New Boat in a Charter company

My thinking was when investing in a shared depreciating asset it would be good to have a large amount of disposable income.   He probably had a great pension plan too.   I was the Compensation Director at a global airline for thirteen years by the way.  Flying a wide body paid SVP money.  

And it doesn’t fucking matter.    It was in the 80s   

 

KC375

Super Anarchist
3,297
1,738
Northern Hemisphere
do any of these big charter companies even have boats that a sailor would want to own?
That’s a big part of the problem.

I’m planning on buying a catamaran in 43 – 50’ range in a few years (disclosure I’ve been 3 years away from doing it for 5 years now).

I’ve looked carefully at the charter ownership programmes, the economics were mildly positive for me based on:

·         using tax shield to shelter other business income;

·         my committing to using the owner weeks;

·         the used catamaran market not softening over the next 3 years;

·         achieving my other commercial goals (i.e. semiretirement in 3-5 years);

·         taking over a boat with no bad post charter surprises (hidden damage, premature engine failure etc. etc.);

Any one of those five items, other than as projected, screwed the economics. Any two made for really bad economics.

So a stupid business decision (PM me if you think this is a good business decision cause I can show you lots of ways to make more money for the risk - and only if an accredited investor)...unless you were going to buy that used boat anyway.

But on top of the dubious economics I probably would not end up with the boat I want. On the spectrum of performance vs comfort I’ve accepted that I should bias my choice towards condomaran given the time split between sailing and anchor. But I do want some sailing ability and long-term livability (owner version not charter version). The charter program economics favour condomoran charter versions. The economics don’t seem to work as well for sportier boats or owner versions.

So marginal economics, significant uncontrolled economic risk, and not particularly desirable boat...seemed to me I had better options for my time and money. Others may come to different conclusions.

 
Last edited by a moderator:

Windward

Super Anarchist
4,610
680
I'm not so sure that maintenance is really up to scratch...  

Yes I acknowledge that it is a case by case issue, and more a factor of the chartering agency.

I took a freshly ex Moorings boat down the coast of CA on a delivery, and what was supposed to be cruise ready for the owner was in shockingly bad repair.

The entire trip was an ongoing battle to keep that POS headed the right way.  What a disaster.

 

teamt

New member
25
4
I have chartered three boats in three years.  I would agree with what is posted above.   The boats are maintained weekly keeping them in service well beyond the typical tolerance of an owner.  The oldest I chartered was 4 years old, newest was 2 years old.  In each case, if I was taking ownership, I would assume that I would immediately replace at least two of the four major systems before trusting them for any cruise longer than a week (engine, generator, air conditioning, and refrigeration).  Charter sails are going to be shot.  You will also replace every latch and hinge on the interior cabinetry.  Assume you are getting a sound hull and possibly two mechanical systems at the end of the charter.

Even after the hurricanes, there are tons of off-charter boats in classifieds.  I am just not sure who are the buyers for these. 

I too looked at the financials seriously.   I just could not see coming out without taking a substantial financial hit when it comes out of charter.  I think your best outcome would be a hurricane totaling your insured boat about a month before your contract ends.

 

Vadim_go

New member
17
0
Yey!!!

Got it! I gonna be in this for the best financial outcome! 

Just, would you share the number of the office responsible for the timing of the hurricanes (you know, that guy up there) so I can make the schedule? 

And to clarify, " well beyond the typical tolerance of an owner" you mean below, or above?

 

Vadim_go

New member
17
0
While I wait for the introduction/contact info that would allow me to have the boat totaled by hurricane a month before the contract ends, and to keep the discussion more on the direction I see as relevant,

- there are more BeneHunteLinas sailed around than Swans, HRassy or J/122 (feel free to add what suits you, say, Lagoons than Outremers... )

- I have reasons to believe that I've got other ways to make money covered, and it is not about making a living or becoming rich I am talking here.

By using the owner time added to the expected residual value (I am assuming 60%) to the payments my initial investment makes sense (even financial, I went to school for that, got papers to prove).

What would be another way I could be screwed that I do not see?

 

European Bloke

Super Anarchist
3,407
826
Aside from the numbers I think it depends how you feel about 'your' boat.  I know this is very different for different people.

We chartered in the Med once, and when we got back to the base we were moored up next to a family who had just returned from a week on 'their' boat.  They were absolutely gutted about the state of it.  Nothing terribly bad had happened, and the maintenance was OK, but after 2 years it was pretty fucked.  Hadn't made for a great holiday for them.

 

Moonduster

Super Anarchist
4,823
229
I'm not sure what's going on more recently, but 15 years ago the Mooring's model was pretty simple and very compelling for many people. It works like this.

You buy the boat with their required down payment, 30% as I recall. They guarantee to make the loan payments. After three years, they take the boat out of charter and refurbish and sell it; none of the boats in their fleet were older than three years old. You get the proceeds.

If you reinvest the proceeds in a second boat and then a third - a 9 year commit - then you get the fourth boat, new, for nothing as the first three have paid for it completely. I've met more than a few people who followed that plan and liked the results - 30% down, 9 years of free charters (4-6 week allowance per year) and a new boat in the end.

 

teamt

New member
25
4
"timing of the hurricanes" ... it was a joke you know.

And to clarify, " well beyond the typical tolerance of an owner" you mean below, or above?  
First, let me say that I absolutely loved chartering, and the staff at every Moorings base have been excellent and helpful.  They have gone well above expectations.   The boats have great for charters... similar to my expectations for a rental car.  My comments are about the ownership side, especially the expectation that you get a well maintained boat at the end of the charter.

Examples of maintenance that is probably not acceptable for an owner for long term:  Re-charge the fridge every 7 days because there is a slow leak.  Bleed the cooling lines on the air conditioner every day as it is sucking in air.  Head  pumping into bilge.  Air conditioner that ices over when it gets humid.  Engine that blows black smoke when it starts up and shuts down.  Generator that overheats if ran over an hour.  Generator that requires jumper wire on starter to get it to start.  Cabinet doors with screws pulled out of hinges.  Sliding entry door not latching (open or closed).  Fresh water pump not strong enough to prime.

You can say that each of these is normal for a used boat and would be expected.  That is probably true.  But in these charter boats, you must expect that you are getting most of those at the end of the charter contract all at once.  You will get a high hour engine, generator, cooling system, etc.  Compared them to a similar age private party boat.   The 2 year old boat I chartered was night-and-day better than the 4 year old boat.  The 4 year old boat had a good hull, and that was about it.

 

Vadim_go

New member
17
0
Very reasonable observation, TeamT.

However, what I am after is not a boat of my dreams. It looks like most of the charter boat fleet if not all (with the exception of ones that are lost) are sold either to another charter business or private owners. 

I would say, any boat can be sold, as long as the price is right. Btw, I remember a conversation on the topic of the right boat, somebody shared a short experience sailing Catana cat in the Caribbeans, that was privately owned, under 10 years old, and "it was exhilarating sailing, but the boat interior was in a terrible shape, everything was falling apart" . 

So, as long as I get my use, and recover some $ at the end, (even on a more positive note, if I love the experience, the trade-up offers both Moorings and Dream are offering for the owners at the end of their contract are quite good financially, as was mentioned here!) boat condition is not an issue!

What bugs me, if some clever charterer wrecks some National Park corrals (or t-bones somebody's big$$ yacht), can I loose the boat in my first year?

What if somebody gets seriously injured or worst, can the lawsuits come after my other assets?

Will the next recession be so bad, that the company stops insurance and mooring payments, and instead of guaranteed income, I will be getting big bills?

 

Willin'

Super Anarchist
4,093
1,753
The Burg, Maine
The rest of us, or a lot of us,  don’t make international airline pilot money.  
That was the point I was making.  The big charter houses always dangle that you can swap your weeks on your boat for another boat elsewhere, which sounds really cool until you figure in travel expenses to Tonga or the Seychelles for instance compared to the Carib or Baja. Just another small point to consider in deciding to buy or not.

 
Top