The huge initial capital and depreciating nature of boats make many people think more than twice before signing the contract.
In this article, we look at both sides of the argument and how to save cost if you plan on financing your own boat.
Are boats a good investment or a waste of money?
Boats are a good investment if you don’t overshoot your budget. If you research your options and go for a vessel that you can afford, nothing trumps the joy of spending time on the water.
However, a boat can definitely also be a bad investment.
Here’s everything you need to know before you decide
A rule of thumb is to only buy a boat you can afford to pay for in cash.
If you are to follow this rule, few people will own a boat. But this is sound financial advice that can help avoid the astronomical cost of owning and running a boat.
The major problem is many people take out huge loans to buy big boats they don’t need and won’t be able to use.
If you look hard enough, there are many ways to cut the cost of owning a boat.
You don’t have to buy a boat if you won’t be spending much time on it. But some of the most precious moments people have been spent on their boats.
The big question is at what cost?
10 Ways to Reduce the Cost of Owning a Boat
The cost of owning a boat shouldn’t dissuade you from buying one. Many people undo themselves by choosing to buy the best boat they can finance with a loan.
But this is wrong for many reasons. If anything happens to your source of income, you will be forced to sell the boat at a lower price because of depreciation.
Use these tips to avoid such sad tales while enjoying your boat.
1) Buy a Boat You Can Afford
Before buying a boat, ask yourself whether you can pay cash upfront. Considering that most boats cost tens of thousands of dollars, most families cannot afford to pay cash upfront.
This means you can’t afford a boat except you take a loan.
But you don’t have to go broke to buy a boat. There are boats you can finance with as low as $200 per month.
Ask yourself if the extra expense will not affect more important things in your life.
Will you be able to continue paying the loan if your financial status takes a hit? Take these factors into consideration before you buy a boat.
2) Determine How to use the Boat
Do you need a big or small boat?
To answer this question, it is important to know what you will use the boat for.
A small wakeboarding boat is perfect if you love watersports such as tubing and waterskiing. Maybe you love cruising long distances.
A good way to save money is to buy the smallest and cheapest boat for that purpose.
With due diligence and enough research, you will find the ideal boat that will deliver maximum value without sinking your budget.
3) Buy a Smaller Boat
Unless you have the financial wherewithal, it’s best to get the smallest boat you can afford.
The bigger the boat, the more expensive the asking price and running costs.
Don’t buy a 10-passenger boat if you will cruise solo on the boat. You can also ditch the elaborate cabin if you don’t plan on spending the night on the water.
Also, a bigger boat is more complex, reducing the chances of DIYing maintenance and other cost-cutting activities.
4) Consider Buying Pre-Owned
Why buy a new boat when there are lots of sparingly used boats for sale at a fraction of the price?
Because a lot of ex-boaters didn’t consider the total package of owning a boat, many of them become frustrated and sell off their prized possession prematurely.
This offers a great opportunity to own a boat on the cheap.
It doesn’t mean you are profiting from someone else’s misfortune; you are only trying to avoid their mistakes. However, it’s important to carry out a detailed boat survey before buying a pre-owned boat to determine its value.
5) Do Your Maintenance
Do you know that the engine in most small boats is a marinized version of the one in your automobile? If you DIY your auto engine maintenance, you can replicate the same on your boat. However, you might need some help from YouTube and experienced friends.
It is possible to change fuel filters, drain engine oil, change belts and even winterize your boat without going to the mechanic.
You may have to call a professional for a broken piston or dinged propeller, but you can save hundreds of dollars in maintenance cost if you do it yourself. The good news is the internet has placed all the help you need at your fingertips.
6) Fill Your Tank Out of the Water
A lot of boaters don’t see this as a cost-cutting strategy, but you can save more by fueling your boat out of the water. This is because dock fuel is atrociously expensive but most people have no choice but to buy once the boat is in the water.
7) Compare Insurance Rates
Frugal boaters hunt for favorable insurance rates like they do for their automobiles.
Insurance providers offer competitive rates to woo customers and you can use that to your advantage.
Rather than buy the first insurance policy that comes your way, shop around for the best bargain. A difference of $10 means you will save $120 which can finance other boat-related expense.
8) Avoid Unnecessary Toys
One reason for the high cost of boats is the advanced gadgetry and plush interiors. Foregoing the flashy stuff can reduce the cost of the boat.
Go for the basic equipment that works.
You don’t need premium trims and posh cushions so long as you are comfortable and enjoy your time on the boat.
A huge part of the cost of owning a boat is storage. If you store your boat at the marina, you may end up paying thousands of dollars over a boat you don’t use.
If you own a small boat, consider storing it at home if you have space.
You can even keep your vessel at a friend’s place or somewhere secure. A little creativity can save you a lot of money and trouble when it’s time to store your boat.
9) Learn Boat Driver Skills
A lot of the huge cost of maintaining a boat is because of the boater’s carelessness. Many boaters cannot drive their vessels safely and only a few know and apply boating rules.
In fact, many people don’t even realize there are rules guiding the use of boats.
This causes boaters to slam their watercraft into the dock, launching pads, free-floating branches, and other boats. The resulting damage is enough to dampen their enthusiasm for the boating life.
The more you use a boat, the higher the value you can derive from it. Unlike automobiles that can stay idle for a long time without issues, many boat parts require frequent use to stay in good condition.
If you think not using your boat is the best way to keep maintenance costs low, the opposite is true.
So use your boat more to get the best value from it.
10) Don’t Outsource Boat Cleaning
A decent boat cleaning is time-consuming and costly. But you can cut the cost if you don’t mind the inconvenience.
Cleaning your boat not only helps you cut running costs but gives you more control over your boat.
You get to choose the cleaning agent to wash the interior so it lasts longer.
5 Common Alternatives to Buying a Boat
You don’t have to buy a boat if you can’t afford one. If you love having fun on the water but cannot foot the bill, these options can help keep your boating dreams alive.
1) Peer-to-Peer Boat Sharing
This works like an Airbnb but you will share boat time. The service is growing in boating regions all over the world including the US and Australia among others.
In this arrangement, the boat owner shares the vessel with you for a fee.
Sometimes, the boat owner deals with you directly but more people now contract their crafts to companies that take off the listing, promotion, and insurance.
You can use this option to spend as much time as you want on the water. If your finances improve or you are convinced buying a boat is the best way to enjoy your time on the water, go for it.
Timeshare contracts allow customers to reserve a block of time in a fleet of boats belonging to a company. While these agreements can be cost-saving and offer many options for boats, sometimes the companies use hard-tackle tactics.
Make sure you understand the terms of the contract before using a timeshare service.
Another excellent way to own a boat without hurting your bank account is to finance it with relatives or friends.
Rather than buy a boat by yourself, join hands with your water-loving friends and family to buy one.
That way, everybody gets to pay a smaller amount and you buy a bigger and better-equipped model. However, you need to have an agreement stating the duties and responsibilities of all parties regarding payments, usage and running costs.
4) Boat Clubs
You can also join boat clubs to have access to a variety of boat types for a monthly or yearly fee.
Boat clubs are excellent for heavy boaters as they cover the running costs.
However, the expensive membership fees make little sense if you only get on the water a few times in the year.
Charter services allow you to pay only for the time spent on the boat. Depending on the company or boat owner, you might be responsible for the fueling and piloting and any damages resulting during your time on the boat.
But it is a cost-effective way of spending quality time on the boat.
While these methods may help you cut the costs of using a boat in the short term, nothing beats the freedom of owning a vessel and using it as you see fit.
All you need to do is get a boat that doesn’t hurt your purse and follow a strict plan to minimize how much you spend on its upkeep.
5 Reasons a Boat Is a Good Investment
Not every investment makes financial sense, and a boat is one of them. Despite the huge initial capital, a boat offers far more dividends than money can buy if you are prudent with your choice.
Before you listen to rash financial advice about why you shouldn’t buy a boat, check out these advantages of owning your own watercraft.
One of the main reason many people love boats is the extraordinary tranquility that comes with spending time on the water.
Though boats are expensive to buy and maintain, they help you unplug from the hustle and bustle of the city.
You can go far away from honking cabs, traffic-heavy commutes, and hectic workloads. Owning a boat helps you relax, reduce stress levels and break the monotony of daily life.
2) It’s Fun
Owning a boat offers a plethora of possibilities to have fun and unwind. Whether you love wakeboarding, waterskiing, snorkeling or fishing, there is a limitless amount of recreational activities on the water.
Not only is boating exciting but you can also get some exercise from all those water sports.
3) strengthen Family and Social Ties
Most people are distracted by their smartphones and social media feed nowadays. Time spent on a boat gives you and your family a rare opportunity to connect at a deeper level.
Because a boat forces everybody to share a small space, you can catch up on each other without video games and other distractions getting in the way.
Also, boating offers the whole family the opportunity to learn basic survival skills, teamwork, fishing and so much more. It’s the reason many boaters don’t mind the strain a boat places on their finances.
Many families and friends remember the memories they had on boats with nostalgia. Nothing compares to that feeling.
4) Juicy Tax Benefits
Updates to the U.S tax regulations in 2018 now allow entities including LLCs, partnerships, and corporations to write off the purchase price of a boat.
However, you must prove that the boat will be used for business purposes.
The new law also allows you to deduct the cost of renovating or upgrading the vessel within the year of purchase. There are also tax benefits for people who buy boats that can be categorized as homes such as vessels with cooking, sleeping or bathroom facilities.
If your boat falls into these categories, talk to your CPA or tax adviser for more details.
5) Deeper Connection with Nature
There are far more species in the water than you would find on land. Owning a boat provides the opportunity to see some of the most iconic aquatic species up-close and personal in their natural habitat.
The joy of watching scores of dolphins stream past your boat or rare turtles snuggling up to you is beyond anything you can experience in the city.
2 Reasons A Boat May Be A Bad Investment
People who advise against buying a boat make valid points. Here are some factors that make a boat a poor investment.
Expensive Initial Capital
Buying a boat is the cheapest part of the deal if you are buying one for the wrong reasons.
Besides the purchase price, you have to pay tax, insurance, registration, licensing and berthing fees among others.
These expenses quickly stack up and eat into your finances. But smart boaters do the math before embarking on this journey.
Owning a boat doesn’t have to end in disaster if you plan and go for a vessel that’s within your buying power.
1) Costly Maintenance
Again, boats require intensive and regular maintenance. In fact, the less you use them the more they require maintenance.
From winterizing to hull repairs, engine servicing, and prop replacements, there is always something to do on a boat.
Veteran boaters use tried and trusted strategies to ensure the cost of maintenance does not overshadow the satisfaction of owning a boat.
2) Depreciation Issues
Boats depreciate quickly, so most people lose money when they sell their vessel after a few years. You can avoid this problem by making sure you really need to own a boat before getting one.
Don’t buy on impulse or because your neighbor has a flashy cruiser cabin and you want one too.
Start by renting a boat or enjoying time on a friend’s vessel for a while.
During that time, try to understand the responsibilities that come with owning a boat and how to mitigate them. And when you finally decide to buy a watercraft, hunt for the best deals and plan on using it for a long time.
The trick to beating the depreciative value of boats is to continue using them for many years.
Here’s a complete guide we’ve made that shows you exact numbers on boat depreciation for each type of boat.
Owning a boat can be an excellent investment if you follow the advice in this article. Boats are expensive but you can get unbelievable bargains on almost new vessels if you are resourceful.
If you are passionate about spending time on the water, go for a deal that doesn’t hurt your purse, cut cost in every way possible and take good care of your boat. You will discover that there is something special about being on the water non-boaters can never understand.
Was this article helpful?
Did you find wrong information or was something missing?
Morten is the founder of GoDownsize. He has filmed and interviewed people living in tiny houses and RVs since 2011. He grew up on the coast where his dad took him boating from a young age. He has completely rebuilt two RVs in which he travels with his family for months at the time. Read more about Morten here.