Chartering with Moorings in Tortola

[jnsnwt]

Nautical 62 said ...

"I'm glad you folks had a great trip. My boat is in charter with the Moorings in Tortola. If anyone else has any questions about chartering there or charter ownership, I'd be happy to share what I know."


Thanks for the offer of knowlege ! I would love to learn from your experience as I am not going to live long enough to make all my own mistakes LOL

I did read in the literature that the Moorings will pay you a monthly lease equal to or greater than your monthly boat payment plus they will do all the maintenance and repairs. This sounds like they are basically buying you a boat but it's using your credit.

I read the literature twice and it still sounds too good to be true. so please tell us where the "GOthchas" are in this lease deal.

[nautical62]

In my case the guaranteed income will end up being about 45% of the cost of the boat, but their guaranteed trade-in is about 50%, so over the course of the contract, the income probably won't quite keep up with the depreciation. The real cost is the cost of your money. One either has to come up with the cash and forgo what you would have earned on that money or has the cost of a loan on a rather expensive boat. If you'd be spending this much on another boat anyways, this isn't an issue, but personally, I'd otherwise be buying a used boat for about 35-40% as much. Also, I have to declare the guaranteed income as income at tax time, and although this is largely offset by the writing off the depreciation, it does have a negative effect on the bottom line. The last thing is that even though I own the boat, I still have to pay an "owner's fee" (about $50/day for the boat for me, but this will vary depending on the boat.) This covers all the things I don't own such as the dingy, dishes, linen service, etc as well as all the water, ice and fuel one needs from the Moorings Base. I feel it's very reasonable for "vacation cruising" - but again, it's different than the costs you'd see with a boat not in charter and should be considered in your decision making.

As you said, they pay all my storage, insurance and maintenance. Maintaining the paperwork and deciding when I want to use the boat are about the only obligations I have. The big question about the economics of course, is what the boat is worth at the end of the charter period. However, even if the boat was worth nothing at the end, I'd probably still come out ahead compared to chartering for the same amount of time.

Previous to buying my Moorings boat, I owned a couple pocket cruisers one of which I kept in Florida that I usually sailed about 7 weeks a year (and worked on for another 2 weeks). When I wanted to upgrade to a larger boat, I realized that for about the same average yearly cost of owning, insuring and storing a 40K used boat, I could own a new 120K Moorings boat. The weeks of owner use were similar to what I'd use anyways. In addition to not having maintenance costs, I don't spend any of my vacation time doing boat maintenance and have no maintenance headaches. It's also nice to not be tied to one cruising area. I should also mention that as the owner, you don't have some of the limitations and encouragement the charter people would have. For example, on my last trip to the Virgin Islands, I didn't do the chart briefing and headed almost immediately outside their normal area and down to the Spanish Virgins.

Obviously, when a boat is in charter, you as an owner can't go sit on it for an evening or take it out for a weekend sail. I also can't take the boat on an extended cruise (longer than 8 or so weeks) while it's in charter. Since I live over 1000 miles from the nearest ocean, and this fits my vacation time well, these things are not issues for me, but would be for many cruisers.

The one criticism I often hear about owning a charter boat is that they get a lot of use by people who may not care or be knowledgeable in taking care of the boat, and therefore the boats end up in bad shape. So far, I personally have mixed reactions to this idea. On the one hand, I do think it's true that charter boats get a a lot of use and some abuse. On the other hand, charterers are paying a fair bit to rent a boat for a week, so companies like the Moorings have a good incentive to keep the boat operating in good condition. I also like that they have been in the business long enough to know how their boats will be used and many of these things have been incorporated into the design from the beginning and are not retrofitted later. (For example, built in autopilots, roller furling, gravity fed holding tanks, fridge, chart plotter, etc.)

Personally, if my goal was get a fairly new boat inexpensively, I think I'd be disappointed in the end because of all the wear and tear. Even though I own the boat, I view it more as buying into a program that allows me to sail at a fraction of the cost of chartering and without the geographic limitations and upkeep headaches of normal ownership. From this respect, I've been very pleased - at least two years into the program.

A couple added notes:

I also have mixed feelings about some of the comforts added to charter boats. For example: Hot and cold pressurized water is something many guests appreciate, but it also makes it easy for people to waste water and if you want to keep the boat at the end of the contract, you have more complex systems to maintain. In my previous pocket cruisers, I could easily identify, get at and fix any electrical or plumbing problem myself. I know I'll never understand all the intricacies and complexities of these systems on my Moorings boat. Many are hidden behind liners and bulkheads. While this isn't an issue while it's in the charter program, it's one reason, I'm tentative to keep the boat after the program is over. I forsee more cruising time in my future, so I think I'll probably go back to traditional ownership after the contract is up, but I have no regrets so far about buying a Moorings boat. I'm doing as much sailing as ever, in more locations with few headaches.

I also looked into Sunsail. For me the decision to go with the Moorings was based mostly on the fact that their owner time schedule worked better for me. Also worth mentioning, is that while Sunsail and the Moorings are now owned by the same parent company and are sharing some resources at the Tortola base, according to the owner, there are no current plans to murge them, for the near future at least, will remain fairly independantly run. Also of note is that at the end of the Moorings contract, one can put their yacht into the Footloose program for an additional three years. If you want to continue on indefinately, it makes more financial sense to take the guaranteed trade-in on another Moorings boat, but the footloose option is a great backup if you want to put your boat on the market, but not have insurance and storage fees, or you are a couple years away from wanting to take the boat and run (sail).

The above are all my personal feelings as an owner in the program, but please don't take any of it as fact as to how anything now operates. Contact the appropriate charter companies to learn more about their current program details.

[Reality Check]

Think if you check... your typically limited to a two week use of your own boat in any given period... if you want it for say 4 weeks... you have to pay or exchange credits unless they have no charters on the books which means you can't do much planning in advance for a firm 4 week or more use of your property.

That is one of the main reasons I dropped the idea of doing the Moorings/ Sunsail charter thing... I wanted to use the boat 4 to 8 weeks at a time. Ended up just buying a boat and use it when ever and for ever how long I want and do to it what I want like adding solar cells and wind generators and fitting it out for more long term cruising... not just the typical mooring field jumps the charter people typically make each day.

You will need a plan for when you reach the 4 to 5 year end of contract... the next stage charter will NOT come close to paying your cost and almost all repairs are totally yours. That is why so many charter boats are sold to individuals at the end of the first charters terms. If you look for a good deal and check the boat out... you can come up with some very nice deals....

[nautical62]

Originally Posted by Reality Check

Think if you check... your typically limited to a two week use of your own boat in any given period... if you want it for say 4 weeks... you have to pay or exchange credits unless they have no charters on the books which means you can't do much planning in advance for a firm 4 week or more use of your property.....


... the next stage charter will NOT come close to paying your cost and almost all repairs are totally yours. ...

I can't speak to the terms of contracts that may be offered to other owners at other times or by companies other than the Moorings, but the above are very different to the terms I have.

In fact, I just returned from three weeks on my own boat and could have used it longer had I wanted to. I had to pay nothing extra and had to use no "credits". I am however limited to 2 weeks per year on exchange boats at other bases.

As for repairs, I am not responsible for any while the boat is under contract. (I do have to pay the deductible if I damage the boat) Obviously, should I choose to keep the boat after the terms of the charter contract, I would be responsible for all repairs as any boat owner would be. Should I decide to not trade the boat, but either sell it or keep it myself, I have the right to inspect it myself or have it inspected to be sure it has been maintained as specified in the contract. Clearly, the boat will have a fair bit of wear and tear and as mentioned by Reality Check the value of well used 5-year old boat will not come close to paying for a new boat in the program. My guess is I'll be lucky to get 50% of the initial price after 5 years, but of course, at the same time, I'm getting regular payments equal to about 45% of the initial value which I'm investing for my next boat, in addition to the end sale price.

As Reality Check mentioned the time available is limited (max of 9 weeks per year by my contract) so it's not a good option for those who are looking for extended cruising. However, for those who have careers or lifestyles that limit them to only several weeks a year, I think charter management is
an option to consider. For me, any cruising boat would only be used by me 8 out of 52 weeks anyways, so it made good economic sense to let others use my boat when I'm not using it, get a guaranteed income. While the boat will likely depreciate faster than non-charter, boats, receiving tens of thousands of dollars in income, having to pay no storage, no insurance and no maintenance much more than makes up for it.

It's true you can't make improvements like adding solar cells while it's in charter. Personally this doesn't bother me. The boat is outfitted for me. Fuel to run the alternator is a part of the deal. Although I'm very frugal with power use, one can use as much as they want with no added fuel cost. Obviously, if I choose to keep the boat after the charter contract and do some extended cruising, I can make any improvements I wish.

[D2D]

Thank you for your very informative posts. We're in the summer of 2010 now, are you still happy as an owner of a Mooring charter boat?

[Rou-Coo]

Thanks for reviving this interesting post.

Originally Posted by nautical62

In my case the guaranteed income will end up being about 45% of the cost of the boat, but their guaranteed trade-in is about 50%, so over the course of the contract, the income probably won't quite keep up with the depreciation. The real cost is the cost of your money. One either has to come up with the cash and forgo what you would have earned on that money or has the cost of a loan on a rather expensive boat.

Given the rate of return on investments these days (and, in particular from when this post was made) that concern is out the window! Do I understand you correctly that this guaranteed rate of return applies regardless of the amount of actual chartering? Was it affected at all by the recession? It sounds like the actual cost to you as an owner is 5% of the cost of the boat plus what you lose on taxes and (potentially) loss of opportunity on the money. Is that the way it works in practice?

Originally Posted by nautical62

It's also nice to not be tied to one cruising area. I should also mention that as the owner, you don't have some of the limitations and encouragement the charter people would have. For example, on my last trip to the Virgin Islands, I didn't do the chart briefing and headed almost immediately outside their normal area and down to the Spanish Virgins.

This surprises me as I would have thought the insurance rate Moorings pays would be determined by them restricting the range of the boat. Were there any additional insurance costs?

Lastly, do you have clear title to the boat while it is in the Moorings program? What I am interested in here is whether you could lose the boat if the company went bankrupt etc.

Thanks for all the information.

[nautical62]

Originally Posted by Rou-Coo

Thanks for reviving this interesting post.

...Do I understand you correctly that this guaranteed rate of return applies regardless of the amount of actual chartering? Was it affected at all by the recession? It sounds like the actual cost to you as an owner is 5% of the cost of the boat plus what you lose on taxes and (potentially) loss of opportunity on the money. Is that the way it works in practice?

Yes, the income is guaranteed in my contract. Over the course of the contract is equals over 45% of the cost of the boat. Some of the contracts I just reviewed on new boats had guaranteed income that equaled about 43% of the price of the boat. By that I mean total price: outfitted, tax, licensing, delivered, etc.

The overall cost as an owner will of course depend on what one sells the boat for at the end of the program. Since my boat is still in the program I can only make an educated guess at this time.

Originally Posted by Rou-Coo

This surprises me as I would have thought the insurance rate Moorings pays would be determined by them restricting the range of the boat. Were there any additional insurance costs?

In my case I believe the insurance deductible is $6,000. I can pay an additional fee with each charter to reduce that to $600 I believe. My philosophy is to pay for the supplemental insurance when I go to a new area, but not one I know and use often. The insurance requires boats to be anchored at dark, unless doing a passage between island chains.

From what I've seen at most bases, they have a covered area: Within this coverd area, they will come assist you if you have problesm. Outside fo this area they will not. Their chart briefings and advertising only covers their covered area, so while one can go outside of that, most don't. Most don't even consider it. Some bases (such as the Abacos) make you sign a form stating you realize you are outside of the covered area.

My point is, because so few users leave their covered area, I'd be willing to bet that claims from outside that area is almost inconsequential.

Originally Posted by Rou-Coo

Lastly, do you have clear title to the boat while it is in the Moorings program? What I am interested in here is whether you could lose the boat if the company went bankrupt etc.

Yes, I have the title and by the contract, can take out of charter anytime with a 6 month notice given to the Moorings. Obviously, I'd loose the guaranteed income.



The above is true to the best of my knowledge, but some things have changed since my contract began, so people who may be interested should really talk to Tui Marine about their most recent contract agreements.

[nautical62]

Originally Posted by D2D

Thank you for your very informative posts. We're in the summer of 2010 now, are you still happy as an owner of a Mooring charter boat?

Yes. I was just on the boat for a couple weeks this June. When the atopilot broke, it was replaced within 1/2 hour. I wish I could say the same about the Hunter I have that is not in charter!

They had 3-page log of all maintenance for me to review, which included cutlass bearing replacement, etc. At the end of the charter I met with an owner representative and we walked through the boat going over anything that may need to be replaced or upgraded. He pointed out a few things I would not have even recommended myself!

Certainly there are a few dings that are consdidered wear and tear and this is somewhat subjective, but so far I agree with their subjectivity. They have replaced the mainsail and many other things as needed.

For me the decision as to whether or not to stay in the program will depend on whehter or not I can trade into a similarly priced boat. For me, I'd gladly spend 20-30% more than I paid for this one. If it comes down to having to pay 80% more, I'll probably hang on to this one instead.

Certainly the boat gets more use and abuse than it would if I was the only user. However, having no insurance, no maintenance and no dockage more than make up for that in my mind. Add to that 45% of the cost back in revenues... I really can't complain. My new 32.2 Moorings boat has been cheaper to own than my first 26-foot 30 year old pocket cruiser.