An Interview with Walter Parham
Note: The following article features an interview with our assistant editor and was originally posted on theSailboatPage.com (2004) and has now been reproduced on our site with permission of the author.
If you’d like to quickly and easily make BIG MONEY buying and selling sailboats in your spare time…
Then get ready to see, blow-by-blow, exactly how the Heavy Hitters ply their trade and use uncommon street-smarts to rake in wallet splitting returns of up to 300% and more on every sailboat…
… and have a ball while they’re at it!
From the Desk of Chris Poplaski
Dear Sailing Friend,
IT DOESN’T seem fair, does it? Most people think of a sailboat as an “expensive luxury item” that provides great pleasure but costs an arm and a leg to purchase and maintain. And for most sailors (myself included), this is absolutely correct.
I always figured that if I could get most of my money back on a boat, at least or some of it, I was doing okay!
But the folks at iBuySailboats.com see things a lot differently. According to their website, they’ve been buying, selling, trading and collecting sailboats for profit for the last 30 years or so.
Profit?… On a sailboat??…
The curiosity was killing me.
As a sailor and a journalist, my interest was piqued ever since I’d first clicked on their site a couple of days’ previous. So finally, I called the iBuySailboats office down in Florida to get the scoop. At first I got an answering machine (it said they were out looking at a boat), so I left a message and got back to my work.
10 minutes later my phone rang; it was Mr. Walter Parham, the assistant editor.
Now most people get a little tense when they receive a call from a journalist asking about their business – I’m used to it. But as I grilled Mr. Parham for details about their system, it was quite the opposite. I found him to be patient, professional and downright generous… Quite frankly, I was shocked with the amount of information he was willing to share with us. I learned more about buying and selling sailboats in just 5 short minutes on the telephone…
Our discussion was broad enough to include just about any kind of sailboat, yet I wanted to include it on our “Island Packet Sailboat Page” because I felt that IPY sailors would find it interesting and beneficial from an owner’s perspective. And in any case, if you’re planning to buy or sell a sailboat anytime in the near future, we think it’ll knock your socks off. Here’s how it went:
An Interview with Walter Parham
Chris: Mr. Parham, as I mentioned on the message, I’d called to get more information for a series of articles we’re running on our website. If you could spare a few moments…
WP: Sure, but please, you can call me Walter.
Chris: Okay thanks, Walter. Just to get things kicked off here, maybe you could tell us how and why you got into the business of buying and selling sailboats.
WP: Actually it didn’t start off as a business venture at all. In the early days it was just a group of sailing friends, myself and a few others, who couldn’t afford to pay rack prices (emphasis mine) for the boats we wanted. So we studied the market, developed a system for spotting undervalued sailboats, and we started buying them.
Chris: And then selling them, right?
Chris: Are you brokers?
WP: No, not at all. We’re private investors… sailors… regular people. We own the boats we buy, and we sell them.
Chris: How does that work, with depreciation and such?
WP: Well once a boat gets to be about 10 years old or so, depreciation isn’t really the issue anymore. The real issues are supply, demand, positioning in the marketplace, and pricing. Pricing is the one that trips most sellers up.
Chris: How’s that?
WP: Right from the beginning we noticed a pattern of wildly huge variations on sailboat prices, even within identical boat types of similar condition. It’s nothing like cars or houses where the “value” is a constant that determines the price. With sailboats, it’s basically the opposite. The price determines the value.
Chris: Are you saying that the actual, real world value of a sailboat is adjustable, according to what sort of price the seller places on his or her boat?
WP: For the most part, yes. The price, more than anything else, tells buyers how much your boat is worth, who should be looking at it, and what they can expect to get for their money.
Chris: That’s profound. I mean, I believe you, but at the same time it’s kind of hard to believe. Can you help me out here?
WP: Think of it this way: If you see a 30′ sloop advertised in the newspaper for $3000, what’s the first thing that comes to mind?
Chris: It must be a real clunker, right?
WP: Right. And if you’re like most of us, your mind is already thinking of what’s wrong with this boat, and why she’s probably so cheap. Soft decks, worn out engine, blisters… whatever.
But let’s suppose that you’re a typical boat buyer. You’ve budgeted a certain amount, let’s say $15,000 or so, and you want the nicest boat you can get for your money, right?
WP: So when you see the 30′ sloop advertised for $3000, you’re already prejudiced against it. In other words, the price has told you that it’s probably not the best one out there… or that you’re going to have to spend all summer grinding fiberglass instead of sailing with your family.
Of course, this may not be the case at all. But from a market viewpoint, the damage is done. You’re thinking, “what’s wrong” with this boat instead of “what’s right.”
We could price that same boat at $18,000 and your expectations of her quality and condition would be 6 times higher. So now, even if we have to make some concessions and discounts for repairs, at least we’re dealing from a position of strength. It’s a much better, and faster way to sell the boat.
Chris: Wow. I never thought about it like that.
WP: Most people don’t. But of course, that’s what creates the opportunities for those of us who enjoy sailboats and choose to make a living this way.
Chris: Walter, you’re blowing me away here.
WP: Sorry about that.
Chris: No, please… this is great. It’s like you’re twisting everything I thought I knew into a pretzel, and throwing back into my lap. Let’s keep going… How does a typical boat deal work for you, start to finish? In other words, let’s take that 30′ sloop as an example. Where do you start?
WP: Okay. Let’s say that I’m the typical seller, and you’re the not-so-typical buyer who wants to make a profit.
Chris: I like the sound of that.
WP: Good. I’ve been trying to sell my 30′ sloop for quite some time. My price is lower than any of the other 30 footers in the area, the boat’s in fair shape, but I’m not having any luck. Nobody seems to want my boat, the phone has stopped ringing, and I’m tired of paying slip fees, insurance and the like. If I’m a typical, frustrated seller, what’s my next move, probably?
Chris: Lower the price?
WP: Exactly. Meanwhile, along comes you. And as incredible as it may sound, you’re one of the very few people in the world who understands that the main reasons my boat hasn’t sold are that my price is too low, I’m doing a lousy job of marketing it, and I’m totally missing all the best buyers. You know that if this 30′ sloop were washed down, backed into her slip and marketed correctly at $18,000, your phone would be ringing off the hook.
So what’s your next move?
Chris: Buy her.
WP: Right. You take possession of the boat, tweak the marketing campaign, bump the price to $18,000 or $19,000 and put her back on the market. In this example, your profit would be about $15,000, minus expenses.
Chris: What kind of expenses are we talking about?
WP: Mainly dockage, insurance, and cleaning supplies if needed. But we keep those to a bare minimum.
Chris: How? Like with dockage for an example.
WP: Dockage is an easy one. If it costs, say $250 per month for a slip, we lock the boat down in a purchase contract with the seller but schedule the closing for the 5th or so of the following month… after that month’s slip fees have already been paid by the seller. This way we control the boat for an average of a month and a half, rent free, which means we’ve just saved $375.
If we work quickly, the boat will be sold before we have to pay any dock fees at all.
Chris: That’s incredible. And this is what you do all day long while I’m stuck behind a desk?
Chris: If somebody was thinking about doing this for themselves, maybe as a part-time business, what’s the risk?
WP: Let’s go back to the example. In this case, you’re sitting on a 30′ sailboat that cost you $3000. You tell me.
Even if you had to pay $6000 or $7000, your risk is nominal because if it’s a good boat, it’ll always be worth at least that much. Compare that to buying stocks where you can lose your shirt overnight and be left with a pile of worthless paper by morning.
Here’s another way to look at it: If you’re a sailor, you’re probably owning your own boat anyway. Most people pay for boats, and there’s nothing wrong with that. The difference here is that we reverse the process and get our boats to pay us.
Chris: I see your point.
Tell me about some of the other subjects you talk about on your website… Negotiations, 3-D advertising, working the BUC books to your advantage and such. I got the feeling that there’s a lot more to this than just pricing strategies, am I right?
WP: Sure. Knowledge is power, so what we essentially did was to document all the tips, tricks, techniques, sources and such that we’ve been perfecting over the last 30 years. We’re still very much active in the game, which helps us keep the content fresh and up to date at all times.
Chris: Which leads me to my next question. Why the Guide? Aren’t you worried about the market getting saturated with a bunch of other people using your material?
WP: Our primary business is still sailboats, not books. I really don’t think saturation could ever become a problem – there are literally tens of thousands of sailboats to buy and sell. And of course, there are more becoming available each day. Builders are cranking them out faster than we can keep up.
Chris: That makes sense. But in the worst case scenario… what if it did happen? What if the market became tight and you ran out of boats?
WP: Not in my lifetime. But to answer your question, I guess I’d toss my cellphone, buy a 90′ schooner and spend the rest of my years drifting around the South Pacific.
Chris: So you guys have been at this nearly 3 decades now, and clearly it’s been working out well for you. Tell me about the ordinary sailboat buyer or seller, someone who isn’t necessarily interested in working with sailboats as a business or investment scenario. How does your system help them out?
WP: Well remember, that’s us you’re really talking about here – in the beginning anyway. Let’s face it, when it comes to our own personal sailboats, most of us like to do our own buying and selling. Nobody knows what we want, or what we’ve got, better than we do, as owners.
So if we’re buying our own sailboats anyway, why not buy them for less? And if we’re selling them, why not sell them for more? It just makes sense to stay ahead of the game. And besides that, we provide an aggressive approach toward minimizing expenses like dockage, maintenance, marine supplies and insurance.
Chris: Who wouldn’t want that?
WP: I don’t know.
Chris: You know, I’ve gotta tell you. I wasn’t really expecting that you’d be like a “real person” that we could talk to on the phone like this.
WP: I’ll take that as a compliment.
Chris: It is. Let me ask you just one more question if I could. I’m sort of familiar with websites myself, as I mentioned I do some writing for a small one called the-sail-boat-page.com. This would make for some really interesting stuff on our featured sailboat links. Would you mind if I published our discussion and put it up on the site?
WP: Not at all. Thank you.
Additional notes from Chris:
If you’ve found this subject interesting, or if you’d like to get started buying and selling sailboats for profit, the Start a Sailboat Flipping Business course is a great place to start. Clicking on the link automatically applies a $10 discount to the course.
Chris Poplaski is a sailor and a contributing journalist for theSailboatPage.com.