Tips and Tricks

If you’re planning to cruise full-time at some point you’ll probably wonder if you should sell your personal residence or not. There are different thoughts on this, I’ll happily share mine.

Let’s start with an important distinction.

Real estate is an appreciating asset (yes I know what happened in 2007, but is the only time since they have been keeping real estate records that prices dropped so dramatically and for so long). A boat is a depreciating asset. In English, the value of your real estate will likely go up, up, up. The value of your boat will go down. So for that reason, you should strongly consider not selling your real estate.

You say “But Captain, I have no desire to return to that house after cruising.” Maybe not, but once done cruising, you could sell that one and buy a house wherever you want to be, all the while it was (probably) increasing in value. Oh, wait, what’s that? You plan to cruise for the rest of your life? Awesome! What if you change your mind? I mean, I know you won’t, but what if you do? What if living on a boat eventually becomes something you no longer want? What if your health declines enough that living on a boat is no longer practical? It happens. If you own real estate, you have a “savings account”. Oh, you’re going to sell your boat and that is your savings account? (please see the previous paragraph).

If you don’t sell your house, what do you do with it?

With rare exceptions, you will be better off renting it out, (and please do not rent it to your family)*! How do you manage your rental while you are away? You won’t. You don’t want to try to manage the property from far away on your boat. It’s more complicated than you think it is. You’ll hire a competent property manager. How do you do that? Send me a message through this site and I will help you. Seriously. I have owned over 50 rental properties and I spent 15 years as a licensed real estate agent and I love helping cruisers almost as much as I love talking about real estate, so everyone will win!

Did your mortgage require you to live in the house?

Good news! Unless you have a reverse mortgage (we’ll talk more about that later) or down payment assistance, even if you got the kind of mortgage that requires you to live in the home, that requirement only lasts one year… after one year, you are allowed to turn the property into a rental property without changing your mortgage. You will want to change your homeowners insurance policy to a landlord policy, but that’s it.

Can you afford both the boat and the house?

If you have owned the house for a few years, and you start renting it out, most likely it will collect more rent than your expenses. Ideally, the amount of rent, will be at least 125% of any mortgage, taxes, insurance & HOA fees, so that you have enough to cover management fees, repairs, and maintenance.**

What is a reverse mortgage and what does that have to do with any of this?

A reverse mortgage is a special mortgage only available to people 62 or older. It does not require any monthly mortgage payments, and in some cases, it will even loan you money that you don’t have to pay back until you move out of the house (usually because you die). If you have a reverse mortgage today, you cannot move your of your house and onto your boat, without paying that mortgage off. If you do not have a way to refinance into a traditional mortgage or pay off the mortgage, then you may have to sell the house.

But here is the best part in my humble opinion. My wife and I are in our 50’s and currently plan to move onto a boat in the next 12-18 months and live the rest of our lives on the water. But what if we’re wrong? What if 10 years go by and we are no longer interested in living on a boat? Or what if our health won’t allow it? i.e. bad knees, bad hip, etc. We can call the company managing our property, and tell them not to renew the lease of the tenants currently living in the house we did not sell.*** Once the tenants are out and we move back in, (as long as we have reached 62 and have enough equity because the value continues to go up, up, up) then we can get a reverse mortgage and live in our home without a monthly mortgage payment. ****

If we do manage to live our last years on the water, our kids will inherit the house and they can decide whether they want to get a passive income from the rental or if they want to sell the property and cash out.

Now, however, there’s another potential issue: getting insurance on your boat.

Check with your insurance agent and ask if owning a house will make a difference in getting boat insurance. And ask if it has to be your primary home or if it can be a rental. Do not lie about whether the boat is your primary home. Lying on an insurance application can void insurance coverage – and will be something that the insurance company looks at if you ever make a claim. However, more and more people are discovering that they have an easier time finding insurance, or more at least more options, when they own residential real estate.

I’ve heard that some big insurance companies will not write boat policies if you do not also have a land residence. Underwriting rules constantly change and I am in no way an insurance broker or expert, so do your own research, but it’s one more thing to check into when deciding to go live on a boat.

Caution:

If you decide to sell, and can possibly afford it, please wait until you’ve been cruising at least a full year before you sell the house and everything in it. This will give you time to ensure that you’re really willing to live a cruising lifestyle. The first year will be a huge learning curve and knowing that you haven’t made an irreversible decision can really decrease the stress.

Also, if you decide to sell, and want my free handy guide to hiring the right real estate agent (remember, I have a significant real estate background) just contact me.

Also be sure to investigate boat insurance before making an offer. Every year, insurance underwriters get more and more strict. Do not assume you’ll be able to get insurance, even if you have tons of experience. I don’t want to dissuade you at all, I just want you to have your eyes wide open.

Fair Winds
Captain Jeff Vegas
Watch video testimonials for Captain Jeff Vegas by clicking this link

* – Unfortunately the most common tenant in the U.S. to stop paying the rent are people related to the landlord. I know, your family is different, right? You’re an adult. Make your own decision. Trust me it’s a bad idea.

** – Be careful to not try to charge more rent just so it will cover your costs. Tenants will pay whatever the market bears, but they will not pay more because you ‘need’ more. They will simply rent some other house. Let your professional property manager determine the rental rate.

*** – We cannot force the tenants to move out before the lease term ends, but we have no obligation to renew their lease.

**** – We will still have to pay property taxes, insurance, and HOA dues, and maintain the property, but we will have no principal or interest payments due for a mortgage.

Sailing is a graceful negotiation with nature, a constant interplay between mastering the wind’s force and adapting to the sea’s mood. Among the open-water sailor’s essential skills, perhaps none is as adaptable and crucial as the technique of heave-to. This maneuver proves invaluable in various conditions, particularly when facing challenging sea states or large swells.

What is Heave-To?

Heaving-to is a sailing technique that effectively halts the boat’s forward motion while maintaining stability. It’s a strategic pause button in open water, allowing sailors to wait out a storm, take a break, or address an issue without dropping anchor.

How to Heave-To

The process of heaving-to varies slightly depending on your boat’s design, but the basic principle remains the same. Here’s a general guide:

Begin with your jib fully deployed such as would be needed for a close reach. Then, tack without moving the jib or the jibsheet, and put the boat at a 90 degree angle off of the wind (beam reach). This will “backwind” the jib (put it on the wrong side of the mast). Next, completely release the mainsheet, which should de-power your mainsail (be careful of this on a Catamaran, you don’t want the sail caught in the shrouds). Adjust the rudder to counter your jib. If using a tiller, push the handle most of the way to windward. A boat with a wheel should turn the wheel most of the way to leeward. You want enough rudder angle to keep the boat at a 90 angle to the wind but not so much that it turns sharply.
Then adjust as needed: Fine-tune your sails and rudder to find the right balance. You should feel the boat settle into a steady, controlled drift. The fact that your beam is broad to the waves concerns people. Don’t let it concern you. The swell will approach the boat and then swirl around it. It’s pretty cool actually!

When to Heave-To

Stormy Weather: Heaving-to can provide a stable platform in rough seas, reducing the strain on the boat and crew. When weather conditions are unfavorable for sailing, and there are no safe bays to wait it out, heaving-to can be a safer alternative to continuing on or anchoring.
Man Overboard: Heaving-to can give the crew time to recover a person who has fallen overboard. In fact, I would argue it’s the best Man OverBoard (MOB) method for a catamaran.
Reefing: If you are unable to reef while underway, heaving to is an option.

Benefits of Heaving-To

Safety: It’s a valuable tool for managing challenging conditions and emergencies.
Rest: It allows your crew to rest without losing significant ground or anchoring.
Control: Maintains control and stability in heavy weather or when navigating tricky passages.

Heave-to is not just a technique; it’s a skill that every open water sailor should master – but practice under calm conditions. It’s a versatile tool that can make your sailing experience safer, more comfortable, and more enjoyable. So, the next time the winds pick up or you need to take a break far from shore, remember the art of heave-to. It might just be the perfect solution.

Fair Winds
Captain Jeff Vegas
Watch video testimonials for Captain Jeff Vegas by clicking this link

 

On September 23, 2019 I received a notification from my credit monitoring subscription that someone had applied for credit using my name, Social Security Number, and date of birth. I called the creditor and let them know it was fraud. On October 10, 2019 I received another notification… a different creditor. I called them. On October 11 same thing & on October 15 same thing so I “froze” my Experian file… On October 17 I received a notification that Experian blocked an attempt to access my credit and that there was a “hit” to my Transunion profile. (I thought I was freezing Transunion & Equifax on 10/15 also – oops!) I then spent some time ensuring that all 3 were “frozen”… 5 “hard” inquiries to my credit report inside of about 3 weeks. Ouch! 4 out of 5 of the creditors said they would report to the bureaus that those inquiries were fraudulent and that it could take 90 days for those to fall off my report. So, while I was in the Equifax site, I decided I would try to expedite cleaning up my credit and I disputed the 3 inquiries that had showed up there plus 2 addresses that were never my addresses.

I should mention that the first time this ever happened to me was in 2008 and it typically happens 1-2 times a year (until 2 week prior to this point) so those addresses may or may not have come from those inquiries. Oh, and did I mention that 3 of those 5 applications resulted in approved credit? In any case, when Experian finished reviewing my dispute, they removed the 2 bogus addresses but told me that the inquiries had happened… so they could not remove them and if I wanted them removed, I had to contact the creditor and ask them to report it as fraud.

At this time I believed that no one could make an inquiry on my credit. If I want to apply for a credit card, car loan or mortgage, I need to “unfreeze” my report long enough for the lender to check my credit, and then, of course, I’ll want to freeze them again. It’s going to be a hassle, but not as big a hassle as the hours I spent on the phone unwinding all the above mess.

Here’s the bummer… credit monitoring isn’t always cheap… I get 1 service free courtesy of my Capital One Credit Card and 1 service free for a year because some company that had my information was breached and as part of a settlement, they offered affected consumers that option (and I took it). [Note: this started happening to me long before the above noted breach.] I strongly recommend you contact your credit card companies and see if their membership offers that as a perk. If it’s free, get it! Seriously! Just get it. And based on my personal experience, if you do not have a company offering it to you for free, you may want to consider paying for it. Be careful about the options you choose though. I’ve been poking around the internet and it looks like most companies that do offer a subscription offer a “1 bureau” option… there are 3 credit bureaus and they don’t all get checked by all creditors. If someone applies for credit with a company that does not check the one you are having monitored, then you still won’t know until they have run up a large bill and I (fortunately) do not know what the process is for unravelling that mess! Of course, another proactive approach would be to contact all 3 bureaus and just freeze your credit, like I have (finally) done.

Here’s how to freeze your credit at all 3 bureaus…

First, what is the difference between a “freeze” and a “lock”? You ready for this? A fee! If you “lock” your credit, the bureaus charge you a fee, if you “freeze” your credit they don’t and there is NO OTHER DIFFERENCE! (I swear)

Go to www.transunion.com/credit-freeze and create an account. You will need to answer some questions that hopefully only you can answer (like “which one of these 5 lenders have you ever had an account with?”). They do that to ensure that you are really you, of course. Then you’ll create a 6-digit pin – put that PIN in a very safe place. Now your Transunion credit file is frozen and cannot be accessed until you log back in and give that PIN.

Then go to www.equifax.com/personal/credit-report-services – similar process as above.

Then, if you have a Capital One card and have taken advantage of their CreditWise program, log into that and freeze your Experian file. (that’s how I did it). Or you can go to www.experian.com/freeze/center.html and I’m sure the process is quite similar to the other 2 bureaus.

Do you even know what is on your credit report?

Did you know you can get a free copy twice a year? (of course, if your file is “frozen” you’d have to “unfreeze” to get a copy). If you have not gotten 2 free copies already this calendar year, stop right now and visit all 3 bureaus online – If you wait until you want a car loan, or credit card or mortgage to find out what yours says, you may find out you have a lot of cleaning up to do before you can get that loan… they can charge you for your credit score, but not to see what good and bad things are on your report. Go check right away…

Because it can even get worse!

On July 18, 2022, I received an email from Experian. The subject line read: Notification of Change of email address

My fingers trembled as I opened it, and this is what I saw

So, I am praying that this is email a scam, right? Someone is trying to bait me into giving them the kind of information needed to access my credit files? So I immediately tried to log into my Experian account and I could not because this email was legitimate. Someone, with all of my information (Social, Date of Birth, etc), convinced Experian that they were me, and that they no longer had access to the email address associated with my Experian profile and Experian let them change the email address! Are you F***ING KIDDING ME? Anyone who knows anything about cybersecurity knows that a common lie told by these cyber pirates is “I don’t have access to that email anymore”. The proper procedure would have been for Experian to email the address on file and see if I responded before changing the email address, but they did not do that!

IDIOTS!

I finally got it resolved and locked down but holy crap! And, it’s not like I can stop doing business with Experian if I don’t trust the way the keep my information secure!

If you think this can’t happen to you, you’re wrong.

Of course I hope it never does, but I strongly recommend you freeze all three credit bureaus today!

Do you need a sailboat delivered? Do you want sailing lessons? Do you want to charter a sailboat and need a captain? Contact me!

Fair Winds
Captain Jeff Vegas