Buying into a Yacht Ownership Program with a Charter Company?

[nautical62]

Originally Posted by leboyd

Actually, if you're comparing buying outright versus buying with a charter company, the opportunity cost is basically the same. If you're buying used (10 year old boat versus new boat), the lost opportunity cost is the difference in the down payment. Using the example above ($200k new/$100k used) and 20% down, the lost opportunity cost is based on the $20k down payment difference.

Good point, and why stop with the opportunity cost of down payment? If one is going to look at opportunity cost, one should also look at the opportunity cost of monthly insurance, monthly dockage, maintenance and cruising costs.

Looking at opportunity costs, one might conclude boat ownership doesn’t make much sense.

[Nils Gruttner]

Tracey, I posted this on another thread. I have more info if you like.... an entire documentary on it.

There is more to yachts than dollars and cents … it's a lifestyle choice!

Previously, I posed the question whether owning a charter yacht is worth it on a number of different forums. The response to that article was amazing and surprising … in some cases personal.

Replies included lengthy calculations, tax considerations, interest gains, spreadsheets … but the hardest part was to determine where the information came from.

Did it come from people with actual experience, people who owned boats in charter, people who maintain these yachts or manage them? Or did it come from people who simply want to voice their opinion, not based on facts but hearsay?

After some follow-up work on how valid the below-listed information actually was, here is the outcome of what you had to say:

56% replied with a definite YES.
They believe that owning a yacht in charter is worth doing if:
* you love sailing a lot,
* if you chose the right operator
* you are still committed workwise and want to explore the worlds sailing grounds before setting off into the sunset,
* you are able to look beyond pure financial rewards, $ and cents and,
* you love sailing (did I already say that? Well, it came up a lot)

11% replied YES BUT.
Ownership to 'make money' can only work as crewed charters.

4% did it, but didn't make any money.
Though in some cases it was unclear whether they regretted their decision

29% replied with a definite NO.
Reasons ranged from:
* don't touch my boat,
* the numbers don't add up,
* I can invest elsewhere for better returns, others earn more money on my yacht than I do,
* the boats get beaten up and are worthless afterwards.

For information: there were a total of 236 replies, with 43 unverifiable comments. Sure, a very small cross section of an otherwise huge industry, but across section never the less.

Dollars and Cents of Charter Yacht Ownership:
Some readers were disappointed that I didn't include any "hard numbers" in the article. My original intention was in fact NOT to slant the question towards the purely financial aspect of "being worth it". Not everything in life is about money!

However, I promised that I would share some details of my deal. The information below is publicly available, so no trade secrets here.

All values are in US$, at current exchange rate, based on a 2019 Helia 44 Evolution with DreamYacht Charters in their 'Dream Easy' Program. No VAT applicable for me at the end. Naturally, there are other operators with similar programs you could choose from.

$665,000.00 - Contract price for the yacht to specifications.
$232,750.00 - 35% Deposit at the beginning of 66 month contract
$166,250.00 - 25% Balloon payment at end of contract
$399,000.00 - Purchase cost of yacht to me (60% of total value)

Based on 6 weeks of 'free' charters per season (2 weeks in high season, 2 in the low season and 2 weeks 'walk up' in any season, with some variations possible), allowing for discounted specials, a mix of locations and seasons around the world over the period of the contract and deduction of the $350.00 turn around fee per charter, I receive $189,500.00 worth of charter value for my personal use during the term of my contract.

There are no running cost / expenses to me during the period of this contract.

A search online for resale value of a 5.5 year old Helia 44 ex-charter with similar specifications currently shows a market valued of $420,00.00 ex contract.

Putting that all together, I end up with the following:

+ $189,500.00 worth of free charters
+ $420,000.00 final value of the yacht
- $399,000.00 initial investment
--------------------------------------------
= + $210,500.00 (which funnily enough is close to my charter allowance!)

Is owning a yacht in charter worth it?
Absolutely, because I am going to have the time of my life over the next 5 years.

For those who invested the $399,000.00 at 5% net; they will only get to sail $110,000.00 worth of charter time ... but they most likely won't because they will spend the money on something else. "We'll do it next holiday".

After all, I love sailing and sail I will. See you out there...

[Hoosierdoc]

Glad I came across this thread. I had contacted Moorings to look into this but had decided against it. Seemed like I'm paying a lot for the right to buy a six year old used boat at the end of it.

I appreciate the breakdown from others who have done it and enjoyed it. I guess it really comes down to whether you'll use the time you're entitled to for chartering or not.

Are there typically much in the way of add-on fees for your weeks of charter time as an owner of a boat in the fleet?

[Nils Gruttner]

Originally Posted by Hoosierdoc

Glad I came across this thread. I had contacted Moorings to look into this but had decided against it. Seemed like I'm paying a lot for the right to buy a six year old used boat at the end of it.

I appreciate the breakdown from others who have done it and enjoyed it. I guess it really comes down to whether you'll use the time you're entitled to for chartering or not.

Are there typically much in the way of add-on fees for your weeks of charter time as an owner of a boat in the fleet?

300€ per trip turn around fee, that's for a 44' cat.

[maytrix]

Originally Posted by Hoosierdoc

Glad I came across this thread. I had contacted Moorings to look into this but had decided against it. Seemed like I'm paying a lot for the right to buy a six year old used boat at the end of it.

I appreciate the breakdown from others who have done it and enjoyed it. I guess it really comes down to whether you'll use the time you're entitled to for chartering or not.

Are there typically much in the way of add-on fees for your weeks of charter time as an owner of a boat in the fleet?

There are other factors besides usage. We have a 43' monohull we purchased in the moorings program. It's been out two years now. We took 2-3 trips a year and each trip was usually at least 10 days. We sold the 2 weeks we could sell.

And then, when we used our time, we often used short notice and upgraded to other boats. The majority of our trips were on catamarans. We even took out the Moorings 5800 one trip. Value of the charter time we used was at least $120k - I think maybe closer to $150k. That's all based off regular rates, which few pay, but even still, it was a tremendous value and experience. And the experience may have been one of the greatest parts. Each trip was an experience itself and then we also moved our boat from St. Lucia to the BVI at the end of the program - that was one of our highlights.

It worked out well for us. I'd do it again someday.

[Nils Gruttner]

Originally Posted by maytrix

There are other factors besides usage. We have a 43' monohull we purchased in the moorings program. It's been out two years now. We took 2-3 trips a year and each trip was usually at least 10 days. We sold the 2 weeks we could sell.

And then, when we used our time, we often used short notice and upgraded to other boats. The majority of our trips were on catamarans. We even took out the Moorings 5800 one trip. Value of the charter time we used was at least $120k - I think maybe closer to $150k. That's all based off regular rates, which few pay, but even still, it was a tremendous value and experience. And the experience may have been one of the greatest parts. Each trip was an experience itself and then we also moved our boat from St. Lucia to the BVI at the end of the program - that was one of our highlights.

It worked out well for us. I'd do it again someday.

Maytrix: glad to hear you had such a positive experience. And even more glad you posted it here as my survey showed the same. You use it, you win.

[barnakiel]

Basically you are financing somebody else's asset.


Whether this is good or bad thing for you, depends on your goals, your money cost and plenty of other factors (like say the risk of the company that holds and uses the boat).



Financially-wise it is very simple though: see if your cost of the money to buy the boat is lower than what you will get (after taxes and other costs) from the company that uses the boat. Now if this % amount is better than what % you get investing the same amount in the best alternative you have, then you simply DO IT, and pocket the difference.


In all other cases, you must valuate the (often) non pecuniary factors like your benefits, you time, your exposure, etc.etc. It stops being objective and your valuation of the scheme becomes non-quatifiable.


I would never do this as I pay cash for my toys. I sell or gift the toys I no longer use. Then use the proceeds to buy other toys.



Somebody else might do it and have a great deal.


Whatever YOU chose, make sure to try and find all the factors beforehand and have a good long look at each.


There is some good read on the subject on the www if you care to google some. There is also at least one long thread devoted to this subject here. Use the 'Search' tab at the right top. It should pop up fine.



Cheers,
b.