Can We Afford a Catamaran ?

[Wavewacker]

2 Doodles!

Sorry, I assumed you were younger I guess, glad to hear you have your education behind you, your marketing degree puts you ahead of most I suspect. Do your due diligence! I'd suggest you be very conservative in your pro forma statements, seems to me to be a hard area to get into.

[justwaiting]

Originally Posted by ColonelK

......

Here is a follow up question for you all, I believe it was suggested that I get experience needed before buying my own boat, which I agree with because we need it making money to afford it. I think it was mentioned to join some of the crews that are sought on this forum as well. I checked out a couple of them and it seems teu don't pay, which is fine since I really just need the experience. But also they seem to always require years of experience. They often have a captain and just need crew so it seems to me they should be able to still use someone eager to learn like me. But it's a vicious circle that you need experience, this is a great way to get it, but you can't unless you already have that experience. Any thoughts or ideas on that?

Since you have qualification/experience in marketing i would suggest that you play to your strengths rather than your relative weakness (sailing). Think of you self as a product that you are trying to market. What are you offering, what do you want in return and how can you package yourself to get the customers attention. Starting point market research, use the search function on CF to lookup threads on crew (including getting them and problems), when you think that you have some ideas start a thread along the lines of "what 5 things makes a good crew members. Look at how you fall short on those issues and seek to address them but at the same time keep an eye on your longer term goals. So lets say that the list comes up with something like

• reliability
• experience
• knowledge
• easy to get on with
• willing to listen

Out of those the problem would be experience and knowledge which i thing you would agree with. So look at training to get qualification because you WILL need them if your long term goals are to be meet. This will show others that you are keen and wiling to listen. Try for minor experiences first, be that rail meat or what ever. If you get an opportunity make sure that you arrive in plenty of time. Better still ask if you can turn up early and help, not only will you learn a lot about things that you would need for your own boat but you will find that if you are the first to turn up and don't leave till every thing is packed more invitations will follow.


Another way in which you may be able to use your marketing skills would be to offer them free of cost to sailing related organization. Lets pick an example; sailing for the disable who can always do with assistance. You could provide the assistance as an individual or packaged as a non financial sponsorship through your business. Structured the right way not only will this help you to NETWORK but may provide you with a tax deduction even to the extent of some minor sailing expenses.


I am not telling you what you should do, rather trying to encourage you to look outside the box

[belizesailor]

Originally Posted by Doodles

And the part about finding some employees to run your other separate business, well I don't know what kind of business it is but that hardly ever works. Nobody knows and runs the business like the owner who has the investment in it.

+1, my experience too with small to medium sized businesses. These size business can't afford to hire executive level staff to run them and it is rare to get lower-level employees with the right skills to really take the reins.

[belizesailor]

Originally Posted by ColonelK

Yes, I can't believe how helpful you all are. It's amazing that do many people would take the time to respond to this. Thank you all very much. I'm sorry I haven't been more responsive but I didn't expect such a quick response from so many people and am out of town for my cousin's wedding right now.

You're welcome. Whether ashore or afloat sailors are generally a pretty helpful bunch....because they all know that next time they may be the one who needs assistance!

Originally Posted by ColonelK

....we plan on going on a week long charter this summer to see if living on a cat, sailing one, and chartering it is for us. I know a week isn't long but it should give us a taste.

Good idea. A charter, and/or crewing for others, lets you get the taste of it before you jump in with both feet. I know of many who have jumped in with both feet with no prior time aboard and discovered they hated it. Bad time to discover this after you have bought the boat!

Originally Posted by ColonelK

Also, I expected there would be classes and tests and licenses needed and have no problem doing what it takes to get those. Though I admit I did not expect you need a year or more experience first.

Loading up on the training can dramatically shorten your learning curve, but in addition to training you need experience. One year is just barely getting started. I've been a sailing instructor since 1994 and I'm still learning stuff ! This is part of what keeps sailing interesting.

Originally Posted by ColonelK

As for where we would want to charter from, we live in fort Myers actually, but would prefer most to be based in Florida somewhere, either south or south west Florida. Marinas and slips seem to be much more affordable in south west Florida. But if regulations and costs were too much to base in FL, I think we would be happy to consider elsewhere in the caribbean.

I used to live in SW Florida. Great cruising ground. At least back then, there were a number of charter companies and sailing schools in the area. I expect there still are. Charters rates were generally cheaper than other venues and you cut out a lot of travel expense. Maybe others with more recent experience in the area can chime in with specific company recommendations.

Having started businesses as a foreigner in the Carib, I can tell you that it is going to be WAY easier for you to get started in your home country. I've owned a few different business in FL and it is an easy state in which to do business (at least when I was there).

Originally Posted by ColonelK

Here is a follow up question for you all, I believe it was suggested that I get experience needed before buying my own boat, which I agree with because we need it making money to afford it. I think it was mentioned to join some of the crews that are sought on this forum as well. I checked out a couple of them and it seems teu don't pay, which is fine since I really just need the experience. But also they seem to always require years of experience. They often have a captain and just need crew so it seems to me they should be able to still use someone eager to learn like me. But it's a vicious circle that you need experience, this is a great way to get it, but you can't unless you already have that experience. Any thoughts or ideas on that?

Not always true that you need a lot of experience to crew. You can often find rides on casual races at local sailing clubs as "rail meat" if nothing else. Every experienced sailor on this forum had to start somewhere. There are many great ways to build experience, but you have to make the effort to get involved in your local sailing community. Join a local sailing club/yacht club (or just befriend someone who is already member), hang-out at the docks, take classes (crew with some training and little experience is better than nothing), charter with a captain/instructor, crew for friends with boats, get yourself a small inexpensive day sailor and just go sailing...plenty of places to do this near Ft Myers. Volunteer to crew at every opportunity also, but always be honest about your experience. Do all the above not just one. You are in an excellent venue for this with opportunities all around you. You will find that as you build experience the opportunities to go sailing multiply exponentially.

[barnakiel]

Originally Posted by ColonelK

(...)

Question 2: We are in our mid 20s so obviously we don't have the cash to buy a boat outright. The only way it seems like a realistic alternative to buying a house is if you can make similar payments on it as a house. ie smaller payments over 20 or 30 years instead of big payments over 5 or 10 years. Is that possible?

(...)

Consult any credit / loan tutorial / manual. The shorter the loan time, the smaller the loan amt, the cheaper the boat (aote). Save up, invest the savings and and buy with cash is the cheapest option.

b.

[belizesailor]

Originally Posted by barnakiel

Consult any credit / loan tutorial / manual. The shorter the loan time, the smaller the loan amt, the cheaper the boat (aote). Save up, invest the savings and and buy with cash is the cheapest option.

b.

+1

Yes, just do the math, it gets ugly when you start using numbers with lots of significant digits. If you finance $200,000 worth of catamaran. even at just 5%, that's $10,000 a year in interest expense alone -- add this to a minimum cost of ownership of about 10% per year and you've got $30K of annual overhead just sitting at the dock. Much better to be on the receiving end of that equation. Financing makes sense for certain types of investments like rental properties, but will just dig you a deeper hole with a boat. I know single boat charter operators who struggle just to make their loan payment (and are often behind on payments). This spirals into getting behind on maintenance...until ultimately they fold up and someone gets a good price on a boat.

Keep in mind that charters cost money to run and thus this $30K annual overhead increases as you start to operate. Fuel, food (lot's of it!), water, crew, permits & fees, emergency repairs during charters ($$$!), taxes...it can really add up to the extent that not every charter run is profitable.

If you want to make money with a boat then just look at how successful charter companies do it. Moorings etc, all know that owning a boat is a very effective way to lose money. So they don't -- they don't own a single boat -- they let someone else with a dream capitalize their business (brilliant!). You can do the same on a small scale by managing a private yacht, or yachts, for someone, but of course you need to build that pesky experience first. I have friends who do this quite successfully, managing both individual private yachts and small charter fleets. They bust their humps, but at the end of the day they make a decent living.

[justwaiting]

Originally Posted by belizesailor

+1

Yes, just do the math, it gets ugly when you start using numbers with lots of significant digits. If you finance $200,000 worth of catamaran. even at just 5%, that's $10,000 a year in interest expense alone -- add this to a minimum cost of ownership of about 10% per year and you've got $30K of annual overhead just sitting at the dock. Much better to be on the receiving end of that equation. Financing makes sense for certain types of investments like rental properties, but will just dig you a deeper hole with a boat. I know single boat charter operators who struggle just to make their loan payment (and are often behind on payments). This spirals into getting behind on maintenance...until ultimately they fold up and someone gets a good price on a boat.

Keep in mind that charters cost money to run and thus this $30K annual overhead increases as you start to operate. Fuel, food (lot's of it!), water, crew, permits & fees, emergency repairs during charters ($$$!), taxes...it can really add up to the extent that not every charter run is profitable.

If you want to make money with a boat then just look at how successful charter companies do it. Moorings etc, all know that owning a boat is a very effective way to lose money. So they don't -- they don't own a single boat -- they let someone else with a dream capitalize their business (brilliant!). You can do the same on a small scale by managing a private yacht, or yachts, for someone, but of course you need to build that pesky experience first. I have friends who do this quite successfully, managing both individual private yachts and small charter fleets. They bust their humps, but at the end of the day they make a decent living.

+1

but you fogot depreciation so at 20% thats about $40,000 per year to add to the intrest, maintainance, repairs ... so about $70,000 per year in fixed costs.

[belizesailor]

Originally Posted by justwaiting

+1

but you fogot depreciation so at 20% thats about $40,000 per year to add to the intrest, maintainance, repairs ... so about $70,000 per year in fixed costs.

Yes, that too.

Although, depreciation can work to your advantage. If you are making a good income (probably at something else while the boat works charter) then depreciation can be used to offset income (assuming US tax law anyway). If you put a $200K boat on a 5-year depreciation schedule that same $40K can be used to offset your taxable income. This makes for a pretty nice tax break!

And of course in reality (as opposed to for tax purposes) boats don't totally depreciate (like a car)... most depreciate a bit and the hit a value plateau and stay there long-term.

Geez....the OP is going to be traumatized by the time we're done!

[justwaiting]

Originally Posted by belizesailor

Yes, that too.

Although, depreciation can work to your advantage. If you are making a good income (probably at something else while the boat works charter) then depreciation can be used to offset income (assuming US tax law anyway). If you put a $200K boat on a 5-year depreciation schedule that same $40K can be used to offset your taxable income. This makes for a pretty nice tax break!

And of course in reality (as opposed to for tax purposes) boats don't totally depreciate (like a car)... most depreciate a bit and the hit a value plateau and stay there long-term.

Geez....the OP is going to be traumatized by the time we're done!

i know what you mean about depreciation in the content of market values, but i didnt want to scare the OP by saying that if they put $50 000 in equiping the boat for charter , water makets, generators ..... than $40 000 would disapper on the spot and then there would still be depreciation based on residual values.

As you have identified the "profit" to be made in charters only exist where operation and boat ownership is seperated. In that model the operator makes a profit only because they are not funding the capital or the depreciation. The owers "profit" is only the tax offset asuming that they have other taxable income. Where the companies operate a mixed ownership model you can be sure that the company owned boats are the ones that are push forward first to clients.

[cruzan1]

Unless your running "day sails" forget doing charters in Florida. There is a reason that Moorings/Sunsail doesn't have a base in Florida. Unstable summer weather (afternoon thunderstorms), hot humid air, winter cold fronts with big NE winds etc. All a perfect mixture for unstable cruising conditions.

There is a reason that most of the market is concentrated in the US/BVI's. Almost perfect weather, great sailing destinations and a pre existing charter infastructure - mooring balls, dingy docks etc. I'd think about what kind of itinerary you could offer out of Miami and how many weeks of the year you could actually pull it off.

[belizesailor]

Originally Posted by cruzan1

Unless your running "day sails" forget doing charters in Florida. There is a reason that Moorings/Sunsail doesn't have a base in Florida. Unstable summer weather (afternoon thunderstorms), hot humid air, winter cold fronts with big NE winds etc. All a perfect mixture for unstable cruising conditions.

There is a reason that most of the market is concentrated in the US/BVI's. Almost perfect weather, great sailing destinations and a pre existing charter infastructure - mooring balls, dingy docks etc. I'd think about what kind of itinerary you could offer out of Miami and how many weeks of the year you could actually pull it off.

Sunsail, used to have one in St. Pete, not sure if they still do. I used to captain charters for them. Yes, the weather in FL can be a challenge, but the SW coast is a great cruising ground.