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  #21  
Old 05-30-2014
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Re: Charter fleet ownership

Why not? As long as you can explain why you think owners are screwed over. As log as its a balanced , fair article with facts to back it up ill publish it. If customers were really being screwed over so much why do they keep on using this service? Maybe the massive positive is the ability to have access to a yacht for a set amount of time every year and in the long run it those holidays and memories pay for themselves? Just a thought.
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  #22  
Old 05-30-2014
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Re: Charter fleet ownership

Reputation: Ok, well, lets start by separating Moorings from everyone else. If you want to place a boat in Charter Moorings is the most reputable. I won’t say all the others are bad. I’ve seen the CYA operation on St Thomas, and those people impress me also.

Location: If you do put a boat in charter pick a location like the BVI because that is a reasonable location to move a boat to and from with a strong resale market is the US. Elsewhere in the Caribbean is less ideal. Never put your boat someplace like Thailand or the Seychelles. The problems with moving the boat back to your home waters are expensive and difficult.

Fictional yachts for sale listings: Check Yacht World. I've seen charter companies put fictional yachts up for sale in out of the way locations like the Seychelles at great prices. I have to guess it is because they are trying to show that after the charter is over, boats can be sold from these locations, when no one really wants to go there to buy a boat. So phony listings are common--read what you want out of that. It tells me these charter companies are trying to game the system—they don’t sell these yachts. I wonder if they exist at all. They won’t answer your inquires and if you speak on the telephone, they are not even trying to sell these yachts. A real yacht broker will follow up. On these phony listings, they never followed up, because they don’t exist.

Buying a Boat Coming out of Charter: I might buy a boat coming out of charter, but I would never trust my boat to a charter company. You are a mark to be fleeced, and they are looking for new blood because they have burnt bridges behind them. Ask people who had a boat in charter that has come out of charter, and take some notes. I've done this for more than 20 years and the number of unhappy people is quite high, while the integrity of the charter companies is low. Some people do repeat the whole process. I'll bet "The Moorings" has the best retention rate.

How to Rip Off a Charter Owner:

Dock Space:
What you pay for dock space? Well the dock space you pay for is not yours. You will find out when your boat is put out on a single mooring and breaks loose in a hurricane, that the charter company gave (resold) your spot to someone else. Now it is an insurance claim and they won’t even talk to you about it. How much time is your boat at it's dock space? Not that often! Be assured "the spot" you pay top dollar for is not empty and someone else is also paying for it. I'd want a clause in the contract penalizing the charter company if the boat is not kept in it dock space when not in use, and hold them liable for damages that occur in such situations.

So you are paying for a seasons dock space and your boat is not even in it most of the time. Great revenue stream for the charter company. Bend over and say "submission" all in lower case.

The Concept of Borrowing Parts: How about borrowing? A part breaks on someone else's boat; they borrow it off your boat so a sister-ship boat can be chartered--the reason is they balance the charter load throughout the fleet and it's that boats turn to go out. What happens next is fun--they bill you--for your boat and then also the other boat for a new part and only have to replace one--showing the same receipt to both owners, and they have pictures to prove it that the work was done on your boat, and the other boat. That covers the labor for moving the part over and makes a nice profit too. Would it be ok if I billed you for something broken on someone else boat?

When someone else has charge of your boat, they (the company or worker) could be selling or swapping parts to other people and you would never know until you see those brand new batteries you paid for two months ago, look like they are five years old. Someone else is enjoying your new batteries which cost you triple because of import duties and labor to replace these once again.

Maintenance Fees:
More on repairs. You are billed a monthly fee for maintenance. Turns out new boats don't need much if anything for maintenance--you pay anyway. Does that money when it is not used to maintain your boat, come back to you? No! Why not? Instead you are billed a monthly service fee and repairs are not itemized unless it is to reduce the amount they owe you.

Insurance: You pay for insurance on your boat. I've heard about boats being a total loss and the owners being screwed because the boat was out on a mooring instead of in it's pen.

Income Calculations: The numbers will reflect that half of the income will go to the charter company and most of it is for fictional needs. What the money goes for changes year by year, but the percentage amount does not. It is a huge cash cow for the charter companies. So, do you think it makes sense to put a boat in charter and then sell it after four years when it is worn out and now needs major maintenance? Or are you better off buying a boat coming out of charter after four years? At least you can inspect, negotiate a reduction if there are problem's or the prior owner is stuck for the repairs. At this point he will be glad to be getting away from a nightmare experience.

Owner Charter Weeks: You get a few weeks a year of owner charter time. They prefer that you sell your weeks, so you don't see what has happened to your boat. But you can't take your boat out when it is not in charter. The explanation is they "might" have a last minute charter. Trust me, this doesn't happen. So ask yourself why you can't take your boat out when it is not in charter? They don't want you to see what is going on with your boat.

22 Weeks of Charter: Run some of the numbers yourself. Figure 22 weeks a year of charter income. Don't believe you will get more--28, 29, or 32 weeks is a lie. 22 weeks is a good number unless the economy tanks, which it could if there is another war in the middle east, in which case it will be worse.

You will also me forced to keep it there in the summer when you could best be using it in New England or the Chesapeake. The summer season is when the hurricanes hit and charters are slower. Still they will try to extract a bit of more money with lower rates, and much higher risk for you.

Why not let you take the boat north in the off season? So if you take your boat way, you might not bring it back—having been ripped off once, you may not want to do it again, so they want to lock you in for four years and then they won't let you take it away. If it is such a good deal, you would want to keep it in charter wouldn’t you? And they should not mind if you want to stop after one year--try to do that!

Yacht Sales:
Once again, they take a big commission if they sell the boat for you, just like they do if you buy through them. At this point you are smart enough to take it elsewhere. If you buy the boat through them for them, why should you pay the sales commission?

Bottom Line: The bottom line is none of these charter companies buy their own boats. That is a huge red flag. They make huge profits and they can afford to buy these yachts, and work directly with the manufacturers—they don’t buy them! They don't because they know it is not a good deal-- it is a very bad deal. The boat will take a beating and get banged up and the cost to fix will be quite high. Consider that charterer's will spend a lot of time running the motors and the hours on these will be quite high too. Engine(s) will be worn out, or two of them if it is a cat. Generators take even more abuse. Batteries will be run down to nothing and ruined probably more than once. If you have good batteries they will wander off onto another boat—see borrowing above. I promise you, the batteries that should last four years easily will need to be replaced in the first two years and probably again later on. They won’t want to keep your boat more than four years, because they know they will actually have to do work on the boat. It is not profitable to bill for work you do, when it makes more sense to bill for work you didn’t do. At best you might be able to negotiate a five-year deal to keep your boat in charter longer. They might do that for the sale, but chances are good you will regret that choice also.

I wanted to put a boat in charter. Each time I researched it over the years, the deals got worse and worse as the charter companies got better and better at protecting themselves and ensuring you take the hit financially—not them.

I would never consider putting a boat in bareboat charter
, even in the BVI with Moorings. I might consider running a private crewed charter operation with a dedicated crew and no middleman brokers. If you are not there, you won't know that is really going on with your boat.

If despite all this, you still think you want to put a boat into charter, read the contracts' fine print and show it to a lawyer, be sure your insurance covers all contingencies, and have a low deductible. I'd insist on a list of charters. I would want to send a post-charter questionnaire to all the customers and inquire about the condition of the boat. I doubt the charter company would allow you to do anything to check up on them--they should not mind. Consider hiring your own local inspection agent and ask him/her to photograph the boat weekly, verify the boat is in it's slip when not in charter.

You do not have my permission to reprint any of this.
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Last edited by Night_Sailor; 05-30-2014 at 09:28 PM.
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  #23  
Old 05-30-2014
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Re: Charter fleet ownership

Quote:
Originally Posted by Night_Sailor View Post
...

You do not have my permission to reprint any of this.
You may want to delete your post. First, it's a public forum and second, when you registered you agreed to this:

"You agree that any content you post on this forum may be re-used by SailNet.com for any reason without your consent."
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  #24  
Old 05-30-2014
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Re: Charter fleet ownership

Quote:
Originally Posted by DRFerron View Post
You may want to delete your post. First, it's a public forum and second, when you registered you agreed to this:

"You agree that any content you post on this forum may be re-used by SailNet.com for any reason without your consent."
Well I doubt anyone would want to reuse it anyway as it is all conjecture. Now I think it is a bad idea for me, but lots of people do it, and many more than once. To me it seems just like timeshares. They make no sense at all, why buy it when you could just rent it an not have any of the liabilities. But I have a very dear friend who has several timeshares and loves them. Seems to me the only one guaranteed to make money are the companies offering them. Seems they talk about 9% but it just does not make sense to me. But then I want to use a boat 52 weeks a year so it would not work for me, as the charters might not like it when I come out of my cabin and start drinking there beer!
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  #25  
Old 05-31-2014
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Re: Charter fleet ownership

I though it would be fun to keep a boat in the Caribbean, so I looked at this a few years ago. For me, the numbers didn’t make sense - yes it’s 9% income (it was 10% not that long ago) but that’s on a depreciating asset. I don’t have the time or interest (ouch!) to figure it all out again but there are four things that I think are (were?) needed to make it worth taking the time to dig a bit deeper.
1. Will you will use all the weeks? If you aren’t going to really use all the time, forget it. Turning the time back to the charter company doesn’t make sense – if you think about it, you can figure out why.

2. Do you not want to sail where you live, or aren’t able to sail there, or have enough money to keep a boat there as well?

3. At the end of five years, do you either want to put the boat into a second tier fleet or alternately, actually want to keep it for personal use? Again, it was a while ago but, if you weren’t going to do one or the other, it really didn’t make sense to me.

4. Are you are in a stable enough situation that you can reasonably predict that the previous three things won’t be an issue for the planned time in charter?
Still with me? If you want to dig deeper, start with the money:
As best you can, find out what your boat is REALLY going to be worth at the end of five years. Don’t use the charter company estimate or what similar boats are listed for – do the research.

Look at the cost to borrow the money and/or loss of income from not using that money elsewhere.

Look into the tax situation for YOU and don’t believe everything that you read on the web. There is some seriously dubious advise out there regarding the tax implications.

Talk to a few second tier companies but take their figures with a pinch of salt.

Talk to people with boats in the secondary fleet and pick their brains about their actually income and expenses. Find them yourself, not though company referrals.

If you get this far you should be starting to get an idea of the finances – Compare that to just chartering for the time that you want to and, if you plan to keep the boat, also look at just buying a boat that is being retired from the primary fleet.
If you are thinking about putting it into the secondary fleet at the end of five years:
Is the boat you want also going to be a popular boat once in the secondary fleet? Remember that your income is not guaranteed. Or will it be an expensive boat to maintain when you are paying the bills?

Are you prepared to move it straight from the primary to the secondary fleet? When I looked, the secondary operators weren’t interested in a boat that had been out of the primary fleet for very long.

Will you be happy sailing in just that one area once you no longer have the option to sail a similar boat elsewhere?

Do you have contacts or are you prepared to do the leg work to figure out which secondary fleet to put it in? Talk to people (and not just one or two ) who have had boats in the secondary fleets for several years. When I was considering this, one owner told me something to the effect, “Look, these guys are far from perfect but at least they are easy to deal with and don’t try to rip me off, unlike the previous company I was with”. At that time there was one company that I felt good about and two that I thought were ok but needed more research. But that was a few years ago and things may have changed. And five years from now when your boat is coming out of the primary fleet, that may have all changed again.

Read Night Sailors post. Can you put together a plan to avoid or mitigate the potential pitfalls in the secondary market? Hint: answering the previous question is half the battle.
One other thing:
Do you have the time, knowledge and inclination to personally oversee the work and to make sure the boat is brought up to appropriate standard when it is retired from the primary fleet? Or know someone who does? And not a local surveyor who gets most of his income form the brokerage boats coming out of the fleet.
Oh, and one more:
Say the economy tanks and you get stuck with your boat at the end of five years - can’t place it with a good second tier company or sell it for what you estimated. And you are stuck without the 9% (or whatever) income but paying for a slip or storage. Will that be a serious financial hardship for you? Are you prepared to take that risk?
Once you have the above answers, and a few more you’ll think of as well, you will be well on the way to deciding if it is right for you. Maybe this forum will help but it won’t give you the answers, you will have to put in the effort.

As with all information on the web, this is worth what you paid for it. I decided not to go there, so I don’t have the experience to know if I actually made the right decision… but I’m pretty sure I did.. for me. My decision was to keep a boat locally and charter somewhere else when I could fit it in. It also gave me the flexibility to charter canal boats and take other types of vacation.

This was going to be a couple of paragraphs but got completely out of control… I hope it is of some help.

Good Luck
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Last edited by Geoff54; 05-31-2014 at 02:34 AM.
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  #26  
Old 05-31-2014
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Re: Charter fleet ownership

Quote:
Originally Posted by DRFerron View Post
You may want to delete your post. First, it's a public forum and second, when you registered you agreed to this:

"You agree that any content you post on this forum may be re-used by SailNet.com for any reason without your consent."
I think that was intended for SailBeat.
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Old 05-31-2014
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Re: Charter fleet ownership

Quote:
Originally Posted by FarCry View Post
I sure don't fit the title of "expert" but I have been employed by a charter company for more than five years. Christine is an expert and maybe she will come back.

Good candidates--
Money, lots of it
Understanding that they will most likely loose money
Savvy enough to understand that if they finance a boat for a zillion years that in 5 years when it comes out of charter, they will be upside down!
Funds and time to make enough trips to take advantage of ownership usage as opposed to charters
Business or other situation in which some, maybe all, expenses can be written off taxes
Wants to travel the world and sail in numerous locations (only with bigger charter companies)
Likes to sail and not "fix" and not concerned with paying for it

Poor candidates---
Just about the opposite of all things listed above
Not worried that others are beating up "your" boat. It's not really yours until the contract is up...
Lots of obligations making travel difficult
Poor health
Limited experiences, there isn't a West Marine and 50 tradesmen down the road that can fix you up. It's de ilons and tings go sloooooow mon....


All things are my impressions/opinions. I've only got direct knowledge of two charter fleets. Within each there are exceptions. My comments are generalities. I don't sell charters or boats and thus have no dog in the fight.
Thanks for the insight.
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  #28  
Old 06-02-2014
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Re: Charter fleet ownership

Quote:
Originally Posted by Night_Sailor View Post
Reputation: . Iíve seen the CYOA operation on St Thomas, and those people impress me also.
Thank's for the kind words.
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  #29  
Old 06-14-2014
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Re: Charter fleet ownership

How much lower does the usage rate tend to be for boats that are not in popular, beaten-path destinations such as the BVIs, but instead are with charter companies in closer-to-home areas (Annapolis, San Diego, Chicago, etc., some of which would have limited sailing seasons)? How could putting a boat in charter is these places make some sort of sense?
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Old 06-17-2014
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Re: Charter fleet ownership

I'll add to this since I'm an owner in the Moorings program. Previously owned in Sunsail as well but traded up to a larger boat in Moorings.

I think its pretty simple. It's about the numbers and how much you can sail. If you can use all the weeks, then its probably close to a no-brainer. If you can't, figure out what you would use and then figure out how much that might cost. To get into Moorings or Sunsail, you'll need a decent down payment and then pay nothing for the terms of the program (5 years). During that time, you can also sell two weeks a year. Take what you've sold and put it towards the boat and you'll end up in a better place. Also if you take the loan over a shorter period, you'll come out better in the end - you'd need to make monthly payments as moorings/sunsail only cover it based on 13-15 year loan, but at the end of the contract you wouldn't be under water.

For us it makes sense for a few reasons. 1) We plan on keeping the boat. 2) We enjoy 3 trips a year, although now we're dropping to 2 trips for a longer time. 3) We sell two weeks every single year. 4) We take advantage of short notice time and upgrade to bigger boats.

Any of these factors alone don't make it worthwhile, but assuming we were break even at the end of our contract, our charter time use (assuming our boat only) would be about $45k taking into account or owners fee. This is less than our down payment, so the big question will be where do we stand at the end of the contract on the loan, but since we are keeping it, it really doesn't matter and we expect to have most of it paid off.

The other huge factor is that most of our trips are not on our boat, but are booked using short notice time. This means that for a small fee, we can book any boat in the fleet a couple of weeks before we want to use it. With this, our charter time ends up being valued at closer to $150k or more over the 5 years. Something we wouldn't have been able to do without being in the program and its been an amazing experience.

In addition, we pay nothing when we have friends come as we are they reason they get such a good deal in the first place. Even with them covering the boat costs (we do cover our own food..etc) they still get a tremendous deal on the trip vs if we were not owners.

We've also met a number of owners who had been through the phase out at the end and were happy with the results and living on their boats. We know there's going to be wear and tear, but we accept that and enjoy the experience we get in the meantime and the fact that a large portion of the boat will be paid off by the time we take possession and that we don't have to worry about managing it now.

The programs aren't for everyone, but they are for many - you just have to understand the details and make sure it works for you.
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