# Charter fleet ownership



## rjcaudle (Jun 27, 2010)

I'm looking for advice regarding owning a boat in a charter fleet. I know that there are negatives, but it's very appealing to me to be able to visit a boat in the
BVIs or elsewhere for 5-7 days several times a year.

I would want a catamaran 38-44 feet. I currently own a monohull in NC. Any suggestions or direct experience would be welcome.

rjc


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## benesailor (Dec 27, 2012)

bump, interested in the response as well, just curious to why someone would buy into this.


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## tomandchris (Nov 11, 2009)

I have owned a boat in charter, but in the north..not the BVI's.

To me this decision would be one of simple math. You say 5-7 days several times a year. How many is several? If the cost of chartereing the boat for those days is equal to the purchase option (revenue minus all costs...not just initial) then you charter and don't worry about the boat when you are not on it. 

Certainly there are as many benefits to charter ownership as there are problems with it. Talk to your tax advison and see all of the benefits and issues. 

Good Luck.


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## night0wl (Mar 20, 2006)

The best account of the dynamics of owning a boat in charter that I've seen online are here: The Usual Suspects - Caribbean Sailing Adventures

The guy owned a boat in Barefoot (second or third tier charter) for 7 years. He lost money on the deal overall, but didn't seem too dejected by the financial aspects of it. Basically, my takeaway is that it will *NOT* make financial sense...but when does boat ownership EVER make sense by the #'s


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## Subaqua (Jul 14, 2013)

rjcaudle said:


> ..... but it's very appealing to me to be able to visit a boat in the BVIs or elsewhere for 5-7 days several times a year.
> .......
> rjc


we own in a charter co. and this is exactly the reason my wife wants us to stay in the program. Using a boat in different ports around the world without having to actually sail there has it's pluses! 'Course, you could do this even without being an owner, just by chartering. It has worked well for us, but wouldn't for everyone.


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## FarCry (Apr 21, 2007)

rjcaudle said:


> I'm looking for advice regarding owning a boat in a charter fleet. I know that there are negatives, but it's very appealing to me to be able to visit a boat in the
> BVIs or elsewhere for 5-7 days several times a year.
> 
> I would want a catamaran 38-44 feet. I currently own a monohull in NC. Any suggestions or direct experience would be welcome.
> ...


I work for a charter company. Full disclosure completed.
What are your goals? Are you trying to decrease the cost of ownership? Are you trying to actually make money (nearly impossible)? Are you trying to sail more and decrease the cost to do so? What are your plans in five years, or so, when a boat would come out of charter? Have you looked at the cost of a 40' foot cat new and seen what the same one sells for after being in charter for 5 years?

I know quite a few people that have boats in a variety of charter fleets. Some have been doing it for 15 years. I know people that have more than one boat in a fleet. I know owners that haven't ever used their boat but send clients/business associates down and write it off. I know others that use their boat more than 6 weeks a year. I know non-boat owners that charter 6-8 weeks every year and have no desire to own a boat. The system works great for some and is a disaster for others. I think the difference is knowing what you are trying to achieve and keeping your eyes wide open as you get further into the options.


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## rjcaudle (Jun 27, 2010)

My goals are not to make money, or end up with a boat of my own in 5 years. My desire would be to travel to the boat or other locations 4-5 times a year and decrease the costs of chartering.

I think if I had my own boat in a fleet I would make those trips more often. I have not checked into the loss of value in 5 years after chartering. That's what I actually was curious about. 

rjc


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## FarCry (Apr 21, 2007)

If you are going to sail 5-7 weeks a year then it might start, and I do mean "start", to make sense for you. If you wish to charter in many far away places then there may be even more advantages.


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## yachtownershipgirl (May 6, 2014)

Hi all, this is Christine Joseph, yacht ownership rep based here in Tortola, BVI for the Moorings and Sunsail. If you send me your contact information, I'll be happy to send further info on the program along with spec sheets and pricing for the Cats we currently have available to own into the program. Cheers!


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## hellosailor (Apr 11, 2006)

Christine, why don't you comment on those questions publicly, here on a public forum? Instead of soliciting private business?

If there are good points to be made, they will remain here for all to see. And this is not the first or only time that someone has come to a public forum asking if buying into a sailboat charter makes any kind of sense, the topic comes up every year. 

Obviously it makes sense to some people, but perhaps you can tell us all when it will or won't be profitable, or advisable, in general. Does it work for people who make under a million a year? Over a hundred grand? Need a tax shelter? Please, do tell us all.


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## rgscpat (Aug 1, 2010)

Maybe while we have some experts looking at this thread, it might be good to turn the question around and ask, 
What factors make someone a good candidate for charter ownership/who will get the most out of it, and what factors would make it make less sense?


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## sony2000 (Jan 30, 2013)

I imagine all contracts require that if you use your charter boat, you have to pay the same rate as everyone else. Only at the end of the year, you are able to get some money back,
assuming there is a profit.


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## Subaqua (Jul 14, 2013)

sony2000 said:


> I imagine all contracts require that if you use your charter boat, you have to pay the same rate as everyone else. Only at the end of the year, you are able to get some money back,
> assuming there is a profit.


Not quite the way it works.. at least not in our case.. and probably not in many cases. If you are on a guaranteed pay program, you may pay a very nominal fee if you use your boat, a turn around fee for linens, etc. , and still get paid by the charter company no matter what.. whether your boat is rented out or sits at dock. You may not even get charged for fuel, water, ice... whatever when you use your boat.. or anyone elses boat that is in the same program.

Other contracts you may not have to pay at all to use your boat, but if you are using it when it could be chartered out to a paying customer.. you're losing that potential income.

Depending on the contract, you may get paid every month no matter what, or the payment could be an annual deal. Just depends on the contract.
Some programs require that you share in the expenses of your boat, other programs you have absolutely no expenses at all.


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## FarCry (Apr 21, 2007)

rgscpat said:


> Maybe while we have some experts looking at this thread, it might be good to turn the question around and ask,
> What factors make someone a good candidate for charter ownership/who will get the most out of it, and what factors would make it make less sense?


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.


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## yachtownershipgirl (May 6, 2014)

Hello All inquiring about yacht ownership. The program is designed for those who make sailing part of their lifestyle, want to travel to exotic worldwide locations to sail, and possibly own a yacht at the end of the tenure. There is no large return on your investment, after all, it is a yacht. The yachts are brand new ranging from monohulls 41-54' to our ever-popular Catamarans from 39-58'. The initial investment is 25% down and for U.S. citizens, we offer excellent financing. Every month you get a guaranteed income check based on a 9% return. The yacht stays in the charter fleet for 5 years. We handle all of the operating expenses - maintenance, dockage, insurance, etc. The ownership use is very flexible - similar to a time share - you get points which equals sailing days. You get up to 12 weeks of low season/5 weeks high season use per year. No blackout dates. And there you have it in a nutshell! Let me know what further questions!


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## jsaronson (Dec 13, 2011)

So for a hypothetical $200,000 boat (I know that's low) let me see - 
$50,000 down
12 year loan @ 5.5 % = 1450 month
ROI of 1500 month
plus registration and insurance. 
After 5 years I'd probably be upside down another 20,000. So it cost me $70,000 over 5 years. If I take 18 charters over 5 years worth $4,000 a charter I break even. For a more expensive boat I need to take more charters to cover the additional expense.


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## hellosailor (Apr 11, 2006)

"Every month you get a guaranteed income check _based on _a 9% return."

So the eager buyer might hear that they are getting a 9% return, when in fact they are getting...what? What does "based on" mean?

Sounds like the "Buy One Get The Second at 50% off" offers, which really mean "Not more than 25% off when you buy two". One sounds way better than the other.


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## yachtownershipgirl (May 6, 2014)

Hellosailor: The 9% return is 'based' on the price of the yacht. It is a GUARANTEED 9% return every month. We have been selling the yacht ownership program for 45 years now and it works well for most. 

Bottom line is you need to go sailing! If you average cost for chartering approximately 3-4 weeks per year over the next 5 years, combination of seasons, you will see those charter fees would be equal/greater than the 25% down you put on the yacht so that is how you determine if the program is for you. 

jsaronson: you're pretty close... I'll be happy to email a proforma/spec sheet depending on the yacht you're interested in but here's one for a Sunsail 41 (Jeanneau Sun Odyssey 409), fully equipped for charter. 
Yacht price: $250,000
25% down: $62,500
Financing based on 4.35% fixed rate over 15 years
Guaranteed 9% income per month: $1,875 (your mortgage payment based on 4.35%-15 yrs is $1,420 so a small positive cash flow per month)
If you apply ALL of the funds we send you over the 5 years, loan balance would be $113,433. Estimated net resale after 5 years around 50-55% residual so around $125,00-$135,000.


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## SailBeat (May 30, 2014)

Hi all 

I'm starting a yacht charter comparison website locations, yachts, things to know and do. I was wondering if any of you would be interested in writing an article about charter ownership progrmas for my visitors. In return I can link to your blogs etc.

It would be great to have some insider knowledge for my customers

Cheers Luke

EDIT: Removed Link that is in violation of forum rules. Jeff_H Sailnet Moderator.


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## Night_Sailor (May 27, 2012)

Chartering is a great deal for the charter companies and a bad deal for the boat owners. Would you like an article on how the charter companies screw over their customers? I didn't think so.


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## SailBeat (May 30, 2014)

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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## Night_Sailor (May 27, 2012)

*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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## Donna_F (Nov 7, 2005)

Night_Sailor said:


> ...
> 
> 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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## miatapaul (Dec 15, 2006)

DRFerron said:


> 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! :laugher:laugher


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## Geoff54 (Oct 30, 2011)

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&#8230; 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&#8230; I hope it is of some help.

Good Luck


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## Geoff54 (Oct 30, 2011)

DRFerron said:


> 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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## chesapeake1 (May 31, 2014)

FarCry said:


> 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
> ...


Thanks for the insight.


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## FarCry (Apr 21, 2007)

Night_Sailor said:


> *Reputation:* . I've seen the CYOA operation on St Thomas, and those people impress me also.


Thank's for the kind words.


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## rgscpat (Aug 1, 2010)

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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## Maytrix (Jan 17, 2011)

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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## Uricanejack (Nov 17, 2012)

In reality it just doesn't make sense no matter how you look at it. I considered putting a boat in with both the moorings and sunsail programs. 
I thought the longer Caribbean seasons would make it work. 
There was a program a few years back where you could put down 25per cent and get the boat free and clear after 5. Year's. I nearly went for it but it doesn't, seam to exist anymore. 

The fact is I just couldn't afford a new boat and relying on charter income was not going to change the facts.

If you can afford a new boat and want to cut the costs of ownership it may work for you. So long as you can afford it. And realize you are going to loose money. 

I worked with a local charter company for several years. In the PNW. They were much more honest than the picture painted by one poster's description of the business plan.
They chartered more north American boat's back then and did not stick with one manufacturer. 
Each boat was individually chartered. By name and picked by charter. And marketed individually. The revenue split was much better at 60 40.
The season to short you just would not get enough chatters to break even.

In reality the buisness plan works for the charter company very well.
No huge financing overhead. No cost for unsold weeks. No cost to insure boats. No cost to moor boats. Small profit from maintaining boats. 
All above born by owner. 

It can work for an owner who can afford the loss. Helping to reduce the anual cost of ownership. 
I would recommend local over Caribbean.

I used to charter regularly local.
I bought an older boat I could afford. It made no sense at all financially. But I like it


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## Maytrix (Jan 17, 2011)

Uricanejack said:


> In reality the buisness plan works for the charter company very well.
> No huge financing overhead. No cost for unsold weeks. No cost to insure boats. No cost to moor boats. Small profit from maintaining boats.
> All above born by owner.


This is not true for all charter programs. Yes, many are like this, but there are also guaranteed programs like Moorings and Sunsail (as well as a few others) where they cover all the costs during the charter and you just pay a nominal turn around fee.


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## dongreerps (May 14, 2007)

This thread beautifully illustrates that making the decision to put a boat in a charter program is a complex decision. Very complex. 
We have had boats in charter programs for more than fifteen years now, so you me consider us experienced. 
First consideration: Make sure your CPA is very familiar with all the rules, and comfortable with them, and will support you. Second: Assume the IRS will audit you. Third: You must repeat must conduct this a business. You must be able to show you investigated the decision to get into this business, and have the records to prove it (make a copy of this thread, and keep it.), and records to show that you are running it as a business. As such there is a limit on how much you can use the boat. Our CPA walked into our audit with 2 1/2 filing cabinet drawers full of records. Our additional tax bill was $1.98 - after two months of IRS review.
Bottom line: cash basis - a small loss. Accounting records - a very big loss Result: we came out ahead because we used the accounting paper loss to offset other gains.
Suggestion: if the charter company is only willing to keep your boat for four years or less, they probably are not maintaining it the way you would want


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## Ars Vivendi (Jun 25, 2014)

Charter boat ownership has pro and cons.
I went through a very sorrow experience and took my boat away from one outfit after the good experienced owners got bought out.
the new outfit NYC looks pretty good after my boat and things seem to go better.

I wrote a nice article 'CHARTER BOAT OWNER BEWARE' with pictures of what happened but can't post it on here with the pictures. If somebody could help with this technical issue I would appreciate as this article about my experiences is a MUST READ for everybody who has or plans to have a boat in a charter outfit.

right now I am working on getting a charter boat owners association going here on the coast of BC as the individual owners are not getting aware of issues....... and I can tell you there is not a lot of support from the charter outfits on this......most of them don't like to have somebody looking over their shoulders.

Please support this issue, PM is very much appreciated.

below the article without pics.

Charter Boat Owner Beware! 
When on July 22nd 2013 the sloop Ars Vivendi had a rock hit in the Octopus Islands in Desolation Sound when out on a charter, a strange and very frustrating journey for the owner of the vessel started. This story is a must read for every boat owner on the cost of BC who has or wants to put his vessel into charter as it will show some behavior, contractual issues and treatment one gets as a charter boat owner by charter outfit, repair yard and insurance. 
The information about the rock hit received me, the owner of the vessel Ars Vivendi, on July 23rd via phone, after the boat had been viewed by the charter outfit owner. The charter was abandoned and the vessel traveled to the nearest ship yard for haul out and inspection. 
Being a proud boat owner and interested/concerned about the vessel I took the time and traveled down to Vancouver Island, a 2800km roundtrip, to view my baby and get an idea about the damage. The ‘fender-bender’, as the damage got classified by some insiders, turned out at the end to be a repair of more than $ 73,000.00, so a substantial damage. 
While present for ~ 7 days and visiting the charter office I got aware of last minute calls for chartering Ars Vivendi which rightfully had to be turned down by the charter company or which have been directed and booked onto another vessel which was still available for the time requested. But why should this concern me as the insurance has a ‘Loss of Revenue Coverage’ as has been verbally communicated to me by the charter company to cover all this lost charters ……. How wrong my belief in this was I got aware in December. 
Spending some time on the charter dock and talking to boaters, crews etc I could overhear conversations about the ‘inexperience’ in handling a vessel of some charter captains which I looked at in a different perspective when a 2nd charter rock hit within this outfit happened later this season. 
Duty called me back home and I followed the repair situation via phone and some pictures that have been mailed to me. Everything looked fine and as boat owner who has the vessel in charter you got to be aware about and accept the risk of having a charter incident so nothing to worry for me. The repair was finished and the vessel brought back to the charter outfit for winterizing and to await the next season. 
In November a long standing wish of mine got granted, I sold my house and moved to Vancouver Island as was my goal for some time. Naturally one of the first visits was to my boat which was slumbering for the winter. Being down on Vancouver Island now, I imagined some cruising during the quiet times of the year and having a very well equipped boat I requested to have it prepared for some Christmas cruising. 
Was I in for an awakening! 
And I would never have gotten aware of all the following if I would not have moved i.e. mean being present on site, near the boat and been able to look into all of this! How many of you charter boat owners are living far away in Edmonton, Calgary or other interior locations and rely on the faith and trust 
you have to your charter company as I had? How big would the bill be for me in spring if all these items would have come up then and everybody could with the time passed deny its responsibility? 
After settling on Vancouver Island I visited the charter outfit and renewed my request for a copy of the insurance policy covering the incident, especially the ‘Loss of Revenue Coverage’, which I previously requested via e-mail end of July ’13 but never received. After some hesitation within the administration I got several pages copied….and that’s all I have till today as no official copy of the fleet insurance covering my vessel has been forwarded to me neither by the charter outfit nor the insurance company…… but I paid for the insurance! 
After studying these copies I realized that the Loss of Revenue Coverage is only for pre-booked charters, so the lost bookings and redirected charters were not respected. Furthermore a clause in the policy which covers the ‘right of the charterer’ offers the charterer unlimited legal coverage……but where am I, the boat owner, no legal coverage for me. Needless to say that this got me up in arms as I felt that my rights were poorly covered and respected in regards to the ‘Loss of Revenue’ and the legal coverage. Thanks god the incident happened in July and not in early May as then there would probably not have been many bookings and I, the boat owner, would have to cover then the cost for the yearly expenses as the vessel would not have created any revenue to cover them as usual! Where is the insurance coverage I was made believe I had? Knowing that most charter companies on this coast have the same insurance where is the proper ‘Loss of Revenue Coverage’ for you? 
4 days after my request to have the vessel ready, the day I wanted to board, I received a phone call from the charter company owner that the fresh water system on board was leaking. Nevertheless I made it out that day and there was a mechanic on board, the Espar heater was not working either. It turned out it was not electrically reconnected after the repair, the cables were labeled but not connected, see picture. 
Now I got seriously concerned as I was under the impression that everything on the vessel has been checked and was in working condition as was verbally confirmed to me weeks earlier by the charter company owner. 
Suspicion awakened I started looking into details; lots of scratches inside the vessel (the vessel had to be totally gutted to perform the repair), incomplete bolting on the floor boards, sticking up corners of the floor board (your feet would like that) out of order light switch, broken forward head cabinet door lock, the oven didn’t line-up with its lock etc, see pictures; certainly enough to have my emotions in the wrong ph-values. So I started questioning the charter outfit owner about a performed sea trial, performance check of all appliances and equipment etc and received negative or vague answers. 
The next morning has seen me boiling some water as the water heater did not work which certainly did not improve my moods. 
On closer look outside the vessel I found that all the cotter pins of the standing rigging had not been bent properly (see pictures); now that is a safety issue as they have sharp ends and can cut into pants, hand, feet and ankles not to mention damaging the sheets. 
So I decided to visit the ship yard and discussed things with them. Very friendly and understanding they were, help was assured in case something would not be right and I should feel free to contact them any time. They stood up to their word later which has to be remarked positively. 
Back to the vessel/charter marina in the afternoon and meet the charter company owner, discussing a possible sea trial for the next day as no test under sail had been done and I wanted to do some boating over Christmas & New Year. The sea trial was envisioned but I was then later sent a text with ‘Sorry no sea trial tomorrow, we have plans, see you next year’….well now, that is very nice and you really feel how important you are as boat owner. Not feeling comfortable with the whole situation I decided to dump my plans for a Christmas cruise. 
How important are we as boat owner to the bareboat charter business on the coast of BC? 
Of the ~ 150 vessels in charter more than 90% are owned by people like you and me…… so we are the backbone, the foundation of that business…… but did I feel as being treated as a back bone….more like a discarded dog bone I’d like to say. 
Needless to mention my confidence into the charter outfit had deteriorated within 14 days from full confidence to very suspicious. So I started making my home work and prepare for the worst that could happen in the New Year. 
January brought some new sights and the first talk. I finally received the written information about the lost booking (and boy was that a fight to get it!) where a potential charterer inquired first part of July to charter of Ars Vivendi in August. The charterer was then informed on July 24th (2days after the rock hit) that my vessel was not available due to the incident. The charter was offered another vessel in the fleet which was not booked for the required time and subsequently booked this vessel. And all this is nicely done via e-mail, so in writing and a perfect proof that the ‘Loss of Revenue Coverage’ in the insurance is certainly in need of improvement as it does not protect the boat owner as I believed! Now this is clear a lost booking but it is not covered under the insurance policy as a pre incident booking sheet was not filled out. Subsequently this loss of revenue was not even put into the claim as submitted by the charter outfit. This would make the insurance company happy I guess; it certainly did not make me happy. 
Now what would the situation be if this incident happened first week in May with an average of 40 – 60% of the bookings are coming in starting May? So would I not have lost then more than 50% of bookings, a substantial financial amount to cover the yearly cost for the boat? 
Within that same meeting I was then pressured to sign the outstanding contract for the 2014 season. I was also told that the 20% increase in the moorage as charged by the charter company (charter moorage $ 12.54/ft/month, official marina moorage $ 7.59/ft/month!!) was not discussable, that the care given the vessel was outstanding as it cost more than $ 8,000.00 in 2013 (and why were there so many issues when I wanted to board my boat?) and that I should tread lightly with the insurance company as ‘they (the charter company) could not afford to have my claim of the lost booking giving a negative impact in their good relationship with the insurance company’ ! 
Hello Charter Company …… who is more important to you, the boat owner or the insurance company? 
My decision was made right then and there: Ars Vivendi will be with this outfit no more! 
Next morning found me signing the contract with the new charter company which I had contacted between Christmas and New Years……(they were available not like to others with see’ya next year). The afternoon had me writing the official note to the old charter company that the vessel was not available for their 2014 charter season which prompted some surprised responses. 
It felt good to shed all the trouble…..but was it over? Not yet. 
In arrangement with the ship yard I brought the vessel back for deficiencies which they really did take good care off. Despite other things I was then informed that the standing rigging had not been fined tuned as this was supposed to be done in the marina of the charter company I left (which explains the unfinished work on the cotter pins). Now here is a question: why was I not even told that the standing rigging was not finished tuning by the charter outfit owner before Christmas? This would sure have explained some deficiencies. The reason why the fine tuning of the standing rigging has not happened I did not even inquire but was I ever happy I did not take the vessel out for any Christmas cruising as I am sure that in case of some damage I as owner would have been liable! Interestingly the fine tuning had already been billed for but not been done. 
End of January I boarded my boat in the shipyard and took her via a 3 day cruise to her new home. 
Feeling good about the situation, the new charter company checked the vessel in detail. During the first week a continued water increase in the bilge was recorded, monitored and investigated. The water intake was finally traced to the drive shaft area, the shaft packing was barely hand tight and even after tightening it there was still more water intake than normal. 
We decided on an early pre-season haul out (mid February) to perform an inspection of the hull and the vessel in general. Part of the reason for this haul out was that the insurance company had not sent any marine surveyor out during the repair of the vessel to monitor the progress and verify the proper repair. Not sending out a surveyor during the work is very unusual and certainly not industry praxis as I learned in the course of all that happened. So a proper re-survey or re-certification after repair had not been done either. 
The close inspection of the vessel in the dry dock revealed a good repair job on the hull but a substantial play in the drive shaft near the propeller indicating a worn out cutlass bearing. It was decided to exchange the cutlass bearing which required the rudder to be removed. With removing the drive shaft we realized that the shaft packing was hardened (which explained the continuous seepage) and had to be replaced. 
How comes that the cutlass bearing was worn out with only 3 days of using the vessel, max 30h of motoring, after the extensive repair has been made? Actually the cutlass bearing was not mentioned as worn out in the spring check/haul-out nor the thorough check after the incident by none of the 2 different marine surveyors. We had all kinds of different philosophies but no real explanation for this premature wear out. 
After the repair was finished the vessel was put into the water to let settle for a few days before the final alignment of engine and drive shaft was done. Now we found the reason for the premature wear of the cutlass bearing and the hardening of the shaft packing: the engine was not properly tightened down! 3 bolts of the engine mounts showed only 5 lbs of torque and 1 bolt was loose, see picture. 
So within the max 30h of motoring the engine could move slightly resulting in misalignment and therefore the premature wear out of the cutlass bearing which was a repair job of more than $ 3,000.00. The detailed description of the repair together with the bill has been sent to the involved parties for them to decide their individual responsibility (incomplete repair or leftover incident damage). Surprisingly I was informed that this part of the damage was not looked at as the damage surveyor had not noted any damage in the running gear but that it is not uncommon to have this kind of damage on the running gear on a vessel which had as severe a damage as my boat. 
Well I was not impressed with all this, but I feel comfortable now to have a thoroughly checked and maintained vessel, a sea trial will follow. 
In the mean time the insurance company agreed to pay the ‘Loss of Revenue’ as claimed by the charter company who had the vessel in care (did they really care for the vessel?) at the time of the incident. Upon request I was forwarded ‘all?’ written communication concerning the claim of loss of revenue. The very well documented ‘lost booking’ had not been claimed by the charter company. Furthermore I could read a note of the charter company to the insurance in requesting that the loss of revenue pay should be given to the charter company as the boat owner that is me, would still owe some money. 
Now that is very nice as the final invoice, closing invoice, after the boat has been removed from the charter outfit had not yet been issued to me but an image of the boat owner to the insurance company has been painted. This makes me especially happy as it turned out that the amount owed to the charter company was only ~ 30% of the amount of the loss of revenue owed to me. 
Here now another question: who is liable to the charter boat owner for the compensation of the lost bookings in case of a charter incident, especially in my case as the one lost booking is so well documented? The insurance company deals only with the charter company the way it looks. The charter company accepts the fleet insurance and the boat owner pays the insurance fee for his boat to the charter company but has no say in it as he does not even get to see the policy. Is the liability of the lost booking then not the responsibility of the charter company for having accepted an incomplete ‘Loss of Revenue’ policy and therefore creating the base for the loss to the charter boat owner? Is this taking proper care of the interest of the charter boat owner, the individual who supplies one of the assets for the charter company to be in business? 
I don’t think so! And the charter company has it easy in putting a new booking onto another vessel available thus saving their income, but the boat owner has no option here other than the insurance coverage. 
Speaking of charges; the charter outfit has in the closing invoice to the boat owner items like: transfer boat from repair yard to charter marina, consulting to ship yard, travel cost to ship yard during repair, totaling in ~ $ 650.00. Now these are in my books cost caused by the incident and therefore should be covered by the insurance company as cost directly related to the incident. Upon addressing the insurance company I was told that these costs are not covered in their policy and are at the discretion of the boat owner……. We are talking about $ 650.00 with reference to a more than $ 73,000.00 repair bill and an additional loss of revenue payment of more than $ 10,000.00. Now is that not very cheap of the insurance company? And with respect to that the boat owner pays for the insurance and the charterer gets legal protection from the insurance but not the boat owner; how would you feel in having them as your future insurance company! But do you have a say in it as charter boat owner? 
Interestingly in this charge to the boat owner is also the fact that in the signed charter contract by the charterer it is clearly stated that the charterer is responsible for all resulting cost/loss occurring due to his caused incident, so why does this charter company charge the owner? 
Oh and before we forget: I took the vessel out of the charter outfit before the insurance period was ended so I was granted a refund for 3 month. But how do you figure that the refund was only a fraction of what I paid for the 3 months. On request I was then told that the charter company acts as insurance agent and charges an administration fee which was not refundable and about which I was never informed. In my case the administration fee was an estimated whooping $ 500.00 on top of the insurance premium calculated on .85% premium on the insured vessel value and $ 350.00 for the liability insurance part as no detailed $ values for the premium etc have been forwarded to me. This administration fee makes an estimated $ 12,000.00 of additional income for this particular charter company coming out of boat owner’s pockets! 
As boat owner, is my journey which started with the charter rock hit on July 22nd 2013 over? I think not as several items are not cleared and closed yet; some might require the service of a lawyer as right now it certainly goes for my rights and respect as charter boat owner and not only for outstanding money. 
As boat owner I feel very badly treated, I got confirmed what I heard often enough that some charter companies take advantage of boat owners who do not live nearby, the charter boat owner gets looked at as cash cow to be used. After all, the boat owners contract with the charter company makes sure that the boat owner will be charged with all expenses (moorage, maintenance, repair, insurance, power, wear and tear etc), the charter company gets their percentage of the bookings, has no risk and no investment but is in charge of proper care for the yacht (which we pay for!) and to market the commercial use of the boat, i.e. sell the charters. Here an interesting question: how many bookings do the very few boats owned by the charter companies get in comparison to the boats owned by others? 
As boat owner I would have been happy with the contract I had but my story proves that there is a big deal more to be looked at. With the lack of representation/presence of the charter boat owners we are at the mercy of the charter company and our faith in their proper conduct. I know for sure that my case is not the only one where a boat owner has been badly disrespected by a charter company and the applying insurance has been accepted by more than one charter company, so the coverage issue applies 
to all of us and not just my case! They are all organized in associations like the bare boat charter association, Boating BC, marine insurers etc and I think it is more than overdue that the charter boat owners get their own organization going as I see and feel the need to be united, to exchange experiences, to represent and to protect ourselves, to have an organization on site which monitors and protects our interest and our assets. 
As a matter of fact, we own more than 90% of thefleet available for charter on this coast; we are the base on which the bare boat charter businesses exist. We all tend to think it is not me who is affected and I for myself must say I thought the same….even 4 month ago, but reality taught me a lesson. 
Am I now opposed to charter boat ownership? 
Certainly not as my boat is still available for charter. Personally I think the concept of charter boat ownership can very well be to the benefit of the boat owner as well as the charter company and naturally to all boaters who like to enjoy the pleasure of boating but can’t afford a boat themselves. 
What is needed to avoid situations like mine? 
I think that the charter boat owners should get organized, found their own association which in term shall represent them and have the right and potential to act to protect the owner, his interest as well as his expensive equipment. This should include consulting to boat owners in general, the freedom as the representative of the owner to look into a proper care and maintenance of their vessels, being involved in contractual issues, insurance matters, incident investigation, monitor/spot check on equal bookings, the cost charged and surveys just to name a few which come to my mind right now. 
I would like to encourage every charter boat owner, including former charter boat owners who might have taken their boat out of charter after an incident, to respond to this story and give their input about their experiences and what they would like to see/covered in an association. I like to encourage all of you to join this movement to create an organ to represent the boat owners for the future benefit to the bare boat charter business in which we, the boat owners, are a substantial part too but right now are at the mercy of the charter company we are dealing with.


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## Ars Vivendi (Jun 25, 2014)

khoclocvn, nice and interesting comment saying 'that's why you charter and don't worry about the boat when you are not on it'...... Ever thought about the fact that without boats owners who offer their boat to charter....there wouldn't be anything for you to charter????

I think the charterers have an absolute responsibility to the vessel they are chartering as with increased incidents less and less boats will be available for them. Additionally charter outfits should feel responsible and take good care of the assets into their fleet.


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## Night_Sailor (May 27, 2012)

If you do it, do it with someone reputable. You can really get burned with some companies.

Generally, I'd say it is a really bad idea. If it was a good idea, why wouldn't the charter companies buy their own boats?

If you want a boat that is mostly paid for, but one coming out of a charter fleet after 4-5 years. If you want to use a boat down there, charter someone else's.

I am not going to go into details, but the number of ways you can be screwed is a long list. DON'T DO IT.


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