Owning a Yacht: An Expensive Hobby
People interested in buying or wanting to own a yacht are usually concerned about the different kinds of costs that are incurred in the process. There are a variety of costs involved in the purchasing and maintenance of a yacht, and some of these costs are hidden. Let’s discuss each one by one:
There is obviously the purchase price (or maybe a fraction of it in terms of a down payment) that you make in order to buy your yacht. In case you have leased it and have it on loan, there is the interest to consider also. Additionally, there are 4 to 5 different kinds of costs incurred in maintaining a yacht which can be broadly classified into operation and maintenance costs, taxes and insurance premiums, and finally, harbor fees. Let’s break these down a little:
- Operation Costs Include:
- Maintenance Costs Include:
- Taxes and insurance premiums make up the third component.
- Finally, there are harbor fees to be paid when you park your yacht in a particular harbor. In case you decide to dry-dock, there are handling and storage, and transport fees to be considered too.
Additionally, there is the cost of depreciation also, as the value of a yacht, like other assets and equipment, goes down over the years.
The Advantages of advertising my yacht for charter
To charter a yacht is to rent it out to individuals, travel groups, or companies who undertake paid travel tours through international waters. Chartering is a great way to leverage some of the expenses you incur on your yacht. Conversely, you can rent out a yacht through a charter and use it to travel for some time. You just pay charter fees but have temporary possession of the yacht during the period of the charter.
Even when you are the owner of a yacht, you can make money and can get a return on your investment (ROI) by chartering your yacht to third parties interested in individual or group commercial travel.
When you rent your yacht out to others, you can claim some monetary compensation for it. There are several professional charter companies to help you in this regard by doing the marketing and management of your vessel. The size and model of your yacht, along with its location, will help decide how much you can gain monetarily from the charter.
The income you receive by chartering your yacht will not cover all the expenses incurred on it, but it will definitely cover these expenses to a certain extent, reducing them.
When you charter your yacht, there are new individuals using it. Your yacht automatically undergoes proper maintenance and is looked after by your crew, so you will worry less about keeping it in good shape. Selecting a good and competent captain is important for that matter.
The process of chartering out your yacht comes with some amount of paperwork. The technicalities involved may seem like a hassle. But when you partner with a professional chartering company, they complete all the related formalities, and you do not have to bother with anything.
The Main Drawbacks of Owning a Yacht available for Charter
Having ownership of a yacht that you wish to charter does have its pitfalls too. They are:
When you charter your yacht out to others, its availability for your private use decreases. There is a likelihood you might not have the yacht on specific dates when you wanted it.
The chances that banks will offer you a loan for a yacht that you wish to later charter out to others are really less. So, the entire initial expenditure will be yours to bear, further reducing the cost leverage chartering would have provided.
With people constantly on board, areas like the salons, the decks, etc., which travelers are more likely to use, will need constant maintenance and, maybe, repairs too.
Your income earned by way of chartering your yacht is taxable under the law. This is a deduction from gross income, a kind of additional expense.
In spite of the income obtained from chartering, individuals who have invested in a yacht or bought it outright do not really get any positive returns on their investment for a long time. This is because the charter fees just reduce the amount of total expenditure of the yacht; it does not really make your yacht a profit.
If a yacht owner is actually making a profit by chartering out his or her yacht, this can only happen after years and years of experience and specialized skill regarding both purchasing and maintaining the yacht as well as renting it out on a charter to the best players in the marine tourism industry.
By following the tips below, you can maximize your income returns on your yacht charter:
- The size and amenities available in your yacht matter: Is your boat spacious and luxurious enough for people to enjoy cruising the ocean waters in it? This is an absolute must.
- Speed of Boat: Your yacht should be equipped with powerful diesel motors and engines for superior performance.
- Destinations Covered: Does your yacht travel to all those glamorous, picturesque places that people dream of? It should, in order to make profits.
Moor Your Yacht in a Touristic Destination
Your yacht mooring should be in a place that is well-known for its tourism. It should be an area where people can enjoy traveling both on land as well as the sea. Some examples that come to mind are St. Martin and Greece in Europe and the British Virgin Islands.
The decision to charter your yacht involves considerable paperwork and the completion of legal formalities. It is best to appoint a lawyer who can suitably advise you on these. Additionally, working out finances is important too.
A professional charter company like WI Yacht Luxury has all pertinent info about how to make charters work and all associated formalities. Partnering with them always works out in the yacht owner’s favor.
Buying and selling of yachts can be a financially dangerous affair as there the returns on investment are too little compared to the initial cost and other cost accruals.
Of course, you could organize cruises on your yacht and try to recover some of the initial expenditure. But in reality, you have to take care, plan and coordinate a thousand things. So, in essence, organizing cruises is more of a tedious job than a means of recovering or making money.
Then again, you could selectively rent out your yacht for photo shoots or other events. This is relatively safe and does offer good money. But it will help cover your total investment and expenditure only to a certain extent.
Nowadays, lifestyle vlogging is quite in vogue. You could try to make vlogs out of your time on your yacht. Once these vlogs get adequate viewership, you could start out with your own channel on social media, get sponsors and make money.
The Best Alternative to Advertising for Charter a Yacht you Own to Reduce the Cost of Yacht Ownership: Fractional Ownership
Fractional ownership of a yacht is when an individual invests in only part of the yacht. This means there are comparatively more funds to spare for just a part of the yacht. So, the cost of owning and keeping a yacht in great condition is considerably reduced.
There are yacht chartering companies like the Windward Islands that allow individuals to own part of a yacht for some time during the year. This way, the cost of ownership is significantly less, but you do get the privilege of being a yacht owner.
In short, the whole process of owning a yacht to charter is not very lucrative, at least initially. For this to be a financial success, you need to have technical, specialized knowledge about boats and yachts and also charter it out in strategic, touristy destinations. For most people, owning a yacht to charter is an expensive affair at first.
- What are the most profitable yachts to charter?
Luxury superyachts (or large yachts, including military superyachts) are usually the most profitable for chartering.
- Are superyachts profitable?
Yes, they are to quite an extent.
- How much can I make chartering my own yacht?
If done in strategic areas and times of the year, chartering is extremely lucrative. An individual can make up to one hundred thousand or more in a single month. The key is to buy cheap, second-hand even, and then refurbish your boat.
- Can the bank help me to invest in a yacht?
Usually, banks don’t outright offer loans for buying a yacht. There are personal loans available that people can use for such investments, but they come with higher rates of interest.
- What is the commission of a yacht charter company?
The standard rate of commission to the yacht charter company per yacht is 15%. This amount can increase or decrease, but just a little.
- Can I own the yacht for free when I rent it out?
The income obtained from renting (or chartering) a yacht covers all expenses incurred in obtaining it only partially. So, owning the yacht for free is difficult, at least initially.
- What are the most profitable yacht charter destinations?
They are the United States of America, British Virgin Islands, the Bahamas, French Riviera & Monaco, Amalfi Coast, Croatia, and Greece.