Home vs Boat

[Capn James Brett]

Supposing you had a mortgage... let's say a $300k to $500k mortgage. If you could sell it and pick up whatever equity you had in it, would you ever consider buying a $300k to $500k boat and having a similar loan amount?

My wife and I are going back and forth between a big expensive boat that would replace our mortgage (payments would be a little lower because of equity in the home, but it would still be something upwards of a house payment), or a smaller and cheaper boat with very little debt. Her perspective is that if we're going to do it, we should go all-in and have a very nice boat. Me, on the other hand, am very concerned about the diminishing value of a boat vs. the increasing value of a house, and love the idea of being nearly debt free.


How have you wrestled with this decision?

What an exciting choice you have here.
I bought my trawler 3 years ago, 87 Defever POC and love it. However, I looked all over and thought this boat would be the one I would live on retirement. It's certainly big enough. My thought on your post, you certainly don't need to spend 300-500K for a very nice boat. Mine needed some cosmetic work, had her repainted with awlgrip in Mexico with a Mexican make over and some nice granite work done down there.She looks new now and for a fraction of a much newer yacht.
My point, maybe consider less upfront costs and do some work yourself and avoid the huge depreciation as well.
Good luck and let us know what you decide. Safe travels.

 

[Seevee]

Definitely a condo for those wishing to escape maintenance. Just remember, there is no free lunch. Condo fees include maintenance just as a home owner can pay for services rendered.

I've looked at condos enough to realize that the fees are ALWAYS more than the costs on a comparable single family home. And, you often have a lot of "extras" that you don't have in a home... management costs, roads that are owned by the association and not the county (but you'll pay county taxes to support my home anyway), guards, fencing, pools, tennis courts, etc., etc.

They you have the condo gestapos, the folks that have nothing better to do, than to get on the board so they can tell you how to live and what to pay for it.

We have a TON of condos around my neighborhood, and a good many of my friends live in them. At least 50% of them have just moved out because they couldn't stand the BS, plus the costs. And most of the rest of them just don't like living there.

There's a "few" exceptions in some of our waterfront condos, where you essentially pay for the privilege of being on the water. An example is the units just to the north of me. You can get a fairly nice waterfront condo, with dock and a reasonable location in the $400K range, with fees of $600 a month (over and above the rest of your fees and taxes). A similar home of the same size would run between $600 and $800k, but would cost less to own and maintain. Your condo lot size would be half as big, single car garage and rules up the ying yang.

Ya make your choices. Condos... NO FRIGGIN WAY!

 

[Seevee]

<<<Originally Posted by tiltrider1 View Post
Sell the house. Buy an apartment building. Let some one else make your mortgage payments.>>>

We own 19 units AND our house all mortgage free. Sure, rental property is a gift that keeps on giving, it like all things however has drawbacks. No need to make a list of the awe shucks other than to say not everybody is cut out to be a landlord. There is more to being a landlord than just collecting rents.

Good points,

Yes, good rental property is MUCH better than the stock market. However, BOTH REQUIRE SKILLS. One is not automatically a good landlord because they've rented a home once, nor is one a savvy market investor because they qualified for a bank account.

Personally, I could argue the single family home as by FAR the best investment. Much easier to buy/sell, manage and is less subject to laws, rent control and government intrusion. And, overall, have a better appreciation situation. And, generally, you attract better tenants which is the key to property management.

I've had both over the years, but only SFHs for now. I've had the best of tenants (and still do). They fix the place up, improve it and pay off my debts and give me a profit. And they have added pools, patios, new bathrooms, flooring, etc., etc. NONE of my multi family folks have ever done that.

However, could argue that however you invest your dollars, you get training on doing it.

 

[Seevee]

If you count the interest paid on the mortgage, houses very rarely make money. For the most part, only people who buy houses for cash or flip them fast actually come out ahead. Your typical 30 year mortgage holder pays between 1.5 and 2x what the house is worth by the time they truly own it.

A $400K 30 yr mortgage at 4% means you'll actually pay $690K (not counting taxes and maintenance or the interest tax deduction) for that $400K house. If the property values go up enough in 30 years maybe it'll work out, but you're rolling the dice.

You also have to consider the inflation rate. A house whose price goes up at the same or lower than the rate of inflation is not actually increasing in value.

In the example above, if after 30 years you sell the house for $700K, you can brag to your friends that you made $300K on your house, but all that really happened is you broke even (which is probably better than most people).

Good point. That's why we take the above situation and put it into rental income, where the tenant pays the $690 and then some.

A personal residence, boat, car or plane is NOT and investment, and I could argue to only finance investments that pay for the cost of money. While often not possible, I could argue to limit consumer debt only to a personal residence, the boat included, but will more than likely cost a LOT more than a dirt home, unless one is ok with living with a lot less.

 

[Seevee]

The best investment most people make is purchasing a home. The worst returns in real estate is residential homes. If you can move up just one rung on the ladder you will probably double your net worth.

Tilt,

Not quite correct..... I've found the BEST returns in residential homes.... often as much 10 to 15% for passive stuff, and if one works it a bit, up to 100%. The market isn't close.

Assume you're first sentence is for home owners, and the second sentence is for an investor?

 

[JLD]

I'm not getting into buying a home as an investment, only, tool as I have already expressed my opinion. While I'm very happy for you with the returns that you have realize, the numbers are not realistic for the average homeowner.

I do disagree with your HOA assessment. There are good HOA's and bad HOA's. If one lives in a development with a good HOA (or condo association) one can potentially get a lot for their money.

Our home of 25 years (sold this January) had HOA fees of about $1300 per year when we sold our home. That fee covered access to our 210 acre lake (the largest privately owned lake in Maryland), three sets of pools, numerous tennis courts, and a very extensive trail system. It also covered maintenance for our private roads (always keep plowed unlike many of the local public roads), and even our trash and recycling pickup. While I never liked writing the yearly check, I never regretted doing so. We also NEVER had an overly aggressive HOA.

Not everyone wants the maintenance burden of owning a single family home. Thus, aside from price, condos or townhouses might be a great option for them. It's all a personal decision based on the needs and wants of the potential buyer.

Jim

 

[South of Heaven]

This thread is fun. We all love spending other people's money! Lol

 

[BandB]

Ya make your choices. Condos... NO FRIGGIN WAY!

We live in a house. However, there are situations in which condos make a lot of sense. While maintaining a house can be less than a maintenance fee, it's not as easy if you're not home. We have friends who are home less than 50% of the time and condos work very well for them. I know others who want waterfront without the cost and they work fine. Some places then they're the only choice such as beachfront Fort Lauderdale. Then the young entrepreneur who is fully invested time wise and emotionally in her business and wants nothing more to deal with and the condo represents a trouble free, safe, and pleasant environment.

While condo "gestapo" or "commandos" are common in some areas, there are many well run and problem free condos in other areas. In our area, condos are common and many excellent ones with great management. In other areas, it's not the same.

Still may not be great investments, but may be perfect for what one needs.

 

[BandB]

Tilt,

Not quite correct..... I've found the BEST returns in residential homes.... often as much 10 to 15% for passive stuff, and if one works it a bit, up to 100%. The market isn't close.

Assume you're first sentence is for home owners, and the second sentence is for an investor?

Actually your last sentence is closer. Residential homes are like any investment. They are lousy investments for those who don't know what they're doing and can be great investments for professionals in making such investments. It's your profession and you're very good at it. Someone else may look and see you and think it's easy money and then lose everything. I'm an expert investor in small businesses but know nothing about being successful as an investor in single family homes and to do so without building some knowledge would not be successful doing so.

 

[ssobol]

...Our home of 25 years (sold this January) had HOA fees of about $1300 per year when we sold our home. That fee covered access to our 210 acre lake (the largest privately owned lake in Maryland), three sets of pools, numerous tennis courts, and a very extensive trail system. It also covered maintenance for our private roads (always keep plowed unlike many of the local public roads), and even our trash and recycling pickup. ...

It is only worth it if you actually use all that stuff.

Where I live the trash and recycling pick up is part of the local taxes, so you might've been paying twice for that.

Personally, I'd never live somewhere that has a HOA. However, it is getting harder and harder to find such places, particularly in "newer" cities like Las Vegas.

 

[BandB]

It is only worth it if you actually use all that stuff.

Where I live the trash and recycling pick up is part of the local taxes, so you might've been paying twice for that.

Personally, I'd never live somewhere that has a HOA. However, it is getting harder and harder to find such places, particularly in "newer" cities like Las Vegas.

Well, we have the most unique HOA of all. Ours is volunteer. To be a member you pay $1000 a year but you don't have to be a member just because you live in the community. There are 315 total homes. The fees all go to paying for security. We have a small guard house but no gated entrance and security that roams the neighborhood. Must work as we have minuscule crime and nothing significant. In Fort Lauderdale, you can actually find crime statistics by HOA.

Our HOA owns no property, not even that the guard house is on as it's city right of way for which we have permission and maintain. So we have flowers there maintained also by volunteers.

Oh they also keep solicitors out.

 

[Seevee]

Actually your last sentence is closer. Residential homes are like any investment. They are lousy investments for those who don't know what they're doing and can be great investments for professionals in making such investments. It's your profession and you're very good at it. Someone else may look and see you and think it's easy money and then lose everything. I'm an expert investor in small businesses but know nothing about being successful as an investor in single family homes and to do so without building some knowledge would not be successful doing so.

BandB,

Good points, but NO investment is a good one unless you have SOME knowledge of how to make it work, be it houses, apartments, businesses, stocks or buying notes.

One needs education to make money. And being in business most likely requires the most. Hats off to you. I made money in the small businesses I had, but spend a LOT of dollars and effort on training, especially my manager. He went regularly to class to be specifically trained on how to continue to profit with the business we were in. I also relied on my in house and my outside accounting firm to keep me up to date constantly and adjust as necessary to keep it profitable.

Did the SAME with real estate (and still take a class on something every year or more). But I found the real estate business produces WAY more net worth than the other businesses with WAY less work. So, I stayed with that, which has paid for all my toys, girlfriends, booze and then some. And today, the effort is just minimal. It was the perfect investment thing to have to make time for the Loop and other long activities. And houses were the least effort.

BUT.... different strokes, and I certainly don't have an issue with a successful business person. They deserve everything they make.

But, you know something interesting...... About 75% of my friends with their businesses have taken their business profits, put them in real estate and ended up with a LOT more in the end. Even in my business, I bought the property and when I sold the business I rented the new owner the building (which was free and clear) for a long term that produced almost as much as the business produced.

Hats off to your with your successful business!

 

[foggysail]

<<<Originally Posted by tiltrider1 View Post
Sell the house. Buy an apartment building. Let some one else make your mortgage payments.>>>



Good points,

Yes, good rental property is MUCH better than the stock market. However, BOTH REQUIRE SKILLS. One is not automatically a good landlord because they've rented a home once, nor is one a savvy market investor because they qualified for a bank account.

Personally, I could argue the single family home as by FAR the best investment. Much easier to buy/sell, manage and is less subject to laws, rent control and government intrusion. And, overall, have a better appreciation situation. And, generally, you attract better tenants which is the key to property management.

I've had both over the years, but only SFHs for now. I've had the best of tenants (and still do). They fix the place up, improve it and pay off my debts and give me a profit. And they have added pools, patios, new bathrooms, flooring, etc., etc. NONE of my multi family folks have ever done that.

However, could argue that however you invest your dollars, you get training on doing it.

Seevee, Yes, a SFH does offer less risk especially if your investment period is short. Our apartments were purchased for long term holding. There were times when my Wife suggested we sell, I refused because the last thing I wanted was a bucket of bucks. My goal has always been to ensure a cash stream instead. No matter how large one's bucket is, it remains a bucket. When money is withdrawn without a means for refilling, eventually it will empty completely. The last thing in life I want is to run out of money before I run out of breath.

Our choice of investing into apartments vs SFHs was simple. Apartment buildings offer a higher return on investment unless of course one gambles in the flipping market. We don't. I have about 25 years experience operating and managing our company. Earlier in life I was a circuit design engineer, later an engineering manager. A landlord's life can be tough, not everyone should be a landlord. I believe one should have some type of management skill prior using property as an investment. An inexperienced person should carefully consider all risks before venturing into becoming a landlord, be it for an apartment building or a SFH. Just my thoughts.

 

[Bryant]

Boat vs house

We talked about the same thing. When you consider appreciation of real estate vs depreciation of a large boat, ins cost on a boat like that, maintenance and upkeep, slip fees etc, in my opinion, it doesn’t make sense. Then there is the issue of selling it when you are ready. Boats like that don’t sell overnight. It can take quite a long time. To paraphrase the old saying “If you have to ask how much it costs, you can’t afford it” if it’s a question of not being able to own a home and the boat at the same time, you can’t afford it.
For us there was the issue of things we’ve accumulated while living overseas and traveling that we just can’t part with so now you add in the expense of storage. Finally, we love to travel.as much as we love boating. This year we have been to Scotland for two weeks and we are getting ready to go to Singapore and Thailand for two weeks. We couldn’t do this if we had a large boat. So, we opted to go with an older GB 36 and make improvements to it while using it, we own a comfortable home and we get to do other things we enjoy.
These are just my thoughts. When it comes right down to it, you just have to do some serious soul searching and be really honest with yourself about what you want. Don’t make the decision quickly. Give yourself time to really think it through. Good luck.

 

[billhall]

no

Are boats now increasing in value as most homes do? It is a very large boat that can offer the same amenities that a home offers, even a small home. No, not putting down anybody who lives on a boat. That is a personal choice and their preference

boats are not an increasing asset

 

[Simi 60]

As a counter argument

We talked about the same thing. When you consider appreciation of real estate vs depreciation of a large boat, ins cost on a boat like that, maintenance and upkeep, slip fees etc, in my opinion, it doesn’t make sense. .

It makes sense if you can keep the house and rent it out
Buy the boat for cash
Live on it without using marinas
At least do some of the maintenance yourself

Then there is the issue of selling it when you are ready. Boats like that don’t sell overnight. It can take quite a long time.

That they do and because of this you can often get them really really cheap

For us there was the issue of things we’ve accumulated while living overseas and traveling that we just can’t part with so now you add in the expense of storage.

We had the same.
We "stored" non essential stuff in a rubbish skip which was very enlightening
And the essential stuff , stuff you actually use, then fits fine on a bigger boat.

Finally, we love to travel.as much as we love boating. This year we have been to Scotland for two weeks and we are getting ready to go to Singapore and Thailand for two weeks. We couldn’t do this if we had a large boat.

As do we
All of our travel is South East Asian based and we plan on getting up there on our own bottom, accommodation and transport sorted.
We couldn't do this if we had a small boat.

 

[jovial_cynic]

After much deliberation (I started this thread back in April!), my wife and I settled in on this:

1. Buy a less expensive boat which won't require much of a loan. We're buying a 1991 Bayliner 4588 and moving aboard.
2. Sell the house, and buy a smaller house that makes more sense as a rental.

Now, as far as I know, the Bayliner isn't a "trawler." It's a "motor yacht." So once I sell our Tollycraft 40', I'll no longer be a Trawler owner? Will I still be welcome here?

 

[SteveK]

After much deliberation (I started this thread back in April!), my wife and I settled in on this:

1. Buy a less expensive boat which won't require much of a loan. We're buying a 1991 Bayliner 4588 and moving aboard.
2. Sell the house, and buy a smaller house that makes more sense as a rental.

Now, as far as I know, the Bayliner isn't a "trawler." It's a "motor yacht." So once I sell our Tollycraft 40', I'll no longer be a Trawler owner? Will I still be welcome here?

In your opinion why is it not a trawler any more than the Tolly. Is it because it can travel over 10 knots at cruise. What?
Nice bayliner BTW

 

[ksanders]

After much deliberation (I started this thread back in April!), my wife and I settled in on this:

1. Buy a less expensive boat which won't require much of a loan. We're buying a 1991 Bayliner 4588 and moving aboard.
2. Sell the house, and buy a smaller house that makes more sense as a rental.

Now, as far as I know, the Bayliner isn't a "trawler." It's a "motor yacht." So once I sell our Tollycraft 40', I'll no longer be a Trawler owner? Will I still be welcome here?

I’m here and own a Bayliner 4788

 

[Comodave]

Yes, you will still be welcome. Congrats on your new boat.

 

[Ka_sea_ta]

After much deliberation (I started this thread back in April!), my wife and I settled in on this:

1. Buy a less expensive boat which won't require much of a loan. We're buying a 1991 Bayliner 4588 and moving aboard.
2. Sell the house, and buy a smaller house that makes more sense as a rental.

Now, as far as I know, the Bayliner isn't a "trawler." It's a "motor yacht." So once I sell our Tollycraft 40', I'll no longer be a Trawler owner? Will I still be welcome here?

We were in similar situation when we retired a few years back... So we sold our home in the south sound, bought a home in AZ and during the summer planned to live aboard our 48 Defever which we kept in Gig Harbor.... This worked for a couple of years while the Defever is a great cruising boat it didn't work well as a live aboard for us particularly my wife. We sold the Defever and looked at the different ways we could still spend our summers in the PNW. We looked at RVs, buying a condo or just renting. After a lot of deliberation, we bought a 4588 Bayliner, its far more comfortable then the Defever it has more living space and most importantly my wife is happy with the boat.... Good luck I hope the boat works for you as well as does for us..

 

[Seevee]

There's no "one choice fits all" in these decisions.


However, I could argue to be sure the choices fit ones financial situation. The dirt home generally keeps up with inflation, so it gives one an easy financial situation to trade, move up or down in houses.


The boat is a depreciating asset and as it ages, it becomes worth less. One could get into a spot where upgrading the boat, even with a smaller one, requires a lot more dollars.


But, both are expenses.... none are investments. If one can afford it, get whatever you want. I could make a strong argument against financing a toy, like a boat, unless you're SURE that you will have enough dollars to live on without stretching your budget.... or better yet, coming into enough dollars later on to pay off the debt.



While I love to live on the boat, I'd probably never make a good full timer. Like my dirt. Also, I'm not a minimalist. Way too much junk to take care of. Have a shed full, a house full and a hangar full and would miss it if I didn't have it. I've got tools and toys I'll never need and love every one of them.


Now, I'm going shopping for more junk.....

 

[BandB]

There's no "one choice fits all" in these decisions.


However, I could argue to be sure the choices fit ones financial situation. The dirt home generally keeps up with inflation, so it gives one an easy financial situation to trade, move up or down in houses.


The boat is a depreciating asset and as it ages, it becomes worth less. One could get into a spot where upgrading the boat, even with a smaller one, requires a lot more dollars.


But, both are expenses.... none are investments. If one can afford it, get whatever you want. I could make a strong argument against financing a toy, like a boat, unless you're SURE that you will have enough dollars to live on without stretching your budget.... or better yet, coming into enough dollars later on to pay off the debt.



While I love to live on the boat, I'd probably never make a good full timer. Like my dirt. Also, I'm not a minimalist. Way too much junk to take care of. Have a shed full, a house full and a hangar full and would miss it if I didn't have it. I've got tools and toys I'll never need and love every one of them.


Now, I'm going shopping for more junk.....

Wifey B: I know it surprises no one that I am not a minimalist. However, boating and cruising has increased my need for my land house.

Why? Because I find local crafts and art and things that reflect areas I visit and have to have space at home to store and display it all. Some use photos, I use art. It's a bit like a scrapbook, other than the fact it's a room.

 

[foggysail]

There's no "one choice fits all" in these decisions.


However, I could argue to be sure the choices fit ones financial situation. The dirt home generally keeps up with inflation, so it gives one an easy financial situation to trade, move up or down in houses.


The boat is a depreciating asset and as it ages, it becomes worth less. One could get into a spot where upgrading the boat, even with a smaller one, requires a lot more dollars.


But, both are expenses.... none are investments. If one can afford it, get whatever you want. I could make a strong argument against financing a toy, like a boat, unless you're SURE that you will have enough dollars to live on without stretching your budget.... or better yet, coming into enough dollars later on to pay off the debt.



While I love to live on the boat, I'd probably never make a good full timer. Like my dirt. Also, I'm not a minimalist. Way too much junk to take care of. Have a shed full, a house full and a hangar full and would miss it if I didn't have it. I've got tools and toys I'll never need and love every one of them.


Now, I'm going shopping for more junk.....

I agree strongly with most of your post except for a desire to live on a boat. Here it becomes a personal choice of course; for me our boat is in a toy category. Our house has 4 bedrooms, one used as an office and an other for exercise equipment all stuffed into 2500 sq ft living space to accommodate 2 people. Small by our neighbor’s standards. I would really be forced to change my life style to live on a boat. Yes there are boats large enough to live on comfortably but I could not afford dockage never mind the other big boat expenses.

 

[Seevee]

Wifey B: I know it surprises no one that I am not a minimalist. However, boating and cruising has increased my need for my land house.

Why? Because I find local crafts and art and things that reflect areas I visit and have to have space at home to store and display it all. Some use photos, I use art. It's a bit like a scrapbook, other than the fact it's a room.

Good point, I'll bet you have a lot of nooks and crannies in the house for your stuff... The crafts stuff sounds neat! And, yes that can take space.....

 

[BandB]

Wifey B: If all our family and friends were retired, we could more easily live on a boat or boats. However, many of them work. They occasionally join us cruising but that's not enough. We look forward to times at home when they all come over. Right now the seas are 8' at 7 seconds so no boating being done here. We have a small group here today, but tomorrow we'll have 25 or so over for a cookout. I don't even know how many.

 

[ben2go]

After much deliberation (I started this thread back in April!), my wife and I settled in on this:

1. Buy a less expensive boat which won't require much of a loan. We're buying a 1991 Bayliner 4588 and moving aboard.
2. Sell the house, and buy a smaller house that makes more sense as a rental.

Now, as far as I know, the Bayliner isn't a "trawler." It's a "motor yacht." So once I sell our Tollycraft 40', I'll no longer be a Trawler owner? Will I still be welcome here?

That sounds like a workable plan. Technomadia on youtube have a nice boat same or similar to the BL 4588. You may want to check them out. They have made some pretty good upgrades that you may be interested in.


We don't don't usually discriminate against boat brand or type. It's ok to own a plastic fantastic go-fast boat, just have to run her slow so everyone thinks you're a trawler yacht.

 

[jovial_cynic]

Awesome. I'm glad I get to stick around!

For folks recommending the Technomadia videos, thanks! I have watched a few of them. Lots of good info.

My wife and I run a podcast (www.dropanchorpodcast.com) where we have been talking through this whole decision-making process. I think we have more fun making the audio show than doing any boat stuff!

 

[ben2go]

Awesome. I'm glad I get to stick around!

For folks recommending the Technomadia videos, thanks! I have watched a few of them. Lots of good info.

My wife and I run a podcast (www.dropanchorpodcast.com) where we have been talking through this whole decision-making process. I think we have more fun making the audio show than doing any boat stuff!

You should keep doing those and come up with a way to monetize them to help pay for the boat. It seems to be the way the youngsters are doing it these days, says the 42-year-old respondant. :lol:

 

[jovial_cynic]

You should keep doing those and come up with a way to monetize them to help pay for the boat. It seems to be the way the youngsters are doing it these days, says the 42-year-old respondant. :lol:

Interestingly, ever since I posted a link to the podcast on the facebook Trawler and Liveaboard group, I've had a huge spike in listeners in the "Male, 50+ and older" group. Makes sense!