Boat Buying Tips

Spring is almost here! For many of us, the warmer (and longer) days also mark the beginning of boating season! If you’re considering the purchase of a new or used boat this year, here are a few pointers to help you save time, money, and frustration.

You may also be interested in my article on the benefits of renting a boat instead of buying one.

There is a saying among people who own or have owned pleasure boats. “The second happiest day in your life is the day you bought your boat. The happiest day in your life is the day you SELL it“.

This saying has been true for many boat owners over the years who didn’t quite understand the financial responsibilities boat ownership entails.

Boat ownership can be incredibly rewarding for you, your family, and your friends. One of the highlights of my year is the annual boating and fishing trip my buddies and I take in the Northern Woods of Maine. Boating brings family and friends together, but it can quickly become a black hole in your wallet.

There are many great resources on the Internet to help you in deciding what type of boat is best for you and your family, and what to look for when making a purchase. My focus with this article is the financial side of owning a midsized “trailerable” ski boat, bass boat, or sailboat.

Being able to afford a boat is one thing, being able to enjoy it is another.

Does Your Lifestyle Have Room for a Boat:
For folks who live near the water, have plenty of free time, and can think of nothing more enjoyable than heading out onto the water, owning a boat can be a very practical and rewarding proposition.

Besides actually being able to afford the boat, the most important thing is to make sure that you have time to commit to being a boat owner. Glancing through the classified section of my local newspaper, I see several “highly motivated” boat owners unloading 4 and 5 year old boats with less than 25 hours on them.

These owners will be lucky to get back half of what they paid, and with entry level ski boats priced around $18,000 they have effectively paid $360 for every hour that boat was being used.

Had these boat owners known it would cost $360 an hour to operate the boat (not including fuel, insurance, and registration) it is likely some if not all would of reconsidered their purchase.

Rent the Boat You Are Considering Buying:
For the last 15 years, one of my dreams has been to buy a sailboat (a used J24 in particular).

Sharing a similar interest in boating, my wife and I decided that it would be fun to rent a J24 sailboat in Rockland, ME as an anniversary present to ourselves. The day quickly turned into an adventure that my wife and I will not soon forget.

Shortly after leaving the dock, the light ocean breeze picked up significantly to the point where I could not longer (with my limited sailboat experience) navigate the boat comfortably. What started as a romantic day on the water quickly turned into a battle just to get to the dock in one piece.

The $212 we spent to rent that boat was one of the best investments we ever made. I no longer had any desire to own a sailboat!

Buy a Used Boat:
With very few exceptions, it does not make financial sense to buy a new boat. Just like cars, new boats depreciated rapidly, often 50% trough the first 4 or 5 years. This is bad for the owners of new boats, but a great way for you to get a good deal.

Financing A Boat:
Some owners bought new boats so that they could take advantage of long term boat loans. Some of these loans extend 10, 15, even 20 years. Financing a boat in general is not a great idea, but financing it for 10 or more years is just stupid.
The less you have to worry about making monthly payments on your boat (especially during the winter months), the more you will enjoy your purchase.

Tax Advantages of Boat Ownership:
When certain conditions are met, the interest on boat loans can be deducted on your federal (and some state) income taxes. However, this is no reason to finance a boat for 20 years! The interest isn’t deducted from the total tax you owe, it is deductible from your taxable income which is then multiplied by your current tax rate to determine how much you owe in taxes, BIG DIFFERENCE!

For every $1000 you pay the bank in interest, you only save $250-300 in taxes (assuming your income tax rate is between 25-30%). This is a dumb idea all the way around!

Enjoy Your Boat:
Nobody is more passionate about boats than I am. I have made my career on the water, and encourage anyone who is interested in boating to give it a try. Fully understanding the financial obligations of boat ownership (and being prepared for them), will ensure that everyday as boat owner will be as euphoric as the first.