Buying Marinas for Sale: An Investor's Guide
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Thanks to growing investment interest, marina sales activity has skyrocketed since the onset of the COVID-19 pandemic: Many maritime real estate firms reported hundreds of millions in marina sales in 2022, and the total US marina market cap is expected to grow to over $18 billion by the end of 2023.
If you're looking to buy a niche commercial property, trying your hand at marina investing might be the right call. Here, we'll discuss what investors should know when searching for and purchasing marinas for sale.
Let's get started.
What Is a Marina?
A marina is a water-side facility that stores recreational boats and yachts. You can think of a marina as a kind of garage for boats: People pay a monthly fee for a spot where they can store their watercraft when they're not using it. Marinas are different from ports, as they mostly store recreational water vehicles.
From the perspective of a commercial real estate investor, a marina is a combination of waterfront property and an operating business. More specifically, a marina would be a type of special-purpose real estate as it would be difficult to convert for different use.
What Are Marinas Used For?
The basic function of a marina as a business is to store recreational watercrafts. Watercraft owners pay a weekly or monthly fee to secure a spot where they can moor their boats. However, marinas often provide other facilities and ancillary services that also generate income.
For example, many marinas also sell boat fuel and fishing supplies. Some marina owners have converted their marinas into functional resorts, complete with lodging, restaurants, and other recreational activities.
Most marinas solely lease space to boat owners, but some might let owners outright buy a section of the dock, similar to how an investor might buy a condominium in a larger building.
What Are the Different Types of Marinas?
Marinas can exist on virtually any large body of water fit for sailing, like lakes, rivers, and oceans. However, the structure of marinas generally falls into two types that relate to how boats are stored: slips and docks.
A slip is basically a single parking space for a watercraft. It's enclosed on three sides, making entry easier and providing more dry space for marina guests. Boat docks, in contrast, are open on three sides, so boats are exposed to water traffic and other moored water vehicles.
Generally speaking, dock-style marinas are more affordable to buy but charge lower rates for storage. The increased material and space for boat slips make them the more expensive option.
How to Buy Marinas for Sale
When exploring financing options for your marina, you should look into an SBA 7(a) loan. 7(a) loans are for businesses looking to build real estate or finance a purchase. 7(a) loans guarantee up to 75% of working capital and allow loan values up to $5 million.
Although you can't use an SBA loan to buy a marina for sale solely as an investment property, you can use an SBA loan as long as your business occupies at least 51% of the space. Theoretically, an owner-investor could run a marina and lease the remainder of the property for passive income.
The best way to look for marinas for sale is to work with a marina real estate broker—commercial real estate brokers that specialize specifically in waterfront investment properties. A marina broker can assist with analyzing property financials and negotiating favorable sales contracts.
Is Owning a Marina Profitable?
Yes, owning a marina can be highly profitable. According to CCIM reporting, average cap rates for marina facilities range between 8% and 14%, which is higher than average cap rates on traditional commercial real estate investments, like office space, retail space, industrial, and multifamily real estate.
The average cost to store a boat in an outdoor marina is around $50 per square foot per year. Assuming an average recreational boat length of 16 feet and a smaller marina with 250 berths, that comes out to just around $250,000 in operating revenue just from boat storage.
According to data from Comparably, the median salary for a marina manager is approximately $71,206. Note that these figures are averages and actual profitability depends on a wide range of circumstances. They also don't account for income the marina might generate from services other than boat storage.
Are Marinas Risky to Own?
Marinas for sale suffer from the same risks as other types of commercial property, such as rising interest rates and liability issues.
However, marinas also come with some unique risks of their own that distinguish them from other kinds of properties:
- Marinas are waterfront properties, so the risks that flooding and natural disasters pose to them are typically higher. As such, insurance costs for a marina might be higher than those for other property types. Additionally, marinas that are open year-round will be more expensive to insure than businesses that close during the winter.
- Boating is also highly seasonal, with marina activity starting in late spring and lasting throughout the summer.
- Marina structures, like piers, docks, and buildings, are continuously exposed to moisture and salt in the air. This kind of environmental wear and tear can result in higher management and upkeep costs.
Marina owners can reduce the risks of owning a waterfront property by coming up with a reliable business plan and setting aside capital to manage maintenance and repair costs.
What Are the Largest Marinas in North America?
The single-largest marina in North America is the Marina del Rey in Los Angeles, with over 4,600 individual boat slips.
The Marina del Rey completed construction in 1965 as a joint project between the US federal government, Los Angeles County, and numerous private developers. In 2022, Marina del Rey generated more than $63 million in direct revenue.
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