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Ian MacKenzie

Episode 21: Ian MacKenzie Show Notes

Ocean Sailing Podcast: Hey folks welcome back to the Ocean Sailing Podcast. This week we are with Ian MacKenzie, he is joining us to share some expertise on a couple of topics that a lot of who have lots of questions about, particularly if they’re buying a boat for, whether it’s the first time or the second time. So we’re with Ian MacKenzie from Ian MacKenzie International and the Catamaran company, welcome along Ian.

Ian MacKenzie: Thank you.

Ocean Sailing Podcast: So Ian’s agreed to join us and so we can drill down into a couple of areas that really can be quite technical, and can be quite costly and full of all sorts of pitfalls if you don’t really know what you're doing. So, before we get started Ian, just tell us about your business, what do you, how long have you been doing what you do and what are your sort of core areas of expertise, what’s you sort of core focuses of business?

Ian MacKenzie: Well I’ve been a broker, I started as a broker in 1990 so 26 years ago and worked for a brokerage at the yacht club, Southport Yacht Club board yacht club for 14 years. And then in 2003, or 13 years, 2003 started my own business. So we basically sell, specialise in cruising yachts, monohulls and then that’s the Ian MacKenzie International and Catamaran Company does catamarans pair and sail. I also am a customs valuer and insurance valuer. As well as an insurance agent for marine insurance, Club marine and Pantaenius. So that’s like a total package you know. So we can deal with boats that are coming in from overseas and help with the import process. We sell boats overseas, we’ve sold boats in Barcelona and Spain and Locos Del Toro and Panama and Thailand, you know, Phuket, Malaysia. So business is global, you know, with the Internet.

Ocean Sailing Podcast: So you sell boats that were based in Australia to overseas buyers or you sold overseas based boats to…

Ian MacKenzie: Overseas based boats.

Ocean Sailing Podcast: Got you.

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: Okay.

Ian MacKenzie: So, you know, those boats were either Australian boats that had ended up there…

Ocean Sailing Podcast: Yes.

Ian MacKenzie: …and wanted us to sell them or they were overseas boats foreign owned and had being referred, we’d been referred to them so they contacted us to sell their boat because Australia, if the boat’s in Asia, Australia is the only first world country basically in the southern hemisphere. And so the money’s, form a boating point of view, the money’s here, it’s Australians that go and buy and they’re pretty adventurous so they’re quite happy to go and buy in Asia or South America or wherever. So it just panned out that way.

Ocean Sailing Podcast: Okay, so today would be good to talk about the boat buying process and then maybe we’ll come back to, if you want to buy a boat but you’re thinking of importing a boat instead of buying a local boat, maybe we’ll just jump into then to some of these…

Ian MacKenzie: Sure.

Ocean Sailing Podcast: …sort of complexities around that which you’ve got a lot of experience and so, you know, if you're talking to someone who is buying a yacht for the first time, whether it’s to do a bit of cruising or a bit of cruising and racing. You know, as a first time buyer, what are my options for what are my options or what are some of the common approaches we’ll take for finding your first yacht?

Ian MacKenzie: Okay, so first thing is to, you know, the inclination for some people have been to look overseas to buy because they’ve perceived that it’s going to be cheaper overseas. Well, with the Australian dollar being as low as it is, it’s not cheaper to buy overseas. It’s better off just buying the boat you want is likely to be next door or locally.

The things you look for, you’ve first got to sort out before you even get off your chair at home is to sort out what your requirements are. How many people are going to be using the boat, where are you going to go cruising, what your budget is and what size you want, that you feel you can manage based on your experience? So those are basically the essentials. 

So you get that sorted and then you go out and start looking at what brands deliver the layouts and all the things that you want. Not all brands are the same and it’s a good idea to stick to a brand because in terms of resale, you’re going to be able to resell the boat, always think about the out when you’re buying in. So people generally stick to the brand names, those are the boats that are turning over. 

So you should know Beneteau, Catalina, all of the production boats. That’s with monohulls, Hanse, ML, and then with catamaran just Catana and Fountaine Pajot and there’s a myriad of brands, Lagoon. And we sell them all second hand. The only new brand we deal with is Hudson Power Cat. We used to be the ML Agents and so, the second hand, the pre-owned brokerage market is vibrant. 

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: It’s a buyers market. So those are basically the things that first buyer would be looking for.

Ocean Sailing Podcast: And how much of a premium does a branded boat command when it comes to resale versus a non-branded, home built…

Ian MacKenzie: Custom built?

Ocean Sailing Podcast: …type, custom type boat when it comes to resale? Say the boat’s 10 or 15 years old, how much of a difference does it make?

Ian MacKenzie: Well because people want to play it safe in this global and uncertain market, the reason they stick to the brands is that they know that everybody knows, the work’s been done. People know what a brand is. It’s a bit like going to McDonalds, you know, you can go to any McDonalds and the hamburgers are the same.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: It’s that McDonalds principle is that you stick to a brand, you know what you’re getting beforehand and so when you got to sell, people know the brand. You just say, “I’ve got a Beneteau 440 for sale,” and people know it. They can just Google it, bang, yeah, they’re all the same. Beneteau 440’s are all the same. So, and that also the prices re actually virtually presetwithin certain tolerances. So you know what you’re going to pay when you buy it, you know what you’re going to sell it for, approximately, taking to account age of equipment, age of rigging, age of sales and condition of all of those. It’s all pretty safe.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: So it’s not so much that it’s worth more, the boat will sell quicker and you’ll lose less. It won’t be worth more, you will just lose less because the boat will be worth less when you go to sell it than when you bought it. But if you buy a custom boat, depending on how well it’s built and how well it’s known, it could take a long time to sell and generally you lose more money on a custom boat. Depending on the design of it, because the design is also a brand.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: So Van de Stadt, you know, Alden, all of those lovely boats, custom built and they appeal to a smaller section of the market. So it’s all about the numbers. The more people you’re selling to, the more likely you’re going to be able to sell your boat quicker and for reasonable money.

Ocean Sailing Podcast: Yeah. So hence it’s easier to sell a Toyota Corolla than a Ferrari.

Ian MacKenzie: Exactly, exactly.

Ocean Sailing Podcast: Wider market that you’re appealing to.

Ian MacKenzie: Wider pool of buyers, yes.

Ocean Sailing Podcast: And also, some of that stuff you’ve got to be careful of some of the custom or one off boats. If you go to a cat two, cat one races, if you can’t get it right hull verification certificates that show the quality of construction that’s occurred, then you can end up not being eligible to do some of those things.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: So that’s a factor as well.

Ian MacKenzie: Yeah, absolutely and so you know, the racing requirements are quite stringent and so you need stability tests and all of that. So you need those figures to match up with the minimum required in say Sydney to Hobart or whatever passage racing you want to do.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: And you could miss out by 0.2 of a decimal point if the stability figures don’t match up and don’t mesh so…

Ocean Sailing Podcast: Yes.

Ian MacKenzie: I’ve just sold a boat where it’s just 0.2 of a decimal point.

Ocean Sailing Podcast: Wow, it’s that close?

Ian MacKenzie: It’s a Gale. Yeah it’s, you know, an expensive boat and he wants to do the Hobart and stuff but, he didn’t buy it to do that, he bought it to go cruising so he’s not upset but that’s just an example.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: Yeah, for sure.

Ocean Sailing Podcast: Yeah, okay. And with the boat broker, are they primarily used by sailors, buyers or by both? I know in the US Market, people often will get themselves a broker when they want to buy a boat.

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: Then they’ll do a conjunctive deal on a commission and there will be sellers, broker and a buyer’s broker. How is it different here in Australia?

Ian MacKenzie: Yeah, no, absolutely. It’s, you know, what I find is that people, buyers and sellers, buyers like to these days prefer to go to a broker because their experience quite often is being when they’ve gone thinking that they’d get a better deal in a private sale, don’t have to pay a commission. But they’ve, more often than not, they get mucked around by the owner. And for an expensive boat, they’re actually giving the owner a substantial deposit and they’re not dealing with an institution.

So they can pay someone a one hundred thousand dollar deposit and then the next thing is they’re in court because the owner’s not returning their deposit and even though he hasn’t fulfilled his obligation in terms of the contract. So then they’ve got a legal expense to get their money back. None of that happens when the deal with the broker where an accredited — most brokers are accredited.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: They’re hopefully part of an accredited association. So we meet with certain standards, quality assurance standards. We run a trust account and we stick to, and we adhere to a code of practice. So we will never hold a deposit while a contract is conditional. So all of those things are quite reassuring for a buyer and for a seller it just takes the aggravation out of selling his boat. We give them expert advice in terms of preparing the boat for sale, we take care of all of that, we have the ability to just make all of that seamless.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: We just organise trades people to come in detail aboard and make everything that’s not working work, and presented as best as it can be to maximise return, the best price. And so, make a sale happen in the shortest possible period and going in at the right, you know, giving them advice at the right price point to hit the market is critical. Otherwise it just sits there for a long period if it’s too highly priced.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: For all of those reasons, both sellers and buyers, most sellers and buyers choose to deal through an accredited broker. There are still the sellers that sell privately and buyers that buy privately but that part of the market, I found, is shrinking.

Ocean Sailing Podcast: As there value guys up, the percentage must come down, right?

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: The more that you’re buying and selling a boat, the less you want to take those kind of risks.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: Yeah, yeah, absolutely. People in the higher end, and we deal with you know, high quality boats.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: And so we’ve just found that our vendors, as a matter of fact, I’ve dealt with owners that have tried to sell their boat private and have been unsuccessful, there’s one just sitting out there, Perry 43. We just settled that yesterday. He’d been trying to sell that privately for a year and a half.

Ocean Sailing Podcast: Yeah, right.

Ian MacKenzie: And…

Ocean Sailing Podcast: That’s a long time. 

Ian MacKenzie: Absolutely. And you know, it’s a case and point where an owner is not the best person to sell it.

Ocean Sailing Podcast: No.

Ian MacKenzie: Because he’s emotionally involved with that boat, he’s attached, he’s done a lot. He’s cruised it all over Asia and around Australia; a buyer walks on board and says, “Ah man, she’s a bit run down.” He takes it as a personal insult and attacks the guy verbally and goes, “How dare you insult my boat, and this and that.” Whereas a broker is detached.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: It’s a business and we’re not emotionally attached for the boat so, as a matter of fact, we encourage the buyer to say, “Tell me, give me honest feedback because I’ll pass it on diplomatically to the owner and we’ll work at getting the boat presenting even better.” So, there’s another advantage here. 

But anyway, that boat there, we actually sold it within two months of enlisting it with us and he’s wrecked, he’s absolutely wrecked. He’s had it for sale for a year and a half and he thought he’d get — he was reluctant to even list it with us and I said, I told him I was a Perry expert and that’s the fourth one we’ve sold in three months, fourth Perry 43. So he’s totally wrecked, you know? So that’s a good example of where an owner he thinks he knows better.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And in the end he was very grateful for the service he got from us.

Ocean Sailing Podcast: Okay, and, like, typically, and I’m sure this is probably not an exact number but how many buyers would look at a boat for the number that actually buy a boat? Like what’s the conversion rate from lookers and tie kickers versus actual buyers?

Ian MacKenzie: Well, that’s another thing David that we as a broker, as a brokerage, I’ve been in this business now, this is my 26th year. Like I want to minimise that traffic over a boat because each person going on a boat is my time. I want a one inspection, one hit rate.

Ocean Sailing Podcast: Yes.

 

Ian MacKenzie: That’s the aim and most often it doesn’t happen but we can work that. With experience, we know the elements that go to making that happen is the boat’s got to be presented as best as it can be, absolutely as best as it can be. Shiny as best as it can be, everything working on it. If the rigging is over 10 years old, it’s changed because insurance companies won’t, won’t ensure it. The sails are totally worn out, well, we get quotes. If the owner doesn’t want to replace the sails, we get quotes for the sails so that we have the information to hand.

So we’re presenting the board as best as it can be so the walk on experience is going to be, “Wow, this is,” — so the way we present it on the net is in a sequential format of photographs. So if someone from Perth’s flying here, the aim is for when he gets on board, he goes, “I feel like I’ve been on this boat before.” Because he’s looked at it in sequence.

Ocean Sailing Podcast: Got an anticipation as well because the good wide photo is not just the photo of the toilet close-up, which is like you see with the…

Ian MacKenzie: Exactly.

Ocean Sailing Podcast: … private sale.

Ian MacKenzie: High resolution, panoramic shots and in sequence of how he would see the boat.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Transom, cockpit, saloon, instruments, galley, you know? That’s the sequence that a person walks through a boat, so he feels like he seen it. And so we also gave them good honest feedback and they ask us a question about the condition of the boat. If I think the boats in average condition but it’s priced accordingly, I would tell them so.

Ocean Sailing Podcast: Yeah, then you get expectations that…

Ian MacKenzie: So I would rather them come and say, “It’s better than you described,” rather than, “It’s not anywhere as good as you know, described.”

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And so, for all of those, when you do all of those things, you know, the chances of someone walking aboard the boat and going, “Yes, this is it. It’s the right price, it presents really well, it’s what I want,” we’ve identified all of that with them before they come to the boat. It's likely that they will step aboard and just buy it. 

So that happens, that’s been happening more and more for us. Like for instance we sold a 45 foot catamaran, the owner tried to sell it for, for about five months and then eventually came to us and I actually thought he was selling it too cheaply. And so he was getting all the bargain hunters that were screwing him even further.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: I put a higher price on it, got a $40,000 higher than he was asking and I sold it for $10,000 less than that.

Ocean Sailing Podcast: Yeah, right.

Ian MacKenzie: He was absolutely wrapped and we sold it, we got the first inquiry within 15 minutes of putting on the web and within 36 hours, we had a contract on it. He had it for sale for five months. 

Ocean Sailing Podcast: So I’m just thinking about that, there are so many parallels with real estate. You know, under pricing real estate is just as bad as overpricing it sometimes because…

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: ….you just attract the wrong group of people and…

Ian MacKenzie: Well people think there’s something wrong with it. People think that the seller’s desperate.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: So they just offer him like 30% less, and he actually accepted an offer 30% less then the guy didn’t think he would and didn’t have the money.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: So he couldn’t proceed.

Ocean Sailing Podcast: Yeah, right.

Ian MacKenzie: So it wrapped him around you know? 

Ocean Sailing Podcast: Okay, and how many, so if you’ve got like inventory locally, how many of your buyers are local buyers or versus coming from further afield, out of interstate and that kind of thing?

Ian MacKenzie: I think most of our buyers come from further afield. They’re either further afield within the state or further afield within Australia, sort of interstate. We sell very few boats to Cold Coasters generally, because of the type of boats that we sell.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: They’re ocean going catamarans, ocean going yachts, cruising yachts, people from all over Australia are looking for them. Because of information technology, we can present a boat with video and high res photos and facilitate. The Internet has sped up the whole sales process, fast-tracked it. So it makes it seamless for a buyer from Melbourne or Perth or whoever to come and air travel is cheap.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: You know, $70 to come from or $20 to come from Sydney or, you know, $150 to come from Perth.

Ocean Sailing Podcast: It’s like it costs you sometimes less to fly to Sydney then it does you the taxi from the airport into the city.

Ian MacKenzie: Exactly. So yeah. So with all of those elements, people are more than happy to come and deal with us also because we’ve been in business for a long time, we get people coming back to us for the fourth and fifth time to resell their boats through us and buy another one because we’re a known factor. They know what they’re getting when they’re dealing with us. So yeah, we sell mainly to people not on the Gold Coast.

Ocean Sailing Podcast: Okay. And do you provide like a sourcing service? If someone says, “These are my needs and I don’t want to look at 10 different websites and deal with 20 different brokers.”

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: Do you work like that?

Ian MacKenzie: So a buyer’s broker, definitely. It doesn’t happen often, it’s just happened yesterday on the settlement of that Perry, their friend who came with them said, “I’m looking at a boat in French Polynesia, what do you think?” And I said, “Well this looks good.” He showed me the specs and he said, “Well I’d rather make an offer through you, at least you’re locally based, I can put my deposit with you, you can sort out all the broke to broker stuff and make sure that…”

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: He made an offer, instantly. Just out of the blue, he made an offer on a 42 foot sailing cat. So it happens, but it doesn’t often.

Ocean Sailing Podcast: And in that instance is the buyer paying you for the service or are you doing conjunction type arrangement with the owner of the other boat?

Ian MacKenzie: Correct, it makes no difference to the seller because the seller is just paying a brokerage fee.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: And that just gets split between the two brokers.

Ocean Sailing Podcast: Yeah, you go, “I’ve got a buyer, you’ve got a boat.” You work together from an agent to agent point of view, boat direct point of view and…

Ian MacKenzie: On some occasions, if the buyer wants the broker to come with them to an overseas, to accompany them to the boat in French Polynesia or wherever, Fiji.

Ocean Sailing Podcast: That would be a tough trip to have to make.

Ian MacKenzie: Then to buyer pays for the expenses.

Ocean Sailing Podcast: Yes, yes.

Ian MacKenzie:  But generally it’s just a split commission.

Ocean Sailing Podcast: Okay. Yeah, so there’s kind of no downside if you’re a buyer?

Ian MacKenzie: There’s no downside, the buyer’s not paying anymore.

Ocean Sailing Podcast: No.

Ian MacKenzie: Yeah, absolutely.

Ocean Sailing Podcast: Okay cool. And so if you’re thinking of buying a yacht and knowing that not all yachts are, well they’re might have been created equal but they’re certainly not maintained equally.

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: How do you go about, you see three Beneteau’s and say they’re 40 footers and they’re all 10 years old, how do you really go about working at the value difference between them? What’s the approach you take to that when one’s in the market for one price and one’s in the market for another? Because at the end of the day it’s about value for money relative to what you’re buying.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: It’s not about the highest and lowest price.

Ian MacKenzie: No.

Ocean Sailing Podcast: And you can buy a cheap disaster that costs you more than the purchase price to get it in working order the first 12 months if you’re not careful.

Ian MacKenzie: No, absolutely, yeah. So basically I have a mental checklist. So, you know, the age of the equipment or the outward appearance of the boat, condition of the gel coat. So it comes back to the point that you raise, how well is the boat being maintained by the owner, or the previous owners? You know, if they’ve had a number of them. So what condition is the gel coat in? Because if the boat needs a total repaint on the hull, that’s like $20,000 to $30,000; a deal breaker. What is the age of the standing rigging? How old are the electronics? We know electronics get out dated within six months but hell, if it’s 10 years old.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: If the electronics are 10 years old…

Ocean Sailing Podcast: it’s a dinosaur.

Ian MacKenzie: They’re ready for the bin, so really, they have no value…

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: …whatsoever. And if so if one of them has got 10 year old electronics and the other’s got six month electronics and the rigging has just been changed and the sails are in beautiful condition, they’re only three years old or in really good condition, those are value add, or not value add but those are major costs. So adds value for that boat as opposed to the boat that needs all of that done.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: You might have to spend $50 grand on the boat if it’s priced the same, of course the buyer’s going to migrate to the boat that’s had all that regular maintenance and upgrades done. So those are the sorts of things that we look at. The engine is the other thing, is how well has it been maintained? How many hours has it done and is there a service schedule records you know, of the servicing done? So those are the major ticket items.

Engines, rigging, condition of/age of electronics, everything else is you know, appearance of upholstery and stuff, it’s minor expenses and you know, people like to make those changes anyway, regardless of the condition of the upholstery. The wife might want to change it anyway.

So that’s how we differentiate and that’s what, those are the things we take into account you know? Whether the boat’s got osmosis as well? One might and one may not. So that’s another huge cost, potential cost. So those are the elements that I take into account when I’m valuing a boat.

Ocean Sailing Podcast: Okay. I listened to something recently where somebody said there’s this age old view you know you buy a boat and you’re better off buying a boat cheap and putting the time into doing it up and. But the opposing view now is “you’re nuts”, because the hours you pour into it that you don’t put a value on and then when you pay for the things you do will far outweigh, not only the time it’s going to take you but the overall cost that of buying a boat where those things have been done the last 12, 24 months.

Because they’re not getting retail value for what they’ve done in terms of improvements so they’re already depreciated in terms of the in value of the boat. So the argument may be that you know, for $50,000 worth of extra value, you’re probably going to pay extra $20,000 for the boat and you’re going to end up miles ahead of you know, just trying to…

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: …buy cheap and do it yourself.

Ian MacKenzie: Yeah, yeah. No absolutely. Like I have a saying that you know it’s hard to, it’s almost impossible to take a poorly maintained boat, a boat that’s been historically poorly maintained by one owner to the next, and work on it and present it and get it to the point where it’s beautifully presented and fully functional because that lack of maintenance, the boat is in an active environment and an active corrosive environment. 

 

And so, for instance, if there’s been a leak that the owner hasn’t fixed and he’s just ignored it’s got salt water leak, down into the electronics, it’s corroded the wiring, the wiring’s gone green right throughout, it’s stained the timber, he hasn’t fixed that and over a period of time, there’s delamination, there’s heavy staining, the wiring’s gone green, things start to malfunction. I would much rather buy a boat from someone that’s fixed a leak in the first place.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And the problem’s never gone beyond that. So it’s a bit like buying a taxi really. You can never buy a taxi and present if it was a private car.

Ocean Sailing Podcast: Yeah. It’s good analogy with heavy use or neglected of use or both.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Yeah, absolutely. So I always recommend buying a well maintained boat or I give my owners, all my buyers the advice to maintain their boats. Be right on to it, fix it as soon as you know that something needs fixing, do it. Because it’s going to get worse.

Ocean Sailing Podcast: Yeah. And sets of a chain of events.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: And then you get to the point…

Ian MacKenzie: And it’s going to let them down at a critical time.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And, Neptune out there, you know, things go wrong at 2 o’clock in the morning when it’s blowing 45 knots, it’s dark, there’s a rock up ahead that you’ve been looking out for, that you want to sail around and the GPS goes down because your wiring’s gone green and you knew it but didn’t fix it all that time ago. So, things go wrong dramatically.

Ocean Sailing Podcast: Yeah, and my boat’s 25 years old and I’ve had her for five years but in the first 12 months, you know, exactly, the GPS was seven years old. That failed at the wrong time, the anchor windlass failed and I couldn’t get the anchor up or down. The water maker failed, the generator that charged the main battery banks failed. Two or other three things failed. All the while on holiday with the family, all over public holiday periods or when service people were out of reach.

Ian MacKenzie: Yeah, exactly.

Ocean Sailing Podcast: And it really does have the ability to ruin your trip and become a real safety issue as well.

Ian MacKenzie: Absolutely. So it’s all about preventative maintenance really.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: As well.

Ocean Sailing Podcast: Keeping that discretion, keeping it up to scratch.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: Otherwise, stuff just keeps happening. You never get ahead of it. Even if you maintain it well, there’s always new stuff that arise.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: If you don’t maintain it well, you’re just a disaster.

Ian MacKenzie: You know they say, you know one of my sayings is, cruising’s all about finding exotic places to maintain your boat.

Ocean Sailing Podcast: That’s right.

Ian MacKenzie: Right?

Ocean Sailing Podcast: That’s right.

Ian MacKenzie: So you might, like, you know when I was cruising, I’ve done 35,000 miles of sailing and cruising, racing and cruising but when we were cruising around the Pacific Islands and so on, you know, you start off with a zero amount of jobs on your list. And by the time you get to New Caledonia, there’s 20 there.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Things had gone wrong at sea and you’ve put it on the list.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: Then once you’ve settled in to your new anchorage and checked the place up, you start working, chipping away at your list of fixing those things and on it goes.

Ocean Sailing Podcast: And then you’re ready to leave again.

Ian MacKenzie: You’re ready to leave again and generate a new list.

Ocean Sailing Podcast: That’s exactly what happens.

Ian MacKenzie: And it’s an active environment. Things are working; you know your boat’s under stress. Things work; work meaning they wear and you just don’t know what you don’t know as well. You don’t know that something’s wearing out, about to wear out.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Everything has it’s, has its lifespan. And they reach the end of their lifespan at different points. But it’s fun, it’s all part of the experience.

Ocean Sailing Podcast: That’s right, it’s funny that even to this day, the Beneteau brochure doesn’t say, “Be aware as a new cruising sailor, you need to be a plumber and an electrician and a builder and an all-around handy guy.”

Ian MacKenzie: Absolutely. A master of all trades.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Not just a jack of all trades.

Ocean Sailing Podcast: And carrier all those spares as well. Okay. So, you know, post GFC a few things changed with the marine industry and then the boating market and where we’re now at in 2016, what finance options are available to boat buyers where the finances are able to be secured, solely against the boat as opposed to an extension of a property mortgage or that kind of thing if you’re looking to buy a boat?

Ian MacKenzie: Yeah most, well every finance company that I’ve dealt with, that we deal with, who will not lend with only the boldest collateral. Especially the boats that we deal with because they, you can get into the boat and sail away from Australia.

Ocean Sailing Podcast: Right.

Ian MacKenzie: So, if you’re selling a Riviera or if you’re buying Riviera, they may lend money against the Riviera because it would run out of fuel. Basically within sigh of land. So, you can’t actually physically go out of, you know…

Ocean Sailing Podcast: Yeah right.

Ian MacKenzie: …go wherever.

Ocean Sailing Podcast: I never thought of that from that angle.

Ian MacKenzie: You’re just going from one fuel pump to the next.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: So, these big power boats. But generally, short answer is, the finance companies want some other collateral in real estate or commercial property or yeah, you know, equity rather than using the boldest 100% equity.

Ocean Sailing Podcast: Okay. And is a new yacht buyer guaranteed to get insurance? The reason I ask is obviously boating… 

Ian MacKenzie: The buyer, first time boat buyer or?

Ocean Sailing Podcast: The boat needs to be of standard, but also the buyer’s got to have some sort of experience right before they go and turn the keys on a half million dollar boat.

Ian MacKenzie: No, no, insurance companies will ensure basically anybody unless they’ve got a history of claims.

Ocean Sailing Podcast: Right.

Ian MacKenzie: Right. So if they’ve had a history of claims with car insurance and with previous boats or they’ve got a criminal record, you know, the usual things.

Ocean Sailing Podcast: Yes, yes.

Ian MacKenzie: Provided you haven’t got a criminal record and you haven’t had a history of accidental, you know, of accidents. Club marine and Pantaenius and most insurance companies will ensure you. You have to start somewhere, they have to take a risk you know? And you know, basically, if you’re a first boat buyer they are banking on the fact that you’re going to take it one step at a time and not just buy a boat and head off to New Caledonia with no experience. You’re going to…

Ocean Sailing Podcast: Yeah, yes.

Ian MacKenzie: …walk before you run. So you’re going to learn everything there is to know about navigation and all the skills that you need for your, for the purpose for which you want to use the boat for and use the boat in a safe way because you’re — it’s not like driving a car where you can just go and hoon it around and it’s okay. When you go out in the ocean in the boat, it might only go out still within sight of land but you could die if you take…

Ocean Sailing Podcast: That’s right.

Ian MacKenzie: …unnecessary risks. There’s reefs out there, if you don’t keep a watch out, you could run into another boat. So it’s life threatening stuff. If you don’t have a life jacket, if you don’t take proper precautions you could fall overboard. You know, it’s all of those things that you really have to practice safe boating and take it one step at a time. So, definitely you know, I’ve sold boats to first boat owners and they were ensured.

Ocean Sailing Podcast: I mean, it’s probably things where the insurance company knows you’ve got a vested interest in staying afloat. If you burn your house down, you can walk out the front door, can’t you? But if you burn your boat to the waterline…

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: …if you’re off shore, you’ve got all sorts of problems.

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: So, okay. And so, what steps would you recommend a buyer takes to thoroughly check a boat from end to end if you’re looking to buy a second hand boat.

Ian MacKenzie: Well I always recommend, as an accredited broker that a buyer engage a surveyor to check a boat out. But that’s the second stage, the first stage is the buyer, after they’ve clarified what they want in their mind, right now, just take the trouble to write down the things that you want from a boat as a buyer. So the, you know, the layout whether the galley’s up or down for catamarans, you know, that’s a factor. Full cabin layout or honor layout like three cabin layout in a catamaran. In a monohull, there’s different centre cockpit or aft cockpit.

 

Ocean Sailing Podcast: Yes.

Ian MacKenzie: Draft issues whether you know, in what draft don’t you want to exceed. So once a buyer’s clarified, in their minds, what they want and that clarification process becomes clearer and more distilled as s they look at more and more boats. They get to realise what they don’t like and by that very nature, they get to know what they do like. And so that sort of hones it down to the do’s and don’ts quickly become fairly clear.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And so you know have good conversations with the brokers that they’re dealing with, ask pointed questions about things that matter for you. Like, if you want a boat that will sail really well, so ask about the boat’s performance. Ask about how easy the boat’s sailing systems are to manage shorthanded, if you are shorthanded. Meaning, on your own or if your wife doesn’t really want to get involved with the sailing part of it.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: Those are the sort of questions you can actually ask them and visually check.  And ask for the maintenance records of the boat and, you know, once you’ve honed in on a boat you can then move to the stage of getting it checked out by a surveyor. Because those guys are specialists, they can check below the surface because what you’re looking at as a buyer is only the surface.

Ocean Sailing Podcast: Or cosmetic stuff.

Ian MacKenzie: Everything that you can see.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: You want a surveyor to check out the things you can’t see and can’t determine just by a visual inspection.

Ocean Sailing Podcast: So will the boat have to come out of the water for a survey?

Ian MacKenzie: Definitely.

Ocean Sailing Podcast: Is that common?

Ian MacKenzie: An out of water inspection is what an insurance company will want anyway.

Ocean Sailing Podcast: Right.

Ian MacKenzie: But regardless of that, buyers will get told, “Well this is a two year old boat so, there will be no problems with it. You don’t need to get it surveyed because you don’t need a survey for insurance,” which is true for a two year old production boat. But, I’ve had situations where I’ve sold a one year old boat and the buyer said to me, “There’s no need to get it surveyed is it? It’s only a year old.” I said, “Well, I wouldn’t spend $600,000 on a boat even if it’s one year’s old, you know, one year old and not get it surveyed.” Because, who knows what’s happened to it.

Ocean Sailing Podcast: They could have run into something.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: They could have collided with something. Manufacturing issues.

Ian MacKenzie: And you know, quite often an owner doesn’t know. Like the owner may not know that the engines or the gearbox is about to fail.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Or an engine’s about to throw a ring or whatever. And that’s easy for a mechanic to check out. Or the owner may not have noticed that there’s a wire strand loose in the standing rigging on the cap shroud right at the masthead, which is not obvious from the deck. But a surveyor’s going to check it out. So those are the things that come to life. So I always recommend using a surveyor, regardless.

Ocean Sailing Podcast: Okay. And, if somebody comes to you and says, “I want to sell my boat.” Do you have like a threshold that you have to set where you say, “Actually, your boat’s not really sellable and if it’s, if it’s going to be sold, it’s not going to be me because hand on heart, I wouldn’t sell that to a buyer.” Or how do you decide?

Ian MacKenzie: It does happen.

Ocean Sailing Podcast: How do you decide?

Ian MacKenzie: As a matter of fact, it’s just happened three weeks ago. Look it’s more about, there’s a couple of points there. We as a brokerage have made a business decision to deal with boats within, not lower than a certain threshold. Because my experience has shown me that you know, the cheaper boats, the $50,000 boat or $100,000 boat generally isn’t as well maintained and I don’t want to offend the people, the owners of $100,000 boats but I’m talking on, there’s been a number of instances where, I mean, probably more for them…

Ocean Sailing Podcast: Especially bigger boats in that price range, right?

Ian MacKenzie: Yeah, yeah. Most owners probably look after their boats, there’s enough owners that don’t look after their boats in that price range and they use selling the boat as an excuse to get rid of it and not do the maintenance.

Ocean Sailing Podcast: Right. 

Ian MacKenzie: Because the maintenance has caught up with them.

Ocean Sailing Podcast: It catches up with them.

Ian MacKenzie: The engine’s just about to fail and the rigging is due to be replaced or overdue, the sail, they’ve had the best use of the sails, sails are naked. So for all those reasons, I don’t deal with boats that are below a certain threshold and I will still look at even the more expensive boats to look at their condition and give advice on what needs to be fixed but having said that, there are still $50,000 boats that are in beautiful condition, I just choose not to sell them from a commercial point of view because there simply isn’t enough for it for me.

Ocean Sailing Podcast: Well, plus your time, right?

Ian MacKenzie: My time is…

Ocean Sailing Podcast: A business broker once told me it often takes more money to sell a $200,000 business than a two million dollar business.

Ian MacKenzie: Absolutely. That’s exactly…

Ocean Sailing Podcast: Because they don’t have the systems in place, they don’t have the reporting in place, a it’s more fragile business. All that kind of stuff.

Ian MacKenzie: Absolutely. We could spend you know, four times long as selling a $50,000 boat for a $5,000 double commission than selling a $700,000 boat for an $8,000, 8% commission so yeah, it’s just a business decision so.

Ocean Sailing Podcast: Yeah. Okay. And you talk about catamarans and your focus going back more than a decade ago on catamarans as an evolving sort of area from a leisure cruiser’s point of view. What are the trends you are seeing with yacht buyers today versus 10 to 20 years ago?

Ian MacKenzie: Well as the population ages, people get older, they become less physically able and agile, you know, we get plenty of monohull sailors come and see us, we sell their monos and we put them into a cat, we sell them a cat and they’re happy as becauseyou know, it’s single level living virtually. The cockpit and the saloon, which is where they spend most of the eight hours of the day in, is on the one level, the same level. So it’s very easy to make that transition and 9.9 times out of 10 they never go back to a monohull…

Ocean Sailing Podcast: Yeah, right.

Ian MacKenzie: …after having owned a catamaran, and there are more and more catamarans. The Queensland Coast, the East Coast really from Queensland cruising where this is where most of Australian cruising boats end up cruising. If not end up leaving their boats to go cruising.   You’ve got shallow bars to go over, you’ve got river systems and so, cats have a shallow draft and so, you know, they can anchor in shallow water, they can put it on the sand and check to clean the bottom, get it to shallower points. So the more areas that monohull sailors can’t get into. 

 

So the trend is being you know, for a burgeoning catamaran market, pair and sail. There’s more and more cats. You can go to the Whitsunday and you see 10 years ago you might see 20 mono’s and two cats in say Nara inlet. Now you see more than 50% of them are catamarans.

Ocean Sailing Podcast: Wow.

Ian MacKenzie: And quite often there’s…

Ocean Sailing Podcast: Wow.

Ian MacKenzie: …the other way around. 18 catamarans and two mono’s. So it's that’s the way it’s trending. That’s not to say that mono’s are going out of phase. They’re still, you know, monohull yachts are incredibly popular and will always have their place, they have that romantic appeal as well and, so there’s a strong racing fraternity in monohulls and so on. It’s just the catamaran market’s growing.

Ocean Sailing Podcast: And it will grow, it will help grow the market, right?

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: Because it’s just growing. The vista and the living space and sitting flat in Anchorages and…

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: The catamaran’s got so many positives for a cruising sailor, the draft issues and being able to park on the beach.

Ian MacKenzie: And as catamaran design evolves, we’ve got catamarans now, like I did Airlie Beach Race Week on a Schionning 46 G-Force called Bullet Proof. We passed Condor of Bermuda, the Maxi…

Ocean Sailing Podcast: Wow.

Ian MacKenzie:  …windward. And we were just walking around the cat and they had 17 guys on the rail and we past them to windward.

Ocean Sailing Podcast: That’s pretty impressive when you start going well up wind in catamarans and still sitting flat.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: That’s really nice.

Ian MacKenzie: And then off the wind we’ve been in 24 knots of boat speed in 24 knots of wind.

Ocean Sailing Podcast: That’s magic.

Ian MacKenzie: So it’s fun. Now, that’s not an out and out cruising boat, that’s a cruiser racer cat.

Ocean Sailing Podcast: But for the performance orientated monohull sail…

 

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: …it’s got both benefits, cruise and race.

Ian MacKenzie: Yes.

Ocean Sailing Podcast: And then the speed becomes a big plus.

Ian MacKenzie: Absolutely. And that’s, that’s a huge market now in the big performance catamarans. HH Catamarans are selling, they’ve got five cats on the go and they’re all going to American buyers that want a high performance, 70 foot catamaran that will sail at an excessive wind speed.

Ocean Sailing Podcast: And then some of the longer passage issues become less of an issue because you started to have the ability to outrun weather systems ahead of time instead of being stuck in bad weather on the cat and worrying.

Ian MacKenzie: Absolutely. You can sail around where the systems. You can get in one good weather system from here to New Caledonia, that’s around 800 miles. In a performance cat, or a performance mono, but the mono would have to be big.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: But in a 44 foot performance cat you’ll get there in under three days.

Ocean Sailing Podcast: Which is just unreal.

Ian MacKenzie: 800 miles with one weather system. So that’s amazing. Like I actually did it in a range of 55, we got there in three days. We were sitting on 14 knots consistently. It’s fun.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And it’s effortless.

Ocean Sailing Podcast: Yeah, well that’s right. That makes the journey really enjoyable, not just the destination.

Ian MacKenzie: Absolutely. Yeah, you can have fun. Puts a smile on the dial.

Ocean Sailing Podcast: Ah yeah, and speed’s exhilarating you know?

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: It’s just always far more satisfying going in the right direction.

Ian MacKenzie: Well and you see that rooster tail behind you, it’s like you go, “What’s going on here? We don’t have any motor going or anything and we’ve got power boat performance in a sailing vessel.”

Ocean Sailing Podcast: And you’re not trying to brace yourself in the galley at 30 degrees of heel and…

Ian MacKenzie: Exactly.

Ocean Sailing Podcast: So, okay. So that’s an interesting trend. Any trends that you’re seeing? Are production boats growing as a percentage of the overall market versus custom?

 

Ian MacKenzie: Always has been anyway. I think you know, the big names I think, the people that produce the production brands have put a lot into their marketing. I mean, a lot of them are French built because they are the largest producers of production boats in the world come out of France. But you’ve got the American brands and German brands coming out of Germany. But definitely more people stick with production boats and there’s a lot of marketing goes into it. So the stories that get told about their products are believed, you know. They study their target market very cleverly and do their research and they know how to market their products. So what people see in brochures, they believe as the truth, as gospel. But it’s got nothing to do with it really. But at the end of the day, I think no producer of production boats wants for a buyer to have a bad experience with their boats. That doesn’t sell boats. So from a long term point of view, they want buyers to come back to them and keep on buying boats. So I think production boats will always sell over a custom boat.

Ocean Sailing Podcast: Especially the economy’s of scale you start to see now.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: And I heard recently that there’s big growth now in yacht racing in China and production of yachts in China and Australian management and direction design. Do you see — have you seen much done in terms of yachts coming out of China and Taiwan? I know there’s been a lot of power stuff coming out of…

Ian MacKenzie: Well, it’s…

Ocean Sailing Podcast: …Taiwan but.

Ian MacKenzie: Yeah, well I’m flying to China, I’m flying to Xiamen first week of September to do a sail of a boat but it’s in its infancy stage. The Chinese I sold the Catalina 42 to a Chinese buyer about, at the Southport Yacht Club on biam. It’s, he’s an experienced sailor but he was telling me that sailing is new to China; it’s still in its infancy stage. But the Chinese have a different mentality and approach to sailing. For them, or to boating. For most of them, it's a status thing. It’s a western status system.

Ocean Sailing Podcast: It’s a new golf club.

Ian MacKenzie: It’s a new BMW or Rolls Royce you know? So for them if you have a boat, it’s a sign that you’re wealthy and affluent and the Chinese believe in signs and symbols and all of that, you know? So definitely it’s a status for them. There is that, there is a small core of them that are really into sailing and are experienced sailors but mainly, they’re into buying a boat because it’s a symbol of their success.

Ocean Sailing Podcast: Okay, so the development of the…

Ian MacKenzie: It’s at its infancy stage.

Ocean Sailing Podcast: The cruiser side of… 

Ian MacKenzie: It’s a huge market.

Ocean Sailing Podcast: Especially with their culture and their work ethic and family time.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: Like the average Chinese family is not going to go away sailing for five or six weeks out on a cruising yacht.

Ian MacKenzie: No, no, absolutely not. There’s a lot said about inferior products coming out of china in terms of boats and so on. But you know, we have to remember that some of the best products in the world and I’m looking at one right there, your Apple computer.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: Comes out of China.

Ocean Sailing Podcast: That’s right.

Ian MacKenzie: Right?

Ocean Sailing Podcast: It says, it’s designed in California, made in China.

Ian MacKenzie: Made in China.

Ocean Sailing Podcast: Yes.

Ian MacKenzie: So, it’s all about quality assurance. So they’re capable of making the best things in the world. It really is all comes down to QA, Quality assurance so. If you don’t you know, if it’s not quality assured, you know, if there is someone, they’re making sure the product is built as per designer’s specs. They have a mentality of substituting cheaper components and so on because the workers are quite under paid or not that well paid, and not that well off, and they’ll substitute cheap stainless fittings for high quality stainless fittings and use substitute cheap resin and cheap paint for to sell off the other stuff. It’s been known to happen. I’m not saying that happens all the time.

Ocean Sailing Podcast: But it’s got some…

Ian MacKenzie: it’s definitely has been known to happen.

Ocean Sailing Podcast: …big consequences if you’re the buyer of a…

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: …boat not well made.

Ian MacKenzie: Yeah. But, like on the whole, I think that’s an issue that westerners have recognised and once they take the responsibility to actually get involved and be involved.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Then, in the whole process, then they get to deliver their high quality goods.

Ocean Sailing Podcast: Okay. So I guess continuing the theme of overseas boats. There was something around the GFC with, post GFC with high exchange rates and, a glut of boats to just dispose of and the US and Europe and Mediterranean and it appeared that there was growing, growing demand for people buying offshore and importing into Australia and even today, you can look at a 10 year old 50 foot Beneteau with a $99,000 on the US price tag and then you can look at the same boat in Australia with a $229,000 price tag and think, “How could it not be half priced but there’s a whole other hidden cost aren’t there in terms of…

Ian MacKenzie: Absolutely, yeah.

Ocean Sailing Podcast: …exchange rate, getting it from A to B, taxes and duties. Do you want to, do you want us to talk about the, the, bend at the end of the pitfalls of buying off shore and then the process in terms of what you need to be aware of that would be a cost?

Ian MacKenzie: Sure, sure. So one of the primary things that primary motivators for Australians to go overseas and buy is the exchange rate. So when the dollar was virtually on par or better than the US and the US is a huge boating market at 340 million people there that are, that are consumers. They have a throw away mentality; they buy a boat and three years later they buy a new boat because this one’s three years old.

Ocean Sailing Podcast: Wow.

Ian MacKenzie: Or five years old, you know? So, there was a glut of boats in the US, huge amount of boats for sale and with the dollar being on par, I would do it myself. I don’t blame them, an Australian, for going and buying overseas but with the dollar now being you know, 20, 27% less than the US dollar plus the 10% GST, plus the 5% duty and then the costs of actually flying there and flying around and having a look at it and then there’s the other element of the US boats are generally wired for 110, so they generators are 110 volt, the whole AC wiring is 110.  So if you’ve got all of those with the generator and air conditioning and the AC system is, the, meaning the electrical system, not the air conditioning system is 110 that’s another huge cost for conversion when the boat comes back here. Although it was fine when the dollar was equal to theirs or even better.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: But it’s not okay now. So you’ve got something like between 40 and 50% on top of your purchase price plus the delivery. So if you’re going to sail it back, fine. If you’re going to ship it back, that’s another huge cost. So those are all deal breakers basically. But the things to look for basically when there are still some Australians that will go and buy overseas because they can afford to and the boat they want is not available here so they’re quite happy to go there and buy there and cruise there for a period of number of years and then make their way gradually back to Australia. 

But that’s only a very, very small percentage of people compared to the amount of people that used to, that previously did. But as I said, you know, those are all the things that you got to look out for is, is, which amount to real dollars. You can virtually more than double, you just, to make it easy for yourself, just double the — if it’s for sale for $99 and for saleUS in the states and it’s for sale for $200,000 here. You’re no better off going there.

Ocean Sailing Podcast: It’s probably on a par.

Ian MacKenzie: And you’re going to spend a whole lot of time and energy to actually end up with the same result. But worse really because you’ll have put so much effort into it. And you’ll have to redo the boat, you’ll have toyou know, for all that work, get a boat the same boat here with all the work done, for exactly the same price that, you know, the end user price, for the price of what it what it cost you to get it to that stuff.

Ocean Sailing Podcast: And it’s already here, you don’t have to get it from there to here.

Ian MacKenzie: Correct.

Ocean Sailing Podcast: Which is you know, months, and…

Ian MacKenzie: Months, I mean, sure, that could be enjoyable if you want to do that cruise and if certainly if you want to do that cruise and if it financially makes sense for you, do it. It’s great. It’s a downwind sail and definitely do it. Some people, it’s their dream and I think they should do it.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: It’s fun. You know, doing that. The longest ocean passage in the world is between Galapagos and Marquesas; 3,200 nautical miles, that’s of nonstop sailing.

Ocean Sailing Podcast: Right.

Ian MacKenzie: There’s no land in between. And some, you know, for some people, they want to do that, it’s their challenge. It’s fun. And it's fair wind sailing really, it’s all downwind and it’s, and you end up in an exotic place. You start off at an exotic place and you end up in an exotic place, French Polynesia. So why not?

Ocean Sailing Podcast: Island hop your way around the pacific for a while.

Ian MacKenzie: But not everyone’s that courageous or has those aspirations.

Ocean Sailing Podcast: No, it’s a big piece of water to cross, that’s for sure.

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: And then there are some other issues too, regardless of what you pay for the boat, when you’re bringing the country in duty and tax is assessable on market value, not purchase price right? So…

Ian MacKenzie: Well…

Ocean Sailing Podcast: …you may think you’ve got a bargain but if the customs decide, or customs strike the value is a whole lot more than you paid and that’s where your duty…

Ian MacKenzie: Absolutely. Absolutely. Customs will actually look at it and go, as you say.  The example you used David was, you see a boat for $99 US there, you see it for $220 here. Well customs will just say, “Hey, I’m sorry but it’s for sale for $220 here, let’s just take off the margin for negotiation,” they’re going to tax you on $190. So you go, “Well, why did I bother? I could have just done it here.”

Ocean Sailing Podcast: So suddenly you have almost $30,000 in tax and dues too.

Ian MacKenzie: Absolutely. So I am a customs valuer and I’m doing one at the moment and yeah, I have to take into account if you’re bringing the boat into the country within 12 months of buying it, then there’s a good chance customs will take it on the transaction value, on the invoice value, provided you bought it through a broker and all of that. They won’t take private receipts.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: It’s something they can check on. They’ll just phone that broker and go, “Is this really happened at this?” Then they’ll verify and chances are, they will, but don’t bank on it.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: My experience with customs is that you can speak to one official at customs and get one story, you call back, you’ll get someone else answering the phone, you’ll get another version. And you call back the third person in Sydney, you’ll get another version. So really, they can do what they like and so there’s no real certainty as to how it’s going to go but the general rule of thumb is, if you bring the boat back within 12 months, it’s likely to go on transaction value, or verifiable transaction value. Over that, you just get it valued at the time of entry.

Ocean Sailing Podcast: Okay.

Ian MacKenzie: By someone like me or other customs valuers.

Ocean Sailing Podcast: And if you just turn up here with a boat and think you’ll sort it out when you get here, you’ve got a timeframe once you arrive, right? You can’t just bring a boat and without sorting out the importation side of it, before you actually have to leave the country with that boat.

Ian MacKenzie: Oh, absolutely. If you rock up with a boat and as an Australian resident, then you’ve got to pay the duty on the spot. You’ve got a few days.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: Right? Or they’ll just put your boat in the bond. They’ll confiscate it, put it in the bond until you pay it and then you can have it back. So, that’s not advisable

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: You’ve got to, it’s best to let them know that you’re coming in anyway as part of the customs protocol, regardless of whether you want to sell it or not.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: But certainly, it would help, there are instances where people rock up where people come in, not intending to sell and a circumstances change along the way between New Caledonia and here and they go, “I’ve had such a horrendous sail, I think I’ll sell it when I get there.” Well that’s fine, you just rock up and you go, “Well, I’ve decided to sell.” They’ll go, “That’s fine, here’s the process, and you’ve got to pay for it.” Basically, you got to pay for it within virtually seven to 14 days.

Ocean Sailing Podcast: Okay. And then, are there other non-compliance issues? I know I bought my boat and that if I wanted to get it certified and registered locally then you’ve got issues with older refrigeration systems, gas systems, and they’re not compliant from an environmental point of view and if you're not careful, you have to end up replacing those to become compliant.

Ian MacKenzie: Correct, you know, there are the R12 gasses were environmentally unfriendly, had ozone like, they affected the ozone layer. But generally these days it’s pretty rare to see boats with R12 and they generally have the ozone friendly gasses. But even then, customs, you know Australian customs look on — they treat a private sailing yacht as, you know, with a small, like a couple of table spoons of caster refrigerant in their fridge compressor as someone importing fridges.

Ocean Sailing Podcast: Right.

Ian MacKenzie: And someone imports that gas, on a commercial basis. So you’ve go to apply for an exemption from importing that gas commercially. It’s just silly.

Ocean Sailing Podcast: Red tape.

Ian MacKenzie: It’s just red tape, it’s just silly. So we’ve created, as a marine industry, have brought it to the custom’s attention that they can treat cruising yachties as though they’re commercial importers of refrigerators when in fact they’re just cruising through with their little fridge.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: And so, they don’t’ want to incur cost of, like you go to get a gas importer’s license for $3,000 and the fridge cost $800.

Ocean Sailing Podcast: Yeah, it’s kind of nuts isn’t it?

Ian MacKenzie: It makes no sense. So you go to apply for an exemption but that’s why I recommend dealing with a customs broker. Like I’m a customs valuer and we deal with a customs broker, we’re in tandem with them and between the two of us, we expedite the sale and they take care of everything. You don’t need to worry about it. Just, basically you’re handing your keys to them so to speak, symbolically. And they’ll, they’ll smooth the waters and take care of those things. Quarantine again, AQIS is another issue. If you’re bringing your boat in, make sure it’s totally, totally clean, whether you want to sell it or not. Very clean because they’re looking for woodworm and so on, insects, drugs as well. 

So make sure that the boat is spotless you know, behind drawers and so on. You may not know that there might be bugs in your boat, ants can fly in, white ants can fly in and shed their wings and start eating your timber wood, well you’ve got a problem, it’s going to be expensive because they’ll have dogs, sniffer dogs come in and that will all cost you heaps. But if you clean your boat out and become aware of it, you can fumigate it, before it gets to that stage, it's seamless for you.

Ocean Sailing Podcast: Yeah. Okay. So yeah, and when I went for the process I used a customs broker and to that point, I had run customs for advice on something. I can’t remember what it was now and I ended up speaking to two or three people on different days on the same issue and only because I could quote the other person’s name previously that I know there were conflicting situation where I said I’ve done X and they said, “But you should have done Y.” 

Ian MacKenzie: Yeah.

Ocean Sailing Podcast: So, having a broker makes it money well spent and then obviously having a valuer helps a lot too…

Ian MacKenzie: Well it just helps you — it saves you money.

Ocean Sailing Podcast: …when they’re in tune with what you’re trying to do.

Ian MacKenzie: It saves you heaps potentially.

Ocean Sailing Podcast: Self-funding shall we say.

Ian MacKenzie: Well yeah, we charge $500 for a valuation. But we could save you $25,000 on a value, on tax.

Ocean Sailing Podcast: On duty and GST.

Ian MacKenzie: Duty and GST.

Ocean Sailing Podcast: Yeah.

Ian MacKenzie: So $525,000?

Ocean Sailing Podcast: Yes.

Ian MacKenzie: No brainer.

Ocean Sailing Podcast: And you’ve got somebody guiding you through the processes that’s on your side as well.

Ian MacKenzie: Absolutely.

Ocean Sailing Podcast: As opposed to some of the conflicting advice you can get so, good.

Ian MacKenzie: Yes, absolutely.

Ocean Sailing Podcast: Okay. Well Ian, thanks for putting aside an hour of your precious time today.

Ian MacKenzie: Not a problem.

Ocean Sailing Podcast: It’s actually been really interesting drilling into the brokerage side of what you do and how that, all of that works and it’s given me a deeper appreciation but also touching on this import side of boat buying. It gives a much deeper appreciation as well as some of the pitfalls you’ve got to think about, some of the costs, some of the complexities involved. So what I’ll do is when I publish this episode on the Ocean Sailing Podcast site.

Ian MacKenzie: Right.

Ocean Sailing Podcast: I’ll publish a show notes and I’ll link to your website as well so if our listeners have got more they want to know and why they want to check you out, check out your services then they can 

Ian MacKenzie: Sure. No, absolutely. Thanks.

Ocean Sailing Podcast: So thanks for appearing.

Ian MacKenzie: Thanks David. It’s been great.

Ocean Sailing Podcast: It’s been fantastic.

Ian MacKenzie: Yeah. No, good. It’s the first time I’ve done this.

Ocean Sailing Podcast: Excellent. Well you’ve done well. Okay, thank you. 

Interviewer: David Hows