The Dollars and Cents of Buying Property

1 March 2011 By Claire Griffiths

To own asmall corner of God's country is an obsession that dates back to the IceAge. And even if crewmembers' lives are spent at sea, buying and renting out aproperty is solid proof that survival instincts to find shelter are still inworking order.

Accordingto Dockwalk's financial columnist, Peter Brooke, the old adage ringstrue: location is paramount. There are several factors to consider when deciding on alocation. For tax purposes, carefully choose the country in which you'd like to own property. Next, you must choose the city or town, then the neighborhood. You may be offering beautiful home for rent, but if the areasurrounding it is in shambles, chances are it won't generate much interest. Property in the right place will always be an excellent investment, but Brookewarns, “Buying property only really makes sense if you get a loan, put down aslittle as possible and get someone else to pay the loan, i.e. a tenant.”

Theaverage investment portfolio costs about two-and-a-half percent per annum torun; owning and letting out a property incurs charges and taxation. “In France,you need to make at least 13 percent of the purchase price, plus any loaninterest to make the venture viable. You will hand eight percent of thepurchase price to the ‘notaire’ when you buy and five percent to the sellingagents when you sell. Maintenance charges and taxes (for example, taxefonciere) are going to round up into a pretty sum,” says Brooke.

Crew should consider whatwill appeal to tenants when purchasing a property with the intent to rent itfor income, says RodMitchell of financial advisers Mitchell Johnson. Good layout, a view, outdoor space and at least one bedroom are ideal attributes of any property. “I recommend people invest some money in the property because it makes them more committed to the project,”says Mitchell. When you purchase a property, there will always be maintenance and upkeep expenses; however, you must decide if you want to spend more money on the purchase or the restoration of the property. “One could argue there will be a betterand steadier return from a more expensive property in France than a distressedpurchase in somewhere like the U.S.,” adds Brooke. If you find an incredibledeal, be sure to find out why the property is so cheap. Mold, fire, water or other damage may have lowered the purchase price. When preparing to buy a property for rental, set a figure that you intend to spend on restoration, upkeep and maintenance. Anything aboveand beyond that number will significantly cut into profits.

Due to the fact that vessels travel so often, it is good advice to use an agent to manage the rental property as most crew will not be in town to deal with renters and rental issues.

Manyyachties choose to buy and rent out. Chef Jane of M/Y Sarafsa bought astudio in Antibes last year that she rents to a friend on a long term lease.“Using the yachting world network helps” says Jane. “There are plenty ofEnglish speaking property rental agencies in Antibes.”

For moreinformation and advice on purchasing property and renting it out, contact PeterBrooke at or Rod Mitchell at