WAYZATA, Minn. -- Minnesota boasts 11,842 lakes and 69,200 miles of rivers and streams according to the Minnesota DNR.

No wonder boating is huge in this region. Financial advisor Dan Ament of Morgan Stanley says do your homework before you invest.

Here are some of his tips:

Buying a Boat?

What type of boat is right for you? Consider how and where you will primarily use your boat. Fishing, cruising (runabouts/pontoons), water sports (ski/wakeboard) and sail boats. Do you have a vehicle that is capable of towing your boat? Do your research on various brands to better understand the features, benefits and related costs. Look for owners forums to gain insight into reviews & owner experiences.


New or Used? American’s bought almost 1 million pre-owned boats in 2013 according to NMMA. Similar to buying a used vehicle, consider having a professional inspect the boat mechanically to confirm its condition. Any existing issues that need to be serviced? Like mileage, boats often have hour indicators to track how many hours the boat engine has been operated which is a useful gauge as to the true ‘age’ of a boat.


What fits your budget? How will you finance it? Similar to buying a car, there is a significant range of prices for the various boat types on the market. Make sure the boat you buy fits your needs but also your budget. If you are financing your purchase consider other debt payments you are already making. A general guide is to keep total debt payments (including your mortgage) below 36% of income. Financing? If you aren’t buying your boat with cash (savings), you will need to secure a loan for your purchase through a financial institution. Loan example: $25,000 loan, 4% interest rate, 5 yr. term – Monthly Payment $460 or about $5,500 / yr.


Consider Depreciation - Estimates suggest an average new boat loses 20% of its value in the 1st yr., 15% in the 2nd yr., etc. Like a vehicle, the early years of ownership are the most costly in terms of depreciation.


Ongoing Costs of Ownership - Costs will vary, however some estimate about 10% of purchase price annually to maintain and own your boat. Expenses may include - Fuel, Insurance, Dock / Slip Fees, Maintenance (Oil changes, annual service, pumps, cover replacements, seasonal boat clean / wax), Trailer tires and Storage. You can assume the larger your boat is, the greater the annual costs will be to maintain it.

Boat Clubs Grow in Popularity


Determining What Membership Level Fits Your Needs – There are variety of boat club membership levels to consider that can be selected to fit your needs and budget Do you have a specific lake or river in mind or do you want to explore different locations? What size boat and type of boat meets your needs? How often and when do you plan to use a boat?


Costs range from $1,500 - $6,500 / year


Boat Club Benefits
Enables you to select different boat styles as desired to fit your needs (ski/wake boat, pontoon, cruiser)

Hassle-free boating – Avoids having to prepare / tow your boat or avoids paying for a boat slip if you plan to keep your boat on a particular location.
No need to maintain, insure or store your boat
Enjoy different lakes / rivers –Boat clubs often have boats available for use at different lakes & rivers to use as part of your membership

Bottom Line? Owning or ‘renting’ a boat can allow you to enjoy hours of family fund or days of peaceful solitude out on the water. It can also be a major investment and one that shouldn’t be done without some consideration up front.

Resources

Your Boat Club

Bay to Bay Boat Club

Stillwater Boat Club

Rockvam Boatyards

Minnesota Boat Club

Priceonomics- boats

Loan calculator