Buying a sailboat
and then chartering it out
to pay for it

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This page updated: May 2012

Lots of great info on

From Dwight Yachuk on World-Cruising mailing list:
Go to the sunsail web site and read about owning a charter.

Basically the bank buys the boat, you put it in charter for 3-5 years, the company manages the bookings and boat maintenance, you get 2-3 weeks a year to sail and if everything goes according to plan the charters pay for the bank loan, management fees and boat maintenance. At the end of the period you get your used boat back.

If things don't go so well, there aren't enough charters booked to pay the costs and you're on the hook for whatever is left to be paid, and you get back a boat that's been thoroughly trashed and needs a major refit before you can sail her.

From Tim on Cruising World message board:
A friend and I looked into this closely. We came to the conclusion that it didn't meet our needs.
  1. Every yacht management company tried to sell it as an investment process, except one. CYC (Caribbean Yacht Charters) admitted that it was a lousy business investment (we knew that), that it was in fact, a method of setting people up to own large sailboats they would be ready to use in a few years.

    It also turned out, that of the charter companies, we liked the Hylas yachts at CYC the most. Of the boats in charter, they (with the exception of Island Packets) are the most oriented to serious cruising and make the least concessions to the type of use it will be receiving during charter. (Like cramming 4 staterooms into a 37' Beneteau, give me a break.) The Hylas is also a high quality boat, and (we thought) sailed and looked better than the Island Packet.

  2. We came to the conclusion that after the 5 yr charter period, we would be left with a somewhat beat up boat and a large mortgage. This would necessitate putting it into charter with some of the second rate companies that allow boats older than 5 yrs. The upshot is, there wouldn't likely be as good a care in the second company so we'd end up with a ten yr old boat with a small mortgage that is really beat up.

  3. During all this time, we would have use of the boat for 4-8 weeks, depending on the company. Using "our boat" would necessitate formal vacation plans, transportation costs, etc. I for one, need to sail. This alone was unacceptable, despite having friends who took me out regularly. It still wasn't enough.

  4. We could in fact buy a 10-25 yr old boat in good condition for the cost of the down payment on a Hylas 46. The Hylas was the boat we evolved to, thanks to a combination of the boat and the charter company. We actually ended up buying our 19 yr old Bristol 40 for $30,000 less than the down payment on a 46 Hylas. (Although most Bristol 40s go for about $28,000 more than we paid for ours.)

  5. By buying and mortgaging an older boat, even with a small monthly payment, we would have constant use of the boat available, even if we couldn't use it every day. My friend in particular can not calculate the benefit he gets from stopping off at the boat to read in the evening, or just spending the night at the dock if he can't get out.

  6. In my friend's case, he was able to cash in some stock, so he owns his boat free and clear. His only cost is the maintenance and slip fees. If he had gone with a charter boat, he would have had to cash in all his stock and would not have that balance still building while he uses his boat. Or, he would have had to take on a mortgage, which wasn't the point for him.

  7. In the not quite three years we've owned our boat, we have sailed 3,485 nm. This would not have been possible going to the islands for even two months a year. (Not to mention the loss of income by having to take unpaid vacation for 6 weeks/yr to do it. I am after all, a wage slave.) It is possible however if you have a flexible work schedule and can be at the boat at 1:00 during the spring and fall when the winds are perfect.

  8. If I didn't use my boat so much, I would consider one of the local (Chesapeake) companies who do not require new boats, and work under a different arrangement. Or, more likely I would advertise on the web and do it all myself. A week or two of income would offset the small mortgage we have on it. Three weeks would do it, if I received all the income. The best deal any charter company offered was 60% of gross, and that was with me handling all expenses except advertising. I'm sorry, I've seen the local company's ads, 38% of that 40% is pure profit for the charter company. Especially since they bragged that 90+% of their business was repeat. Typically in business, it's the owner of the capital that makes the most money. What's up with that?

Obviously, you will make your own decision. I'm quite content with the fact that I own a world class cruising yacht that I get to visit if not sail, every day. By the time that first five year charter contract would be up, we will have the boat substantially paid for and substantially ready for long distance offshore voyaging. Our first minor attempt will happen this year when we circumnavigate the DelMarVa peninsula.

If we had purchased a new boat and put it into charter, that step would not be taking place for at least six more years. I lost my dad when he was 52. It was a total surprise and shock. It also made me aware that I could go today thanks to any number of possible incidents. I would be really pissed, if I died just before taking possession of a boat that I'd owned for 9 1/2 yrs but never really had a chance to use. Really pissed.

That's why when people out there say, "Go Now." I believe them and I'm trying as hard as I can. Part of that process was buying an older, well-built boat at a bargain price. One that I can use every day. Everything in life is a compromise. We think ours was a good one for us. You'll have to find your own center. Good luck, ain't life grand?
and more from Tim:
One of the issues that came up in our evaluation was that the charter companies are also dealers for the boats they use. You buy the boat from them, pay full markup, which is substantial on the boat, much less the extras. One company charged $1,500 for the mandatory tableware package. $150 at Target would get you the same stuff. They get you to take the depreciation hit on their product, while you pay them for the privilege of keeping them in business with up to date, current inventory.

Then they charge you 60% of the income to manage it for you, AND as has been noted, maintain it in the cheapest way possible. When it's all over, you're standing there with at the very best, a well-used boat and what's left of a 20 yr mortgage.

If I were a non-boater, I'd say operating a charter business was a pretty good scam ...

From Jeff Twiss on Cruising World message board:
We just returned from a Caribbean charter. This was with a company I respected, have used several times, and had seriously considered a charter boat investment with. I ended up chatting to a few of the local staff over beers one evening after our charter. An unsolicited comment was "you really don't want to own one of these charter boats." I was surprised. Ends up that their impression is similar to mine: too many people with too little knowledge/sense/skill/experience are allowed to use/abuse your boat completely unsupervised - despite the best of maintenance, the boats will get trashed.

From Sheldon Gawiser on Cruising World message board:
We put our Hylas 46 in the manufacturers charter program CYC. All was pretty good during the charter period. When it came time for refurbishment, they all agreed that lots of work was their responsibility, but then didn't do the work and refused to pay for the work they had contracted for.

Now they are essentially telling us to sue them if we want to collect. A whole bunch of owners are in the same position.

So, if you are going to do this yourself, without any management company and you can cost out the damage done by charters as well as the loss of value for your yacht, go ahead.

But if you want to use a charter management company, DON'T!!

From jen/Allied Wright 40 on Cruising World message board:
[Re: an approximation of the percentage of a charter fee that the charter company keeps as management fee/turnaround fee/fuel&water, etc. for a boat in a charter management program:]

Did the charter-out thing once ...

From the paperwork we happened to see on our charter company desk, the percentage is negotiable! Our 40' sailboat was in charter for one summer. We got 60% and they got 40% of every charter fee ($600 for a $1000 charter) but OTHER owners had arranged to get more, i.e. 70/30 or otherwise. The charter income and tax write-off that year was VERY nice, especially deducting all the accoutrements required by the charter company that we would have had to buy anyway. However, what got us in the end were the mounting maintenance charges to keep the boat up to charter company par (not free) and the relatively high cost of our slip at the charter co.'s marina. Our charter income would probably have been higher but the boat is pretty old and needed so much tweaking the first year (and we sailed it so much) that it was hard to keep it charter ready. It helps to have a newer boat, and/or a mound of liquid capital if the boat needs anything replaced at a moment's notice. P.S. DO NOT sign anything that allows repairs, etc up to a certain amount - like $100 - without them contacting you...unless you don't mind getting $99'd to death ... Our charter co. was great but our boat was a little too "good and old".

From Brian Woloshin on Cruising World message board:
[Re: buy new boat, have charter company put the boat in charter service:]

These deals are never as good as they are presented. The negatives they do not tell you about include:

1) The boat is only in charter for three or four years. When the charter term is over you still have 11-12 years of financing to pay off.

2) The boats are abused by people who do not know how to handle them. This is why after the three or four years they are too beat up to continue being chartered.

3) The interior is designed for charter - lots of cabins and lots of heads. Not the interior that a cruising family would want.

4) Ex charter boats are hard to sell because of their run-down condition. Look at the brokerage ads and see how many boats Moorings brokerage is trying to sell and look at brokerage listings that specifically say never been chartered.

From Jeff H on Cruising World message board:
While there may be exceptions, in my experience this is a bad idea.

I have known a fair number of people who have owned boats that have gone that route. The big problem has been that the boats are maintained just enough to keep them in service. They come out of livery needing some combination of sails, electronics, upholstery, deck hardware, engine or at least a rebuild, and a lot of cosmetics. These items quickly add up to more than you have received in charter.

There are unusual but more extreme cases. One such is the story I heard (first hand) of a guy who'd bought a boat from CSY. They failed to make the payments and ultimately he ended up "repossessing" his own boat in the middle of the night in South America.

Another worst case story (told second or third hand) was a boat that had been structurally damaged to the point of being economically totaled while in charter. It was patched up very poorly and returned to the owner. Since this happened while the boat was in charter the owner could not make a claim for insurance to put the boat together right or total it out. He ended up with a totaled ex-charter boat that he could not give away. Supposedly he ended up letting it go for the yard bill.

Now those are the worst cases but the ex-charter boats I've seen have always needed huge amounts of sweat and money to make right.

From David Guenther on Cruising World message board:
I had a good friend who did this. The boat was in terrible shape when he got it at the end of the lease.

From Sheldon Gawiser on Cruising World message board:
Don't Do IT!!!

We bought a Hylas 46 under a short term charter program where the manufacturer's representative was the charter company, CYC. Great boat, good experience while in the charter fleet, all the income as a discount up front.

Now comes time for refurbishment and they sell the company and no one pays to fix the boat.

Unless you have them put the money in escrow, and you have a good lawyer on retainer, just don't do it.

From Paul Marcuzzo on IRBS live-aboard mailing list:
... I had checked into the Moorings program once and your "free" owner weeks still cost you $400+ for cleaning, laundry of bedding, etc ["turnaround fee"]. Plus fuel and ice.

From Michel Benarrosh of
... I have a slightly different opinion about buying a used charter boat. Yes, you're right, it is a minefield, but as Moorings owner for 5 years, I have seen lots of owners walking out happy with their boat at the end of their contract. (Just in case, I don't work for the Moorings and my site is completely independent.)

From Cat Guy on
> Interested to see if anyone has had any experience with leaseback
> arrangements with large national companies such as The Moorings, Sunsail, or others.
> I'd like to know if the cost of purchasing the boat (assuming a 10% return
> on the money you would use to purchase the boat) and putting it into
> charter service is offset by the income received and/or the
> tax write off (this would be based on putting the boat into service
> with a high charter rate, such as the Virgin Islands).
> Also, what are the implications with deducting the expenses as a business?
> How long will IRS allow you to use the boat each year if you plan
> to write off the expenses?
> Another issue is the wear and tear on the boat from charter service.
> Someone mentioned that boats in the Caribbean take quite a beating
> from being in the sun day after day.

(1) First, if a "leaseback" (often referred to as "charter-management") were a REALLY good deal ... you probably wouldn't be "invited to the party." I mean, you don't see Mssrs. Hertz or Avis asking you to subsidize THEIR "fleets," right?

(2) The average mark-up (or gross profit margin) realized by a company selling monohull sailboats is between 18% and 27%. The profit margin for those dealers selling cruising catamarans is about 15%. Now, if one of those sales people is trying to tell you what a GREAT DEAL you'd be realizing if you purchased one of his monohulls or catamarans at the retail list price and then put it into a charter fleet, you've just GOT to wonder this: If he thinks the charter-management deal is such a GREAT thing for you, then why doesn't HE purchase his own boats and put them into charter-management. After all, he would be earning not only the profit that he claims you would earn, but his "delta" -- the cost he pays for a monohull or cat is anywhere from 15% to 27% less than you. So in effect, his ROI (return on investment) would be higher, because he's paying less initially for the boat than you. And yet ... guess what? Very, very few boat dealers EVER purchase one of their own boats and put it into charter. That would seem to be a rather telling fact, don't you agree?

(3) We've already noted that dealers and salesmen, who could get "into the game" for appreciably less than you (because they can purchase the same boat for less) nonetheless seem to almost universally shun the notion. The following figures may help explain why. Let's consider a fully-equipped 38-foot cat that would cost you approximately $300,000 all told (i.e., boat, delivery to the charter base, charter equipped [bimini, electronics, ground tackle, linens and galley-ware, dinghy/outboard, safety gear, bottom paint] and commissioning). In most cases the owner has financed that cat's purchase. And in most cases that has meant a 20% down payment ($60,000) with the remaining 80% of the boat's cost financed for a 15 year period at something around 8.5% to 9% interest. For a boat based in the Caribbean, where the typical number of weeks chartered per year is about 24 to 28 (be HIGHLY skeptical if they tell you more), you can anticipate earning a solid 10% return on that $60,000 down payment. Meanwhile, an increasingly inventive assortment of sales come-ons "seem to promise" waaayyy more income than that "10% of funds deposited" just mentioned. Essentially, though, they're ALL variations of "moving beans from one pile to another." (How could they be otherwise? If the "delta" -- that is, the overall cost of the cat -- is the same, and if the charter rates are essentially the same, how could you expect that the rate of return is much different from one company to another?) Simply know this: these various "come ons" are essentially just the "20/80" factor mentioned above, but dressed up in different clothing. For example,
(a) There's the "you pay for half of the boat up front, and we'll pay the other half during the 5 years of the charter ... at which time you'll get the boat, entirely paid off, even though you only had to put down 50% of its cost." Well, okay. But given today's fairly generous market place, doubling your money over a five year period isn't all that spectacular. More to the point, though, you're not really doubling your money. Plus, the company is avoiding having to use hardly any of its own credit line while nonetheless suddenly acquiring a (theoretically) "$300K" yacht. And of course they're not really matching your $150K up-front payment, because THEY don't have to pay $300K for that boat. In fact, given the purchase clout of a charter company, they're probably acquiring the boat for 20% less than its actual purchase price. Meanwhile, because charter rates generally increase with time, they'll be making more money from your boat with each passing year. And YOU will be absorbing virtually all of the $65,000 to $90,000 depreciation (more on THAT in a moment).
(b) Of course there are other come ons, too. There's the "we'll take 30% of the income from each charter and we'll 'give' you 70% ... but you agree to pay all of the operating costs." In which case you never truly know how much of their potential profit they'll choose to divert toward maintaining your boat.
(c) Or, the alternative -- "we'll take care of all of the costs, and you'll get 15% or 20% or 25% of each charter." In which case you never truly know how much of their potential profit they'll divert toward maintaining your boat.

(4) That pesky ol' debil, DEPRECIATION. There's been a long and rather interesting phenomenon among production-built cats (as compared to one-offs or racing models or homemade cats): the majority of production-built cruising cats, from 5 to 25 years old, resell for the same price their original buyer paid for the base boat (i.e., excluding optional equipment, taxes, delivery, etc.) At the low end, a 1985 Gemini (a pretty "meager" vessel back then -- my how it has improved), cost just about $50K. And today, a privately used '85 Gemini still sells for about $47K to $52K. Meanwhile, one of the most luxurious production cats of 1990, the Privilege 39, cost about $215K (base boat). And today, that '90 model (privately owned and used) sells for anywhere from about $200K to $220K. Did you note that qualifier -- "privately used"? Privately owned cats generally do not depreciate, whereas charter-based cats do. Typically, for boats based in the Caribbean (where the depreciation is higher than if the cats are operated in shorter-charter-period areas like the Chesapeake or the Pacific Northwest because the former see much more use), the factor ranges between 6% and 8% annually.

Yikes!! YOU do the math!
(a) Earn 10% on the $60K you put down, but ...
(b) Suffer 6% to 8% depreciation on the $225K sum that represents the base-boat price (of the total package that costs $300K). And remember, that depreciation repeats itself each year the cat's in charter.

Well, now you begin to see why the charter companies themselves don't make much effort to provide their own cats for their fleets. It's just not a particularly attractive "investment."

Many boat dealers, most of the magazines (where charter-management ads make up a large portion of their revenue), and virtually all of the charter-management companies are going to extol the virtues of charter-management. Frankly, there's no advocacy group for an opposing opinion ... because no one makes money from NOT putting a boat into a charter program.

I'm easily willing to concede charter-management isn't a total rip-off. But does it qualify as a "great investment opportunity"? Phew, NO! At least not from where I sit.
Another answer, from starshipenterprises on
Many charter companies will guarantee to make your payments and give you back your boat, a bit worse for wear, in five years. As someone close to the charter industry (but not involved financially) I know that these boats do take a beating, though reputable companies, such as the ones you mentioned, will maintain them and "put them right" upon return to the owner. I know that the companies you mentioned are extremely well-informed regarding deductions and will be happy to answer your questions and walk you through various plans.

From Tim on Cruising World message board:
... I persisted and looked into buy-for-charter operations. I finally and ultimately decided to buy used when I realized that even if everything they said about charter income were true (It is highly unlikely half of it is true. They are after all in the business of getting you to put up the capital for their business.), I would be spending the amount of a perfectly good used boat as the down payment for a boat I would be letting other people use for five years before I got to use it. Why would I buy a new boat to let other people use it only to delay getting a used boat, when I can take the same money and buy a used boat for me to sail every day, now ? ...

From Jeff on newsgroup:
Recently when chartering a boat in the BVI, I spoke with a young islander who works for Sunsail at Soper's Hole. He was rather candid. He said that the average charterer knows almost nothing about boats and sailing. It was obvious from the damage the boats receive almost daily. Mooring lines wrapped around the shaft, damaging the transmissions; collisions with nearly anything, including other boats; groundings; misuse of the plumbing, electrical, and electronics systems with resulting damage; torn sails; ruined outboards ("lots o' dem <expletive deleted> don't even know dat de two-stroke need some oil, can ya believe dat"); punctured dinghies; and so on ad nauseum. What the owner of the boat is left with is a piece of trash, according to this young man. You only have to look at the prices of used charter boats to see that his words are accurate. No doubt many of the owners buy charter boats with the idea of keeping them when they come out of charter. If that is the case, why then are so many of them offered for sale at the end of their charter life?

From Paul Marcuzzo on the WorldCruising mailing list:
[Re: buying an ex-charter boat:]

After being on one that was at the end of its charter life and looked at some that already were. I would budget for a complete rebuild for within a year - engine, probably transmission, running rigging, sails, batteries, VHF, stereo, mattresses etc. Remember for the most part these are rode hard and hosed off Sunday morning back out Sunday afternoon during the high season, so maintenance is "patch up mon until next time she breaks". And this is what I observed from one of the top names in chartering. If you can get a good price and don't mind the work to get her in shape, go for it.

From John Easteal on the WorldCruising mailing list:
I chartered for 2 weeks in the BVI, February this year [2000] from Sunsail.

It quickly became obvious that maintenance did not exist and that repairs were skimped.

I felt sorry for the owner of the Hunter that we had.

From Geoff Klestadt on the BoaterEd "Ask the Captain" forum:
A friend of mine delivered his beautiful little Jeanneau 36 for charter and two years later he got back a wreck. The boat had cost him at least $100,000 and his total return was $10,000 over two years even though his boat was very popular and chartered all the time according to the records supplied.

The sting in this deal was that although the revenue was split 40/60, the maintenance and repairs were at the owners cost. You guessed it, the charter company did zero preventative maintenance and charged big-time for "repairs". Most charterers didn't know much at all about anything nautical and frequently damaged the vessel.

For example, in two years he got charged $8,000 to fix "electrical problems" on the boat. If the outboard on the dinghy didn't work the charterer just calls up the agent, who says "no problems", speeds out, changes a spark plug, and hits the owner with a $700 bill. Same with the engine, sails, deck gear and so on. Big bills for repairing what should have been maintained in the first place.

The final straw was that after he had paid to have a proper pen for the boat, it was left out in a hurricane so that the agents' "friend" had his boat's pen. The bow fitting locking pin jumped out and the mooring chain took out everything forward of the mast.

The wreck which came back was just a mess, from the twisted stainless steel stern BBQ, to the corroded two year old Mercury 9.9 hp, to the torn Zodiac, the mouldy carpets, scratched interior, ruined electronics, etc. We even found the brand new cover he had supplied for the Zodiac to keep the sun off and the water out - it was still in its plastic package!

I've also personally seen charter agent's staff sleeping on boats to avoid rent. Another friend of mine hired a charter boat which almost sank after the log came out of its fitting (probably never screwed down). While he was swapped to another boat, I wonder how big a bill the owner of the other boat got?

From John Saunders on the BoaterEd "Ask the Captain" forum:
Look at all the numbers carefully, but look deeper into who is running things and how they do it. Dig through their boats in that location; all of them. Call owners. I have seen operators charge for everything and others who did too much and charged too little. Both have problems. The system needs to be operated in a very organized and almost mechanical manner, in order to prevent some of the problems you saw. Some work will be done by contractors and as much as that may cost, it is a necessity.

I also had a friend who lost a whole 38 ft sailboat. Only got back the dinghy. Bad charter, paperwork was not right etc. Don't know about the results of the insurance/lawsuits, but the local island gov. supposedly took a $50,000 bite out of someone for reef damage. Thousands of boats are chartered successfully each day.

The operators are selling the charter program, and many operators sell the boat. It is easy to confuse/mingle the two. You must know how much they are charging for the privilege of dealing with them. Shop the boat price and you may see? Nothing is free. Watch those taxes.

Except legally, it will never be your boat while in the charter service. This is a Business Deal! A strange person, who you hope is qualified, will operate it each week. If you really like boats, if this will be "your baby", maybe this is not for you. Would you rent out your dog? Kids, maybe, if it were legal, but your dog?

From Cruise News Fall 2000 - "Uncle Sam Wants To Buy You A New Boat!":
For a charter boat to make sense for you, you must be able to answer all of the following questions in the affirmative:
But I would add my own "spin" to that:
For a charter boat to make sense for you, you must be able to answer all of the following questions in the affirmative:

From Wendy and Bill Cook on the SailNet liveaboard-list:
Wendy and I just completed our 1st year in the Sunsail Home Waters program in Tampa Bay. We couldn't be happier. The program is a bit different than the "Island Boats". Sunsail has "Home Waters" fleets in Tampa, Annapolis, and Vancouver, BC. We can use our boat any time we want, as much as we want. It is located in a great marina in lower Tampa Bay. We live in Chicago. It takes us 4 hours door to hatch boards, so to speak. The Sunsail folks we bought from, Terry and Ed, told us to count on 14 weeks of charter revenue a year. We finished the year with 14 weeks, 3 days. That grossed out to a little more than $22,000. We split the charter income 50/50. With only 14 weeks of use (as opposed to maybe 40 weeks of use by the island boats) our boat still looks brand new. The program delivered everything as promised and we have a wonderful boat that we used about 7 weeks ourselves last year. The Sunsail Tampa Bay folks are a first rate group. We would recommend this program without reservation.

From Tom Barbernitz on The Live-Aboard List:
Although we never took part in the actual ownership programs offered by most of the major charter companies, I did seriously consider it for a while. IMHO, it does not make financial sense.

The charter company does guarantee the payments ... for the first 3 or 5 years out of a 20 year mortgage. Basically, they get the best years of usage (and lowest maintenance) and then give it back to you. Yes, most of them do maintain them, and even "refurbish" them before they turn them back to you, but still ... the boat has been heavily used and abused for the 3-5 year period, and now has a history as a "charter" boat. In addition, they tie up your credit during the period to do it.

In addition, you typically end up with a boat configured for charter (i.e. - 4 staterooms with 3 heads). I'd just go look for a used one if that's the type you want. Just my opinion of course ...

From Judy Rouse on the SailNet liveaboard-list 8/2004:
Owning the boat through the Moorings program has been positive for us, with a few caveats. Hope this response is not too long. We live in Houston TX, and are not interested in having a boat here to sail the brown waters of Galveston Bay; so we head to the Caribbean every chance we get. That is why we put the boat in charter down there.

We purchased the boat new directly from Moorings. We had chartered from almost every company in the BVI and would not have considered putting a new boat in charter with any company except Moorings. Sunsail maintenance sucks, and most of the other charter companies are secondary charters (used boats). Moorings has Beneteau equip their boats to Moorings specifications. For our 2000 boat, there were 53 Moorings additions/changes that Beneteau would not have done to their regular production boats. We entered into a charter management contract with Moorings covering Feb 2000 thru June 2005; contracts always cover 5 high seasons, so some boats end up being in their fleet slightly more than 5 calendar years and some slightly less. We received a guaranteed monthly income amount for the duration of the contract, regardless of amount of time boat was actually chartered or sitting idle. Good for us after 9/11 caused slow-down in travel. We were allowed a total of 8 weeks "low season" (now 9 weeks) for owner's usage per year. Seasons vary by base location; owner's low season in BVI is April 15 through Dec 15. If we used the boat during high season, each day of use would count as two normal days of our allotted time. We also could sell any unused owner's time --- which we did a few times and generated additional bonus income.

Maintenance quality/performance varies widely by base location. At the Bahamas base right now maintenance is deplorable; Belize leaves a lot to be desired because of parts shortage and lack of facilities; in Tonga it was wonderful. Maintenance at BVI is always very good because that is their largest base location. Our boat has been maintained extremely well. We use the boat the full 8-9 weeks each year and have been careful to write up anything that needs attention and followup checking on those repairs on our next trip. From the very first week of ownership, we made it a point to get to know the base general manager and the base maintenance manager and establish a friendly relationship and we give them occasional gifts to encourage them to remember us and our boat -- nothing elaborate or expensive.

For some reason our boat is faster than others of the same model, and a local captain likes to race our boat in all the BVI regattas (and almost always wins). This captain treats our boat like it is his own and that has also helped with having the boat well maintained by Moorings. Thanks to the captain, our boat has brand new sails, sheets and lines as of April this year. Other four-year-old boats in the fleet are not so lucky.

We were on the boat for 5 weeks in May/June and noticed that in addition to the sails, several other items had been replaced since our previous trip. New CD player; new speed transducer, wiring and Raymarine display unit; complete new toilet and full-length mirror in forward head; and some other things that I cannot remember right now.

That said, the boat will still be five years old when it leaves the charter fleet; and a five-year-old boat cannot be considered "almost" new. The gelcoat looks chalky even though Moorings claims they wax it. There are a few dings in the formica galley countertop. The Yanmar engine will have almost 5k hours when boat leaves fleet next summer -- running it two hours daily to charge batteries and refrigeration adds up when boat is in almost constant use for five years.

One other point -- the charter management contract is negotiable on a few points. Some owners have even better deals than we do regarding reciprocal time at other base locations. We went to Tonga and used a 461 boat as part of our owner's time, but if there had not been a 461 at that location we would not have been able to do that. Other owners have had the wording in the contract changed to allow them to use reciprocal owner's time even if a particular base location does not have the exact model that they own.

Bottom line is that our boat is maintained better than we expected, and it is heavily used. This charter management arrangement only makes sense if you are going to use the boat a lot. Our contract with Moorings guarantees us a trade-in value of $143k next summer if we wanted to purchase another boat of same or larger size. If we were to sell the boat next summer at realistic low market price of $120k, it will have cost us approximately $25k to own the boat; and we used it or sold the unused time for at least 8 weeks per year. We could not have chartered a 46 ft boat for that amount of time for that price.

If you are not able to use the boat a lot, then it does not make financial sense.


> If it has cost you $25K to own the boat and use it for
> 5 years, then if you didn't use it at all, wouldn't it
> still cost you $25K?
> Is that all it costs total? Or when it comes off
> charter after 5 years will you still owe a lot? Or is
> it paid for after 5 years?
> And can you continue to charter it after the first 5 years?

PLEASE do not think that I am advocating anyone buying a boat and putting it in charter. I am just answering questions that have arisen because of my original posting asking about best location to refit.

1. It would have cost us only about $7k if we had not used the boat at all; the other $18k is what we have paid in incidental per diem expenses paid to Moorings when we used the boat ourselves. The owner has to pay for use of the dinghy that you do not own and a few other minor things. If we had not used the boat then we would not have had those expenses. And they only allow you to sell 2 weeks of your owner's time each year, so don't think that you would be able to sell all 8 weeks and make more money. But, why would you want to own a boat that you are not using while it is losing value as other people put all the wear and tear on it?

2. Yes, that is all costs total. Moorings paid all maintenance expenses and insurance for 80% of original purchase price hull value. They no longer insure it that way. New contracts state that they will insure the hull at a decreasing value each year as the boat depreciates. We did personally carry an additional 20% insurance for the first 2 years. It was not required but we did it anyway. It cost $500 for the first year and $750 for the second year. By the third year we felt the boat had depreciated enough that being insured for 80% of the original purchase price was more than sufficient.

3. We do not have a mortgage on our boat; did at first but had a good year and paid it off. However, if we did have a mortgage, then at the end of the Moorings contract we would still have another 10 years of payments on the standard 15 year mortgage. According to our original loan amortization schedule, if we had only made the normal scheduled monthly payments then our loan balance would have been $123k when boat phases out of Moorings fleet. If sold the boat at that point at the realistic market value, then would be clear --- and no boat any more after enjoying the 8 weeks annually for 5 years. If used the guaranteed trade-in of $143k and bought another boat, then would have had the $20k difference to loan pay-off to use as down payment on the new boat.

4. No, Moorings does not normally keep boats older than 5 years in their fleets. Tonga had a few that were 6 years old but that is only because that base is so extremely remote that they have trouble getting people to place their new boats there. Moorings does have a secondary charter fleet called Footloose, where you can sometimes place your boat for an additional 2 years. But the income is drastically reduced and I do not believe Footloose does good maintenance. Even in the BVI the Footloose fleet is operated as a separate fleet with separate maintenance facilities. I would not consider doing that.

5. You did not ask, but the income you receive each year is offset by the depreciation you are allowed to write off. Our CPA handles all that, but it has basically been a wash each year.

From Sal Mannuccia on World-Cruising mailing list:
It is too good to be true. We get to use the boat for 9 weeks during the slow season. Which means not during the winter months, from end of November to end of April. If you choose to use it during the winter months you get fewer weeks. We go to the BVI 2 weeks in June, 2 weeks during Thanksgiving and 6 weeks around the world in their other ports. Have been to Tahiti, Belize; going to Greece in Sept/05 and planning to go to Turkey and Croatia in 2006 and 2007.

You put down 25%, the Moorings makes mortgage payments plus a few hundred dollars more to you. You pay off the mortgage and keep the extra cash to do what you want. The Moorings pays for everything that you can imagine to maintain the boat. You have no expenses for the boat for 5 years. When you use a boat you pay for daily expenses based on the size and type of boat; it's contractual.

After 5 years you have the option of keeping the boat, trading in the boat with the Moorings (guaranteed value in contract) or leaving it in charter with Footloose or another charter agency.

This is our second year first boat and love it.

From Jerry on "Carabella" 3/2006:
In the Moorings base in the BVI, there is a huge glut of boats waiting to be chartered, and charter rates have fallen drastically. So many people have entered the charter-ownership program that now none of them are making enough money to keep up with the payments.

From Anita on The Live-Aboard List:
One of the things you might want to think about is how much heartache you will go through between now and the time you take your boat out of charter service. As long as you do not have any strong emotional attachments to your boat or the things on it, maybe you will do OK. We had so many things stolen or broken, it was ridiculous. Every time you see your beautiful boat damaged because of someone's lack of judgment and then YOU get the bill for repair, the pain just wasn't worth it.

We also paid more in insurance than most people.

The charter company we had our boat in was located in Punta Gorda, FL. We even chartered from them before we put our boat in their charter service. They started out being OK, but when the ownership changed everything went to hell in a handbasket. We actually bent the davits on the boat we were using and offered to pay for the damages. We were told that the davit had been repaired recently and was under warranty, so no need for us to pay for it. My guess and from my experience the owner of the boat had to pay for it.

I have heard that the best charter companies to have your boat in are in the Caribbean. Maybe you should start there.

As always not all experiences are the same. Good luck with your decision.


... finding the right company is the challenge. We did not have the same kind of luck that you did. We had our Island Packet 37 in charter service for 5 years. That owner was very good and treated us with respect and our boat too. However, he sold out to someone else. That person uses the boat owners to make his living. Sounds OK? Not really, he would not hold the charterers responsible for the damages. He would get a deposit to cover any damages or missing items from the charterer. However, he would NEVER hold them responsible for what happened on our boat. Any of our boats. Example, one year we PAID over $20,000 for repairs on our boat. It didn' t happen all at once but over the year with normal repairs, teak work, bottom jobs, davits repaired, new batteries twice, replacing equipment that was lost or stolen. Heck the people that chartered our boat went so far as to STEAL a video (Capt. Ron), that we left on the boat for their enjoyment. (We have a TV/VCR combo on our boat.) Plus, the contract we were under was almost impossible to get out of.

We expected normal wear and tear from charterers. But not the amount we received.

We accept some of the responsibility for our experiences. We did not go into it with the right info. My suggestion if you are seriously interested in putting your boat into a charter company, find out the names of the owners current and past and TALK TO THEM. Don't go by a letter. If the owner will not share the info with you ask him to have the owners contact you directly. If you do not have any responses from the owners of the boats, then try to find out who the owners are any way you can. You NEED to talk to the current owners of the boats in the charter company.

If you still decide to put your boat in charter service, don't expect to make a fortune. We didn't, we only expected to be able to make our slip payment and maybe insurance payments. We made enough money to pay the slip fees the first year and some of the insurance the second year, then the new owner took over. I know of other owners from the same charter service that lost a lot of money too. Plus, this same company has had so many employee turnovers its scary.

I am sure there are companies that are better than the one we had. I just suggest that you really do your homework take a LONG time to do it. Good luck.

I am sorry for unloading and yes this is a sore spot for me. I apologize for getting on my soapbox.

From Lee Haefele on The Live-Aboard List:
Bought a boat, Leopard 38 catamaran, in Tortola, BVI and left it for a year with a charter company. Rented a lot, made good $$, took a big depreciation tax deduction. Picked up boat following season. Boat was ex Moorings charter boat with 5-6 years use already. Additional year of heavy use in tropics now requires new engines and mainsail and the cost is more than profits.

From LateStart on Cruising World message board 7/2011:
Re: Is it a break-even to purchase a charter yacht ?

I don't think it is easy to break even, but can be done. I made a little money on a 37' in the Moorings fleet in Tonga that I owned years ago. It came to about 2% return on investment. However, the purchase price had been reduced, I worked at marketing most of my owners time, and I moved the boat to a secondary charter fleet after the Moorings contract ended. Most charter boat owners do it for the pride of ownership. It might make financial sense if you use all you owners' time for sailing vacations and count the charter fees saved. Or want to depreciate a boat before converting to personal use.

I sold my boat in Tonga through Moorings brokerage and got a fair price for it. But I don't know if that is normal. There are so many ex-charter boats coming out of the Caribbean that the prices are usually depressed in that area.

Right now I own my second charter boat, a 51' sailboat in the Anacortes Yacht Charter fleet close to where I live. I am beginning to doubt that I will come out ahead even with doing most of the maintenance myself. The season is just too short here. However, I bought at what I think was the low point in the market, so if prices go up, there is hope for me.

My observations:
In Cane Garden Bay BVI 6/2009, I saw a charter boat ignore the channel, come in over the middle of the reef at 4-5 knots, and hit it hard, with a bang you could hear a hundred yards away. They backed off, and eventually found their way into the anchorage. Wonder if it damaged the keel ? Wonder if they told the company about it ?

In Vieux Fort St Lucia 1/2011, I had to keep waving boats (not all of them charter boats) away from the submerged reef in the anchorage, the only hazard in the whole place. One boat hit it hard before I could get up and warn them.

My conclusion: a lot of people never look at a chart or guidebook before coming into an anchorage.

From kd3pc on SailNet forums:
Re: buying boat and putting in charter program in southern California:

Good luck, and be sure to search the forums for similar posts. You could write a book on the disadvantages to match the marketing creativity of the charter managers.

For some it works, but if you think at the outset that the charterer will use YOUR boat and "possibly not taking good care of it" ... I would rethink the whole idea.

They will not take care of your boat; think rental car.

They will "lose" valuable items, that you will have to replace at cost plus 40-60% before the next charter. Things like dock lines, both sets, will be "left somewhere, earlier this week". The manager will not charge "his best clients" for "little things like dock lines".

Anything not nailed down will be used, abused or misplaced.

Your insurance will be higher as you are now a charter boat owner, and you will likely need a fairly expensive $1M liability policy, just in case.

Slippage will be higher, because the client wants to park his car near the boat, not walk, as does the management company, cleaners, fuelers, etc.

Maintenance will need to be done 6-10 times more often, and likely by the $100/hour technician, unless you are going to take off work to do it.

Then the wear and tear of a 2-year-old charter boat, will be similar to a 10-12-year-old non-charter boat.

Unless you have a more compelling reason to do this, I would seriously think otherwise.
From rgscpat on SailNet forums:
Has the management company shown you figures from comparable boats so you have an idea of how much rental usage you can realistically expect?

I'm guessing that the California usage patterns are a little more seasonal than at the big Caribbean operations, so you'd get less money out of the operation but maybe less depreciation and more maintenance and owner time.

Does the boat layout and equipment that the company wants you to have on the boat match up pretty well with what you'd want for your own use?

How specific is the company about their end-of-contract procedures for when the boat gets turned back to your sole use (what repairs do or don't get done)?

Oh, and if you haven't done much business with them as a customer, it just might be fun to have a friend of yours do a short charter from them to get an idea of how good their procedures are.

From Andy Bacon on Cruising World message board, 3/2009:
... you can and should drive a hard bargain as far as pre-handover restoration is concerned. New sails, especially (they'll have a new set somewhere). You will find that living aboard places different demands on the vessel to chartering (see our article on the Boat Equipment page).

From article by Steve Erickson in 11/2008 issue of Latitudes and Attitudes magazine:

Posted on Facebook by Don Green 5/2012 [I have removed names from the text]:
Does anyone have any tales about chartering their boats or using a charter company to do so? I came across this piece and many more and am horrified:

1. It took me 6 months to get them to admit that they owed me and pay up my share of money for air-conditioning revenues. They also charge $60 for electricity for every night my air-conditioned boat sat on the dock during charter. We all know it does not cost $60 per night. Maybe $20. They were determined to keep as much of those AC revenues to themselves.

2. They insist that renting my boat out the night before a charter, known as a sleepaboard, is not considered part of charter income and they refused to share those revenues with me.

3. They told an owner that his sail was trashed, made him buy a new sail and then when I asked about taking the hardware off the old sail which they had left on my boat**, told me "no, they were repairing the sail and using it on one of their boats going back to Florida" (I have the email).

4. When I pinned them down to serious under-performance of customer service and maintenance issues they resorted to canceling one of my charters and giving that charter to another boat they brought in from somewhere else purely out of spite. I call that stealing $5,000 right out of my pocket.

5. It all started before my boat even arrived from France. I asked her, the queen b***h, about getting my cushions made. Six months before it arrived I asked her. I wanted specific fabrics and open-cell foam. No answer. The day my boat arrived and was due to go out on charter in 3 days, the cushion guy finally shows up and no he does not have any of the material or foam I wanted and she, the queen b***h charged me $4,000 for the bottoms only, that is no backs and did not include the Flybridge cushions. What choice did I have? 30 linear ft of cushion ... $4000.

6. The first Sep after I had my boat, they asked me for my owner's punch-list of things I would like to have done during Sep maintenance. Three years later they still had not done one item on my list. As you know, we owners pay them for everything they do. I would have thought that would be an incentive for them to work on my boat. NO.

7. As managers of my property or yours, they have at the very least a tort requirement to take care of our boats and put them ahead of their own financial interests.

8. They fall down on customer service (that would be you the boat owner). They like owners who stay home and come down to use their boats occasionally but don't pay any attention to reports and charges. Who don't question anything.

9. They also like you to make an appointment to see your boat. By all means do not show up unexpectedly. You just might see someone else's trashed sail sitting on your boat or you might find parts of your boat missing ... but they don't pirate your boat, they just LOAN parts of your boat to others going out on charter. Like my mainsail they loaned to the guy **whose torn and trashed sail was now sitting on my deck. Could it be they were going to tell me that was my sail sitting there and make me buy a new sail. They only make $1,000 or so every time someone buys a new sail. As he was explaining how they don't pirate parts he was explaining why my ladder hatch was missing. He had LOANED it to another boat.

10. They are very good at changing oil and performing routine maintenance, but when your boat needs extraordinary care as it gets older, they don't have the time or staff to give it the attention it needs.

11. The best thing they could do is go out of business. I have pages of stuff.

12. The president of the company who financed my boat for me for 3 years, well after I had my first argument with the queen b***h, called in my loan early. We later made up (what choice did I have), but I of course refinanced ASAP.

video - Rick Moore's "Ode to the Credit Card Captains"

From Bryan Genez on Yacht-L mailing list:
A boat can be "bareboat" chartered in the US without being documented, and without a coastwise trade endorsement. The owner of such a boat can even require that a licensed captain be aboard. But the owner cannot specify the captain. If the owner is aboard or if the owner specifies a particular captain, then the USCG considers the boat under the control of the owner, and will require that the boat be documented with a coastwise trade endorsement.

Captaining your own boat as a charter boat:
My understanding of it:
  • Need a Captain's license, which requires coursework, time at sea, periodic drug testing, etc.
  • Boat must be licensed/inspected.
  • Probably need a business license of some kind, and pay taxes. Especially if you'll have any employees.
  • If you cruise to another country, entry fees will be higher than for a private recreational boat.
  • Need to be in a place that people want to cruise in.
  • Customers will want to cruise in the "good season", leaving your personal cruising for the "bad season".
  • You must enjoy entertaining people.
  • You probably won't be able to get a license to operate in a foreign country; they want their own citizens to have those jobs.
  • Your freedom to postpone certain repairs will be reduced.
  • You may have to have a more powerful dinghy, and more toys such as snorkel gear and kayaks, than you otherwise would.

See some comments about charter boats in Strategies section of Buying A Boat page.