What condition is a boat in, after five years of chartering?

[Jdege]

Hi, folks.

I'm a land-locked guy, who's been thinking about taking up the cruising lifestyle.

In a Burst of Spontaneity ... (new member hello)

I'm currently 57, with a decent job, some money in retirement accounts, and a smallish house with a mortgage. Most of my retirement funds are in a traditional 401(k), but I have a fair chunk in a Roth. I was noticing that if I retire at 65, I'll have enough in the Roth to buy a used Gemini 105MC, or something else in that price range. (And because it's a Roth, I can withdraw it without tax consequences.) With the boat paid for, and the house sold, I figured I could live on SS and the income from the traditional 401(k), and have a fair cushion against emergency, until health and age forced me ashore.

But browsing around revealed another possibility. I will be able to access the Roth funds without penalty at the age of 60, at which time it should be sufficient to make a down payment on a new Gemini Legend 35, or something similar, which I could then make arrangements to charter, with one of several charter management companies. They promise (though don't guarantee) a 9-10% return on investment, which should cover paying off the loan at an accelerated rate. I wouldn't expect that the loan would be paid off in full, but the balance should be down to where I could cover it, at the end of a five-year charter period.

Given the choice between the two, the chartering option would cost me more money, overall, but would result in my having a newer boat, that had been under constant maintenance, as opposed to an older boat that would need who knows what to bring it up to working condition.

I'm not going to be making any decisions for a couple of years, but I thought I'd ask - what kind of condition are charter boats, at the end of a five-year charter cycle, in the Leeward Isles? Are they still in usable condition? Or are they likely to be worn out to the point of uselessness?

[Lizzy Belle]

I would personally never buy a boat with a charter plan - key word here is personally tho. I expect any boat that has been chartered for a couple of years needs some sort of refitting to get her back into shape.

But what I was wondering: these are big boats, especially since from what I understand it's just you who'll be living aboard and sailing. Since you said you have very little sailing experience, I am wondering why you wouldn't opt for a smaller, older boat that you can own outright.

When you buy a used boat, you know what you're buying. With the charter plan, you buy a new boat others will be using, and you still end up with a used boat -- you just don't really know for sure what you'll end up with, nor is the return on investment a sure thing.

as opposed to an older boat that would need who knows what to bring it up to working condition.
Get a survey done on a new-to-you boat, and you'll know just that, and what it would cost

I'm not saying there's anything wrong with your plans, hope it doesn't come across that way, I'm just wondering why you haven't opted to go the 'easier' route, so to speak

[WindwardPrinces]

They say that chartering only makes sense financially if you intend to take vacations with that charter company anyway.

Otherwise, just buy the boat you want outright.

[Jdege]

Originally Posted by Lizzy Belle

I would personally never buy a boat with a charter plan - key word here is personally tho. I expect any boat that has been chartered for a couple of years needs some sort of refitting to get her back into shape.

I'd expect that some refit would be necessary. Folks talk about standing rigging needing to be replaced at 10 years. I'd not be surprised that it would need to be replaced after 5 years of chartering. And even if the routine maintenance has kept everything working, there will be equipment that wouldn't be needed on a charter boat that I would need for a live-aboard.

Originally Posted by Lizzy Belle

But what I was wondering: these are big boats, especially since from what I understand it's just you who'll be living aboard and sailing. Since you said you have very little sailing experience, I am wondering why you wouldn't opt for a smaller, older boat that you can own outright.

The boat in question, the Gemini Legacy 35, is not a big boat - 35' LOA, 14' beam. And it is the boat I'd want, given my current understanding of what I'd want (which is based on very little knowledge, at this point, but I plan on learning as much as I can, in the years before I have to make the decision.) Buying an older Gemini 105MC would definitely be a second choice. (The Legacy 35 has two engines, the 105MC only one, and that can make a huge difference in trying to maneuver a cat into a slip.)

Originally Posted by Lizzy Belle

When you buy a used boat, you know what you're buying. With the charter plan, you buy a new boat others will be using, and you still end up with a used boat -- you just don't really know for sure what you'll end up with, nor is the return on investment a sure thing.

The question, in my mind, is whether I'd prefer a 20-year-old 105MC or a 5-year-old Legacy 35. And I'd prefer the latter, unless... As for return on investment, of course it's not a sure thing. I'd be able to service the loan, at least, in the worst case.

Originally Posted by Lizzy Belle

I'm not saying there's anything wrong with your plans, hope it doesn't come across that way, I'm just wondering why you haven't opted to go the 'easier' route, so to speak

I don't have plans, I have options. And I'm musing about which would be 'easier'.

[gjordan]

It is years ago now, but I bought a boat that had been 5 years in charter, then 2 years in private ownership. It was a good price, but was (I think) much more maintenance than a 7 year old privately owned boat. The boat looked good, but the engine care had been minimal and the wiring had been messed with enough to give lots of trouble. Charter companies want the boats rented and moving as much as possible for the income. Fixing problems is often done, just enough to get it back out rented ASAP. There may be very good charter companies, but they are all in it for the money, and not really for you. I was pretty experienced at cruising when I bought it, and shipped lots of spares and tools to the boat, but it took (like all boats) a lot of work to keep it going. I think the best advice was on your other thread, that said buy a cheep re-sellable boat and start learning what you like and what you need. They are often not the same thing. Crewing on as many peoples boats as possible will teach you a lot, and not cost you much. Try monos and multis. There are good points to both. Getting stuck on one idea before you have much experience can lead to mistakes that take the joy out of sailing. Enough of my opinions. Good luck_____Grant.

[Lizzy Belle]

Originally Posted by Jdege

And it is the boat I'd want, given my current understanding of what I'd want (which is based on very little knowledge, at this point, but I plan on learning as much as I can, in the years before I have to make the decision.)

I'm not a huge fan of cats (except for the feline kind ) so I'm not the person to advice on that. In general tho: make sure you have actually sailed the boats you consider buying - regardless of the number of hulls

What I meant by 'big boat': 34' isn't a big boat, but a 34' cat is a lot more boat to maintain, handle and afford then a 34' monohull. I haven't a clue how easy or hard a Gemini Legacy 35 is to sail solo, or how comfy they are at sea.

As far as living aboard goes, you have to love the room a cat offers

[Jdege]

Originally Posted by gjordan

I think the best advice was on your other thread, that said buy a cheep re-sellable boat and start learning what you like and what you need.

My plans for the next few years, as stated in my original post, haven't changed. I'll be taking the classes, and doing some charters. I'll be making no decisions regarding what to purchase, for two or three years.

[Jdege]

Originally Posted by Lizzy Belle

In general tho: make sure you have actually sailed the boats you consider buying - regardless of the number of hulls

Agreed.
I don't even buy a car, without doing a rental of the same model over a weekend.

[Lizzy Belle]

Originally Posted by Jdege

I'll be making no decisions regarding what to purchase, for two or three years.

Sorry, re-read your post and the charter option is also 3 yrs away. Sorry, since you posted the question I kinda assumed you were thinking of buying sooner, and I didn't read your post well enough

Since a lot can change in 3 yrs, I'd just stick to the sailing lessons and getting to know different kinds of boats for now.
By the time you have more experience on both monuhulls and cats of different makes / models, chances are you'll have a very different 'want & need' list then you do now

[sanibel sailor]

Ask an accountant.

Charter companies know the charter business pretty well. If there was a 9-10% rate of return to be made, they would be doing it themselves rather than offering this "deal" to the public. I suspect that the pro-forma has a lot of assumptions that are hard to make reality.

One option is to go charter a boat for a week.

See how rigorous the companies are screening potential customers. When I started sailing bigger boats, I was surprised that they would let me take the boat with my limited experience. I woould not have let me charter my boat.

See how the boats get knocked around during a week of constant use by someone who does not own or maintain it, then multiply that by 5 years. Not quite "drive it like you stole it", but it is a rental.

Some of these companies have a brokerage arm to sell the old boats. Check what the pro-forma says about the end of contract value vs what they are asking for them. Selling prices will be considerably less.

[Jdege]

Originally Posted by sanibel sailor

Ask an accountant.

Some of these companies have a brokerage arm to sell the old boats. Check what the pro-forma says about the end of contract value vs what they are asking for them. Selling prices will be considerably less.

I'm settling on two take-aways, from this conversation:

1. Do a charter of the boat I'm interested in, with the management company I'm thinking about doing business with, to see what they're like, and how they're handled
2. Check to see what their old boats are selling for, when they are retired from charter

[Lizzy Belle]

And keep in mind that both what you'll be looking for and the market itself can chance (a lot) in the next 3 - 8 years.

Originally Posted by gjordan

I think the best advice was on your other thread, that said buy a cheep re-sellable boat and start learning what you like and what you need. They are often not the same thing. Crewing on as many peoples boats as possible will teach you a lot, and not cost you much. Try monos and multis. There are good points to both. Getting stuck on one idea before you have much experience can lead to mistakes that take the joy out of sailing.

[Privleoplag]

you sound a bit like I was about 5-7 years ago.. and now my boat is due out of charter in 6 months. I'd say unless you can get a lot of use of a boat you put in charter .. hold off a bit on buying one and putting it in charter, build up your funds a bit. For us it worked because now, with the boat soon coming out of charter, we've been sailing a lot the last 4 years, and that's 4 years of sailing we wouldn't have had. I believe the model of boat we bought retained pretty good resale value but resale isn't what we were looking for, we were looking for a boat to live on during the winters.
There will be charter boats coming into the market when you're ready to move aboard. I don't know what the charter company is like that you're looking at as far as end of contract phase out goes, but I believe that would be a good time to get involved with purchasing a used charter boat. I think you could end up with a very fine boat out of charter if you are boat smart. Of all the boats we looked at before buying in with a charter co., the private boats that were priced comparable to the used charter boats were in terrible shape.

What shape will the boat be in after 5 years of charter.. It will all depend on how involved the owner was with the phase out and how meticulous/agreeable the charter company was with doing the phase out.. if they have a phase out contract. With some ex-charter boats/comapanies it may depend on just how involved the owner was with the boat while it was in charter.

I like your thoughts on the Gemini.. It was one we were considering too. Don't worry about single handing.. if you've got some good abilities, you'll do fine. There might be some exciting times, just have to manage. Good Luck.

[exMaggieDrum]

Originally Posted by gjordan

It is years ago now, but I bought a boat that had been 5 years in charter, then 2 years in private ownership. It was a good price, but was (I think) much more maintenance than a 7 year old privately owned boat. The boat looked good, but the engine care had been minimal and the wiring had been messed with enough to give lots of trouble. Charter companies want the boats rented and moving as much as possible for the income. Fixing problems is often done, just enough to get it back out rented ASAP. There may be very good charter companies, but they are all in it for the money, and not really for you. I was pretty experienced at cruising when I bought it, and shipped lots of spares and tools to the boat, but it took (like all boats) a lot of work to keep it going. I think the best advice was on your other thread, that said buy a cheep re-sellable boat and start learning what you like and what you need. They are often not the same thing. Crewing on as many peoples boats as possible will teach you a lot, and not cost you much. Try monos and multis. There are good points to both. Getting stuck on one idea before you have much experience can lead to mistakes that take the joy out of sailing. Enough of my opinions. Good luck_____Grant.

I worked at a private boat yard for several years as an electrical and electronics tech. The local charter companies had their own repair/maintenance crews but sometimes they would get overwhelmed in the rush to get boats turned around and out again for booked charters. So I would sometimes be asked to help. There was intense pressure to "fix", as in get it working somehow, and cut any corners necessary to do so. That mean no time to do tidy wiring or really diagnose other problems. Many times the reported problem, which led to expectations that only "xyz" had to be fixed/replaced was wrong and then the charter managers would have a fit because it might take longer than expected. That isn't to say that all repairs were haphazard but some definitely were not up to basic standards of workmanship. And the regular repair crews didn't always have the best skills as they had to hire people to work weekends and long days on Saturdays and Sundays so the best guys tended to work at shops with regular M-F schedules and 40-50hr weeks.

As noted by others, I would expect you to find some repairs done that you would want to redo. And, charterers were incentivized not to report problems lest they have to pay for the repairs, so somethings didn't get reported at all and left until more damage was caused. And some outside owners were either cheap, or didn't have much experience with the cost of owning a boat, and would not authorize needed repairs so they would linger, and some never would get fixed before the boats were sold.

I would think you might find some very good value in ex-charter boats but I would in no way say, in general, that they are in as good of shape as owner-operated boats. But that is "in general" as you can find plenty of bad owner-operated boats that are not maintained well. Just do your due diligence and then be prepared to do the "normal" fixing and upgrading you would do on any new or used boat. I would, however, recommend you give charter boats a good inspection under the covers if you can. And look at the maintenance logs. Charter companies "should" keep detailed records on each boat in its fleet. They may (or may not) allow you to see the logs if they are selling the boats themselves.

[Macblaze]

Last year we chartered a 2006 Bavaria 32 and sailed along side a single-owner Tartan 34 for a couple of weeks. The Bavaria had been in charter since day one and the owner of the Tartan had actually toured her when he was shopping.

The Tartan was immaculate. The Bavaria was worn.
The Tartan had toys and lots of handy mods, the Bavaria was spartan.
The condition of extras like the dinghy and outboard were actually the only really bad things on the charter though.

I have also chartered boats (in the PNW) as old as 1999 and they were condition-wise, indistinguishable from the, 2006...

But, the Bavaria ran solid for 3 weeks. It had not major issues, sails etc were in good condition and nothing made it uncomfortable. It was just a bit tired. I don't think we would have noticed it if we hadn't been aboard the Tartan so much... that boat really shone, but the owners were the meticulous kind.

And if you look you will find lots of people have bought used charter boats. I just think it depends on what kind of owner you want to be, because putting it in charter is like letting your 16-year old drive your brand new car for the first few months...it won't be new when you get it back.