Friday, May 24, 2024

Can I Charter My Boat

Is Charter Ownership Right For Me

MY ANCHORING SYSTEM, on my charter boat

In deciding whether charter ownership is right for you, ask yourself three questions:

  • Am I paying income tax on taxable wages or salary from my work or business?
  • Do I have a limited amount of time to use my yacht?
  • Am I willing to allow qualified people to charter my yacht when Im not using it?
  • If the answer to these questions is yes or maybe, then charter ownership is something you should consider. The reality is that most people use their yacht once a month, on average, leaving the balance of the month available for charter. Besides, if the yacht is paying for itself, it relieves the pressure some people feel to be constantly using it because of the cost. This actually lends to the enjoyment of the yacht when they do use it.

    Professional Maintenance And Support

    Placing your yacht in charter also is an excellent way to ensure that it will receive professional maintenance, service and care. Yachts in a charter fleet typically are washed weekly and cleaned inside and out after each charter. Routine maintenance is performed on a regularly scheduled basis and damage promptly repaired. For you, as the yacht owner, it means that you can spend your time sailing your yacht and not doing cleaning, maintenance and repairs.Your charter management company will require that every charter customer demonstrate that they are qualified to operate the yacht being chartered in order to minimize the potential for any damage. Damage caused by a charter customer, up to the amount of the insurance deductible, is paid for by the damage deposit they make up front when chartering the yacht.

    Caution To Charter Customers

    “Most customers take for granted that everything is being regulated and that they’re safe because someone has oversight,” says Jesus Porrata, lead marine investigator at Coast Guard Sector Miami. “When you hop on a bus or a plane or a train, you don’t ask the captain , you assume that everything is in place. When it comes to boating you can’t make those assumptions because a lot of people are using their vessels in an illegal fashion. They’re putting passengers at risk by not having the proper skill set, not keeping the vessels in a state that’s seaworthy, not having the proper life-saving appliances aboard.”

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    Boat Economics 101 And The Case For Boat Management

    One popular avenue to generate revenue with a boat is to leave the boat at a popular charter destination and enter into a yacht management agreement.

    Under this scenario, the boat owner hires a third-party company to take care of the boat and book charters on it. The revenue made by chartering the boat can offset the cost of boat ownership, while allowing owners to fish aboard while they are in town. There are some definite advantages to this approach.

    Before you can wrap your mind around how to use your boat to generate income, it helps to understand the expenses associated with keeping and operating a vessel. As owner of Maverick Yachts and a principal of Maverick Costa Rica, Larry Drivon understands the economic variables associated with boat ownership from three separate perspectives.

    He is a boat owner, he owns a boat building operation and is involved in yacht management, as well.

    There are three operating expense categories. The first are fixed costs. You incur these even if you never leave the dock. These include insurance, crew, dockage, painting, etc. Next, there are daily costs that arise when you use the boat. These include fuel, ice, bait, food, drinks and everything related to running the boat.

    Most people who own a charter boat dont plan on being the hands-on manager. That leaves two options. You can work with a management company or can opt for captain and crew management, Drivon says.

    Geography Business Model Size Segment Of The Yacht/boat/vessel

    How can you monetize your boat with Peer to Peer yacht ...

    To most people Yacht Charter rates seem to be very high as an absolute per-week-value, but are they high enough when you consider the cost of the asset/s and its running costs? The latter can have a very large range as variable costs depending on how and where the vessel is managed and can make a significant difference. Ultimately, it the acquisition price that is crucial but the variable and fix costs are the ones that can determine whether the operation is profitable or not. If you are looking to build a business plan to charter yachts and get in the business this article will be useful, however, you might want to contact us for more ad-hoc support.Looking from outside the yachting industry, charter rates like those of M/Y Serene chartered by Bill Gates for over 2.5M$ a week, might sound as an exorbitant price to pay, but let us look at it differently than simply comparing the charter rate to the alleged value of the yacht at $300 millions. Indeed, if you take into account a rough estimate 10% of the purchase value spent on running the yacht every year and at the number of potential clients that can pay such rates for a week of charter all of a sudden the weekly rate seems not as high any more.

    Back to our original question, is investing in Yacht Charter profitable? At Rodriquez Consulting we would tend to say YES It can still be if you do it right!

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    Rental Or Charter Requirements And Getmyboat

    We pride ourselves on making it simple to rent or charter your boat on our easy to use platform. As stated in our terms of service, it is important to note that boat owners must comply with local and state laws and regulations while using GetMyBoat. This includes the U.S. Coast Guard regulations and laws concerning bareboat charters, as well as captains licensing.

    It is the boat owner’s responsibility to ascertain the legal requirements applicable to the type of operation in which the vessel is to be employed and to ensure every requirement is fully complied with before operations begin. Contact your nearest Coast Guard unit for the latest laws and regulations. See local boating laws and regulations by state here.

    Below you will find two documents from the U.S. Coast Guard that define small passenger and charter vessels as well as requirements for each.

    What Experience Do Charter Companies Ask For

    Charter companies want confidence that you will not damage their boats. Nor do they want you to damage yourselves for that matter. They look for similar experience. That is, whether you can demonstrate you have chartered similar sized boats in a similar area. Can you deal effectively with tidal ranges and currents? How sound are your reef navigation techniques? Do you really know how much anchor to put out? If a squall pops up will you be able to put a reef on quickly? These are the type of questions they will ask.

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    Illegally Operated Charter Boat Operations Are More Common Than You Think Here’s An Inside Look At A Coast Guard Sting Operation

    Coast Guard Station Miami Beach crewmembers board the 50-foot pleasure boat Natalie on the Miami River in December 2019. The cruise was terminated after it was established that it was an illegal charter operation.

    On March 31, 2019, when Dallas Ladd, 38, welcomed two passengers aboard his 45-foot motoryacht Sea You Twerk, he didn’t know they weren’t his usual customers partygoers looking to let their hair down. The passengers were undercover Coast Guard special agents running a sting operation to investigate Ladd for operating an illegal charter.

    In February, according to the Miami Herald, the Coast Guard had stopped Sea You Twerk and found multiple violations, including not having a valid Certificate of Inspection and not having a credentialed mariner captaining the boat. A month later, Ladd was issued an order by the captain of the port to cease operation. But he didn’t.

    A Classic Wooden Yacht Has A Specific Clientele

    Fixed my boat so I could go FISHING

    They tend to be older folks for whom the word recession has only vague implications. Others are business people entertaining clients and families celebrating events. Since our summer cruises are in an area where people often get married on private islands, we also find ourselves in demand for wedding parties.

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    How To Choose A Charter Management Program

    Boat owner, Anna Mourou, founder of the successful woman sailor network, She Captain, recently bought her boat with Dream Yacht Charter. Anna shares with us how she went about researching charter management programs

    Why did you choose a charter management program?

    Lets start with the most important decision you need to make, what boat should I choose and how can I afford it?

    After looking at boats on the private market for about a year, we started realizing that the boat we wanted, a catamaran size 38-45ft, would be out of our budget. We felt privately owned boats held more risk with possible hidden problems, whereas, charter boats always have to work so any issues are found more quickly.

    Before I did my research on charter boats, I was a bit judgmental in thinking they would not be kept in as good condition compared to a privately owned boat. But I then realized it was just the opposite. Charter boats have to have a certain number of hours of maintenance work carried out each year the boat always has to work and be secure. So when I realized that, that became my strongest reason to move forward on finding a charter boat.

    Tell us a little about the financial set up

    We had a fixed budget and, to be honest, it was a bit too low for the boat we were hoping for. We also wanted a boat that we could get out of a charter program two years later so we could sail around the world in 2020. So after finding our dream boat, we settled on the Performance Program.

    Find out more

    Bareboat Yacht Charter Faqs

    Do I need a license to rent a bareboat?

    In most countries, you are required to have an internationally recognised sailing/boat license through schools such as an ASA, RYA or an ICC . In countries such as Croatia, you are also formally required to hold a radio license. Alongside these licenses, in the Mediterranean, a detailed and up-to-date sailing resume may be required for a boat rental (sailing resumes are typically used in the Bahamas/Caribbean and America where licenses are not necessary. For small motor charters, a powerboat level 2 certificate is sufficient. The licences are obligatory and prove that the charterer has undertaken training and has every necessary boating skill to manage a vessel safely. If you are unsure whether or not your license is sufficient, be sure to send it to your broker before booking the boat. Sometimes, a license obtained in your home country can be converted to an ICC for use in the Mediterranean waters. Again, be sure to contact your broker if you are unsure about this.

    Can I charter a boat without any sailing experience?

    I have sailed before but don’t feel confident to charter. What are my options?

    What does a skipper do?

    Can I choose my skipper?

    Do I need certification if I charter bareboat?

    Does the skipper sleep onboard?

    Do I have to feed the skipper?

    Once I book a charter, how do I pay?

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    Starting A Yacht Charter Business

    If instead, you have decided to do yacht charters as a serious business and turn a profit at the end of the year you might want to contact us and get your numbers right. Your brand and charter offer needs to be well structured and differentiated from the competition. Considering the information we have provided above, I hope it is clear that those who are in business for profit will have a tough time against those who are essentially covering the cost of ownership and therefore are running at a loss.

    Therefore, it is of utmost importance to plan your investment and offer positioning as thoroughly as possible and with the most updated amount of information on current yacht charter price trends .

    How Charter Yacht Ownership Works

    My Boat

    The business is structured like any other for profit business and enjoys the same tax benefits, plus a few more. To take advantage of the tax benefits, the business is operated as an active participation business. You can manage your own rental program or place the yacht in a charter company to be marketed and assist with management.

    To realize all the tax advantages there are simple tax rules and operating requirements that need to be followed. Its especially important to know your obligations for meeting the IRS standards as an active participation business.

    The benefits are great when you operate your yacht as a business. You can deduct all the costs of ownership including berthing, maintenance, loan interest, insurance and all related expenses. When a business buys new equipment, the purchase price can be depreciated using the MACRS schedule depreciation schedule. You can also take advantage of the Section 179 deduction in the year of your purchase which gives you even more write-offs for greater savings.

    There are lots of misconceptions about the requirements to operate a charter yacht business.You will find clarification at our Savvy Buyers Guide webinar, Your Yacht As A Business. etting up your business is easy, and we have a detailed program to help you get started and make sure youre doing all the things necessary to have a successful experience of ownership, operation and management.

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    Can I Sell Or Charter My Boat While In Mexico

    It is illegal to sell a Temporarily Imported Vessels in Mexico or Mexican Territorial waters, so be sure any sale is done off shore, and after having cancelled the Temporary Import Permit and cleared out internationally to a point outside Mexican Territorial Waters. A new owner could re enter Mexico and file for a new Temporary Import Permit with the new documentation.

    The boat may not be used for commercial purposes without government authorization, For information on chartering your boat while in Mexico, we recommend you speak to the Port Captain or ECO Naviera with offices in our marina.

    The Intangible Added Benefits

    Finally, putting a boat in charter isnt just about deferring costs and sailing more. Youll also receive assistance on the front end. For example, Horizons Thompson touts the way a charter company can help out with things like ownership contracts, factory direct pricing, delivery logistics, marketing management and warranty management. If youve never owned a boat in charter or otherwise, theres a lot of handholding that you may find beneficial by going this route.

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    Some Yachts Are Specifically Designed To Make Money

    Having a yacht that is custom-built for charters or, put simply, turning profits, is the best way to go about using a yacht charter solely for investment purposes. Its not impossible to make money with a yacht charter, but it also takes a good amount of experience and skill to get the job done right.

    There are so many dynamic factors that are involved with running a successful yacht for charter operation, and one of the main things to keep in mind is the quality of service youre providing your customers. This will be a factor in determining how much your vessel is worth to your yacht charter guests.

    Owning a yacht for charter is profitable in more ways than one, but getting all the moving parts right requires some know-how and expertise with yacht charters. Remember, you can offset the cost of owning your yacht, sell your yacht for a profit, or design a yacht for money-making purposesthe dream is possible with help from experts.

    Be it profit or pleasure, a yacht yields a lifetime of happiness.

    Insurance Liability And Warranty

    Tiny Fish Won Me All The Money On a Fishing Charter Boat!

    Charter companies offer umbrella fleet insurance, which is more affordable than if each owner buys his/her own policy and is usually estimated at 1.8 percent of the hull value. Its basically mandatory, with charterers also being charged a daily collision damage fee that covers the deductible so the owner is spared the expense. Yachts are covered for casualty loss as well as up to $10 million P& I coverage for damage to other yachts or personal injury. That means if a charterer runs over a snorkeler while anchoring, for example, the owner is not liable.

    Unfortunately, for catastrophic incidents like hurricanes Irma and Maria, the issues can be a bit murkier. Per TMMs Pietrykowski, the boats that were a total loss fared well with 100 percent coverage on stated value of the vessel. Those that were damaged but repairable, however, had to go for insurance claims, and some of those costs came back to the owners.

    Factory warranties are also provided by boat and equipment manufacturers with no additional cost to the owner. However, if, for example, a stove goes out, the cost of shipping in a new one may go against the owners expenses.

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    How Can I Deduct The Cost Of A Boat As Listed Property

    Things become a bit more complicated if you use your boat for both business and personal pleasure, but you can still get some business write-offs. The IRS considers certain assets to be listed property. This is property that could be personal or business in nature and is any of the following:

    • Passenger automobiles
    • Any other property used for transportation . This includes boats.
    • Property generally used for entertainment, recreation, or amusement. This could include items like computers, phones, cameras and just about anything that is moveable. Listed property is most property that is not land or buildings.

    If you want to deduct expenses of listed property such as a boat, you must use it more than 50% of the time for business. That means if you have a boat that you charter, but you take it out yourself for pleasure every now and then, you must carefully document when you use it for business and when for pleasure.

    Now heres the catch. If you can demonstrate that your boat is a business asset that is used over 50% of the time for business, you must pay taxes on any personal use. Personal use of the boat, which is a business asset, is considered a benefit to you personally.

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