Charter Boat Ownership and the Phase Out.

[nautical62]

I have a boat that was in charter with the Moorings for almost 5 years and has now been in Footloose for a bit over a year.

Overall, I've been very happy. I agree it gets more wear and tear by being in charter, but getting almost half the value of the boat back in guaranteed income, having no insurance, no storage and not maintenance fees, makes up for that many times over. (Your 56% sounds similar)

Some things I recommend considering:

Is income guaranteed?

Are you stuck with dockage and other costs, even if it's not earning income?

What guarantees do they have about the shape of things when they turn the boat over to you at the end of the charter? Both the Moorings and Footloose have different standards. I can't speak to Dream Yacht Charter.

[David_Old_Jersey]

Originally Posted by dasha

But I am only paying 56% of the new price. If I were to buy a 6 year old charter boat now, I would exect to pay at least 50% of the new price. Yet I wouldn't know what sort of phase out it had and how thorough the survey and repairs were.

I have no idea if your figures are correct - but to my mind for 6% less you get to choose a boat that is good enough now, not be stuck with one that might be (and probably will be. probably). I use the term "good enough" advisadly, likely won't be anything really wrong with her. but won't be really great either (in condition and equipment).

Not knowing what sort of phase out it had? does it really matter? - you are buying the boat in the condition it is in now and not what it was last month. If you / your surveyor is not satisfied with the boat bills / repairs / replacements, then look at another..

No receipts / bills for new whatevers? - then they ain't newly replaced or repaired. Same as for any boat / deal - the plusses and minuses always reflected in the price....albeit with the 6 year deal not so transparent, but it still applies.

Having said all that, am not against the idea on principal. Never done it meself though! (unlikely - but never say never)...but from comments from others seems that it makes sense when the own use really works for "you", especially that it "saves" cash & aggro in keeping own boat all year round somewhere warm and foreign (to you) simply for a few weeks sailing a year........and that of course depends on own circumstances and wishes (and them not fundamentally changing too much).

[carstenb]

Dasha, I'm more or less in agreement with the others. If you have 250/300K to blow - you can buy a killer boat.

I should tell you that about 6 years ago I bought a 1 year old boat out of a charter company. The boat had less than 100 hours on the engine clock. I never had cause to regret the purchase. It was a great boat. The sail, however were dead by the end of 4 years.

You could, of course ask Dream if they have any boats for sale right now and then go look at hem. That will give you an idea of how they maintain them

[dasha]

Thanks for some reality checking everyone!!!
They are good points though and I'll have to think through some more. I can't get a boat right now anyway, this is a long term plan. It is prudent to get the research done early!! We wouldn't be leaving on the long cruise until the kids are older (only 4,3 & 1 at moment) and we have enough sailing experience.

I guess the main plus points for me is that I am buying on the strong Aussie dollar, as opposed to in 6 years time when the Euro/US dollar may have recovered (or maybe not!! ).
The other BIG plus point is the free (almost) use of the boat in many worldwide destinations. That has to be factored in. I just got some quotes back for 2 weeks on a Lipari 41 in Greece in July. Ranging from £8-10k GBP depending on age of boat. So that is roughly £50k GBP of usage for just 2 weeks/year over the 6 year charter period. I could get extra usage in low season as well. I probably wouldn't spend that in the real world, but thats just it isn't it! I get a taste of luxury for 2 weeks a year that I wouldn't otherwise have. And I get boat at the end of it.

Decisions decisions!


Nautical62 - Were Moorings pretty good at Phase out? Did you pick up on many faults and were they happy to rectify them? What sort of condition boat did you get at the end of the charter period?

[maytrix]

Originally Posted by dasha

If I were to buy a 6 year old charter boat now, I would exect to pay at least 50% of the new price. Yet I wouldn't know what sort of phase out it had and how thorough the survey and repairs were.

That's not completely true. You could buy a boat that is at the end of its contract and then see the survey through.

Doing it that way, you would be able to buy after the boat took its largest hit on depreciation. Like buying a car after it's been driven off the lot.

Another thing to look at is modifying the contract - see if perhaps you can have new sails at the phase out added into it.

[GTom]

Sorry for reviving an old topic, but I am interested in exactly this operator (DYC) as well. Dasha, have you finally decided to go for the deal?

I am eyeing a smaller mono (Dufour 382 or Jeanneau 389). I also have just ~3-5 weeks a year that doesn't really justify a 1:1 private purchase of any boat, letting it rot in the marina for heavy $$.

For a business case, I throw in
Case#1: 3 weeks charter on a cheaper boat out-of season (a rental doesn't have to be the boat of my dreams) - in 5 years that makes at least 15k€.
Case#2: upkeep of a depreciated 39' boat in a cheap marina (Portugal, Turkey) - in 5 years at least 10k€+repairs
Case#3: Dream Easy, Pay 35% upfront+25% at the end = 60%, ~the market price after 5years.
Case#4: Guaranteed income ~= 60% effective boat cost* after 5 years, added security is that the boat is AFAIK 100% on your name.

*subtracted a 1% yield on the capital in case you have it. Loan (assume 4%) is worse, if you have to finance 1/2 of the boat price, then maybe 6-7% income/year remains providing a ~70% effective boat cost.

Just looking at the numbers, charter ownership wins by a large margin, that could easily cover a major refit. If cases 1-2 are not that super-conservative (e.g. spend a high season in the pricey Croatia), you count devaluation on the used boat in case#2 then the margin becomes even larger.

Their reciprocal use is also for me, I am definitely interested seeing other cruising grounds but sacrificing all my holiday weeks for the sake of an ARC? Maybe not...

[Village Idiot]

Hey Dasha and GTom

I am about to push the button on a similar deal with the same company. In my case a Lagoon 38 based in Croatia

Just wondering if you went through with the deal and how it worked out for you?

Or does anyone else have actual personal experience with Dream Yacht Charters to report on?

thanks

[GTom]

I decided against the charter approach for multiple reasons. First of, the maths for my ~10-12m mono case:
- true, boats after 5 years charter are listed at quite high prices, but what are they really sold for on a buyers market? Here is an example listing of a 4 year old 34'-er at ~95k$. (guess a discuont how much a buyer really pays for it...)
- as for the new prices: a new Dufour 350 (33.6') costs ~200k$, you end up paying 70 + 50k$ = 120k$ for a 33'-er.
= even if you don't have to touch the boat and the perfect buyer walks down the pontoon, your wallet depreciated 25k$/~20%.

Second, that the design is restricted, I don't need 2 heads, etc. Also, in the meantime I fell in love with classic designs - but that's another story.

After these, I don't see any financial advantage. Even that 20% (optimistic depreciation hit on your wallet) would cover your 5 years marina+repair expenses in lots of places - and having your own boat you have full flexibility, nothing lost if you have to postpone your sailing 1-2 weeks in the middle of the season, etc-etc.

As for other charter models, guaranteed income* is just reshuffling of capital costs. Variable income is risky (see full charter fleets+cruising grounds wiped off in this year's hurricane season - not much income there).

*Ouch, the word "income" will get your tax man itching...

A cat might give you different maths, you have to run the numbers with marina prices you're interested in and new vs realistic 5 year old Lagoon prices.

[Village Idiot]

Hi , and thanks for the reply

I cant see the link for the 'new' price of the boat cos I am in australia and it directs me somewhere else, but the Dufour 350 is listed at 152k euros on the sheet they sent me very recently. at 80k euros the 4 yo boat for sale reps 52.6% of that price which is about what you pay them, although of course the actual sale price of the boat may well be less (assuming you sell after the contract is up)

For the cat I am looking at the maths seem a bit better than that , as from my research I dont think I could buy a 5 or 6 year old equivalent cat for any less than I am paying them on the Dream Easy schemes, even if I factor in a generous discount to the asking prices, and that is without counting the value of the use in the meantime.

But the point is not really to make money or even breakeven on the buy /sell transaction; I happen to want a boat full time in 5 years, and I want more limited use of one both next year and in the intervening years, without paying a fortune for it . I have looked at all options from buying one to chartering for 4 weeks a year, and this financial model seems to beat the other options by a fair way, so this suits my circumstances.

At this stage I am happy the maths work for me and I am more interested in establishing if the whole thing is bona fide before I hand over the wonga

cheers anyway

[GordMay]

Greetings and welcome aboard the CF, Village Idiot.

[GTom]

Originally Posted by Village Idiot

Hi , and thanks for the reply

I cant see the link for the 'new' price of the boat cos I am in australia and it directs me somewhere else, but the Dufour 350 is listed at 152k euros on the sheet they sent me very recently. at 80k euros the 4 yo boat for sale reps 52.6% of that price which is about what you pay them, although of course the actual sale price of the boat may well be less (assuming you sell after the contract is up)

For the cat I am looking at the maths seem a bit better than that , as from my research I dont think I could buy a 5 or 6 year old equivalent cat for any less than I am paying them on the Dream Easy schemes, even if I factor in a generous discount to the asking prices, and that is without counting the value of the use in the meantime.

But the point is not really to make money or even breakeven on the buy /sell transaction; I happen to want a boat full time in 5 years, and I want more limited use of one both next year and in the intervening years, without paying a fortune for it . I have looked at all options from buying one to chartering for 4 weeks a year, and this financial model seems to beat the other options by a fair way, so this suits my circumstances.

At this stage I am happy the maths work for me and I am more interested in establishing if the whole thing is bona fide before I hand over the wonga

cheers anyway

Indeed, you should re-run the maths for the cat. (the price sheet I see for the Dufour 350 says 148k$+46k$ "options & comissioning").

The main trap for charter boats is the maintenance, because they get far much more wear than owner's boats. Also very important consideration is the title, aka what happens if the charter company goes bankrupt (although, for DYC this is quite unlikely).

For me, the really appealing part was the worldwide flexibility, but realized, I don't necessarily want to jump to a new cruising ground every year.

[Village Idiot]

yep the worldwide flexibility is an appeal for me too, even if i dont end up using it much. Its a big benefit over buying and owning a boat outright in any one specific location.

[GTom]

Also don't forget, that a charter boat even if you buy as new, won't be "new" at all even after its first season. The rest is maths/money, concerning real depreciation, repairs, capital costs and inflexibility timewise. For my small mono-case it was a clear no-go, but marina/insurance/repair costs of a Lagoon cat are in a completely different league than for a 30 years old plastic classic, which I'll go for...

[LakeSuperior]

IMHO, this is a fantastic deal for the charter company. It's simple math. At the end of 6 years you are getting a very used worn boat.

If you invested the upfront money for 6 years at 5% you could more than pay for the couple weeks of charter per year over the six years and in addition purchase a used boat that would much nicer than the 6 year old charter.

Plus, what if your life or interests change during the six years? Now you are stuck with a boat you probably couldn't sell for your upfront money.

[ol1970]

I'm with the previous poster Lake Superior, the only person guaranteed to win is the charter company.

1) Take your 56% down and invest it. Guess what if it goes down substantially because of the economy...so do boat prices, probably more.
2) Having chartered boats myself and even with me treating it as my own I feel you are going to end up having a boat after 6 seasons that is the equivalent of a boat that has seen 12 seasons of private ownership.
3) The new boats coming out today are really cool, with great new features that make the boats made 6 years ago look outdated...guess what, the boats 6 years from now will make you wish you'd waited.
4) Do a extensive spreadsheet for yourself detailing every expense. I think you'll find that chartering out somebody else's boat and not buying will still come out ahead.
5) The one guarantee in all of this is that your situation will absolutely be different than it is today 5 or 6 years from now. Health/family/desire to sail full time/finances/etc. will all play a role. If you have money to burn now then by all means go ahead, life is short, but if you are choosing to buy into a charter program to save money, that's not the most prudent choice.

This is coming from a guy who purchased a used catamaran out of charter but had to back out the week of closing because the survey revealed it was a piece of junk.