about buying into charter...

[sundog]

I keep hearing bits of info but not the whole story. I'd like to hear from someone who ordered up a new boat and put her directly into charter for 3 years or so then took her home for extended personal use.
What was your bottom line price/savings once all the dust settled?
If you were in the market for a used boat would you do this or just go buy a used boat?
I don't care if it was a mono or cat either, I'm after the big picture.

thanks!

[2Hulls]

Hi Sundog - I did not do this, but considered doing it and ruled it out. So all I can provide is why I ruled it out - and it's for a very simple reason: I wanted an owner's version cat. Now a days you can find more in charter than when I was interested. CatCo, for one, will put owner's versions into charter. The down side is that you won't get the charter income with an owner's version for obvious reasons.

Hope this helps.

Dave

[sundog]

Yeah I thought about that but if I buy used my price range won't allow me to be too picky. I'll likley buy a used charter cat anyways but its just going to be 2 of us so I guess my surfboards will get their own private cabin! I'm also perfectly capable and willing to rip out a cabin and head and reconfigure the area to my liking while maintaining structural integrity.
Thanks though!

[Therapy]

I posted a new thread yesterday on this subject.............at least I thought I did...........I can't find it. Tired maybe.

I also want to hear from someone who actually did it.

[yeloya]

Hi Sundog,

I've bought a boat which is still to be delivered in March. I gave it to charter for 2008 season and having gone through this experience I can give you some clue..

1-Whereever you are, larger, newer boats sell better. There is less competition, more demand. Hence, you get better return on yr investment. Checking the bookings of my charter company, I see that boats like Jeanneau 54 DS, Salina 48, etc. are almost fully booked already with an average weekly price of 5-6.000 €.. I assume that their owners are also having special deals with the charter company, ie. are getting higher percentage of income. (here, the general practice is that the charter company gets 18% commission + 20 % agency fee. Super boats are probably paying 15 or 16 % commission instead of 18%..)
37 ft monohull will have a very little chance of even covering her expenses..Moreover, these boats are most likely sold out with further discounts (last minute, etc..) which are charged back to the owner. So, in my view, a useless operation..

2-For a cat in charter, obviously 4 cabins are prefered over owners version. I knew that and yet ordered a owners version. That's why the weekly price of my brand new Orana is almost equal to 5 years old 4 cabins Belize. They are both selling well. On top, at least for FP's, owners versions cost 10 to 20.000 USD more. So, if yr primarey objective is to make money, you better call for quattro (4 cabin version)

3-The last point.. If you intend to give yr boat to charter, make sure that they do take good care of yr boat and their own operations. See how they do their check in and out. Do they properly check every part of the boat every time with care ? Do hey have appropriate technical staff ? Do they screen their customers or just let the boat go with whoever claims to be competent for taking the boat out ? Check out some of the boats who stayed with them for 5-8 years in charter..

If everything goes right, a 300-350.000 € worth boat, under the management of decent charter company might pay off in 4-6 years while in the meantime you can enjoy yr boat couple weeks in the season and lot more out of season. I said "if everthing goes right"..Inevitably, there will be bad seasons, bad wheathers, some abusing charterers, etc. You will have to accept these risks upfront. After all, there is no free lunch...

To summarize, if you have that much money but not much time to fully enjoy yr boat and you still want to have yr own boat, that's the way to go. Otherwise, chartering a boat couple of weeks every year is another alternative. Third alternative (I understand that's what most forumers are doing) is to buy somewhat smaller or older boat and keep it for yourself..
If you have even more money, there is 4th option as well; buy whatever you can, don't give anybody, keep it the marina 50 weeks out of 52 and pay for the expenses..

Cheers

Atila

[mickmul]

Good advice Atila - I think the most important thing is care - care for the boat and care who's chartering it. I once had a serious failure of a gear/throttle cable in the Med on a cat. Going alongside I needed to go astern on the stbd engine and selected it. The engine went ahead at about twice the revs giving the boat a nice slap off the wall. We made fast and video'd the fault - select ahead, watch boat go astern, select astern, watch her go ahead etc. Then we fixed the fault and informed the charter company who were on a different island. When we returned the boat it was immediately chartered again with no engine check. I won't mention the company obviously . . just take care who you use . . . .

[Therapy]

Originally Posted by yeloya

Hi Sundog,


3-The last point.. If you intend to give yr boat to charter, make sure that they do take good care of yr boat and their own operations.

Atila

Key point I believe. Thank you.

I guess one must visit the docks and look at the boats etc.

Is this easy to do? I mean, will the companies let you look over their boats?

How to contact present owners for opinions?

[David M]

Originally Posted by mickmul

Good advice Atila - I think the most important thing is care - care for the boat and care who's chartering it. I once had a serious failure of a gear/throttle cable in the Med on a cat. Going alongside I needed to go astern on the stbd engine and selected it. The engine went ahead at about twice the revs giving the boat a nice slap off the wall. We made fast and video'd the fault - select ahead, watch boat go astern, select astern, watch her go ahead etc. Then we fixed the fault and informed the charter company who were on a different island. When we returned the boat it was immediately chartered again with no engine check. I won't mention the company obviously . . just take care who you use . . . .

Heck...mention the company. It could benefit a few people! Who is more important?...the company or us?

[Therapy]

Originally Posted by David M

Heck...mention the company. It could benefit a few people! Who is more important?...the company or us?

I vote us.

I also think I could put up with converting a cabin into an office after I take over the boat.

I know people that charter may well have the "it's a rental" attitude but my wife says that the type of people that charter a boat for 5k + a week are not abusive in general.

Is my wife correct?

[Vasco]

Originally Posted by Therapy

I vote us.



I know people that charter may well have the "it's a rental" attitude but my wife says that the type of people that charter a boat for 5k + a week are not abusive in general.

Is my wife correct?

In a word, NO!! People vary and the ability to charter a boat for 5K a week doesn't change them. I once heard one of the workers of a charter company cursing coming off a big cat that two couples had chartered. The spare cabin and lockers were filled with all the garbage from a two week charter. And believe me two weeks of vacation consumption can really create a lot of garbage. Some folks feel that at that price they can do anything they want. The charter company did not say anything to the charterers. The company did not own the boats and income is income so don't antagonize the customers. This was a company where the boat owner pays for all the upkeep as opposed to one where the company pays and the owner gets a share of the proceeds.

[Therapy]

Originally Posted by Vasco

In a word, NO!!

Dang!

Originally Posted by Vasco

This was a company where the boat owner pays for all the upkeep as opposed to one where the company pays and the owner gets a share of the proceeds.

I would think that no matter what the contract said, the charter company would not eat any costs in the end.

[kenackr]

I'll try to keep this short.

I bought a brand new 40' sailed her for a while then thought to put it into charter at a small operation in the Bahamas.

The boat paid its own way for a couple years (income = expenses (including boat payments)), then came hurricane Andrew.

While communications were still off line right after the storm, the charter company formed a "salvage operation" and then claimed salvages rights on all of the boats in their care, mine included. It turns out that the insurance company named "US & Continental" that the charter service had suggested for use was a ponzi scam and paid out Zero dollars to anyone on the storm. Even though a class action suit against the insurer was filed and won, the assets that were being held in a California bank, turned out to be worthless when the laywer went to seize them with judgement in hand.

I lost well over $100k cash with zero recovery from anyone.

Oh yeah, and then 3 years after, the IRS dissallows the deduction for the boat loss (eventhough we had attached a copy of the court case against the insurer) on the basis some of some clerk thinking that all boats have insurance and I was lying about it. Then they tell me I owe $20K in back taxes and penalties because of it. Then they froze all of my accounts.

So what's the moral of the story?

Be very, very careful before dealing with anyone when you are in an absentee owner situation, especially if they are not a US terriory or possession where US law presides.

Do all charter companies do this? No. Do all insurance companies do this? No. Is it something I ever thought of? No. Am I the only one it ever happend to? No.

Your milage may vary.

Ken

[Therapy]

Originally Posted by kenackr

I'll try to keep this short.



I lost well over $100k cash with zero recovery from anyone.


Then they froze all of my accounts.





Your milage may vary.

Ken

Sheesh!!

[mikereed100]

It turns out that the insurance company named "US & Continental" that the charter service had suggested for use was a ponzi scam

Thanks for naming names Ken. Is the charter company stii in operation? I'm not sure who is the more shameless scammer here, the charter company or the IRS. My condolences,
Mike

[Vasco]

Brings to mind the case when some of these companies cease operating. The owners have to fly down asap and try to reclaim their boats. Happened a few times in the BVI when all those smaller outfits were going bust.