Yacht charter management shcemes

[farquart]

I am looking to buy a yacht for charter and then cruise the med at the end of the 5 year term with the boat paid for out of the chartering.

Which companies should I look at

what is the best way of financing this

 

[jimbaerselman]

Two issues to consider.

First, you are taking the cost of financing the boat off the operator. The reason operators offer this option is that financing costs are a large element of their costs. Finance costs include lost interest on the money invested (or the interest you pay to borrow the cash), plus real depreciation (ie, cash value after allowing for inflation losses). The total is is going to be more than 10% per annum of the boat's cost when new.

Second, charter boats are designed to accommodate a maximum number of people for only two weeks at a time, who do as many passages as they can in that time, with quick, skilled maintenance available. That means many small cabins, spacious saloons, lots of engine time, inefficient 12volt systems and an assumption there's plenty of manpower available. You are likely to cruise with fewer aboard, possibly for longer periods, spending more time in port and less time motoring. Bigger cabins, smaller saloon, much more efficient electrical systems (those fridges!), and anchor systems suited to short handed sailing may then be your needs. Consider the expense of modifications . . .

 

[Mark-1]

Which companies should I look at

If you really want to go down this route try Sail Ionian. A UK family run the business, they always seem to have plenty of customers and the boats are well looked after. From a charter's POV they're brilliant, I imagine the same would could be said of their service for the owners of the boats.

http://www.sailionian.com/

Obviously, DYOR as always.

 

[Baggywrinkle]

You will not pay for the boat with a charter management program. You can save the cost of your annual holiday.

I've been wrestling with the same question for 3 years and my calculations show that it does not pay if you need finance to buy the boat in the first place. It only just becomes acceptable if you pay cash for the boat and don't mind a bit of depreciation.

Varous schemes exist, Sunsail has the most financially predictable and the most restrictive in yacht choice -

Scheme 1 - You pay 100% boat price - the boat belongs to you even if sunsail go to the wall. You get a boat fitted out by sunsail with no possibility to alter it. You get a guaranteed income of around 7-8% but only in specific locations.
Scheme 2 - You pay 65% of the boat price and get no income. After 5 1/2 years (6 seasons) you get the boat.
Both schemes give you access to your boat, any similar boat and the beach clubs based on points per year.

Other companies schemes vary, I've seen some suggesting 4,5-5% boat price p.a. but not guaranteed, and the cost of your own time on the boat is usually included as profit in the calculation.

The contracts I've seen are all written so that you are responsible for all the costs - this usually results in a break even of about 9-10 weeks charter a year. i.e. the boat doesn't cost you any more than the original purchase price. Less than 9 weeks and you will get billed.

A new boat (approx 40 feet) will 'hopefully' return 11,000 - 14,000 Euros a year after all running and charter costs, based on approx 19-20 weeks charter per year - bear in mind this is almost 5 months of solid charter which is not that easy to achieve.

Profit tails off significantly after the 3rd season due to new sails, interiour upholstery, maintenance and repair and the arrival of newer boats in the charter fleet making yours less attractive.

A boat kitted out for an owner may also be more difficult to charter as charter customers generally want to max out beds and toilets. There is a market for 'owner versions' but it is much smaller.

I have at least now satisfied myself that a good charter company will keep the boat immaculate - but this will show up in the running costs. After all it is in their interest to keep the boats attractive - it's no different to a hotel room

The engine hours will be high but replacement and overhaul of the engine is included in the longer term contracts. There is also always the possibility of damage during charter, but there's also the possibility of damage due to neglect when a boat isn't in constant use and regularly checked. (undiscovered leaks, chaffing, weather, theft, sun, bird poo, mould etc.. etc..)

In the end, you depend entirely on the charter company. Less maintenance means more profit short term, more problems long term. More maintenance means less profit but a beautiful shiny boat.

I have used the same charter company (Ecker Yachting in Austria) since discovering them in 2005. I have sailed boats varying from 3 to 10 years old and always make a point of nosing around the various boats during change-over day. They are all immaculate, well equipped and to be honest I've seen many much scruffier private boats. I've also met the Sail Ionian (Boss + Staff) shepherding their fleet into shelter in Sivota on Lefkada. They seemed pretty responsible and the fleet looked in pretty good order. Top Yacht has also got a reasonable reputation but I've never used them so can't comment.

PM me if you want any detail on costings etc.

Oh, and finally make sure you budget for a hefty VAT bill when the boat comes out of charter.

 

[Dockhead]

"Scheme 1 - You pay 100% boat price - the boat belongs to you even if sunsail go to the wall. You get a boat fitted out by sunsail with no possibility to alter it. You get a guaranteed income of around 7-8% but only in specific locations.

Scheme 2 - You pay 65% of the boat price and get no income. After 5 1/2 years (6 seasons) you get the boat."


Let's see:

If Scheme 1 means you get 7% to 8% on top of repairs and replacements, then your real income is 7% to 8% MINUS depreciation. I'd say the real depreciation rate of a sailboat is probably 10%, more in the first years, and less in the later years, but let's be kind and say 5% (20 year useful life). That means you are getting 2% to 3% on your money, and you are -- as if -- buying a former charter boat, 6 seasons old, at 30% off the brand new price. How much of that 30% will you spend on a refit after you take the boat over? Certainly it won't be less than 10% to 20% of the original price. In that case you are jumping through all these hoops just for the dubious privilege of significantly overpaying for a used charter boat.

Sorry, but this just makes no financial sense whatsoever. I am assuming no tax losses/benefits.

Scheme 2 is even worse. It means you pay the full price (or more) of the six seasons old charter boat, 5 1/2 years in advance, with no interest. The only thing you earn on your money is a little use of the boat.

Ick. Owning a yacht is financial idiocy in any case. You can't make it better with one of these cockamamie schemes. The only right way to own a yacht, financially speaking, is to either inherit it, or to just blow the money by paying all cash for it, cash which you just write off in your mind and forget about. Then suffer through the running costs. If you need a mortgage to buy a yacht, you can't afford it (IMHO).

 

[ridgy]

It's insanity.
Why not buy a 1/4 or 1/5 share in something and get your 6 weeks sailing per year for the £1-2k annual running costs.
After 5 years sell your share for a relatively small loss and if you still really, really like sailing around the med then you can buy the 5 year old ex charter boat of your choosing for the correct price.
If after sailing the med for 5 years you decide you'd rather be doing something else, which is quite likely, then sell your share for a relatively small loss and that's the end of it.

 

[nmeyrick]

I have to admit that if I was in the market for a 5 year old ex charter boat (I'm not) I can't see how this would be more financially attractive than investing the money in the meantime and buying a 5 year old boat in 5 years time.

That way you have no exposure in the meantime to the vagries of the charter market, political instability eg Greece or varying fortunes of the Charter company who may potentially go bust leaving you with no boat.

Importantly you also get to chose the pick of the fleet at the time you are buying it, rather than take the one you picked 5 years ago before it was thrashed and run onto the rocks. I'm not saying charter boat is automatically bad, but there are good and bad and I'd rather be able to chose which I got. Having sailed in a sunsail regatta where I saw one of their boats holed below the waterline and sink to the level of the top 2' of the mast I would be pretty gutted if that had been my pride and joy!

 

[activesail]

I have preferred to charter yachts over the last ten years rather than buy one. Simply because when I was working the time available for me to use a yacht was limited.

In my experience, charter yachts get used very heavily by people who do not have much respect for them. They are going to drop the yacht off at the end of their holiday and will get away with anything they can.

Because of this the yachts become very tired looking in a relatively short period of time.

Personally I would prefer to buy a well maintained second hand yacht, which has had loving owners or perhaps enter into a yacht share arrangement for the next five years..

 

[westernman]

In my opinion, unless you really have loads and loads of free time to spend on the boat and to spend on working on it, it never makes sense to buy a "standard" "charter" kind of boat.

You can hire them when you want one and walk away from them afterwards - no maintenance to do, or get organised to get done, no depreciation, no worries.

Also you can easily choose different locations to charter from and don't have to worry about 10 year waiting lists for marinas and such nonsense.

For me, to own a boat, it has to be a very special boat. One which I cannot find on a charter fleet.

A boat is not a good investment - usually exactly the opposite. So buying a boat on borrowed money is very bad financial management.

Obviously, judging by the hoards of AWBs in my marina, not many people think the same way as I do.

 

[cgull]

Why not just charter a boat in 5 yrs time????

 

[Oceanis]

I had a boat under charter management with Sunsail. It was an Oceanis 343 based in Kremik in Croatia on a 3.5 year term.

The upside was:

I didn't have to pay any costs for insurance, maintenance, marina fees, etc. I could charter Sunsail boats FOC anywhere in the world and didn't have to worry about getting the boat there in the first place. There was a guaranteed minimum buy-back price on the boat if I decided not to take ownership at the end of the contract term.

The downside was:

It only just makes financial sense if you charter Sunsail boats FOC as much as you are allowed and take these savings into account. There is a limit to the number of weeks per year that you can charter FOC. Sunsail can also get you cheap flights through their parent company. Sunsail boats are hammered, I think for every year under charter management the boat gets the equivalent of 3-4 years private use. The boats are turned around between charters in about 6-10 hours and there is only time to fix what is reported broken and nothing else. My son worked for Sunsail in Greece for a year and he had some horror stories to tell about the staff usage of the boats. I have seen these boats driven into rocks on full throttle and i have been on a Sunsail Sunfast 37 that was dismasted in the Solent when the rig failed. I had the bolt drop out of the gooseneck in the Greandines and another boat with broken links in the anchor chain, empty fire extinguishers, gas pipes coroded beyond recognition and UV strips falling of the genoa in the Gulf of Thailand. The specification of Sunsail charter boats is the minimum that they are required to have for charter and the layout is always to maximise berths at the expense of storage.

We spent two weeks on our boat at the end of the first charter year from new and the gearbox was knackered, some huge chips in the gelcoat and a big and deep scratch down the hull. So at the end of the charter term I took the money from Sunsail for our boat and left it with them.

So, the Sunsail deal will only just about stack up financially if you maximise your free usage of their boats. It's a great way to charter yachts around the world without the cost and problems of getting your boat to these locations. A lot of the boating community view you as a serious threat to the safety of their boat and will do anything to stop you coming near them - however, I have to say that after observing SOME of the people Sunsail allow to charter their boats this is partly justified.

I would be very cautious about taking your boat back at the end of the charter term as many of them are very very tired. If you do plan on taking the boat at the end, go for a base in the Med with a shorter season.....the Carrib is bad news.

If you see the Sunsail charter management deal as a way to make money forget it and as has been said already you will be liable for the VAT on the boat at its market value when you take ownership. We have now bought a boat here in the UK that has never been chartered. I enjoyed our three and a half years with Sunsail, we certainly got to sail in some fantastic places round the world but I would never take the boat the end of the contract term.

 

[davidej]

I only looked very cursorily at one of these schemes before rejecting it so this comment may reveal my ignorance -- but

Sunsail etc buy these yachts in bulk at, i am sure, huge discounts on list price. But the punters deal is all related to list price. Is this what keeps them afloat?

 

[Dockhead]

In my opinion, unless you really have loads and loads of free time to spend on the boat and to spend on working on it, it never makes sense to buy a "standard" "charter" kind of boat.

You can hire them when you want one and walk away from them afterwards - no maintenance to do, or get organised to get done, no depreciation, no worries.

Also you can easily choose different locations to charter from and don't have to worry about 10 year waiting lists for marinas and such nonsense.

For me, to own a boat, it has to be a very special boat. One which I cannot find on a charter fleet.

A boat is not a good investment - usually exactly the opposite. So buying a boat on borrowed money is very bad financial management.

Obviously, judging by the hoards of AWBs in my marina, not many people think the same way as I do.

Indeed.

It's a little like wives versus prostitutes. Prostitutes are VASTLY cheaper and much less trouble than wives. Same with chartering boats. I don't know how much weeks a year you would have to sail before owning a boat starts to be comparable to chartering for cost, but it would be far more than anyone with a job could ever do.

But then there's the little factor of love . . .

You don't care that she's vastly more expensive, and vastly more trouble. She's yours! And not some worn-out, beaten-up, clapped-out, everbody's yacht passed lovelessly from hand to hand to hand.

And even some of that trouble brings pleasure -- fixing this or that, upgrading something . . .


That's why we stopped chartering after many years and bought our own. If we had been able to charter a boat like the one we were able to buy, we would never consider buying. But you can't.

But the cost of "love", in both cases, is very high.

 

[farquart]

Thanks for your knowledge and suggestions, Think i will give it a miss. Buy over here and do the trip same as last time.