purchase a new boat mainly to put into a charter program?

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Nov 30, 2007
271
Hunter 36 Forked River, NJ
I just returned from the BVI for my first charter cruise ever. It was an ideal experience in a boat as close to ideal as I'd expect after 5 years of fulltime chartering. With the success the chartering business seems to have maintaining, and renting out these boats (and the prices they get), I'm curious about the feasibility of ownership, and the potential returns - the pros and the cons. Has anyone taken that plunge, or investigated it? Do tell!
 

KD3PC

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Sep 25, 2008
1,069
boatless rainbow Callao, VA
look carefully before you leap...

We did it with a new 1999 Beneteau 36CC, and if you can look at it strictly as a business, you may come out ahead. Likely not. There are tales here and on other sites - spend some time with them...A couple from my personal experience....

We bought a new set of dock lines almost every charter..."we can't really charge a future customer, because they "forgot" the lines" they would tell me....well you can't charge me another $200 every charter. Feel free to substitute dishes, glasses, silverware, books, dvds, PFDs, almost anything that is not nailed down and you will get the picture...

Your insurance, if you can get it, will be outrageous.

The boat will be trashed, or destroyed if you expect it to look like it did when you started it. We put carpets down, but high heels and street shoes will damage the best flooring, and puncture the decks and cockpit locker tops, and hatches.

The cost the charter firm passes on to you...for cleaning, for laundry, for pumpout, oil changes, maintenance, etc...will be at least 4-5 times the actual cost.

The weather will kill your numbers, and any deposit will be retained by the charter firm....meanwhile your expenses add up.

Slippage is high, as "we can't have our customers walk out" to the end of an easily accessible, deep slip when they can beat the boat up or drag the keel to get out of a shoreside (read more convenient for everyone) slip.

Forewarned

But if you think you have a way to make it work, go for it. You will get an education one way or another. And if you have not "worked with the public before" this will surely help you understand the public...

dave
 
Dec 27, 2005
500
Hunter 36 Chicago
Thought about it for awile. Got the brochures and talked to a Moorings / Sunsail agent at one time. Several things we considered were the cost of transportation to the BVI's, limited times that we could use the boat or the options of using other boats at other Moorings/Sunsail locations plus the wear and tear on the boats after 5 yrs of charter. After all things considered it seemed that unless you're retired and have the desire to spend much of your vacation or free time in the BVI's or other Moorings/Sunsail locations - that it was better in our situation to continue chartering. If I remember you had your choice of 2 or 3 weeks in the BVI's that you could use your boat and after that there was some limitations to you if you wanted to charter either in the BVI's or some other location.
 

Tim R.

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May 27, 2004
3,626
Caliber 40 Long Range Cruiser Portland, Maine
Banooma, did you not see some of the other charterers while at the base? When I chartered in the BVIs this past March, I was amazed to see the level of inexperience. Not just for sailing but boating in general. Do not do this if you want to get a new boat because after one season it will be much worse off than if you alone sailed her. It may be acceptable to you but not me. Our boat had just gone into the club range and was not too bad but it was a lot more wear and tear than if I cared for the boat alone.

I can think of 2 very close and trusted friends I would trust my boat to and I would still worry.
 
Nov 30, 2007
271
Hunter 36 Forked River, NJ
My approach would definitely be more as a business than as my personal craft. I imagine I would sail it no more than a week or two per year. I did see some yahoos out there, but I'm also thinking of what the Moorings gets for 35' yacht per DAY in a location where income is pretty much year round - even in a deep recession year like this one. That said, I really don't know how much of that income comes back to the owner after insurance and maintenance is paid, I don't know how the boat is valued at the end of a program; as the boat ages I don't know how easy it is to slip it on down dock into Sunsail, and then Footloose, how their programs are structured, etc.. before selling it (and how difficult that might be - is a boat that is used-but maintained- continuously worth more or less than others that weren't chartered?). At this point, I can't imagine keeping a Catamaran anywhere near where I do my regular sailing, and even the draft of a Beneteau from the Moorings fleet might make things a little too interesting for the shoals of our bay.

I guess if I could make income that keeps up with other alternatives, that supports a sailing vacation each year, and doesn't throw me in the red when it comes time to sell, it would be worth it. Then again, if that was the case more of us would be doing it. :)
 
Feb 26, 2004
22,760
Catalina 34 224 Maple Bay, BC, Canada
ROI

Let's see, you buy a brand new boat for almost the same as what you'd pay to have one close to your home. Then every week someone new comes to the boat. Even if they were ALL perfectly trustworthy, the wear and tear of using the boat 24/7 for most of the year wears it out much more than if you bought that same boat new at home and used it yourself "normally" for weekends and a four week vacation. And you'd take better care of "your baby" than dock workers and vacation charterers.

So at the end of any given period, 1, 2, 3 or more years, you end up getting a boat that even with the best of cases is worn, worn, worn, much, much more than you would do so yourself.

And that's IF the renters were careful, considerate and loved your new boat as much as you do.

Think that'll happen?

So, if you can live with THAT scenario, then the only thing left is ROI, return on your investment.

You said: "That said, I really don't know how much of that income comes back to the owner after insurance and maintenance is paid..." and all the other items you mention in that sentence.

That's not much of a "business" approach at all. If you're actually interested in this concept, and you can get over the "trashed boat syndrome" that many of us have discussed, then that business issue is the only thing left for you to determine if it makes sense for you.

I also agree with Tim: "I can think of 2 very close and trusted friends I would trust my boat to and I would still worry." I would modify it somewhat, in that I wouldn't worry because I, too, have found those two trustworthy friends. Anyone who I'd had any hesitation about would not take our boat, anyway, anytime, anyhow, so it's not those two. And one of the two have used our boat a number of times - when I return I couldn't tell that the boat had been used. That friend is so considerate that he learned how I tie my on board lines up and replaces them exactly as I would have done. What a prince!

Interesting that it's also only two! Since we're on different sides of the country, I doubt it's the same two! :)

"I guess if I could make income that keeps up with other alternatives, that supports a sailing vacation each year, and doesn't throw me in the red when it comes time to sell, it would be worth it. Then again, if that was the case more of us would be doing it."

Uhm, that's where they get the boats. I believe that a lot of people are still doing it. I don't think those companies buy the boats outright themselves, but I could be wrong.
 

Joe

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Jun 1, 2004
7,999
Catalina 27 Mission Bay, San Diego
I agree with Stu...... if you don't know the numbers it isn't business. Get the numbers first.
 

larryw

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Jun 9, 2004
395
Beneteau OC400 Long Beach, CA
Knew a guy, on my dock, who bought a Bene 42 out of charter program. It would have been easier, and cheaper in the long run, if he'd have just bought it new. One year of charter service is like ten years of owner use. Your boat is in there for five years, you get it back and it's fifty years old. Going partners on a charter boat, now that might be an idea. The guy that runs Latitude 38 is a partner in a cat in the Caribbean and gets six weeks a year on it (six of the best weeks, in a row) and he's going to do the same on another multi-hull in Southeast Asia.
 
Oct 22, 2008
3,502
- Telstar 28 Buzzards Bay
Boats that are generally put in to the charter business come out of it rode hard and put away wet, and generally need a pretty major overhaul to bring them up to decent usability after the charter period ends. Given the lack of guaranteed income, the high wear and tear—since a charter boat is often abused far more than a privately owned boat—I would not want any boat I chose for myself to be in charter.
 
Nov 30, 2007
271
Hunter 36 Forked River, NJ
The point about the wear is well-taken. Stu, part of the reason I asked if others have looked into it is because I don't know the numbers. The information sent from the Moorings and Sunsail so far hasn't been very forthcoming, and I haven't been able to find any such analysis online. I don't know if anyone with the information provides depreciation data through different programs, and what the recovery value is at the end of a boat's chartering life.

Spring through early fall, I do my sailing every weekend from my home port and am perfectly content with my boat and my marina 45 minutes away. So, I really don't need another boat to love. I don't have the vacation time to spend 12 weeks out of the country. I don't know that I could find, or want to look for renters to fill my 10 weeks that I don't use (would the Moorings do that?) I do know, though, that people love their chartering vacations, and spend lots of money on them. I know the wear and tear by renters will subject the boat to more issues sooner, but I also assume that the Charter company would be aware of these issues weekly, and be on top of them because this boat is representative of their business much more than it is my name (or maybe they do the minimum to last to the end of the program?)

My initial thought was that it might be an income opportunity loosely similar to owning a vacation townhouse (without expected appreciation of real estate). If I could make an investment in a boat I use once a year, that can bring the same experience I just enjoyed to others, and could make some money from it, it would be much more gratifying than investing it in a portfolio of companies whose products I might not ever see, use, or agree with.

I'm just making up these numbers for the example, but if I could invest $100k in a boat, enjoy 5 years of "free" sailing vacations while making $75k income, and then make $75k selling it at that point, I'd be doing ok.

Clearly there are many Charter boat owners who believe in the return they get from their ownership, but is it financial? is it the idea of an automatic vacation? is there a tax advantage?
 

Rick I

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Jan 6, 2007
414
CS36Merlin and Beneteau 393 - Toronto
It's really not a business, at least not for the poor schmuck that buys a new boat from a charter company and puts it into charter. The charter company makes most of its profit from selling you the boat. Their major business is selling new boats! I think chartering them is secondary to selling new boats.
 

Tim R.

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May 27, 2004
3,626
Caliber 40 Long Range Cruiser Portland, Maine
One other thing to note is that if you go with Moorings or Sunsail they have boats made somewhat to their spec. I am convinced that they are built cheaper because of the fact that they never see serious conditions.

I have chartered 2 Oceanis(Beneteau) boats in the last 6 years. The one I chartered 6 years ago was built much better than the one we just chartered. The creaking at the mast step and bulkheads kept us awake at night and I am not a light sleeper. The first night my wife asks me "why doesn't our boat make these noises? We have been in rougher anchorages then this." She hesitated for a second or 2 and then she figured it out. Smart woman.

I cannot imagine what you may be left with after 5 years of charter.
 
Oct 22, 2008
3,502
- Telstar 28 Buzzards Bay
Also, one point is that many charter boats are configured for the charter trade and may not be the best configuration for a privately-owned boat. A good example of this is that many will have two small aft cabins, to maximize the number of people that you can shoehorn onto the boat, and a single larger aft cabin would be more suitable for most private owners.

Tim R's point about the gear on some charter boats is also a good one. From what I've seen, many charter market boats have winches and other hardware that is sized at the absolute minimum necessary for the boat, and if you were buying the boat, you'd have to upsize a lot of the gear for it to be really suitable to sailing full time.
 

KD3PC

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Sep 25, 2008
1,069
boatless rainbow Callao, VA
the numbers on chesapeake bay were 60%/40% split...they kept the 60, I got the 40 but had to pay all expenses out of that. I found that the split paid for slippage, insurance, and normal maintenance, not much left over after that so the items I mentioned before were out of pocket to me.

After less than a year in service, (I opted out, no harm no foul to either of us) I ended up with a boat that needed significant wood work, vertical walls trashed from liquor spills that were never cleaned up, floors were goners and both sides of the boat at mid-ships were holes about the size of your hand where fiberglass should have been, done exiting the slip..

Your mileage may vary. The big boys will tell you what kind of boat to buy, how long they will keep it in the program, what it will cost you to "buy out" prematurely and how the financing works...you pay up front, after expenses then you may get a refund.

dave
 

Ross

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Jun 15, 2004
14,693
Islander/Wayfairer 30 sail number 25 Perryville,Md.
I have 18 semester hours of accounting and I will not bu residential rental property, I will not be an absentee owner of any property of any type except equities and bonds. I would consider a triple net lease for commercial rental property. There is much money in the charter boat business but how you manage to get some of it is the mystery.
 
Jun 13, 2005
559
Irwin Barefoot 37 CC Sloop Port Orchard WA
Here's one other input. I have charted others boats, chartered my own boat and bought a boat that had been in charter service for 10 years (after it was completely rebuilt). My advice is that if you can treat it as a business and make enough net from the chartering to pay the complete cost of the boat plus a comfortable profit, and plan to sell it as is at the end of its charter life for whatever you can get for it, then go for it.

Chances are that this will not be the case, or the charter companies would be doing that exclusively themselves. So in the overall recommendation, don't do it.

The boat I bought after 10 years in charter (in which the owner got to use it 2 wks/year), cost the owner all he had ever made, to rebuild and restore it. He lost money on the sale but got his 2 wks /year. That's expensive ownership.

When I chartered my first boat through a broker to be able to write off my boating expenses I lost Two dingys in 2 years (Dyer Dhows). They cost my deductible and I had to try to get reimbursement from the charterers. No joy, So I stopped doing it.

Good Luck

Joe S
 

Tim R.

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May 27, 2004
3,626
Caliber 40 Long Range Cruiser Portland, Maine
Also, one point is that many charter boats are configured for the charter trade and may not be the best configuration for a privately-owned boat. A good example of this is that many will have two small aft cabins, to maximize the number of people that you can shoehorn onto the boat, and a single larger aft cabin would be more suitable for most private owners.
The other charter boat design I do not like is the galley along the side of the salon with minimal handrails and no way to wedge yourself in to cook or prepare drinks/food. Very dangerous setup. This is a popular european design. I like my little galley where I can wedge my hips against the handrails and reach the utensils, cookware, cabinets, trash bin, sink, stove and icebox without moving.
 
Nov 30, 2007
271
Hunter 36 Forked River, NJ
Tim C350 from Seattle- the Beneteau 322 I chartered last week has a holding tank. It has a simple valve that drains by gravity, with no macerator or outlet pump. It's the only BVI Charter boat I've ever been on.
 
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