Considering Sunsail/Moorings Owner Program (merged)

[Epiphany]

My cruising opportunities and desires have dropped to only a few weeks per year. I am considering the Sunsail/Moorings owner program as a way to keep me involved without the expense/upkeep demands. I would like to hear what you all think.

[GordMay]

I think a single post would suffice to initiate a conversation.

[Teknav]

Ask yourself...if it is a profitable business, how come charter boat companies do not own any boats? Think of charter companies as brokers in the stock market; whether you buy or sell, they get their commission almost risk free. The owner, in the end, is left with a depreciated and sometimes badly handled boat that requires a pricey retrofit. Mauritz

[Alecadi]

Originally Posted by Teknav

Ask yourself...if it is a profitable business, how come charter boat companies do not own any boats? Think of charter companies as brokers in the stock market; whether you buy or sell, they get their commission almost risk free. The owner, in the end, is left with a depreciated and sometimes badly handled boat that requires a pricey retrofit. Mauritz

Perhaps you are right. I cannot say not having their numbers in front of me.
But, in any business, there is a golden rule: don't use your own money for capital goods. Use others money whenever possible.
In this case it's probably a good move for the charter companies to have others immobilize capital and they have the tools they need with others money.
Now , the depreciation is certainly to be taking into account for the owner of the boat and that is what they have to consider most in the operation in term of long term profitability.

[Epiphany]

I fully realize it is a good deal for Sunsail/Moorings. That doesn't mean it can't be OK for me as well. They pay all expenses for the first 5 years and I get up to 12 weeks (6 for sure depending on season) anywhere they have a similar vessel. I don't anticipate wanting more than 6 weeks. I know there is depreciation and that I have to sell the boat after 5 years. Owning a cruising boat again (I just sold a Gemini.) is out of the question so I have to charter, borrow or crew to go cruising. With my situation chartering is my best option so my reference point is charter vs charter owner program. My other option is don't cruise. From that context what am missing to convince me not to do it.
Thanks!

[Alecadi]

Originally Posted by Epiphany

I fully realize it is a good deal for Sunsail/Moorings. That doesn't mean it can't be OK for me as well. They pay all expenses for the first 5 years and I get up to 12 weeks (6 for sure depending on season) anywhere they have a similar vessel. I don't anticipate wanting more than 6 weeks. I know there is depreciation and that I have to sell the boat after 5 years. Owning a cruising boat again (I just sold a Gemini.) is out of the question so I have to charter, borrow or crew to go cruising. With my situation chartering is my best option so my reference point is charter vs charter owner program. My other option is don't cruise. From that context what am missing to convince me not to do it.
Thanks!

For me definitely charter is better than charter owner it leaves you more flexibility

[Stu Jackson]

You said it yourself. How do the #s add up for you? Since you already know the pros & cons of charter ownership as far as the boat and its before & after condition, then I'm not sure anyone else can help you out here. Am I missing the point of your question? Seems to me to be a very personal and financial decision that ONLY you can make.

[Epiphany]

I am seeking substantive comments or problems/issues I have overlooked and trying to benefit from the experiences of those who have done it.
Thanks!

[nautical62]

I own a boat that was in contract with the Moorings and now in contract with Footloose. Compared to chartering the same time every year, it's clearly notably cheaper.

Yes, the boat gets more use as many like to point out, but they also have to maintain it well, or they couldn't charter if for the rates they do. I feel people who also make the generic statement about the boat depreciating faster are also not considering how that compares to the notable income and incredible savings of having no insurance, no maintenance costs and no dockage fees.

If you compare owning a charter management boat to chartering 5 weeks per year, I think you will see that owning is much cheaper, but crunch the numbers yourself, assuming different boat values at resale. Personally, even if I gave my boat away, I still wouldn't be notably worse off than having had chartered the same amount of time.

If you are comparing owning a charter management boat to just owning a boat, comparisons can vary notably more, but again, I suggest you consider both alternatives and objectively crunch the numbers.

One thing to keep in mind when comparing owning a charter boat to chartering is whether or not you and/or your family would be picking up the entire cost of the charter or splitting it with multiple friends. That can make a big difference.

Don't forget to factor in the owner's time or turn around fee in your comparisons:


Pros I've seen:

Cheapest way to own a boat I've experienced, having owned 4 cruising boats.

Just show up and go - no maintenance, no headaches, no time spent getting to the actual cruising ground. Having no worries for me is a big one.

Much like chartering, but cheaper.


Cons:

You may be purchasing a much more expensive boat than you'd otherwise be happy with. That price difference is big, it may make up for the savings and guaranteed income. This last point is a big one for me, since the price of their minimum boat has gone up notably over the past 7 years, while at the same time the used boat market has improved notably.

You are stuck to a charter lifestyle - you can't go sit on it any night, and can't go sailing on it for 3 months straight.

In contrast to chartering, you are committed - you can't decide to spend your money on something else instead. At the end of the program you have a boat to either keep or sell, and will assume the costs and headaches of a normal boat owner.


In this thread and others, many say chartering is probably a cheaper way to go. I don't know what numbers they are assuming in coming to that conclusion, but they are most certainly not the numbers I've seen as an owner directly comparing the two. Owning has been much cheaper.

[Epiphany]

I am in a similar position to Nautical62 in that I will only charter. Along with that I will rarely if ever want to cruise more than 3-4 weeks per year.

I may however want to upgrade to a larger (I am considering a mid 30s monohull.) boat. Anyone had experience with Sunsail/Moorings upgrades?

I am also considering having a partner. Forming an LLC seems like a the way to go. Anyone had exerience with parterships in charter ownwer programs?

[boatman61]

Well I picked up a Beneteau 331, 2001 model when it was 'phased out' end off '06... after 5 years chartering the best offer the owner got was my $60,000...
so if you can find out what a 2001 Bendi cost then subtract my $60K... add any costs incurred during charter period.... that should give you an average % on your potential losses at least

[denverd0n]

Originally Posted by Epiphany

They pay all expenses for the first 5 years and I get up to 12 weeks (6 for sure depending on season) anywhere they have a similar vessel.

Note that if you are not actually using your own vessel, but rather another similar one, then there are additional fees.

From the looking into it that I've done, it comes down to whether or not you are going to make full use of the owner's time available to you. If you are only going to use maybe 3 or 4 weeks per year then it would probably be better (from a strictly financial perspective) for you to just charter. If you are actually going to use every bit of the owner's time that you can, then you will probably break even by going the charter-owner route, and might even be a few bucks ahead.

Of course, there are intangible benefits to being a boat owner, even if it does spend most of its time being sailed by others. If that has some value to you, then that changes the equation in ways that only you can determine.

[nautical62]

Originally Posted by boatman61

Well I picked up a Beneteau 331, 2001 model when it was 'phased out' end off '06... after 5 years chartering the best offer the owner got was my $60,000...
so if you can find out what a 2001 Bendi cost then subtract my $60K... add any costs incurred during charter period.... that should give you an average % on your potential losses at least

Good to see a real number used. In this thread we've seen opinions to both extremes regarding the finances of owning vs. just chartering with no real support offered either way. So here is a comparison between chartering and owning a charter management boat using some real numbers:

Cost of owning, minimum boat boat beginning Jan, 2007:

$60,000 Aprox. net cost of my boat after 6 years (purchase price minus income)
$08,400 Owners time (now "turnaround fee") $280/wk X 5 wks/yr X 6 yrs.
$00,000 Insurance, Dockage, Maintenance.
$00,000 Fuel, dinghy use, cleaning etc. - Covered in Owner's time above.
$00,000 Tax on income against depreciation write off.
_______
$68,400 Total cost for 6 years of "chartering" and owning boat at end


Cost of chartering minimum size boat at 5 weeks per year for 6 years:

$66,000 $2,200/wk X 5 wks X 6 years (don't own boat at end)


So, even if I gave my boat away, I'd be almost break even with the cost of chartering similar boats for the same amount of time. My guess is the sales value of my boat would be a little less than the 60K mentioned above, but let's say it takes 6 months to sell it during which time I have 5K of expenses, and it sells for just 50K. That's still $37,500 to me after expenses and broker's fee. I'm still about 35K ahead compared to chartering. (and that's using conservative figures. I think I'll do better than that.)


Now, that's a minimum boat starting in 2007. Obviously buying a bigger boat now for use over the next 5-7 years will cost more, but so will the comparable charter fees.

For those who keep saying chartering is cheaper than owning, I'd like to see a similar comparison using the actual boat price and income you've paid, vs. how many weeks you've used it. Obviously, not all situations are the same.

__________________________________________________ ________

Notes:

Not everyone will use their boat 5 weeks per year. Obviously, using the boat for more than 5 weeks per year would mean a better return on owning, and using it less than 5 weeks would mean a lower return.

My above comparison does not include the opportunity cost of money. In my case, since the stock market had a big decline in 2007, deciding to purchase in 2006, instead of keeping my money paid off well. Had I kept my money invested for chartering purposes, I would have had significantly less money to charter with . Obviously, the opposite would be true in times of good returns. Also if one took out a 15-year loan for a boat in the program for 5 years, meaning a great deal of the loan would still be outstanding, one would have to account for that. My personal philosophy is to own the boat 100% when it comes out of charter.

My comparison is also comparing the total costs of owning vs. chartering as faced by one person or one family that would be paying the entire charter fee. As a single person, sailing with friends, that's not necessarily what I would face. When friends join me on my boat, I'm picking up the majority of the tab. In comparison if I were to charter with 3 friends, we'd probably be splitting the costs 4 ways, meaning, my individual share would be a fraction of that listed above, and that's a notable change in the chartering costs I would face. If you would normally be splitting charter fees with others, that needs to be accounted for when making side by side comparisons.

I also feel that over the 6-7 years I've owned a boat in charter both the prices of new charter management boats has changed as has the used boat market, but that affects the comparison of owning a new boat in charter, vs. a used boat not in charter. Above, I am comparing chartering to owning a boat in charter management only.

[Cotemar]

The charter advertizing makes you think that the boat will be worth 1/2 the purchase price at the end of the charter agreement. In this buyers market and slow economy, that has not been the case. The ex-charter boat stays on the market for years at a high price and the owner gets frustrated and antsy and just wants to sell the boat to move on with life.

The Moorings / SunSail / Footloose / TMM plans, in the end, leave the owners still holding the bag.

No one seems to be able to say if it’s a bag of Sheet or a bag of Cash

[Steve W]

Nautical62, just curious, if the diesel or tranny implodes, does your charter company bear the cost of replacing the engine or tranny under their maintenance plan during the charter contract? How about the outboard or the dinghy? Otherwise, your numbers seem to make sense. I really enjoyed all of our BVI charters, especially the part where I handed the key back to the charter company and let them worry about the boat, maintenance, insurance, bad charterers, tropical storms and hurricanes. Very interesting thread.