Buy a slip first and boat later?

[DMage]

Wife and I are looking to get into boating, and after doing months of research (and browsing this forum) plus plenty of window shopping we've pretty much decided we want to find a 1989-1990 390EC. We are expecting our first child soon so wouldn't purchase a boat for the next year or so either way.

With that said I have done a lot of shopping around for prices on slips, and, being that I hate paying money to rent I searched for slips for sale. That led into a whole different set of research and shopping. The marina that I found has some reasonably priced slips, but I am looking now for a second opinion - is this a good price, and is what I am planning a good idea?

The marina I am looking at has slips for sale in the mid to high 20's. Their 43 x 18 slip is around $26k with a $190/month maintenance fee, and the 58 x 17.5 slip is around $29k with a $250/month maintenance fee.

Comparable marinas in the area would charge around $5500/year to dock the 390. Maintenance fees here would be more than half of that for the 43' dock @ 2280 or 3000 if I decided to buy up to the next largest 58' slip. Obviously if the maintenance fee and the comparable marina's rent fee stayed equivalent I would be looking at a 8 - 12 year break even.

Since I am not looking to occupy the slip for at least the next year (and more likely not for the next two years) it would be rented out. I can purchase a slip with a renter in place that would immediately cover the maintenance fees and bring in about $200 in profits per month, or $2400/yr. This makes my monthly immediate cost zero and shortens the break even point of the purchase.

Logically this makes sense to me, not to mention when we get the boat it would save me ~$200/month on dock fees. Downsides that I am seeing are that I have no experience on the waterways or the area, and am going into this blind. I've talked to other slip owners and renters and they all have good things to say about the marina and the area though. However, unlike some marinas with slips for rent that we checked out, this place was relatively quiet. They have social gatherings but it was nowhere near as lively as the other marinas we stopped at.

Any slip owners out there have advice? Anyone who was looking at buying a slip who backed out for reasons care to share why?

 

[mainstream]

Hello I was looking his year at buying a slip I pay 4000 a year for the season which up here is short our slips are 79000 but our anual dues are 1500 a year for maint but our realestate taxes are $1700 a year so for me unless I take and liquidate the cash and pay for the slip in full and not take out a note is not worth it for me do you know if you are accesed real estate taxes in Fla I am retiring to Fla in a few years and I want to do a liveaboard down there and keep my house and other boat up here. To answe your question I would get a boat first then decide wether you like the marina first because if you do not like it even tho you could rent it you will more then likly have to buy or rent on in a marina you do like and you may pay more for it I feel buying slip first is like putting cart before the horse but good luck and also good luck with your soon to be new addition to your family

 

[moparlvr4406]

Here is my perspective...
buying and renting may be a good option since you are looking for a 40' craft ...when you buy the boat you WILL need a place to put it. Now keep in mind...buying may not be an immediate process..can take months or years to find the right craft in the condition you want. Perfect 20+ year old boats are "not so common". many shoppers here have gone a long time and many failed surveys before the right one came along.
I don't feel grabbing your piece of water first is putting the cart before the horse in any way but make sure the wording on a rental agreement gives you access to said slip in a timely fashion when you do purchase the boat.

 

[Ididntdoit]

I think your nuts - what if you don't like boating - than you need to dump the slip and the boat. What if, after a little experience, you decide you want to locate the boat somewhere else? You may buy a slip with a renter but what makes you so sure it will stay rented - if was such a "sure thing" and great deal the current owner would probably keep it. Its not like many places have "waiting lists" for slips these days. Step back and think about it - If its an "investment" your looking for do somthing else.....

 

[comsnark]

I agree. The 8-12 year payback does not make this anywhere near a slam dunk, and ties you up.

 

[fwebster]

Here are a couple of observations, but no recommendation...............

Buying a slip locks you in to one location. I've been at the same marina for 25 years and that is rare. Slip owners and tenants change on a regular basis and you can very easily find yourself in a bad situation for a young family. For example, a group of 20 hard -core bikers bought 5 big Sea Rays from our dealer (all 5 deals were partnerships with 4 partners each) , all contingent upon keeping their boats here. Almost over night we went from a very family friendly place to one where there were drunken parties all night, usually with clothes optional. It took a couple of years to get them out of the marina and a lot of customers moved when they could find slips. You cannot do that when you own the slip.

What if you decide that you want your boat in a different location?

Typically, the association tries to minimize the maintenance fee. That means that much of the long term maintenance is deferred until it can not wait any longer. That usually means you can expect assessments for the big ticket items not covered by the monthly fee.

Slip values generally follow real estate prices, but may also follow boat demand. You may be near the bottom in your area on the real estate part of the equation, but there is still very limited demand for over 40 ft boats, Therefore, you may be buying an asset that has not fully depreciated yet.

The general consensus is that there are slips available everywhere. Well, that isn't true. The 390EC has a 13'-11" beam and needs at least a 16 ft slip. Wide slips are sometimes hard to find. I don't know about your area, but here in NW Fla., there are no 16 ft slips available within 40 miles of me.

Good luck with whatever you decide.

 

[scottgoad]

Here are a couple of observations, but no recommendation...............

Buying a slip locks you in to one location. I've been at the same marina for 25 years and that is rare. Slip owners and tenants change on a regular basis and you can very easily find yourself in a bad situation for a young family. For example, a group of 20 hard -core bikers bought 5 big Sea Rays from our dealer (all 5 deals were partnerships with 4 partners each) , all contingent upon keeping their boats here. Almost over night we went from a very family friendly place to one where there were drunken parties all night, usually with clothes optional. It took a couple of years to get them out of the marina and a lot of customers moved when they could find slips. You cannot do that when you own the slip.

What if you decide that you want your boat in a different location?

Typically, the association tries to minimize the maintenance fee. That means that much of the long term maintenance is deferred until it can not wait any longer. That usually means you can expect assessments for the big ticket items not covered by the monthly fee.

Slip values generally follow real estate prices, but may also follow boat demand. You may be near the bottom in your area on the real estate part of the equation, but there is still very limited demand for over 40 ft boats, Therefore, you may be buying an asset that has not fully depreciated yet.

The general consensus is that there are slips available everywhere. Well, that isn't true. The 390EC has a 13'-11" beam and needs at least a 16 ft slip. Wide slips are sometimes hard to find. I don't know about your area, but here in NW Fla., there are no 16 ft slips available within 40 miles of me.

Good luck with whatever you decide.

I'm with Frank on this one - you're stuck with your neighbors if you buy whether you like 'em or not. At our marina, you purchase the "improvements" such as decking, sink, cabinets, etc. but still rent the slip. If I purchased the decking on a slip where there was say 300 sq ft and decided to move, I'd have that money as a credit towards another dock's improvements.

My previous marina was totally opposite. You can buy the improvements and still have to lease the water. On Lake Texoma you were allowed to build cabanas and sometimes 2nd story decks, etc. These type improvements were owned by the individual that leased the slip, but the marina would take their 10% fee any time the improvements changed hands. If you fell behind on the slip rent, then the marina had the right to take ownership of your improvements and give you the boot. Then they get this nice improvement and can sell for whatever they feel like and profit from someone's misfortune.

I'm not sure how the marina you are looking at operates, but just things to keep in mind before making a purchase. When I moved from Texoma to the Dallas area, I didn't have a boat. I had friends with one at a local marina and decided to lease a slip while I looked for another boat to purchase. I actually loved having a place to go even with no boat. For me it's a great place to relax and chill on the water. It took my wife and I close to 6 months to find the boat we liked and purchase, so we had the slip for half a year before even having the boat there.

Since being at the same marina, I've moved around a couple of times and enjoy the freedom to move if I want to upgrade to a larger slip, or closer to friends.

 

[Kameroo]

I also recommend renting before buying. Our first location was a nice marina but turned out to be a party pier. With little kids, we moved to a quieter location where we wound up buying.

 

[docofthebay]

Good choice on the boat you want! They are awesome! Go for diesels if you can find a boat with them. I get double the fuel economy that gas 390s get.

 

[ziekman@cox.net]

Get boat, rent slip - from my perspective that alone is enough of a committment. In the end, go with your gut instinct as only you know what's best for your given situation. In any event, good look on the endeavour, you won't look back!!

 

[Pkunze]

I agree with the Get Boat then Slip group. Both boats and slips are not neccesity items, they are mostly purchased with disposable income. Therefore I personally would not look at the transaction as an investment type. There are a lot of other things to consider during the boat purchasing adventure, you may think you want a certain size boat but then realize you want something smaller or visa/versa, having already committed to a slip takes away flexibility and maybe purchasing negotiations. Also, not sure if is common practice but some marinas looking to transact a sale may give you a free year on the slip rental.

 

[mrpaper]

Buy the slip even if you don't get a boat!
At $2400 per year income rented out, its a great investment 8.2 percent interest on the $29k slip

Gary

 

[DMage]

Thanks guys for the feedback. Still up in the air about what I want to do. I just think I'll wind up kicking myself after 8+ years of renting knowing that I could have saved money by buying. Not to mention that there is still a tangible asset owned. My wife and I are nowhere near retiring so this is going to be a long term thing for us.

Good choice on the boat you want! They are awesome! Go for diesels if you can find a boat with them. I get double the fuel economy that gas 390s get.

Thanks! I've been looking into diesels and researching the engines/repairs now. If we can find a nice 89-91 I think we'll be leaning in that direction. Ultimately we'll want to use it to cruise up and down the coast, so again, cost savings calculated out it makes much more sense to go with the diesels!

Buy the slip even if you don't get a boat!
At $2400 per year income rented out, its a great investment 8.2 percent interest on the $29k slip

Yeah, same thought process! With a renter I could make anywhere from $2400 to $4800 a year depending on the boat size and slip purchase when renting, and if the renter is lost then you get a cut of the transients, which breaks you even with your dues. Plus, you still own something that can be sold later.

 

[fwebster]

Yeah, same thought process! With a renter I could make anywhere from $2400 to $4800 a year depending on the boat size and slip purchase when renting, and if the renter is lost then you get a cut of the transients, which breaks you even with your dues. Plus, you still own something that can be sold later.

You are looking at this thru rose colored glasses...............I am a little more pragmatic. You are in storm country--- what happens when you get a good blow or a surge that does some damage? Most marinas have a huge, like astronomical, deductible IF they can even buy protection for named storms. And, what reserves are your association holding for wwhat major maintenance? What happens to your profit when you get an assessment?

 

[DMage]

You are looking at this thru rose colored glasses...............I am a little more pragmatic. You are in storm country--- what happens when you get a good blow or a surge that does some damage? Most marinas have a huge, like astronomical, deductible IF they can even buy protection for named storms. And, what reserves are your association holding for wwhat major maintenance? What happens to your profit when you get an assessment?

Those are good questions, and the reason why I posted this on the forum. I'll check into the associations insurance deductibles, reserves, and inquire on any historical special assessments. Thanks!

 

[comsnark]

Remember, if this was such a good deal then the marina owners would buy up empty slips and rent them out themselves.