Buying Salvage and reselling

Hi everyone.

Its been a long time since i've been online. Lots have happened since the last visit i've made here.

I've been looking to start a new company based around the idea of buying beat up salvaged sailboats(maybe power boats too), and cleaning them up and turning around and reselling at a profit.

Since i haven't actually taken a project boat from salvage to ocean ready, I was hoping some fellow people here can advise me.

All of the work will be done by myself and a few friends if needed, but what on average does it cost to get a small 30ft sailboat ready from salvage?

I understand that it really depends on the boat, some need more than others, but in your personal experience, what have you seen?

 

"What have you seen?"
Well, I have seen lawsuits, bankruptcies, fisticuffs, divorces, sinkings, fires, and all manner of nasty things happen to people who do not have an adequate understanding and background in the building and repair of boats and want to become instant experts.
To be a credible craftsman, you must first serve some sort of apprenticeship, or possibly graduate from a trade school, then work in the field for many years to develop an impressive resume that will qualify you to strike out on your own. (possible pun)

Also an important factor in such a business will be the ability to sell the product as well as to obtain supplies and products necessary to complete professional repairs.

Try a project for your own edification, and keep careful records of time and expenses invested in bringing your salvage boat to safe and shipshape condition.
In fact, why dont you post a blog of your effort, and give us a link here?

 

The only way to do this and maintain your sanity is to bottom feed. I did this casually for ten years in Key Largo. The boats found me. The most I ever invested in a single boat was $500. The longest I ever owned one was 3 weeks. Typical sales price for 30 - 35 footer was $1500 - $2000. Best was $3000 for a nice 32' er with two sets of sails, new lines still on the spool, and good ground tackle. Mostly, you need to be real good at cleaning up titles - you need to be able to do that within a couple hours buying the boat. This was my girlfriend's job and she was good at it. Sometimes I only owned the boat for 1 day. 80% of the actual value added was in removing junk, cleaning the cabin, and getting a clean title. As far as using my skills, that was in knowing which project to take on and which to pass on (Passed on 9 out of 10). I saw some crazy stuff sell in the Keys after the 2004 - 2005 hurricane season. I could have picked up 50 - 55'ers all day long for nothing. But I would have had to spend money and time on those. Back then, the bank wouldn't even come and repossess a brand new boat from a bankruptcy. They'd come get washers and dryers and 30 year-old rust bucket vans and leave the brand new boat in the driveway.


There are still thousands of boats heaped up from the east coast storm a couple years ago. I presume these are all still being carried on some bank's books as assets. If you can get in with a bank as they off these from their books, you might be able to cherry pick one or two nice boats. But chances are, somebody's nephew will beat you to those. Bottom feeding is much safer, and no fisticuffs. In short, it is a very competitive market once you cross the $5000 dollar mark. If the boat is worth enough to actually transport someplace, then you are in effect competing world wide against people who have been doing this for generations. By staying cheap and local and insisting that everything come to you and be taken from you, you avoid all the drama.

 

Hey chowdan, take a look at Copart Auctions online they always have a ton of boats. I picked up a 1979 Hunter 37c for $300 last year. The boat sank at the dock of a nearby marina so I tracked it down to copart. Yes, I am a fool but I will sail off into the sunset in search of warm islands with monkey's. I work on boats for a living and this Hunter is a major job. Without some knowhow you could easily get in way over your head. Be careful! After hurricane sandy there were hundreds of boats for sale, most of them are still for sale mostly because there is no market for sinkers. You could pick one up for say$1000, then you will put a whole lot of time and money into it and in the end you probably won't make that money back. I looked at hundreds of salvage boats from hurricane sandy (just curious) and only saw a few that seemed worth the effort, Seems that if you could make a buck fixing these bargains up then there would be a bunch of folks doing it but there isn't so I would say that's a pretty good sign. Good luck to ya..........g

 

How dependable are your friends? Will they work ten hours days to meet a deadline? How skilled are they?

 

There is a joke which goes;-

What is the best way to get a million dollar boat?
Have a million in the bank, buy a 2 million dollar boat and start spending money...

My reply is that, No thats the second best way, the best is to find the guy above and turn up with 650,000 in a suitcase.

That's the first point, there's 'Asking Price' and then there's the selling price.

It creates an illusion that there is profit there

You see a '89 Moneypit 23 Xl advertised for 10,000 and think "Hmm, I know of a '90 Moneypit 23 Xl Platinum for 1,000 and I reckon I could fix it up for 5 or 6, and it would be worth the same. The problem is that it will be worth the same but the 10K boat sold for 6 or 7 so you'll be lucky to break even, AND the only guy in the neighborhood who wanted one has just bought the first boat!

Now give yourself an hourly rate based on your skills, If you're a 200 dollar an hour boat guru - well 90% of the time you'll actually be doing minimum wage level grunt work so you've pulled your 200 down to 11 or 12...

If on the other hand you're a grunt you'll be sharing half your profit with a guy who's done 2 days work to your 4 weeks!

Of course the Guru hires a crew of grunts, but then he's playing foreman rather than being a 200 buck an hour guy...



Phil has a good example - obtaining a clean title - adds a lot of value for a little expense - and a customer doesn't want to 'learn' that skill.

Paint on the other hand is a great way to lose money, do it right and the time and materials will probably exceed the increase in value, do it wrong and you'll decrease the value - better to offer it clean, sanded and ready for painting.

In the fall 'good boats' will be sold at a price reflecting the cost of winter storage, but the gems are in spring - 80% finished projects where the owner has invested cash and time but now want to be out sailing not spending time finishing the refit - you'll buy his work for cents on the dollar - of course if you get it wrong, someone else is buying YOUR work for cents on the dollar.

 

It takes a great deal of experience to know which boat to buy and turn it over for a profit. I've done this for many years and you'll take a lot baths, until you gain some experience. I can't emphasis this enough, you need a lot of skills to do this regularly and turn any kind of profit. You also need to have the pockets for the eventualities that comes up, on this sort of thing. You will buy boats with what seems to be a good engine, just to find it's got a rod knock, you will buy boats that seemed sound, just to find the transom is mush, the electrics worthless and best of all, the HIN has been changed and you're now the proud owner of stolen property (you'll love this one).

The best thing you can do is relax and hopefully forget about any of these ideas you've been having. Trust me.

 

The only people who succeed in business, are people who have a strong grounding in the nuts and bolts of the particular industry involved. And they typically don't ask questions of strangers, about what they need to do to make a go of it.

 

I think Mr Efficiency has "knocked the nail on the head" with his response.
In short if you needed to ask the question, you shouldn't do it.
Three ways to possibly fail in business.
1. Go into a business that doesn't suit you. I grasped an opportunity to go into business with low expense which should have been very profitable. But I had no interest in it, it didn't suit me and I eventually quit losing money.

2. Go into business that you know nothing about. You should work for someone in that area to learn the ropes and to establish contacts.

3. Rely on someone else for supply. You can build a good business only to have your source of supply dry up. Also known as "Having all your eggs in one basket." This also applies to relying on one major client for your income.

Poida

 

Yes well the friends that are helping you will become not so good friends in the end. Been there. It will strain and tax any relationship! A good friend of mine bought this ferro cement sailboat(yes he is insane) that needed a ton of work. While in the process he met a groovy chick and she jumped right in and helped. I told him one day that if they could get thru this project without killing each other she was definitely a keeper.They did it then got hitched and took off sailing. Nice story, usually doesn't go that way. Any how, I like PAR's idea, roll up a big twisty and think on it a bit. There are easier ways to make a living........................peace........g

 

I used to work with a friend who was a salvage agent for several large insurance companies. He regularly got offered written off boats but was not able to pick & choose. He had to take them all and many were badly smashed up or burnt. Maybe one in 5 turned a good profit the rest were very low wages only. This was the price of getting the regular offers plus the cases of wine that had to be laid out.
Do you like grinding fibreglass for days on end? you will get very good at it!
The burnt ones were a nightmare to repair or clean & a real health hazard, i for one never want to go near one again!
Often the only real money to be made was stripping them of gear & selling it at boat jumbles.
Many boats would have a bare minimum repair then be sold as a fixer upper, the reason being that there is always someone out there who wants a boat bigger than he can afford & thinks that a boat that needs tons of work is a bargain.
Anyone who has refitted a yacht properly will know that it costs rather a lot more than is ever profitable.

 

THANK YOU EVERYONE! This is exactly what i needed

I know that I am no where near the point of being able to do this. My first step towards this plan was to pick up a salvage sailboat for myself to gain experience.

My friends are actually quite reliable. A few of them have partnered on the side(we all work as software devs) flipping houses and have been hired to remodel a few boats(nothing major though).

I have experience with fiberglass, and anti-foul paint however its been a few years.

The idea of reselling vessels is definitely 3-5 years away as we have other projects underway right now.

The biggest thing thats making me realize i shouldn't follow through with this is the fact that resell value is what someone is willing to pay and potential flaws we may make could be deadly for someone else. Not something my conscious wants to deal with.

 

I did a similar thing in college but buying cheap cars at auctions and selling them.
And even considering that for every boat buyer there are maybe 100,000 or more car buyers, I still took a beating on 10% of the cars I flipped.

I learned early that if I needed to do more than a paint polish,interior shampoo,cheap tires,and maybe spray bomb that scratched bumper-I'd actually lose money.Because I'd have the car for 2 weeks doing work to it with my money tied up, when I could have bought and sold 3-4 other ones that needed no work.

Best way to make money was to buy a rusted out specialty car-MGB,Fiat,Muscle car,Camaro etc and sell parts. But then I had a free storage spot.

Perhaps the way to go is to part out the boats-gear,engines,winches,stoves etc but depends on the cost to dispose of the hull.
But then are you competing with established businesses?

Mr Efficiency has it BTW.

 

Parting out boats isn't practical, even with E-Bay. Parting out sailboats is a greatly smaller market, less than 10% of the pleasure boat market as a whole. The only thing you can really sell is engines, drives and some electronics. The engine has to be able to run, the drive has to be in a boat, so they can test it or exspect to get 1/4 of it's value otherwise.

The best way to make money is to flip boats, powerboats specifically. There are lots of boats, in the 10 to 15 year old range that have tied owners. They bought a Bayliner bowrider when the kids where young and interested in getting pulled around in a tube by their dad. They grew up, discovered girls are a lot more interesting, when to college, etc. and the boat has languished in the car port, unused for the last few years. It's battery is long since dead, the cables well corroded, the finicky bilge pump clogged and inoperable, the bimini full of bird crap and a few rips on the seams, the engine all varnished up, etc., etc., etc.

This is the boat you can flip. A little love, a few replacement parts, carb cleaning and general clean up, put it at the curb with a sign for 1/2 it's new value and hope for a sucker soon. The trick is to know which boat to buy, the ability to access it's condition (quickly) and understanding the market, so you have a real chance at actually selling it. Most folks are looking for a center console or a party type boat. They want to fish or drag their kids around. These are the boats that move.

Sailboats on the other hand don't sell. You can sit on a pristine something or other for years and still take a bath when it sells. The only sailboats that do sell are the ones you rarely see for sale. High speed dinghies, with strong fleets and followings, the J's and a few others also can sell, but you better live next to a marina and it's attached yacht club/sailing school or you'll never move the puppy.

 

Maybe where you live. I bought all my sheet winches off of eBay out of the USA at about 1/3 of the local asking price. Including postage.

PDW