How to get the money for a boat

[CEShawn]

So how does one get the money for a boat?

Lets add a little more into that...

So I want to build a boat, get the kit and engine figure take two years to get it in the water. The killer is that its not to easy it seems to get financing for this as its not built yet.

Talked to a couple builders in Maine, it seems like if I was in Maine would be no problem to do it but since I am in Mass it is. Seems like if I was in ME I could get a construction loan etc.

I have a small home equity line of credit but that isnt going anywhere as its barely 30K. Its insane but do I need to fund this with credit cards until its complete then get a loan then.

I can't be the only one to have to play this game but very few people seem to get into this.

Back ten years ago with my Dad, it was just easier to buy a boat built already.

 

[Montauk Rocket]

its much easier, cheaper, quicker to buy a boat than build one right now, imo.

I see amazing deals everyday. I cant believe it, but they arent moving.

 

[Frigate]

The question is what does it take for you to be "in Maine". Renting someone's garage for a small amount and a P.O. Box or does it take more?

 

[CEShawn]

I'm still 5000 miles away trying to get these done.

Montauk Rocket, I do agree with you but believe in the long run I'm better for building it myself so I know the job is done to my level of satisfaction not always chasing someone's horror stories. Any custom boat, downeast or carolina that wasn't production finished can have horrors to deal with. In my opinion I just want to build it once and then ten years down the road, know what has to be done and what I am getting into.

 

[bassriver]

Shawn,

Did you sell the General Marine?

What are you looking to build?

 

[tunaorlater]

I had to take a home equity to do my first. I disagree that there are many great deals out there on downeasts. There's a lot of boats for sale but I have yet to see much that's worth what they are asking. When you finish your own you know exactly what you have.

 

[CEShawn]

I have it under agreement but almost think I regret selling it because I do not think I will really be gaining much except for expenses.

I'm just stuck out on a ship right now 7 months now and dreaming. I think I will probably buy another house first.

 

[MDI45]

I know guys who got construction loans and they dont live in maine....that statement is not true....i think 8943 POST just had a 33 Duffy built at atlantic boat with a construction loan

 

[8943post]

We just finished a build with Atlantic Boat in Brooklin ME, fortunately they're hooked up with a loan broker who knows DE boats and was able to fiund both a construction loan and long term financing. The construction loan was easy and went thru a local Maine bank. The long term financing was a nightmare, we have a strong credit history and 30% for a downpayment. The problem is that Maine built boats are unique and not understood by the majority of boat loan lenders.

It took almost 60 days to close the final financing, they demanded extensive personal and business financials back 5 years, wouldn't take our word for anything and basically made us prove the value of each and every asset we own...real estate, boats, cars, business etc.etc...

As it turned out they were actually more concerned with who Atlantic Boat was. Because they don't have slick brochures or a huge sales and marketing dept. they couldn't substantiate the value of the boat we were trying to finance. They also thought we were just buying the kit and not a completed turn key boat...even though we furnished them with almost 100 picts showing the build process from hatching the mold to seatrial!

If you plan on financing a Maine built boat make sure you're got everything up to date and be ready for a long and tedious closing process. email me and I'll be glad to give you contact info for Spencer Evans who was our loan broker...if not for him I doubt we would've gotten financing.

my email is: [email protected], I'll help in any way I can.

 

[CEShawn]

Thanks for the info, I know its not an easy process...

Just feeling the water out on this one...

I can basically do it cash but hate, because it would buy the kit now 40K, engine in six months another 30K, then another 30K in parts 12 months later etc...

 

[CaptDave]

This is a good topic especially the way banks have tightened the strings these days since being hit with all of the fore closures. Just curious, would a boat lender have a little better understanding of the process and be willing to do the loan compared to a bank? It was easier when people had $200 -$300 equity on property they owned compared to much lower property values these days.

The scary part is with all of the catch shares including talk of having it omposed on bluefin tuna and recreational fish could the future of custom built boats be only for the elite who want to cruise or lobsterman with great catch history?

Dave

 

[BillD]

Shawn,

"I have a small home equity line of credit but that isnt going anywhere as its barely 30K. Its insane but do I need to fund this with credit cards until its complete then get a loan then?"

Bad idea....VERY bad idea!!!

FWIW,

Bill D

 

[CEShawn]

Bill I agree its a bad idea... That 50K CC with 7.9% has been making me itch, but then again like my dads FIRED wealth management expert said... Why do you own a boat? Sell it, its costing you to much. Is owning a boat a good money management idea? LOL

I think the industry will change again, who knows...

I want to name my next boat "Wanderer" after the last whaling ship. Must have been something knowing you were the last to do something. Awesome picture in NB about her sadly I think she wrecked just before/during WWI off Cutthunk...

 

[8943post]

We used Bar Harbor Bank and Trust for the construction loan, don't see why they wouldn't do a kit boat loan. Very easy to work with, Jim Lacasse was my contact. At least they understand boats built in Maine.

It's ironical that boat lenders have no problem lending money for a production built cruiser that 'll depreciate substantially over its' useful life but they shy away from a DE boat that will always retain a good portion of its value. Go figure!

 

[F/V First Team]

They shy away because these kinds of boats aren't in a book. Think of it like a car, all a bank has to do is pick up the book and go through the list, find the make, the model, then go through the list of options. You can't do that with a custom built boat and therefore they are lost. They need a list and a depreciation scale.

 

[cb34]

New build

Only build if you have the money to build and the money is expendible. These boats depreciate faster than the factory boats. The higher the level the finish the faster they depreciate. From a financial stand pt, boating will never make sence but a boat loan is pure insanity. Just my 2 cents.

 

[captchuck]

I always tell my wife that one day I would love to live with a boat loan rather than a car loan. Unfortunately its been the other way around, my boats have always been limited to the cash I have as wether i like to admit it or not its a luxury. Although it doesn't feel that way.

 

[Downeaster]

Only build if you have the money to build and the money is expendible. These boats depreciate faster than the factory boats. The higher the level the finish the faster they depreciate. From a financial stand pt, boating will never make sence but a boat loan is pure insanity. Just my 2 cents.

100% agreement with cb34 and other contributors to this thread. Make no mistake about it, most of the top-of-the-line DE's being built today are being built with inherited money, trust funds, proceeds from a successful business or investments - not W-2 wages. With the perhaps the exception of the scallop fishery, there are no commercial boats being built for New England (let's use IRS guidelines here - a commercial fisherman is one who derives at least 2/3rds of gross annual income from fishing). Don't think that you're going to scrape by and make this work - the talk of putting a boat on plastic (at plastic rates) scares me! Plan on having your boat built with discretionary funds only. Think about the state of commercial banking for a moment. They're stuck in a real estate mess that'll take a decade to stabilize (once that process starts and that process hasn't started yet). The world is awash with boats in an uninterested market - do you believe that a lender is interested in collateralizing a loan with a depreciating asset that is already a dredge on the market (much less a construction loan to scratch-build that depreciating asset)? I hope that I don't come off as "preachy" but you're getting some damned good advice with this thread. You'll be much better off downsizing your expectations and then finding something affordable in the used boat pool.

 

[8943post]

Downeaster,

I agree with most of what you said, as I'm not a commercial guy I can't comment on whether you can make money fishing or not...the exception being the Scallopers in NB who most deservedly are finally doing very well.

I'd bet that over the long haul...15 to 20 years, you'll find that the DE boats, once fully depreciated, will continue to return a fair amount of their original value, especially when you consider all the inflation that's coming down the road. Doubt very much the same can be said for a high-volume mass produced production boat of the same size.

I've seen articles in Salt Water Sportsman magazine that show many of the 30 to 35' center consoles selling for $275k and up not even rigged with electronics or fishing gear. We're trying to sell our 2001 31 Jupiter for $59k and this was a boat that sold for $135k new in '01.

Just my $.02

Financing anything on a credit card that you can't pay off in 30 days is insane...you'll live to regret it

 

[Downeaster]

<snip> I'd bet that over the long haul...15 to 20 years, you'll find that the DE boats, once fully depreciated, will continue to return a fair amount of their original value, especially when you consider all the inflation that's coming down the road. Doubt very much the same can be said for a high-volume mass produced production boat of the same size. <snip>

Keep in mind that every system on the fifteen to twenty year old boat is suspect (and likely needs repair or replacement). Incidentally, it is (only) maintenance and new builds for the well-heeled from away that are keeping the Maine boatbuilding community afloat.