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Discussion Starter #1
Hi all,

I am curious what people think about the risk of this these days. We all know markets globally are terrible. Boat builders are on the ropes. Now maybe this bodes well for getting some good prices. On the flip side though, I see the risk that you get xyz co started on your boat and 3 months into it the company is out of business. What do you do then?

For instance, Poncin Yachts is currently working under creditor protection (extended to May 31 2009). So if you were thinking of getting one their new Catana's which are fairly popular cats, would you be happy placing an order for one? Now they mentioned in a press release that they got a few boats sold at the Paris boat show and thats great - but what are those buyers doing to protect themselves that a boat can even get completed?

I am not picking on Poncin/Catana here, it is just one that I know is operating under creditor protection as it is a public company.

So, you find your dream boat, its new, shiny and has everything you think you would like. Do you risk it in this world with a builder? How do you protect yourself? How do you know whats going on when it isn't even a public company (like Poncin). For instance, I quite like the look of the new Outremer 49. Well how the heck do you know what is going on financially there to ensure you would get your boat completed? What kind of contracts do people need to get put in place to protect themselves?
 

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Midwest Puddle Pirate
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The other thing to be concerned about is a boatbuilder in distress taking shortcuts on their boats. Just like the builder of my house (who went out of biz half way through building my neighbors house) forgot to put re-bar in my foundation. If you lose a fat deposit, you may be lucky compared to the last guy who actually took delivery.
 

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Discussion Starter #3
Live in France/Maine/South Africa/Chile for a year and offer to be a worker maybe? Catch is, visa's run out in 90 days for most and you definitely can run into issues (tax) at 180; not to mention working in a foreign country (even if its working on your own boat for 'free').
 

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My family has gotten through the current mess in very good shape BUT we feel there was a LOT of luck involved in not getting a job with the wrong company

I can't bring myself to do anything right now that i can't do with cash and as we get in the 50+ age group planing a decent retirement has become are #1 item
 

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Telstar 28
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I would be hesistant to buy a new boat, that hasn't been built yet, from a builder that is having financial issues. Cutting corners is one risk. Losing the deposit if they do go belly up is another. Putting the money in escrow would be one way to help protect yourself, but many boat manufacturers would not agree to that, especially if they're strapped for cash.
 

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Aquaholic
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If I were in a position of dropping 50 or 100 K for a deposit on a new boat; I would demand a completion bond just to be on the safe side. That would be as good as escrow; but not tie up the cash for the builder.
 

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If you search the Pacific Seacraft email list archives and also google the history, you'll see that company's recent bankruptcy and some pretty clear examples of what happened to those hefty deposits. Even folks who'd paid for the majority of their boat (and were given authority over it by the court) chose to allow the unfinished boats to go to auction with the broader company -- understandable, but ultimately a poor decision.

The only guy who did well was the guy who bought the company -- now debt free -- for less than 150K! The near finished boats were worth far more than that -- let alone the intelectual property rights to the PSC-31 C-34, C-37 and the PSC40. Throw in molds for everything from the Orion to the Flicka to the Ericson line . . .. Sheesh! You can see why the guy in Pretty Woman made his money by breaking up companies not saving them! I think its awesome the new owner is trying to save PSC but would you want to be a start up sailboat builder in NC these days?

Back to your question: I think you could draft a contract which placed title to the unfinished boat in your hands early on and which calls for progress payments based on work completed -- with the builder always more invested in the boat than you the buyer. That said, the PSC problem of "who wants to finish an incomplete boat" can't truly be conquered. You could ask for personal insurance from the owners . . . yada yada yada. No great solutions.

If you really want new, I'd try to buy an unsold 2008 ata big discount.
 

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A melon with a dream...
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what about ongoing support?

Of course the first issue is getting a completed boat in the end... but what about a year down the road when you have a technical issue and the company no longer exists? Who do you call?

It seems the decision is first about how badly you need a new boat right NOW and how long you might put it off to see what happens. Beyond that, there are a lot of boat builders out there and a little research might prove that there is one that is more solvent, and will have a better chance of remaining so, through these economic times. So, along with the standard questions about design and construction, it would also be prudent to do a little inquiry into the people who make up the business side of the company. Perhaps a little more cumbersome with a private company as opposed to a public one, but in this age even with just a little digging you have all kinds of information at your fingertips. So, I say, google away! :)
 

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I'd be worried about the resale value or depreciation also. The question would be why "new". There are so many near new boats on the market at steep discounts it really can't make sense right now to build. Catana is an example. Look at how many are on the market (80) and the turn rate. You can buy a one and sail for two years straight with the savings from new.
 

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Discussion Starter #10
Going through the prices of these used boats though I am not seeing anything remotely attractive for pricing compared to new.

For instance, the first Catana that shows up today for me at Yachtworld is a 47 footer vintage 2000 at 365,000 gbp or 536,000 usd and a second 2000 is 385,000 gbp or 565,000 usd. Real money here. I don't know the price of a new Catana in that size. I do see the new Outremer 49 is around 640,000 usd. Well Yachtworld has a 45 2004 for 512,000. So 128,000 gets you 5 year newer (well brand new) boat and larger. The only reason I could see the 45 might compare is if the older used one had scads of new high end gear/electronics onboard (and relatively new). So thats why I think new might very well be attractive - the used prices look like jokes to me compared to some of the new prices I am seeing.
 

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I'd be worried about the resale value or depreciation also. The question would be why "new". There are so many near new boats on the market at steep discounts it really can't make sense right now to build. Catana is an example. Look at how many are on the market (80) and the turn rate. You can buy a one and sail for two years straight with the savings from new.
This may not be right in all cases. If you bought a new boat 2 or 3 years ago for a price, you are going to be loathe to sell if for substantially less, and you may not even be able to depending on your financing situation.

In contrast, builders have a fair amount of leeway in terms of what they can do to sell a boat they are holding in inventory.

Today, there are a number of examples where you can get a 2008 new boat for the price of one that's 2 to 4 years old.

And Cam, the new ones I've come across are fully outfitted, as several were boat show boats. This includes electronics, sails, ground tackle, canvas, and all kinds of other goodies.

In this bizarro market, there are opportunities to get a new boat for the price of used. Not every one mind you, but there are some opportunities out there.
 

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Discussion Starter #13
Do you think builders are sitting on large amounts of inventory though Dan? I am not sure how the business works but I would think right now that without an order you wouldn't just be rattling off boats without orders. Sure you would make your show versions to get to the different venues but would there be piles of boats sitting in stock at Lagoon or Hanse or whoever?

I do realize that there likely would be incremental cost on that new boat for 'goodies' that would definitely add up. That said, if you can resist some of the temptation to go nuts, you would add say 50k. So now lets call that 49 I mentioned 690,000 vs a 5 year old version (smaller mind you) at 512,000. Maybe you can haggle 30k off the used one but I bet you might get 30k off the new one. So 660k vs 482k or about 178k of difference.

For that money, you have new electronics, know your boat wasn't crunched on a reef, have some semblance of a warranty (assuming the builder doesn't go broke), have warranties on the fittings and are likely to get a full instruction set from the manufacturer. Over 10 years the used likely sells for what, 200k and the new by then maybe 300k? So you eat 282k on the used in 10 years and 360k on the new. 28,000 a year for one, 36,000 a year for the other. Realistically, this is a very small to medium amount of your annual budget.

To me, that makes new seem like a more interesting route as 8,000 a year over ten years (assuming a ten year 'trade') isn't a make or break number. Even if I assume I invest the difference its not changing the calculus much.

Not sure I am missing a lot here but to me this is my reasoning on why if I were doing this today I would be looking at new.
 

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Do you think builders are sitting on large amounts of inventory though Dan? I am not sure how the business works but I would think right now that without an order you wouldn't just be rattling off boats without orders. Sure you would make your show versions to get to the different venues but would there be piles of boats sitting in stock at Lagoon or Hanse or whoever?

I do realize that there likely would be incremental cost on that new boat for 'goodies' that would definitely add up. That said, if you can resist some of the temptation to go nuts, you would add say 50k. So now lets call that 49 I mentioned 690,000 vs a 5 year old version (smaller mind you) at 512,000. Maybe you can haggle 30k off the used one but I bet you might get 30k off the new one. So 660k vs 482k or about 178k of difference.

For that money, you have new electronics, know your boat wasn't crunched on a reef, have some semblance of a warranty (assuming the builder doesn't go broke), have warranties on the fittings and are likely to get a full instruction set from the manufacturer. Over 10 years the used likely sells for what, 200k and the new by then maybe 300k? So you eat 282k on the used in 10 years and 360k on the new. 28,000 a year for one, 36,000 a year for the other. Realistically, this is a very small to medium amount of your annual budget.

To me, that makes new seem like a more interesting route as 8,000 a year over ten years (assuming a ten year 'trade') isn't a make or break number. Even if I assume I invest the difference its not changing the calculus much.

Not sure I am missing a lot here but to me this is my reasoning on why if I were doing this today I would be looking at new.
That seems like an interesting/logical way to look at it.
 

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Discussion Starter #15
To clariy - when I say 'realistically, this is a very small to medium amount of your annual budget' I was specifically meaning the difference between the two numbers ie 8,000. If you have the budget to eat around 28k or 36k the difference is likely not killing you. Of course, this math could be off as I pulled the end values of the boats pretty much out of thin air. But it has to be admitted it would be easier to sell the 10 year old cat than the by then 15 year old cat.
 

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Hi all,

I am curious what people think about the risk of this these days. We all know markets globally are terrible. Boat builders are on the ropes. Now maybe this bodes well for getting some good prices. On the flip side though, I see the risk that you get xyz co started on your boat and 3 months into it the company is out of business.
Theres not a boat builder today, yesterday or tomorrow that isn't, wasn't or gonna be 3 months away from being out of business! Thats the way the boat building industry rolls good times or bad.
 

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True - the asking price is high on boats. I'm looking for a Bahia right now. Fountaine Pajot still has a brand new, never floated 2006 in La Rochelle for less then some of the 2004 boats listed. The difference to me is the sell price discount. In good years, boats typically sold for 20% less then asking price. While it's a pure guess, I'm planning on paying 40 to 50% less then asking. With a new boat, there isn't a discount or maybe 10%. Time will tell for me but luckly I have time and some sellers may not.
 

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Discussion Starter #18
Unfortunately for me, the earliest I see actually seriously thinking of being in the market isn't until closer to early second quarter 2010.
 

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To clariy - when I say 'realistically, this is a very small to medium amount of your annual budget' I was specifically meaning the difference between the two numbers ie 8,000. If you have the budget to eat around 28k or 36k the difference is likely not killing you. Of course, this math could be off as I pulled the end values of the boats pretty much out of thin air. But it has to be admitted it would be easier to sell the 10 year old cat than the by then 15 year old cat.
You could go the other route and try to source a throughly depreciated boat (say, 10 years old) that surveys impeccably due to low and conservative use.

In other words, assuming everything but the engines (maybe!) on a 1998-9 otherwise beautiful boat is in need of replacement, and argue the price down from there with the assumption that all the electronics, some of the wiring and some of the plumbing will be replaced and that the engines may require mid-life service.

We pay a great deal for style and the perception of style, but in some cases, the best or most logical design of a type has already been produced, particularly in a relatively conservative area of design as small yachts. There are many examples of 25 year old designs that have been merely tweaked or updated in terms of trim or electrics and still find an audience.

My point is that the middle distance of the used market holds more bargains than the "newly used" primarily on the basis of perception and the desire of the dealer to recoup the initial cost as much as possible, whereas a 10 year old boat owner knows that his boat (even if it has been only daysailed 20 times and maintained and serviced religiously by marina staff in that period) will labour under the impression of "old, out of fashion" and will be priced accordingly.

The next step, of course, is "classic", at which point the boat will hold or increase its value somewhat based on reputation and whether or not someone does a circ and writes a book praises some otherwise unremarkable 1988 cruiser...:D
 

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Hi all,

I am curious what people think about the risk of this these days. We all know markets globally are terrible. Boat builders are on the ropes. Now maybe this bodes well for getting some good prices. On the flip side though, I see the risk that you get xyz co started on your boat and 3 months into it the company is out of business. What do you do then?

For instance, Poncin Yachts is currently working under creditor protection (extended to May 31 2009). So if you were thinking of getting one their new Catana's which are fairly popular cats, would you be happy placing an order for one? Now they mentioned in a press release that they got a few boats sold at the Paris boat show and thats great - but what are those buyers doing to protect themselves that a boat can even get completed?

I am not picking on Poncin/Catana here, it is just one that I know is operating under creditor protection as it is a public company.

So, you find your dream boat, its new, shiny and has everything you think you would like. Do you risk it in this world with a builder? How do you protect yourself? How do you know whats going on when it isn't even a public company (like Poncin). For instance, I quite like the look of the new Outremer 49. Well how the heck do you know what is going on financially there to ensure you would get your boat completed? What kind of contracts do people need to get put in place to protect themselves?
I am the wrong person to ask as I am not a big believer in buying a new sailboat in even the best of times. My general feeling is that with a bit of patience, one can do so much better used.
 
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