In article . net,
Maxprop wrote:
The prevailing mortgage loans in San Francisco these days are the no-down,
interest-only loans. Some lenders even advertise "no credit checks." If
the real estate bubble bursts, there may be some lenders in a world of hurt.
That said, I'd never want anything resembling a depreciating asset (Swan 44,
for example) on paper. I buy only what I can afford to pay cash for.

Well, that's not a terrible philosophy, but it isn't necessarily the
best one. My next boat will probably be via some sort of loan. It's
not that I can't afford it to pay cash, but I can probably find other
uses for the cash, I won't be depleting my cash reserves, and I can
claim the boat as a vacation home and get some tax benefit from it. It
will still depreciate in value, but I should be able to partially make
up for that with this strategy.




--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article . net,
Maxprop wrote:
The prevailing mortgage loans in San Francisco these days are the no-down,
interest-only loans. Some lenders even advertise "no credit checks." If
the real estate bubble bursts, there may be some lenders in a world of
hurt.
That said, I'd never want anything resembling a depreciating asset (Swan
44,
for example) on paper. I buy only what I can afford to pay cash for.

Well, that's not a terrible philosophy, but it isn't necessarily the
best one.

It is ALWAYS the best one, if you have the cash.

My next boat will probably be via some sort of loan. It's
not that I can't afford it to pay cash, but I can probably find other
uses for the cash, I won't be depleting my cash reserves, and I can
claim the boat as a vacation home and get some tax benefit from it.

I've heard these excuses for decades, and they didn't wash years ago, nor do
they now. If you add up the tax benefits you get from writing off the
interest on your boat loan, plus any interest you may earn from investments
made with the money instead of the boat purchase, you're still behind. The
only real excuse for not paying cash is, "I don't have it." Everything else
is just rationalization for allowing someone else the opportunity to make a
lot of money at your expense.

It
will still depreciate in value, but I should be able to partially make
up for that with this strategy.

Notice that I didn't even include depreciation in my statement above, Jon.
Add that in and you've got an even greater losing proposition. That said,
there is nothing wrong with financing a boat. It may be the only way one
can have a boat. It's a matter of priorities.

Max

In article et,
Maxprop wrote:

"Jonathan Ganz" wrote in message
...
for example) on paper. I buy only what I can afford to pay cash for.

Well, that's not a terrible philosophy, but it isn't necessarily the
best one.

It is ALWAYS the best one, if you have the cash.

Nope. Not always... for some of the reasons cited previously.

I've heard these excuses for decades, and they didn't wash years ago, nor do
they now. If you add up the tax benefits you get from writing off the
interest on your boat loan, plus any interest you may earn from investments
made with the money instead of the boat purchase, you're still behind. The
only real excuse for not paying cash is, "I don't have it." Everything else
is just rationalization for allowing someone else the opportunity to make a
lot of money at your expense.

No, that's just not true. Have you suddenly switched professions to an
economoist or CPA?

Notice that I didn't even include depreciation in my statement above, Jon.
Add that in and you've got an even greater losing proposition. That said,
there is nothing wrong with financing a boat. It may be the only way one
can have a boat. It's a matter of priorities.

See my last comment, and it's certainly a matter of priorities.

--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article et,
Maxprop wrote:

"Jonathan Ganz" wrote in message
...
for example) on paper. I buy only what I can afford to pay cash for.

Well, that's not a terrible philosophy, but it isn't necessarily the
best one.

It is ALWAYS the best one, if you have the cash.

Nope. Not always... for some of the reasons cited previously.

I've heard these excuses for decades, and they didn't wash years ago, nor
do
they now. If you add up the tax benefits you get from writing off the
interest on your boat loan, plus any interest you may earn from
investments
made with the money instead of the boat purchase, you're still behind.
The
only real excuse for not paying cash is, "I don't have it." Everything
else
is just rationalization for allowing someone else the opportunity to make
a
lot of money at your expense.

No, that's just not true. Have you suddenly switched professions to an
economoist or CPA?

I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.


Max

In article . net,
Maxprop wrote:
I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.

It's just not true. Besides, as soon as someone uses the word "never"
in an argument like this, it usually means that there is no such
absolute.

I'm purdy good with dem numbers also.

--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article . net,
Maxprop wrote:
I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.

It's just not true. Besides, as soon as someone uses the word "never"
in an argument like this, it usually means that there is no such
absolute.

I'm purdy good with dem numbers also.

Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Max

In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time. Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.






--
"j" ganz @@
www.sailnow.com

Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going
to
save money, or at least not lose any, by financing the boat. We'll
assume
you have sufficient money in relatively liquid assets to purchase the
boat
outright.

Wow. Max, you don't know much about money do you? Many people can make
more money with a 64K cash investment spent elsewhere that would easily
outrun the losses for financing the boat. Unless you plan to keep her
forever, you're only "leasing" her in effect anway. Why hand over the
entire amount if you plan to trade up anyway in 5 years? In our case we
bought the boat outright, but there were serious financial profile
factors to consider as well for us.

RB
35s5...OUR boat!
NY