Houseboat Living and Ownership (© Joel W. Rogers)

Living on a boat is a dream shared by many. Ian and Manion Morton, who have been living aboard their houseboat for the past 10 years, say it's eminently achievable.

"It's not a financial choice for us. We do it because we like boating, the beautiful scenery, the tranquility and the amazing sunsets," says Ian Morton, who maintains a Web site, All-About-Houseboats.com.

Buying a boat to live on isn't a simple decision. There are old boats and new boats, million-dollar yachts and beat-up old fishing trawlers that some people call home. But for this purpose, we'll stick to flat-bottomed houseboats that are designed to be floating cottages.

Owning a houseboat has gotten trendy in the past few years. New ones can be as long as 150 feet, cost well over $1 million and include any and all of the bells and whistles that you might find in a million-dollar house on land.

Smaller, older houseboats are more reasonably priced — in fact, often very reasonably priced — and while those who live on one pay for marina space, they avoid real-estate taxes, trash collection and recycling bills, landscaping and grass-cutting expenses.

They don't escape maintenance costs — or if they are good at it, they have lots of do-it-yourself jobs. Water, especially salt water, is corrosive and boats need nearly constant upkeep.

Before you sell your house and buy a used houseboat, be aware that in the past few years, as living aboard has grown more popular, increasing numbers of marinas are turning away live-aboards. And some jurisdictions are even outlawing the practice because residents don't pay school or property taxes and contribute to polluting the waterways.

The outlay
Some people live on very small boats, but Ian Morton says he can't imagine living on one that is less than 40 feet. A 30-year-old, 40-foot houseboat may sell for as little as $8,000 to $10,000, but the maintenance to make or keep the vessel seaworthy can be daunting and costly. In any case, Morton suggests avoiding boats that are more than 25 years old because they are hard to finance and insure.

What's your home worth?

Boat loans are similar to RV loans -- at least a point higher than mortgage loans for homes, nearly always requiring 20% down and limited to terms of 10 or 15 years. If you buy a $50,000 houseboat and finance $40,000 of the price over 15 years, expect to pay about $370 per month, assuming a 7.5% interest rate. As long as the boat has a galley and a head, the interest is tax-deductible, just as with a mortgage.

While there are certainly plenty of houseboats in inlets and bays near the ocean, inland lakes are prime houseboat territory. Renting a slip in an agreeable area that permits people to live aboard year-round costs anywhere from $300 a month for a no-frills slip on a lake to as much as $1,500 a month in a marina with ocean access. The charges are usually figured on the length of the boat, with $12 per foot per month a typical charge. Unmetered electricity, including an air-conditioner, can run as much as $50 per month. And if more than two people live aboard, generally there will be a $25 or $30 charge for each.

Water is usually included, but sewage pump-out will be extra. The Environmental Protection Agency estimates the annual cost of weekly pump-outs for a boat on which people live aboard to be $550.

Other costs include insurance and, if the boat is older than 10 years, an initial survey of its condition. Prices for the survey and the insurance are based on the value and size of the boat, but a ballpark estimate of insurance on a 30-year-old houseboat worth $50,000, docked on an inland lake is $600 to $800 per year, plus about $750 for the survey.

Home affordability calculator

If the survey finds that the boat has some minor cracking and softness, chances are the insurer will offer little more than liability insurance. As with auto insurance, carrying liability is most important. While you might not care if your boat sinks or goes up in flames, people onboard or nearby boat owners will certainly look to you for compensation if an incident injures them or damages their property. You also need fuel-spill liability in case your tank leaks.

Knowledgeable boaters also suggest that you put 10% of your boat's original cost aside for maintenance each year. In the case of a $50,000 boat that's $5,000.

Without factoring in the maintenance fund, cost of boat ownership ranges from $880 to $2,100 a month, but as every boat owner knows, a boat is a hole in the water into which the owner throws money.

Other articles in this series:

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By Jennie L. Phipps, Bankrate.com