Boating is like RVing, but some folks think it classier.
We are looking at boats with the idea of selling the RV and then living on the boat for the summer for a few years. Boating is an interesting endeavor as there are all sorts of boaters, just as there are all sorts of RV'ers. And like with RV's you can get into a lot of trouble with a boat very easily, and it can be hard to get out of it.
As I noted in the casino effect, there are a lot of financial transactions in this world that are easy to get into and very, very hard to get out of, just like a casino. When we were in Las Vegas, the Caesar's Palace casino had a conveyor belt to haul people in from the sidewalk, just like a slaughter house. Once inside, however, getting out required us to walk nearly a 1/4 mile through successive rooms of bright flashing lights, loud sounds, and noisy distractions. The exits were not clearly marked - intentionally.
You can buy a boat, lease a car, sign a student loan, or get a 20-year note on an RV like falling off a log. An hour in the "closing room" at the dealer or the registrar's office is all it takes. Then it takes a lifetime to pay off the note - as often you are "upside down" on the car, RV, boat, or education, for decades. Easy to get into, hard to get out of. That is the casino effect.
One boat we looked at, a hoary old Sea Ray, was sitting on blocks at a marina. The owner admitted that he hadn't had it in the water for over two years. His ex-wife wanted it sold, but he "had to get" $35,000 for it as that is how much he owed the bank. You see this all the time with boats, cars, jet-skis, or whatever - people thinking they are entitled to the balance on the bank loan, just because they owe that much. You try to explain to them market values, and they are deaf. You also try to explain to them that a boat that has high hours, shitty maintenance, and several major defects isn't worth squat, but don't bother. The owner wants to pay off the note, and he thinks he is entitled to this, just as a millennial with $50,000 in student loans thinks he is entitled to a six-figure salary and a corner office.
And as I noted in the upside-down boat, there are millions of boats, RVs, cars, motorcycles, jet skis, and snowmobiles rotting in side yards across America, as their owners continue to pay on the loans on these items which are worth less than the balance on the note - and the owners have long since lost interest in them. You can make expensive mistakes in life, very easily, in a matter of a few hours and a few signatures. Leave your pen at home.
Boating is particularly weird in that many people own boats and rarely go boating. We've visited several marinas where people have made encampments on the dock next to their boats, with barbecue grills, refrigerators, entertainment systems, and a "nest" of chairs. They drive 2-3 hours every weekend to sit next to their boat and drink cocktails with the other boat owners, occasionally washing and waxing the boat, but rarely ever leaving the dock with it. This struck me as rather absurd, but it is what a lot of boat owners do.
For example, one boat we looked at had 400 hours on the engines (gas engines, which are good for about 1500 hours before a rebuild) since it was built in 1993. The owners drove from Rochester, New York to the 1000 Islands every weekend for 12 years to "hang out" on their boat, but they rarely left the dock with it. I can't in my own mind, justify such an expense for something used so intermittently. If I have a boat, I want to be using it, not every weekend, but nearly every day.
RV'ers are no different. Many will keep an RV at a campground all "season" and then visit it on the weekends only, hanging out with friends and drinking, but rarely, if ever, traveling in the RV itself. One wonders why they don't just buy a cabin or at least a park model. Buying a motorhome and then never driving it anywhere seems kind of silly, but I guess I am the only one to think that way.
One problem with these sorts of purchases - or any sort of purchase - as that few of us think of them in terms of the "end game". If you buy something, how do you get rid of it down the road? You want that shiny new cell phone, but fail to think about the five or six old cell phones you bought in years past that are not rotting in a drawer or closet somewhere because you can bring yourself to throw them away. Everything you buy has an "end game" associated with it, and planning this end game is essential.
That is one reason some folks like leasing cars or "upgrading" to new cell phones every few years. You get a new toy every so often and the old one goes away without fuss or bother. Well, there is a fuss and bother, but it is in your bank account - you get dinged for "turn-in fees" on the car, or you pay far too much for the new cell phone. But it illustrates how much people are willing to pay for convenience or perceived convenience.
Our plan in buying a boat is not to have one "forever" but for maybe 3-5 years. And as such, we have to be cognizant of how to get rid of it later on. After five years, you can expect the boat to depreciate by as much as half the price you paid for it. Financing such things on 10-year notes is dangerous as your are likely to be upside-down on the note for at least 7 years. Not only that, but you will pay as much in interest as you do in principal on the note. And yet, that is how most people pay for things.
Paying cash avoids this problem, but many folks will make specious arguments that paying cash forgoes the "opportunity cost" to make money in the stock market. Yet, if I borrow money at 4.5% on a boat loan (and pay almost 100% interest payments the first year) am I really coming out ahead? What investment out there promises a guaranteed 4.5% rate of return on my money? Moreover, if I decide I want to sell the boat, I don't have to worry about being "upside down" on it.
A boat like this can be had for about $30,000 with low hours and in good condition. Since few people can pay cash for older boats, prices are low.
In the age and price range we are looking at there are very good bargains to be had, as boats of this age are difficult to finance. Joe Paycheck can get a loan on a brand-new boat at the dealer, who has a relationship with a local finance company. But older boats are harder to finance and as such (like older cars) the price drops off accordingly.
But as I have noted in the past, when you buy an older boat, car, RV or whatever, you really are just buying the repair rights. Once you own the item in question, you have to pay for the upkeep. And with larger boats, the upkeep can be expensive. Just for docking, storage, winterizing, annual maintenance and the like, the costs can be $5000 to $8000 a year depending on the boat size, the marina in question, and the type of storage and docking. Keeping a large boat clean is a major chore and many owners hire locals to wash and "detail" their boats on a weekly basis. The actual cost of purchase will be quickly exceeded by the maintenance and fuel costs within a few years. Add to that the cost of transient docking, if you want to travel at all - and don't want to anchor out every night.
And this is assuming you don't have any major repair problems such as a bent propeller or shaft, repowering, or whatnot. Everything associated with boats is expensive, and often what would be a simple repair in a car is a major headache in a boat, particularly in some models which have engines located in remarkably inaccessible places.
So, are we going to buy a boat or what? Maybe. Maybe not. Our timeline is the next two years, so we have plenty of time to do more research. Since we can pay cash, we are in a position to make a deal when the time is right - for example in February when the boat is in storage and the owner needs to get out from under it in a hurry.
But it may turn out we don't want to own a boat at all. You can rent boats in many places, and our immediate plan for next year is to rent a boat or houseboat on the Erie Canal and the Rideau Canal (in Canada) for a week or more and figure out whether owning a boat is worthwhile. It may be that after a few weeks of renting a boat, we decide we've "been there done that" or that renting is a far better alternative than spending a pile of money on a rapidly depreciating asset and maintenance.
I also still like the idea of a boat I can maintain and haul myself. One problem with larger boats is that it can cost $150 to $300 just to have it hauled out of the water. And once out of the water, you are often at the mercy of the mechanic at the marina closest to where it broke down. A trailerable boat may be smaller, but you have more choices in terms of storage, repair, and general maintenance. The cost of "hauling out" a trailerable boat is often free. And boats of 30 feet or more can still be trailered (although you'd better have a good trailer and truck to haul it with).
Traveling long distances by boat is often boring and sometimes dangerous, if the weather changes suddenly. Our boats got maybe 1-2 miles per gallon and had a top speed of 30 miles per hour or so. On the trailer, however, they were getting 10 miles per gallon and capable of 70 miles per hour. Many States have free boat launch ramps (or ramps with modest fees) and free trailer/truck parking. It may make more sense to buy a 28 foot cabin cruiser and trailer it than to own a 35 footer and never go anywhere.
But we have all the time in the world to decide, and we need a boat like we need a hole in the head. Once you decide you "have to have" something, it is all over for you. We are enjoying retirement and don't want to fuck it up with something as stupid as a boat purchase.