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Old 14-11-2014, 12:56   #46
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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These charter "deals" and salespeople always sound like their trying to push "time shares." "Buy into the lifestyle," "Buy into the deal."
Years ago I looked into this type of program. Someone commented, if this was such a great way to buy a boat then the Moorings would be buying the boats themselves and not trying to sell the plan to you.

Seemed like a valid point to me.
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Old 14-11-2014, 13:12   #47
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Years ago I looked into this type of program. Someone commented, if this was such a great way to buy a boat then the Moorings would be buying the boats themselves and not trying to sell the plan to you.

Seemed like a valid point to me.
If someone is just looking to buy a boat, then no, charter ownership isn't really a good way to do that.
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Old 14-11-2014, 13:13   #48
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Originally Posted by skipmac View Post
Years ago I looked into this type of program. Someone commented, if this was such a great way to buy a boat then the Moorings would be buying the boats themselves and not trying to sell the plan to you.

Seemed like a valid point to me.
I assume it is because the charting companies and boat owners have different objectives, and they are not necessarily incompatible.

For a charting company, the objective is to maximize cashflow and reduce capital expenditures. This is a must-do approach in this type of businesses. Their objective is NOT to go on vacations as cheaply as possible (that's the objective of the boat owner). The company's objective is to avoid having capital tied into their assets. So having other people put the capital makes perfect sense.

For the owner of the charter boat, one objective may be to charter as cheaply as possible. The question as to whether the charter program helps achieve this objective is an important one, but it is unrelated to the issue as to whether or not the program benefits the charter company. It is not a zero sum game.
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Old 14-11-2014, 13:18   #49
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

Budha, I think what some folks were trying to say, some in a very nice way and others rather bluntly, is take a look at 'worst case scenarios' as well.

Like you said, you have 5 years to just save save save before you make a decision. This is great, and I'm kind in the same situation I figure worst case scenario is "in 5 years, I'll have alot of savings, whether I buy a boat or not".

Then, after that, really just need to look at worst case if you buy the charter boat.
1. What happens to the numbers if you can only use 1 week a year for charter, or no weeks. Can you sell your personal weeks also, I don't know?
2. What happens to the numbers if the boat value is less than predicted, due to whatever, economy, global issues, whatever.
3. What happens to the numbers if airfare goes up?
4. etc etc.

We had some friends that bought a catamaran in 97 and hired a Capt for private charters. They made decent money, and paid for a decent part of the boat, and got to use their boat alot, but in 2002 they had to come out of pocket almost $100k because of 9/11 cancellations. Still, when they fully retired in 2007 they had a good chuck of the boat paid.

I'm sure you get the idea. As a tech kind of person, I'm sure this is in your thoughts, perhaps just not down in the numbers.

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Old 14-11-2014, 13:22   #50
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Originally Posted by FollowingCs View Post
Budha, I think what some folks were trying to say, some in a very nice way and others rather bluntly, is take a look at 'worst case scenarios' as well.

Like you said, you have 5 years to just save save save before you make a decision. This is great, and I'm kind in the same situation I figure worst case scenario is "in 5 years, I'll have alot of savings, whether I buy a boat or not".

Then, after that, really just need to look at worst case if you buy the charter boat.
1. What happens to the numbers if you can only use 1 week a year for charter, or no weeks. Can you sell your personal weeks also, I don't know?
2. What happens to the numbers if the boat value is less than predicted, due to whatever, economy, global issues, whatever.
3. What happens to the numbers if airfare goes up?
4. etc etc.

We had some friends that bought a catamaran in 97 and hired a Capt for private charters. They made decent money, and paid for a decent part of the boat, and got to use their boat alot, but in 2002 they had to come out of pocket almost $100k because of 9/11 cancellations. Still, when they fully retired in 2007 they had a good chuck of the boat paid.

I'm sure you get the idea. As a tech kind of person, I'm sure this is in your thoughts, perhaps just not down in the numbers.

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Yes, indeed. Looking at worse case scenarios will definitely be part of the equation once I have to make a decision. Thanks.
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Old 14-11-2014, 13:27   #51
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Years ago I looked into this type of program. Someone commented, if this was such a great way to buy a boat then the Moorings would be buying the boats themselves and not trying to sell the plan to you.

Seemed like a valid point to me.
While the individual programs may or may not make sense, the concept of low capital investment is a time honored financial tool. Usually, all parties win something, otherwise it wouldn't work in the long run.

My company, for example, buys a pool of railcars. Then we 'sell' the actual assets to investors but manage the railcars for them, giving X% return on their investment. The investor is happy because he has what he feels is a good return backed by a physical asset, and our company makes money managing, repairing and leasing the railcars.

I do the same thing with apartments. I find a deal, bring in a group of investors, give them X% preferred return on their investment. I make a little money off the top by managing the property, they get a good return, all our happy. Oh, and the BANK is the biggest investor, often bringing 80% to the deal, for a measly 4.5% return.

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Old 14-11-2014, 13:29   #52
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

Here's just a few more costs that should be considered that can easily be overlooked when making comparisons:

1. Tax consequences: You will have to declare income, but also get to write off deprecation. How does those compare?

2. Owner fee/turn around fee. This isn't that great, but don't forget that there is some out of pocket cost to using the boat, even though you own it.

3. The financial impact of guests vs. family - This one probably doesn't matter if it's just family but can make a huge difference if you cruise with friends. It's one of the reasons I'm not doing the charter management again.

When I owned a charter managed boat, (As well as non-charter boats) guests/friends would pay their fair share of groceries, etc. However, while being a charter-like experience, they were not contributing to a charter cost, because it was my boat (or time traded for my boat).

Now that I'm no longer in a charter management program, when I charter with friends, I'm not flipping the whole bill. Chartering a cat this winter for example will cost each of us $1000 for 9 days. That's much more for my friends and the charter overall is more expensive, but since I'm only paying 1/6 of the cost, for me it's cheaper than owning.
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Old 14-11-2014, 13:34   #53
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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3. The financial impact of guests vs. family - This one probably doesn't matter if it's just family but can make a huge difference if you cruise with friends. It's one of the reasons I'm not doing the charter management again.
.
Just curious, do you mean when you were an owner you didn't want to ask your friends to pitch in for the cost or that there is something about being the owner that prevented you from having friends pitch in? I guess it could be consider sub-charting since you are the owner so having friends pay would make you a charter captain which would likely be a no no for licensing and contract reasons. Did I get it right?
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Old 14-11-2014, 13:39   #54
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

I agree with the risk comment. You have to decide how risk plays in and that can work both ways.

Buying in earlier, may save you money, but it leaves you less adaptable to unforeseen changing circumstances.

On the other hand, I had to think long and hard about whether to put most of my savings into my boat, so I'd own it outright at the end of charter, which I chose to do. It turned out to be a great decision because: 1. It meant I couldn't possibly owe more on the boat than it was worth at the end. 2. The market tanked, 6 months later. There's no way I could have afforded a boat a few years later had I kept that money invested instead.
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Old 14-11-2014, 13:53   #55
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Originally Posted by BlueBuddha View Post
Just curious, do you mean when you were an owner you didn't want ask your friends to pitch in for the cost or that there is something about being the owner that prevented you from having friends pitch in? I guess it could be consider sub-charting since you are the owner so having friends pay would make you a charter captain which would likely be a no no for licensing and contract reasons. Did I get it right?
Yep, that's what I'm saying. My feeling is if friends join me in using a cabin or my car or my boat, they are guests. I'm not going to charge them for the cost even if I buy that thing specifically because I want others to join me. From a legal and insurance standpoint, you also need to be careful about when cost sharing may be seen as taking people out for hire, even if you make no profit. I don't think there's anything wrong with talking to friends, buying a boat, with the agreement they all help pay some of the costs, but that simply was not my philosophy.

Charting is much more obviously a venture everyone enters more equally Nobody in the group already owns the boat, so there's no question that the costs should be split evenly.

It's interesting however, because now that my friends see the chartering costs, many have inquired about me buying a boat again, and them paying more when they sail with me, as it would be cheaper for them than paying a chartering fee. It's all a matter of perspective I suppose.
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Old 14-11-2014, 14:12   #56
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Please note that we are not "rich", at least not based on the Republican's definition of rich.
I would be interested in hearing what exactly that is and perhaps how it differs from a non-Republican's definition of wealth?

I know non-Republicans who are excessively rich, so this is an odd comment to make on a sailing board.

Sounds like you want your politics validated along with your "plan".
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Old 14-11-2014, 14:20   #57
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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I would be interested in hearing what exactly that is and perhaps how it differs from a non-Republican's definition of wealth?

I know non-Republicans who are excessively rich, so this is an odd comment to make on a sailing board.

Sounds like you want your politics validated along with your "plan".
Yes, sorry. It was a minor silly joke. None of the discussion has been about politics, so I didn't mean to make it about politics. That was just a joke, a bad one and very dated one I admit, in reference to the GOP senator who was arguing during the tax reform debates that a salary of 500K a year did not make a person rich. I know, the joke fell flat. Good thing I'm not a comedian or I'd starve!

I'm not a republican but I'm also not a democrat. I'm much more of a libertarian. But I rather talk sailing and buying boats, so I apologize for the silly joke.
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Old 14-11-2014, 14:26   #58
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

You can probably save five to ten thousand dollars more a year by deferring purchase of a boat you won't be using but would pay to store and maintain.
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Old 14-11-2014, 14:27   #59
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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Yes, sorry. It was a minor silly joke. None of the discussion has been about politics, so I didn't mean to make it about politics. That was just a joke, a bad one and very dated one I admit, in reference to the GOP senator who was arguing during the tax reform debates that a salary of 500K a year did not make a person rich. I know, the joke fell flat. Good thing I'm not a comedian or I'd starve!

I'm not a republican but I'm also not a democrat. I'm much more of a libertarian. But I rather talk sailing and buying boats, so I apologize for the silly joke.
Got it, hard to convey tone on the internet.
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Old 14-11-2014, 14:29   #60
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re: Long Term Boat Retirement Plan - Are These Numbers Right?

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You can probably save five to ten thousand dollars more a year by deferring purchase of a boat you won't be using but would pay to store and maintain.
Agree 100%! That's definitely one thing we will not be doing. We will either buy when ready to move in, or use a program that will keep us from having to pay for storage and maintenance if we are not using it full time.
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