Long Term Boat Retirement Plan - Are These Numbers Right?

[BlueBuddha]

Originally Posted by rognvald

Buddha,
Compliments on your ambitious goal for the future. Nothing worthwhile happens in life without a dream and a plan. However, life is a delicate and unpredictable balancing act where , at times, we lose the ability to control our destiny: illness, death, infirmity, financial ruin, relationship problems are a few examples. These are factors that cannot be predicted and are impossible to factor into the human equation. They are part of the human condition. Remember the lines of the Scottish poet Robert Burns from his famous poem "To A Mouse:"


"The best laid schemes of mice and men,
Often go awry."

Good luck and much success in accomplishing your dream.

Rogvald thanks you so much for post. It is a masterclass on how to make a point with kindness (some people here could learn from this post). I definitely agree. Many things are out of my control. All I can do is to focus on those that I can control. Best wishes.


Sent from my iPhone using Cruisers Sailing Forum

[nautical62]

Originally Posted by Weyalan

Bear in mind that 99.83% of the time, a boat is a depreciating asset (and 82.1% of statistics are invented on the spot ) If you are planning to retire onto a boat (nothing wrong with that) I'd be looking at putting money into where it will grow until you are ready to purchase, throw the lines and go. Owning a boat for 5 years before you are actually properly using it is not what I would be doing. Just my 2c worth.

During that 5 years it is indeed depreciating, but he would also be earning a guaranteed income and avoiding chartering expenses, by being able to sail on a boat he already owns. He may not be planning to live aboard it at first, but he is in fact planning to use it.

The question is how the economics of the two scenarios compare, which is why I think he needs to rationally compare the actual different decisions he's considering, rather than focus on one or two factors only which may not accurately represent the bigger picture.

[BlueBuddha]

Originally Posted by nautical62

The question is how the economics of the two scenarios compare, which is why I think he needs to rationally compare the actual different decisions he's considering, rather than focus on one or two factors only which may not accurately represent the bigger picture.

Do you mean that I should actually look at the economics of the options, compare actual numbers, look at the big picture, and not make a decision based on often repeated "truisms" about how some options could not possibly, under any circumstances, be beneficial to the buyer? That's just too rational!

[sailorboy1]

Consider whether a charter boat layout is really what you want to end up with in the end. I'm a mono guy and wouldn't want the charter boat verison of my boat instead of the owner version.

[nimblemotors]

Whenever somone runs number on why buying charter boat makes sense,
it raises alarm bells, because anonymous people can be anyone, like for example trolls for charter companies.

Here is a plan, save your money until you can afford to buy the boat you want in cash, and then retire. For some, that is a $20k boat and I'm already retired, for others, that is save $500,000 and retire at 67.5 years old.
What works for you is what works for you.

[19 and counting]

Originally Posted by nautical62

They often advertise (sell) the idea of paying 25% down, and making payments which at the end of 5 years, allow one to have paid off about 50% of the boat and made a small positive monthly income.

What I chose to do instead was structure it so that the guaranteed income paid off my loan, so I owned the boat outright at the end of the contract period. I'm glad I went that way.

My boat was a smaller monohull costing 120K. I ended up paying about 60K to own it outright (The other half being paid for with guaranteed income) and on top of that got to use it for 7 years with no dockage, insurance or maintenance costs. I ended up selling it instead of continuing to cruise it, but per year it was much cheaper than either owning a similar boat not in charter or chartering would have been. The value of the boat at the end was roughly equal to what used boats were selling for, so if one is comparing that to just buying a used boat 7 years later, I basically got 7 years of chartering at almost no cost.




True I was was trying to compare buying a boat in charter management and then keeping it to two separate scenarios: 1. Paying to charter for 5-7 years, and then buying a used boat. 2. Buying a boat, not putting it in charter, but paying insurance, dockage, maintenance, and having no charter income.

I can see where it sounded as if I was rolling both of those ideas into one in my attempt to not get too long winded.

It's a good idea to consider that some people can be happy miles away from their boats and still be able to deal with what happened to it during that last charter season (from maintenance issues to people destruction) and not even worry that they've killed the dream by being bummed by the circumstances. Search your heart on this one. Personally, chartering my boat an airline flight away (I hate airports and planes)
would drive me nuts, I don't want anyone else on my boat and I don't want anyone else fixing it but my husband and myself. Fortunately we live in one of the best cruising/play on the water year round locations on the planet so we do use the boat all year long. Some days we just go down and hold hands on it. But some very good friends live in Canada during the summer and come down and live aboard all season long in Mexico very happily. It's their boat and no one else uses it. One way to go. Of course it won't be brand new unless you have lots of bucks but then either is your cat gonna be once you get your hands on it. We are all so different yet the same!

[Kenomac]

Originally Posted by sailorboy1

Consider whether a charter boat layout is really what you want to end up with in the end. I'm a mono guy and wouldn't want the charter boat verison of my boat instead of the owner version.

I was just going to write the same statement, but sailorboy beat me to it. The reason there's so many ex charter boats for sail with few buyers, is due to the fact that they are set up all wrong for two people. Who needs multiple cabins for just two people? What you'll need is a larger master cabin, and more integral storage space. With an ex-charter boat, you'll end up with a extra small master cabin and and three guest quarters stuffed with gear.

Doesn't make sense to me.

One more important point: As several posters have pointed out... most people have a very narrow window of opportunity to head out cruising, poop happens in life. Don't spend too much time over-planning for what in most cases will never happen. What I mean by that... Buying a boat and heading out. When the right time comes, just go for it. The marinas are filled with boats owned by the over-planners and dreamers.

[maytrix]

Moorings does have owner versions of some cats. In fact the 3900 is one of them. Although what will change in 5 years will likely be the boats moorings has going into their program. We'll likely see new models.


At any rate, why not consider buying into the program now and trade-in 5 years from now. You need not buy the boat you want in the future and need not even buy a Cat. You could buy a lesser expensive mono and use the short notice time to upgrade to a cat when you charter over the next 5 years. Pay off as much as you can during that time and trade in and get the cat you want. Done the right way, over the 5 years you should be able to be out of pocket less than spending $10k a year chartering. Plus you can try out lots of different boats.

[Kenomac]

Why does Bubba have to buy any boat right now??? Why not just enjoy chartering boats owned by other people for the time being and purchase a quality used boat when he's ready? Same difference at the end, but he will most likely end up on a boat with less usage over the same period. Example: Our used Oyster had only 600 hours on the engine when we purchased it. If it had been an ex-charter, I'm sure it would have had several thousand hours on it plus the other associated wear and tear on the hull, deck, furnishings, etc.

These charter "deals" and salespeople always sound like their trying to push "time shares." "Buy into the lifestyle," "Buy into the deal."

Geez, just buy a good boat when the timing is right, when you have the time to enjoy cruising.... and you can afford it. Or... Just continue to charter.

[maytrix]

He doesn't have to, but we own a moorings boat and in the time we've owned it so far (have 1.5 years left) we're pretty close to having used as much time as the boat is worth. So there's a big cost benefit to ownership depending on how you do it and what your plan is. Had we not owned, we never would have chartered as much as we have and certainly wouldn't have been on some of the boats we've been on (44, 46, 48 and 58' Cats).

[nautical62]

Originally Posted by 19 and counting

It's a good idea to consider that some people can be happy miles away from their boats and still be able to deal with what happened to it during that last charter season (from maintenance issues to people destruction) and not even worry that they've killed the dream by being bummed by the circumstances. Search your heart on this one. Personally, chartering my boat an airline flight away (I hate airports and planes)
would drive me nuts, I don't want anyone else on my boat and I don't want anyone else fixing it but my husband and myself. Fortunately we live in one of the best cruising/play on the water year round locations on the planet so we do use the boat all year long. Some days we just go down and hold hands on it. But some very good friends live in Canada during the summer and come down and live aboard all season long in Mexico very happily. It's their boat and no one else uses it. One way to go. Of course it won't be brand new unless you have lots of bucks but then either is your cat gonna be once you get your hands on it. We are all so different yet the same!

The OP, however is not talking about owning a boat at a dock where he lives as you are. The OP is comparing chartering for 5 years, to owning a charter managed boat for that same 5 years and then buying a used boat. Both offer basically the same sailing experience. The difference is one makes a commitment earlier, the overall cost is different and one allows you to get to know your boat well, before having it for full time cruising. In both cases, someone else is doing the maintenance.

I've owned boats both in and out of charter (most out).To me having someone maintain my boat at no cost to me, allowing me to simply show up and head out cruising that same day was a positive, not a negative. Having the maintenance, insurance, dockage paid for by charter income, as well as getting back half the purchase price in guaranteed income was also a big benefit as it allowed me to own a much more expensive boat at a much lower cost than boats I've owned at 1/4 the price.

However, I get that owning a boat in charter management doesn't work for everyone. It hasn't always work for me. My point is simply that the OP should take an objective look at both options as they actually apply to him, and not dismiss an option based on a generalization that doesn't include the larger picture.

[John_Trusty]

I have a simple question every time I hear about charter contracts. If the deal was that good for people putting in the principal, then why don't banks and hedge funds invest in chartering companies? Why does the Moorings (and the rest) pay to advertise to convince you, the small-time investor, to get in on their great deal? As Nautical62 notes, most people don't figure the full cost or the risks.

For practical investment terms, nothing beats a diversified portfolio of stocks and bonds in stable countries. If you think your stocks did badly in 2007 - 2009, think what the bookings at luxury vacation resorts (such as yacht rentals) did in that period. If your guaranteed income is dependent on their selling charters, then you take the risks. I'd put my money in a Fortune 500 fund, and take it out when I want to look at boats.

[maytrix]

It's quite simple John, you don't make money on boats. No one should go in to a charter contract expecting to make money. Like I said though - we've used well over $100k worth of charter time in the past 3-4 years. Have a trip next week where it would have cost $13k and we paid a small fraction of that.

So I see it as a way to experience things you may not otherwise (we couldn't afford to spend $13k a few times a year) and at the same time pay off your boat. In the end you end up with a boat with a good portion of it paid off. Even if you sold it and just broke even, you end up with 5 years of chartering at a greatly reduced cost. It's not right for everyone - gotta use it enough.

[nautical62]

Originally Posted by Kenomac

Why does Bubba have to buy any boat right now??? Why not just enjoy chartering boats owned by other people for the time being and purchase a quality used boat when he's ready?

He doesn't have to. However, some valid reason to not just charter and own earlier instead:

1. It's likely cheaper in the long run.

2. You get to know your boat better before taking it on full time, which among other things means you are much more likely to identify problems which the charter management company is required to fix. When I took my boat out of charter, they were required to fix any and all problems, so it was in much better condition than any of the used boats I've purchased not in charter.

Originally Posted by Kenomac

Same difference at the end:

No, very likely not the same difference.

Originally Posted by Kenomac

These charter "deals" and salespeople always sound like their trying to push "time shares." "Buy into the lifestyle," "Buy into the deal."

It's the same idea as a time share, in that having multiple people use something costs an individual less, than one person using it on a limited basis and letting it sit unused the rest of the time.

Charter management however is not a time share. When you buy the boat, you are the only owner. You are not buying a share. You are generating income from charter fees when you not using the boat which also defray the costs of dockage, insurance and maintenance. Unlike a time-share you can book the boat anytime you wish, (even more so than with chartering) though how much you can book it depends on the season.

Originally Posted by Kenomac

Geez, just buy a good boat when the timing is right, when you have the time to enjoy cruising.... and you can afford it. Or... Just continue to charter.

That's an option, and one that does not require a commitment as early. However it's probably a more expensive option in the long run. Most such decisions have trade-offs.

[BlueBuddha]

Thank you all for your input. It is very useful to read the diversity of opinions. I tend to be very data driven (I'm a scientist after all), so translating your thoughts into actual numbers as I move through the process will be the next challenge.

One thing that we are sure about is that we will not buy a charter boat or any other boat for the next 5 years. The plan is to charter for the next five years only 1-2 weeks per year. Even if owning a charter boat for makes sense financially, it doesn't fit into our plan because we would not use it enough. We have 5 years worth of many land vacations we want to check off our bucket list before increasing our charting time.

As I mentioned in the original post, the real decision point will come in 5 years, when we have to decide what is the type of ownership that works best for us from them until retirement.

Anyhow, I do appreciate everyone's input! Thank you.