Yacht charter management is a good way to reduce the cost of a boat and also offset the cost of ownership. To make it a successful endeavor, the yacht owner has to be informed and involved. There are different types of management programs offered by the charter industry, but the two most popular programs offered by most charter companies are the "Guaranteed Income Program" and the "Performance or Income Sharing Program". Both these programs have their pros and cons and the boat owner has to figure out what will work best for their particular situation and plans.
The main aspects to consider for the boat buyer when choosing charter management programs are their risk tolerance and possible need for tax benefits. That will dictate, to a large degree, if a guaranteed monthly income with less risk, involvement, and liability vs the Performance Program with higher revenues, but more personal involvement, may be a better fit for you.
Over the last five years we have represented a number of buyers who have purchased large catamarans for personal use and who have placed their yachts into different charter programs. It seems the current trend in catamaran ownership is to go bigger! Most of our owners of catamarans over 50ft, place these catamarans into one of several crewed charter programs. The basic idea is that the boat is operated as a business, which enables the owner to reduce the cost of ownership through the use of available tax advantages and income from charter to pay for the boat.
We have sold large catamarans of different brands, of which the more popular ones are Lagoon 77, Lagoon 620, Fountaine Pajot 57 (and now the Ipanema 58), Lagoon 52, Fountaine Pajot 50 and Voyage 500. All our owners in these programs have successfully created small businesses and achieved their ultimate goals.
Different charter yacht management programs work for different people. We have just completed the first Live-Aboard Boat Buying Seminar of the season and while we all had a great time, it was all serious business! Attendees, Bruce & Holly and Jack & Reenie, had very different yacht ownership interests, but one of the underlying themes of these seminars is always: “How do I offset yacht ownership costs?
Ownership in a charter program can provide solutions to the financial and practical disadvantages of traditional private ownership. It really is an easy option provided you go into it with the right expectations and goals.
Q: What is the first thing a prospective buyer should look for when buying a catamaran out of a charter fleet?
A: First look for a boat just phased out of a fleet by either:
Next, make sure the boat has no accident history. ESPECIALLY if the accident has triggered an insurance claim, not that such boats would necessarily be poorly repaired. But more simply, there are enough boats on the market, so buyers should eliminate the doubtful ones. Look preferably for boats that are sold by their owners, not by the charter companies. The latter are usually boats that have been taken in trade against a new boat; therefore, they have not necessarily been through the end of charter program yacht phase-out process. The charter company might have taken the boat in trade and simply put her up for sale with no inspections or repairs.
What is the difference between a yacht dealer and yacht charter company and why should you care? Well, when you buy a new yacht, you have a reasonable expectation of good after sales service with warranty issues to be taken care of. You would also expect, in the case of the yacht business management program, that projections will be met and that the program meets scrutiny by the IRS as was promised. You would expect the yacht dealer or charter company, who sold you the boat in the first place to be responsible, right? Well, unfortunately, this is not exactly the case once a third party gets involved.
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