Hi Scotty,

I really like your post. One reason I have been waiting to buy is I hate the feeling of, "I put everything I have into getting this boat. I sure hope it doesn't break." Years ago, at a time when my cash flow and wealth were very, very low, I bought a used 20' HydraSport CC. It ran great, but I was always concerned about repairs.

After reading your post, it reaffirms my thought of having low monthly carrying costs so if there is a big repair, repower, refresh bill, it doesn't consume my happiness. I figure, if I wait until after we move into the waterfront house, by then, insurance bills might be lower and the unfortunate but fortunate deflation of boat prices will play in my favor.

I told my wife 3 years ago that someone is finishing their $90k kitchen remodl that we will get for pennies on the dollar. I feel the same about the high performance boating market. No offense or insult to existing owners, but I am a finance/investment guy and have an eye for trends. Builders are not going to be asking top dollar prices for boats in the future. It is likely the MSRP will stay sky high, but the "rebates" will be enormous.

Don't count on this anytime soon. Remember the boat business is based on the volume principle. Even if they scraped by 08 by selling inventory to dealers that are still floorplanning those boats with the 09's being ordered/arriving now. These "builders" all have fixed overhead that will not shrink with the lower volume production so they actually need to make more money per boat now than in years past to cover their costs (fixed as well as variable).

Cigarette built about 40 boats last year and Outerlimits may have built 1/2 that. If they have a 25% deduction in orders for the 09 stuff then Cig will make 30/ OL about 15. They now need more money per boat to cover the cost of management (*note Skip axed Neil so he may save a few bucks this year), facilities, regular personnel etc.
Now this doesn't take into consideration the past debt like owing Mercury for past engines/drives (Fountain reportly carries significant debt on parts that purchased on credit terms). Plenty of home builders/contractors get into this pinch when the current work won't pay off the debt from past work and then they get stuck on a job with no credit with suppliers (using today's deposits to payoff yesterday's debts).

The other issue is on boats that were financed in good times with little/ no down at 6-8% interest and the boat has now plummeted in value but the owner can't sell/ trade since the payoff far exceeds the current value. The banks don't care, the owners are pissed they are upside down/ won't maintain boat since it is just a hole of negative equity now. You are trying to buy it right yet all parties involved aren't in a position to help even if they wanted to.

I could buy a boat now on credit or wait until I was 50 to pay cash. No brainer IMHO. Ok- so I could have paid close to cash now but why deplete my account. Looking back? GREAT move because I am going to save at least what my boat cost by being a cash buyer in the housing market right now.

I spent 1/2 of what I could afford to borrow so I have stripper, beer, fuel, repair money so I could enjoy the boat.

Keep it within budget and go get a loan! Only live once...

All my toys and vehicles are paid off, but some of them were financed at the time of purchase. I still carry a mortgage on my principal residence and rental properties. The bottom line is do what you are comfortable with b/c the issue of paying cash or carrying debt does not have a one answer fits all ending. As MDMark said, you only live once...

If you were financing and investing the money for the last 12 months, I feel sorry for you. You'd have been better off to pay cash for the boat. You can't invest at a fixed rate that earns more than your boat loan rate, so it's a risk. In good times, you do well, in bad times, it's a double whammie, investments tank and boat values fall. The guy that paid cash for the boat is much better off.

My issue is not the financing, but my incoming cash flow is too low. It is now and always will be. :)

And here I sit with credit card checks with Fixed 3.90% rate, no fees. I must remain diligent :angry-smiley-038:

Have the cash for the toy before you buy it but put that cash to work in a low risk investment account. Then use a HELOC or second mortgage and pay for the boat that way, you can use the intrest expense as a write off and you can still have the cash to pay it off if and when you want to.

In the mean time you have a boat that is not such a drag on your net worth.

"Investments"
 

Its all in HOW you invest and what you invest in.

I disagree you cant invest at a fixed rate an pay for the boat.

I agree you cant do it with interest on money or stocks (at least last year), but not if you invest in the right things.

You need to invest in different things than ordinary guys do.

Invest in assets people are willing to shell out hard cash for on a regular basis and you win.

Example-before I bought the new boat (Check it out in the Laveycraft forum) I made an investment last July of 120K in a piece of equipment that's returned 33K since. Try that with stocks or real estate.

I didn't buy my boat till the money started coming in from the investment- and I used some of my own money as a down and the cash flow from the investment now make the payments - not me.

A boat is not an investment its a liability squared. ( unless its a ferry, or a cruise ship that can generate cash flow)

If you paid cash you are out the cash and you have a boat you cant sell that's highly depreciated in one season. No thanks.

(ok a 20K boat I wouldn't finance but then I wouldn't buy a 20K boat either)

I have the cash flow to pay the boat, strippers, gas, insurance, booze, weed, new bikinis for the babe and then some without reaching into my own pocket.


Uncle Dave

what's the piece of equiment?

Secrets
 

Not going to give away my investment secrets, but I work in the production and postproduction business <TV& film> It is gear that services those markets.

I believe in having a few % of a bunch of different businesses.

2 years ago I went in with 3 other guys and bought (of all things) a concrete pump, it was about 100K and its been making money as well.

Equity lines are great for deductibility- but if you need to get off your house or get one now you may be challenged as many are up against the 80/20 equity ratio.

secondary positive cash flow is better- no compromises

Uncle Dave.

sounds like you got a plan, I agree, keep the toys separate from the house, I have a couple rentals that when it's time to sell will finance my boat upgrade.

Finance atmost half make double and triple payments and have fun! AND build a bigger TOY BOX!!!

Disposable income?
 

I think the key definition here should be that "ALL TOYS (even women) SHOULD BE BOUGHT WITH DISPOSIBLE INCOME" Whether or not that income is financed or cash is not the question or the answer. The income must be disposable and you must be able in all condtions to maintain that level of disposable income spending PERIOD!
If you use this philosophy you should in any ecomomy to maintain your TOYS and such (even women) you will do just fine!!
Keep it Simple!!

Best Regards,
Ray @ Raylar

all I know is that the last 3 Big boats I have bought were ALL bank repos, and we have done well on all of them. Always paid cash, and sold them @ the amount I had in them or more.
Dean

Sweet idea. I like the "used, but loved" situation of a repo. Concerned about reliability but do the repo's tend to have warranties remaining? Do you have a dealer who does the repos or just word of mouth?

yachtauctions.com is all I know about. They still don't have many go-fasts in their inventory.

It's highly unlikely they will raise prices due to low volume. However, they don't want to lower prices because people will stay away, thinking they will continue to decline. Look at teh auto industry, they didn't drop prices, just raised rebates to draw more sales. It's the same effect but perception is different. Rebates are temporary.

I don't have much experience in the new-boat-buying side, but large rebates are inevitable once credit starts flowing. Then, when things stabalize, they will reduce or eliminate the rebates and . . . wallah. . . prices are high again. Works better on the consumer's psyche.

Pete, when you are ready to upgrade let me know. I'll make you a deal. :cool:

only about 20% of the people pay "true" cash for boats

some cash comes from home equity and other people get loans and drop the money into there accounts and pay with check

It seems that the recent 'comformists' were people that borrowed more than they could afford because they were comforming to society's trend.

I like consistent, modest growth over bubbles and bursts. Watching the last few bubbles form, I decided that keeping my overhead down and delaying expensive toy purchases, and now it's paying off.

I vey well could steal a large waterfront house on prime land and put a mack-daddy rig on the lift and pay far less than others did a few years ago. But that's my opinion. We'll see what pans out.

But I try to make large toy acquisitions in a manner that allows me to control their disposition, not the market trends or slowdowns.

Buying cash is control over amount of insurance,amount you can use it,if huge repairs and surprize damage occurs you will be using credit for that also is the begining of the end:eek:use it long enough it owes you nothing!my 02:cool:

:eureka::eureka::cool:

Payments on toys are a no no for me. Mortgage and utilities payments are the only thing worth paying for monthly.......I've got a 20 year old boat....but it's paid for!!!!:ernaehrung004:

No, repo yards are full cause of the banks gave money to people who couldn't afford it, or people fell on hard times.:eek:

And I must say not too many 20 yr old boats as nice as yours Craig