Seawind Build Slot Deposit - What am I missing?

[Elimax]

I do not have any concerns about Seawind's viability. I like the builder and what they are doing. We are still likely to be going this direction, we will just need to be a little more solid in our decision before the deposit.

[redneckrob]

Originally Posted by Alistair242

As for Seawind going belly up? Not a chance in the foreseeable future.

The problem with the future is that it's not nearly as foreseeable as we like to think it is. Seawind is in a great spot right now, way more orders than they have production capability to fill. As was mentioned, the natural thing to do in that situation is build more production capability. Which for a capital intensive industry like boat building means taking on debt load. Which sadly makes the company less likely to survive the next downturn. And downturns from the perspective of the seller of a completely discretionary high ticket luxury good are fast and utterly brutal.

I agree in the short term, I'd have no qualms about putting $50k down for a Seawind with a build staring in the next 6-9 months. A whole lot can happen in 2 years though.

I like the OPs thought process and it sounds like you're making a well reasoned decision, also good to hear the clarifications and somewhat changing story when you asked for things in writing. I may well be plunking my $50k down in a couple years (or wishing I had today) so appreciate the sharing. Let us know how it goes.

[Zzmeyer]

sailjumanji said it how I experienced. I was told by one dealer (Fountaine Pajot Saona 47) that the first payment was refundable. The dealer I actually ordered it from laughed. Why would FP give you the opportunity to tie up a production slot without commitment? It would just likely push out potential production slots causing some serious buyers to look elsewhere. If it is truly refundable, and it sounds like it isn't, you've gotten good advice on third party escrow and what triggers release to either you or the manufacturer. What I was able to do, because of the two year plus lead time, was to negotiate the initial payment to an amount I could live with if I defaulted or they went out of business.

[Tin Tin]

Get a copy of the contract they want you to sign, and post it on this forum then all the bush lawyers will have a chop it it for you, free of charge.

[Anders]

Originally Posted by Alistair242

As for Seawind going belly up? Not a chance in the foreseeable future.

Many well established boat builders have gone bust and many of their buyers has lost a lot of money.

[Alistair242]

Originally Posted by Anders

Many well established boat builders have gone bust and many of their buyers has lost a lot of money.

Thats surely true but right now Seawind has a solid footing with excellent sales. It would take some seriously bad management to cause them to fold between now and when you received a new build if ordered today. That was my point. There is always some risk but in their case very little right now.

[SailorScott]

I am working with Seawind currently. My build should be done at the end of this summer. They have been good to work with. They have met or slightly beat the milestones that they have promised. Their designs/options are progressing and improving as technology evolves. With my understanding of their order book you should not be too worried about bankruptcy risk. I thought that the $40k deposit and the terms were pretty reasonable all things considered. If you really like the boat then put your money down and reserve the build slot.

[Sand crab]

Which boat Scott? And when did you order it?
Thanks

[Rubicon King]

Originally Posted by redneckrob

The biggest risk is that if Seawind becomes insolvent at any point in the next 2 years you become an unsecured creditor and get pennies on the dollar of your deposit back. I don't have any information to suggest Seawind is in any financial distress, but as literally hundreds of failed boat builders of the past 50 years indicate, any boat builder is a recession away from failing, and who knows what the next two years will bring. Look at it another way, if Seawind issued a corporate bond it would probably have to be at an interest rate north of 10% vs AAA rates in the 2% range. That extra interest represents the risk that Seawind defaults, which is the risk you're running while being compensated with 0% interest. So it's not the interest you're forgoing by not investing elsewhere, it's the interest you're forgoing they would have to pay you to take the risk of giving that money to Seawind specifically.

That said, I don't personally think that's reason enough to avoid making the deposit, given it's size vs what you can clearly afford for buying the whole boat. But it is a slightly different picture of the potential down side in reality than you listed that's worth considering so at least you go into it eyes open.

What he said +++++

[SailorScott]

Sand Crab, Boat is a SW1600. I placed the deposit in the beginning of 2Q2020. I believe that I took a slot that someone gave up.

[piranha]

I have put up such deposit for $20,000, my house didn't sell as planned so I had a hard time with the funds, found a more affordable used vessel way before build started and was NOT returned the deposit. I dealt with the South Florida dealer. I would caution anybody to not count of having their deposit returned. PM me for information.

[Zzmeyer]

piranha - sorry to hear about that. I had a Fountaine Pajot Saona 47 delivered at the beginning of Covid. Took delivery and sold it six months later for what I paid for it, less a big commission checks. I know several who were in the production queue and wanted out. The dealer was always clear with me that the deposit and subsequent progress payments were not refundable. I'm guessing if they were refundable folks would put in orders just to reserve a slot or perhaps to broker slots. The dealer and factory did work with the people I know. One sold his boat in a private transaction through the Facebook group to someone who was very happy to skip the multi year wait. The other was permitted to change to the 42 although he went back into the queue which delayed delivery for more than a year. I guess you are lucky only having a $20,000 deposit. We were required to have a 10% deposit.

[piranha]

The point is that if the OP is foreseeing a need to back out of the order my experience points to the fact that he should be prepared to lose his deposit. Thankfully I backed out before the first 100k+ payment.

[Wigglygoog]

To quote Yogi Berra, "It's tough to make predictions, especially about the future."

My Seawind 1260 was delivered and commissioned in September of 2020. Therefore, I was writing big checks for my boat in the middle of the worst worldwide pandemic since the Spanish Flu of 1918. Glad I did! Seawind has solid management. They are not perfect. No one is. But my experience is they really try and make it right for their customers.

Life is a risk. I try and minimize risk by working with good solid people.
If any boat builder is going to be able to deliver a new catamaran per the agreed time, even in a difficult economic environment, it's probably Seawind.

[piranha]

Wigglygoog, are you saying that past performance does not guarantee future results or are you saying that it does? The past is, factually: Seawind delivers good boats but doesn't return deposit checks. This last point being the OP question, incidentally. What's your point about the future?