remote workers financing a live aboard

[aybabtme]

Unfortunately, I don't know much more about their finances, I think I already asked them too many indiscrete questions...!

[thinwater]

If a pair of childless 30-somethings making $300K plus have money problems, they need to pay a financial advisor to talk sense to them. Certainly, this is not OUR problem. It's a laugher.

[joelhemington]

Originally Posted by aybabtme

Friends have had this idea of financing their next boat. My default is to only pay cash for boats/cars/etc, since it's a depreciating asset. But their argument is that they would use it as a primary residence. Here's the rundown:

They're a couple in their 30s who live nomad lifestyles and work remotely (from wherever they're located) in the tech industry, bringing home tech industry average salaries 150k/y each and more with equity grants (I'm not privy to how much), and have been for years. Their income is steadily growing year over year. They have no debt, they max out their 401K, etc...

They're currently in short-term rentals moving from cities to cities, spending seasons in different part of the world from time to time. They're uninterested in buying a house and staying put. They'd like to continue being nomad but with a boat, to avoid paying rent. They have boating experience; they know they want to live aboard. They'd like to get a newer, bigger sized boat than the day-sailer they have right now, which they find is too cramped to live on. They think they could better spend their rent money on a marine mortgage. They think they can afford payments on a 400 to 500k$ boat. They don't have the cash to buy outright, but can afford a 20% down payment.

Would it make sense for these people to get financing?

Like I said in the preface, I'm feeling pretty icky about their situation. My default position is that they should wait and save money until they can buy it outright. Their counter argument is that while they wait, they're throwing the same amount of money at a rent for a place they don't own, and that financing a depreciating asset is better than throwing money at their landlords. Their argument gives me pause, and I'm not sure how I feel about it. In a way, it makes sense, but at the same time, it feels wrong for some reason. Maybe I'm too conservative?

Sounds a bit iffy to me. Why do they need that much boat just as a live aboard? Seems like a hundred grand would easily do it. And then there's full coverage insurance and slip rent (which is not getting any cheaper) If they want something that actually sails, maybe it's a different story but it sounds like they just intend to be marina queens. If they have the down payment for a 500K boat, why not just buy an old 50' monohull outright and move in?

[Mook1e]

Originally Posted by aybabtme

Unfortunately, I don't know much more about their finances, I think I already asked them too many indiscrete questions...!

With what you've provided and caveated with the assumption that they will remain financially stable, I recommend they purchase/finance an inexpensive monohull or at most a 38 to 42 foot owner's version catamaran, AFTER they try a few test runs in some familiar places chartering each choice platform while working. This won't give a full idea of what's required as liveaboards, but it will at least give them a feeling of the spatial differences.

These folks work from their cat, although they've definitely gone "all in" and have since upgraded to a Leopard 50
https://youtu.be/jr9GUJP8u-M

[Dougtiff]

Aside from the financing issue's, people don't realize it's difficult to find live aboard moorage in many state's, due to the stupid 10% live aboard rule's.

[letsgetsailing3]

You know, a boat isn't an investment. So it's not an equivalent to real estate.


That said, I don't really care what these folks decide to do.

[Shrew]

All it takes is one of them to get laid off and the dream becomes a nightmare. I work in a technical role in the enterprise software field. layoffs happen all the time. You don't always get a $150K job next week. At that level, you have a split of skill sets

1) General knowledge

2) Specific to the platform, application, environment that you're working in.

You might be a wizard at Oracle, but that means nothing to the folks at SAP.

I once sat in an interview where he looked me in the eye and said, "your skillset and history would make you perfect for the job, however I need someone tomorrow. It'd take you 6 months to get up to speed. I have a job in tech support at half the salary, but you'd be bored. Thanks for coming in".

Whatever their plan, I would make based on one persons income.

[john gohl]

These folk can buy our 40ft live aboard yacht in a marina in Asia linked to 5 star resort on an island 5 mins by ferry to mainland.. Good stable 4G/5G. Pleasant tropical weather. Good supermarkets, international airport 5 mins away.
70th usd includes car and motorbike.
Many expats in this and other marinas and on mainland.

[RaymondR]

With their earning and spending habits these folks definitely need to become boat owners. Living on the financial edge the way they do they would be crazy to become fixed asset owners because a fixed asset that is one lacking mobility one is always subject to eviction in the event of falling behind on payments. Just look at all those empty houses in the US after the Global Financial Crisis.

With a boat, the income goes down, the anchor comes up and Mexico or Central America here we come.

[Tom and Maje]

I don't see why they shouldn't do it. I'm assuming that the prefer not to spend more than 20% down. If they've maxed out their 401Ks, then it stands to reason they have other financial assets they don't want to liquidate. As to boats depreciating, they can buy a used boat. That's what we did, and the asking prices for our model boat is about the same as when we bought it in 2014.

Maje

[mvweebles]

Ah yes, a modern urban legend fantasy story. A couple who gross $300k (net at least $150k after 401k) , traveling the world on $300 flights to Bali, staying in $15 AirBNB palaces, taking Ubers, and nursing a coffee for hours for free wifi.

Why bother with a mortgage? Why not complete the fantasy with a Kickstarter campaign? Ongoing operating costs via Patreon? As long as one or both are reasonably hot with a perma-smile, should workout fine.

[letsgetsailing3]

Originally Posted by mvweebles

Ah yes, a modern urban legend fantasy story. A couple who gross $300k (net at least $150k after 401k) , traveling the world on $300 flights to Bali, staying in $15 AirBNB palaces, taking Ubers, and nursing a coffee for hours for free wifi.

Why bother with a mortgage? Why not complete the fantasy with a Kickstarter campaign? Ongoing operating costs via Patreon? As long as one or both are reasonably hot with a perma-smile, should workout fine.

True.

If she looks good in a bikini, the boat could be free.

[letsgetsailing3]

Originally Posted by Tom and Maje

I don't see why they shouldn't do it. I'm assuming that the prefer not to spend more than 20% down. If they've maxed out their 401Ks, then it stands to reason they have other financial assets they don't want to liquidate. As to boats depreciating, they can buy a used boat. That's what we did, and the asking prices for our model boat is about the same as when we bought it in 2014.

Maje

I believe when he’s saying “maxed out 401k”, he means maximum contribution, not withdrawals.

But you and I both know that boat ownership isn’t free.

[trouble]

It sounds like your using the other person scheme to ask questions for yourself. So if you really want a bigger boat and don't want to pay cash for it, put 20% down and pay the payments you want and sail, then worry about everything else you need to do to live, this lifestyle that you've chosen. Just like landlubbers do everyday with there house and mortgage. Don't look for some cheap way to live and not pay your fair share, we all pay and pay well to live the way we do, if there was an easier was and cheaper way to do it we all would, but we all want to be legal in our endeavors so we and our children can keep doing it.

[valhalla360]

20% of $500k = $100k. Live on $50k and in a year, they have $200k.

You can buy a pretty comfortable boat cash with $200k (heck even $100k can get you a decent boat). Then if they want to upgrade, they can save up for another couple years and move up to a more expensive boat.

PS: A $400k loan at 5% interest is going to have a monthly payment around $4200. Add in maybe another $1000/month for slips, maintenance and other ongoing costs...what kind of places are they staying at for $5200/month? We do month stays at airbnb apartments a few times per year...We could double what we spend to upgrade to really nice places and still wouldn't be half of what they are looking at.