Hatteras Resale Prices

[krush]

Somebody that can come up with 150k cash, can also come up with 200k cash.

 

[racclarkson@gmail.com]

Somebody that can come up with 150k cash, can also come up with 200k cash.

You know, I've been on enough boats belonging to folks who can't afford their boat to not ever want to have to take it back. And there is a legal process for foreclosure that can be quite lengthy if the foreclosee wants it to be. That's a period of time when they know they are going to have to give it up and, human nature being human nature, may further degrade the value of the asset (trash the boat). And then there's the subordination of the second to the first (if that's the case) wherein the party holding the first mortgage isn't necessarily helpful to the party holding the second.

As painful as it is, I have to agree with Capt'n Krush.

 

[krush]

As painful as it is, I have to agree with Capt'n Krush.

Conversely, somebody that can finance 150k, can also finance 200k (or make up the 50k difference with cash).

 

[jrbrein]

Look, I am not a banker or a lender, nor am I advocating taking advantage of buyers. My point is simply, resale prices of older boats are lower than they would be if financing was available. We can not change the lending industry, but as individuals we can influence individual transactions.

As an example, you list the boat for $150k. Replacement new 1.5m. 100% refurb $600k
Too old to get conventional lending. You list for $200 as is with $50 as a second. You receive the $150k at closing and buyers note costs him an extra X per month over 5 years.

You feel good about the risk, you hold the paper and earn 10~12% on the $50 and the extra $50k less the cost to insure the risk. You don't feel good, discount the note to $25k and sell on secondary market. End of story you sold the boat at worst for $175 instead of $150.

If I were in the brokerage business, you bet I'd have this angle to offer. It would make me more valuable to sellers and buyers alike.

My goodness we are a group of old curmudgeons.
Just proffering some out of the box thinking. Stop shaking your canes at me.

I could not agree more with you!

What ever the assett is, it can be financed regardless of whether it appreciates or depreciates. Mobile homes and used cars both depreciate and the only way many of them could be sold is by creative financing.

I am a landlord and I check credit, public records, and I do a criminal background check on all of my tenant applicants. I find out who you can trust and who you cannot.

Just make the terms workable and attractive....sold!

 

[jrbrein]

One more thing!

I have learned over the years that there really is no sign of intelligence at the bank. I have also learned that you never ever trust any bank. Banks will screw you.

I am in the house business and I have done many owner financed deals both when buying and selling houses. No banks!

Owner financing is as much an art as a numbers game.

Jon

 

[Walter P]

Back in the days of Jimmy Carter when interest rates on home mortgages were close to 20%, I thought I saw an opportunity to make a few bucks by lending money secured by mortgages at a slightly lower rate. All the dead beats that never paid more than offset the gain. It wouldn't have been as bad if the repo'd building was not trashed but unfortunately most were. I have seen many people trash an otherwise nice boat because they know that the bank is about to take it. Why is it that they seem to justify their actions because in their pea brains, the bank is the bad guy. They had an understanding with the bank or other lender that we will lend you x dollars and you agree to pay us back with interest. Very simple and no one held a gun to the borrower's head. The bank upheld their end of the deal by lending the money, but yet when they asked the borrower to uphold their end of the deal and make timely payments, they figured it was OK to get even with the evil lender. Obviously I no longer engage in the lending business. Ben Franklin was indeed a very wise man when he said"Neither a borrower nor a lender be"

Walt

 

[jrbrein]

With all due respects, it depends who you do business with.

Just the same way I vet a tenant (as I described above) is the same way I would do my diligence to carry a note from someone. This has served me well for the last 13 years renting houses and apartments to people. It is not easy but it is doable. You can be just as careful as any bank would be.

I would say that the majority of financed boats, cars, houses... you name it, go as planned. If not, there is no market anymore.

Jon

 

[ronparise]

As a buyer, when my seller refuses to consider financing, I have to ask , what's wrong with the asset? If I offer to pay for a boat over 5 years, and he refuses, he's telling me that something is likely to go wrong. Also speaking as a borrower, i view the bank or individual making the loan, as my partner. We are in this thing together. If things go bad, I have no problem asking for a renegotiation or even returning the keys if it doesn't work out. ( I am in no way justifying trashing the asset)

After the savings and loan crisis years ago, the value of the real estate that they had financed, dropped like a rock. Looking at the value of our old boats, I have no doubt that prices would go up if financing was readily available. I know I paid more for mine than it was worth because the seller held paper for a year. And I would have paid even more if he had been willing to take his money over 5 years

 

[Finalee]

Boats are toys not assets. Not a good idea to finance a toy. They break or are no longer fun to play with, so you need to have the ability to walk away from it without repercussions.

 

[Tinman]

Not a good idea to owner finance a depreciating asset such as a boat. When times get tough the first payment that stops are the toys...including maintenance. Ask a lawyer the cost of collecting debt and foreclosure before owner financing....big $$$$'s. Remember, lawyer/politician$ created these laws and not in the favor of landlords or debt holders...for a g$$d rea$on.

 

[Walter P]

Fred and Tinman, Both made excellent points. I won't finance a boat neither for a sale or purchase for the reasons you two stated.

Walt

 

[racclarkson@gmail.com]

As a buyer, when my seller refuses to consider financing, I have to ask , what's wrong with the asset? If I offer to pay for a boat over 5 years, and he refuses, he's telling me that something is likely to go wrong. Also speaking as a borrower, i view the bank or individual making the loan, as my partner. We are in this thing together. If things go bad, I have no problem asking for a renegotiation or even returning the keys if it doesn't work out. ( I am in no way justifying trashing the asset)

Will Rogers said banks are institutions designed to loan money to people who don't need it. My father taught me that you either want to owe banks a lot or a very little because when you're in the middle, and the rubber meets the road, you'll find out what your banker is reaching for is not an equitable solution but that tube of grease they all keep. A good many people found out in 2009 that banks were poor partners.

I've rented, leased and sold properties for the last 35 years. Thankfully, I have no more residential properties and the attendant headaches. I look back in disbelief at the times when I frequently collected rent with a Winchester Model 12 in one hand and receipt book in the other. Properties do get trashed, even by people who have or had good credit and can pass a background check. I once concurrently rented to a doctor who became an alcoholic house painter and a guy paroled for murdering his girlfriend in a fit of passion. The later kept up his apartment and always paid on time; the former lived in filth and was forever in arreas. People change.

 

[jrbrein]

Robert you are correct, however as my mother always said; you can't change the spots on a leopard!

Jon

 

[SeaEric]

In the past five years I have done two owner finance deals. Both were + or - half million dollar boats. Both had large down payments, short terms and huge monthly payments (one was $10K/month) All went like clockwork and both are now paid off. It can work. It helps when buyer and seller are both millionaires.

 

[krush]

As a buyer, when my seller refuses to consider financing, I have to ask , what's wrong with the asset?

LOL for serious? That's a new one to me....buyer won't self finance, so boat must be a POS.

How about, owner could run boat aground and sink it in first 24hours of ownership, insurance company says boat is worth 25% of what note is, and I get nothing.

 

[rsmith]

LOL for serious? That's a new one to me....buyer won't self finance, so boat must be a POS.

How about, owner could run boat aground and sink it in first 24hours of ownership, insurance company says boat is worth 25% of what note is, and I get nothing.

Or negligence and not pay a dime out on the claim.

 

[ronparise]

LOL for serious? That's a new one to me....buyer won't self finance, so boat must be a POS.How about, owner could run boat aground and sink it in first 24hours of ownership, insurance company says boat is worth 25% of what note is, and I get nothing.

Not must be a pos, just something to question and a point to negotiateIt's like if a seller can't show me that the boats been properly maintained, I'd assume (at least for the purpose of negotiation) that it hasn't been maintained. And no question the boat could sink and the loan would no longer be secured, but you would still be able to collect on the noteBottom line is I risk my life every time I cross the street, but I take steps to mitigate that risk, I don't not cross the street. There is a risk buyingor selling an old boat whether it's financed or not. I will pay more for my toys if they come with financing. Even if I have the cash,

 

[jrbrein]

How about, owner could run boat aground and sink it in first 24hours of ownership, insurance company says boat is worth 25% of what note is, and I get nothing.

Or, your new buyer agrees to make payments to you and as soon as he takes possession of your nice boat, he takes the boat strait down to French Guiana were he sells the boat to a local tribal leader for some pretty beads, his oldest daughter and US dollars....lots of them. He always wanted a Hatteras.

This happens everyday!!!

 

[SEVEN]

That would not surprise me. LOL

 

[Chasemmc]

The point is not whether you would finance the boat, but would the selling price be positively affected by the option.Also, if u were the loss payee secured by your note, u would have a stated value policy.Maybe it's good u guys are all retired, cause even a little risk taking is clearly too much. I risk capital every day conducting business, i consider the risk against the gain and make a judgement. If the note represents proceeds I would never have gotten in a cash deal, the risk is minimal cause I got in the first the value of a cash only deal. Of course it would be safer to stuff it in my mattress