Financing a repower

[Jackman]

I was wondering how most of you guys do a repower as far as financing is concerned.
1) Cash (No happening with me)
2) separate loan for the engines from the boat if you have financed the boat

or

3) Refinance the boat loan to include the engines...(probably requireing a before and after survey to asses the value of the boat so the refinancing can occur.

I'm still thinking about all of this in lieu of my tank issues that may occur..probably will occur. My boat is currently set up for diesels as far as intakes, shafts ect are concerned. The Cummins 330B remans would cost $22750ea with the tranny's and everything else needed for the install. I think I'm running out of options at this point. No matter what....I'm not getting rid of my Hat. Not an option!

 

[34Hatt]

No matter what....I'm not getting rid of my Hat. Not an option!

Well that answers the question of should you make that Big Investment.

I financed mine with Home equity wife wanted new back door, siding and fence I wanted a pair of 330b's It was a win, win

 

[Don E]

My 34 Ft Hatteras Same Year As Yours Is Under Construction In Sarasota,did You Repower With Reconditioned Engines? Don

 

[Capt.Erich]

Your best bet is to get a home equity line of credit.

The other option is to start a company using your boat for company use/expense. Once you incorporate, you will need to set up a checking account and can apply for a line of credit for your company. There are some IRS rules that you will want to look into regarding this. Talk to your accountant.

It can be difficult getting a loan for old boats and especially for refits. Banks typically don't understand nature of marine financing and will "farm it out" to a company who deals in Ships Mortgages.

The advice I give to everyone that is going to refit or invest major money in any boat is the following:

First, look at the market and determine what your vessel’s MARKET value will be AFTER the refit.

Subtract the current MARKET value from the above figure and try your hardest to keep your refit budget close to that number. You will never “profit” unless you are in the business and can do the labor yourself. Even then it’s questionable.

If you are infatuated with your boat and intend to have your ashes tosses into the deep blue from the transom of your boat by your Grandchildren… in other words you have no intention of ever selling the boat, my advise is… have fun and spend as much money as you can afford or even more. It will keep me, and my friends, in business.

 

[Mike36c]

Home equity is the way to go as you can write off the interest and call the shots by cutting checks on the spot (or NOT cutting checks ). The $22K for each engine sounds a little high, have you looked into buying runouts? I've been told a reman long block can be bought for around $5K, or maybe just overhauling the runouts, then you know what you have. I think you can save some bucks while not going el-cheapo on quality.

 

[Woodsong]

I'm not a hatt owner at the moment but if you go the home equity route make darn sure you are financially in very good shape...like you can pay all your bills and live for 6 months if you happened to loose your job or something. It would not be wise to risk loosing your house over a set of diesels....

 

[rmaher]

AMEN, Woodsong! What's often expeditious for our boats may not be sensible for our families! (Did I really just write that ???)

 

[Jackman]

22k each includes the mounts, motors, tranny, panel, harness ect. Everything I need to drop them right in.

I will look at other places as well if any of you guys have a favorite source for the 330b's. These engines are new but considered reman because they don't meet the new epa regs. They don't have to if they're labeled this way and used for a repower. These engines have a 2 yr warranty. I could end up paying dearly for someone else's mistreatment of the engines.


I was looking for pullouts but you never know what you are getting. I would consider buying pullouts from someone on this forum or someone I knew, however.

 

[Jackman]

What else do I need to complete this repower? I'm not seeing that I need much more that what I listed. The engine bays are clean I just redid them when I rebuilt the 454's and need nothing there.....the engine package looks as though it will fit right in with what I've got. The props are okay but I could use 4bladed with a good cup. The specs they guy gave me for economy and speed were phenomenal. I would be okay with half as good as what he quoted....Please let me know worse case scenario what I'd need to complete this....I'm putting together a spreadsheet to figure out which way to go with this. My Dad and I have missed too many prime fishing seasons to not get this right.

My goals....I have my masters liscense and would like to go part time business and parttime fun and hang with the other Hat owners in my area. I do not plan to get rid of her. I'm fine with her size and do not have two footitis. If I won the lottery is the only way I' go bigger!

 

[jim rosenthal]

Two good sources for these engines: T&S Marine Engines in Crisfield, MD, and Edwards Marine in Ocean City, MD. Both Cummins dealers and very fair.

These engines are also eligible for the extended Cummins warranty, out to four years.

Other costs: Cummins engineers will need to sign off on the install at seatrial to put the warranty into effect. There are some costs associated with this. Other than that, the install usually involves engine mounts, installing the harnesses and panels, etc. You should be able to get something for your old engines and gears, esp since you just went all through them.

 

[Jackman]

Thanks Jim.

I'll try those two as well. I don't know for sure I'm being quoted a good deal. I think my dad and I will do the install if we upgrade and have the Cummins guys sign off. All the stuff that takes real time is already done from the 454 rebuild...the cleanup, painting ect. My Hat seems to have been set up for diesels so those items you would normally have to change are already in place(ie the 2" intakes, the 6in exhaust out the back, the shafts are 1 1/2 aquamet ect. I think I'm going to be jittery over the next few weeks thinking this through an if I should follow through with it.

Here are the specs the guys gave me over the phone for my install....

Cummins 330B turbocharged 330metricHp/315 SAE HP w/ZF twin disc

29.4kt +/-10% WOT

24.5kt cruise 18gph total

all with 20x22x4blade nibrals

He said between 2-3g/nm at cruise. I would be happy doubling my .65gal/nm that I currently have.

I couldn't imagine how this boat would do near 30kt. That's insane. My 265gal fuel capacity would take me to china with these engines!

 

[jim rosenthal]

Sounds about right. I think they are optimistic on the fuel mileage, but you never know- she is lighter than my boat. The 330s are all you need in there. Sounds like they are going to specify 1.5:1 gears, am I right? If you and your dad can do this, it will save you a lot.

Most people who are financing a repower I think refi the boat as a whole package. Years ago when I did this, that is the route I went. HE loans were far less common then because people didn't have the kind of equity that they have gotten recently in an overheated real estate market (which is now cooling a bit, isn't it). That would be reasonable. The HE loan guarantees you the tax deduction, I think. The loan on the boat may also have deductible interest if the boat qualifies as a second home, which every Hatteras would do.

Good luck with all this. If you call either of the Cummins dealers I mentioned, please let them know that I referred you. Also, buying the engines out of state will save you some money on sales taxes if the engines are shipped to you at an out of state address from the selling dealer. This is what I did; the engines were shipped to Slane's in NC. There were freight costs, but the sales tax for local delivery would have been MUCH higher on 34K worth of engines.

 

[Banshee36]

I can vouch for Edwards Marine, I bought my engines from him, and bought the extended warranty. as far as paying fro them, I leased mine from Telmak Leasing, which was bought by wells fargo. If you have a captains license andrun one charter a yaer you may qualify. The payments were 100% writeoffable(tax man speak i think) with a buy out at the end or give the engines back. They had many options , Just another method to buyem.

Now that I am a member of the Custom carolina Boat club, I'll be checking on youse guys and I'll send the New owner of the Banshee, after the seatrial of course, to the site.
The new Banshee II is a 1993 45 foot Alex Willis powered with twin 450c Cummins.
JW

 

[REBrueckner]

One big issue that comes to mind is your intended length of ownership of the boat and new engines. It sounds like you to plan to keep this boat for quite a while in which case such high quality/guaranteed engines may make sense for you. And such a purchase may be appropriate,also, if you intend to run high annual hours.

The other side of the coin is if you are a recreational boater at 100 hours or so annually, you could argue that most of the life (value) of such new engines will be lost while sitting dockside, unused and corroding in the salt air. If that's close to your situation, and it's tough to be objective, then perhaps lower cost engines make more sense. Also, if you need to sell the boat, it's not likely that you'll recover most of your engine expenditure.

Perhaps other style/model of "rebuilt" engines are available at substantially lower cost. Like 71 series Detroits. If you can connect with a knowledgeable local contact who knows reputable rebuilders, you could wait for a lower cost option. My neighbor in NY recently put in a "rebuilt" Volvo diesel in a trawler...my local mechanic knows the guy who refurburshed the engine and said his work was trustworthy/reputable, etc. Knowing who does the rebuild work and their reputation is critical.

As was noted, shipping across state lines may eliminate or reduce sales tax. That's several thousand dollars you will use to better effect than state spenders. You might even be able to pick the engines up via a rented truck and transport them yourself.

Another option is to trade up is when the market is slow....like now. Sure you'll not get as much for your boat but if you want a bigger (more expensive) boat you can wait a for deal that meets your needs and net savings can go in your pocket.

The bottom line is that you want to be happy with whichever route you take. Brand new modern diesels will not make you happy if making the payments for them becomes a big worry. Nor will much less expensive used take outs that you don't trust. Only you can decide whether saving some funds ahead of time to reduce monthly payments makes sense for you.

 

[Mike36c]

Jack, Your running gear package will work just fine (I have the same on my 36) and a 1.5:1 or maybe a 1.75:1 gear is what you want. The numbers for speed are accurate and you might actually do a little better but the man is off on the mileage. My boat fully loaded, and I mean maxed out Bahama trip loaded topps out at 27.5kts and cruises around 24kts netting me around .8 to .9 NMPG verified by flowscans and several 100nm+ trips. Other members here may do better but thats what I get. You should should see around 1.5 to 1.7 with a lighter boat. Just take a look at the fuel charts online for the 330b.

As for for re-power items here was my list: New generator, racors, all fuel lines, HD battery cables/swiches, powdercoated stringer caps, custom mounts, and a first class Marine Exhaust Systems from the turbo to the aft bulkhead. The "while your at it" list was new A/C's, hydraulic lines, battery charger, water heater, high water alarms, and generator exhaust w/ gensep. I moved all items from the aft bulkhead elsewhere (hynautic reservoir, battery charger, etc).

The 330b is a great engine with a long history, the only weakpoints are the raw water pump (sherwood crap) and the aftercooler. BEFORE you install the engine remove the aftercooler and slober the ends and o-rings with tef-gel then re-assemble. The factory puts them together dry (BAD) but if you do this right away and then service them yearly, no problem. Boatdiesel.com has a bunch of good info on how to keep your engines happy.

 

[Boatsb]

Jim on the sales tax issue in Florida and many other states you are required to submit a form for the tax that was not collected on the sale and also the tax. I deal with many companies in and out of the state and this is a common mistake made by people thinking they are saving on the tax. If you are audited there can be interest and panalties that would be more than the original tax liability. Check the rules in your state before you find out you could be in trouble.

 

[Jackman]

I have two residences. One in PA and one where our summer place and boat are located, which is in DE. They are a no salestax state. So all I have to do is have the engines delivered to the DE address. There should be no sales tax required.

You're right about the form, though if I did not have the place in DE. I can't go to DE purchase something tax free and then take it to PA. The business I purchased from is required to report I did not pay sales tax if I only have a residence in PA. I am also required to go pay sales tax in PA for the item. Luckily I have two adresses.

 

[Jackman]

In the event that I do not go new....depending on my financing because finding such financing is hard for those of us with older boats...what would you look for as far as a good candidate for an overhaul on a set of 3330B's? What do you stay away from and what price do you stick to assuming total rebuild? What would you pay for a set of 330b's that need a total overhaul?

Thanks,

Jack

By the way...currently still looking at how to finance this project. I have two estimates and they are both the same, but in two different states. 44k for a set with trannies and controls as well as mounts. The process continues.....

 

[34Hatt]

I would say all you speed #s and props look real close I am 330b 1.5 to 1, 21" x 21" 4 blade with a little cup. 28 kts top end loaded 22-24 kt cruise and I figured some where like 18 gals at cruise. All I know is I have been very happy with them.
I did go used and stressed the hole way thru because of being used. It has turned out real GOOD but it could have turned ugly fast. To rebuild them I would say its hard to estimate it do they need turbo's, aftercooler, Injectors or pumps these are all Items that can add up to big #s fast. I had some lee way with my #s and sure enough I had to do Injectors on one and a turbo on the other.
I would stick with the remans. It sounds like you are set up well for them what about adding in for Filters and fuel line with the return!!!! They add some $$$
The Info above about the aftercooler is good Info Athens has step by step on Boat diesel on it and you should do it also he has good info about the mounts next to the raw water pump. The sherwood pumps on them are crap but Athens now has replacements that are far better.
Good Luck with it..

 

[SeaSwick]

When I repowered my 27' SeaCraft with twin Merc 190 I/O's, the dealer set up financing the purchase of the engine & drive package through GMAC. My memory tells me it was a 10 year term w/10% down...

GMAC sold the loan to Provident Savings Bank. 4 years later I went directly to ProvSB to refinance the whole boat & they said they don't do boat loans, which didn't phase me 'cause, actually, the engines were financed not the boat.

Went through Essex Credit & got 15 year refi term at... ProvSB. But I digress...

Whoever you get engines from should have sources of financing, if not outright manufacturer's financing.

HELOC's are easy & quick, but I like to keep my financed things separate.