It’s No Time to Be Water-Resistant
For sea-faring folks, there’s never been a better time to buy some real estate for your boat
CTW Features: Patricia Rivera
Here is one benefit of the mortgage crisis: Boat enthusiasts who have discarded slip ownership as something out of their financial reach may find that, even in the water, it is a buyer’s market.
Prices of wet and dry slips have dropped during the last 18 months in part because of a slowdown in the $40 billion recreational-boating industry and the increased availability of spaces in investor-owned dockominiums and rackominiums.
The dockominium is the water-based version of a condominium that gives individuals ownership of a boat slip within a marina community. A rackominium offers dry storage spaces and certain services within a large storage building adjacent to a marina.
“If you’re lucky enough to find boat slips available now you should seriously consider buying one. It’s not often that they’re available,” says Brian Jackson-Pownall, owner of Florida-based Victoria Investments, Inc.
Over the years, the number of boaters in key waterfront states across the nation has increased, yet the number of slips has decreased. More marina owners also have opted to shift from renting to selling slips as part of a condominium package.
Nowadays, rackominiums outnumber dockominiums. In a world searching for greener options, it is also deemed as a more environmentally friendly option given that boats are not kept in the water. Dockominiums have been criticized in the past for their potential to drive middle-class boat owners out of the marina market.
That trend toward dockominiums even reached four-season states, such as Delaware, inspiring boat owners to purchase a slip to assure availability.
Rafael Perez jumped on the bandwagon in 2004 soon after he heard that the Indian River Bay marina where he docked his small cruiser would eliminate rentals.
“I hadn’t planned on buying a slip, but I also didn’t want to deal with the hassle of searching for a spot every year,” he says.
His investment of $28,000 has proven wise so far. Similar boat slips in the same marina have sold for 40 percent more this year.
Boat slips appreciate in value from around 10 to 25 percent each year.
“We’ve seen high appreciation values for a simple reason: There is no backlog of slips being produced. Waterfront space is very limited,” says Jackson-Pownall.
Applied Technology & Management, Inc., a Charleston, S.C., water-resources engineering firm, surveyed marina managers and found that 71 percent of respondents said there was a perception of a slip shortage in their area for at least certain-sized vessels.
Most respondents were from the Southeast, but a number of marinas in the Northeast and Mid-Atlantic area also reported local perception of a slip shortage.
Jackson-Pownall adds that boat owners could easily save money on an annual basis by buying a slip, depending on how much they pay to rent. Before considering a purchase, make sure that you are able to finance a slip. You may need to find a financier that specializes in marina investments.
Greg Proteau, executive director of Boating Writers International and writer for the national online boating magazine MadMariner.com, suggests that prospective buyers take their time to research the investment.
“Traditional real-estate people are not familiar with all the details, which makes it harder to really understand everything involved with a boat-slip purchase.
Proteau, who lives in Wilmette, Ill., says it is vital to work the numbers. Compare the cost of renting versus buying in the same facility.
Then, calculate the monthly cost of ownership. Do not neglect to include closing costs, real-estate and sales taxes, maintenance fees and special assessments. Later, compare benefits such as the term of the loan versus the length of lease and the potential appreciation.
Those considering a dockominium or rackominium also should ask many questions. Proteau suggests those related to:
• Monthly maintenance fees and amenities: What is included in the monthly maintenance fees? Will fees increase substantially at any pre-determined point? Will you be expected to pay additionally for services such as washes and flushes?
• Property taxes: What is the estimated tax cost?
• Insurance: What are the specific coverage requirements for the slip or rack and the boat?
• Resale: What are the resale or leasing options for owners? Must the developer be involved?
• Owner’s service options: Can outside service professionals work on a boat or are owners required to use the marina’s service personnel?