For those with a new boat

[longbeard]

Spend what you can spend I guess. I feel really lucky to be able to own a Malibu, even if it is a 1998 Sunsetter LX, direct drive, no heater, no shower, no led lights, no tower speakers. But when my family is together on it, and we are towing someone and they are having a ball, there is no place I would rather be.

[TallRedRider]

And to more directly answer the question, my 2006 247 is probably worth close to 50K. I consider myself a rich guy to spend that much on a recreational item. I make what I consider to be great money, and I just can't stomach spending more than I have spent on a boat. Of the guys I know with brand new boats, they are all making 300K or bigger. Usually business owners, specialist physicians, entrepreneurs that sold a business for a 1 time big profit, and a few construction guys that hit it big at the right time and saved enough to weather the storm of 2008-09.

[FAMILYRIG]

I don't think you could have said it any better. I purchased my Echelon for $3000. It is an older boat with a few quirks & requires a little extra maintenance. Watching my kids laughing & jumping off the swim platform made me realize that they could care less if the boat was a 2013 or a 1994. Sure someday I would love to upgrade, but with a 6, 5 & 2 year old this is all the boat we need for now. (I won't mention what they love to ride in behind the boat.. )

[demo9asx]

This is turning into a very interesting discussion. I am really curious how many folks actually paid cash for a new boat these days. Someone thought it might be 50% but I kinda doubt that. Even if you gross income is $300k/year, paying cash for an $80k boat is not something you do on a regular basis. To add to that, not all people who make $300k+/year are into boats and that further reduces the number of the cash buyers.

I think the 15-yr loan definitely a key factor in increasing demand because now it is affordable. I am willing to bet that there are a lot of people who make $300k+ that would still finance the boat for 15yrs just because they can and it is less exposure.

Same with automobile lease. Most luxury car buyers are likely well-off and a lot of them to lease. Why? Because it is affordable with minimal cash outlay and those people will likely get into a new car anyway in 4yrs and lease a new vehicle with full warranty. Why tie yourself to a depreciating asset when you can afford to spend the monthly cost of a lease and you know you have the income stream to do it.

I am sure if there is no option to finance a boat for 15yrs, we will see a price reduction.

Edited September 14, 2012 by demo9asx

[MalibuTime]

I am honestly not sure how I (we) ended up with a new boat when we bought, it is still a surreal dream. We just decided that's what we wanted after testing several new and used boats and decided we could make it work financially with a lower interest HELOC which is now paid off. I don't see ever buying another new boat unless I hit it big. The VTX is a great all-around watersports boat, works great for us.

There is no question that many people are beyond their means with these boats, but also I am pretty sure in this market (Seattle) many buyers are paying cash, or financing with alternative approaches besides an 8% boat loan.

Edit- No question I would have a blast in an 98 Sunsetter or a 2013 VLX, boats are plain fun, beats watching from shore is for sure.

Edited September 14, 2012 by MalibuTime

[gorilla]

boats are plain fun, beats watching from shore is for sure.

Agree. I never thought I would own a boat, but took the plunge last spring. I didn't buy new because I didn't want to. I'm a big fan of rocker switches and minimal electronics controlling something that sees a lot of moisture. So, bye bye Malivue. My wife and I make damn good money and could pay cash for a new one, but I'd rather let someone else take the depreciation hit. I've only once bought something new (car, truck, boat) and that was my wife's Mini Cooper. It was trouble from the get go, should have walked away, but that's another story. I LOVE buying used, just have to find an item that was well maintained and looks as good as new. My 2007 had 63hrs on it last spring when I bought it and was in almost showroom condition. Bought it for more than $30k off invoice and all my friends thought I bought a new boat. But there are plenty of people out there that can't stand owning something that they didn't own new. More power to them.

[Bill_AirJunky]

I think a lot of boats are bought with cash, and the ultra rich are buying them. And i would dare say half of the boats are bought that way.

The 15 year loan makes people think they can afford them, who are not ultra rich. This may be the other half.

Pretty idealistic way of looking at it. Wish it were all true.

We ride with a couple of guys fairly often..... one sells Malibu boats..... and the other works for Chase financing his sales. The guy working for Chase is not doing bad, actually doing better than the guy selling the boats. He told us about how awesome it was going back in like 2005 & 6, then a slow period a year or two ago but things have picked back up now. I haven't talked to him about it recently but he just bought a lot at Schweitzer Mt & is in the process of building a 6-plex, ski in/ski out, right on the ski runs. He said he's keeping one & selling the other 5, around $200k -$300k each, 3 bedrooms, 2000 sq ft, heated driveway, underground parking, etc.

I know we financed for 15 yrs initially. Put a bunch in a down payment, paid on it for a year or so, then refinanced into a 5 yr loan at lower interest.

One guy I know that bought this year & he's in a 7 yr loan with a good chunk down.

[Broccoli2]

We are in the group that financed.

I make some decent money but could not afford a new boat. I have paid cash for all my previous boats. It was time to upgrade my 1995 24 foot. Because I am usually a cash/used guy I could not believe how much new boats were. I figured I would get the newest and best so I would love having it for the long hall... I was approved then saw the payment. I was shocked that people have that kind of payment on a boat. If I lived on a lake and I could walk down to the dock and take it out every night It would still be to much for me. So I started looking at used again and really couldn't find anything I liked. Back to new. We kept taking options off until I was comfortable with the price. I ended up with a new V-ride. I love this boat and more importantly I love the price compared to the higher end modles and at 1/2 the price with 3/4 down it was a perfect fit. I did opt for the 15 year loan but I make payments that are double and hope to start making triple soon. I wanted the lowest payment possible because I own my own business and if we have slow times I could still easily make the payment. I don't think I miss any of the features of the 80+k boat. This boat does every that boat does. For 1/2 price.

[saidainc]

Ive seen people on here buying new boats every 2 to 3 years or so or at least talking about doing this.....are these people real? I used to ride motocross and bought a new motorcycle every 3-4 years while my friends bought one every year at about 9k out the door. I am blown away people can do this with an 80k boat

[jrz1]

Crazy.

For a luxury product it's all supply and demand. If they flooded the market with boats, prices would be lower.

Only thing is I'm not sure if Malibu or any of the other boat manufacturers are really tonning it. I don't think they could significantly lower the price of the boats without a) meaningfully de-contenting; or b) eventually going bust. It's not an unlimited curve.

[MalibuAdam]

I have a rule, the only thing I will borrow money on is a house. I told myself I would never buy a new boat either as depreciation kills you and most people who buy new are only doing it to have the "flashy new boat". I personally don't like a bunch of high tech fancy gadgets in a boat. I have decided though that this new surfgate system is something that makes so much sense for me to have that I don't want to wait to get a used boat. Surfing is my favorite hobby and it makes such a huge difference having a great wake and wastes way less calm water time not having to switch over all the weight. I will be paying cash for my new malibu, but I could have afforded to pay cash for a new one when I bought my last one.

[FlatH20]

great discussion - love reading everyone's perspective - we're sitting on a small payment on our Malibu very manageable and with our down we're not flopped so if the upgrade bug bites I'm in great condition and I'll scrape together what I need to make certain we walk away in good shape, if that is what we want to do. couple takeaways - like the thread mentioned earlier - if there's passion for the activity (and there is) I'll sacrifice something less important to the family. Another, - it's priceless what you get from seeing the family having a blast either on or behind the boat. got to enjoy the time while you can - time flies I've watched my kids grow up behind the boat(s) - it's been a fantastic experience which I hope to continue. If I couldn't swing it with anything but a 15 year loan - I'd do it, and 15 years later I had better be sitting on a worn out malibu and a beat up body...

[wakebrdr94]

On my first boat I chose the 15 year just for the low payments and "in case anything happens". And paid it in 6. It was nice for that flexibility around the holidays or a last minute trip. I was in a better place now when I bought the current boat and it's paid for. Although the surfgate upgrade is inticing, I can't imagine the extra money for it. If it was a retro fit sure, but not 12 or 15 k when all is said and done for newer boat and taxes.

[srintx]

Great points made by all. We never thought that we would buy an $80K boat, but when you make money on the sale of your old Malibu and have end of year bonuses things happen and the picture becomes clearer when you put pen to paper. So I think anyone looking at buying a new boat should consider all options and determine which ones work for them.

[Bradley Thornton]

Over all I say most people go on a 15year note. But a lot of them can afford a 5 year they do it for safety. I do agree with people wont what other people have. I think the next few years maybe different as far as people that don't buy new. Surfgate will make people buy new I'm even thinking about it. We love my 06 Vride we can do it all. Going to try to retro fit it. The fact is surfgate is ((safer)) and the fact that everyone doesn't have to sit on one side of the boat is a big deal to most like my wife. Its all about budgeting for me.

[water_junky]

While I don't make $300k a year I make pretty good money, we have no kids, bought my house new in 1984 and paid it off about 4 years ago. We paid cash for both of our last boats and still own both of them. We ordered our new 2009 VLX at a time when boat sales had really dropped, we got a deal that we couldn't refuse. When we want something we start saving for it and wait until we have the cash. My Response was ten years old when we ordered our new VLX, my Response had 650 hrs on it when we got the new one and it still looks like a brand new boat. I keep my toys for a long time and take very good care of them, this allows me to save money up for new toys. Most people assume that we are so far in debt that it isn't funny, it's all how you decide to spend your money.

[SurfgateBob]

This is turning into a very interesting discussion. I am really curious how many folks actually paid cash for a new boat these days. Someone thought it might be 50% but I kinda doubt that. Even if you gross income is $300k/year, paying cash for an $80k boat is not something you do on a regular basis. To add to that, not all people who make $300k+/year are into boats and that further reduces the number of the cash buyers.

I think the 15-yr loan definitely a key factor in increasing demand because now it is affordable. I am willing to bet that there are a lot of people who make $300k+ that would still finance the boat for 15yrs just because they can and it is less exposure.

Same with automobile lease. Most luxury car buyers are likely well-off and a lot of them to lease. Why? Because it is affordable with minimal cash outlay and those people will likely get into a new car anyway in 4yrs and lease a new vehicle with full warranty. Why tie yourself to a depreciating asset when you can afford to spend the monthly cost of a lease and you know you have the income stream to do it.

I am sure if there is no option to finance a boat for 15yrs, we will see a price reduction.

Right now you can get a 15 year loan for around 4%. This is a fixed price to acquire money. It does to some extent drive asset prices up, but loans are still hard to qualify for and the overall boat market is down. Even if you're making a high income it would be nuts to not finance with those terms. You can put down enough to make your payment easily affordable, invest and earn better than 4% without taking substantial risk, even accounting for taxes. Think of it as buying money low. Plus the utility you get out of the boat has value, albeit intangible.

You still obviously need to have enough cash in reserve so you're not screwed if you lose your job, but if you're confident in your ability to stay employed, you might as well take advantage of cheap money. After all, this is exactly what the federal reserve wants you to do. Don't fight the fed, right?!

[jkendallmsce]

Right now you can get a 15 year loan for around 4%. This is a fixed price to acquire money. It does to some extent drive asset prices up, but loans are still hard to qualify for and the overall boat market is down. Even if you're making a high income it would be nuts to not finance with those terms. You can put down enough to make your payment easily affordable, invest and earn better than 4% without taking substantial risk, even accounting for taxes. Think of it as buying money low. Plus the utility you get out of the boat has value, albeit intangible.

You still obviously need to have enough cash in reserve so you're not screwed if you lose your job, but if you're confident in your ability to stay employed, you might as well take advantage of cheap money. After all, this is exactly what the federal reserve wants you to do. Don't fight the fed, right?!

I like your logic...but with the economy stagnant and QE3 as of last week, and the economy not getting better as the media would like us to believe....the housing/construction market continues to waller in the mud....where are you suggesting putting your money where, even if it is not guaranteed, you can make better than 4%? Certain cities housing markets are rebounding, such as Las Vegas....but if QE3 busts, so will that market.

CDs are a NO, stock market...well right now we are seeing a slight bump only due to the uncretainty of QE3....if their track record is any indication, QE3 will be as successful as QE1 and 2....which they were NOT!! Some overseas markets are doing well...such as Brazil...but how long will that last??

[SurfgateBob]

I like your logic...but with the economy stagnant and QE3 as of last week, and the economy not getting better as the media would like us to believe....the housing/construction market continues to waller in the mud....where are you suggesting putting your money where, even if it is not guaranteed, you can make better than 4%? Certain cities housing markets are rebounding, such as Las Vegas....but if QE3 busts, so will that market.

CDs are a NO, stock market...well right now we are seeing a slight bump only due to the uncretainty of QE3....if their track record is any indication, QE3 will be as successful as QE1 and 2....which they were NOT!! Some overseas markets are doing well...such as Brazil...but how long will that last??

You can find defensive blended funds with around a 3% dividend yield plus the chance of capital gain/loss. You'll get punished right now if you take no risk. QE3 is actually an argument to spend NOW as your money will be worth much less in the future and you'll be paying back your loan with worthless dollars. Now if you can hold a job in that environment, that's the question ;-)

[jkendallmsce]

You can find defensive blended funds with around a 3% dividend yield plus the chance of capital gain/loss. You'll get punished right now if you take no risk. QE3 is actually an argument to spend NOW as your money will be worth much less in the future and you'll be paying back your loan with worthless dollars. Now if you can hold a job in that environment, that's the question ;-)

Exactly... that is why i threw in the guaranteed comment. AND again yes with the QE3, which is a hail mary to excite the market, and leaving it open ended to more gas can be dumped on...and yes again with the money will be worth much less in the future....I am counting on my silver mine (ha ha) to be worth lots more in the next 2-3 years.

[MalibuTime]

Right now you can get a 15 year loan for around 4%. This is a fixed price to acquire money. It does to some extent drive asset prices up, but loans are still hard to qualify for and the overall boat market is down. Even if you're making a high income it would be nuts to not finance with those terms. You can put down enough to make your payment easily affordable, invest and earn better than 4% without taking substantial risk, even accounting for taxes. Think of it as buying money low. Plus the utility you get out of the boat has value, albeit intangible.

You still obviously need to have enough cash in reserve so you're not screwed if you lose your job, but if you're confident in your ability to stay employed, you might as well take advantage of cheap money. After all, this is exactly what the federal reserve wants you to do. Don't fight the fed, right?!

4% on a 15 year boat loan? For less than a 135k loan? (ballpark for a pigged out top-of-the line something or other) I am skeptical, but if you're saying this from actually seeing that rate for a boat loan then I am surprised.

Edited September 20, 2012 by MalibuTime

[Asmodeus2112]

The houses on the lakes that I have been on start at $750k and go up into the millions. Heck, here on Lake Austin there are houses on the market for over 10 million. I would imagine that lakes all over the country have expensive houses and attract the rich, and buying boats is not too difficult for them. I'm glad, otherwise there wouldn't be and used boats around that the rest of us can afford.

[nyryan2001]

ok so new 80k ish boat..... you trade in your older paid for boat and get trade in and tax credits. You dont go over the top on options: heated seats, bling trailer, LEDs, insanely overpriced upgraded factory stereos...do some of that yourself over time. You throw another chunk at you save up for a while over time.... finance the rest.

At that point your payments resemble what any decent new 1/2 ton truck/SUV costs. Yep you finance it for the 12-15yr periods... you do your best to make extra on the payments as often as possible. Nothing irresponsible or not "what a real man does" about any of that. You dont loose street cred because you didnt pay cash for your boat.

Not unachievable for middle class folks... the only real variable is the length of time it takes to save up those chunks of money to reduce your monthly payments. Look at your tax returns.... do things like gifts for kids only at Christmas...adult birthday gifts should be real small....stuff like that adds up. look at your cable bills, cell bill, Starbucks and crap like that. 3-5k vacations. How often do you eat out or order in food dropping 40-75$ a meal. What type of reoccurring optional stuff you do spend on? Look at your bills and monthly report on your credit/debit cards and think what could you do without for a Wakesetter.

1-3yr old boats hold their values very well...4-7yrs old, 300-400hrs and more is where the prices finally start to drop. Look at Vrides. Tell your local dealers you are interested.... but not emotional and VERY price sensitive. in a 2yr period, there could be that one guy who wants to consign and sell his boat very quickly for a number of reasons.... if you dealer knows you are interested... you could get the deal of your life. I paid less for my 247 BRAND NEW for less than what many paid for their 23's and about the same as what some folks paid for their 2011 and 2012 decked out 21s.

WAIT, SAVE, be PATIENT...

[jkendallmsce]

The houses on the lakes that I have been on start at $750k and go up into the millions. Heck, here on Lake Austin there are houses on the market for over 10 million. I would imagine that lakes all over the country have expensive houses and attract the rich, and buying boats is not too difficult for them. I'm glad, otherwise there wouldn't be and used boats around that the rest of us can afford.

You should get out more often....How many of those lake front homes are second/weekend homes and how many do you see FOR SALE on them, bank owned, etc. Cause those houses dropped in price pretty much the same percentage as the $200,000-400,000 house did...so if you 2M dream house dropped say 50% like a lot of homes did across the country, your house is now worth $1M. So you have lost $1M in equity...makes ya wanna go out and but a new BU doesn't it?? and pay in cash that you don't have?? In many cases the higher end homes dropped a greater % than those say in the $2-4K range.

I saw one in Danville CA that sold in 2006-7 for $4.75M (before the crash) bank owned, sold for $975,000 last year. That is an 80% drop!!....I did not look at it, so I don't know the whole picture, but an 80% drop in value is a hefty hit. And it aint just in CA, my sister lives on Lake Tapps in WA, same there, home prices easily dropped 50%, many depending on when they were purchased and or refied have dropped well over 50%.

One of my rentals, guy bought a house in Elk Grove, CA...had to have been one of those no look/peek loans...bought it for $950,000, looking on Zillow it appreciated to 1.12M, he walked away and the bank sold it for $500,000!! How'd you like to be in your dream home and be upside down for $500,000?? in only 2-3 years taboot. Heck I would walk away, cause that house will NEVER be worth $1M in my lifetime, and I've got another 30-40 years on this planet. knock on wood

The grass aint always greener on the other side of the fence/lake/whatever.

Edited September 20, 2012 by jkendallmsce

[Horns1]

You should get out more often....How many of those lake front homes are second/weekend homes and how many do you see FOR SALE on them, bank owned, etc. Cause those houses dropped in price pretty much the same percentage as the $200,000-400,000 house did...so if you 2M dream house dropped say 50% like a lot of homes did across the country, your house is now worth $1M. So you have lost $1M in equity...makes ya wanna go out and but a new BU doesn't it?? and pay in cash that you don't have?? In many cases the higher end homes dropped a greater % than those say in the $2-4K range."

think you should take your own advice..... Houses in Texas didn't tank like they did in Cali, none of those homes dropped 50% in value, maybe 10-15%, and I would bet maybe 1-3 are bank owned, but from what i have seen the real estate market has fully recovered in most of Texas. Probably lots of them are 2nd homes from people who live in Houston & Dallas. The Texas economy is going very well compared to most of the country

Edited September 20, 2012 by Horns1