Liveaboard Financing Quandary

[GDFL]

Here's my situation: A year and a half ago we sold our house, moved to Florida and bought a house using what little money we had as a down payment and bought furniture we don't need. We have since discovered that living aboard is our dream. We're trying hard to line things up to be able to sell our current house and move aboard soon. Due to current market conditions and realtor fees, we'll be doing good to break even on selling the house so there will be no positive equity coming out of it. The specific model of boat that we are looking at (we're pretty firm on this) was made in the late 70's to early 80's and the market ranges from 67k to 95k. Our ideal plan would be to sell the house and live in a temporary housing arrangement until the boat could be closed on and moved to the marina. Here's the problem: our credit is very strong and our income is very strong, but we don't have much liquid cash at all for a down payment and we can't swing a boat payment and house payment at the same time. Once aboard, our living expenses will be cut in half or more because we're currently in much more house than we need. I feel that this loan would make perfect sense to an actual person, but it doesn't fit the mold of standard loans so I'm running into problems. Either they won't finance it or they need 20% down, which as stated above, we don't have. Any advice would be much appreciated. I want to get things squared away so that we can get the house on the market and get on with things.
Thanks,
Garrett

[Pura Vida]

From your post it is not clear if you will get the down payment back out of your house or if you will be walking away from the deal without any cash. Is it the latter? The only time I ever borrowed money for a boat was from myself using my 401k. I can't suggest that strategy but it is an option. When I first moved to the coast I lived in an effeciency for a year to build up cash for a boat. It took patience but paid off. Just make sure your wife doesn't get the gardening bug ini the meantime.

[GDFL]

Originally Posted by Pura Vida

From your post it is not clear if you will get the down payment back out of your house or if you will be walking away from the deal without any cash. Is it the latter? The only time I ever borrowed money for a boat was from myself using my 401k. I can't suggest that strategy but it is an option. When I first moved to the coast I lived in an effeciency for a year to build up cash for a boat. It took patience but paid off. Just make sure your wife doesn't get the gardening bug ini the meantime.

We are income rich and cash poor because of our stupid house. It was a mistake to ever buy it in the first place, but that is hindsight. We carried over a bit of equity from our last house into this one, but because of the luke warm market and realtor fees involved, we won't get a penny at closing. We'd probably be lucky to not have to pay to get out of the house. Our house is costing us 3k+ per month including the mortgage, taxes, insurance, hoa fees etc. We can happily live on a boat tied up for about half that and be able to kick our savings into high gear IF we can ever get this deal to work out. I'm embarassed to say that our savings thus far for retirement are less than stellar, but not nonexistant. I'm behind schedule, but at 27 I have several years to catch up. One of the main reasons for moving aboard is to drastically cut living expenses and simplify our lifestyle by not physically being able to buy "stuff" so that we can establish a suitable nest egg and retire much much sooner than we would otherwise be able to. My wife probably wants to do this even more than I do so I really need to make this work...soon

[gonesail]

find a marina with an available slip where you want to stay. make sure you are OK with what they have to offer. IMHO you should sell the house before you finance a boat unless you are going to buy it with cash. good luck.

[avazquez]

In my case I saved the money. And when I had enough I purchased the boat cash. Interests will kill you. Then month by month instead of making payments to the bank I make improvements and repairs to the boat. I guess its hard to save the money but it is great to know that the boat is yours. Get good insurance and have peace of mind.

[ssullivan]

Take it from me... I'm an *expert* in over-extending myself to afford a nice boat:

You can't buy the boat until you have sold the house, no mater how much you would like to. If you are pushing your cashflow that agressively and can't get rid of your asset to free up the liquid, you aren't going to find many lender who will support you in that kind of kamakaze mission (pardon to any Japanese people who take offense, just using the term to mean "suicidal").

If you keep the house, borrow for the downpayment AND finance 100% of the boat, you will be in deep doo doo.

The only alternative I see is to take out a 2nd mortgage on the house (assuming you have equity) and use that as your downpayment.

In a bit of self promotion, here is my boat, fitting your exact requirements and currently living aboard at anchor. We are selling her because we can't afford the loan... so I know of what I speak.

Take a look:

boats.com - Boats for Sale: Boat Details - Gulfstar Hirsh 45

[GDFL]

Nice boat SS. I do plan on selling the house first. We would have to find some sort of temporary housing while waiting to close on the boat and get it to the marina. One likely option is that we would temporarily move into an RV in a very nice campground near our house. An apartment really isn't an option because I hate apartments and we have two beagles that don't need to share walls with anyone else. They are very tolerable when I can control their environment, but an apartment just wouldn't work for them. The problem with the house is that the market sucks and there is now just enough equity to cover realtor fees. No room for a 2nd mortgage for a down payment and no down payment once we sell. I may can scrape together 10% down on a boat, but it would be a stretch. My basic problem is that I have no extra money to play with right now, which makes it hard to get into a boat. Once I get into a boat I'll have all the free income in the world to save and quickly pay off the boat.

[GDFL]

I found a suitable marina and it happens to be 5 minutes from work. I'm going to talk to them today and see how long the wait list is, but I know that many people live aboard there and the facilities seem nice.

Originally Posted by gonesail

find a marina with an available slip where you want to stay. make sure you are OK with what they have to offer. IMHO you should sell the house before you finance a boat unless you are going to buy it with cash. good luck.

[hellosailor]

Wait till you see what the marina prices are, including the insurance you'll need to keep the boat through hurricane season.

You are familiar with the long lists of hidden costs of boat ownership, yes? For Florida dockage and a boat...it may total up far higher than you think. And, if you want to sell the house in less than six months, it may sell for way less than you think. The furniture is a total loss--unless it was inexpensive and just happens to be what your buyer wants. Especially in Florida where there's so much estate sale furniture.

Still, if that's the dream, go for it!

[GDFL]

Originally Posted by hellosailor

Wait till you see what the marina prices are, including the insurance you'll need to keep the boat through hurricane season.

You are familiar with the long lists of hidden costs of boat ownership, yes? For Florida dockage and a boat...it may total up far higher than you think. And, if you want to sell the house in less than six months, it may sell for way less than you think. The furniture is a total loss--unless it was inexpensive and just happens to be what your buyer wants. Especially in Florida where there's so much estate sale furniture.

Still, if that's the dream, go for it!

I'm well aware of almost all of the costs involved. I just got turned down for my first choice of marinas, but plan B is cheaper anyway. The marina is 186 miles from the mouth of the St. John's river and about 35 miles inland from the coast. I talked to owners of the same boat over the weekend and insurance will be between 2 and 3k per year. Marina will be between $500 and $700 per month. Boat loan will be $700-$900 per month. Add laundry, maintenance, upgrades, the stuff I pay for at home anyway, and on and on and I'm still much better off than the 3k+ per month I'm spending now. I've owned smaller boats all my life and I ran the docks at a large marina one summer in college so I'm not completely oblivious to what boating is all about. I'm not too worried about the house selling. I may not have much equity, but I'm still in a good position. It will be the cheapest house in a highly desireable neighborhood. It may take more than 6 months, but that's just a rough number.
Thanks,
Garrett

[hellosailor]

AH, 35 miles inland. That really changes the prices.<G>

[chris_gee]

Your problem is time. You want a quick solution but there isn't one. You sell rent save then buy which you know. You then get a depreciating asset instead of one which over the long term will appreciate. The costs of upgrading and maintenance will likely exceed any savings you make if you ever want to use it as other than relatively cheap accommodation, assuming your transport costs remain the same. Your incomes seemingly are relatively high. There isn't much diifficulty is seeing that to build capital you have to bite the bullet and save and that takes time.

[Tropic Cat]

I'm a little confused. What body of water is 186 miles from the mouth of the St. Johns and is 35 miles inland? This must be a typo. Palatka is about 80 miles, it must be that.

I'm also confused about a late 1970's to 1980's boat that sells for more than 60K. Confused only because that will be a pretty large boat. Large boats have masts taller than 44' which is the Bridge height on the St. Johns at Green Cove Springs. So, I would assume that that boat either comes with a chain saw, or it's a power boat, right?

And Lastly, I must be really confused tonight as real estate in Florida is selling for less money today, than it was a year ago... so, if "what little money we had as a down payment" means what I think. You will have a problem selling the house without writing a check to your bank for the balance of what you owe.

You're 27 and have plenty of time.. stay put and wait until you save some money.

Rick in Florida

[GDFL]

The boat is a Schucker. Some have no masts, some have shortened masts, and the rest have masts ranging from 42 to 48 ft bridge clearance. The city is Sanford, which is Lake Monroe, which is 180something miles from the mouth and about 35 miles from New Smyrna/Edgewater.

The real estate numbers work out where what I owe on the house plus realtor fees equals right at what I can sell the house for plus or minus a few grand. Those numbers are real and not just optimistic guesses. Stay and save is the easy answer, but with what I'm paying on the house I don't have the ability to save any significant amount. It makes me sick to pay the mortgage and hoa fees.

Most Schuckers on the market now have gone through fairly recent refits. I know that boats are expensive to maintain and upgrade. If living on a boat costs at least $1500/mo cheaper than my current arrangement and also limits my ability to buy "stuff" that I don't need, how can I not save money? I know that maintenance and upgrades can't run $1500/mo on a 40ft boat that has recently been refitted and isn't putting significant miles under the keel.

It's not that I want the quick solution. I want to create an ability to save money while living on a boat that I can easily sail away someday. I want to have the security that if my job were to disappear, I wouldn't have to worry about selling a house before I could move to a new job. I want to build a nest egg and get out of the ratrace sooner rather than later. I'm spending 36k of my takehome pay per year to live in my house while building almost no equity. That is just plain stupid.

what is so wrong with my thinking?
If I didn't own the house, which I won't before I close on a boat, then I would be in great financial shape to buy and live on a boat and do all the things I want. I'm just trying how to get from here to there without waiting 5 years while paying 36k per year to live in my house that I really don't think I'm getting 36k of value out of.

[Tropic Cat]

Not a thing as long as you can come up with the down payment on the boat and manage the monthly expenses.

$1000.00 boat payment
dockage @$700.00
at $300.00
maintainence at $300.00
Of course.. you'll want to use the boat...say $300.00 a month

Hmmm.. I add this up to being pretty close to your home expense. Now, you didn't mention if you have children, but you say "we". So, I figure if they aren't part of your life yet, they soon will be. I would say that all in all, the house makes more sense right now.

Besides, you're going to have to take a tape measure to that mast. The difference between 42' and 48' is the cost of a crane to pull the mast and put it back again north of Green cove Springs, should you want to actually motor somewhere.

Just my opinion

Rick in Florida

Rick in Florida

What do we have?