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Old 26-01-2016, 10:54   #1
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Purchase to charter

I'm considering purchasing a powercat for charter, with the idea of assuming ownership in 5 years when I'm ready to retire. In the meantime, I'd perhaps use the boat for 2-4 weeks per year. Would I be just throwing money into a pit in some tropical location or can I actually make money/earn equity doing this? Is it generally better to buy a new or used boat?

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Old 26-01-2016, 11:05   #2
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Re: Purchase to charter

At least several threads on this subject already...give them a look.

Boats are depreciating money pits. If they were ultimately profitable then charter companies would own them directly. My 2c from 20+ years involvement in the charter industry as both a charter captain and a boat owner.

You can get some "benefits to owner", but making a profit wont be one of them.

Generally, new boats depreciate more than used boats. Well made, well maintained used boats tend to hit a value floor and hold it for a long time.

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Old 26-01-2016, 11:21   #3
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Re: Purchase to charter

How much does a new boat cost? How much does a charter company sell their used boats for at the end of 5 years? What is the difference? Is that difference more than, equal to, or less than 2 weeks of chartering times 5 years plus the 5 years of boat payments (mostly interest anyway) that the charter revenue is paying?

Would you buy a new car and let Hertz rent it out for five years and then take whats left of it?
Do charter companies spend less on maintenance than an actual owner would? Do they spend even less at the end of the term?
What is the cost of bringing a charter boat up to top condition at the end of 5 years?
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Old 26-01-2016, 12:11   #4
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Re: Purchase to charter

Originally Posted by Liam Wald View Post
What is the cost of bringing a charter boat up to top condition at the end of 5 years?
That is a question I've wondered for quite some time
Itchin' to Ditch - - Blog about our adventures and upgrades aboard our 1976 Bristol 27. Soon we shall be abroad cruising the high seas.
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Old 26-01-2016, 15:14   #5
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Re: Purchase to charter

I bought a 2009 Leopard 372 powercat at its 5 year departure point from The Moorings. Boat was $450k new. I bought for $230K. It took $25K (all work done by pros, not DIY) to bring it back to very high quality.

I'm chartering it out now at Southwest Florida Yachts in Cape Coral. It only made sense for me because of the large Section 179 tax deduction of a boat business LLC, whereby the whole purchase price and capital upgrades were written off against my other sources of income. Those tax savings became the "kitty" by which to mostly fund the negative cash flow each year. I have found that I only need to fund about 2 weeks of my old charter costs but now am using the boat for 4-5 weeks.

In my case this was a winning situation, albeit only 7 months into it. I don't see anyway that a one boat business would ever generate even break even cash flow. After 5 years I should be able to sell and walk away without being upside down. I have very detailed spreadsheets on all the income/ expense/ tax calculations if someone is seriously interested.

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Old 27-01-2016, 11:21   #6
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Re: Purchase to charter

Thanks for the info. David, I'd love to see those spreadsheets. Anyway you can email those to me? Thanks.
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Old 28-01-2016, 08:39   #7
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Re: Purchase to charter

Only makes sense based on using the boat and hoping to come close to breaking even on actual money side. If not going to be using it more than 2 weeks or so a year, then stay far away. As the timeline approaches where you will be able to start using it more, reconsider and look for owners, who for various reasons (such as health/finances/divorce), want to sell there 3-5 year old boat. Those boats may be able to come closer to being in good shape vs price. The biggest depreciation of a boat is on the second day that the boat is owned. And we all know what the 2 happiest days of boat ownership are.

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