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:
- Crew salary and insurance
- Yacht insurance and P&I
Maintenance Costs Include:
- Shipyard cost
- Replacement of broken pieces
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 a 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.
Read also : Luxury yacht charter FAQ
Owning a Yacht Becomes a Lot Less Expensive When You Charter It
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 brokerage 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 Charter Income Might Compensate for Some Maintenance Costs
The income you receive by chartering your yacht will not cover all the expenses incurred on it, but it can definitely cover these expenses to a certain extent, reducing them, if it is properly marketed.
Your Yacht is Always Used and Maintained
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.
Your Charter Company Handles Most of the Hassles of the Charter
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:
The Yacht is not Always Available on Your Dates
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.
Read also : The yacht charter experience ladder
The Bank Will Likely Refuse You a Loan to Buy a Yacht for Charter (No Leverage)
The chances that banks will offer you a loan for a yacht that you wish to later charter out to others are really slim. So, the entire initial expenditure will be yours to bear, further reducing the cost leverage chartering would have provided.
Some Parts of Your Yacht Will Need More Frequent Repairs
With people constantly on board, areas like the salons, the decks, engines check ups etc., which travelers are more likely to use, will need constant maintenance and, maybe, repairs too.
Profits Will Be Taxed
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.
The Typical Return on Investment (ROI) of a Yacht for Charter
The Vast Majority of Own-to-Charter Yachts Have Negative ROI
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.
Yacht Owners with Positive ROI are Very Experienced and Specialized
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.
Our Advice If You Want Your Yacht Charter to be As Profitable As It Can Be
By following the tips below, you can maximize your income returns on your yacht charter:
Pick The Right Yacht To Have a Chance to be Profitable
If charter profitability is important to you, pick a yacht with the following characteristics:
- A large enough yacht: Is your boat spacious and luxurious enough for people to enjoy cruising the ocean waters in it? This is an absolute must.
- A fast boat: Your yacht should be equipped with powerful diesel motors and engines for superior performance.
- Moor your yacht in a popular place: 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.
Get a Lawyer to Have a Good Legal and Fiscal Set-up
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.
Partner Up with a Yacht Charter Company
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.
What Are the Other Ways to Make Money with Your Yacht?
Buying and selling yachts: a dangerous investment
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. That being said, it’s not technically impossible to make money by buying and selling yachts. Purchase-Sale legal formalities here.
Read also : FRACTIONAL YACHT OWNERSHIP EVERYTHING YOU NEED TO KNOW
Organizing cruises on your yacht: a job rather than a profitable investment
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.
Renting out your yacht for events
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.
Advertise your lifestyle on social media
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.
Real also : Fractionnal yacht ownership : everythings you need to know
Key Takeaways on Owning a Yacht to Charter
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.
Frequently Asked Questions
Yachts from know shipyard are usually the most profitable for chartering. The key is a professional crew and a good central agent for your marketing.
Chartering a superyacht just offsets the costs. Majority of superyachts offered for charter earn money to offset expenses, they do not earn a profit.
If done in strategic areas and times of the year, chartering your own yacht can be 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.
Usually, banks offer loans for buying a yacht if you have a strong initial payment. There are personal loans available that people can use for such investments, but they come with higher rates of interest.
The standard rate of commission to the yacht charter company per yacht is 15%. This amount can increase or decrease, but just a little.
The income obtained from renting (or chartering) a yacht can sometimes cover all expenses incurred, but not always. So, owning a yacht for free by renting it out is possible, but not guaranteed.
The most popular yacht charter destinations are the United States of America, British Virgin Islands, the Bahamas, French Riviera & Monaco, Amalfi Coast, Croatia, and Greece.