What’s happening in Florida’s used sailboat market? And more importantly, how can you profit from it?
It’s no secret that the Florida boat markets are running soft right now. Hurricanes, rising insurance rates and property taxes, plus a nationwide decline in real-estate equity values have impacted the Sunshine State with what many are describing as an unbearable economic adjustment.
But history shows that during all phases of an economic shift, there are two groups of people:
- Those who are losing money from the changes
- Those who are making money from the changes
Obviously, nobody wants to be the loser in this game. But winning is another subject, so if you’re interested in flipping sailboats as an income-producing venture, or even as a hobby, we’re going to roll up our sleeves now and talk about some real-life strategies that work.
Times have changed. And while most people are busy scratching their heads, others are out there buying up ‘investment grade’ sailboats at near fire-sale prices; barely a fraction of their true market values.
Why are they doing this?
Because these buyers know that in reality, wealth doesn’t get “lost”; it merely changes hands. And right now there’s a whole lot of wealth changing hands in Florida:
- Like the classy Cal 36 that was just purchased down in the Keys for only $3,000, including a strong Perkins 4-108 diesel, roller furling, with new canvas and electronics.
- Or how about a super-clean Newport 30 in Ft. Lauderdale for just $2,100. All she needed was a new Lexan porthole (lens) and some lifelines.
- Or the spacious Morgan OI 41′ cruising ketch that just sold in Tampa Bay, for under $20,000… solid and just needing some interior cleaning.
By the way, you can put the power tools and paper suits away, because these are not ‘project boats’. They’re not exceptional cases, either. They’re common, everyday examples, just a tiny sampling of what’s actually going on all over Florida right now.
But the real question is, how can we prosper in a soft market?
There are many possible answers to this – We’ll cover just a few here. But before we do, we should mention that even without using any special techniques at all, any one of those 3 boats we just mentioned would be an easy sale at twice the price. Doubling your money would be a snap.
But instead of that, we’re going to take a closer look at some alternative strategies to produce 3X, 5X or even 10X our initial cost… from an investor’s perspective:
- $15,000 Profit on a Newport 30. The #1 reason that older, smaller and less expensive boats get “stuck” on the market with no buyers is a lack of readily available financing. It’s a problem, but problems create opportunities. And for savvy investors who are willing to become part of the solution, the rewards are extraordinary. After all, since when does a 30′ cruising sailboat only cost a few thousand dollars? Since the banks and lending institutions decided they’d rather go after bigger fish… that’s when. No funding = no buyers. Get it? So let’s think about it. If we, as investors, can solve the finance problem, then our boat is instantly transformed back into a more normal, competitive price and value range. Which in this case, given the condition, accommodations, and capabilities of our Newport 30 might be something closer to fifteen or twenty thousand dollars.
If we only have to pay $2,100 to buy the boat, then why wouldn’t we accept $2,000 – $3,000 as a down payment, plus $250 a month for the next five years? She would sell very quickly under these terms.
And after all, when the buyer’s down payment covers our initial investment, we have ZERO ($0.00) of our own capital at risk, and everything else is gravy.
What kind of gravy?
How about $250 times 60 months? That’s $15,000… pure profit.
- $30,000 Profit on a Cal 36. Particularly with a vessel in the mid-size range, like 35′ feet or so, often times the problem is that she’s just in the wrong place. She’s possibly too big to be considered a weekender for local sailors, and yet too small to attract much attention from serious buyers in other parts of the country. Stuck in the middle, plain and simple. The seller gets discouraged and keeps lowering the price (BIG MISTAKE), not realizing that there may be a much stronger demand for their boat… somewhere else. This is exactly what happened with the Cal 36.
Solution? We have three choices:
A) Move the boat to another location where the demand for such vessels is likely to be increased. It’s simple but it works, and on a boat that typically sells for $35-$40,000 in a better market, we don’t mind taking a cruise along the coast to get the job done. (Who says making money can’t be fun?)
B) Keep the boat where she is, but ramp up the newspaper advertising to include every major market within a six hour driving radius. For a boat in the Florida Keys, this should include Miami, Ft. Lauderdale, Tampa, St. Pete and yes, even Orlando. If you’re not in Florida, just get a map and draw a big, 300-400 mile circle…
C) Offer financing the same way we did above, in which case finding a local buyer becomes much, much easier. The demand for such financing is extraordinary, and with a cash outlay of just $3,000, why wouldn’t we accept $3,000 as a down payment, then $500 per month for the next 5 years? Our profit would be $30,000 (60 mos. X $500).
We could also use any combination of the above.
- $50,000 – $60,000 Profit on a Morgan 41 Ketch. With larger and more expensive boats like the Morgan O.I. 41, the economy of scale kicks in, and export becomes a viable solution. In other words, we might specifically market the yacht for overseas buyers. For obvious reasons, we do not finance international transactions – payment in full is required at the closing table. Right now, US-owned yachts in the $75K and up range are attracting international buyers in record numbers, mostly due to the strength of foreign currencies vs. the US dollar. Buyers from Europe, Central America (esp. Panama & Costa Rica), Australia, New Zealand, and South Africa have figured it out – their money goes a LOT further in the US than it does at home right now.
The only reason we normally limit this approach to larger and more expensive yachts is that shipping costs are proportionately less of a factor as we approach the $100K threshold. Remember, it still has to make sense for the buyer, who might spend $8,000 to ship a 30′ footer to Europe, but only $10,000 to ship a 40′ footer.
If trans-oceanic delivery is within your buyer’s scope and the capability of the yacht, by all means this might be an attractive and economical alternative. Many of the yachts imported into the US and Canada during the 70′s and 80′s were sailed over – not shipped – for this very reason.
Sound complicated? It’s not. Remember, there’s no reason to have everything planned out in advance because it’s typically the buyer who makes these arrangements – not the seller.
Want to have yourself a great time, and make serious money flipping sailboats?
With some additional tricks of the trade and insider knowledge, you can tilt any sailboat market to your extreme advantage, both when buying and selling. Buy for less, enjoy the boat, then sell her quickly and easily… and for top dollar… no matter what’s happening in your area. For profit, for pleasure… or both.
To get started today, download the Start a Sailboat Flipping Business course. (Clicking on the link will automatically apply a $10 discount.)
Finding Sailboats for Sale in Florida (South Florida, Gulf Coast, Atlantic Coast) – Classified Ads
TIP #1: Looking for a bargain? Of course you’ll check the big city newspapers, but as much as possible try not to skip over the smaller publications. Small newspapers usually have lower advertising rates, which are often very attractive to distressed sellers and in some cases, trustees (ie. estate sales, donated yachts, etc.)
TIP #2: Check well outside of your normal boating area. Oftentimes, a seller will advertise in their hometown but not necessarily where the boat is located. It’s a common mistake, and it’ll often cause a boat listing to go ‘stale’, but can result in some outstanding bargains for the savvy buyer.
TIP #3: Don’t make the same mistakes that so many sailboat buyers make. Pick up the How to Buy a Sailboat guide and find a great boat at a bargain price. Clicking on the link will apply a $5 discount off the guide, courtesy of iBuySailboats.
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