yacht ownership programs with the likes of sunsail

[Otter]

[ QUOTE ]
1. Interest on the cash they would have had to borrow (you'll be losing the potential income from that cash instead)

[/ QUOTE ] You only put down 10% of the cost, the rest is financed by a marine mortgage where the interest and capital repayments are covered by the charter fee you receive from Sunsail. You are therefore only loosing the investment income on your 10% deposit and Sunsail are paying the first 5 years of an 8-10 year marine mortgage. The benefit to them is keeping vast amounts of debt off their balance sheets and they pass the risk of rising interest payments onto the owners; the benefits to the owners are zero maintenance, berthing and insurance whilst someone else pays off half their marine mortgage and they get 5 or 6 weeks or virtually free chartering a year.

 

[tyce]

what you say is not strictly true simon, in fact it is a mile off.

just out of interest i ordered the sunsail pack, a ben 36 is 89k,
the monthly return is 600 quid, in order to get a mortgage on it you have to put down 20%, so, as the length of charter is 5 years, this would be a monthly repayment of £1400
if you did it over 10 years (you would have to find your own means of paying) it would cost £850 a month.
they are having a laugh, anyone would be mad to take it up.

 

[Birdseye]

Never forgotten a Sunsail flottilla/ sailing centre holiday when the Sunsail reps had a race at the end of the hols and used the yachts as dodgems, deliberately bumping into each other.

 

[Otter]

Just quoting this months YM

 

[jimbaerselman]

Who, of course, carry a lot of adverts for charterers promoting such schemes . . .

 

[bedouin]

[ QUOTE ]
You only put down 10% of the cost, the rest is financed by a marine mortgage where the interest and capital repayments are covered by the charter fee you receive from Sunsail. You are therefore only loosing the investment income on your 10% deposit and Sunsail are paying the first 5 years of an 8-10 year marine mortgage. The benefit to them is keeping vast amounts of debt off their balance sheets and they pass the risk of rising interest payments onto the owners; the benefits to the owners are zero maintenance, berthing and insurance whilst someone else pays off half their marine mortgage and they get 5 or 6 weeks or virtually free chartering a year.

[/ QUOTE ]
I'm afraid that reads like a direct quotation from Scumsail marketing rather than an accurate and objective statement.

Firstly I would be surprised if they guaranteed that the charter income would cover the marine mortgage - they certainly didn't when I looked into it unless you put down 50% deposit. In fact the paragraph contradicts itself in that it says that it passes the risk of rising interest rates to the owner - which it couldn't do if it guaranteed to cover the interest payments.

Secondly you only get 6 weeks charter a year if you go low season - if you prefer sailing in the summer months that goes down to 2 weeks.

Thirdly paying 5 years of a 10 year marine mortgage does not pay off half the capital debt so at the end of the 5 year term you will almost certainly owe more on the mortgage than the boat is worth.

Maybe the scheme has got much more generous since I looked at it - but I very much doubt it.

It is also worth pointing out, should anyone be thinking of doing one of these schemes, that marine mortgages are actually quite an expensive way of financing a boat.

 

[tyce]

is there an echo in here

 

[andymcp]

Maybe I've got a screw loose, but I'm looking at doing one of these schemes right now. A few things I've got round to understanding early on:

i) Don't do it quickly. Take plenty time finding out how the various schemes work, how they distribute/quantify the income, what exposure you have to additional costs. It varies widely including, as some here have pointed out, who actually owns the boat. I am looking at delivery for the 2008 season to give plenty of time for checking it all out.
ii) Understand what you want to get out of it. A lot of these schemes park your boat for the winter in the area where it's chartered. I want to use it outside the traditional charter times, as well as in season, so I will get plenty of use out it.
iii) Don't let someone tell you what boat to buy. I went to the LIBS this year to look at what I liked, based on what was missing from previous boats I had chartered. Only two boats were in contention at the end of the show, and that excluded a number of the companies running these schemes who demand they specify the yacht. I can see why they want to do that, but it's my damn boat /forums/images/graemlins/smile.gif
iv) Understand the actual tax regs, not the ones the charter company tell you exist. Some of the promised tax benefits are related to who actually owns the yacht. If the company are not crystal clear about this, walk away.
v) Know the get-out rules. I want to be able to walk away if I'm not happy, with my yacht still mine and without penalty.
vi) If you can't afford the boat you are considering anyway, this shouldn't be viewed as a way to subsidise buying one.
vii) Understand who will be using your boat. Some schemes put it into flotilla use. I've seen countless incidents involving beginners on flotilla boats that were funny at the time, but would worry me were they on my boat. Some will only offer it to bareboat charters, and ask for qualifications from those stepping aboard. Not a guarantee, but better than unmitigated chaos.

I had run my numbers for this against a marine mortgage quote - if there are cheaper ways of financing a boat, I'm all ears.....

 

[jimbaerselman]

[ QUOTE ]
I had run my numbers for this against a marine mortgage quote - if there are cheaper ways of financing a boat, I'm all ears.....

[/ QUOTE ] Best way is to raise your (or a new) house mortgage. Much cheaper finance rates. Then spend it on a boat . . . marine finance! What a rip off!

 

[Twister_Ken]

"iii) Don't let someone tell you what boat to buy. I went to the LIBS this year to look at what I liked, based on what was missing from previous boats I had chartered. Only two boats were in contention at the end of the show, and that excluded a number of the companies running these schemes who demand they specify the yacht. I can see why they want to do that, but it's my damn boat "

This only matters if you actually want to take ownership of the boat at the end of the period. As I understand it, many 'owners' don't, but roll into a new boat.

 

[bedouin]

I reviewed a few options at LIBS again this year - I find the idea very attractive, but I still can't get the figures to add up. If you are only looking at 3 weeks use a year you're better off chartering

 

[andymcp]

[ QUOTE ]
This only matters if you actually want to take ownership of the boat at the end of the period. As I understand it, many 'owners' don't, but roll into a new boat.

[/ QUOTE ]
Yes, I would want to keep the boat. I can see why people might not, but that's not for me.

 

[andymcp]

[ QUOTE ]
I reviewed a few options at LIBS again this year - I find the idea very attractive, but I still can't get the figures to add up. If you are only looking at 3 weeks use a year you're better off chartering

[/ QUOTE ]
Yup, at that level of use it's a nice idea but not really financially sensible. By the time you get into taking 5 or more people over for 5 weeks a year, it starts to work out better.

 

[andymcp]

Well, I have walked away from the management option. In the end, we only found one company that we would trust that would let us choose the boat, not place limitations on our use, not have a list of conditions the length of your arm.

Then they pulled their scheme.

On the plus side, nobody else will be using our boat now, so it may be smaller but it's going to be all ours. /forums/images/graemlins/smile.gif

 

[Twister_Ken]

On the even more plus side, you now have the opportunity to buy a really nice used boat, and save yourself tons of cash on fitting out a min-spec new boat.