To Buy or to Wait . . .

[GorMac]

Hi All,



My wife and I are planning to go cruising in about 6 years. We would like to go sailing for 2 to 4 weeks a year until then, slowly increasing as work allows. I am starting to look into 40 to 45 foot bluewater cats for us & occasional guests. Current funds available are about 150K. As far as I see it there are basically 3 options:

1. Buy an older cat now
   • Pro - provides us with something to sail on for the next 6 years that we can get to know, fix up & get the way we like. Currency exchange is pretty good right now (CDN = USD). A buyers market right now for this size cat (from what I've read)
   • Con - we would have to keep the boat somewhere & maintain it, thus how much of our 2 - 4 weeks would we get to sail. In another 6 years the boat will be 6 years older - is it good to start cruising on a 15-20 yr old boat?
2. Sign-up for a moorings/sunsail 5 year plan
   • Pro - provides us with something to sail for the next 6 years, maintenance & docking included.
   • Con - we would end up with a boat worth about what we put into it, but probably not to our liking layout/equipment/bluewater wise, thus requiring shopping for a new boat (starting over).
3. Wait 5 or 6 years and buy an older (5 - 6 yr) cat
   • Pro - lets us invest the $ and do further research.
   • Con - doesn't get us out sailing for our 2 - 4 weeks a year. Currency exchange may go back to historic (CDN = .6 USD). Resale market could swing to sellers.

I'm not asking for the answer to this, just looking for thoughts/opinions as to what people have done/planning to do.

A couple questions:
Would any 3rd tier charter companies take on a 15 year old cat?
What do people do with their boats between purchase & cruising when only able to use occasionally?
Would a well maintained quality boat that is 15-20 years old be a suitable starting point for a circumnavigation?


Thanks.

[denverd0n]

If you have not already done a lot of sailing then I would suggest that you do some chartering between now and then. I would suggest trying both catamarans and monohulls, just to be sure you know how each behaves and which you would prefer.

[Pete7]

Couldn't agree more, charter for several years in different locations. Doesn't matter if you like or hate the boat after a week, its the experience you want; to decide what you need in your future boat, oh and to have a great holiday

Must be some good late bargain charters around at the moment with the economy hurting. Pact a bag, have passport ready and get googling

Pete

[multihulls]

I am in the same dilemma and am doing lots of internet surfing.... found the stuff below a very useful guide with logical decision points, just do't recall where I downloaded it from and italicizing is not working...


The Good News

Let me first say that ever since I purchased my first boat in 1995 (a Jeanneau 50 with one of the big charter companies), I have, of course, experienced some frustrations, some bad years with lower than expected charter income and some headaches of different varieties. However, I do not regret buying my boat for one minute, and I am now on my third boat. It has given me a great opportunity to:

 Go cruising extensively in the most exotic sailing grounds in the world, without having to worry about the maintenance of the vessel: showing up is basically all I had to do!

 Enjoy a great activity with my son, and make him love it; make him closer to me while teaching him a lot about seamanship, marine science*and respect of the environment.

 Make a lot of great new friends;

 Own a boat partly paid for by charter income after 5 years of enjoyment.


Not bad, right? In other words, would I give up the sunsets at anchor in the Virgin Islands with a nice cool drink? Or the wild card games at night with friends on board? Or the phenomenal sailing in the Caribbean Trade Winds?
NO WAY. I can't think of anything I could have spent my money on, that would have given me so much enjoyment and fulfillment over the years. It is a great experience, which I will renew as long as I'll be able to.

But it's just that before you sign on the dotted line and engage in this large financial commitment, there are some caution signs you should know about, to help you deal more smoothly with this whole process.



Is Buying a Boat An Investment?

First and foremost, (although less and less charter companies try to present that argument), if you have been led to believe that this is a profitable investment in any way, we've got some news for you: Buying and owning a boat is anything but that, not by any stretch of imagination. However, if done the proper way, buying a charter boat may be a way to:

 Minimize your financial exposure.

 Enjoy sailing in fabulous and remote sailing grounds that you probably would not get to see otherwise, and at a greatly reduced cost.

 Benefit from all of the above with much less headache than with traditional ownership. (Note: We wrote less headache, not no headache)

 Incidentally, satisfy your ego: Telling your acquaintances that you own a yacht in the Caribbean, the Med or in the Pacific is a guaranteed attention-getter!



The Homework

As for any large expenditure, you must do some significant homework beforehand. And remember: Do not get emotional about this. Deal with facts and numbers only.

1. Preliminary Tests

You must ask yourself 3 important questions. Depending upon you answer, ownership may or may not be for you.

Question 1:* Do I intend to keep the boat at the end of the charter management contract, usually 4 to 6 years? Or: Will I likely roll over to a new boat with the same charter company?

 You answered YES: GOOD. Charter boat ownership is in effect a great way to enjoy sailing for a few years without major expenses, AND own the boat at the end of the contract while having the charter income pay for some or all of the mortgage. (More about income and finances later).

 You answered NO: NOT GREAT. If you do not intend to keep your boat at the end of the management contract, or trade-in and roll over to a new boat with the same company, then you'll probably want to resell her.

If so, here is the scoop on what some charter companies might tell you:

 After 5 years, boats keep a resale value of up to 60%, and...

 ...Our brokerage company will help you sell the boat.


The reality - What charter companies/brokers will not tell you:

 Selling a used boat can sometimes be a long, and frustrating experience.

 You seldom, if ever, get the price you thought you would—probably not 60% after 5 years or more.

 You will get several low-ball offers that will insult your intelligence.

 Your wait may be even longer when the brokerage house you chose has 6 charter boats similar to yours for sale.

 If the boat has not been sold before the end of the contract, you will have to pay the mortgage and the boat expenses without earning any income on the boat any more. OUCH!


Solutions to explore:

 Do not buy a boat and keep chartering as in the past.

 At the end of the contract, move your boat to a second-tier fleet.

 Find a charter company that offers a buy-back guarantee with a fixed price at the end of the contract. Some companies try to address all the inconveniences above and are offering options like simple and straightforward buy-back; or buy-back at a pre-determined price if you rollover to a new boat.


Question 2:* Do I intend to use the boat extensively during the contract (like, 3 weeks+ a year)?

 You answered YES: GOOD again. Significant use of the boat will make ownership less expensive than simple chartering, not to mention the extensive enjoyment.

 You answered NO: NOT GREAT. If you do not intend to use your boat a lot, but have answered YES to the first question, you can safely proceed further. However, make sure you consider all negative factors carefully.


If you answered NO to BOTH questions, then we seriously suggest you reconsider. You're much better off continuing to charter as in the past since charter boat ownership does not present any advantage in your situation, except satisfaction of your ego (see above). It has been recognized over and over by charter boat owners that ownership does not make sense (financially or otherwise) if one does not use the boat much or keep her after the contract.


Question 3: Do I need to over-borrow (as in: I must take an equity loan on the family home to come up with the down payment) to afford the boat?

If it is the case: DO NOT DO IT. STOP READING RIGHT NOW AND FORGET IT! Alternatively, consider a smaller boat, until the numbers fit. Many owners find themselves "upside down" at the end of the contract, when they owe more money to the bank than the boat is really worth! Similarly, do not count on the boat income for anything else than paying the mortgage. That would be a fatal mistake! In other words: You must apply all the charter income towards your mortgage or note, including any cash flow surplus you may get.

OK, if you successfully passed your tests, you're in good shape! Now it's time to make choices.



2. Your Choices

We will assume here that you will acquire a bareboat (see bareboat vs. crewed discussion.) You have 3 main decisions to make: Which management company, which type of boat, and which location.

But before we get into this, we strongly suggest you try to talk to current boat owners with the companies you have in mind, but preferably not the ones the company has pre-selected. To do that, you can hang out at major Boat Shows (Newport, RI, Annapolis, MD, Oakland, CA, etc.) and ask one of the people attending the management company booth to introduce you to a couple of current owners. (There are always some owners hanging out there.) They should be more than happy to do this and you will have the effect of surprise. And/or go on the Internet: Boating newsgroups (Sailonline forum charterboatowners : Charter Boat Owners Group "rec.boats" and "rec.boats.cruising", Traveltalkonline) will help you find owners. Do it. You will learn a lot.

The Charter Companies

You will find lots of companies on the market, large to small. Here are the pros and cons for each.

Large Companies

There are 2 large companies:
Moorings - 700 boats, 28 bases worldwide;
Sunsail - 1,400 boats, 40 bases worldwide, several land resorts.
Note: Although they are distinct companies, they now belong to the same German company, TUI, a large travel concern.
A third one, VPM, is a French-owned company, with 200 boats, better suited for European residents/citizens.

Pros:

 Been around for a long time.

 Relatively financially solid, but ask for recent financial statements anyway (not an easy one, but some companies volunteer it);

 Large selection of boats;

 Worldwide bases where you can sail boats similar to yours, using what veteran owners call "Reciprocals". Some companies (like Sunsail) even offer exchanges with land-based resorts;

 The company will guarantee your income and will take care and pay for all the maintenance, docking, insurance, etc. You pay nothing. You can make a very accurate financial projection of where you'll be at the end of the contract.

 Standardized maintenance and hurricane procedures;

 Standardized, proven phase-out procedures;

 If they go under, which is highly unlikely, you will sweat a little, but they will probably be bought out and you will not be left hanging.

Cons:

 No flexibility if you want a boat model they do not offer, or if you want additional custom features or equipment on the yacht;

 Limited owner's use of the boat (6 to 9 weeks a year);

 Customer service somewhat less personal, although The Moorings makes lots of efforts on this aspect.



Medium and Small Companies

The ones we like are Tortola Marine Management (TMM), Horizon Yacht Charters and Voyage Charters in the British Virgin Islands. CYOA and VIP (which also offer power boats) in the US Virgin Islands. Typically, those companies have fleets of about 20 to 60 boats, a very close relationship with owners, and excellent customer service.

Pros

 Customer service more personal and easier to get in touch with;

 Smaller concerns (like Tortola Marine Management and Horizon) voluntarily limit the fleet to a manageable size so they can take extreme care of their customers and boat owners;

 Some have been in business for a long time. However, this is an active industry: Some companies might have a new management. Verify this.

 More flexibility in choice of boats and equipment if you want a particular model;

 Unlimited owner's use of the boat.


Cons

 Financial status of the company has to be seriously checked: If a small charter company goes belly-up, it will most probably disappear and leave you in a panic. However, some the ones we show above have been in business for quite a long time.

 No guaranteed income. Your financial projections always remain hypothetical. You will be hit hard on the income if another bad hurricane season hits the islands again.

 Small choice of locations- sometimes only one location offered; thus no other bases available for "reciprocal time";

 Maintenance and phase-out and hurricane procedures to be thoroughly checked.



Implications of Your Company Choice

The big guys (Moorings and Sunsail) typically offer:

 Guaranteed income even if your boat never goes out on charter. Income typically equals 8 to 10% per year of the value of the boat new.

 All maintenance and expenses paid by the company. You pay literally nothing.

 Use of reciprocal charters in many other locations worldwide

 Guaranteed buy-back options, but...

 LIMITED owner's use: 6 to 9 weeks a year, with sometimes a limit on weeks in hi-season.


The smaller outfits typically offer:

 Not-guaranteed, variable income equal to roughly 60 to 75% of the charter income;

 Company performs the maintenance, but you (the owner) pay all expenses: you will be billed for maintenance, docking, insurance, etc. Those companies charge a mark-up on parts over cost.

 No buy-backs of any sort, but...

 Unlimited owners' use.

 Few other locations geared to exchange programs.


Do you see where we are going here? I do not want to generalize because there are exceptions for everything. But in a nutshell, the big companies are better suited for owners who are happy with limited owner's use and who, basically, want a completely headache free, not-too-emotional kind of ownership.

The smaller companies are much better suited for owners who want to own a particular type of boat, (TMM for example, will take almost any boat you'd like in their fleet) with customized features, like to sail a lot, maybe go out on their boat 2 months at a time, and like to be very involved with their boat.

So as you can see, your choice here can drive you in 2 completely different universes. You will have to very carefully assess which one is best for your needs.



The Boat Type

Obviously, your choice of boat will stem from your budget. And although you might find some price differences between companies for similar boats -mainly because of equipment differences- eventually, you will get the same bottom line, as in "You get what you pay for".

Once your budget is defined, several criteria should guide your choice.

 Will you sail mostly with your wife/husband/significant other only? If so, you might want to look into a center cockpit: they often have the most comfortable owner's stateroom. 

 Will you often take the kids or friends along? If so, you will need more staterooms/heads. Would you consider the roominess and stability of a catamaran — great for young kids? Or are you a hard-core monohull sailor?*

 Assuming you will keep the boat after the end of the contract, will she suit your goals back home? Same question if you intend to go cruising for an extended period of time at the end of the contract.

Very important: All things being equal, all boats do not bring in the same charter income. Some boat sizes/configurations are more popular than others among charterers. Therefore, if you choose a contract with a percentage-based income (see contract section), you'll want to know exactly what kind of income boats similar to yours have generated over the last, say, 2/3 years. For that, during the course of your contract negotiation, you have to ask the management company to show you the listings of real bookings achieved by boats similar to yours, at the base you will choose (see below.) Most companies will show you "proformas" of future potential bookings. Not good enough. Proformas can be deceiving, vague and optimistic. Insist for the real stuff. If the company has nothing to hide, they should have no problem disclosing this information to you.



The Boat Location

This is a matter of personal preference, but here are some criteria.

If you plan to base your boat in the Caribbean, bear in mind that the South Caribbean, also called the Windward, (Grenada, St. Lucia, Martinique) present more sailing challenges, with a lot of open ocean sailing, longer legs, and generally stronger winds than in the Northern Caribbean, also called the Leeward, (US and British Virgin Islands, St. Martin). So your sailing self-confidence and your anchoring technique will have to be up to par in the Windward.

Conversely, the northern part (US and British Virgin) offers an almost unlimited diversity of sailing grounds and anchorages in a relatively small area. Personally, this area has been my long time favorite.

In the Bahamas and the Florida Keys, waters are much shallower, so catamarans are more adapted to the grounds and will let you go places that monohulls cannot access.

Very important: For similar boats, all bases do not bring in the same charter income. Some are more popular than others among charterers. Therefore, if you choose a contract with a percentage-based income (see contract section), you will want to know, again, what kind of bookings boats similar to yours have gotten over the last 2 years (see above, section 2.2.) Thus, if for geographical preference, you elect to base your vessel in a somewhat remote area, we strongly suggest that you go for a contract with guaranteed income. Some remote locations, with the advantage of being very exotic, might also have the problem of lacking competent mechanics and surveyors. Even parts could be hard to come by.

Finally, check how practical and pricey is the airline access from your hometown to the base you'd like.



Well, you have done your homework, made your choices, and you feel comfortable. You are armed to the teeth and ready to go to the nest step: Contact several charter companies and start getting a feel for the real thing. But as we hope you understand by now, this is not a simple process, and we urge you to carefully tale all the steps above!

[maxingout]

I wouldn't purchase a boat until I am ready to use it a great deal. Until then I would charter.

[witzgall]

I you only want to sail 2+ weeks a year, then don't buy until you are < a year away. The time, money and effort you will need to invest can be substantial, better to use that to charter for the 2+ weeks, and save $$$. IN the meantime, you can try different boats, in different places, and get a better idea of what you want to buy when the time comes.

Chris

[Charlie]

What about looking at buying a boat coming out of charter from a first tier company and finding a second tier company that will take it on. You might be able to break even on the cost of the boat that way. If the cost is 60% of a new boat (and with the economy the way it is you may be able to get it at 50% or lower) there is a reasonable chance of getting the boat to turn a profit.

I would be concerned with the following items: 1) the financial stability of the 2nd tier company and 2) their maintenance. Although you are planning in leaving in 6 years there is a reasonably steep learning curve on how to maintain a boat so if you want to leave in 6 I would own the boat and maintain it by year 4.

Another option is to join one of these sailing clubs that gives you access to different boats. Tradewinds Sailing: Club rates - San Francisco Sailing Lessons, Bay Area, sailing lessons, sailing classes, Sailing Instruction, sailing club, ASA, sailing vacations, Sailing Lessons, San Francisco, sailboat rental, rentals for less then the cost of slip fees per month you can sail quite a bit.

[Cheechako]

it'll cost you less to charter twice a year than owning a cat that size. however, i would buy your boat at least 2 years prior to cruising to get it in the order you want and become really familiar with it... my experience is that alot of things on a boat go bad in 6-8 years, so if you buy one now, you may be doing a lot of refurb before you leave...

[jatich]

I'd like to dig up this 4 year old thread. I'm in exactly the same position as the OP. Times have changed quit a lot since 2011 and I wonder what the situation is today.
I'm looking for a 40ish catamaran, easy to single-hand sail.

[denverd0n]

The situation hasn't changed at all. If you are 6 years away from casing off, and expect to have 2-4 weeks per year between now and then for sailing, then chartering makes WAAAAAY more sense than buying a boat right away, for all the reasons already mentioned.

[JPA Cate]

If your boat is part of a charter fleet, you'll wind up shlepping all your favorite junk to and from the boat each time you use it. As the time approaches when you want to take it out of the fleet, so you can use it more, the to-ing and fro-ing of tools, bedding, supplies of various kinds, becomes more intense. For our friends who did it, it was a terrific hassle. YMMV.

I am on the side of the people who are advising you to charter a number of different boats, and learn what you like best. You may wind up with your final cruising boat far different from your present ideas. Experience informs choices.

Ann

[jatich]

I started windsurfing and catamaran sailing when I was 11 years old and I've been dreaming of a yacht almost all of my live. I do sail sometimes with friends who own a yacht and I have chartered a monohull in Thailand for 16 days a few years back. I do have a clear view about the boat I'd like to live on.

However, I'm tossed between option 2 and option 3 (cf OP post).
What will give me the most favorable cost-to-benefit ratio?
I know that option one will not give me the exact boat I like, but I can sell it after a few years and get what I really want.

PS. I will start another thread asking about the maintenance of charter boats in Malaysia and Thailand, because that will be a key-factor in my decision.

[Cherise]

With these types of posts I wish people would specify if they live by the water and if it is warm enough, for them, to liveaboard there.

If so, I actually I think it is more important than doing a charter - go find an owners forum of the few types of cats you are interested in. Then ask the owner for a ride and pick his/her brain. You get to sail it and receive some sage wisdom about the boat that you won't find during your two week charter (like maintenance costs to mods necessary for cruising).

Then buy one, rent the house (you still benefit from home ownership tax breaks while you continue to work and build the kitty and keep a potential appreciating asset). And go liveaboard. 6 years could turn into 3 or 4 years with the savings of living aboard vs a mtg or high rent.

There may be even more overall cost savings by living aboard first. Imagine you buy the boat, spends loads on gear, get out there and find out you or your partner want out. Thats expensive (read ex. to follow).

If you two cant hack living aboard at a marina, you have a good chance not making it cruising. By moving aboard first you also get to do some mini-cruising to ensure that the at anchor life is for you both.

Plus, most marinas have a few knowledgeable cruisers there you can talk to and be sure it is for you before you add gear or quit jobs, sell the house kinda thing.

Boats are not cheap. But I know for me, despite $700 last month in boat parts, a big month, it is still less than paying for rent or a mtg (however, I am in the expensive SF Bay Area).

You could piss away a lot of money by being fearful with that you need to buy now. Like the op worried about currency rates and future US boat prices. Fear can make us do unwise things. Like buying a boat that costs two slips, for six years of slip, ins., and upkeep costs for just a month a year of use.
He is obviously a smart guy to be able to afford such a cat. He should know deals are to be had, always, if you dig and are flexible. Now with the net we know of them outside what our broker, group of sailing friends or yc knows about.
I know a few people who grabbed up some sweet deals on some nice cruiser or semi-cruiser ready newer plastic classic boats (10 years or less).

One example, the owner had the dream, I guess too big/selfish of one where he thought the wife would love it just as much as him. She didn't and ordered it tp go - now! Accepted at 40% off avg listed price.
I bet everyone on here knows someone with that sad song.


Sent from my SGH-T999L using Cruisers Sailing Forum mobile app

[Ribbit]

If living close to the water, and therefore able to sail at weekends, wouldn't it make a lot of sense to pick up a small cheap boat, to cram in as much experience as possible in the meantime? Could join a local yacht club, and get access to all sorts of courses as well. I know my local small yacht club lays on all sorts of events through the season too, which could be a lot of fun to join in with (subs are very reasonable with the one I am in the process of joining, at under $30 equivalent a year).

For what chartering might cost in the interim, this could be far better value, as well as more useful for learning?