savings since working for the government you don't really make a lot of money at first. So, my plan is to save for 1yr and a half to 2 yrs, which I can save around 50k to 80k.
2. Right now I'm making around $5,200 monthly (after taxes), I only have a car loan that started at 35k, which I will be done with the payments in two years and a few debts in credit cards.
3. I went to Experian and I currently have 735. Now I do have around 50% in debt which I'm currently spending around $550 to lower my credit cards, in a few months I would zero all my credit cards. Hopefully, this will raise my score to 780/800s (based on a projection in creditkarma.com)
4. I calculated my debt-to-income in Experian and it says it is at 8%
5. Right now I pay rent of $1,375 monthly. I don't have a mortgage on a house.

So based on my salary and being able to work remotely, I'm looking into living aboard for a few years. Since I'm Puerto Rican and I would love to be able to go from the main USA and PR to visit my parents/family.

I know that currently, the only bank that allows liveaboards (that I know of) is Essex. During my research for the loans, I asked two marine financial groups and they told me they wouldn't be able to help me to get a loan because I don't have a "comparable loan". The cheapest catamarans I've seen are around 200k, I know I can make the payments of that loan and have extra for insurance/provisions/maintenance. But since I don't have a "comparable loan" in my credit history, because I have not invested in a property (mortgage), I'm afraid I won't be able to get approved for a loan.

Here are my questions:

1. Has anyone had any experience in my situation?
2. Has anyone have been able to get a boat loan without having any real state (or comparable loan)?
3. If this could be a potential problem in getting a boat loan, what would be the steps I should be taking right now, for in the next 2yrs I'll be in perfect conditions to get approved for a loan.
4. I was told that a good idea was to start with a smaller boat, make payments for a year and then sell it and try to get a bigger loan and so on until I can get the bigger loan. (to create big loan history in my credit report)
5. Should I get a mortgage loan of a comparable loan amount and then when I'm ready, rent out the house and get a boat loan?
6. Am I crazy? My old folk keeps telling me that I am, haha.

PS: I know that not everyone is a marine financial expert but any ideas/suggestions or experiences would be greatly appreciated.

[zemurray]

Well I’m sure you will get lots of advice. But here are a few things to think about.
Catamarans are twice as expensive as monohulls. Are you going to anchor out all the time? If you are planning on getting a slip, you could be paying twice as much due to it being a catamaran. Depends on the area you are in, but 1000-2000 a month for a slip wouldn’t be out of the ordinary.

The longest you can go on boat loans I think is 20 years, and the interest will be a bit higher than a home mortgage. So expect to pay more on your monthly premium than you would for a house of equal value.

boat insurance on expensive boats isn’t cheap either. Plan on at least 1% of hull value annually, so 200k boat, would be at least $2k a year in insurance. Probably more like 3-4k.

You’ll probably spend 5-10k per year in maintenance on a 200k cat. Maybe even more.

A boat is a depreciating asset. In 20 years you have the loan paid off, but the boat will be worth less than half what you paid for it, and when you factor in inflation, that 100k will be worth like 25k in todays money.

I think a much smarter plan would be to save your money, become debt free, and spend $50-75k cash on a 30-35ft monohull. Slip for that boat will be $500 a month. Stay debt free and continue saving all the money you would have spent on a worn out 200k catamaran and maintenance.

[SunKing]

your biggest problem will be that you have no ties to land... a boat can sail away and they are then screwed (as they see it)... it would help if you owned a house, plus rent is additional income... you will also find that most lenders are going to want a substantial down payment for a boat, like 50 percent or more...
plus owning a house for just two years you wont have much equity so that wont go too far securing a boat loan... your plan is ambitious but you might get lucky. dont hold your breath though...

[Mook1e]

Good luck.
Here's a nice Cat to consider
https://m.sailboatlistings.com/view/78175

And realistic info for financing:
Direct from Azul Marine Finance -
" I just saw this thread (Boat Finance) - I'll cover a few of the questions asked. Catamarans are actually selling at premium prices- I’m working 80 hour weeks on loans- the brokers selling cats are incredibly busy. Rates have jumped 1/4% in the past month on loans due to increased perception of risk by the lenders.

****Over $100k on a loan- figure 20% down in the continental US. 25% down in the Caribbean, Rates are 4.18-4.68% in the US. 1/2% higher in Puerto Rico and the Caribbean. Big boats- over $1m are 4.25%.****

My wife and I finance around 25 cats a year in the US, Caribbean, for Clients taking delivery in Europe at the factory, non-US citizens, Charter, and several other variations. We have an office in San Juan,PR and Sarasota, Fl. Greta and I provide around $60M a year in marine loans. Always happy to answer any questions...
https://azulmarinefinance.com/

[ol1970]

Seems like you are asking the right questions and starting down the path. My only suggestion would be sell the $35k car and drive something more in line with your finances. Quick rules of thumb I used to become financially independent are 1) Always pay cash for depreciating assets 2) don’t let depreciating assets make up more than 5% of your net worth.

Now I can see you stretching that for a boat that you live aboard but don’t go above 20%. Although life is not boring when you have to think about we’re every dollar is going it isn’t that much fun. Yes others may say this is way too conservative but you don’t take exercise advice from a fat kid lol. Good luck with your journey!

[captlloyd]

“ the only banks that allow liveaboards......”, I presume you will be living in an apartment when you buy the boat, after you own the boat is the bank going to be monitoring where you live or how much time you are staying on the boat ? I don’t think so.

[Capt Jerry]

Zemurry has some good ideas. If you do choose to finance, check out Bank of the West.

[taxwizz]

If you are earning $5,200 per month AFTER taxes, that is probably $6,200 per month before tax, which is around $75,000 per year. Not a fortune, but not a pittance.
If you live frugally now, I think that you are well on your way to your dream.
I wish you smooth waters.
I am jealous.

[Cadence]

Originally Posted by vicpr25

Hi Everyone!

I'm new to boating/sailing and to the forums. I've been researching and reading about getting a boat for living aboard, either a monohull or preferably a catamaran. I work for the government in an agency as a computer engineer. Thankfully I can perform my job completely remotely (just need internet connectivity). I have been working there for around 8 years and finally, I got to a low six-figure salary. So now I'm at a point of either getting a catamaran for a few years (now that I'm still a little "young") or getting a house (which I'm not in a rush to get, since I don't have many responsibilities/family). So for the time being here is my current plan & a few questions:

A few info:

1. I'm currently saving for the down payment. I don't have a lot of savings since working for the government you don't really make a lot of money at first. So, my plan is to save for 1yr and a half to 2 yrs, which I can save around 50k to 80k.
2. Right now I'm making around $5,200 monthly (after taxes), I only have a car loan that started at 35k, which I will be done with the payments in two years and a few debts in credit cards.
3. I went to Experian and I currently have 735. Now I do have around 50% in debt which I'm currently spending around $550 to lower my credit cards, in a few months I would zero all my credit cards. Hopefully, this will raise my score to 780/800s (based on a projection in creditkarma.com)
4. I calculated my debt-to-income in Experian and it says it is at 8%
5. Right now I pay rent of $1,375 monthly. I don't have a mortgage on a house.

So based on my salary and being able to work remotely, I'm looking into living aboard for a few years. Since I'm Puerto Rican and I would love to be able to go from the main USA and PR to visit my parents/family.

I know that currently, the only bank that allows liveaboards (that I know of) is Essex. During my research for the loans, I asked two marine financial groups and they told me they wouldn't be able to help me to get a loan because I don't have a "comparable loan". The cheapest catamarans I've seen are around 200k, I know I can make the payments of that loan and have extra for insurance/provisions/maintenance. But since I don't have a "comparable loan" in my credit history, because I have not invested in a property (mortgage), I'm afraid I won't be able to get approved for a loan.

Here are my questions:

1. Has anyone had any experience in my situation?
2. Has anyone have been able to get a boat loan without having any real state (or comparable loan)?
3. If this could be a potential problem in getting a boat loan, what would be the steps I should be taking right now, for in the next 2yrs I'll be in perfect conditions to get approved for a loan.
4. I was told that a good idea was to start with a smaller boat, make payments for a year and then sell it and try to get a bigger loan and so on until I can get the bigger loan. (to create big loan history in my credit report)
5. Should I get a mortgage loan of a comparable loan amount and then when I'm ready, rent out the house and get a boat loan?
6. Am I crazy? My old folk keeps telling me that I am, haha.

PS: I know that not everyone is a marine financial expert but any ideas/suggestions or experiences would be greatly appreciated.

You can't borrow yourself out of debt. Pay off all your existing debt then revisit this plan. Fly to visit your folks it would be cheaper.

[vicpr25]

Originally Posted by taxwizz

If you are earning $5,200 per month AFTER taxes, that is probably $6,200 per month before tax, which is around $75,000 per year. Not a fortune, but not a pittance.
If you live frugally now, I think that you are well on your way to your dream.
I wish you smooth waters.
I am jealous.

Thanks! I hope to get to my dreams too, But to clarify a little bit better for anyone else that might be reading, I'm currently making $102,663 a year and since I work for the govt in three years with my auto promotions, I'll be at $112,930.

PS: I'm reading all the comments/suggestions please keep them coming,

[joelhemington]

I'm thinking you just haven't looked around enough. James of Zingaro found a 20% down loan fairly quickly when he cracked up off the Big Island. He's never owned a house or anything besides the boat he destroyed. The bank will want full coverage insurance but your total monthly cost should be relatively the same as you're paying now in rent. Don't think your credit score will rise dramatically if you pay off your credit cards. I did that prior to buying a house and mine actually went down a few pegs. It seems they want to see you actively using your credit but not in excess of 25% of your limit. Pay off the car if you want to reduce debt (plus you can get cheaper insurance). 50K down will get you a lot of nice choices in the used catamaran market.

[vicpr25]

Originally Posted by Cadence

You can't borrow yourself out of debt. Pay off all your existing debt then revisit this plan. Fly to visit your folks it would be cheaper.

With the current plan, I'll be debt-free (credit cards) in less than 3 months, and I'll finish my car payments in two years. In two years I should have saved around 50k-70k for the down payment and I would only be paying the boat loan if I get approved.

Going back home to visit my parents is just one of the reasons, but is not the only one. For some other personal reasons, it would be more convenient with this plan.

[Cadence]

Originally Posted by vicpr25

With the current plan, I'll be debt-free (credit cards) in less than 3 months, and I'll finish my car payments in two years. In two years I should have saved around 50k-70k for the down payment and I would only be paying the boat loan if I get approved.

Going back home to visit my parents is just one of the reasons, but is not the only one. For some other personal reasons, it would be more convenient with this plan.

Boat loan and hell of a lot more relating to living aboard. Get your credit score up and go to the bank with written breakdown and they may go for it. I might even leave out the live aboard. I don't mean to sound negative but you need to do more investigation than here.

[Singularity]

Originally Posted by vicpr25

...PS: I'm reading all the comments/suggestions please keep them coming,

When Walter Cronkite was a millionaire he bought a boat that you can buy today for <$50,000. Such a boat will do everything that a factory new boat can do, except maybe impress certain types of people.

No matter which boat you buy, every component on the boat has a service life (e.g. paint, sails, rigging, seat cushions, water pump, engine) such that, unless you are buying new, no matter what you're going to be continually servicing/replacing things as you go along. A 20 year-old boat may have more "stuff due" than a 40+ year old boat that's been better kept.

You talk saving for a couple years to accrue 50-70k for a down payment where another option is to buy something with good bones but can be purchased outright for less, maybe much less, where you fix/fiddle along the way as your budget allows (assuming you crack the books to learn how to turn a wrench). Ever read Zen and the Art of Motorcycle Maintenance? Are you the guy who likes to do the wrenching, or pay someone else to??

Anyhow, point is that one does not have to spend so much money on anything if they can be satisfied with less. One of my favorite stories from Kurt Vonnegut (yacht guy himself) commenting on Joseph Keller's (Catch 22 guy) death:
https://medium.com/@bobsutton/kurt-v...e-8a31ca397888

True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.
I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel ‘Catch-22’
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
Not bad! Rest in peace!”
— Kurt Vonnegut

[Chotu]

The biggest help you’ll get:

“You are NOT a liveaboard!”

You’re going about it all wrong. Do NOT tell a lander you’re living on a boat. Only tell them you’re buying a boat. You’ll never be approved otherwise.

As to building your credit history, yes, you may need to do that. Start now. But with the non-liveaboard status, tons of lenders with easier lending criteria will open up.