It's all in the details
Equipment leasebacks can be reasonable investments, if -- and only if -- the numbers and details work out. You say there's a "guaranteed" lease? Does that mean the charter operator signs a contract to pay you a fixed amount every month, or is your income a percentage of the revenue the boat earns? "I can almost guarantee you'll earn $xx per month." That's just salesman double-talk. If you're earning a percentage of revenue, and revenue isn't so good for some reason -- like weather -- then your cash flow gets upside down. Insist on histories of other similar boats that are in the same program. They can strip off names and other personal information, and just show you the charter records. What if they don't sell all of the "fractions"? What if they just sell a couple? Do they still pay the full lease to you? You may be entitled to a substantial accelerated depreciation on the boat. At the moment, aircraft owners who buy new and leaseback get 30% depreciation the first year. I don't know if boat owners are included in this soon-to-expire sweet deal, but you might check. I suggest you find a tax advisor that has dealt specifically with boat leasebacks. You should find this advisor before you sign the deal, and have the advisor look it over. Will you make your down payment back? What will the boat be worth when it comes out of the charter lease? Will its value at that point be greater than the mortgage payoff? If the operator specializes in newer boats, are you financially ready to have the boat kicked out of the leaseback program after 5 years? Anyone who has leased back through The Moorings can tell you about this. All of their boats are spankin' new. Who pays for an engine rebuild if the diesel blows something through the block? It could happen. You might be on the hook for "major repairs." What happens if the charterer runs aground, gets dragged off, then hit with salvage fees? Do you pay? Will you have to then sue the charterer to recover? Remember, these guys work this deal all the time, and you're a newby. Act like it, get a pro to advise you, and you might come out of it with your shirt.
