Budget & Investing for Income for RTW/Long term Cruising

MBullock

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Hello, I'm sure this has been asked many many times so I'm a bit hesitant to ask as I'm sure I will endure a wall of flames :) But having done searches on here there doesn't seem to be too much recent discussion.

My partner and I are planning to head off from the UK in ~5yrs. We currently own a Beneteau 473 that did an atlantic circuit with her first owners. We're in two minds whether to keep this is go to something larger (perhaps a B 57) but I guess that's another thread.

Anyhow, our biggest unknown is the budget we would 'require', and secondly confirmation of the best way to fund this budget.

On the first one, my partner thinks that we should look at GBP2K per month. She doesn't want a champaigne lifestyle but also insists that we should have cash for meals out when we want etc. We won't want to 'live' in marinas but again should we want/need to etc. Our 'route' would take us pretty quickly from the UK, to the Carrib (without hanging around in Europe too much), and from there who knows - maybe spend time there - maybe continue through to the Pacific. If, e.g. we could manage on GBP1K mth then we could probably head off sooner. Any thoughts on realistic budget, perhaps after insurance and maintainance costs which I can estimate pretty well.

Secondly, our thought it to put our cash into properties, rent them out fully managed and live off the income. On the basis that we are protecting our capital, and if/when we return we can sell them for something reasonable again in the future.

I would really appreciate any experience or thoughs from those planning similar.

regards, Malc
 

Tranona

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The £2k a month is reasonable provided you don't have major boat problems or want to fly back to UK regularly. Food costs on average are little different from UK, but you have to adapt to what is available locally. Would be tight if you used marinas a lot in the Med. If you are not in a rush your expendiutre tends to gravitate to your income - so there are people who can do it on less - there are often articles in the mags where people share their experiences and its easy to see that eating out, travel and marinas are the big money users.

As to generating the income - it is really no different from the problems facing anbody who does not have a "wage" - low returns on any reasonably secure capital. Property has its attractions, but if managed remotely needs professional help and the returns plus the hassle may not be worth it. On the other hand there is always the attraction of long term capital growth. One popular way is to rent out one main home so that you have something to return to and invest any spare cash in an interest bearing account where you can draw the interest regularly and dip into the capital if need be.

There isn't a single, or easy answer - you just have to look at all the alternatives and choose one that suits you and your attitude to risk.

Good luck with your plans
 

jordanbasset

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Certainly think you would be comfortable on £2000 per month and could probably manage on half that if you did not spend too long in marinas and not too many meals out. But it does depend on your cruising area and life style choices you make. For example we were told the Algarve was expensive but we were able to spend most of our time at anchor there and so spent very little. When the weather is good nothing beats eating out in the cockpit. But as some one has already said there is always the unexpected repair bill so have a contingency fund which you can access for this eventuality. Best investment we made was on a diesel engine course, already paid for itself many times over in servicing costs.

Re investment, if you are looking at long term investment property is probably as good as anything at the moment. We rent out property on a fully managed basis, as did not want the hassle of arranging plumbers etc from a distance. Costs us 10% of rental income but well worth it for piece of mind. Any communication with rental agency is via e-mail.
But be sure you do your home work on the type of property that secures maximum return for your money. For example in my area modern 2 bedroom terraced/semi-detached houses rent well. You get single people, couples and couples with one child interested in them and my properties have never been empty. In other areas may be going for larger properties to rent out to students for example. If you decide to become a landlord research is the key to buying the right properties. Check out on the internet and local newspapers what properties are in demand and the rental return you can expect from them. Which are the popular areas to rent. Would be worth speaking to rental agents and asking them their view, as they should know their area. Also to spread the risk of property being empty and or expensive repair bills will probably make more sense to buy more smaller/cheaper properties than one luxury property.
However property like any other investment can go up and down and unless happy with that risk you may wish to go for something with a lower return but which safeguards your capital. Although with inflation and tax, even deposit accounts will over time degrade the real value of your capital.
Good luck and best wishes
 
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robmurray

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We are in the same position as you - ie planning a big trip in 5 or 6 years. We have chosen the rental property route and already have a couple of cottages. We also bought a marina berth which gives a reasonable yield. About 5% yield before agents charges seems readily achieveable wit both. We are planning on c £2k per month but have no personal experience of cruising budgets. Without switching your thread to boats, a B47 is aleady a big boat for a couple. B57 surely rather too big and expensive to berth - the money spent on changing could be a big part of your cruising budget. Good luck with your planning. Exciting stuff!
 

MBullock

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boat choices

Thanks to those who have responded, very useful food for thought.

I don't mind discussing boat choice too:) we love our 473 and have seen off heavy weather in her and used her for corporate jaunts too. I'm not worried about size, we fly kites two up etc and the autopilot does great on long runs. I agree re insurance and maintainance. My other half thinks we need more space, washing machine etc for a multi year trip. Perhaps that's another thread/question . Its just load carrying capacity. Our boat has a Gen and watermaker and the stern sits low. Add to that a washer, perhaps a dive compressor etc. Ultimately though we don't have experience of sailing in warmer climes where perhaps less is more. I also think one thinks of ones home life and transposed that to boat living which isn't right. Mobile at the moment in the us so apologies for brevity.

Malc
 
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Beware!

Of relying on rental
Full management means they on average will take 25 plus percent off you
They put tennants in for 6 months an give a break which lets them keep a years fee let aloane the unnecessary maintenence.
I had one who removed a bbq from a garden because it was dangerous to children and charged £150 for the pleasure, let aloan the £250 light switch replacement.
If you take full management definately dont tell the agent your going sailing anywhere
They also have the scam where they turn the tennants over i.e they move one in say theres a problem with the house/flat in a couple of months So they take a years fees , then do it all again.
so they add up
check in
check out
gas safety (again)
clean Their fees
inventory
etc etc etc.
Most people I have met who have been out cruising long term have just given up with rental property and made the money work somewhere else.
Oh also you are responsible to register deposits now even if the agent takes them and if you dont do it you get fined 3 times the deposit within in 14 days kinda like a parking fine but worse.

5yrs in and I think Im gonna do the same, stock market is easier to deal with.
Or maybe buy a charter boat.

I would go for the bigger boat and if you change your mind in the carribean
you current boats gonna be worth a hell of a lot less there .

anways good luck with it all
still floating:cool:
 

mandlmaunder

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Hi Malc and welcome to the forum

Dont worry about asking questions on here there are lots of old threads about just about every thing but information changes almost daily and looking through the thousands of topics could take weeks and still not be the right stuff for you.

Income- We tried the rental approach with our house in the UK but found that be an absentee landlord even with a management service was taking up lots of time and causing more hassle than the returns we were getting.
But that was just our experience and not necessarily typical.

When we left for our 2 year Atlantic trip we were sure we could survive on about 1,800 to 2,000 per month but horrendous weather saw us sheltering in marinas for weeks at a time with only short weather windows for making any miles. We heard the phrase 'it's not normally like this at this time of year' in many different languages in our first 9 months of travel and blew our budget each month very quickly.

Fortunately we both have transportable skills that allowed us to top up the short fall almost every where we went.

If you don't plan on working on your trip then be prepared for budget over runs or life style changes to accommodate what you really have to spend, a budget is a great thing to have in mind but where your comfort levels are are known only to you and your lady, dinners out are fun but so is finding the ingredients for your favourite meal in a country where things are different or changing your diet to what the 'locals' eat will give you much more of a feeling of doing something different with your life and not just be English abroad but actually getting in there and having some thing new to tell the folks back home.

Boat size- We live on a 36ft cat with no A/C or watermaker or laundry service or generator or sat TV or Diving compressor(but I would love one) but these are things we don't have to service or pay some one else to service.
Lack of A/C is an issue about two weeks a year and we live in the Virgin Islands almost full time as to the other things almost all can be gotten easily from a land based company or done without completely as we are live aboards with a budget that doesn't include some of the things that much bigger and much more expensive boats have but again that is us, her on board can do the laundry by hand using as much sea water as she wants and a final rinse in fresh with me ringing out and the sun drying everything with no generator running for a few hours every few days.

The bigger the boat the more every thing on it and for it costs, specially marinas! obvious I know but still a fact.
Every time you need to go to the chandlers they ask what size boat is this part for and I am convinced that the price is matched to the boat size not the part price so when asked what size is my boat I always say it's for the kayak, seems to work.

The more stuff you can do on your boat the happier you will become with your boat knowing that the work carried out by you is done correctly and not leaving you wondering if all the work you paid to have done really was or wether they know you will not be back and rip you of with shoddy parts and work practices.

You don't mention wether you can maintain you engines and other major parts of your boat and wether you intend to do haul out work yourselves or pay a yard to carry out annual stuff for you, the price differences are huge and the savings equally satisfying when you can do most of it yourself, it also makes you understand your boat and her systems better.

Hope this helps, keep asking questions and answers will follow.
Good luck on your travels
Mark :)
 
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jonic

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2k a month would be fine. When we first set off in 2003, we found that we could get by on £600 anchored out in the Caribbean. But that was pre kids and at one point in the USA with long marina stays due to bad weather, and hiring cars and finding stuff to keep the kids amused that rose to 3K.

The main thing is to do as much boat maintenance as you can, as that is where the costs can rocket.


The funding/investment options will depend on the market.

We had rental properties with a reasonable yield, then the market took off and it made sense to cash in and re-invest some of the profits in high interest and inflation linked bonds. Then as the market fell we bought back in.

Be flexible, the beauty of being away is you can take a considered view with out being influenced by the "noise" and media. Even if it means doing something that every one else isn't!

The main thing though is to go.

A word of warning, if you go for a significant period of time, coming home is ...lets just say challenging.

Fair winds
 

Sy-Revolution

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The three of us (43,42 & 9) did last year in the Balearics on around 300 Euros per week.
However, that was NO marinas (no need) and we hardly ever ate or drank out (our cooking is pretty good and a Mahou outa the deep freeze is pretty good!). Nor much in the way of running repairs.

This winter we've halved that here in Tunisia (phew!).

We did spend quite a bit on fuel though, was wind was rarer that rocking horse poo.......
 

mocruising

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world cruise

We too were hoping to fund our world cruise from our property portfolio which we have had for some years now. Alas I feel that we will have to sell all the property and move the money into a more tax efficient vehicle that will produce better returns. We have ten houses that we rent out. However even working on a 5% gross yield by the time you have paid all the costs (Agents fees 10%, annual gas and once electrical certification,insurance,repairs and break downs, rental holidays (times the property is empty) advertising, VAT on fees, accountant fees, tax ) plus all the other expenses that seem to follow the actual cash return on the value of the property is less than 2%. If you have mortgages then these have to be paid as well. This is exclusive of capital growth. This has been the case over the past seven years. Unless you have a portfolio that is at least 2 million GBP you will be hard pressed to make your 2,000.0 per month. We don't. All our rental property is in the West Country and are 3-4 bed. terraced houses. When I stop work we will sell the lot and think about bonds or something else.
 

MBullock

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Many thanks for that MoCruising. That sort of backs up the calculations I've been doing. I guess the answer is to sail sooner and eat only rice :)
 

MBullock

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Thanks MandLMaunder. The transportable skills is something that I've been thinking about (I work in IT and could expect my skills to be in demand in any developed area) - or we are now thinking about paying crew or Skippered Charter. We do skippered charter mainly in the form of Corporate days in the UK now. I'm going to post a new thread to see if any advice exists on the forum in this respect. Thanks again, Malc
 

GrahamM376

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Many thanks for that MoCruising. That sort of backs up the calculations I've been doing. I guess the answer is to sail sooner and eat only rice :)

Budgets vary wildly depending on your preferred life style, we eat local produce whereas some can't exist without their Tesco stores transported out every two weeks. You don't need to stick to rice but will save a bundle by avoiding restaurants overlooking resort beaches and marinas, go where the locals eat and usually get better food cheaper. It may sound "tight" but even a cup of coffee can vary between 80 cents and several euro.

We don't have a budget as such but spend under 1000 p.m (11.5m boat) on normal living & sailing expenses. We avoid marinas most of the time, particularly in high season.

Boat problems can make a big hole in the budget so make sure it's fully kitted out and with any likely needed spares/service kits before leaving, it's easier to source gear at home and generally at cheaper prices. Get dive tanks/regs tested and life raft serviced before leaving, flares well in date etc.
 

MBullock

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Thanks. your profile says Faro based... is that still the case? I've not really thought about the Med before but starting to give it some serious thought. The basis being that we could potentially head off earlier, sail during summer and I could come back to UK/Europe to do contract work in the winter to bolster the funds.... just thinking through diffferent options really.
 

Tranona

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Thanks. your profile says Faro based... is that still the case? I've not really thought about the Med before but starting to give it some serious thought. The basis being that we could potentially head off earlier, sail during summer and I could come back to UK/Europe to do contract work in the winter to bolster the funds.... just thinking through diffferent options really.

That is a very common pattern and if you can get work in the winter is very practical. There is very little sailing in the winter in the Med, so most boats moor up somewhere, even if full time liveaboards. The most popular areas for this pattern are Spain and Greece because of the choice of wintering places and, particularly for Spain the ease of access through budget airlines.
 

truscott

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Have been following this thread with interest, as we find ourselves wondering when we're ever going to be able to go. Originally started out investing in property with a view to retiring and sailing off on the income that it would generate, only to discover that in spite of a very respectable capital base, and a moderate debt ratio (for tax and capital gain protection), the net returns are negligible (5% gross drops to around 2-3% net). Have given up on that idea and are now thinking to go only for the sumer months and go back to contract work in the winter (I'm in IT like the OP, so will probably return here to the Gulf).

It does seem that the costs of living in the med are astronomical, with many posting amounts that most people living ashore (in the likes of Turkey & Greece for example) don't earn (and yet they somehow can afford to live there). I can see why many forsake it for foreign climes such as the Caribbean, South Pacific, Asia or even some parts of the Indian Ocean (Chagos seems to be about the only place where your wallet is no good to you!).

We've got the boat. We did some of the sensible stuff like waiting till the kid had flown the coop and building up a retirement base. The bugger of it all seems to be that the folk who cried "go now" were right. In the time it's taken us to get ready to go, Croatia has almost priced itself off limits, Greece is getting that way, and Turkey doesn't seem so far behind. Having spent a great many years working in the Middle East, North Africa doesn't hold much in the way of attraction. I'm keen to visit Carthage but I'm getting a bit sick of the desert. So maybe the answer is get out of the Med as soon as possible?

Curious what others think.

Cheers, PT.
 

SeaMonkey69

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Look at Commercial Property to Rent

Not wishing to turn this into a "how to invest money" forum (there are plenty of those out there) but the OP did ask for thoughts and experience. My wife and I are in the process of selling up (the hard part in today's property market) and setting off (can't wait). Some of our income is being generated from rental of a light industrial unit (and we are in the process of acquiring a second one). The one we currently own cost £85k, new, about 7 years ago and is now generating nearly £10k per annum of rental income, in a depressed market. Not sure of current capital valuation but estimate at £120k. Commercial leases are typically full repair and insurance (i.e. at tenants expense) and are 5 years long with rent review after 2 or 3. A management company will charge about 10% of rental so we'll be left with £9k pa from this property (commercial estate agents often do this work). The trick, of course, is to find a reliable tenant but most small businesses are run by honest, hard working people and (touch wood) we have had no bad experiences to date. Risk is the unit will be empty and then you have the expense of business rates, insurance etc. We hold our property inside a small pension scheme. From what I know of residential property commercial seems to offer better rents but less chance of an upside in capital appreciation.
 

GrahamM376

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Thanks. your profile says Faro based... is that still the case? I've not really thought about the Med before but starting to give it some serious thought. The basis being that we could potentially head off earlier, sail during summer and I could come back to UK/Europe to do contract work in the winter to bolster the funds.... just thinking through diffferent options really.

Yes, we're still Faro based, have a swing mooring in the pool just off the town. The boat's in Bruce's at the moment, I've been scraping years of old antifoul off and re-epoxying. We usualy return home twice a year for 4-6 weeks, leave the house empty, having downsized to a bungalow to boost funds. No way would I sell up with savings interest/stock market as it is, would never get back on the ladder again.

Many people go home in the winter to work or, in the summer to avoid the heat. With internet access being readily available those with a web-based business often run it from the boat.

I retired at 53 (OAP this year!), having had the choice of - work longer to have more money or, no work, more time, enough to be comfortable - but forget the AMEL or HR. I do a bit of boatwork from time to time if in the mood but no employment as such. A friend is finding enough work around the Algarve to pay his winter marina bills by cleaning/maintaining boats and changing oil for those who aren't capable so, there is a crust to be earned if needed.

Although you mention the Med, it's a big place and prices vary wildly between the east and west - best see other threads about costs but, lets say we meet many people leaving the western med because of the prices and lack of permanent berths in some areas.

Before anyone ventures south, I would suggest having a look at the pilots and checking the up to date prices. Google Earth is good for having a look around.
 

Sy-Revolution

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You can always winter here in Tunisia. The people are great, living expenses halved, we 'could' live on £500 per month here but I just can't stop buying things (new Samsung laptop HD 500 gb £41, 3 waterproof bike bags, £70, Tiny 2.5 kg load washing machine £35! it's llike being on the generation game, they're giving it away!) and the weather (apart from today) has been wonderful.

5 months in Monastir marina inc water+power for 11m around £1000.

You can eat out at a cheap place in town for under a tenner for 3, including drinks and the meat & veg is as fresh (read seasonal) as you like.
We're off to Turkey next winter but I'd gladly come back here.



We sold up and left home with around 190,000 to invest. We went with a varied portfolio arranged through Edward Jones and invested at pretty much the bottom of the market. They were bought out by Towry-Law mid last year and we then transfered into their managed fund. Again with an emphisis on diversity and good quality holdings. We've given ourselves a budget of 1200 Euros per month. Last year we had some refitting to do and that pushed us a fair bit over, this year (fiscal) we've been ok. Our investments over that period have done well and the portfolio currently stands at 40,000 more than when we left. Obviously that could all change. If things get tight we can always work......................or beg.


So far so good.

C.
 
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