Slip - Rent vs Buy

[FYN409]

This weekend my wife and I rented a slip that is now available for purchase. We have been thinking about renting a slip for the season next year, so this option is timely. Looking for advise - pros/cons of rent vs. buy. I know there are dues/fees there when you buy, but you also have equity. While our boat is a smaller boat for slip purposes, we are looking to move up in the future. The slip that is available will support a 48-50' boat so we have plenty of room to expand We have also though about purchasing it and renting it out for a few years to help recoup some off the costs.

Thanks,
Ryan

 

[gerryb]

We've also been in the same situation. Comes down to the numbers and hard to give you advice with none given on your post... maybe if you give more details on cost to purchase, annual taxes/fees when owning, cost to rent, annual appreciation estimates, amount/rate to borrow if purchased, etc.

 

[comsnark]

Right. It's all in the numbers. Just like a timeshare. . .

 

[tobnpr]

Your post got me thinking about the "dockominiums" and how their cost- which was spiraling out of control along with condominiums and other RE- has been affected by the recent downturn. The fact that boat sales and boat use are down has got to be another factor that *should* have the prices heading south.

Valuation has got to be a crapshoot at best. Proceed with caution...

 

[sbw1]

Your post says west Michigan. Not sure where you looked but places like Grand Isle have been poor investments. Originally they sold for 35,000 or more. I believe they are going for considerably less than that now. There have also been some major issues that have required fixing. The sea wall eroded a few years ago. The dock decks started falling the water several years ago--another systemic problem. All the trees needed to be removed and replaced. So.....ongoing maintenance issues and a depreciating asset is the trend. Other places have had similar issues. They ran out of water in Saugatuck---extensive dredging required. Best way to beat the system in west Michigan is to buy a cottage on a lake that is connected to Lake Michigan.

 

[Alex F]

Last time I had asked myself the same question the answer wasn't hard to find. The anual membership fees were around $2K per year, which is on top of your slip payment (mortgage or whatever). I pay under $3K for the season, so I don't know what they have to offer to make it so attractive. But, from numbers point of view it makes no sense to me.

 

[FYN409]

Actually Grand Ise is where the slip is at. Interesting to hear about the issues they have had, was not aware of that. This is why I am asking, I have never thought about "purchasing" a slip, always figured we would rent. As for cost, they are asking 20k, and the association fee's are $1200 per year, plus $400 for city taxes. A similar slip to rent would be around $3100/year.

I was looking at it as sort of an investment, but from what sbw1 is saying it sounds like they deprecate, not appreciate.

Interesting, please keep the information coming it has been helpful.

Thanks,
Ryan

 

[ezwoo]

Covered 40' slips go for up to $175,000 here in the Seattle area. They seem to sell pretty quickly too. I keep waiting for the "bubble" to burst but it hasn't yet. The numbers make no sense because they rent for $550/month. Would you call this "irrational exuberance"?

 

[sbw1]

I beleive the Grand Isle slips were selling for around $40,000 in 1986.

 

[Morpheus]

Like the others have said, all down to the numbers, do you really like the slip location and it's location to where you boat, what about what comes with the slip.

The way I look at it is like renting or buying a house. Renting your just throwing money away but buying your atleast building some equity.

 

[mmcguire2002]

Slips only sell with houses here in SoCal. Houses with slips start in the multiple millions. Moorings in Catalina range from $150K+ for a boat my size, to over a million. Since I am poor in comparison, I rent a slip. They range fro $550 to over $1200 for an LOA of 38 ft.

Boating requires a 2nd income here...and it is a shame.

 

[NautyDog]

Has anyone noticed if the value of these slips have dropped in the last 6 months along with the housing market?

Buying a slip is like buying a house - as long as you buy low and sell high, it's a great deal! Of course the slip market should be more volatile then the housing market in most cases.

 

[MikeS]

I went through this same experience in November when I got our boat. Being a 460, 15' beam, finding a slip (Manasquan / Brielle area NJ) wasn't easy. I found a spot, at the dock I wanted, end slip - meaning less chances for me to run into stuff - and the owner agreed to give me annual rental, not seasonal of April 1 to Nov 1, for $7500. I took it. He paid 89k in 1980 for the slip and his "dockiminium" fee per year on the slip is $2700. He's not going to boat anymore due to health and agreed in my contract to sell me the slip for $50k if I close in the first year, and deduct the $7500 I paid him from that. While I think it's a decent deal, certainly based on what he paid and considering the very few slips that have the location I do (one of 2 available marina's that don't require me to deal with the railroad bridge over the inlet - I'm on the inlet side) I still think he might go lower if I wait until October to decide. Our plan was if I learn to run this boat, and like it, and can afford to - that it ends up in our place in Mexico in the next couple years. But, even if we yank the boat I think I can rent the thing and cover my costs. Bottom line, in my opinion - and it's very much geographical, supply and demand based, and based on the size of your boat - or any upgrade needs - is I am going to wait it out. Your numbers - and that size slip might work for you too. Sounds like the carry costs even if your borrow the money could be less than what you'd pay in rent. There's really only 1 month here when it's just downright uncomfortable to boat - and this slip doesn't freeze, so I have the option to leave in the water if I want.

 

[Mr Salt]

There is another issue beside the numbers, that is how long will you be boating from that particular location. Is there a possibility that you might get a second home on the water somewhere else and then have to get rid of the slip? If you rent it it is easy to move if you own the slip it is not as easy. I am surprised to hear that values have gone down.

Have you talked to anyone at the condo association as to what big expenses are coming and have not be fully reserved for. The old problems may have pushed the prices down because of special assessments, but if they are over things could be good. It looks like there is a 10 + year pay back on your investment for owning versus leasing,that seems to be a long time. On the other hand, what has happened to slip rental rates over the past several years?

 

[BON DIA]

The only boating thing that has appreciated is our slip, 18 x 50, covered....~ 12% per year. When we purchased it took ~ 10 yrs to break even vs renting. Lake Travis has very few marinas with individual slip ownerships.

 

[rwvw415]

We looked at the same issue about 13 years ago when we moved from a 1989 268 Sundancer to a new 330 Sundancer. For us we knew we would always be boaters and I did not want to rent a slip for the rest of my life. So we moved to a nice Yacht Club bought the largest slip I could afford and paid the ownership fees and enjoyed the fact that I was not giving a landlord my hard earned money each month. Over the years our boats have gotten larger but my ownership fees have stayed about the same. The price is much less then the rents that I would have paid over those 13 years and if I ever do sell the slip I will get my money back with about 3% annual appreciation. For me that is a deal I could not pass up.