Buy a boat and let it be used by charter company

[denverd0n]

Originally Posted by belizesailor

Two totally different animals...not a valid comparison. It is quite feasible to make significant profit from real estate...both cash flow and appreciation. And many companies/investors do own their own profitably. Not so for a typical mid sized charter boat.

Thank you. Exactly the answer I expected someone to come up with. Basically, real estate is not a depreciating asset whereas a boat is. Absolutely correct.

BUT!... Many, many companies also lease all of their office furniture. That, too, is a depreciating asset. Just like a boat. A company not owning their own office furniture doesn't make any more sense than a charter company that doesn't own its own boats. Yet it works for thousands of very profitable companies.

Things that make you go, hmmmmm.

[OldFrog75]

Originally Posted by denverd0n

Thank you. Exactly the answer I expected someone to come up with. Basically, real estate is not a depreciating asset whereas a boat is. Absolutely correct.

BUT!... Many, many companies also lease all of their office furniture. That, too, is a depreciating asset. Just like a boat. A company not owning their own office furniture doesn't make any more sense than a charter company that doesn't own its own boats. Yet it works for thousands of very profitable companies.

Things that make you go, hmmmmm.

But Charter Companies aren't either the owner or the tenant. More like the building manager who is paid a 40% commission by the owner.

[belizesailor]

Originally Posted by OldFrog75

But Charter Companies aren't either the owner or the tenant. More like the building manager who is paid a 40% commission by the owner.

Yep, it is an excellent money making business model. Just review the Moorings model...they make money every step of the way...from selling the boat into to charter thru decomissioning from charter.

[belizesailor]

Originally Posted by denverd0n

Thank you. Exactly the answer I expected someone to come up with. Basically, real estate is not a depreciating asset whereas a boat is. Absolutely correct.

BUT!... Many, many companies also lease all of their office furniture. That, too, is a depreciating asset. Just like a boat. A company not owning their own office furniture doesn't make any more sense than a charter company that doesn't own its own boats. Yet it works for thousands of very profitable companies.

Things that make you go, hmmmmm.

No correlation to renting furniture either.

Charter companies don't own boats because that is a certain way to lose money.

[denverd0n]

Charter companies don't own boats for the same reason that my company doesn't want to own their own building, or their own office furniture. We are not in the business of real estate, nor in the furniture business. Investing precious capital in these things would take it away from the business that we ARE in. So we invest as much of our capital as we can in our business--the business that we are good at--and we make our money that way. And we happily let someone else make the money on the real estate and the furniture. The fact that we might be able to ALSO make money on the real estate or the furniture is irrelevant--that is not the business that we are in.

Understand. I am not saying that buying a boat and putting it into charter is necessarily a good idea. Nor that it is a sure way to make money. Nor even that it is POSSIBLE to make money that way.

What I am saying is this: Anyone who makes the blanket statement that putting a boat in charter is necessarily a bad investment, because if it wasn't then the charter companies would use their own capital to buy all their own boats, simply does not understand how business finances can--and quite often DO--work. There are lots and lots of companies that choose not to tie up their capital in various ways that might well make them some money, because they want to focus as much of their capital as they can on the fundamentals of the business they are in.

Now. I'm sure there are still a lot of people who don't "get it." Business finances can be quite complicated and esoteric. So, if you don't want to believe this, fine. Don't. No skin off off my nose. And someone else can feel free to have the last word. Nonetheless, I--and I am sure, lots of others--understand quite clearly why a charter company might not want to own all of its own boats, and it does not necessarily have anything to do with whether that ownership would be a winning, or losing, proposition.

[valhalla360]

Renting offices and furnature is totally different. That's about having an exit strategy. If the market shifts, you want to be able to move and follow the market.
If you buy a boat to put in charter, you don't have an exit strategy.

The equivilent of charting would be renting out furnature. Of course the biggest difference, is if you are renting furnature out, you don't put in clauses that allow you to sit at each desk for at least 4wks out of each year. It's a buisness deal and you don't let personal use and preferences mess up the deal.

Bottom line, the moorings are into charter boats. That's what they do. If it was profitable, they would be buying thier own boats.

[belizesailor]

Originally Posted by denverd0n

... Nonetheless, I--and I am sure, lots of others--understand quite clearly why a charter company might not want to own all of its own boats, and it does not necessarily have anything to do with whether that ownership would be a winning, or losing, proposition.

Ive been involved all aspects of the charter industry for about two decades...nothing esoteric about it...charter companies don't own boats because its a losing proposition.

[ObsessionSTJ]

After watching the way folks tend to handle the charter boats from our area (British Virgin Islands) I would be reluctant. That being said, there is always an exception to every rule

Caio,
Camile
St. John, USVI
www.mountainsandseashore.blogspot.com

[belizesailor]

Originally Posted by ObsessionSTJ

After watching the way folks tend to handle the charter boats from our area (British Virgin Islands) I would be reluctant. That being said, there is always an exception to every rule

...

Usually charter guests don't do much serious damage to boats. What really makes them old & tired in a short time is poor maintenance combined with heavy use.

Its not the charter company's boat, and there is often short turn around time between charters, so they do just what's needed to keep the boat in service. Some companies are better than others, but all have this constraint to deal with.