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Willis Boatworks Old School 22 - Hull #6 - Build Thread

Old 02-13-2019, 07:36 PM
  #141  
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Cpalms, what Bill is talking about is;

This is not about the boatbuilder getting credit at the bank.....

This is about a potential boat owner trying to get credit at a bank to have a builder build a boat for him.

Very different scenario.

Most banks don’t know where to start the paperwork for a boat that hasn’t had the keel laid.

Getting financed for a completed boat is easy. ��
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Old 02-13-2019, 07:59 PM
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Originally Posted by bills106 View Post
After the 2008 recession and even somewhat before that with the luxury tax, if you want to hear laughter, go to the bank with a boatbuilder and ask for a line of credit! Unless you've got a lot of collateral to put up there isn't a bank in NC that would even remotely consider it. Too many banks (and suppliers) have been burned over those events. I've never built a boat that was financed but have spoken to many other builders who lamented they've lost many prospective customers who've tried to secure financing locally for a newbuild and were flat out refused. Didn't matter what their credit situation was, the banks just weren't interested in financing a boat.
This is the reason that the real custom yachts are almost always owned by men who made enough money, decided they wanted to own the best, and found a builder to produce that product. I would guess that a very rich individual with massive collatoral would be able to finance the construction of a custom yacht. Why would they?

Banks are only interested in what the sale price of the completed or not completed item is worth. What value do you think a banker places on a partially complete custom sportfish? They have no idea, so they don't touch that lending world.

The other thing is most banks sell the loans and there are probably not buyers for that debt.

It is still my dream to own a Carolina boat someday. I will not be getting a loan though.
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Old 02-13-2019, 08:10 PM
  #143  
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Banks are very simple to understand. They love to give money but they need collateral. They are happy to give money to someone to build a building on a piece of property cause the property is there's if the person defaults. They are happy to give you money to buy a new boat from the boat show cause the collateral is the boat that already exist. Or, they are happy to give a person a equity line on your house for the difference between the value and what you owe.

When is comes to building a new boat from scratch the other person is completely correct they probably will not write a loan unless someone's House is the leverage. Then in which the person is better off doing a home equity line. Furthermore, this issue doesn't come up cause 99 percent of the people who go out and have a custom boat built pay cash. Especially the ones walking into jarret bay, Bayliss telling them they want a 70 footer.
Let’s stay on issue here about Willis. He is flat out simply with out a doubt in my mind stealing from Peter to pay Paul and I know first hand. My father name is name is Peter and we tried doing business with him. I hope this thread continues for months and years until everyone in the boat business know what he is all about.
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Old 02-13-2019, 08:43 PM
  #144  
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Originally Posted by muskrattown View Post
This is the reason that the real custom yachts are almost always owned by men who made enough money, decided they wanted to own the best, and found a builder to produce that product. I would guess that a very rich individual with massive collatoral would be able to finance the construction of a custom yacht. Why would they?
In this low interest rate environment/ strong economy - rich guys finance everything. Why wouldn't they? Generally speaking of course, everybody is different, but these days LOTS of rich guy finance everything - all of their cars, boats, planes, 2nd/ 3rd homes, etc. (Of course, nobody on THT engages in this type of foolishness, everybody here pays in cold hard cash)

Here is how it works. The math is very simple. Obviously there are lots of ways to finance rich guy stuff but the easiest is for rich guys run a line against their securities (stocks and bonds). They can borrow between 3.5% and 4.5% allow their securities to continue to appreciate and not incur capital gains on the sale of securities. As far as the boat/ car/ plane/ home seller knows the buyer paid 100% in cash when in reality he was financing the whole thing.

For example, a rich guys brokerage account:

$10,000,000 account which contains:
- $5,000,000 Inv. Grade Munis - 90% borrow, expected return 3.5%
- $5,000,000 S&P 500 ETF - 65% borrow, expected return 8%

That means this rich guy can have $7,750,000 (hello 72 Viking) wired out of his account just by signing a piece of paper at a cost of ~4.25% variable and keep his assets invested assets at an expected return ~5.75%. This math oversimplified but it is what rich guys do all day long and the reason every quality boat builder has a wait list a mile long. Banks love this because they have virtually risk free way of earning and rich guys love it because it's a cheap, tax efficient way to to deploy a ton capital quick and easy.

So when rates go up and stock go down it is unlikely Freeman's will continue to appreciate in value. Problems for another day LOL.
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Old 02-13-2019, 10:00 PM
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Sorry for helping to change subject. Point is, banks don’t leverage empty mold or jig. Please help keep the discussion on AJ and Willis Boat Works not being able to complete his projects and many people have to suffer in the mean time. Thanks.
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Old 02-13-2019, 11:44 PM
  #146  
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The chances of AJ Willis getting a bank loan is slim at best. They already have a bankruptcy on the books a few years ago. I an not a banker but I know they do not like to dish out money after that happens. The pattern I am seeing here is this:

1. They get a deposit from a new client by offering them a low ball price up front.
2. They start the work and use that deposit to fund the previous customer and their lifestyle.
3. They then are way behind on the project and the owner is hounding them to get the boat completed.
4. AJ starts to tell lies in an effort to keep things afloat and make everyone happy.
5. The owner has enough of the BS and lack of progress and grabs the boat from the shop half done.
6. The owner now does not have a great deal any longer as he now has to pay again to fix sloppy work and work that was not completed.
7. Owners now are all starting to talk and exposing this trend. Everyone is now filing suits and judgements.

Thats is it in a nutshell.

Mike
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Old 02-14-2019, 02:49 AM
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Originally Posted by InternationalMarineMike View Post
The chances of AJ Willis getting a bank loan is slim at best. They already have a bankruptcy on the books a few years ago. I an not a banker but I know they do not like to dish out money after that happens. The pattern I am seeing here is this:

1. They get a deposit from a new client by offering them a low ball price up front.
2. They start the work and use that deposit to fund the previous customer and their lifestyle.
3. They then are way behind on the project and the owner is hounding them to get the boat completed.
4. AJ starts to tell lies in an effort to keep things afloat and make everyone happy.
5. The owner has enough of the BS and lack of progress and grabs the boat from the shop half done.
6. The owner now does not have a great deal any longer as he now has to pay again to fix sloppy work and work that was not completed.
7. Owners now are all starting to talk and exposing this trend. Everyone is now filing suits and judgements.

Thats is it in a nutshell.

Mike
Damn, a Ponzi scheme
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Old 02-14-2019, 05:47 AM
  #148  
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Originally Posted by Brocnizer1 View Post
Damn, a Ponzi scheme
As the OP of a 30 CC build from AJ I must reply. I am very happy with AJ the man is hard at work on my build daily. I have given draws to AJ only when I myself check the work. No money is borrowed on this build its in my bank account. The only thing I forsee stopping this build is the internet. 2008 a lot of builders trawlers small large companys went under. Not all were granted goverment loans such as GMC Chrysler. As a buisness person I must say it takes more guts to have tried and failed than never given the effort at all.
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Old 02-14-2019, 06:10 AM
  #149  
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Originally Posted by Cpalms View Post
In this low interest rate environment/ strong economy - rich guys finance everything. Why wouldn't they? Generally speaking of course, everybody is different, but these days LOTS of rich guy finance everything - all of their cars, boats, planes, 2nd/ 3rd homes, etc. (Of course, nobody on THT engages in this type of foolishness, everybody here pays in cold hard cash)

Here is how it works. The math is very simple. Obviously there are lots of ways to finance rich guy stuff but the easiest is for rich guys run a line against their securities (stocks and bonds). They can borrow between 3.5% and 4.5% allow their securities to continue to appreciate and not incur capital gains on the sale of securities. As far as the boat/ car/ plane/ home seller knows the buyer paid 100% in cash when in reality he was financing the whole thing.

For example, a rich guys brokerage account:

$10,000,000 account which contains:
- $5,000,000 Inv. Grade Munis - 90% borrow, expected return 3.5%
- $5,000,000 S&P 500 ETF - 65% borrow, expected return 8%

That means this rich guy can have $7,750,000 (hello 72 Viking) wired out of his account just by signing a piece of paper at a cost of ~4.25% variable and keep his assets invested assets at an expected return ~5.75%. This math oversimplified but it is what rich guys do all day long and the reason every quality boat builder has a wait list a mile long. Banks love this because they have virtually risk free way of earning and rich guys love it because it's a cheap, tax efficient way to to deploy a ton capital quick and easy.

So when rates go up and stock go down it is unlikely Freeman's will continue to appreciate in value. Problems for another day LOL.
I am no "rich guy" but this does not make sense to me. The guy is going to go through the hassle of getting a loan, risking his investments (they don't always go up) and then having to make payments all to get 1.5% to save a hundred grand on a $7,750,000 boat? Seems like it would be much easier to sell the dogs, take the tax savings, buy the boat outright under a corporation, use it for "business purposes" and get even more tax savings. It does not make sense to me so maybe that's why I'm not rich. haha
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Old 02-14-2019, 06:16 AM
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Originally Posted by Tarbaby View Post
Cpalms, what Bill is talking about is;

This is not about the boatbuilder getting credit at the bank.....

This is about a potential boat owner trying to get credit at a bank to have a builder build a boat for him.

Very different scenario.

Most banks don’t know where to start the paperwork for a boat that hasn’t had the keel laid.

Getting financed for a completed boat is easy. ��
something at which Bill should know a thing or 12 about. We will forgive the poster as maybe he unknowingly misinterpreted Bill’s response.

From my keyboard jockey seat it appears Bill knows his stuff on the boat building scheme as well as to how to run a business. We should all be respected as men but any man that has left a lucrative job to start a business and rub elbows with the giants of the industry. Well let’s just say I feel you are better off lending him an ear rather than advice on this subject matter.
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Old 02-14-2019, 06:57 AM
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Only posting because I don't want people that might want to finance a Custom Boat to think it's an impossibility.
I can't say if there's an upper threshold, but I do know a lender that can and will finance builds.
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Old 02-14-2019, 07:01 AM
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Originally Posted by buckshotgumbo View Post
Only posting because I don't want people that might want to finance a Custom Boat to think it's an impossibility.
I can't say if there's an upper threshold, but I do know a lender that can and will finance builds.
I will def keep that in mind in the future
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Old 02-14-2019, 07:17 AM
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Originally Posted by buckshotgumbo View Post
Only posting because I don't want people that might want to finance a Custom Boat to think it's an impossibility.
I can't say if there's an upper threshold, but I do know a lender that can and will finance builds.
I'm not saying it's an impossibility but I know of two instances (with other builders) where very well qualified individuals were flat out told by local branches of some pretty large banking firms (top 10), they weren't interested in financing boat builds and suggested they get with their own banks. Pre 2008 it wasn't uncommon for portions of builds to be financed with many procedures routinely in place and established but that's changed around here at least.

And I was also referring to the difficulties faced by builders seeking lines of credit with a bank. We are fortunate to have a very good credit rating but without hard collateral (ie. real property) I very seriously doubt any boatbuilder in NC is getting a line of credit to finance a boat project no matter how long they've been in business. Too many banks were burned and they have good memories! John Bayliss might be the one exception to that rule but he could pull it out of his pocket and probably not notice it missing!
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Old 02-14-2019, 07:28 AM
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Originally Posted by Locke N Load View Post
I am no "rich guy" but this does not make sense to me. The guy is going to go through the hassle of getting a loan, risking his investments (they don't always go up) and then having to make payments all to get 1.5% to save a hundred grand on a $7,750,000 boat? Seems like it would be much easier to sell the dogs, take the tax savings, buy the boat outright under a corporation, use it for "business purposes" and get even more tax savings. It does not make sense to me so maybe that's why I'm not rich. haha
Boats RVs office at your home is a big red flag for the IRS not me. I make the money my S Corp pays the taxes then after all taxes are paid can I take a cash dividend. Not to say many people do.
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Old 02-14-2019, 08:26 AM
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Originally Posted by bills106 View Post
I'm not saying it's an impossibility but I know of two instances (with other builders) where very well qualified individuals were flat out told by local branches of some pretty large banking firms (top 10), they weren't interested in financing boat builds and suggested they get with their own banks. Pre 2008 it wasn't uncommon for portions of builds to be financed with many procedures routinely in place and established but that's changed around here at least.

And I was also referring to the difficulties faced by builders seeking lines of credit with a bank. We are fortunate to have a very good credit rating but without hard collateral (ie. real property) I very seriously doubt any boatbuilder in NC is getting a line of credit to finance a boat project no matter how long they've been in business. Too many banks were burned and they have good memories! John Bayliss might be the one exception to that rule but he could pull it out of his pocket and probably not notice it missing!
I understand and agree. There are exceptions to every rule. I work for a much smaller builder than you guys and we're familiar with the struggles to finance. Luckily we found someone with roots in the maritime industry that works with lenders that are willing to fund builds. Having a knowledgeable and proactive Loan Specialist is important. I know you know all this, but the casual reader may write off having a Custom built if they think they can't get funded.
The difficulties for a builder looking for a line of credit are understood as well, although we never saw that as an option.
Somewhat unrelated, I was recently exploring options for a build for myself, and it turned into a huge hassle for the simple fact that I work for the company building the boat.
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Old 02-14-2019, 08:35 AM
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Originally Posted by buckshotgumbo View Post
Somewhat unrelated, I was recently exploring options for a build for myself, and it turned into a huge hassle for the simple fact that I work for the company building the boat.
Wouldn't that automatically make you the worst possible customer ever!

I've heard of times like that and a lot of griping from both the guys in the shop and the front office, hard to pull fast ones when you're there every day!

On big boats, it's normal for the owner to have a representative on site for much if not all of the build and it makes sense. Usually it's their full time captains and it keeps them employed and who better to have make the day to day calls on what goes where than the guys who'll be working on it! For some strange reason though, when it's a long board sanding time, they always seem to have to go home for a while.
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Old 02-14-2019, 08:53 AM
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Originally Posted by buckshotgumbo View Post
I understand and agree. There are exceptions to every rule. I work for a much smaller builder than you guys and we're familiar with the struggles to finance. Luckily we found someone with roots in the maritime industry that works with lenders that are willing to fund builds. Having a knowledgeable and proactive Loan Specialist is important. I know you know all this, but the casual reader may write off having a Custom built if they think they can't get funded.
The difficulties for a builder looking for a line of credit are understood as well, although we never saw that as an option.
Somewhat unrelated, I was recently exploring options for a build for myself, and it turned into a huge hassle for the simple fact that I work for the company building the boat.
very well put buckshot.
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Old 02-14-2019, 08:55 AM
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Old 02-14-2019, 08:58 AM
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Originally Posted by Locke N Load View Post
I am no "rich guy" but this does not make sense to me. The guy is going to go through the hassle of getting a loan, risking his investments (they don't always go up) and then having to make payments all to get 1.5% to save a hundred grand on a $7,750,000 boat? Seems like it would be much easier to sell the dogs, take the tax savings, buy the boat outright under a corporation, use it for "business purposes" and get even more tax savings. It does not make sense to me so maybe that's why I'm not rich. haha

Yes, he would save far more than 100k, ‘rich’ guys are always willing to take the risk (get the sweet boat and worry about the problems later) and he doesn’t have to make any payments. The interest can run indefinitely as long as you have the capital reserves. Zero out of pocket. You buy your Freeman today, sell it in 18 months for what you paid for it and the only thing you paid was 18 months worth of (deminimus) interest. What could go wrong? Lol.

Your idea for a corporation and ‘business purposes’ is a good one except for one thing - it’s tax fraud if the boat is not used for business purposes or is calculated on a ratio of business to personal use.

Sell what dogs? The S&P is up massively in the last 10 years. Rich guys never have ‘dogs’ in their portfolio anyway. Just ask them.
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Old 02-14-2019, 09:12 AM
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Originally Posted by Cpalms View Post

So what your telling me is when Billy Freeman, who just build an enormous new facility, paid cash for the facility or he went to the the bank? How did Sea Vee's build their new factory? If John Bayliss goes to his local Bank of America Branch (HQ'd in NC), they won't extend him a line of credit? The banker would chase him down the street to get his business.

.
There's quite a difference between the Freeman's and SeaVees, with well established companies and long waitlists who put out multiple boats a year, than a guy who has only completed a couple boats, not matter what his name is. And he'd still need some type of collateral. If he doesn't have it, either in real property or whatever else, he's not going to get that line of credit. I'm sure even Freeman and SeaVee are using the new facilities as the collateral. That's different than needing more money to build the boat a which doesn't exist yet.
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