buying a cruising yacht in todays economy

8/15/2019 Buying a Cruising Yacht in Todays Economy

1/31

Purchasing a Cruising YachtPurchasing a Cruising Yachtin Today’s Economyin Today’s Economy

11

Presented by Steve SziromBellingham, Washingtonwww.OysterYachting.com


2/31

[email protected]

Boat Buying MethodologyBoat Buying Methodology

•• Asses the state of the boat market Asses the state of the boat market – – Buyer’s market or seller’s market?Buyer’s market or seller’s market?

•• What is the intended useWhat is the intended use – – Inland waters, coastal, blue waterInland waters, coastal, blue water

– – Where and how oftenWhere and how often

•• Search local, re ional, wideSearch local, re ional, wide

April 12, 2012 April 12, 2012 © HTE Research, Inc.© HTE Research, Inc. 22

– – USA West coast, Mexico West coastUSA West coast, Mexico West coast

•• Research and view boats locallyResearch and view boats locally – – Learn characteristics of different manufacturersLearn characteristics of different manufacturers

– – Learn valuation of used vesselsLearn valuation of used vessels

•• Focus on ‘short list’ Focus on ‘short list’ – – Builder, size, budget, usageBuilder, size, budget, usage

•• Offer, Negotiate, Contingencies, CloseOffer, Negotiate, Contingencies, Close – – Mechanics of purchaseMechanics of purchase


3/31

[email protected]

Assumptions & Notes Assumptions & Notes

•• Boat design and sailing involves compromises andBoat design and sailing involves compromises andcontroversycontroversy

•• When quoting numbers and figures, assume used vessel,When quoting numbers and figures, assume used vessel,about 42 feet LOA about 42 feet LOA

•• Assume cruising mode (part Assume cruising mode (part--time or longtime or long--term),term),monohullmonohull


•• When I state my preferences, it is based on 30+ yearsWhen I state my preferences, it is based on 30+ yearsboating experience, many boat shows, researchboating experience, many boat shows, research

•• Buying sailboats is not about investing, but adopting aBuying sailboats is not about investing, but adopting alifestylelifestyle

•• Presentation is from POV of buyer (not seller, notPresentation is from POV of buyer (not seller, notbroker, not boat manufacturer)broker, not boat manufacturer)

•• If you have any questions, contact me by email or phoneIf you have any questions, contact me by email or phone – – Email: [email protected]: [email protected]

– – Tel: 360Tel: 360--676676--22602260


4/31

[email protected]

Boating Market StatusBoating Market Status

DJIA low 3 mo. earlier


Source: Bellwether Report

WMAR low 6 mo. earlier


5/31

[email protected]

Boating Market InfluencersBoating Market Influencers

•• Availability of credit, currently more restricted Availability of credit, currently more restricted

– – $150K loan, ~4%$150K loan, ~4%--5%, 20 years, mid5%, 20 years, mid--700s CR 700s CR

•• Loss of wealth via home price declines, “house equity bank” hasLoss of wealth via home price declines, “house equity bank” hasdried updried up

•• Rising cost of new boats, fiberglass materials related to the priceRising cost of new boats, fiberglass materials related to the priceof oil, labor cost increasesof oil, labor cost increases


•• Stock portfolio losses recovered, but uncertain futureStock portfolio losses recovered, but uncertain future

•• Unemployment rate lagging recovery (~8.3% ‘official” number),Unemployment rate lagging recovery (~8.3% ‘official” number),40 weeks unemployed historic high level40 weeks unemployed historic high level

•• Loss of talented worker pool due to 2009 shakeoutLoss of talented worker pool due to 2009 shakeout•• Government regulation increasing: engines, licensing, liveGovernment regulation increasing: engines, licensing, live--

aboards, etc.aboards, etc.


6/31

[email protected]

Boating RequirementsBoating Requirements

•• Where will you be boatingWhere will you be boating

– – Bays/inland waters,Bays/inland waters, coastal, blue watercoastal, blue water

•• How many persons will be onHow many persons will be on--boardboard – –


,,

•• Storage requirementsStorage requirements

– – Weekenders, twoWeekenders, two--week sails,week sails, coastal/ocean passagescoastal/ocean passages

•• How often will the vessel be usedHow often will the vessel be used – – Cruising lifestyleCruising lifestyle,, ½ and ½,½ and ½, weekend/day sailingweekend/day sailing

•• Racing orRacing or performance cruisingperformance cruising


7/31

[email protected]

Cruising Sailboat AlternativesCruising Sailboat Alternatives

CoastalCoastal Blue WaterBlue Water

DisplacementDisplacement LightLight--ModerateModerate ModerateModerate--HeavyHeavy

Stores/SparesStores/Spares Two weeksTwo weeks Four weeks+Four weeks+

Size: 39-42 ft LOA


--

RigRig Sloop/SloopSloop/Sloop--cuttercutter Cutter/SloopCutter/Sloop--cutter/Cuttercutter/Cutter

LiferaftLiferaft PreferredPreferred Must HaveMust Have

Fuel TankageFuel Tankage 200200--400 NM range400 NM range 400400--800 NM range800 NM range

Typical Builders/ModelsTypical Builders/Models Beneteau, Catalina,Beneteau, Catalina,Hunter, BavariaHunter, Bavaria

HallbergHallberg--Rassy, Valiant,Rassy, Valiant,Nordic, Tayana, PassportNordic, Tayana, Passport

PricePrice $80K $80K--$200K $200K $150K $150K--$450K $450K


8/31

[email protected]

New Boat Price vs. Size LOA New Boat Price vs. Size LOA


•• Price increases exponentially, not linearlyPrice increases exponentially, not linearly•• Maintenance cost annually is about ½% to 1% of purchase price (notMaintenance cost annually is about ½% to 1% of purchase price (not

including berth, insurance, tax)including berth, insurance, tax)

•• To outfit for cruising add 25%To outfit for cruising add 25%--35% to sales price35% to sales price


9/31

[email protected]

Cruising Sailboat Ideas:Cruising Sailboat Ideas:The Big PictureThe Big Picture

•• For a couple, about 36 to 44 feet LOA For a couple, about 36 to 44 feet LOA – – For stores, living aboard, guests, a fewFor stores, living aboard, guests, a few

– – Quality always trumps sizeQuality always trumps size

•• For bestFor best--bangbang--forfor--thethe--buck 5buck 5--7 years old, cruise7 years old, cruiseequippedequipped

– – Turnkey setup, rigging, engine, sails should be in good/very good conditionTurnkey setup, rigging, engine, sails should be in good/very good condition


,,

– – Prefer no cored hulls below waterlinePrefer no cored hulls below waterline

•• Sloop, sloopSloop, sloop--cutter, or cutter sail plancutter, or cutter sail plan

•• Furling jib, fullFurling jib, full--battened main, roller bearing carsbattened main, roller bearing cars

•• Bulletproof anchor setup, electric, min three anchorsBulletproof anchor setup, electric, min three anchors•• Fin keels/spade rudders, or modified keels/skeg rudderFin keels/spade rudders, or modified keels/skeg rudder

– – Deeper draft keel version is preferable for cruisingDeeper draft keel version is preferable for cruising

•• Bulletproof engine setup, double Racors, oil/fuel filter change friendlyBulletproof engine setup, double Racors, oil/fuel filter change friendly – – Extended cruising range under power is a plusExtended cruising range under power is a plus


10/31

[email protected]

Where to Look for BoatsWhere to Look for Boats

•• YachtWorld.com (dominates industry) YachtWorld.com (dominates industry)

•• SailOnline.comSailOnline.com

•• BoatOwners.comBoatOwners.com

•• Boat owners association websites (by owners)Boat owners association websites (by owners)

•• Charter boat operations websites (Moorings, Sunsail)Charter boat operations websites (Moorings, Sunsail)


– – Preferably in the Mediterranean, competitive, inventoryPreferably in the Mediterranean, competitive, inventory

– – Best time to make offers is May when contracts expireBest time to make offers is May when contracts expire

•• eBay/other auctions (wild card)eBay/other auctions (wild card)

•• Craigslist (hit or miss)Craigslist (hit or miss)

•• Boat shows on West CoastBoat shows on West Coast – – See Oyster Yachting for tips and West coats showsSee Oyster Yachting for tips and West coats shows

•• Boating magazines classifieds (for sale by owners)Boating magazines classifieds (for sale by owners) – – See Oyster Yachting for a list and linksSee Oyster Yachting for a list and links


11/31

[email protected]

Why Do a Wide Search?Why Do a Wide Search?

•• For negotiating power, even if considering a local or regionalFor negotiating power, even if considering a local or regionalboat purchaseboat purchase

•• Boats which have cruised to Mexico or other cruisingBoats which have cruised to Mexico or other cruisingdestinations are better cruisedestinations are better cruise--equipped, bugs worked out,equipped, bugs worked out,and often more attractively pricedand often more attractively priced

•• No sales tax in Mexico, and Oregon.No sales tax in Mexico, and Oregon.

$$$$


•• The ‘best equipped, best priced, best condition’ boat may beThe ‘best equipped, best priced, best condition’ boat may beoutside the buyer’s region for any number of reasonsoutside the buyer’s region for any number of reasons

•• Either start your cruise in paradise, or deliver boat to homeEither start your cruise in paradise, or deliver boat to homeportport

– – Delivery costs vary, many variablesDelivery costs vary, many variables

– – Better prospects for cruise equipped boats, possibly motivated sellersBetter prospects for cruise equipped boats, possibly motivated sellers

•• Look more closely near yachting centersLook more closely near yachting centers – – San Carlos, La Paz, Mazatlan, Puerto Vallarta, San Diego, Los Angeles,San Carlos, La Paz, Mazatlan, Puerto Vallarta, San Diego, Los Angeles,

San Francisco, Seattle, Vancouver, BVISan Francisco, Seattle, Vancouver, BVI

$$$


12/31

[email protected]

Boat ResearchBoat Research

•• Owners associationsOwners associations

– – Google “boat manufacturer”, “owners association”)Google “boat manufacturer”, “owners association”)

•• Boating magazines (print and web)Boating magazines (print and web)

– – Cruising WorldCruising World--”Classic Plastic” section”Classic Plastic” section


– – Blue Water SailingBlue Water Sailing--”Boat Reviews” section”Boat Reviews” section

– – Practical SailorPractical Sailor--”Sailboat Reviews” section”Sailboat Reviews” section

– – SailingSailing--”Used Boat Notebook” section”Used Boat Notebook” section

•• Google specific vessel under considerationGoogle specific vessel under consideration – – “manufacturer”, “model/size”, “boat name” “manufacturer”, “model/size”, “boat name”

•• Sailing community portals such as “SailNet.com” Sailing community portals such as “SailNet.com”


13/31

[email protected]

Valuation of Used Boats Valuation of Used Boats

bucvalu.com $28/mo

nadaguides.comFREE


yachtworld.comsoldboats.com

boatus.com

FREE

FREE

$$$


14/31

[email protected]

BucValu PricingBucValu Pricing



15/31

[email protected]

Yachtworld Search Yachtworld Search



16/31

[email protected]

NADA PricingNADA Pricing



17/31

[email protected]

Buying Through Yacht BrokersBuying Through Yacht Brokers

•• ProsPros – – Facilitates purchase mechanics, such as, showing vessel, offer/counterFacilitates purchase mechanics, such as, showing vessel, offer/counter--offer,offer,

negotiations, haulout, sea trial, paperwork, documentation, lining up insurance,negotiations, haulout, sea trial, paperwork, documentation, lining up insurance,loansloans

– – A trusted yacht broker can work with buyer to assist finding the right yacht A trusted yacht broker can work with buyer to assist finding the right yacht(“buyer’s broker”), assess true market value, provide sales prices of recent sales,(“buyer’s broker”), assess true market value, provide sales prices of recent sales,

inputs on market conditions, other relevant factorsinputs on market conditions, other relevant factors


•• onsons – – Works for and represents buyer’s interestsWorks for and represents buyer’s interests

– – Charges 10% commission of sales priceCharges 10% commission of sales price

– – Sometimes not knowledgeable or reputableSometimes not knowledgeable or reputable

•• Caveats for BuyerCaveats for Buyer – – Don’t use brokers’ recommended surveyor, get recommendations/referencesDon’t use brokers’ recommended surveyor, get recommendations/references

– – Require funds to be deposited in escrow account, preferable 3Require funds to be deposited in escrow account, preferable 3rdrd partyparty

– – Do all the work during sea trials, check everything (engine, equipment, sails,Do all the work during sea trials, check everything (engine, equipment, sails,etc.)etc.)


18/31

[email protected]

Buying Directly from OwnersBuying Directly from Owners

•• ProsPros – – Knowledgeable about vessel, knows intricacies, systems, may be usefulKnowledgeable about vessel, knows intricacies, systems, may be useful

after the saleafter the sale

– – Commission fee saved by seller, can be a negotiating point for buyerCommission fee saved by seller, can be a negotiating point for buyer

– – May assist in onMay assist in on--thethe--water delivery of vesselwater delivery of vessel

•• ConsCons

– – May not have realistic assessment of the worth of the vessel, no brokerMay not have realistic assessment of the worth of the vessel, no broker


‘sanity check’ ‘sanity check’

– – Emotional component enters the picture when making low offersEmotional component enters the picture when making low offers

– – Owner may not be knowledgeable about the process, paperwork Owner may not be knowledgeable about the process, paperwork

– – May not have urgency to sellMay not have urgency to sell

•• Caveats for BuyerCaveats for Buyer – – Use a marine escrow/titling companyUse a marine escrow/titling company

– – Have offer/sales agreement reviewed by attorney, consider using for theHave offer/sales agreement reviewed by attorney, consider using for thedealdeal

– – More due diligence is needed to check authenticity of seller and the boatMore due diligence is needed to check authenticity of seller and the boat


19/31

[email protected]

Ask Basic Questions Ask Basic Questions

•• Fuel tanksFuel tanks

– – Number, material, total gallons, replaced?Number, material, total gallons, replaced?

•• EngineEngine

– – Manuf./model, engine hours, last overhaul, whatManuf./model, engine hours, last overhaul, whatwas serviced/replaced, fuel injectors serviced?was serviced/replaced, fuel injectors serviced?

•• Hull/deck Hull/deck – – Condition? Spider cracks, gouges?Condition? Spider cracks, gouges?

– – Cored hull below water line?Cored hull below water line?

– – Blisters? Was epoxy job done?Blisters? Was epoxy job done?

– – Lead or iron keel?Lead or iron keel?

– – Windlass model? Anchors?Windlass model? Anchors?

If Possible, ask questions/make inquiries by email


– – Age o ue ines, ex aust ot er oses Age o ue ines, ex aust ot er oses

– – # primary fuel filters# primary fuel filters

– – Motoring range under normal cruising RPMsMotoring range under normal cruising RPMs

•• Sails/canvasSails/canvas

– – Age of sails, manufacturer? Age of sails, manufacturer?

– – Age of other canvas, dodger Age of other canvas, dodger

•• RiggingRigging – – Age of standing rigging, lifelines Age of standing rigging, lifelines

– – Age of running rigging Age of running rigging

– – Condition of rudder bearingsCondition of rudder bearings

•• Below Deck Below Deck – – Holding tanks macerator? Discharge pump? Y Holding tanks macerator? Discharge pump? Y--valve?valve?

– – Height to headliner, length of bunksHeight to headliner, length of bunks

•• Useful to knowUseful to know – – # of previous owners, cruising history# of previous owners, cruising history

– – Documented?, name of vesselDocumented?, name of vessel

– – Last survey available?Last survey available?

– – Last bottom paint job?Last bottom paint job?


20/31

[email protected]

InIn--thethe--Water InspectionWater Inspection

•• Bring flashlight, camera, notebook Bring flashlight, camera, notebook

•• Compare info given by email to personal inspection (not good sign if manyCompare info given by email to personal inspection (not good sign if manydiscrepancies)discrepancies)

•• Take pics, make notes of all systems that are not covered in broker’s pics and infoTake pics, make notes of all systems that are not covered in broker’s pics and info

•• When checking engine start/run, insist that it be started from cold stateWhen checking engine start/run, insist that it be started from cold state


•• Typica re ags:Typica re ags:

– – “Birds nest” wiring behind fuse panel, wiring not properly secured “Birds nest” wiring behind fuse panel, wiring not properly secured

– – Engine room very dirty, oil drips, or fuel leaks, rusty clampsEngine room very dirty, oil drips, or fuel leaks, rusty clamps

– – Boat heavily scented to cover up smells, or just heavy fuel/oil smellBoat heavily scented to cover up smells, or just heavy fuel/oil smell

– – Signs of water leakage (wood discoloration) around liners, wood panels, ports, fittingsSigns of water leakage (wood discoloration) around liners, wood panels, ports, fittings

– – Very dirty bilges, oil or fuel smell in bilge water, rusty keel bolts Very dirty bilges, oil or fuel smell in bilge water, rusty keel bolts

– – Engine blowing out too much black or blue smoke, oily sheen on waterEngine blowing out too much black or blue smoke, oily sheen on water

– – Spider web cracks in gelcoat (difficult to see) on side of hull, or too many gel coat cracks around fittingsSpider web cracks in gelcoat (difficult to see) on side of hull, or too many gel coat cracks around fittings

– – Rusty or seized fittings/valves, rusty rigging wire, cracks in turnbuckesRusty or seized fittings/valves, rusty rigging wire, cracks in turnbuckes

– – Spongy, soft areas on deck Spongy, soft areas on deck


21/31

[email protected]

Buying ConsiderationsBuying Considerations

•• Focus on seaworthiness issues and basicsFocus on seaworthiness issues and basics – – A sound hull/interior structure, engine, sails, standing rigging, anchor setup are A sound hull/interior structure, engine, sails, standing rigging, anchor setup are

necessary for successful cruisingnecessary for successful cruising

•• Electronics depreciate fast, minimum value after 5 yearsElectronics depreciate fast, minimum value after 5 years

•• Big ticket refitting items:Big ticket refitting items:

– – Engine/installation ~$15Engine/installation ~$15--$20K $20K


– – -- , , ~, , ~ --15K 15K

– – Replace standing rigging ~$4K Replace standing rigging ~$4K--$7K $7K

– – Replace canvas (dodger, sail cover, bimini, winch covers) ~$6K Replace canvas (dodger, sail cover, bimini, winch covers) ~$6K

•• Only buy a used boat which needs extensive refitting if you have timeOnly buy a used boat which needs extensive refitting if you have time

and expertiseand expertise•• Don’t fall in ‘love’ with a boat, be patient, more boats always come onDon’t fall in ‘love’ with a boat, be patient, more boats always come on

the marketthe market

•• Don’t be shy to make a lowDon’t be shy to make a low--ball offer for your dream boat, see where itball offer for your dream boat, see where itgoes (you can always add more $$$ but not take away).goes (you can always add more $$$ but not take away).


22/31

[email protected]

Costs of a Boat PurchaseCosts of a Boat Purchase

••Cost vessel (full price or down payment)Cost vessel (full price or down payment)

•• Sales tax*Sales tax* – – Most states, ~ 6Most states, ~ 6--9% of sales price9% of sales price

– – Offshore delivery?Offshore delivery?

– – Defer it via charter programDefer it via charter program

•• Sailing school* (for newbies only ~$600Sailing school* (for newbies only ~$600--$1,200 per person)$1,200 per person)

•• Travel costs to view candidate boats (varies)Travel costs to view candidate boats (varies)

•• Haulout (~$300)Haulout (~$300)


– – Vessel (~$15/foot) Vessel (~$15/foot)

– – Sails* (~$75/hour, usually 1Sails* (~$75/hour, usually 1--2 hours)2 hours)

– – Rigging* (~$75/hour, about 2 hours)Rigging* (~$75/hour, about 2 hours)

– – Engine* (~$150)Engine* (~$150)

•• Marine title/escrow companyMarine title/escrow company

•• Documentation (~$150 self Documentation (~$150 self--service, ~$400 for agent)service, ~$400 for agent)

•• Delivery* (by truck, delivery skipper, owner delivery)Delivery* (by truck, delivery skipper, owner delivery)

•• Refitting for cruising (coastal less than blue water)Refitting for cruising (coastal less than blue water) – – 7 years old, ~25--50% of purchase price50% of purchase price

* Possible cost saving


23/31

[email protected]

Dealer/Broker PricingDealer/Broker Pricing

•• New boatsNew boats – – Commissions range in price from 10% to 20% over factory costCommissions range in price from 10% to 20% over factory cost

– – Boat show ‘specials’ can sometimes yield good dealsBoat show ‘specials’ can sometimes yield good deals

•• Aftermarket installations Aftermarket installations

– – Equipment marked up 40%Equipment marked up 40% – –


•• Used boatsUsed boats – – Exclusive listing or open listing for six months termExclusive listing or open listing for six months term

•• CautionCaution— —talk to owner only with open listingtalk to owner only with open listing

– – Commission is 10% paid by sellerCommission is 10% paid by seller•• Split between the listing broker and selling broker ~50Split between the listing broker and selling broker ~50--5050

•• Splitting involves CoSplitting involves Co--op Agreement between brokersop Agreement between brokers

•• Trusted selling broker can sometimes bring better resultsTrusted selling broker can sometimes bring better results


24/31

[email protected]

Sales ContractsSales Contracts

•• Names and addresses of buyer and sellerNames and addresses of buyer and seller

•• Description of boat and engine, including make, model, year, and HullDescription of boat and engine, including make, model, year, and HullIdentification Number and engine serial number(s), detailed equipment listIdentification Number and engine serial number(s), detailed equipment list

•• Purchase price and deposits made, tradePurchase price and deposits made, trade--in boat, if applicablein boat, if applicable – – T icall 10% cash de osit held in escrow accountT icall 10% cash de osit held in escrow account


•• Delivery date, where and when the boat will be deliveredDelivery date, where and when the boat will be delivered

•• Whether sold with warranty, or “as is” conditionWhether sold with warranty, or “as is” condition

•• Buyer’s contingenciesBuyer’s contingencies

– – Inspection, sea trial, financing, surveys, insurability, clear titleInspection, sea trial, financing, surveys, insurability, clear title•• Statement that the boat is free of all liens, encumbrances and debts incurredStatement that the boat is free of all liens, encumbrances and debts incurred

during seller’s ownershipduring seller’s ownership


25/31

[email protected]

Purchase Contract ContingenciesPurchase Contract Contingencies

•• Personal inspectionPersonal inspection

– – For out of town buyers, can reject deal after viewingFor out of town buyers, can reject deal after viewing

•• Satisfactory sea trialSatisfactory sea trial

– – Test and try everything/all systems yourself Test and try everything/all systems yourself, prefer windy days, put engine, prefer windy days, put engine

under load, bring a knowledgeable friend or consultant, don’t rush itunder load, bring a knowledgeable friend or consultant, don’t rush it


•• urvey survey s

– – Negotiate purchase price downward to correct defectsNegotiate purchase price downward to correct defects

– – Prefer price reduction, rather than fix (?)Prefer price reduction, rather than fix (?)

•• Clear titleClear title

– – essential for used boatsessential for used boats

•• Acceptable boat loan terms Acceptable boat loan terms

•• Ability to obtain insurance Ability to obtain insurance


26/31

[email protected]

Offshore Delivery BasicsOffshore Delivery Basics

•• The State of California will assess ~9% sales tax (for new vessels) or use tax (forThe State of California will assess ~9% sales tax (for new vessels) or use tax (forused vessels) if the boat wasused vessels) if the boat was

– – (1) purchased in California (includes within 3 miles offshore); OR(1) purchased in California (includes within 3 miles offshore); OR

– – (2) purchased for "use" in California(2) purchased for "use" in California

•• If the purchase can be structured so that the transaction closes > than 3 milesIf the purchase can be structured so that the transaction closes > than 3 miles

offshore (technically outside of Calif.), then the buyer would satisfy the first testoffshore (technically outside of Calif.), then the buyer would satisfy the first test ’ ‘ ’’ ‘ ’


– – Calif. determined that “true intent” is difficult to determine through an objective testCalif. determined that “true intent” is difficult to determine through an objective test

– – A "presumptive test" was established, where a buyer who could prove that the boat was used A "presumptive test" was established, where a buyer who could prove that the boat was usedoutside of California for a particular time period after the purchase was presumed to haveoutside of California for a particular time period after the purchase was presumed to havepurchased it for use outside of California.purchased it for use outside of California.

•• PrePre--2008: met test if used outside of Calif. for 90 days in the first six months after purchase (The Ensenada2008: met test if used outside of Calif. for 90 days in the first six months after purchase (The Ensenada

Yacht Club) Yacht Club)•• PostPost--2008: Gov. Schwarzenegger signed into law legislation to close “loopholes” resulting in return to the one2008: Gov. Schwarzenegger signed into law legislation to close “loopholes” resulting in return to the one

year ruleyear rule

•• Very complicated, Very complicated, suggest services of maritime attorneysuggest services of maritime attorney familiar with offshorefamiliar with offshoredelivery.delivery.

– – Requires supporting documents for the State Board of Equalization, offshore delivery affidavit, UseRequires supporting documents for the State Board of Equalization, offshore delivery affidavit, UseTax Return for State Board of EqualizationTax Return for State Board of Equalization


27/31

[email protected]

Offshore DeliveryOffshore Delivery

•• The buyerThe buyer must follow very specific rulesmust follow very specific rules – – Not appearNot appear to intend to bring the boat back to Calif., orto intend to bring the boat back to Calif., or

– – Not AppearNot Appear to be keeping it out CA. to avoid the sales taxto be keeping it out CA. to avoid the sales tax

•• How it works:How it works:


– –

– – The location is documented by taking a picture of the GPS locationThe location is documented by taking a picture of the GPS location

– – A picture is taken of the day’s newspaper to document the date A picture is taken of the day’s newspaper to document the date

– – A picture of the buyer is taken behind the helm A picture of the buyer is taken behind the helm

– – A picture of the exchange of the final payment is taken A picture of the exchange of the final payment is taken – – Back onshore, the broker submits all the required paperwork andBack onshore, the broker submits all the required paperwork and

gets it notarizedgets it notarized

– – The buyer will provision his vessel and sail it to Mexico (orThe buyer will provision his vessel and sail it to Mexico (orOregon) shortly thereafter and stay out of California for 6 monthsOregon) shortly thereafter and stay out of California for 6 monthsto one year (depending on the buyer’s state of residence).to one year (depending on the buyer’s state of residence).


28/31

[email protected]

Offshore DeliveryOffshore Delivery

•• Key PointsKey Points – – The purchase contract (new or brokerage) must stipulateThe purchase contract (new or brokerage) must stipulate

the offshore delivery as one of the contingenciesthe offshore delivery as one of the contingencies

– – The purpose of the offshore delivery is not to avoid sales taxThe purpose of the offshore delivery is not to avoid sales tax

– – Do not keep current California berthing arrangements, orDo not keep current California berthing arrangements, or


intends to return to Californiaintends to return to California

– – California buyers must keep the boat out of state for aCalifornia buyers must keep the boat out of state for aminimum of 365 daysminimum of 365 days

– – Buyer must keep records of using the vessel to verify it hasBuyer must keep records of using the vessel to verify it hasnot been stored (no specific usage period given, but thenot been stored (no specific usage period given, but themore the better)more the better)

– – The buyer cannot use the boat or put equipment on it untilThe buyer cannot use the boat or put equipment on it untilhe has taken delivery out of the statehe has taken delivery out of the state


29/31

[email protected]

Sailboat Usage TrendsSailboat Usage Trends

April 12, 2012 April 12, 2012© HTE Research, Inc.© HTE Research, Inc.

2929

Source: NMMA

Sailboat Owners

~ 33 days usageeach year

~ 2-3 days usageeach month


30/31

[email protected]

Boat Usage ModelsBoat Usage Models

•• Sole OwnershipSole Ownership – – Highest upfront cost, highest monthly costHighest upfront cost, highest monthly cost

– – Best for cruisers, liveBest for cruisers, live--aboards, lifestyle sailorsaboards, lifestyle sailors

•• PartnershipsPartnerships – – Share upfront and monthly costShare upfront and monthly cost

– – Usually 2Usually 2--4 compatible partners (partnership agreement)4 compatible partners (partnership agreement) – –

Cost of 30 Days Sailing/Year (40-Foot Sailboat, $175K,


31/31

[email protected]

Lessons I Learned About the Sailing LifeLessons I Learned About the Sailing Life

•• There is no perfect cruising sailboat ... everything about sailboats is aThere is no perfect cruising sailboat ... everything about sailboats is acompromise.compromise.

•• The happiest day is when you buy a cruising sailboat. The second happiest isThe happiest day is when you buy a cruising sailboat. The second happiest isNOT when you sell it.NOT when you sell it.

•• Cruising sailors are the ‘greenest’ people on the planet.Cruising sailors are the ‘greenest’ people on the planet.

•• Reading books and sailing classes are useful, but experience is the bestReading books and sailing classes are useful, but experience is the bestteacher when it comes to sailing.teacher when it comes to sailing.

April 12, 2012 April 12, 2012© HTE Research, Inc.© HTE Research, Inc.

3131

•• Sailing is not a sport, it is a lifestyle (except for racers) that is magical,Sailing is not a sport, it is a lifestyle (except for racers) that is magical,relaxing, terrifying at times, enhances confidence, instills independence,relaxing, terrifying at times, enhances confidence, instills independence,teaches ‘green’ living.teaches ‘green’ living.

•• Anything that is not lashed down on deck will eventually fall overboard. Anything that is not lashed down on deck will eventually fall overboard.

•• Sailing is NOT free. The wind IS free but after 36K NM, a new set of sails costsSailing is NOT free. The wind IS free but after 36K NM, a new set of sails costs

$12K (~$.33/NM)$12K (~$.33/NM)•• When in hot climates, you can never have enough beer on a sailboat and itWhen in hot climates, you can never have enough beer on a sailboat and it

can never be too cold.can never be too cold.

•• When women are on board, keep the heads clean.When women are on board, keep the heads clean.

buying a cruising yacht in todays economy

Documents