Please see the catamaran buying tips and questions and answers below. Contact Us for more information and to buy your own catamaran.
NEGOTIATING TIPS FROM THE TOP PROS:
Be prepared! Arm yourself with facts about that model of catamaran. Know why the seller is motivated to sell.
Set goals and limits! Know when to walk away. Know that you have other choices of catamarans. List those alternatives.
Maintain emotional distance. Don't allow yourself to get angry at the opposing side. Cultivate patience. Give yourself time to plan replies to counter-offers. Use your broker as a go-between.
Make "oddball" offers: Don't offer $240,000. Offer $238,400. The Seller will ask "Why?" and think that you gave it a lot of thought and used some scientific reasoning to arrive at this number for his catamaran.
Put your catamaran offer in writing! It has double the "weight" and will be taken much more-seriously.
Get Pre-Approved for financing. If you can tell the Seller that you are already approved, this makes your offer more powerful.
Stay flexible on Acceptance Date and Closing date. These are very important to the Seller and may not be so important.
Listen effectively. If anything is unclear, re-state what he/she says with, "Let me see if I got that right, you said…..". Plan questions in advance of negotiations.
Speak with ultra-clarity. You cannot be "too clear"! Be accurate and be brief.
Know when to conclude the agreement. Determine if it's a good deal by asking yourself if the catamaran deal furthers your long range goals. Can you perform? Can the opponent perform? Know your legal rights.
ARE THERE ANY GOVERNMENT SUBSIDIES AVAILABLE TO U.S. RESIDENTS? : Are you a U.S. taxpayer/Resident who is in the 25% or greater tax bracket and has a current annual tax liability of $50,000 or more? If so, then there is a little-known way to buy a new boat and get the government and other people to help pay for it. Ask us about our YACHT AS A BUSINESS Program.
ALWAYS TRY TO BUY CATAMARANS FOR SALE PRICED IN WEAK CURRENCIES (Foreign Exchange Factor TIP): Consider the impact that foreign exchange makes. If you have dollars and are buying a boat in Euros there can be huge price swings from year-to-year. Consider buying a catamaran for sale priced in a relatively weak currency. This is primarily how some boat dealers and speculators make steady money every year. They buy boats priced in a weak currency and sell them in a stronger currency. For example, a few years ago the Euro was .88 to the dollar. Lately it has been as high as 1.41 to the dollar. So the Euro has gained a significant amount against the dollar and that boat that would have cost $88,000 a few years ago now costs $141,000. Americans considering new boats built in Europe or considering used boats owned by Europeans is not a good idea nowadays. What are some of the weakest currencies against the dollar? All the South American and Latin American currencies. Some Far Eastern currencies. Ask an experienced broker for advice here.
BUYING NEW CATAMARANS Tip #1: Don't ever buy hull #1: Major manufacturers change models often. Even the builders who have been around since the 1800's have problems with the first few hulls whenever they come out with a new model. There are ALWAYS big problems in the first 10 hulls and some experienced brokers will not let their customers buy hull 1-10. If you are considering buying a new catamaran, be sure to ask the dealer "How long has this manufacturer been building this model?" and "What hull number are we talking about?" You do NOT want hull # 1-5! Hulls #1-5 always have "bugs" to work out…
FINANCING Tip #1: Get pre-approved by a lender. It is free to get pre-approved and marine loans have no points to qualify. They are all "simple interest" loans with no pre-payment penalty. If you know you will only keep the boat 2-3 years then the "out of pocket" expense is surprisingly low. Many catamaran buyers have a three year "itch cycle". That is, they keep a boat for three years, then they "get the itch" to sell it and try out another boat for three years. If your "Beacon" (or "FICO") credit score is less than 700 then the situation may be difficult to get approved. Lenders like this score to be in the mid 700's or higher. Lenders also look at your debt to income ratio. They want this to be below 35%. Be careful when filling out loan applications. You may want to omit that unrecorded debt you have with Aunt Sally. Use only marine lenders, as most banks do not understand the catamaran lending business and don't lend for catamaran's valued over $100K. If you know your income as shown on your tax returns will be not be at least 200% of your debts then ask for a "no-income verification" or a "no documents" loan. Essex Credit does these. I highly recommend checking your FICO scores before applying for a loan. If you have sufficient equity in some real estate then the cheapest loan is usually a real estate equity loan.
FINANCING/Credit Repair Tip: Americans, always check all three of your FICO scores before you apply for loan pre-qualification. IdentityGuard.com is a website where you can do this at a minimal cost. Sometimes your scores are lower than you thought. Here is a trick that raises your scores significantly in as little as 30 days. Simply pay down any and all credit cards below 50% of that total credit line and don't let the balance get above 50% until your loan is approved. So, for example, if your Visa card has a balance of $12,000 and the total credit line is $20,000 just pay it down to under $10,000. Your scores will shoot up within 30 days. You want the highest scores possible when your marine lender looks at your application. Higher FICO scores mean lower interest rates and easier/faster loan approval. There can also be mistakes and debts listed that you paid off but were never removed from your file. These mistakes should be disputed and corrected. If your average score is below 700 then you may have some credit file cleaning to do. Usually this means disputing outdated information that lingers in your credit file.
FINANCING Tip: Many banks say they are "interested in yacht lending" but they are really only interested in finding that "one in a hundred golden borrower" whose savings accounts they can also get… so you waste your time filling out forms only to be rejected if you don't have 110% perfect credit or don't have the big fat savings accounts they want to get their hands on. If your credit is less-than-perfect, talk to your yacht broker or salesperson about where to apply. He is there to help you get financed! You really only want to deal with serious marine lenders.
HOT INSIDE INFO: Yachts have seasonal price tendencies. It is possible to see huge swings in prices in just 6 months' time. I have seen incredible price changes from year to year and I think understanding this factor alone can save you many thousands of dollars. Consider this: every year, the buyers of certain types of catamarans are buying for the winter "high season" in Florida/Bahamas and the Caribbean. These types would be sailing catamarans, trawlers, cruisers and Sportfish type yachts….They generally start their shopping in late August and this buying activity ends in December. The lowest priced/best deals sell first (June-July-August) and the highest priced "worst deals" occur later on (October-November-December) but this can vary by one month in a given year… When hurricanes are churning up the Atlantic Ocean (July through October) this helps weaken prices in all the Eastern Seaboard and Caribbean markets. Every year, the very highest prices for a given model are usually seen in December or perhaps January. I am absolutely amazed at the number of people who fail to plan ahead and end up paying 15-35% more at the last minute. In other markets, like in the northern U.S., Pacific Northwest and Great Lakes, the peak buying season is at other times like the Spring. And when the Fall arrives there is not much buying in those areas …so, this is precisely when you want to be buying! You want to be buying when your competition is not buying. Ask your salesperson "What is the peak buying season for this type of boat?" Then consider buying when demand is lowest.
INSIDER BUYER'S TIP: The Location Factor. Catamarans tend to vary in value depending on where they are located. A certain type of boat in Florida that sells for "x" in Florida may often sell for "x plus 20%" in California or the Pacific Northwest. Freshwater-kept boats in the Midwest U.S. can sell for 30% more than the identical boat in Florida. Caribbean-based boats often sell at a 5-20% discount to the Florida price because there is a large supply of boats there compared to a small number of buyers. Can you see how you can save big bucks by shopping in certain areas especially if you combine this strategy with the "seasonal price tendencies" noted previously? Of course, you may not want the boat in the low-priced area but deliveries can be arranged and you can still save substantially by buying "in the right place at the right time". To discover more about this ask me about the "locational discounts" ....
Tips About Surveyors: If you require financing then do not book a surveyor until you verify whether your lender requires a particular surveyor. In some cases, lenders specify that the surveyor must be a member of "SAMS" (Society of American Marine Surveyors) or "NAMS". You would not want to pay for a survey twice so find out the lender's requirements before talking to any surveyors! Be sure to engage a surveyor who knows your model of catamaran. Many surveyors will say they are experienced in your model but are not really experienced. You wouldn't want a motoryacht specialist to survey your sailing yacht. Or a monohull specialist to survey a catamaran. You wouldn't want a foot doctor performing brain surgery….well, it's the same thing….Ask the surveyor how many of that model he surveyed in the past 12 months. If it's less than two then he is probably not that experienced. Ask your salesperson for the list of Surveyors for the area that the boat is in. Also ask Gary Fretz for a copy of his "Helpful Hints for The Survey".
INSIDER SECRETS INSURANCE Tip: Most catamaran policies are for an "agreed upon" value. That is, if there is a total loss, then you are paid the "agreed upon value" with no deductions. Beware of the "actual cash value" policies wherein the underwriter can deduct substantially for depreciation and other reasons. Sometimes the major non-yacht insurance companies use these (like Allstate or State Farm). Beware of "Exclusions" ("weasel clauses" that allow the insurer to disallow payment) and always buy an "All Risk" policy (vs. a "Named Peril" policy). Usually policies will allow you to legally "over-insure" the catamaran by as much as 20% of the appraised value. If this is of interest to you, then the surveyor should be notified so his appraisal is done properly.
If you understand the system, you know how it is possible to be legally exempt!…
HOW CAN I PAY NO TAXES?: Offshore registration is a legal way to avoid paying sales/use taxes and Customs duties. However, you can usually expect to pay $1,000 to $5,000 to set up an offshore corporation. Most larger catamarans prefer to register foreign flag because it offers more privacy (it is very difficult to discover who the beneficial owners of an offshore corporation are), no taxes and less liability. Some U.S. lenders are comfortable with catamarans registered in U.K. "Red Ensign" countries. (i.e. former British colonies like the BVI, Cayman Islands, Bahamas, and Barbados). For details contact David Sims at Beacon Capital Ltd. 284-494-8829 www.beaconsecurities.com.
Some US lenders will insist upon U.S. Documentation. Check with your lender early on.
The drawback to offshore registration is that you will have to exit the U.S. once/year to renew a Cruising Permit in order to remain in U.S. waters. The other drawback is that the attorneys in these offshore jurisdictions charge $1,500-5,000/year to maintain the holding corporations. But you can usually achieve anonymity of ownership by using this strategy.
Sales and Use taxes are levied in the U.S. by the individual states and generally apply to US Residents. Each state is somewhat different in their approach to this subject. Whether you owe this tax has to do with where the catamaran is registered and where and how the catamaran will be used. Speak to Gary Fretz about this matter especially if the boat will be kept in or transiting through Florida. He has attended every legal seminar and tax seminar for yachts ever held in Florida and stays up-to-date with all the nuances and changes in the tax code. He can also give you a copy of the Florida Department of Revenue's summary on this subject.
Tip: Some catamaran buyers who qualify, will register their yachts in a tax-free state like Delaware in the name of a corporation. These corporations cost around $250 to form and around $100/year to maintain. This is the lowest cost in the world. The yacht registration fee in Delaware is determined by size of vessel and is usually between $50-120/year to renew. This is the most cost-effective "state" registration. You may want to "Document" or Federally-register your catamaran if you are traveling mostly outside the U.S…..This can also be done in the name of a Delaware corporation but only US Citizens can Document their vessel. US marine lenders require Documentation 95% of the time because it helps perfect their lien on the yacht. A Documented vessel enjoys some benefits that state-registration does not offer. One benefit: the theft of a Documented vessel is a Federal-offense regardless of where it occurs. You can get help from the nearest U.S. Embassy if a crime has been committed aboard a Documented vessel in foreign waters or on the High Seas. Also, some foreign jurisdictions (like Martinique and Guadeloupe, French West Indies), have hassled Delaware-registered vessels as "not being properly registered". Documentation offers one other benefit: a clear chain of title. The U.S. Coast Guard will keep track of the legal ownership and liens are recorded on the Abstract of Title. So, when you are buying or selling a Documented vessel, it is easy to check for and prove what liens are on the yacht. Non-U.S. citizens cannot own a U.S. Documented vessel. The U.S. President has the right to commandeer a Documented vessel in time of war and the U.S. Government does not have to restore the catamaran to its previous condition.
Ask your broker to explain the differences between Documentation and state-registration if this is not clear. There is no sales tax or use tax in Delaware and many yacht owners legally avoid sales tax liabilities utilizing this jurisdiction. You can Document a vessel in the name of a Delaware Corporation to achieve this tax savings. More catamarans and aircraft are owned by Delaware corporations than any other jurisdiction in the world. There are five other U.S. states who do not tax yacht sales but Delaware does it the fastest and cheapest.
WHAT IS THE LOWEST COST OFFSHORE LOCATION?: If you would like to have an offshore registration and don't have an unlimited budget, buy the catamaran in the name of a Gibraltar corporation (the cheapest British jurisdiction to form and maintain a corporation…some have been formed for $800 recently) but register it in a low-cost registration-jurisdiction (Cayman Islands or Belize…they currently allow "outside" corporations to register catamarans)… Prices change constantly so check with your broker about what is currently the most-competitive. Some owners choose The Marshall Islands because it is relatively inexpensive and you get to list the hailing port as "Bikini" ( a town in the Marshall Islands that the bathing suit was named after in 1951). St Vincent and The Grenadines is becoming a popular jurisdiction to register yachts. GF knows the Governor-General of St Vincent and can get it done quickly and cheaply.
HOW CAN I LEGALLY BE VAT-EXEMPT?: Concerning European VAT. If you are an EC citizen going back to Europe with a catamaran, then contact Gary Fretz about a little-known way to legally avoid paying VAT. Many Europeans are stunned to discover this well-hidden loophole that the EC governments do NOT want you to find out about. You must follow certain rules which include buying the catamaran outside the EC and you must leave the EC for 6 months, but some cruisers can arrange this in order to save 13-21% VAT taxes. If you are a non-EC citizen going to Europe in a catamaran then you can usually get a cruising permit and remain there tax-free for at least six-twelve months. If you are an EC citizen and you will be only operating in the Eastern Mediterranean, ask GF about "the Italians' favorite VAT-avoidance program".
TAX Tip: No matter how smart your personal accountant is, he probably has little experience in the caveats of tax laws in regard to catamarans. This is a complicated subject. Get the best advice from the top experts. Contact Gary Fretz who can refer you to CPAs and yacht lawyers who are experienced in yacht business accounting and legal rules ….For those of you attempting to avoid California Sales and Use Tax, contact Associated Sales Tax Consultants Incorporated 916-369-1200, www.astc.com.
CAN I OPERATE A FOREIGN-BUILT CATAMARAN IN CHARTER IN U.S. WATERS?: There is now a loophole so that you can charter non-U.S.-built boats in the U.S….. It is known as the Jones Act Exclusion and costs $3-400. You can also be exempt from Sales Tax in some states when you place your catamaran in charter. Ask your charter manager or Gary Fretz about the nuances of these tax loopholes.
U.S. Customs duty WHAT US RESIDENTS NEED TO KNOW: Congress passed laws to help the domestic ship and yacht builders which calls for a 1.5% duty on all hulls built outside the U.S. and brought here to be sold or used. This is on the "appraised value" of the catamaran. There is a fee on top of this by the Customs broker of .4-.5% and a surveyor must be paid to write a letter confirming the appraised value. Surveyor's fees are usually $100-500. Speak to your broker about the nuances of this law. So, if your situation calls for this tax to be paid, plan on spending 2% of the appraised value to cover the "import duty" and guard this paperwork carefully. When you are ready to re-sell the catamaran in the U.S., you will need this! Customs will NOT look in their files for old Duty payment records….so if you lose this receipt you may have to pay it again upon the sale of your boat. Some used catamarans for sale that were foreign-registered may owe Duty a second time. If you are buying a used, foreign-flag catamaran and are bringing her back to the US then always find out if you will owe Customs Duty. Contact Steele Reeder at Howard S Reeder Customs Brokers (Miami) for an informed opinion of your situation.
South African-built catamarants are exempt from this duty if they are new.
Contact Me now to buy your next catamaran!
QUESTION AND ANSWERS for Catamaran Sales
Q. We will be cruising full time and attempt a circumnavigation. For the first year probably more local cruising to gather experience. (Med Sea or Caribbean)
A. YES, AS THE OWNER OF AMERICA'S OLDEST SAILING SCHOOL I RECOMMEND YOU TAKE IT SLOW AND EASY AT FIRST.
Q. We will get certified by RYA this summer. (Coastal Skipper, and eventually on the boat the yachtmaster.)
A. EXCELLENT ! YOUR INSURANCE COMPANY WILL WANT TO SEE SOME CERTIFICATION AND "COMPARABLE EXPERIENCE"
Q. TAX exempt?
A. I CAN SHOW YOU HOW TO GET EXEMPTION.
Q. You say all Cats turn into Money Pits eventually. How is it economical to buy one in the first place? Sell it after a few years?
A. THIS IS BEST DISCUSSED BY PHONE. I HAVE DISCOVERED THE KEY TO "MAKING MONEY WHEN YOU BUY A BOAT" OR AT LEAST NOT LOSING MUCH, WHEN YOU GO TO RESELL IT.
THE SHORT ANSWER IS: FIND A VERY POPULAR MODEL, BUY IT IN THE "LOW BUYING SEASON" IN A "LOW DEMAND LOCATION" (LIKE A REMOTE ISLAND AND I'LL MOVE IT FOR YOU) OR FIND A "FRENCH TAX SHELTER BOAT" WHICH CAN BE GREAT DEALS ....KEEP THE ENGINE HOURS AS LOW AS POSSIBLE, KEEP THE BOAT WELL-MAINTAINED, SELL IT IN A "HIGH DEMAND AREA" AND DURING THE TIME OF YEAR WHERE WE SEE MAXIMUM BUYERS.
Q. Can we get a better deal if we pay "cash"?
A. MAYBE, BUT UNLIKE REAL ESTATE, IN THE SELLER'S MIND ALL YACHT DEALS MUST BE SETTLED WITH CASH (A WIRE TRANSFER) SO IT MIGHT NOT MAKE A DIFFERENCE. LENDERS MAKE THE CLOSING MORE COMPLICATED AND CAUSE DELAYS OF ABOUT 1-2 WEEKS WHICH DOESN'T ALWAYS MATTER TO THE SELLER.
Q. How does altering the interior of a cat affect the reselling price?
A. IT CAN HELP AND YOU CAN MAKE MONEY BY DOING THIS, BUT THIS IS A "SLIPPERY SLOPE" TO CLIMB! YOU ABSOLUTELY MUST DO IT IN A FIRST-CLASS WAY. IF THE "REMODELING" IS NOT PERFECT IT WILL NEGATIVELY AFFECT VALUE.
Q. Great talking to you today. Huge help as always. I am thinking the Lagoon 410 is the type of boat you are encouraging me to buy because of my limited budget and desire to have a longer waterline cat so I can carry more stuff and not pitch as much while sailing upwind in a chop?
A. Thanks for this. The 410 in CT could be a "rare possible-gem". But we do not know the actual condition because the local agent probably "fluffed up" the listing sheet and didn't want to know about the defects when he took the listing so then he doesn't have to disclose them. This is just the way it usually works. If I am the listing agent, I want to always want to know and disclose the defects up-front so there are minimal "surprises". But many listing agents do not. I owned one of these 410's and they were extraordinary breakthroughs in their day. One of them averaged 21 knots between Ft Lauderdale sea buoy and Palm Beach sea buoy on their GPS (2 knots was Gulf Stream "push" so they were actually averaging 19K through the water. This was on a broad reach in winds of 25-30 knots and they had a Code Zero downwind sail up). This will have 35-50 defects noted at survey like all cats of this vintage so be prepared for that. Some Sellers will make additional price-concessions after survey to cover major "previously undisclosed defects' repairs" and some of them have the attitude that "this is a used-boat at a much-lower used-boat price and this is 'normal wear and tear' so I'm not reducing price to cover any defects. If you want a perfect boat then go buy a new one with a warranty" The solution to this issue issue is not always something we can predict so when you pursue these older boats this is a risk that you will assume. Many sellers are coy about this and will NOT give us a truthful indication before survey about whether they will give further price reductions for defective "surprises" we find at survey. A "mini-survey" is our best tool to get to the truth before we spend money and time to see the boat.
1126 S. Federal Highway (Suite 253)
Fort Lauderdale, Florida, 33316, USA