Buying a boat in Charter Management: The final numbers

[safariKY]

Re: Moorings,
Does anyone know how many weeks/yr. on average, say a 41 ft - 45 ft. monohull is likely to be chartered? What % of the weekly charter do they give the owner. We have chartered with Moorings many times and are considering the yacht ownership program with a 5 -7 year loan of around $200,000. Our only goal is get the monthly payment guarantied, and sell the boat at the end of the contract for the down payment (approx. $50,000) Any extra monies would go toward the loan to ensure it is paid off in full at the end of contract. Appreciate the answers to these questions before sitting down with the Moorings rep. We have also been told that the smaller monohulls are the most chartered. True?

[nautical62]

Originally Posted by safariKY

Re: Moorings,
Does anyone know how many weeks/yr. on average, say a 41 ft - 45 ft. monohull is likely to be chartered? What % of the weekly charter do they give the owner. We have chartered with Moorings many times and are considering the yacht ownership program with a 5 -7 year loan of around $200,000. Our only goal is get the monthly payment guarantied, and sell the boat at the end of the contract for the down payment (approx. $50,000) Any extra monies would go toward the loan to ensure it is paid off in full at the end of contract. Appreciate the answers to these questions before sitting down with the Moorings rep. We have also been told that the smaller monohulls are the most chartered. True?

Last time I talked to them, their guaranteed income was a fixed guaranteed monthly income, not a guaranteed percent of the charter price. In the boats I discussed with them, the total income provided over the 5-year charter period ended up being about 43% of the purchase price.

My preference is to structure the loan so I own the boat outright at the end of the contract, so I'm not stuck making payments, paying insurance and dockage on a boat I'm no longer using, isn't selling and is no longer generation revenues, but that's just my philosophy. Also talk to your tax professional about the tax implications of a income, a depreciation schedule and what they will likely mean at the time of sale.

[Privleoplag]

Originally Posted by safariKY

Re: Moorings,
Does anyone know how many weeks/yr. on average, say a 41 ft - 45 ft. monohull is likely to be chartered?

That will vary by what base it is at.. in the BVI, usage will be very heavy, in the Seychelles, not so much. My boat in St. Lucia seems to get used anywhere from 7 - 21 days each month. It has about 1/3 the engine and generator hours compared to similar age boat in the BVI, but my sails and rigging get used probably 1/3 more than a BVI boat.

Originally Posted by safariKY

What % of the weekly charter do they give the owner. We have chartered with Moorings many times and are considering the yacht ownership program with a 5 -7 year loan of around $200,000. Our only goal is get the monthly payment guarantied, and sell the boat at the end of the contract for the down payment (approx. $50,000) Any extra monies would go toward the loan to ensure it is paid off in full at the end of contract.

as mentioned, it is not a % of charter income that you receive on their guaranteed program, but a % of the purchase price, approximately 43% of purchase price spread out over monthly payments. This may be different now, but seems to be mentioned here often.
Don't forget the 10% fee a broker will charge you to sell your boat, along with all the other fees, dockage, insurance, maintenance, etc. when calculating the sale price of your used boat.

Originally Posted by safariKY

Appreciate the answers to these questions before sitting down with the Moorings rep. We have also been told that the smaller monohulls are the most chartered. True?

I think that is changing, I hear a lot more talk about sailors wanting catamarans when they charter, and monohulls when they are back home. Even the power cats are becoming much more popular. On the docks, I seem to hear quite often, the wife talking, and more and more are looking to get out of their monohull (not necessarily in charter, but privately owned), and into a cat. It may be the case that the small monohulls, because of their price point, are still very popular. My observation is that catamarans are getting the nod, and monos are in demand less so. Other people may see differently.

[safariKY]

Thanks for the information, but I have one more question: Does anyone know what the guaranteed income was for a 41 ft 3 cabin monohull?

[Privleoplag]

Originally Posted by safariKY

Thanks for the information, but I have one more question: Does anyone know what the guaranteed income was for a 41 ft 3 cabin monohull?

If their program hasn't changed. it all comes down to the purchase price of that 41' monohull.. are they $250,000? 250,000 x (approx.) 9% = $22,500 / 12 mo. = $1,875 month @ near 5 years,

[denverd0n]

Originally Posted by safariKY

We have also been told that the smaller monohulls are the most chartered. True?

I find that hard to believe. My wife and I enjoy chartering--just the two of us. As such, we look for small monohulls. No need for a 40' catamaran for just two people. But small monohulls are getting harder and harder to find, while every charter company out there has more and more large catamarans available.

If the above were true, I would think that we would be seeing more and more small monohulls being made available, but we are not.

[Privleoplag]

Another thing I just thought of.. and it affects the re-sale of your boat a bit. An equally equipped Leopard boat, of the same model as the Moorings boat, will cost less to begin with.. so right off the bat with the Moorings boat, you are starting with a lower value boat because you can buy the same thing with the Leopard moniker instead of the Moorings branding for less $$. I'm not sure the difference in $$ on a small monohull, but on a mid 40's cat, it is quite substantial.
Granted, without the Moorings, you'll get no monthly check.. but still, if you're considering everything, consider this also.

[james.SKT]

Thanks for taking the time to offer all this good info. I have been looking for someone's final tally and comments on buying into a charter (and specifically moorings). 1/3 to 1/4 of the cost overall doesn't sound bad but that's probably what I spend now on a weekly charter because I get about 25% off normal rates at other charter companies that are significantly less expensive than moorings weekly rate to begin with. In fact, I have never chartered from moorings just for that reason...their yachts are in great condition but at about 3x the rate. Thanks again for the info!

[philduval1]

hi, i'd like to have opinions (and thoughts) to see if my numbers are realistic in this business plan. I'm looking to buy a cat (Lagoon 440 or 450) and entrust it to a charter company in the BVI's.

Incomes projected:

+20 weeks @ 8000$ = 160 000$

expenses projected:
(boat paid cash, no financing)
-Charter company commissions: 160 000$ x 30% = 48 000$
-Turnaround fees = 20 weeks @ 550$/ea. = 11 000$
-Boat sitting by charter company = 1 200$
-Maintenance (including yearly haul out) = 15 000$
-Insurance = 7 000$
-Dockage = 7 500$
-Depreciation (per year) = 14 000$

Total of expenses = 103 700$

net income ( 160 000$ -103 700) = 56 300$

Thanks.

[Sail-Orion]

Phil ... I think these numbers look pretty good. I recently went through the same exercise and ended up pulling the trigger on a Lagoon 400S2. Time will tell how accurate my assumptions are. The only one of your numbers I might question is Depreciation ... Seems a bit low ... $14k is less than 3% on a $500k vessel. Good luck!


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[henryv]

Sorry - your numbers are overly optimistic. Generally charter boats only make sense if you value the personal use. If they could turn a true profit after depreciation the charter companies would own their boats.
Henry

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[GordMay]

Greetings and welcome aboard the CF, Phil.

[Sail-Orion]

Originally Posted by henryv

Sorry - your numbers are overly optimistic. Generally charter boats only make sense if you value the personal use. If they could turn a true profit after depreciation the charter companies would own their boats.
Henry

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Henry ... Would you mind stating specifically where you find the numbers "overly optimistic"? Thanks!


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[maytrix]

Regarding the numbers, as long as the numbers coming from the charter company are fixed (dockage, boat sitting, insurance..etc) are accurate, then the rest really depends on a few things.

How successful they are in chartering the boat and how much maintenance is really needed. If it does go out for 20 weeks and the maintenance number is accurate then it all works out fine. But what I would question is what happens if there is some damage? Who pays for that? I have heard many stories of a charterer causing damage, but the owner ends up paying. That could certainly raise that maintenance cost quite a bit.

Usage is also an important factor - any owner use means it isn't going out on a charter, so will owners use fall in the high season at all? That might take money out of your pocket.

[henryv]

I think the budgeted depreciation number is way too low. Four cabin ex charter boats do not hold their value very well and there are usually enough boats for sale to make it a buyer's market.

I think you will find the turnaround fees and the insurance will be higher than your numbers. The maintenance costs will also probably exceed your budget and they tend to increase as the boat ages.

You will also have charges for annual replacements for bedding, towels, galley items that have gone missing, etc.

I currently own a 3 cabin boat in charter so revenue is lower than it would be with a four cabin boat but there is a bit of offset with the boat getting beat up less and resale is higher for owner's layouts. We previously had a used cat with a second tier company.

Henry

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