Owning a flottila boat, pro's and con's

[TheBoatman]

Owning a flottila boat, pro\'s and con\'s

A friend of mine went to LIBS and came away with the grand plan of buying a 43 footer and chartering out through the normal charter companies. To buy the boat fully spec'ed up 106K, income (claimed) to be 40K / year, charter period 5 years then the boat is his to do with what ever.

Now call me cynical, but that seems a bit to good to be true to me?

What are the pro's and con's of this type of "deal".

BTW he was thinking of chartering in Turkey. /forums/images/graemlins/confused.gif

 

[aluijten]

Re: Owning a flottila boat, pro\'s and con\'s

Two things come to mind here:
Addditonal (not discussed) costs like insurance, interest, winter storage and maintenance.
CLAIMED revenue: 40k per year => to be generated in (maybe) 5 months per year => 8k per month => 2 k per week net.
That seems highly unlikely to me

Arno

 

[Talbot]

Re: Owning a flottila boat, pro\'s and con\'s

£40k before tax and other costs - so thats probably nearer £15k. 5 years still £40k to pay plus all the rigging, sails and other items that have worn out, plus the boat itself which has been heavily used and in some cases just worn out - if it was such a good deal why would the charter companies by trying to get people to sign up!

 

[Joe_Cole]

Re: Owning a flottila boat, pro\'s and con\'s

Seems too good to be true.

With their discounts I'll bet that the boat costs the charter company a lot less than the £106k. I suspect they'll be making a healthy profit on the deal from day one.

 

[starboard]

Re: Owning a flottila boat, pro\'s and con\'s

No pro's.....the con's are that you shell out a heap of money for an eventuall piece of junk!!!!!!

 

[Rowana]

Re: Owning a flottila boat, pro\'s and con\'s

Tend to agree with others - All Con's & no Pro's

Have a look at what charter companies are trying to sell "used" boats for.

Wouldn't touch it with a 10foot bargepole myself!

 

[tcm]

Re: checking gift horse\'s mouth quickly

5 years isn't Moorings, who i uderstand look after the boats very well but tip them after 3 years. More likely sunsail, who dont look after the boats quite s well, but are cheaper and get more business. Or maybe another upstart, who could be dead keen.

I've met a lot of people who like these plans, and who wouldn't otherwsie be able to justify a 100k whatever boat.

£40k rental income sounds a bit high though. But 10-15 means a dirt cheap boat, really.

Easiest check - ask for telephone numbers of a few others doing the same thing. No, not just one, that's the director's mate init...

 

[Sailfree]

Re: checking gift horse\'s mouth quickly

40k per year for 5 years =£200k return for only £105k invested plus a boat thrown in. Its so good the charter companies can't let anyone else do it and buy all the boats to keep the income for themselves. Now let me think - but why arn't they buying the boats themselves but inviting others to buy a boat for them, difficult one that Sherlock!!

 

[tcm]

Re: checking gift horse\'s mouth quickly

um yes, cept they have costs like advertising, salaries, boat show exhibitions, moorings maintenance, so not that incredible a deal.

 

[ShipsWoofy]

Re: checking gift horse\'s mouth quickly

On the other hand, even if you only pay 1/2 the boat off in the first 5 years, you end up with a coded boat that surely you could continue to charter privately to keep your own costs down, while getting greater use of it.

Or is it not that simple?

 

[dedwards]

Re: checking gift horse\'s mouth quickly

I looked into this in detail a while ago. The company in question isnt sunsail either as they offer a guaranteed income and a very tempting benefits package. The reason companies do this is the same reason that other companies sell shares in themselves - to free up cash for other things. And yes, the larger companies do get the boats for cheaper so make some money right at the beginning of the contract.

the pros to doing this are income on the boat and the benefits package offered. On the other hand, there are a number of possible cons including:
accessibility to your boat
condition of boat at end of deal
convincing the IR that you don't need to pay VAT on the boat.

Other posts have mentioned the potential hidden costs - some companies pay for these, some dont.
As I said earlier, Sunsail offer a temting package but the one thing that I couldnt predict (and hence why I didnt do it) is the condition of the boat at the end of the deal. You need to speak to people who have finished the scheme to find out if the boat will fit in with your future plans. (btw, it is possible to continue to charter it out but the income will be greatly reduced)

Remember: the deal only lasts 5 yrs while the mortgage lasts 10-15 yrs.

 

[ytd]

Re: checking gift horse\'s mouth quickly

I owned a charter boat a few years back and everything people have said here is true. Charterers are less experienced and less careful then owners so maintenance is very high. Insurance should cover major accidents, although it didn't cover the 2 engines I had to replace during the 5 years of ownership when charterers ignored the temperatue alarm and motored on with the inlet blocked. They lost their bond but that didn't cover the 10% of the cost.

But the boat survived it petty well and it was a good investment after tax. This was in Australia so I've no idea the tax rules applying to a Turkish Boat operated by a UK resident. Without the tax benefits it would have been a poor investment so check with the company's advice with a tax advisor. The 40K income is gross but sounds about right. After expenses I averaged about 30% of gross income.

One con is that you only get limited (off-season) access to the boat during the charter period and it will be quite second hand when it is all yours, so it's not really buying a new boat.