Waterfront STR on private lake; Is a boat important?

Question

Hello, I am closing soon on my first STR. It's on a private, all sports lake in northern MI. We have negotiated the sellers boat in the deal if we want it. The home is valued at $175,000, purchase price was $153,500, they are asking $25,000 for the boat which I understand is a good deal (from a friend/boat dealer) and we should scoop it up if we want it. Does it add value to the property for renters? Is it a bigger headache than it's worth? There are not a lot of rentals in the surrounding, small private lakes. The property is an 864sqft A-frame. I'm thinking the boat extends the outdoor living space. But would SUP, kayaks, fun island, swim platform etc...satisfy the same requirement? Fishing is good on the lake, mostly large mouth bass. It's a pontoon, not a proper fishing boat. Maybe we just get it for our family's use and not for renters... Thank you. Christa

Joe Splitrock · Answer

@Christa Parsons I would do research on your competition. Look at competitive STR listings and see what they offer for boating.

I have actually pondered the same question when I considered a lake STR. It seems the entire purpose of staying at a lake is to enjoy the lake. In that regard, you want a boat. If you don't have a boat, that gives two options. Bring your own boat or rent a boat. Either way, you probably need a boat dock and maybe even a lift. You will need to remove those for winter and put them out in the spring.

I know people mention liability, but I would also be concerned with maintenance, damage and theft. Inexperienced boat drivers can easily run the boat into shallow water or seaweed and damage the motor. They could run out of gas in the middle of the lake. They could run into the dock when bringing the boat in. They could fail to properly lift and secure the boat, leading to theft or loss during a storm.

If you do choose to buy the boat, make sure you pay for it separately on a separate bill of sale. It should not be part of the cabin purchase. This is for tax purposes. The boat has a faster depreciation time and may even qualify for bonus depreciation. This could help greatly on reducing taxes in early years.

On a personal note, I would personally be more inclined to rent a lake cabin if there was a boat. I don't have a boat and I would see value in that. I also know that the best business choice is not always my personal preference.

Hopefully others with lake cabins respond.

Travis L. · Answer

We have friends that do this but make the boat separate rental agreement.  Personally I wouldn't want the risk/liability of the boat rental.

Grant Thompson · Answer

The boat sounds like a HUGE liability for a STR. Disclosure: I don't own or operate any STRs.

Steve K. · Answer

@Christa Parsons I would do SUPs, kayaks or canoes for the renters. There’s a reason for the saying, “The two happiest days in a boat owner’s life: the day they buy the boat, and the day they sell the boat”. Motorboats are expensive to maintain, a lot of liability and I wouldn’t trust renters to take proper care of it. If it’s a good deal I would pick it up for personal use though, or just resell it in the spring for more $ (used market for pontoon boats is crazy hot currently). Serious fishermen will probably have their own boat that they could launch and they will want a bass boat/ fishing boat not a party barge anyway.

Joe Marini · Answer

As an alternative, possibly provide the prospective tenants or buyers resources to rent a boat or purchase a boat instead. I see it as too big of a liability concern personally. Wish the best.

Christa Parsons · Answer

Thanks everyone. We passed on purchasing the boat that is there currently. We will continue to consider a boat for us or the property. Maybe as we learn more from our renters this next season. I do appreciate the feedback that if you are renting a waterfront property it would be nice to have a boat. Luckily, the boat ramp is at the end of our street and there is a local boat rental company, and we have a dock that will need to be taken in and out seasonally. I will load the property up with kayaks, SUP's, fun island, maybe a paddleboat etc... swim platform.... Thanks again, I really appreciate the support. This is a first for me.

Jennifer Williams · Answer

Sounds like too big of a liability to me. I agree that canoes and kayaks are probably a better choice.

Colleen F. · Answer

@Christa Parsons   I would provide people powered boats,  canoes, kayaks. If it is a fishing lake a johnny boat but even if you have a small trawling motor on a johnny boat people don't know about boat motors.  You need to have someone monitor the people powered boats being present on check in and check out because they can disappear.

What do people do on this lake?   Party lake?  A pontoon boat is a big choice. Is it a bigger house?    If they can rent from someone else do what you can to facilitate that.  I would not start with owning a pontoon boat particularly if they can rent one, my sister in law got one with her house and it was a fair amount of maintenance.  We do own a sailboat and it takes maintenance, we have an electric motor  just in case but when we had gas it was a big pain. It won't start, why won't it start, how long does it take to get it to start and we were only using it in the mooring field.   I can't imagine a renter dealing with motor issues.  Also some states you need a boat license.  Oh and whatever you do don't provide any jet skis... because people can surely damage those.

Christa Parsons · Answer

Colleen, it would be a pontoon boat, 70hp. Lake is 270 acres, 25' deep. Local real estate agent mentioned there is a boat rental place available that services this area. OR would people powered toys suffice? (SUP's, kayaks/canoes, paddleboat etc...) Thank you!

Colleen F. · Answer

Are we talking some canoes and kayak or a motor boat.    People powered boats are an expected amenity on a lake.   Life jackets too.   A motor boat is a liability particularly in small lakes.  If you have a huge lake and you can't rent one it might make sense.  there really are alot of variables.

Waterfront STR on private lake; Is a boat important?

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