Moorings Charter Program

[Karana]

I,m interested in hearing from sailers that have been in the program.
It seams like a good way to end up with a catamaran after5 years in the charter fleet.
Is it as EZ as they say on the web sight.
After 5 years how much was left to pay off the lone. Was the boat in good shape.

[Cotemar]

Have used Moorings charters many times and thought about a purchase also.

1) The boat is valued at 50% of the purchase price after 5 years, but the actual market price is far lower than the 50% value.

2) Chartering a boat is like letting every kid with a learners permit in your town drive your brand new car for five years. The car may be running in five years, but will have a lot of issues.

3) The odds favor the Moorings Company not the actual boat owner.

[Teknav]

Cotemar! Very true indeed! That's why boat charter companies do NOT own any boats of their own. They act like a rental agency, getting a cut/commission on every rental/charter without owning the property.

Mauritz

[FLLCatsailor]

You are way better off buying an ex charter boat from someone who has put their boat in the fleet for 5 years and taken the huge depreciation hit...

[DotDun]

During a cursory investigation, I discovered:

They ask for 20% down.
Typically finance the remaining on a 20 year mortgage.
At 5 years, the value of the boat is at best 60%
On a 20 year 5% mortgage, 83% is left to pay off after 5 years

Simple math example:
Boat = $400,000
Down Payment = $80,000
Finance = $320,000
At 5 years balance = $267,000
Boat is worth at 5 years = $200,000 - $240,000
Remaining 15 years of payments @$2111/month.

If one is still working (not retired), IMO, the 5 year 'free' use of your boat or another sounds better than reality. I concluded one would be money ahead to buy a boat coming out of charter, if in fact that is what one wants. And I believe with enough investigation, a decent boat could be had coming out of charter, assuming additional $$ needed to bring it up to proper condition.

Tax advantages/disadvantages not considered in the above. Beware of 'claimed' tax advantages, I smell a rat there but didn't investigate.

If it was lucrative, the charter company would finance the boats themselves.

[Factor]

Obviously there are differences in each jurisdiction, particularly in so far as taxation implications are concerned, but putting a boat into charter in Australia can be quite effective, but you need to start with at least a 1/3 deposit to make it work

[Cotemar]

This info may help also.

[Privleoplag]

Originally Posted by DotDun

During a cursory investigation, I discovered:

They ask for 20% down.
Typically finance the remaining on a 20 year mortgage.
At 5 years, the value of the boat is at best 60%
On a 20 year 5% mortgage, 83% is left to pay off after 5 years

Simple math example:
Boat = $400,000
Down Payment = $80,000
Finance = $320,000
At 5 years balance = $267,000
Boat is worth at 5 years = $200,000 - $240,000
Remaining 15 years of payments @$2111/month.
....

Tax advantages/disadvantages not considered in the above. Beware of 'claimed' tax advantages, I smell a rat there but didn't investigate.

If it was lucrative, the charter company would finance the boats themselves.

One thing that you missed is that the payment on a 20yr @ 5% is as you say $2,111 except you may get a contract that pays $3000 mo. so then if you apply the extra $889 each month your balance at the end of 5yrs is $204,500 vs. your estimated $267,000.

Then your estimated value of the boat looks like it could be ahead, except for all the money you spend traveling down to use your boat. + you have the option to sell 2 weeks of your time.. which could generate additional ~$5000 year or so, then that makes a quite a bit of difference.

Now, refinance at the end of the contract for another 15 years.. using all the above.. your payment could be $1,415 @ 15yrs/5% vs. the $2,111 you figured.

Or, don't go with their finance.. put down some over 1/2 the money up front, and end up with $0 balance at the end...

[DotDun]

Originally Posted by Privleoplag

One thing that you missed is that the payment on a 20yr @ 5% is as you say $2,111 except you may get a contract that pays $3000 mo. so then if you apply the extra $889 each month your balance at the end of 5yrs is $204,500 vs. your estimated $267,000.

Then your estimated value of the boat looks like it could be ahead, except for all the money you spend traveling down to use your boat. + you have the option to sell 2 weeks of your time.. which could generate additional ~$5000 year or so, then that makes a quite a bit of difference.

Now, refinance at the end of the contract for another 15 years.. using all the above.. your payment could be $1,415 @ 15yrs/5% vs. the $2,111 you figured.

Or, don't go with their finance.. put down some over 1/2 the money up front, and end up with $0 balance at the end...

My limited-view observation with the chartering business is that those with a lot of cash don't participate as there are better investments to be had. As you propose, pay $200,000 down on a boat and in 5 years own that boat worth $200,000-$240,000 isn't what's considered the best investment, looking at from a purely investment POV.

I agree that there are other reasons to own a charter boat.

I'm not saying that owning a charter boat is bad. For some, it works out great, each person has different criteria. I'm simply explaining what I discovered when I started peeling that onion.

I didn't get very far into the process before bailing, but it appeared to me there is no room to negotiate prices either. So you may end up paying $400,000 for a new boat that could be had for $375,000 (or cheaper) buying as a private deal.

Again, I was looking at it thru investment glasses, which probably tainted my view.

[Cotemar]

You could go to a boat show and buy the boat for $100,000 less than what the Mooring charges for the same boat. Looks like they make a large chunk of money upfront to as they say accommodate you (bend you over twice).

[maytrix]

Seeing that most comments are negative, I'll give you the flip side.

Since you'd want to own it at the end, I think you are already off to the right start. A boat at the end of the program will have more wear and tear than a privately owned boat, but everything will work and you can be as involved as you want in the phase out to ensure everything that needs fixing gets fixed.

As far as the finances are concerned, if you just want to get someone else to pay a portion of the cost, I don't think its a good plan. If you want to get some sailing in without having to worry about any of the associated costs that go with it (dockage, maintenance..etc) and own a boat at the end, then it can be a great program. Fly down, use the boat, fly home.

Boat mortgage can be whatever you want. They want 20% down but you are able to finance it however you want to. You can put more down and you can likely adjust the terms. From what I have seen most mortgages tend to be 15%.

Another advantage to the program is the ability to use boats at other bases and also to be able to upgrade to larger boats. If you can make use of this, then you get even more value.

So for us as owners intending to take our boat at the end of the program, we're using as much time as we can and often upgrade to larger boats so the value we are getting out of the program is huge.

The only things you can't do is look at it as an investment and think you will come out ahead. But if you go in knowing this and with the right intentions, it can be a great program.

[DotDun]

Originally Posted by maytrix

The only things you can't do is look at it as an investment and think you will come out ahead. But if you go in knowing this and with the right intentions, it can be a great program.

Agree 100%.

I have even entertained the idea of owning a charter boat in addition to my private boat for all the reasons maytrix outlined. Just haven't stepped off that curb.

Also, there are other charter companies with differing terms. What if you don't want to own a Moorings? Get a different brand/model and put it with TMM, as an example.

[maytrix]

Yes, there are many companies to choose from. With many others, you get to customize the boat as you want. With many of those, you also have to deal with paying for everything but get a much larger percentage of the charter fees.

Moorings is guaranteed as is Sunsail. I believe there is one other company that offers guaranteed revenue as well. For us, guaranteed revenue, upgrades and multiple bases were all selling points.

[svlamorocha]

Originally Posted by Karana

I,m interested in hearing from sailers that have been in the program.
After 5 years how much was left to pay off the lone. Was the boat in good shape.

I went through the "program". I do not know about the loan options but can talk about the boat´s condition. The boat was is very good condition after the "phaseout" refit and I was pretty happy with the result. That said, I did spent quite a bit of effort and time before and after the phaseout refit to make sure the right things were dealt with in the right way. I am not sure how much of the outcome was due to what I did...

Cheers
C

[Teknav]

Would-be owners should consider this...How many days per year, are you going to use the boat? Do the number of your sailing days justify buying a boat? Would you be better off chartering a bare-boat? If you do a detailed cost analysis, you'll find that chartering a bare-boat will always be the best deal than owning; boats 35 ft and up. The only exception, to that cost analysis, would be if you're going to use the boat as a live-aboard.

Mauritz