The Essentials of Living Aboard a Boat

by Mark Nicholas

  Security and Safety

  Security is a serious concern. I once lived at a marina very close to bars and clubs on a boardwalk overlooking the marina, and some nights when I’d get home from work, drunk barhoppers would be sitting on the boats! Peace of mind would suggest that the marina not only maintain some form of security, such as keypad entry systems, but also ensure that a security system is functioning, and if the system is failing, employ guards to protect the boaters and their boats. This means that the doors should not be routinely propped open and strangers should not be permitted to wander the docks at all hours. I have seen gates that could be opened by simply reaching around to the inside.

  Boats are highly susceptible to being broken into and stolen, and their equipment is often easy to remove. Ask whether the marina has experienced security breaches or any other problems from the surrounding community.

  With regard to safety, be sure that the marina takes care of its property. If a marina is located in an area with freezing temperatures, how will the management handle snow and ice on the docks and piers? What about the risks of the water freezing? Does the marina provide bubblers or something to keep ice from forming around your hull?

  In addition to general safety, every boat owner depends on his or her neighbors not only to be responsible members of the community, but also to maintain their homes and use their equipment in a safe manner. Fires are notorious for spreading from boat to boat. Some marinas allow the boats to fall into a high state of disrepair.

  As we’ve mentioned previously, liveaboards come in all types, including the fugitive/hiding-from-the-law type and the type that keeps his boat in a highly flammable condition. Make sure that your safety and security are protected in every sense.

  Costs

  Marina costs vary widely, although hardly any marinas are “cheap.” If you are sensitive to costs, you might find that one marina might offer you a cost within your price range while still providing the level of amenities that you need as a liveaboard. You do get what you pay for, but you might not want or need all that you get. Strike your balance. We’ll explore costs now.

  6. Estimating Costs

  Many people consider boating a rich person’s activity, at least with regard to casual (pleasure) boating. I don’t think that many people envision lobster or commercial industry boating to be luxurious (even though modified lobster boats can make really terrific liveaboard homes). Nonetheless, casual boating is perceived as an activity for people with surplus income. When it comes to owning a 30-foot (or longer) boat and getting to spend time aboard, the general public, and the government, feel as though the boat owner has benefited from the fruits of society, liveaboard or not.

  I have always enjoyed having my friends drop by, even if many of them loved me a bit extra for my boat. Liveaboards are popular and spoiled: People would bring me food and beverages and spend the day in my “house” at the dock or cruising the islands. In my many years living on dry land, even my dearest friends were reluctant to bring me food and drinks just so they could sit in my living room. The boat, however, is a different story.

  Whether or not my boat is a luxurious craft, floating nearby the islands is luxurious, and that opportunity is perceived as a special activity reserved for the elite few. The person without boating experience, or who has not done a little research, wouldn’t guess that a boat capable of providing that kind of enjoyment need not cost $100,000, but can be acquired for mere thousands or even hundreds of dollars. Of course, you get what you pay for, but there are some wonderful opportunities throughout all price ranges.

  Anything that is perceived to be luxurious and high-class will often be an easy target for taxes, surcharges, and inflated expenses (note, for example, the luxury tax). Boating is highly susceptible to that generalization. It’s too bad that the government and general public don’t get to know me specifically, because then they would know that I’m a pretty normal guy not blessed with the fortunes of the few—I count my jellybeans like the majority of us.

  Relative to land-based houses, things break and deteriorate much more quickly on boats. Boats rock and move; there are stresses on the hull and deck with every movement. Water damages everything, and salt air contributes more damage, whether at sea or shore. At sea, there is a whole other world waiting to hurt you and your boat, including dumb boaters doing dumb things, rocks and debris sitting just below the surface, lobster traps so poorly marked that they are just waiting to foul your prop, and drunken crew and passengers that don’t understand or respect a boat’s systems (think putting garbage into the toilet and trying to flush it down).

  I once had a simple sail problem and needed to have an inexperienced crew member keep the Fog pointed into the wind while two of us went forward to try to unsnag a furling line. The crew member couldn’t keep us pointed into the wind despite my many attempts to teach her to aim at a certain fixed point on land (the scary part is that she has a driver’s license). The failure to get that line unsnagged quickly, ended up tearing my headsail, causing more than $400 in damage. It could have been much worse, for my friend and I were almost thrown overboard by the thousands of pounds of force on the luffing sail.

  For me, that $400 was a big deal. For some powerboaters, spending $400 in fuel is a light weekend. Still, it’s all relative and things break for many reasons, or no reason at all.

  Some people who do not own a boat, joke about how much they love it that their friend owns one, because they can boat for the small weekend cost of some food and beverages. They appreciate the luxury of boat ownership and have decided to pass the costs off to their friends while still getting to enjoy the best parts.

  Some days we get a lot for our money. Other days we get very little. But no matter how we look at costs, it is imperative to understand them. I know there are publications that elect not to discuss costs in a realistic way since, as one magazine editor told me, they vary so widely from boat owner to boat owner, and situation to situation. Yet another person at a well-known publication told me that the reluctance to discuss costs was tied to an internal policy of trying to avoid discussion of specific topics that could scare people away from boating, and thus, the purchase of the publication.

  Cost Spreadsheet

  The best way to handle a discussion of costs is to walk through an example. I have tried to ascertain average costs at a few of the more-popular marinas in the New England area. I spoke as well with marinas in Southern California, Northern California, and the Pacific Northwest and know that these costs are reflective of many of the popular urban boating centers. Rural and less-populated boating centers will be less expensive.

  Despite the difficulties of putting together a general spreadsheet with all of the potential variables, to assist you in your decision making I feel it is essential that I provide a basis from which you can begin your research. Percentages and costs will vary based on an infinite set of circumstances, including location and service providers. Your financing company may require a different down payment percentage than I have assumed. You may see line items and costs that do not apply. Good for you: delete them from your spreadsheet. Particularly if you have limited means or want to get a good grasp of the potential financial impact, please take time to create your own spreadsheet so that you can avoid unpleasant surprises.

  Also, it is important to know that as a liveaboard, you will be avoiding other costs, such as landside accommodations, as well as getting something very valuable for your money.

  When I was living in San Francisco, overall the most expensive city in my experience (even more expensive than New York City), every local newscast on TV finished with a segment introduced this way by the announcer: “Now here’s one more reason why the Bay Area is the greatest place on Earth!” Despite the high costs, the population of the San Francisco Bay Area believes that they have bought a slice of heaven for their money.

  Living aboard is no different. In exchange for your money, you get all of those benefits that you had considered
earlier, including things like freedom, sunsets, lifestyle, getting rocked to sleep, and getting to enjoy the sounds and smells of the sea. These aren’t just a list of nice things, but truly hold a special meaning. Many of us stop everything we are doing to watch a spectacular sunset. Some of us throw parties in storms, and toast Mother Nature. Only by carefully considering the costs compared with the benefits can you make a final, educated decision about whether this is financially, practically, and emotionally right for you.

  Bear in mind that this spreadsheet does not include such expenses as food and alcohol, costs of an automobile, going to movies (and renting movies), and other costs—this is not a total budget for you and your life. If you have a child in college, you’ll still have to pay college bills. If you owe child or spousal support, don’t forget to make your required payments. I don’t know your individual situation, so your financial needs are yours to determine. And if you like going to fancy restaurants, your luxury is only yours to know. Together, however, we should do a pretty good job of covering the costs of boat ownership.

  Before we get started let’s talk also about the issues of opportunity cost and depreciation. Opportunity cost means the cost of lost opportunities as a result of your chosen path. For instance, if you are living aboard and do not choose to own any real estate, you are foregoing any price appreciation. Maybe you don’t care. But it is a cost. Even more dramatically, if you own a home, or at some point would have owned a home, you are trading an asset that would have appreciated for one that will depreciate.

  In recent years, some marinas have sought to raise money by selling property interests in their boat slips, just as if the slip were a piece of real estate. There are various ways to do this, but the most common structures are similar to either a condominium or a cooperative (co-op) association. These structures allow for the slips to be bought and sold, potentially with some restrictions, and the marina continues to require the slip owner to abide by marina rules and by votes of the marina, condo, or co-op board. Just like condominium fees for real estate on land, there are condo fees or association fees, which provide payment for management, taxes, improvements, upkeep, and maintenance.

  Another structure now in use is one whereby a marina sells share certificates to boat owners. Shares, sold at market value, allow for the exclusive use of a designated slip when the share owner is in the marina. The certificates for larger slips cost more. In this model, the shares are really a part ownership in the marina, and when the share owner is away, the marina can rent out the slip as though the slip were vacant. The money generated is used to offset fees of the share owner, and generate profit.

  While more susceptible to market adjustments (since these slips, like the boats in them, tend to be luxury items), share certificates allow the potential for capital appreciation and tax benefits. In addition, these investments, if purchased for a reasonable amount and assuming that marina fees are not too high, will allow for the acquisition of a valued and worthwhile asset. Some of these deals, however, are overpriced and carry a great deal of market risk.

  Of course, there are also cost offsets to the expenses of boat ownership. If you are paying rent on land, then maybe you’ll conclude that you don’t incur any immediate opportunity costs and, in fact, might ultimately save quite a bit of money. If you are a renter on land, you may be paying renter’s insurance, which you will no longer have to pay. When you pay your boat insurance, the impact of the cost is not as significant as it would have been without any offsets. If you decide to become a cruising liveaboard, you may find that many of your former expenses—such as automobile and marina costs, your cable and utility bills, the cost of daycare for your children, and things like that—could be entirely avoided. Your specific circumstances will differ.

  We’ll compare a few different choices, including:

  Old Woody

  40’ Wooden Boat

  Cost: $10,000

  Rafthouse

  40’ Rafthouse

  Cost: $15,000

  Mini Sail

  30’ Sailboat

  Cost: $35,000

  Big Speedy

  40’ Power

  Cost: $30,000

  Big Sail

  45’ Sailboat

  Cost: $150,000

  Initial Costs

  Let’s begin by focusing on how much it will cost initially (out of pocket) to purchase and take delivery of your boat.

  Initial Cost Comparison Table

  Type of Expense

  Old Woody 40’

  Rafthouse 40’

  Mini Sail 30’

  Speedy 40’

  Big Sail 45’

  Down Payment

  $10,000

  $15,000

  $7,000

  $30,000

  $30,000

  With the exception of Old Woody and Rafthouse, which cannot be financed, down payment is calculated assuming 20% of the purchase price (most lenders require this).

  Tax

  $500

  $750

  $1,750

  $7,500

  $7,500

  We’ll assume that our state charges sales tax of 5%. Some lenders will permit the sales tax to be financed and added to the loan balance, while others will not.

  Survey

  $0

  $0

  $960

  $1,280

  $1,440

  We’ll also assume that Old Woody and Rafthouse have decided to forego a survey, since both boats will remain dockbound. For the remaining boats, we assume that the surveyor is charging a fee of $15 per foot and surveyors will examine the hull both out of the water and in the water. If the boat is in the water, she will need to be hauled and relaunched. Hauls and launches in NE range from $11.00 to $15.00 per foot. We’ll assume a realistic expense of $14 per foot. Also, good surveyors will want the boat hauled several days prior to the survey in order to dry the hull, which may result in additional costs for out-of-the-water storage. Some marinas might charge high storage costs for this (a local marina charges $2 per foot per day), while others might do it on a complimentary basis. I’ll assume a fee of $1 per foot for three days.

  Registration/

  Documentation

  $45

  $0

  $45

  $500

  $500

  You will typically have a choice of state registration or Coast Guard registration, although the Rafthouse is not typically required to be registered, as she does not have an engine. Some states require registration even with CG documentation, but this is the exception. For state registration, costs vary by jurisdiction. Some lenders charge a fee and require that they be hired to perform the registration or documentation services (or they will farm this service out to a documentation service provider). Massachusetts charges $15 for the title and $30 per year. CG documentation will cost $150. Whether done yourself or done by the finance company or documentation service, the fee is typically about $500, which often covers other services as well.

  Delivery

  $400

  $400

  $400

  $400

  $400

  If you need to have your boat delivered, there will be fees, whether the delivery is by captain or truck. When I was looking at a boat in Maryland that I wanted brought to Boston by truck, the cheapest quote I could find was more than $5,000, not including the haul and launch. A delivery captain will charge a fee, which will include per diem, expenses, travel, and time, including delays. We’re going to assume that every boat will require a delivery fee of $400.

  Repairs and Upgrades

  $200

  $300

  $700

  $3,000

  $3,000

  There are always immediate costs, whether they be new linens, safety gear, or immediate repairs. This is a wild card, for the sum could be many times this amount, or very little. Because of my bad surveyor and bad luck, my costs for emergency repairs (all unforeseen) were approximately $4,000. Just for purposes o
f a number, we’ll assume that the new owner will spend 2 percent of the value of the boat for repairs and necessary “stuff.”

  Total Initial Costs:

  $11,145

  $16,450

  $10,855

  $42,680

  $42,840

  Observations: Remember that Rafthouse and Old Woody are uninsurable and cannot be financed (so no survey is required). The buyer of Rafthouse has decided to forego the survey because not only is she an economical residence, but with no engine, her systems are limited. The owner really just wants her to float. It is foreseeable that other “cheaper” boat buyers such as the owner of Old Woody might want to do the same, but if there is any rigging or equipment, as well as an engine, it really helps to have an expert examine the condition of the boat. Variables are involved in the process of boat buying. For instance, a boat purchased on the hard may need to be launched and have her engine commissioned as part of the survey. Then she may need to be decommissioned and returned to land. All of these expenses are borne by the buyer; their terms should be contemplated and agreed upon as part of the original offer.

  Other initial costs will be incurred but are more appropriately placed in the monthly payment category—such as slip fees—or in the seasonal category, depending on whether the purchase is made at the beginning or end of the summer season in a cold-weather climate location. For instance, marina costs are often assessed initially for the season, and you will surely be required to provide your insurance company with a hefty check to get started. Paying the amount up front means less future charge, but be prepared for other costs and expenditures to hit, such as costs for provisioning. Some lenders might consider, in addition to financing the cost of a boat, financing sales tax and costs of boat repairs or improvements. They will very carefully consider financing boat repairs, for they often expect that you are buying a boat at a discount and restoring it to its proper value.