8 year old cat into charter? Possible or not?

[Piscis]

Many new cat buyers are financing their dream by giving the boat into charter for 5 to 7 years after the purchase. Then, after that period, they can take the boat out of charter and use it or selling it to finance a new boat.

During this time they have very limited access of their or a similar boat from the charter fleet.

I was just thinking about a different approach... Why not buy a boat and use it for a couple of years, lets say around 6-8 years, and then decide to eather sell it or give it to a charter company to earn some money with it for, lets say 2-3 years?

I see a couple of advantages doing it that way. First of all i can use MY boat for myself as long as it is still new and not beaten down by neglegting charter crews after 5 years. I have seen three year old charter cats, which i would not want to own after taken out of charter...
Second, i would have the choice of doing so at all, after that 8 years of owning the boat. If i am eger to continue, i do so. If i want to sell i do so and if i want to keep the boat but want to earn some money with it, i can do as well. It will be just my call, not the charter companies.

Will it be very difficult to find a charter base that would except my boat to be managed and run in their company? Considering an 8 year old boat in good conditions. LOA around 38feet.

Somebody here who acctually did that kind of approach? Or is in the process of doing so? Would love to hear your experience!

If a charter base would run the boat and take care for all charter expenses (insurance, maintenance, repairs, marina costs, management costs...) how many percent of the total charter fee a customer pays would go into my pockets? E.g. in SE Asia, a 40foot cat in highseason is about 4500€ per week, In low season around 2500€. Thats between 10000-18000€ a month. How much return could be expected for me as the owner?

I have seen many charter bases, offering boats well over 10 years of age. I chartered a Lagoon 380 from year 2003 a while ago. So there must be a market for that kind of cats...

Thanks!

John

[billknny]

Originally Posted by Piscis

Many new cat buyers are financing their dream by giving the boat into charter for 5 to 7 years after the purchase. Then, after that period, they can take the boat out of charter and use it or selling it to finance a new boat.

John,

I think you are missing a key point. After 5 to 7 years it is not exactly true that you CAN take your boat out of charter, but rather you MUST. The large charter companies want nothing to do with boats much older than this.

This is a common place where people's grand financial plans fall apart. When the charter company hands them the boat back in some remote place, and they are not ready--for whatever reason-to take it. Suddenly it's an albatross. I worked for a small charter outfit, and we saw this a lot.

But... You can find a smaller, maybe one location, charter outfit that would be happy to have such an older boat retiring from cruising service. You might find the cash flow isn't as steady as the larger outfits.

If I was in that position, I'd buy one of the retiring charter boats, and let someone else eat the initial depreciation, but how that works for each person's situation is very different.

[belizesailor]

Background: Ive been around the charter industry since 1994 as a charter captain, sailing instructor, delivery captain, and boat owner. Ive been closely involved in the operations of several charter bases, but avoided like the plague becoming a charter base manager (one of the worst jobs in the world).

In all those years, Ive never seen an owner ultimately come out ahead (Including myself!). Actually, I have seen it once, but that was a very unusual case.

Charter companies are very good at selling the dream to folks as a clever means of capitalizing their business with OPM (Other People's Money). The larger A-string charter companies like Moorings have this process down and they make money at ever phase of the transaction. They wont touch an older boat.

However, there are some B & C string charter companies, who will take older boats. The quality of these companies covers the range from damn good to terrible...as does how they will maintain your boat. Poor maintenance by the charter base is one of the hardest things on a boat in charter.

An older boat in charter will not pay for itself, but it can help defer much of the cost of ownership. In the end, boat maintenance will chew up any temporary profits...especially as the boat ages and bigger expenses pop up.

There are potential tax advantages to having a boat in charter like depreciation.

The best situation for having a boat in charter, especially with a smaller charter company, is to be an involved owner: develop a good relationship with the owners/manager and crew. Be physically on site as often as possible. Make sure they know you are paying attention to how the boat is maintained. You & your boat will get better service than the typical absentee boat owner. Ive been the primary captain for boats Ive owned in charter service: that is the ideal arrangement.

Being present also reduces issues like unreported charters and unauthorized use of your boat...Ive been on a lot of great sunset cruises on OPB (Other People's Boats)...usually with the base manager aboard!

[Jeannius]

Being present also reduces issues like unreported charters and unauthorized use of your boat...Ive been on a lot of great sunset cruises on OPB (Other People's Boats)...usually with the base manager aboard!

When I had a boat in charter I fitted a Tracker. The boat only went on ONE sunset cruise. As soon as it was known there was a tracker aboard it didn't happen again.

[belizesailor]

Originally Posted by Jeannius

When I had a boat in charter I fitted a Tracker. The boat only went on ONE sunset cruise. As soon as it was known there was a tracker aboard it didn't happen again.

Good idea! Dont tell them until after you bust them the first time! [emoji57]

[Tupaia]

Originally Posted by belizesailor

Good idea! Dont tell them until after you bust them the first time! [emoji57]

Don't tell them at all, just bust them, they will think you have spies, much better to keep them on their toes.

[Snore]

Originally Posted by belizesailor

Good idea! Dont tell them until after you bust them the first time! [emoji57]

I believe that is why so many charter boats have a hard-wired AIS. Long-range it is cheaper than a tracker.

[yeloya]

Being in charter business for more than a decade, all I can say is that putting 6-8 years old cat in charter may work or not, depending on where and what kind of cat. I am not too familiar with the market in Caribbean but this won't work for instance in Croatia (the seasons are very short, marinas and labour costs are very high and it's full of brand new cats) it may possibly work in Greece and will definately work in Turkey where there is a huge demand for cats while there isn't enough supply. If the cat is 3 cabins, it will be even more difficult. If it's a cat 50+ she will have much more chances.

I totally disagree with what Belizesailor is saying; I have never seen or heard of base managers partying on customers' boat. One should be real idiot to do that and idiot base managers don't last too long in this position. Unreported chartering is almost impossibleİ you need to get a crusing permit from the harbour master every time the boat gets out of marina and everyone can easily have an access to these data, even on line. If you leave w/out it and cought by CG, you will have a big trouble + the insurance will not pay anything if something happens to the boat.
"Being present" for getting better service is also something unheard of. Noone is stupid, almost all of the boat owners are coming to sail with their boats at least once a year and they see how their boats are treated. If they are not happy, they can take their boat out of yr company and put somewhere else. I know some big companies are making long term binding contracts and one should simply avoid them because of this.
After all, you are leaving yr valuable asset to a company; if you don't fully rely on them , find another one. Otherwise, they can always find a way to cheat you even if you spend all of yr life on their bases..

Cheers

Yeloya

[belizesailor]

Your experience in your market may vary, but all of these things do indeed go on in the Carib. No port captain anywhere in the Carib requires a permit just to leave the harbor and little if any data is logged by officials in any databases here...certainly nothing pertaining to charter vessel movement.

[Bean Counter]

Originally Posted by belizesailor

Your experience in your market may vary, but all of these things do indeed go on in the Carib. No port captain anywhere in the Carib requires a permit just to leave the harbor and little if any data is logged by officials in any databases here...certainly nothing pertaining to charter vessel movement.

Are you going to share with the forum those charter companies that allow unreported charters and staff partying in OPBs?

[belizesailor]

Originally Posted by Bean Counter

Are you going to share with the forum those charter companies that allow unreported charters and staff partying in OPBs?

Multiple charter companies in Texas, Florida, and Belize over a 26 year time period. Some of whom are no longer in business. These were mostly the B & C string charter companies, not A string companies like Moorings/Sunsail.

[Piscis]

Great infos from you guys. Thanks a lot!


Some more infos about my situation and what i was thinking: If i buy new, i will definitally get an owners version. When buying second hand, it will be a different story. I will see what the market offers at the time.
The boat will get a german registration, but will never see EU waters. So i am really working on a VAT free purchase and use.
IF i decide to give the boat into charter after a certain amount of years of use, it will go to the SE Asia area or South Indian Ocean. Most probably to Thailand, Indonesia or Malaysia. Maybe Seychelles...



The charter option would only be neccessary if my financial plans will go south and there is the need to get some funds after a couple of years. I do not consider this very probable, however, things may go wrong and this will be "Plan B". Plan C means i have to sell the boat, Plan D... well... not thinking about that... LOL


John

[rabbi]

Originally Posted by yeloya

Being in charter business for more than a decade, all I can say is that putting 6-8 years old cat in charter may work or not, depending on where and what kind of cat. I am not too familiar with the market in Caribbean but this won't work for instance in Croatia (the seasons are very short, marinas and labour costs are very high and it's full of brand new cats) it may possibly work in Greece and will definately work in Turkey where there is a huge demand for cats while there isn't enough supply. If the cat is 3 cabins, it will be even more difficult. If it's a cat 50+ she will have much more chances.

I totally disagree with what Belizesailor is saying; I have never seen or heard of base managers partying on customers' boat. One should be real idiot to do that and idiot base managers don't last too long in this position. Unreported chartering is almost impossibleİ you need to get a crusing permit from the harbour master every time the boat gets out of marina and everyone can easily have an access to these data, even on line. If you leave w/out it and cought by CG, you will have a big trouble + the insurance will not pay anything if something happens to the boat.
"Being present" for getting better service is also something unheard of. Noone is stupid, almost all of the boat owners are coming to sail with their boats at least once a year and they see how their boats are treated. If they are not happy, they can take their boat out of yr company and put somewhere else. I know some big companies are making long term binding contracts and one should simply avoid them because of this.
After all, you are leaving yr valuable asset to a company; if you don't fully rely on them , find another one. Otherwise, they can always find a way to cheat you even if you spend all of yr life on their bases..

Cheers

Yeloya

One can just visit one of the Croatian bases especially in shoulder season / off season and ask for a charter weekend on spot. Good deals to be had!

Then check with the owner if that charter ever showed up in his records...