Buying Boats: a Quick Guide
I visited Florida in late January and spent time in the southwest (Naples and Marco, Sanibel, and Captiva Islands) and the southeast (Fort Lauderdale, Miami, Miami Beach, and Boca Raton). Among many other things, I learned about boat-buying. (“Ships” for you retired Navy personnel!)
The biggest key is to have your finances in order. The rules for buying anything 35’ or longer or $350,000+ are similar to getting a jumbo mortgage. Assume 20% down, although a few lenders will bend that rule slightly for those with stellar credit (800+). Speaking of credit scores, don’t even think about a large boat loan if your credit score is below 700. Expect to provide written and verifiable evidence like personal financial statements and tax returns.
Where to get those loans? Those spending more than $3-5mm should consult their wealth managers and private bankers. Boat brokers always know where to find credit. Check with your bank. Just remember to carefully evaluate offers against each other.
Loan details? Expect interest rates ranging from 3.75% and fixed terms from 15-25 years. As with a home loan, expect the lender to demand a full inspection by a qualified inspector and appraiser.
Other things to know? Assume 8-12% of the boat’s cost as yearly expenses. (Yes, there’s a reason that “BOAT” stands for “Bring Out Another Thousand!”) This figure will rise for boats requiring a captain and crew. If the boat has the amenities of a house (berth/bedroom, head/toilet, and galley/kitchen), it may qualify as a second home with interest being deductible on your taxes. Check with your CPA/tax advisor. Finally, boats depreciate. You will save significant money by studying the depreciation tables for your favorite make and model!
While I’m not a boat broker, I know a few. I also know how to help you find a waterfront home in Wisconsin and around the country! If you need help finding a home for you and your boat, please give me a call or send me an email. I’ll be happy to help!