Ruin My Dreams Please

[Steve Carson]

I have spent the last few weeks tirelessly looking at boats and learning as much as I can about what it takes to cross oceans. I have formulated the below plan that I would like you all to critique so that I can build a better plan and help others learn as well.

About Me:
28-year old desk jockey who writes financial reports for work and even now during my free time... a new low. I will be traveling with my partner of 5 years. She has no experience and I have 3 weeks of experience sailing 40+ foot Yachts. I intend to get ASA 101-104 certifications before buying. I am the type of person to do things for the story and I would like to cross sailing across oceans off my bucket list.

Destinations & timeframe:
My current plan is to take 2.5-years to sail from the Mediterranean to Australia. I will start with 6 months in the Mediterranean, 8 months in the Caribbean, and the remaining 16 months crossing the pacific into french Polynesia, new Zealand and up the coast of Australia.

Financial situation:
I have saved up $70K USD and have a guaranteed passive income of $11K per year. So over the 2.5 years, I will have a total of $97.5K available to spend.

Boat:
I am looking to purchase a 2015 Bavaria 37 Cruiser (pictures attached) from a charter company in Croatia. The boat is listed for $85K USD and I will be putting down 20% ($17K) and financing the rest. I am assuming that by paying the full asking price I can get them to do $8500 in repairs to bring it up to sail away condition. This would be the equivalent of getting a 10% discount (Fair assumption yes/no?). I would also ask for them to cover closing costs. After the down payment, I will have $53K of savings remaining and $11K a year of income to fund my adventures ($80.5K over 2.5 years).

Financing:
Using a 15-year term for the $68K loan at 7% would make the payments $607 per month, $7284 per year or $18,210 over 2.5 years.

Operating costs:
There is a video on the YouTube video by Sailing Yacht Florence called “How much does it REALLY cost to sail around the world?” and they recorded an average expenditure of $17K per year. The $17K they spent included everything from food to maintenance costs. We plan to be just as frugal as they are but things never go as planned on a sailboat so I will build in an extra $3K of expenses. My total operating costs per year will be an estimated $20K or $50K over the 2.5 years.

Cashflow:
Based on the above calculations and assumptions I should expect an initial payment of $17K, and annual cash outflows of $27K to cover operating costs and the loan repayment.

Depreciation:
I will sell the boat for an assumed 15% loss in Australia where these types of boats fetch a premium compared to the eastern Mediterranean. I believe this is a fair estimate because the same make and model averages a 5% decrease in value every year according to YachtWorld listings. This level of depreciation will leave me with a sale price of $72K for the boat and a remaining loan of $61K, the net of which would leave me with $10K cash in pocket.

Conclusion:
If my assumptions hold true, I will be looking at spending $50K in operating expenses + $17K downpayment + $18K loan repayment - $10K reclaimed at sale = $75K USD for 2.5 years or $30K per year.

Starting with $97.5K cash less $75K for 2.5 years of expenses will leave me with $22.5K for unforeseen costs and surprises and hopefully enough for a flight home from Australia.

Please let me know where you see holes in my plan and comment with any suggestions you have. All feedback is appreciated!

[belizesailor]

If you just want to tick crossing oceans off your list, then you dont need to buy a boat to do that.

[Mike OReilly]

Steve, I don't normally respond to these kinds of questions. This is not a put down, but they are all too common. But since your location bears a striking resemblance to mine, I'll offer my quick thoughts.

#1. I won't critique your numbers. You've obviously spent a lot of time thinking about it, and you know your finances. Besides, others here have more knowledge than I around finances. I will say that the vast majority of people will spend more than you budget. I spend less, but I'm certainly an outlier here. And I'm not sailing around the world.

I would also seriously question your depreciation guesstimate. A RTW boat takes a serious beating, and given the current shyt-show that is afflicting the world's economy, I'd say any guess as to boat values three years out is just that, a complete guess.

#2. How do you currently live? How much to you spend annually? Do you live small right now? How large is your home? How many vehicles? How often do you eat out? All these are just to say that most people don't suddenly learn frugality when they step on a boat. Most people don't change much, so if you live large on land, you'll very likely do so on the water.

#3. (Perhaps most importantly) How do you know you like cruising? And even more importantly, how do you know your partner does? Three weeks of sailing is no basis to answer this question. It's a start, but a three week charter or course bares very little resemblance to living and cruising on your own boat.

[Macblaze]

Sine you like sailing videos, check out Sailing Bacchus Home (https://www.youtube.com/channel/UCXplY5fv_1RLG0nxN-qQEqw). They are sailing a Bene 36 to Australia. Particularly the videos before and after their trip to the Canaries. I think you will find you are investing a bit more into the Bavaria than you anticipate.

And I agree with Mike's comments about the boat being beaten up. You yourself are going to try to get the current owners to invest to bring it into "sail away" conditions and I think you will find you will have to do the same but probably a lot more than the $8500 it needs now.

Just my 2 cents

[Kelkara]

You don't mention the costs and taxes involved in importing the boat to Australia before you can sell it.

[Rucksta]

Check out import duty and GST in Australia.
https://www.abf.gov.au/imports/Pages...g-a-yacht.aspx

My understanding payment due at time of entry.

[Paul L]

If you are financing the boat then you will be required to have comprehensive insurance on it. That will eat up s large chunk of your annual budget.

Your 15% depreciation is just a wild guess. Foreign exchange rates change more than that in many years.

Financing a cruising boat really puts you in a tough position. If you can, try and figure out a way to have it paid for. Also, there will be a fair number of good deals on boats coming up around the world. No need to limit yourself to a charter company sale.

[Pete7]

If you are willing to live like Sailing Flo and I like their approach, then I think its doable. Don't get too hung up on one particular yacht because you won't be sailing this year even if you buy it now or later this year. Europe is in lock down. Even if you could visit and buy the yacht, doubtful if you could move it or have work done before the winter. Very little sailing in the Med during the winter btw.

Their approach is to sail everywhere and anchor out for months at a time. They cook on board with very little expenditure ashore, nothing wrong with this, but you would have to copy their style of living.

You could also search Markj on here who bought a Bav 39 and sailed around the world 1.5 times with very little expenditure and no major changes.

Pete

[Fbfisher]

In addition to the other points made, I don’t recall seeing the broker fee when you sell. That plus the other expenses associated with getting the boat ready by addressing deferred maintenance or the buyers demands (see your own), and your projected $10k net upon sale is gone.

Fun idea though...

Cheers!

[GordMay]

Greetings and welcome aboard the CF, Steve.

[Fore and Aft]

Steve concerning resale value it all depends what type of owner you are? Once when surveying a yacht I had an owner follow me around with a thick towel making sure I never scratched the interior of his yacht. If you are that type of owner then you have a good chance of getting most of your money back maybe. But realistically your Bavaria is going to turn up in Australia half flogged after crossing two oceans and will need some serious maintenance. Things like engine hours and rigging life cannot be wound back so that all comes off the sale price. Your lack of experience almost gaurantees a few gel coat chips and maybe a knock on the keel. So if you can accurately guess the value of a well used Bavaria in 3 years time here in Australia you are smarter than most people.
Cheers

[Dulcesuenos]

Everything you think it will cost,, multiply by 2, then see if you still have enough $$$.
I fix, refit, work on boats for other cruisers and we are also FT cruisers.
Saying it costs double may be a huge understatement. The unexpected things can always happen.
One cockroach or insect found onboard alone can cost you thousands in Australia., a failed injector pump, auto pilot component, dinghy engine, bad furler, rigging, blown out sail due to an unseen stitch, it all can quickly escalate and drain your account.
I've not worked on many Bavarias but if their rudder system and support base is like a benneteau, I wouldn't cross the Caribbean with it.

[billknny]

Another BAD assumption baked into your numbers, is that you sell the boat as soon as you are finished with it, at an average price.

Even in a good economy, getting a good price on a boat can take MONTHS--of finance payments, insurance, and dockage fees before you sell.

If you need to borrow money for this, you CAN NOT afford it. As has already been pointed out, if you finance, you'll need hull insurance. Worldwide cruising insurance is very expensive. If you buy the boat out right your finances do not seem like you can afford to self insure.

Scale back your dreams, or wait a few years, live as frugally as you imagine you will while sailing, and save a bunch more money.

Comment from an experienced cruiser: I wish I had brought more money and fewer clothes.

[Rucksta]

All the advice given rings true to this 65 year old serial boat owner.

As a 28 year old second time owner I was wise enough to ignore sage advice from elders, bought a boat offshore and went fishing diving & sailing.

Unmitigated financial disaster in spite of selling the boat at a profit 10 years later.

Immediate retrospective breakdown showed for the time on cruising grounds (not passage, working on the boat or working to replenish funds) I could have stayed in work, kept the real estate, kept the peak earning years, chartered in exotic locations, flown my guests first class and still be a million or more ahead of the curve

The experience was priceless and changed me in ways that lead to greater success later in life.

If your going to go broke do it before you are 30.
If your going sailing do it while you are young enough to get laid.
Live with the consequences.

[Sailshabby]

Find a boat you can buy for cash. Spend a couple years (I know, I know, but you’re young!) working on it and sailing her. After that, you’ll have real world answers to most of your questions.