Author Topic: SHort term housing napkin math...  (Read 3827 times)

Le Poisson

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SHort term housing napkin math...
« on: May 01, 2015, 11:06:12 AM »
SO for fun I thought I'd do some math to see what the difference between liveaboard yacht club 'housing' and cheap apartment would look like as an interim housing option.

Not very exotic stuff, but in my mind, the boat HAD to come out ahead. I mean you can pick up a cheap houseboat for close to $10,000 this time of year (case in point - http://tinyurl.com/k2vbof7) cruise it home, and then plug in and you're done. Since the boat is not intended to leave the slip, we aren't too worried about condition of propulsion, but are concerned with the hull and interior. Yacht club equity sign up here is about $5,000 and a slip is only $250 a month. Since dock rent includes Wifi and electric (which heats and cools the boat) there would be no utility costs.

The upfront is high compared to an apartment, but that would come out ahead over a very short time - right?

Keeping costs strictly to housing/utilities/communications - the stuff where you would see a saving being a liveaboard, and ignoring the obvious pains of living on a dock (long walks to the bathroom, small storage spaces, winterizing the boat, etc.) and assuming a minimal maintenance budget, I found that in about 16-24 months the boat and apartment would equalize. This assumes that the tenant invested the upfront savings month over month at 6%, and that the liveaboard invested the rent savings month over month at 6%. My budget below is based on what I could find in local CL/Kijiji listings, and a healthy dose of guesswork. I have never paid renter's insurance, and when I had a boat it was insured for recreational use. I also have no idea what utilities cost in a rental apartment compared to a detached home.

Budgets looked like this:

Renter:

Upfront costs:
First/last month rent - 1700
Damage Deposit - $1000

Upfront Total: $2700

Monthly housing Costs
Rent (one bedroom basement) - $850
Utilities - $200
Wifi - $80
Renter's Insurance - $30 (A guess - I've never rented)
Monthly Total - $1160

Liveaboard:

Upfront Costs:
Cost of Boat - $8500
Yacht Club Equity Fees - $5000
Boat transport to slip - $600

Upfront Total - $15,600

Monthly Costs:
Slip Fees - $250/mo <-- Yacht club for 40 ft boat. (Marinas have higher slip fees but don't charge equity buy-in)
Utilities - $0
Wifi - $0
Insurance - $30 (Based on Pre-Mustachian experience for Lake Ontario in the Toronto area)
Maintenance - $200

Monthly Total - $480

So Since the monthly cost of living aboard was so low, I thought the window for the Yacht club to catch up to the apartment would be really quick. I was surprised that it was about 2 years, but the equity is what causes that, so it makes sense.

Differences look like this

Month 12 - Total Cumulative Cost of housing
Boat - $20,680    Apt. - $15,846

Breakeven - Month 19 - Total Cumulative Cost of housing
Boat - $23,625   Apt - $23,493

Month 24 - Total Cumulative Cost of housing
Boat - $25,719   Apt - $28,946

Month 36 - Total Cumulative Cost of housing
Boat - $30715   Apt - $41996

So based on this, if someone were to get a 36 month contract to work in this area (east side of Toronto), it would be a better investment to buy a crappy boat and join the local yacht club than it would be to rent an Apartment. Downside is that living in a yacht club is a little less than comfortable and cramped quarters could drive you stir crazy. I don't know if that's worth $10K over 3 years.

I have not acccounted for cash-out/depreciation in this math since by the time the $10K boat has been lived on for 3 years, you'll be giving it away anyhow, and most landlords around here seem to just keep the deposit money at the end of term.
« Last Edit: May 01, 2015, 11:09:07 AM by Prospector »

Field123

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Re: SHort term housing napkin math...
« Reply #1 on: May 01, 2015, 02:24:24 PM »
Is living on the boat during the winter a viable option?

jmusic

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Re: SHort term housing napkin math...
« Reply #2 on: May 01, 2015, 02:52:16 PM »
I've considered doing the same thing in San Diego.  I admit that I skimmed parts of your post so forgive me if you covered them.  I know you budgeted $200/mo for maintenance, but I've heard boats can be hideously expensive (granted that's probably to keep RUNNING, not sitting). 

Also, some marinas either charge extra or limit the numbers of liveaboards.  Is that included in your $250/mo for slip rental?


Le Poisson

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Re: SHort term housing napkin math...
« Reply #3 on: May 01, 2015, 04:12:54 PM »
Is living on the boat during the winter a viable option?

Yes - there is a strong bachelor liveaboard community in Toronto harbour despite the cold. Amazing how much heat shrink wrap holds in.

Le Poisson

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Re: SHort term housing napkin math...
« Reply #4 on: May 01, 2015, 04:16:40 PM »
I've considered doing the same thing in San Diego.  I admit that I skimmed parts of your post so forgive me if you covered them.  I know you budgeted $200/mo for maintenance, but I've heard boats can be hideously expensive (granted that's probably to keep RUNNING, not sitting). 

Also, some marinas either charge extra or limit the numbers of liveaboards.  Is that included in your $250/mo for slip rental?

Maintenance can be - but as you pointed out mostly its the running rigging that lets go (sail) stuff for live-aboard tends not to let go once you have it working - at least from what I saw when we had our boat. A BBQ on teh rail is good for years. The ovens pretty much last forever. Same with onboard heaters. That is why I only put in $200 per month for repairs. Trouble is that you will eat through that $200 really fast - it may be pretty aggressive. I should up that, but its a spitball.

I based this on my experience as a recreational sailor at a yacht club. With the club, the cost of the liveaboards is shared by everyone in the club, but I never saw any rules limiting the number of liveaboards. Also in the club, your membership dictated the slip fees, so they were pretty much set the day you joined - hence the low number at $250. Very little variability there.

Le Poisson

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Re: SHort term housing napkin math...
« Reply #5 on: May 01, 2015, 04:29:40 PM »
Some things to consider:

dump fees to clean out gray water and black water tanks on the boat (yes, you will need it for both as you won't always use the dock heads and showers exclusively).

Bottom cleaning services for the boat unless you can do this yourself (usually requires a diver with proper cleaning equipment). 

Possible haul out for bottom painting/repair. A costly service that has to be done every so often so buy a boat that has this done recently.

Other maintenance & repair costs needed on boat (they really can be a money pit!)

Insurance for the boat

Annual property taxes on the boat.

depreciation of value when you sell (they usually depreciate but can also appreciate so many defray some of the overall costs of ownership)

also many apts include wifi, cable TV and some or maybe all utilities in their monthly rental fee so many be much less than the $280/month you came up with - making an apt cheaper/month.

annual increases in slip fees and apt rental fees (apt increases are likely to be much greater than slip fees/month) but, depending on where you are living, available liveaboard slips may be limited and/or expensive.

- A lot of this varies between marinas/clubs, but at the club we were members of, pumpout was included so I overlooked that.
- Bottom cleaning for a live aboard in fresh water is pretty non-existent. A snorkel set and a once-per-year swim with a scrub-brush will take care of things. Just motor out of the marina to avoid stray electric currents. In salt water this is a necessary expense though.
- Again the advantage of a yacht club over a marina - we had twice-per year haul outs where industrial cranes came in and if you booked time you got it. for blocking/bottom painting this was great.
- Haul for blistering/bottom repair is another story - but with the boat never going more than 100ft, do you really care about that maintenance piece? You're only living on it for 3 years.
- Money pit absolutely - I think you have to have a slumlord mentality to make this work. you aren't keeping this space ship-shape, you making a livable environment for a few years then offloading a boat thats worthless. If you are going top restore teak and shine brass this wouldn't work in your favour. Beyond keeping it warm and dry, no maintenance.
- I had insurance in my list. Up here (no Hurricanes) it is minimal - $30 a month.
- Property tax - what property tax? Do they really charge property tax on boats in the states?
- Depreciation - that one is easy - 100% its worthless when you move off it. Sell the keel for scrap. Use that to hire someone to drag the hull to a landfill.
- I have never seen an apt up here with wifi. At the rate I quoted an apartment would be "plus utilities" utilities included will run you $1000+ An apartment might include laundry though - which can be a big deal. Dragging laundry across the docks is no fun.
- Yes to annual rent increases, but slip fees are locked in at the club we were in (a subject of much debate). Charter members with original boats - very rare - were still paying slip fees from the late 70's.

At a marina, these calculations would likely look very different, but even as they are, I'm not sure if I'd be cut from the right cloth to live aboard for three years. How much is that $10,000 really worth in quality of life???

The_path_less_taken

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Re: SHort term housing napkin math...
« Reply #6 on: May 01, 2015, 08:44:32 PM »
Your numbers sound good. But I'd need to factor in the lack of privacy: everybody and their brother knows your routine, if you're home, etc. On weekends good luck sleeping in due to weekenders hollering it up.

Cheapest housing is usually a sublet, in urban areas.

Unless you can score "housesitting" gigs. Or RV it.

In rural areas...there are tons of ranches that just want somebody in a 5th wheel parked out by the gate...some even pay your utilities/water/etc. Many campgrounds also pay a bit.

 

Wow, a phone plan for fifteen bucks!