Buy a slip or keep renting one...

SkiPharmer

SkiPharmer

Active Member
Jul 27, 2014
282
St. Croix River, MN
Boat Info
2001 Formula 41 Performance Cruiser
Engines
Twin 8.2. Liter Mercruisers Direct Drives
So i know there have been a few threads on this. They all seem to be a bit different than my situation. Our marina is in Afton, MN (Windmill Marina). We love the marina, have been there for 4 years and don't ever want to leave. We are currently renting a 36 foot slip for $5200/year (slip, water, electric and winter storage included). We eventually want to upgrade to a 40-44 Sundancer in the next 5-8 years. There is a slip for sale that is 15x44ft for $80,000. HOA or "common fees" are roughly $2,400 a year if we buy the slip. I would need to finance it, the terms are 4.5% and after 5 years it goes to a balloon. We would put $16,000 down and finance the rest. Giving us a payment of $405/month. The slip rents for $7200/year. We don't plan on leaving this marina and plan to boat our whole lives. We are fairly young (37 and 34) with two small kids 4.5 and 20 months. Lets hear your advice!

Thanks!
 
iSlips are not liquid and in a down economy they can lose value quickly. In a 2008 type recession you might find you can't sell it any price. The benefits of purchasing vs. renting are not compelling unless you believe the slip is going to appreciate quickly. If I was in your shoes I would invest the $16,000 and continue to rent
 
Does the $2400 a year cover replacing the dock when it eventually needs it? How old is the marina? Any history of assessments like condos have?
 
I am inclined to agree with JimT. Based on the figures you provided, around the 17 year mark, things come are about the same whether you buy or rent. At $2400/year X 17 years=$40,800 + $80,000=$120,800 to buy it and you continue to pay $2400/year afterwards. 17 years of renting at $7200/year=$122,400.

A lot of things can happen in 17 years. As a renter you can walk away. As an owner, you are obligated to keep paying whether your investment is still worth the investment or not.

Just my $0.02...I am sure you will make the decision that is right for you and best of luck either way!

Bennett
 
Thanks I appreciate it! I was on the fence, and then I was for sure gonna do it but then i crunched the numbers more and now I am thinking more about NOT doing it. $16,000 is a lot of money and paying down other debt (cars and 2nd mortgage) sounds appealing to me.
 
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Yeah taking out a loan on a non-appreciating or even a flat asset doesn't make a lot of sense, particularly if you have other debt. Now if you were in a position to pay cash for it, the advice might be different.
 
I am assuming that where you live you pay the $5200 annual fee for really only what....5-6 months of boating? Yes, you do have to pay for winter storage someplace but both scenarios seem like a small actual boating return for the dollars.

There is another thing to consider....You say you don't ever want to leave the marina but you are only 37. So many things could happen in your life to alter that thinking. What if you receive a job opportunity of a lifetime in another state? I grew up in Seattle and never thought I would leave. Then at 35 I received a great job offer in Houston. Moving was scary but we decided to give it a 2 year try. I haven't lived in Seattle since even though my Mother and brothers are still there. I moved in 1975. You just never know where things might take you.

Purchasing the slip would be a better deal if you did not have to finance it. If it was a smoking' deal that had an appreciable resale record maybe I would think differently. I dunno.... sound to me like you should just sit tight for now. In my life, for every real estate deal I passed on or didn't get, a better one came along. Your gut instinct is usually right. What is your gut telling you.

Best of luck
Shawn
 
Interesting.... Fall of '16 we made of opposite decision and purchased in Bayport, MN. Our rents are 10k for a 50 ft slip.

In my thinking using the example above after 17 years you at least have something you can sell. If you rent for 17 years you still have nothing to show for it.

To us it boiled down to renting vs buying a house. Housing price are up big time in our area. Do you not buy because the might be lower in 5...10..15 years?

Feel free to PM if you would like any further info.
 
That slip seems a bit small if you get a 44 Sundancer the boat has a 14' beam and is 45' overall without a hyd swim platform...(I am in a 17x50 and I think I am too cramped with neighbors and length)

I thought we would never go bigger... My wife said last year I need to get a bigger boat ... :) Point is you never know what's going to happen so leave yourself options.... I think the greatest thing about renting is you can go anywhere and in your case move around the marina if you don't like your spot for what ever reason.

As far as the money goes... You can justify anything... But keep in mind your buying access to a rectangle of water. It will swing wildly with demand... I am thinking in your case and current economy it probably hasn't been worth more... So it most likely can only go down....

I would take the money and buy a bigger boat !!
 
Last edited:
Zach312 said:
Interesting.... Fall of '16 we made of opposite decision and purchased in Bayport, MN. Our rents are 10k for a 50 ft slip.

In my thinking using the example above after 17 years you at least have something you can sell. If you rent for 17 years you still have nothing to show for it.

To us it boiled down to renting vs buying a house. Housing price are up big time in our area. Do you not buy because the might be lower in 5...10..15 years?

Feel free to PM if you would like any further info.
Click to expand...

The analogy to renting vs buying a house doesn't work. Housing is a necessity whereas boating is discretionary. Mortgage interest is deductible. The interest on a slip is not. If you lose your job, suffer health issues, get divorced, etc. you can get out of boating for the short or long term. You will always need a roof over your head.

The OP may be committed to boating for life but the odds that a 37 year old will be boating from the same slip in 17 years are very low. 17 years ago I was a committed sailor and owned a sailboat on the coast. Today I own a powerboat on a inland lake. Things change!
 
My monthly payment would be $405 over 20 years and this is at 4.5%..after 5 years it could and probably would go up. $405/month/20 years= $97,000 + $16,000 (down payment) + $2,400(20 years)(HOA) = $159,000. I currently pay $5200 a year for my slip, let’s say I upgraded boats next year (which I don’t plan on to for 5-7 years) then that slip would be $7200. $159,000/$7200= About 23 years to break even. Doesn’t seem worth it.
 
Our marina is a condo association also and we've purchased two different slips over the last 18 years. Back then, 60' covered slips were selling for $50-60k....now they're worth $20k. The other issue are the unforeseen assessments that can be charged over and above your condo fees. We've had a "special assessment" for the last 8 years with no end in sight due to dock and bulkhead replacement. We had a covered shed collapse due to snow and all the owners paid dearly for upgrades during the dock replacement. Fortunately, it was my dock so I got to reap the rewards unlike others.
 
Agree with most other posts. This is a math problem. And the answer doesn't support purchase. You need the purchase price to be MUCH lower for the math to work IMO.
 
Nice Marina BTW........my .02 cents
 
SkiPharmer said:
So i know there have been a few threads on this. They all seem to be a bit different than my situation. Our marina is in Afton, MN (Windmill Marina). We love the marina, have been there for 4 years and don't ever want to leave. We are currently renting a 36 foot slip for $5200/year (slip, water, electric and winter storage included). We eventually want to upgrade to a 40-44 Sundancer in the next 5-8 years. There is a slip for sale that is 15x44ft for $80,000. HOA or "common fees" are roughly $2,400 a year if we buy the slip. I would need to finance it, the terms are 4.5% and after 5 years it goes to a balloon. We would put $16,000 down and finance the rest. Giving us a payment of $405/month. The slip rents for $7200/year. We don't plan on leaving this marina and plan to boat our whole lives. We are fairly young (37 and 34) with two small kids 4.5 and 20 months. Lets hear your advice!

Thanks!
Click to expand...
Gol-dangit son, is that you again?:( I already told you to compare the numbers....you can pee it away on a boat or pay it to yourself. One way you'll have a little better than -0-, the other way could be a nice retirement cushion with 2 commas in it.
 
Great to hear others thoughts on the topic.

We are glad to have purchased. Who knows if we bought at the top of the market and it goes down from here I am sure we will feel differently.

The renting vs owning a house analogy applies to us in the sense that I would apply it to anything I anticipate continuing to use for years into the future. Things change and it may be difficult to sell a house to relocate for other life opportunities as well. I felt at some point I had to draw a line in the sand.

Assuming slip values stay the same our break even point is 5-6 years. I understand values may go up and may go down but I also felt i didn't want to continue to spend 10k/yr and never be able to recoup any of it. At some point I felt I had to make some assumptions.
 
Woody said:
Gol-dangit son, is that you again?:( I already told you to compare the numbers....you can pee it away on a boat or pay it to yourself. One way you'll have a little better than -0-, the other way could be a nice retirement cushion with 2 commas in it.
Click to expand...


I assume you are referencing that the slip isn't going to zero and you will have something to sell in the end?
 
Zach312 said:
I assume you are referencing that the slip isn't going to zero and you will have something to sell in the end?
Click to expand...

It's certainly possible to end up owning a slip and getting something less than zero at the end. As mentioned above marina assessments can be significant. With my luck I'd buy a slip and have the pleasure of paying a $10,000 assessment at the end just so I can sell it for $5,000. This kind of luck may be exclusive to me, however. :)
 
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