Is it better to buy a boat or a house?

Question

My husband and I are looking for unconventional ways to keep our debt down. We estimate that a $190K house would max out our resources. We have a combined $17K in student loans. We are considering buying a $80K sailboat instead of paying rent. The idea is that we'd be able to live simply, pay down debt, and recoup some of our expenses when we sell the boat and move into a house. Any thoughts?

Answer 1

I'd say go for it!! You only live once...and you'd be able to say you lived in a sailboat!! That's awesome!!

Answer 2

The boat is a LOUSY investment. Buy it only if you can afford it as a luxury for personal enjoyment. You are far better off to 'rent simply' and save for a downpayment in that fashion, rather than incurring a debt of $80K on an item which is guaranteed to depreciate heavily and rapidly.

Answer 3

Depending on your geography, a house is always one of the best investments you can make.

Loan payments are tax deductible

Can get 80%+ leverage

Over the long term your house should appreciate.

A boat almost always depreciates over time.

Answer 4

LOTS of thoughts here:

Have you ever heard this expression: "A boat isn't anything more than a hole in the water you put money into"?

Believe it or not, it happens to be true. The maintenance and storage fees for a boat - any kind of boat - are high.

So, you don't have a slip year 'round. When you want to go to another area and you don't have the luxury of time, you'll have to buy a trailer, won't you?

In the off-season, you'll pay for storage fees, won't you?

Do you think your boat is going to keep up with inflation and the real esate market, the same amount and way a single family home would?

When you put that boat on the market, do you honestly think you'll get anything close to what you originally paid for it?

While you're living on your $80K sailboat, do you honestly think real esate prices will stagnate until you think the time is right for you to invest in your first home?

I don't know your ages, nor where you live or what your ambitions and goals are. I don't know whether or not you have children. All I know is what I read in your question.

Here's my suggestion: In the very near future, you should sit down with a bank or mortgage company. Using your present financial profile and credit scores. you should at least see what kind of mortgage you can comfortably qualify for and afford today.

Inquire about "1st-time Buyer" programs in the area where your banker/mortgage officer or real estate agent tells you about. THEN buy a house within your price range. Its not going to be the exact perfect home you want it to be. Very seldom is this the outcome.

BUT, AT LEAST "you'll have your foot in the door." In today's mortage market, this is the kind of mortage you should be looking for or qualifying for: You want a fixed-rate, open-end, no pre-payment penalty, no negative amortization mortage. IF you have to qualify for an adjustable rate mortgage, ["A.R.M."], you want an ARM without negative amortization. IF possible, you want it to be convertible - from the ARM to a fixed-rate, open-end, no pre-payment penalty, no negative amortization mortgage.

While you're living there, you'll be building equity in that home and paying off the mortage - as well as paying down your student loans.

Statistics inform real esaate professionals the average first-time buyer does not live at that first home forever. You'll live there TOPS - 3 to 4 to 7 years.

THEN, you find a very knowledgeable, reputable real estate office who has a nice business of renting single family properties to the best qualified tenants. You approach that office and explain your situation to one of the rental agents.

Flattery should get you EVERYWHERE! If that rental agent impresses you enough to get your first house as a rental listing, by all means do it. Let that office handle all the prospective tenants and applicants. In the end, that real estate agent will get a commisssion and a portion of every month's rent, BUT you won't have to deal with the headaches of being "the Landlord" or "my/our Landlord".

You should not sell your first home to buy your second home. INSTEAD, you'll show the rental income - in the form of a lease and other documents from your tenant - from your first home as additional income. The equity in that first home will be shown as an asset - not a liability - on your mortage application.

You'll live in your second home 3 to 6 years. You should do the same thing with the second home. DON'T sell it. If it happens to be that same office who manages your first home, let them manage your second home. Let a reputable, knowledgeable real estate rental agent manage your second residence. And continue doing this.

Under this format, do you know what I'm doing my best to show you? I'm showing you how you can become wealthy - millionaires! People do it this way ALL the time.

You don't need fifty or more rental properties to be a millionaire. You can do it with about 10 to 15.
There are 3 "secrets":
1] You never sell any of the properties you buy. You "use those properties as stepping stones" to get better and bigger properties for yourself and your family.
2] Until you become adept at "reading" people and jnot taking any garbage from any tenant or prospective tenant, you let the rental agent manage your properties AND do his/her/their job..
3] By keeping your mouth shut, about who you are, you can go to any of your properties at any time - just to see how your tenants are taking care of your property or properties. You can pretend to be a landscaping contractor or a person who is giving a bid for work to be done. BUT once "you let the cat out of the bag" and tell the tenants who you are, those tenants will bother you for the repairs and other problems the property has or the properties have.

THis is only the barest of the essentials. I hope you got the idea and grasped the concept.

I wish you well.

VTY,
Ron B.

Answer 5

Boats get rusty and depreciate.... so does houses.... but the land the house is built on normally goes up in value through time... (inflation)