Is buying a salvage boat for me?

Are there salvage boats deals out there?

Yes, there are. There are also salvage money pits. So let’s take a look at what salvage is:

Salvage boats generally fall into two categories. The ones that are damaged to an extent that the cost to repair exceeds the market value, or repairs would not put the boat back into the condition it was in prior to the loss. And two, where a constructive total loss is declared. A constructive total loss is where the agreed insurance value, less salvage is less than the cost to repair.

Most of the time salvage is sold on an “As Is, Where Is” basis. This means there are no warranties, the condition is the condition, any costs incurred in storage may be yours to settle up when you pick it up and you must transport it from where it sits. They are sold on a competitive bid basis and where many boats are damaged at the same location often an auction is held. There may be particulars unique to each situation and you should be aware of these by contacting the selling party or their agent for a bid package or bid solicitation prior to bidding.

It all cases you should inspect the boat prior to bidding to determine the extent of the damage and your repair cost (see “pig in a poke” below). Remember you will be bidding against professional salvage companies. These people know what to look for and the resultant salvage value. They have the expertise to repair this vessel at a cost competitive rate and the resources to resell the repaired vessel.

Finally, be sure the seller will provide you with clean title or documentation on the vessel after the sale. It is also a good idea to contact your attorney to determine what (if any) your obligation(s) may be in the future to a potential buyer.

What expertise is needed to repair a salvage vessel?

Do you know how to complete structural FRP repairs? We are not talking about small nicks or gelcoat repairs here. Do you know how to fabricate a template to be used in a major hull repair? If you have not completed major structural repairs do you know a yard that has? and will they work with you at a lower than market labor rate to effect this repair? Most of your repair cost is going to be labor. If you can answer “yes” to all of the foregoing then keep reading.

What should I look for on a salvage vessel?

If the vessel sank in salt water you can presume the engines and electronics need to be rebuilt or replaced. The electrical equipment will likely need to be replaced. The wiring will need some work, but will mostly be reusable (based upon a salt water immersion study recently completed and to be published soon). If the submersion was in fresh water some of the foregoing equipment may be repairable. The interior furnishings, other than those broken or damaged, may be reusable. Rub rails, windshields, and other extrusions may no longer be available and you may need to change out all just to replace a damaged section. So it boils down to “how much needs to be replaced”. An avenue to consider is using several salvage boats, as parts, to rebuild one boat.

What is pickling?

When an engine is submerged the oil inside is displaced by the water and it fills with water. When it is removed from the water rusting (oxidation) begins immediately. The best way to combat this oxidation is to de-water the engine, change the oil and filter (at least 2x) and run the engine to operating temperature to dry it out. Be sure you pull the spark plugs or injectors and turn it over to blow the water out of the cylinders before you start it. If you don’t you will bend the connecting rods, because water doesn’t compress. If your not mechanically adept contact a qualified marine technician for assistance. If there is no time available to do the foregoing then the engine is de-watered and filled with diesel fuel (pickled) to reduce the formation of rust and prevent seizing. This pickling is better than leaving it full of water and it should last for a short while. It will allow for salvageable parts during an engine overhaul. As a rule of thumb if the pickling is one month old, forget the engine.

Do I need a survey prior to buying the salvage boat?

It will help you ascertain the extent of the damage, and the net salvage value (bid price) for the boat. It won’t uncover all of the repair problems that need to be addressed, as some of these will only turn up after taking the salvage apart to fix it. But much of this ‘hidden’ damage can be anticipated with a survey.

So what’s this “pig in a poke” mean?

As a general rule do you want “to buy a pig in a poke”. A good deal has to be more than just monetary considerations, although that aspect cannot be overlooked. Buying a boat for $500. Then putting $7000-$10,000 into it and still not having a boat that is worth using or that you could have bought used for only slightly more is not a deal. First determine an average price for the “Value” of the boat in good working condition (you can use value books [NADA, BUC, Abos Blue Book] for this purpose). Determine the finished “value” and write it down. Remember the items to look for in the rest of the FAQ, then use a survey form and price out all the items that need to be replaced, Determine if you have the skill or expertise needed to do the work, use a multiplier of at least 125% of total repair cost (parts/labor/sales tax), and finally answer the question: “will this boat fit your needs when it is completed”. Here is a survey form you can use:

Average “value” $ __________________

Salvage buying price less $ __________________

Marine survey cost less $ __________________

Major parts to be replaced less $ __________________

List: __________________ $ __________

__________________ $ __________

Sales Tax $___________

(use additional paper if required)

Outside labor cost needed less $____________________

List: __________________ $ __________

__________________ $ __________

Sales Tax $__________

(use additional paper if required)

Other costs (Storage, transport) while being repaired less $_______________

Re-titling less $_______________

State licenses less $______________

Fudge factor +25% add parts labor and sales tax and add this cost to your repair costs to cover additional expenses that may be required

Fudge factor less $ ___________________

Add up your costs, including the fudge factor, and subtract them from average “Value” listed above. Is it a big number or a little number? Does it appear to be worth the trouble of your time and monetary investment? If so get the wife’s permission and go for it.