Financing a boat for liveaboard

[coot]

Originally Posted by sluissa

As for the trackers(thank you for correcting my mistake, although they still do transmit their position to whoever owns it). They are used in shipping situations to track truck shipments across the united states and I assume other places as well. And a close cousin to what I'm suggesting has been in use by the police to keep an eye on house arrested criminals for years. Obviously there are ways of defeating them. But hopefully the owner wants the deposit back and will want to keep from being a fugitive.

The truck tracking systems use GPS the same way we do. They receive the GPS signals, and then the truck knows its current position. Another subsystem transmits that position information to the tracking center. I've heard of the truck using cell phone / paging networks to send in the reports. I've heard of similar systems using VHF radios on city bus systems.

Unfortunately, you have to consider the difference between someone who is willingly cooperating in the tracking (the truck driver) and someone who wants to circumvent the system (the boat thief). The truck driver has no interest or motivation in disabling the tracking. He just wants to get where he is going and get paid. If he decided to steal the truck and payload, he would be well advised to find the tracking system and disable it. Removing the fuse would probably do it.

Effective "house arrest" systems are based on a radio transmitter that is physically attached to the person in a way that is difficult to remove without breaking it. The radio transmitter sends a periodic signal to the base unit. If the base unit does not receive the signal, it knows the inmate has either damaged to anklet or left the area. The prison officials gather records from the base unit, and if discrepancies are found, they know the inmate violated the house arrest.

It is fairly easy to escape from such a system: just walk away, buy a Dremel and cut off the anklet. But you have to walk away from your entire life. If you come back, you will get caught and put in a real jail for longer than you would have had house arrest. Again, the system works because the entity you are tracking is willing to cooperate.

In the case of a loan, I can see two scenarios:
- the guy was going to pay back anyway, so we don't need to track him.
- the guy is going to steal the boat anyway, so he will destroy the tracking unit if he knows it is there.

I would think the tracking unit would need to be wired to the boat's electric supply, so it shouldn't be that hard to find.

[cat man do]

Originally Posted by Weyalan

I "financed" my boat by buying a house in fairly run down condition in a neighbourhood that was just starting to become trendy. In less than 4 years, with only a minimum of work on the house - mostly just painting, it went from $115,000 (what I paid for it) to $275 (what I sold it for). The difference was my profit (minus mortgage payments). that difference bought me my boat plus seeded the crusing kitty which is now growing nicely.

Congratulation on your result.

This was our start as well. $100k to $300 k in 5 years and doing nothing to it, but then using the equity to buy investment properties.

We also have asked the question and the answer has always been no, as you can sail a boat away.

But what about a car, they'll lend $50k for a car, which can be driven away, and chopped, re-birthed etc.

Don't see a difference.

Dave

[sluissa]

hellosailor: I apologize, I took it the wrong way. Won't happen again, I promise.

I will drop the idea here, I still feel it is viable, but I do not feel like explaining my thoughts under these circumstances.

[seafox]

Hey hello sailor, lucky you just did a grin. Imagine if you
went all out with this.......

OK, buy a boat, and sail away without paying for it. How? Simple. Buy it with a state registration. THe lender keeps the title. Go to joe no one on the street, and give him a hundred bucks to go to a notary with you and sell you the boat under federal documentation. All it takes is a bill of sale. Document the boat under your name and sail away. Chance the Coast Guard will catch the lein on the boat, very slim. Or, even safer, buy a documented vessel. Write yourself a bill of sale from some fictitious party. Take it to the local DMV. state register it. The state DMV's in many places will not check with the coast guard. They will rarely even communicate with other state DMV's. Sail away, and make sure the registration is paid every year. Being honest people, we wouldn't dream of pulling one of these scams, but they do happen.
As for tracking, a lo-jack can be removed and attached to the dock where it won't be noticed.
My point is, there is no fool proof system, as the fools are getting smarter. The finance companies are aware of this, and losses are a part of doing business. The best they can do is offer policies that make it harder to put them in this situation. Unfortunately, these policies make it difficult for honest poeple to work within the system. The crooks will always find a way around them.
As for destroying your credit, if someone is dishonest enough to steal a boat by defaulting on a loan, somehow, I do not think their credit rating is much of a concern. As for fraud charges, chances are IF they are found, it won't be in the US, and the cost of extradition, and salvage costs to bring the boat back, as well as the red tape to get the boat back from the country where the crook was caught will probably be cost prohibitive for the lender. AND, if a person steals a boat, and goes cruising, it is unlikely that they will return to the system if they return to the US. Most likely, they will never return, ad plan on spending the rest of their golden years in Mexico.

[ssullivan]

I have to admit, I get a little upset at how some folks on this thread were able to finance their boats. This is one key difference between your generation and mine. You guys got a lucky ride. Good for you, but it's painful to watch. You guys owned real estate before it balooned up and paid for things like your boats. Nothing against you personally, but I get frustrated hearing those stories when I have to pay for every cent of my boat through actual work, rather than magic numbers that just appear out of nowhere by stroke of luck. Congrats on the lucky life, but boy do I wish my generation could get in on just one of those strokes of luck the baby boomers had.

Again, nothing personal... just very heart wrenching to see that some very nice boats were bascially just found out of luck in your cases.

Gen X really got the short end of the stick on a lot of this stuff.

[michael201]

ssullivan,

I'm sorry we were not able to discuss my plans further. I know some don't find it enjoyable to be around kids in a slightly tight space.

I'm slight Gen X. Not to pour too much salt in the wound so to speak... We've made millions over the past 6 years investing in the proper areas and property and there was ZERO luck involved. If you want to discuss how offline I'd be happy to.

Were there risks? Hell yes! There always are. Did we have skin in the game? Very much so. I hate most of the NO MONEY DOWN GET RICH QUICK BS. It does take money to make money. We've also done well in other areas that do not involve land.

Like you, we are both educated and have experience that would generate at a minnimum 150 to 200K per year in income if we lost all our property for whatever reason. That makes it easier to take risks.

I agree somewhat about the short end of the stick. Mostly I agree about the greed and attitude of the BB gen. But I am a firm believer in making your own destiny.

Michael

[tomdidit]

ssullivan,

Your generation gap is showing. No violins for you from this leading edge Baby Boomer. You sound like we just wandered through the orchard and picked the low hanging fruit. I can assure you that most of us worked our a^^'s off and took some risks to be successful. Did we have some opportunities, you bet. However, I can assure you that in every generation there is a group that finds opportunity and those that do not. A saying I always liked is " You won't know it is opportunity knocking if you don't answer the door!". You put skin in the game and get what you work for. Only so much low hanging fruit you know.

As to real estate.....reasearch, work, research, work...money in, money in....and if you did your due diligence you get a pot full back out. An example of that door not being answered is a friend of mine. Same age, same education (actually better!), same job and income at the time. A piece of lake front property became available in 1980 for $120K. It would have been a stretch for him but it was doable. His reasoning for not making the purchase was that there was no way he was going to pay that much for a piece of property at the top of the market when the bubble was about to burst. He would just wait a year and buy something when the property values came down to reality. Sad fact (for him) was that property sold for $130K at that time, and since has sold for $248K, $589K, and $1,300K. I think a few generations made some money on that one. And every one of them took a risk!

I have a son who is now 30. Top 2% of his high school class, very good athlete,socially graced far beyond me at his age, went to a great college....for one year. He decided after that one year that he wanted to go west and ski while he was young. After his first year out there we had a conversation about his needs. He explained to me that he did not need the cars, boats, second homes, etc. to be happy. However, he admitted he liked mine a lot. I asked him what he did need and at at that time he said that he could make it and be happy on about $15K a year. I said go for it because if you were home and in school that is $15K less than I would be spending on you. 11 years late he is still out west, still skiing when he can, and probably struggling on three times his original needs. However, he is happy, has become a great back country skiier, and living his fathers dream.I love to visit because he makes me stretch myh skiing abilities. Different drummers? Probably not, just a different dance.

Ssullivan, I have enjoyed many of your post on this board. You have some great experiences and did put the skin in the game to live your dream. But.........don't assume that an older generation got all the breaks and you have to work for yours. The company I retired from was started by an immigrant 150 years ago with some serious skin in the game. People still go to work for them today and some of them are building wealth. Some of them don't answer the door and are not. There are trade offs in almost everything you do. Your choice.

While I am addressing this I should say that piece of property my friend did not buy was on Lake Michigan and is on the market for an even higher price today. I left that area for a long time and am now back. I think your assumptions on the Great Lakes, based on a trip with MOSTLY benign conditions, are not the basis for making broader based assumptions about the lakes. Ted Turner found that out when he was the America's Cup guy that was going to run the Mac Race in the puddle. He ended up apologizing to the Lake God's when his boat started falling apart.

[swagman]

Hi Sean,
Not all the older generation were lucky.
We only purchased our UK based yacht by deciding to buy 6 years back using finance and paying it off by working hard.
The fact that I (as an older generation sailor) see more and more younger people sailing around the globe makes me think todays younger generation have it better that we ever did when we were their age!
Cheers
JOHN
PS - Thats not a whinge by the way - I'm just jealous!!

[dksailing]

I have to agree with SSullivan. I am one of the 'lucky' ones he is referring to who bought a house in FL 5 years ago and have now sold it at a pretty good profit. And quite honestly, I feel a little guilty about it. (No, I'm not going to give the money back, but I was raised to be humble and compassionate.)

For all the "smart investors" out there, I view it as simple greed. They bought a piece of property or house that someone else would have liked to have and actually *used* it for themselves. Instead, the investor bought it simply to sell it for a higher price and screw the other guy. I know, I know - it's a capitalistic society. But when I see everyone standing around trying to figure out ways to make money without actually working, it's pretty darned annoying.

[ssullivan]

Folks, don't get me wrong. Some baby boomers had it rough. I'm not saying everyone was lucky in a single generation. That would be a huge over-generalization.

I don't want to start a generational war.

I'm not even whining that I didn't get a break...

I just know quite a few boomers that have done as mentioned in this thread. Bought a house with a loan, then all of a sudden, through no work on thier part, they are worth $250K+ more than when they bought it. It absolutely *is* a stroke of luck in those cases, of which there are quite a few. I was too young for home ownership when the tide was rising, so I never got a chance to ride the wave. It's very true of this generation I'm in that we have started out with a financial noose around our necks. And, in cases like mine, where I did like Acoustic and paid for 100% of my college, never getting a cent of help from parents to start out in life - not for clothing, not for anything, then you don't have the money it takes to make money (as Michael mentions). Not trying to be a whiner here, and I certainly believe that we each make our own destiny and that you can work hard to make it, etc...

BUT...

What I am saying is it hurts a bit to see how very many people in the boomer generation got rich just by standing around minding their own business.

We all work hard. I have worked 60+ hours a week through my entire professional career and worked 25 hours a week while I was in college. I worked even more when I had my own business. This didn't help me in any way. Prices rose, pay scales and raises became a thing of the past, bonuses became a thing of the past, and for many people I know, jobs even became a thing of the past.


Now, many of my peers work at the grocery store, or WalMart, or in restaurants. They get lucky and land office work for $40K/yr. Some get good jobs, but that still isn't free money like the house appreciation, which is what I'm talking about here. That's what is tough to watch.

DkSailing: It takes a big man to step up and say what you said. Don't feel guilty. That's not necessary. It was just good fortune and I'm happy you were able to benefit from it. There's nothing wrong with that.

It's just that on this end of the stick, we can't even buy houses, nevermind getting a stroke of luck from them to pay for our boats. It's tough to read stuff like the luck some of the posters had above. All great guys, and great Cruiser's Forum contributors. Like them a lot and more power to them.. but DAMN... just one little stroke of luck would be nice.

Let me add briefly since many will start to say that boomers worked very hard: You did. No question. We all do. You guys just got a financial break that we didn't get. One of those breaks was real estate. The other was cost of living vs. the wages you made throughout your life. As an example, what did a Chevy cost back in 1975? What did you make per year back then?
What's a Chevy cost today, and what's the average worker make? See what I mean? Big difference in numbers. The Chevy costs a much larger percentage of your salary now than it did in the early parts of your careers.

Anyway, it's just a comment. I don't want to hijack the thread. Boomers worked very hard for what they have also. No ill will intended. I repect you all a great deal.

[knottybuoyz]

Boomers now have their own search engine on the web that supposedly tailors results just for them. Jury's still out on that one methinks!

cRANKy™

[Weyalan]

Just for the record, I am not really a baby Boomer. I would guess I'm the same age as Mr. Sullivan.

Using real estate to make money is not something that has become impossible these days. I only bought my house less than 5 years ago and sold it less than 1 year ago... and, for the record, I saved hard for the deposit But the point is, even 5 years ago when I bought that house for $115k, a nice house in a nice suburb cost $200-250k. The house I bought was not in a nice suburb, it was in a suburb of mixed residential, retail and light industrial... but it looked like it was beginning to become less industrial and more residential, with a couple of old warehouse areas being redeveloped into yuppy appartments. So, I took the risk, and it paid off. I spent a lot of time not eating out ever and I never bought a new item of clothing for a couple of years to put together the money for the deposit and other costs associated with the purchase, then I continued to live a fairly frugal existence while I paid of the loan as hard and fast as I could. In the approximately 4 years that I had the house I had paid off over 40% of the loan, and, as y'all know, it gets exponentially easier to pay of the loan as the interest goes down. And I was lucky that my prediction for the suburb was correct... but it wasn't exactly rocket science.

The thing is, real estate is cyclic. There are periods of rapid growth and periods of slow growth or even no growth. Perhaps houses used to cost less in proportion to wages, but I bet that back in your parent's days, you couldn't get a 95% loan, which you can these days.

I know that it is frustrating to see "money make money" while hard work barely seems to pay the bills. I know; I arrived in Australia a little over 10 years ago with a fews hundred dollars and a backpack. I watched my work assoicates buying new boats and new mercedes with the dividends from their investments while I paid the rent and put food on the table.

Now I am doing it relatively easy. I have my yacht (which cost about $US 50k) and I have about $US100k invested in a managed fund that will provide the cruising kitty when I sling the lines. I have gone from day-to-day, hand-to-mouth existence to relative comfort in 5 years or so. I still have to pay the bills, put food on the table and a roo over my head, but now I have a little more. In another 5 years I will probably be able to semi-retire and go cruising.

In 5 or 10 years you will probably have gone through the same thing and be "on easy street" and will have almost forgotten about some of the tough times.

[ssullivan]

Hey Weylan. I'm 35. Thanks for that uplifting post. I enjoyed it and it helps.

Question: I'm obviously an idiot when it comes to real estate, investing and anything else other than knowing how to keep a hold on the little money I do have. So is financing 95% to 100% of anything a good idea? I was under the impression that it isn't, as the interest chews you up and if the market dips, you go upside down quickly. What am I missing?

[Weyalan]

Hi Sean,

I am hardly the guy to be offering financial advice... I rely on good luck and guesswork rather than knowlege and good management!

Having said that, I will agree with you 100% that it is always better to borrow less rather than more. I actually saved / scrimped / stole / borrowed and begged about 30% of the value of the house that I purchased, and that certainly made the repayments easier to handle. I ended up borrowing 80k against that 115k property and when I sold it for $275k I owed about 47k.

It is extremely unlikely that you are any sort of an idiot, Sir. Borrowing 95% against a property is not ideal by any means, but if it is the only way that you can get into "the game", it is probably better than not playing the game. The bottom line is that if you aren't paying off a loan on your house, you are probably just paying off someone else's loan on their house (which you are renting). This is a self obvious truth, but it took me about 15 years too long to work out just how fundamental/important that the truth is. I really, really wish that I had bought a house before I turned 20, not when I was 35 (for the record, I just turned 40, so I am older than you, but at least in the same ballpark). When you buy, you are probably going to have to take a step down in size / standard from what you might be able to afford to rent, and it certainly won't be what you would ideally want, but, in my opinion, you have to get your foot in the door / toe on the ladder (insert cliche of choice). Real estate seems to cycle every 6 or 7 years, so even if all you are doing is making minimum repayments, the house will be going up in value and you will see a decent return on your investment relatively quickly (and you aren't paying rent). Think, for a moment, how much rent is, on average, in your area... multiply the average weekly rent x 52 and then x 7... that is how much "free" investment capital you have generated in owning your own place for 7 years...

Honestly, Sean, I am sure I am not telling you anything you don't already know. I am lucky in that I live in a relatively inexpenssive corner of the world, and I freely admit that I have had my share of luck. You are obviously not afraid of hard work, and you are smart enough that there is little doubt in my mind that you will be "doing ok" sooner rather than later. Just to put it into perspective... When I was 35 I didn't own anything except a 1975 station wagon and a push bike. Now, 5 years later I own a 40' yacht and a chunk of investments... life can change pretty fast!