Yacht Charter Management Programs In A Nutshell

Owning and sailing a catamaran in an exotic part of the world is a dream for most people. However, paying for maintenance, insurance, dockage, new “must-have” equipment, and other bills can be a drain on any yacht owner as you watch the sum add up monthly. Fortunately there are ways to reduce the overall cost of owning a yacht so you can get back to smiling with the wind in your sails.

Charter yacht management is one way to make it more affordable and help keep costs low while owning the boat of your dreams.  We have used these same methods with our own boats and we have helped hundreds of other sailors do the same.

But don’t be fooled! You can get trapped into something that does not work for you because not all management companies or charter operations are a good fit for everyone. Not every boat fits the “charter” model either. Make sure that you understand what you are getting into. Read and understand your contract. Make sure you have a good exit strategy and if you are unsure, get a good expert advisor.

Read on to get a video overview and more details of the 5 most popular yacht charter management programs offered by companies like The Moorings, Dream Yacht, TMM, CYOA and others. 

Additional details for each of the charter management programs follow this video. Also, see our analysis to help you decide if buying a new, charter yacht or used yacht is right for your situation

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"Yacht as a Business": FAQ's And Common Misconceptions

FAQ's About Owning Yacht Charter Business and Tax Advantages

crewed charter ownershipWe have received so many questions about operating a yacht as a business in the last few months, so we've decided to present a FAQ section for YBO. Basically, if you are a US tax payer, enjoy sailing and want to own your own yacht at a substantially reduced cost, this program will work for you. Although the acquisition of a new yacht may be an effective business tool to take advantage of these tax rules, the tax benefits must be carefully planned, documented and implemented to make sure that it can withstand scrutiny. 

Many of your questions and doubts will be answered in this list but if not, please feel free to give us a call or email us. Also read the article explaining "Yacht  as a Business" Ownership in more detail. 

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Fractional Or Shared Yacht Ownership Done Right!

Ownership Redefined For The Sharing Community!Fractional yacht shares Imagine owning and sailing your own luxury catamaran for less than 20% of what conventional yacht ownership or bareboat charter would usually cost you! 

That is exactly what this program is designed to do. It gives you the opportunity to enjoy the benefits of yacht ownership for a fraction of the cost of conventional ownership. Shared yacht ownership is exactly what it sounds like—you buy a share or fraction of a yacht. It is not a time-share where you only purchase the rights of usage for a certain amount of time and end up with nothing when the term expires. With shared ownership you legally own the fraction of the asset and hold the title to the yacht.

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Unique Ownership Programs For Large Luxury Catamarans

Large sailing catamarans offer excellent yacht ownership opportunitiesWe have mentioned before that catamarans are getting bigger. The number of yacht buyers who have purchased large catamarans in the past five years has increased and there is no sign of this trend slowing down. But with these big boats come a hefty annual holding cost.The catamaran owners are therefor all trying to find a way to reduce the cost of ownership.

Many, if not all of these catamarans are in some type of business arrangement. 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. Here are a few good examples of how you can reduce the costs of owning a luxury yacht.

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Pros & Cons Of Yacht Charter Management Programs

choosing a Yacht charter Management program is a carefully made decisionYacht charter management is a good way to reduce the cost of a boat and also offset the cost of yacht ownership. If you and your family are sailors and want to explore different parts of the world,  owning a boat in a charter fleet can be a very fun and rewarding experience. To make it a successful endeavor, we recommend that the yacht owner be informed and involved in the management of their boat.

New vs Used Catamaran

The one question we get a lot is: "Should I buy a new boat and place it into charter management or buy a 5-year old boat that was phased out of charter management when I am ready to go cruising". That is a fair question and can be easily explained. 

Usually your timeline will determine if you should buy a new catamaran and place it into charter. If you have 2-5 years before you will go cruising full time, doing a charter program is a good way to own the boat that you actually want and help pay for the boat with charter income. By the time that you are ready to go sailing, your 5-year old charter boat will be worth 60% of the original value of the boat, exactly the value of what you will buy someone else's 5-year old charter boat for, give or take. So, why would you give up a new boat, five years of worldwide sailing and 40% of income? It makes no sense!

Pros Of Owning A Charter Boat

  • Pride of ownership
  • Warranties in place on all equipment 
  • The boat will generate income and will pay 40%+ of the mortgage over 5 years.
  • 5 years of sailing (8-12 weeks @ between $4,000 - $20,000 / week value)
  • Phase out program ensures a fair outcome at the end of your charter program
  • You sail away with a known quantity. You know the sailing and maintenance history of the boat that you will go cruising on.

Conclusion: If you have the time and the financial means, it makes total sense to buy a charter boat sooner instead of waiting five years and then buy a five-year old charter boat.

Charter Yacht Program Types: 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. Charter Programs In A Nutshell>>

Risk Assessment: 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.

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