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Old 24-02-2015, 15:19   #1
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Buy a boat and let it be used by charter company

Is this a good investment and good return ? One of my friend have done it, but he said he regretted it.
Anyone have done it? Is it good or not? Like to hear the experience.
I was thinking buying a cat and let it charter for a year or two than I will live on board and try to travel far away.



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Old 24-02-2015, 16:01   #2
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re: Buy a boat and let it be used by charter company

Charter vessels tend to be like rental cars. Unloved, worked hard and may have many latent defects.

Do you want a tax offset and have the tax situation that can take advantage of it?

It is rarely a good option to get a good yacht cheap. Some have achieved this, mostly cats as I recall, but I suspect we dont hear much from those that have regretted it.

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Old 24-02-2015, 17:06   #3
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Re: Buy a boat and let it be used by charter company

In a previous life my girlfriend and her ex owned a monohull in the Moorings fleet. Since I've heard her say it multiple times I'll pass along what she has said. The boat came back in immaculate condition but it was not a good financial deal. They sailed all over the world in the 3 or 4 years, utilizing the special owner's deal. When all was said and done, they could have paid full price to charter all those times and been ahead financially. This was some 20 years ago so it might not be the same now.

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Old 24-02-2015, 17:33   #4
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Re: Buy a boat and let it be used by charter company

There are lots of threads threads on this. My take is basically...

1. If you want a 5 year old boat that has been well maintained but used hard then put a new boat in charter. You have to wait 5 years to get it but in the meantime you can "enjoy" the owners benefit of chartering anywhere in the charter fleet.

You can skip the 5 year wait by buying a used charter boat and be basically in the same spot.

My take is that it is not a way to get a free boat or save any money.

I have a friend who has bought 2 boats off charter and both boats were fine and exactly what he paid for.
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Old 25-02-2015, 07:03   #5
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Re: Buy a boat and let it be used by charter company

This has been discussed extensively here, so a search will turn up numerous threads. Bottom line, from what I've seen, is that for it to work out as a good financial deal you have to be able to take full advantage of the owner's time, and full advantage of the tax benefits.

The other thing that I would say is that there seem to be quite a number of people who do this with the thought that it will be great to spend 12 weeks a year (or whatever) using their owner's time. But in the end they only chartered 2-3 weeks a year before they bought the boat, and afterwards they still mostly go 2-3 weeks a year (or maybe just a LITTLE BIT more), and end up trying to sell the rest of their owner's time. That is, they planned to drastically change their habits, but didn't. So while they convinced themselves ahead of time that this was going to be a great opportunity, it turned out not to be.

I guess what I'm saying is that you need to be brutally honest with yourself about how much of that owner's time you are actually going to use. Not how much you HOPE to use. Or how much you would LIKE to use. But how much you will REALLY use.

Either that or just forget the economics of it and buy a boat because you want to, and accept that it is--in no way--an "investment." There are lots of good reasons for, and lots of rewards from, owning your own boat that have nothing to do with the economics of the matter.
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Old 25-02-2015, 07:17   #6
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Re: Buy a boat and let it be used by charter company

My summary when I looked into it was that I would have to come up with 25% downpayment, the chartering would pay for 25% if lucky, and I would need to pay the last 50% for a 5 year old heavily used boat that was not set up for me. It was attractive to use owner time anywhere in the world but it can be easily bought for less money
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Old 25-02-2015, 07:53   #7
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Re: Buy a boat and let it be used by charter company

If it was profitable to buy new boats and put them in charter, why doesn't the charter company do it directly (banks would happily lend them the money if they didn't have enough cash on hand...assuming it was profitable).

We looked into it several years back and when you strip away the fancy marketing materials, at best you get a small discount if you can take maximum advantage of the owners weeks along with some tax incentives.
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Old 25-02-2015, 09:15   #8
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Re: Buy a boat and let it be used by charter company

Main thing to reflect on is that charter and long term cruising are very different activities and require different things from the boat, make sure you allow for conversion costs. Think of it as buying a guest house to turn into a home only you get all the furniture as well
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Old 25-02-2015, 11:20   #9
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Re: Buy a boat and let it be used by charter company

Lot of variables to consider. Are you thinking of doing this locally (you didn't say where you live) or something more distant like with Moorings in the BVI.

I've considered it locally (So. California) and based upon my calculations the only way it makes sense is with a used boat (taking advantage of someone else's depreciation) and a reasonable expectation the boat will be popular enough to get at least 100 days of charter/year. Even then it's an iffy proposition. Lots of expenses to consider, not the least of which is unexpected maintenance.

As an example, I know of a very popular 9-10 year old charter boat one could buy for around $55000 that grosses to the owner about $18000/year after the charter company's commission/fees but before any other expenses. Best deal I've heard of but is it good enough? The owner is selling it in spite of the presumed cash flow.

If you do it, I think it has to be approached as a business with the boat being a commodity rather than your baby. Too much wear and tear to be emotionally attached to the boat.

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Old 25-02-2015, 11:52   #10
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Re: Buy a boat and let it be used by charter company

I've done it and know others who have as well. In truth you could pay rack charter rates and over five years you will come out way ahead over buying a charter boat. The big "M" charter company likes to present their offering sheets on the boats available by giving the full rack rates values of your 12 weeks/year owner's time along with the "guarantee rental income" as dollars to you, which is a little disingenuous. First, who has 12 weeks off a year for five years to cruising. Probably a lot of people but they don't have the hundreds thousands of dollars and/or for the credit to buy in. Our deal was a 47' cat in Raiatea, French Polynesia. This worked pretty well because I'm retired (airline) and can fly down there for free. Even if I just left her parked in the marine for the whole week, where can you get a 4-bedroom, 4-bath over-water bungalow for $115 a day in a tropical paradise? Do it again? Maybe but I'd need an iron clad exit strategy for the end game and that's not easy to develop.
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Old 25-02-2015, 13:13   #11
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Re: Buy a boat and let it be used by charter company

Quote:
Originally Posted by leftbrainstuff View Post
Charter vessels tend to be like rental cars. Unloved, worked hard and may have many latent defects.
I have no problem to buy used rental car or ex chartered boats. Their prices are often good. I would prefer buy a well used chatter boat than a private boat that has never been used for years sitting at the dock.

Having said that I would not want to use my own money to buy a new so that the Chatter Company can make money off my money. If I have time, I would rather charter that myself.
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Old 25-02-2015, 13:13   #12
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Re: Buy a boat and let it be used by charter company

It's been said many times and in many different ways; "A boat is at best a poor investment." There; I've said it again.
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Old 25-02-2015, 17:36   #13
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Re: Buy a boat and let it be used by charter company

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Originally Posted by Gpolar View Post
Is this a good investment and good return ? ...

Been discussed a lot here, so search existing threads for discussion, but short answer "No".

If it was a good investment then charter companies would own boats...they don't.
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Old 25-02-2015, 18:29   #14
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Re: Buy a boat and let it be used by charter company

You have read all the reasons why not and they are legitimate. There are so many used boats out there you can find a decent deal on a well equipped boat anytime you are ready. You can charter anytime at less cost and risk. What has not been discussed yet is the quality of the maintenance the boats receive.


I have delivered several boats to and from the BVIs and the maintenance these boats have received was definitely subpar. It would take a substantial effort and expense to bring a boat from the Caribbean up what I would call acceptable. Even Moorings boats, which is head and shoulders above the rest, were barely ready to sail when I arrived on site to take the boat away.


Deals can be had but check the boat closely.
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Old 25-02-2015, 22:27   #15
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Re: Buy a boat and let it be used by charter company

Thx all.
Alwaysforsail. Where do u suggest to buy used boat? Becoz traveling around the world to find a boat maybe more expensive than the boat


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