LaughingCat

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.

Jupiter Sunsation

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.

marylandmark

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...

Jigsaw89

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...

32fever

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.

VtSteve

And here I sit with credit card checks with Fixed 3.90% rate, no fees. I must remain diligent

Ironmanwb

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.

Uncle Dave

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

Pete280

what's the piece of equiment?

Uncle Dave

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.