Boat Sale ( Owner Financing )

M

MarkMuck

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A family member has a yacht in LA he wants to sell. It's worth about $600,000. A friend wants to buy it. Large downpayment and owner financing the rest.

Has anybody ever done anything like this? I have done this with houses before but never a boat. Any advice would be welcome. Thanks
 
Just like doing it with a broker. Friend makes offer with a deposit, contingent on satisfactory sea trial and survey. After doing both, buyer and seller sits back down to renegociate needed repairs and/or price adjustment. Once everything is done, buyer pays seller and gets a bill of sale. Everything needs to be done and lender kept in the loop since he is providing the funds needed to buy the boat.
 
You're talking big dollars. I would get a lawyer involved. It's a movable asset so your chances of recovery in case of default are lower than a house. You need good documentation and a way to protect your lien on the boat. I think coast guard documented vessel will help.

If it was me, I only deal with someone who could get the loan or pay cash.
 
I'm not a fan of 3rd party Coast Guard documentation companies (there are some sleazy ones out there) but in this case, I would find a good one to handle the paperwork on this to make sure all the correct forms were filled out and properly submitted to the CG.
There should be 4 people at the closing table...buyer, seller, yacht mortgage rep and CG Documentation company rep.
 
quote:
Originally posted by cwms

I'm not a fan of 3rd party Coast Guard documentation companies (there are some sleazy ones out there) but in this case, I would find a good one to handle the paperwork on this to make sure all the correct forms were filled out and properly submitted to the CG.
There should be 4 people at the closing table...buyer, seller, yacht mortgage rep and CG Documentation company rep.

Click to expand...


You realize the proposal is for owner financing. There is no bank or Yacht mortgage rep.
 
Great way to lose a friend!
No bank for seller financing, no need for 3rd party documentation company. Buyer can document it himself with paperwork that seller provides, a CG form, and $84.00 if the boat is already documented or $133.00 if it is not. Coast Guard answers the phone and they are very helpful if the buyer has any questions. No need to pay a third party a fortune to do this. I did mine myself and it took me less than an hour to have it in the mail having never done it before.
If the boat isn’t currently documented then it likely has a State Title which can be transferred once all liens have been satisfied.
Seller should have a lawyer make a contract for the loan and establishing a lien on the boat. If the seller was smart he would have his own lawyer review it.
Had a friend who about 15 years ago bought a commercial property where his business was located for many years. Seller held the mortgage. My friend was too cheap to pay a lawyer to review the mortgage contract. He “knew the seller for years”. Dumb doesn’t begin to describe that move.
There was a clause in the contract that prohibited him from pre-paying for 5 years (no big deal unless he wanted to resell), and another that said the seller had the right to foreclose if a payment was 72 hours late. That second clause could have been a problem.
Luckily he was able to refinance another property (2nd home) at a much lower rate and he paid off that that mortgage on the 5th anniversary to the day.
 
Don't do it unless you are prepared to repossess it without mercy.
 
Agree, if he can't get a bank to finance him, then why would I consider doing it?
 
Who said that he could not get a loan. Owner may want to get the return on the money at close to boat loan rates.
The friend situation is a different issue
 
Don't do it. Buyer in theory could trash the boat and walk away.

If he can't get bank financing there is a reason.
 
Never had luck getting involved with friends or family with money. I know that it works for many people, I’ve just never been one of them.
 
Come on Get, You have to think if he's going thru the hassle of owner financing, he has few other options.
 
Maybe there is a possibility of a bond or insurance for the loan? If that is possible but the company will not provide it, RUN!
 
I provided owner financing on a 25 yr old boat that I sold a few months ago. In this case, it is essentially a bridge loan until they sell their old boat. I got a substantial down payment. I got a notarized contract that spells it all out. It is CG documented and I am shown as the lien holder. I am also shown as lien holder on their insurance. This is on a landlocked lake, so moving it would not be easy.

Would I do this deal with a true friend - nope.
 
Getting a boat loan is so easy and sick what they approve. Point is, me, perfect credit, assets and cash value through the roof. I apply for a boat loan, and in 24 hours approved. I apply for a mortgage for another home or property, and OMG, months and tons of paperwork. Point is, Real Estate has real value and a asset easily attached. A boat is a depreciating asset. But a boat loan, is easy. If a person can't get a boat loan, I would run!!!
 
Actually loans can be difficult to acquire depending on your situation. We have had zero debt for years. Since I did not want to touch investments that were doing really well with the "Trump Bump" we decided to finance the RV.
In spite of our assets, we had a tough time getting a loan! We had to hunt and peck to finance the RV. Our ROI vs. debt cost is still positive but it was a PITA to get.
 
Boat and car loans are super easy to get around here. Way too easy sometimes. It should be harder for people to get themselves in to financial trouble.
I’ve got some close friends, and relatives too, that sometimes make me wonder how they sleep at night.
I’m not a lover of consumer debt so I don’t take advantage of it. Other than two car leases for the cars we drive every day, I pay in full for everything and pay off credit card bills in full as soon as they come.
I wouldn’t loan money to a friend or family member unless I was fully prepared to never get it back, and I would never ask one of them to loan me money either.
I know that these financial arrangements between friends and relatives work for a lot of people but I’ve gotten burned before and had relationships severely damaged because of it so I wouldn’t put myself in that position ever again.
 
A boat loan on a $600K yacht is not easy or simple.
Owner could easily get 5%, but I would not finance unless I knew the financial details of the buyer
 
Seller financing makes sense when purchasing real estate. Boats are nonessential luxury items that depreciate. This seems more risky for the Seller than the Buyer. I'd consider a discounting to make an all cash sale, as the Seller, before I'd take on the risk collecting the full loan amount over time. What's a good night sleep worth? If you can't pay cash to buy it then you can't afford it. Just me... IMO
 
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