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A Charter Cat’s Meow
MQ interviews the owner of a Lagoon 380 that was five years in the Sunsail charter fleet and is now cruising the East Coast
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ob and Kathleen Child of Tiverton, R.I. knew from the start that they wanted a mid-sized catamaran for their primary cruising boat when they had the time to do some serious sailing. They had started with a beach cat and had, over the years, chartered every type of cruising cat available in the Caribbean. Bob is an optometrist and Kathleen is a software consultant. They are good planners, savvy investors and like doing research before making big decisions. Knowing that they were several years away from semi-retirement and would have only a few weeks a year to sail, the concept of buying a boat in a charter fleet appealed to them. They could sail several times a year in the Caribbean or other destinations where their charter company has bases and they could own a boat that is earning its keep and paying the boat mortgage along the way.
MQ was curious how charter cat ownership really works and if it can make sense for other cruisers who have long range plans so we sat down with Bob to hear his story from beginning to end. MQ – How did you go about deciding which charter company to work with? Bob – We knew all along that we had a bigger cat in our future, and we had a pretty good idea of what we needed in a cruising boat. So we spent quite a lot of time chartering in the Caribbean so we could try out different designs from different builders and boats of different sizes. Once we had homed in on the Lagoon 380, we contacted all of the companies that had this boat in their fleets so we could collect their sales and contract information for comparison. The points that were really important to us were:
1) guaranteed income that would cover the mortgage, 2) length of the contract, 3) the size of the initial down payment, and 4) the number of weeks of charter that would be available to us. With both of us still working full time, the most important of these was the income the boat generated through the life of the contract. This was some years ago. We finally decided that the deal offered by Sun Yachts was to our liking so we bought the boat through them and signed the charter contract. Not long after that Sun Yachts was bought by Sunsail who honored all of the details of our Sun Yacht contract. MQ – Did you make a cost comparison between buying a new boat in a charter fleet versus buying a used cruising cat? Bob – We did research the used boat market for a couple of reasons. We wanted to compare the overall costs of the two possible approaches and we wanted to see which of the cruising cats were holding their value best in the used
boat market. Back in 1999 and 2000, there were not that many modern production cats on the brokerage market, not like today, so our choices in used boats was somewhat limited. Even so, the way our schedules and the overall costs worked out, buying a new Lagoon 380 for a charter fleet made more sense to us. MQ – During the five years you had your cat in the charter fleet, how many weeks a year did you actually use it and where did you charter? Bob – We were allotted six weeks of charter a year and could choose to use an equivalent boat at any of Sunsail’s charter bases worldwide. As it happened, we used the boat three to four weeks a year and turned back the unused weeks to the company so they could generate extra income for us with the extra charter weeks. We always intended to get to Europe for a few weeks of charter in Greece or Turkey but busy work schedules and other obligations got in the way. But we did get to cruise all over the Caribbean and had a
lot of fun exploring places like the Grenadines and the Windward and Leeward islands. MQ – What was it like owning a boat in a busy charter fleet? Bob – You know what it’s like in an anchorage in the B.V.I. at the end of the day. Kathleen and I like to sit in the cockpit where we are anchored enjoying a sundowner and watch the charter boat follies as they try to pick up moorings or set the anchor. And it really made us wonder what was happening to our boat when we were not there, knowing that the information on some charterers’ sailing resumes may not be as accurate as we would like. Our biggest concern was how well the boat would be maintained over the five years. It was in the charter company’s interest to keep the boat running smoothly so the engines, refrigeration and all of the pumps were always regularly serviced and repaired. We are not sure we always knew what was being repaired or when and there are a few places on the hulls that
have some slightly discolored gel coat that look like repairs. But in general, the boat was always in good condition whenever we used it. It is important when you enter into a deal like this that you remember it is a business for you and the charter company and that you have to be tolerant of the company and expect that there will be repairs along the way. MQ – At the end of the five-year contract what happened? Bob – We owned the boat ourselves throughout the deal so we simply took possession of it when the contract expired. The company had specific obligations to make sure the boat was in good order and they lived up to all of our expectations. The boat was surveyed and any faults noted were fixed. As it happened, the sails, the trampoline and the Bimini had been replaced in the fourth year at the company’s expense, so we were all set there. The company replaced the anchor chain, upgraded the primary anchor, replaced one alternator and replaced the life raft, which had come as original equipment. Since then we have cruised the boat in the Caribbean and then back to the East Coast. We keep it in North Carolina in the winter and in Rhode Island in the summer. MQ – On the financial side, how did you make out with the boat and what were the tax implications? Bob – While we had the boat in the charter fleet, all expenses were covered by the charter company and we were guaranteed income to offset the mortgage so the ownership was cash neutral. Plus we got up to six weeks of charter free. After five years we owned a five year old boat
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that essentially cost us half the price of a new boat. It’s hard for me to discuss tax implications for anyone other than us since everyone needs to sit down with their own accountant to work through the impact of new income, new debt and so forth. For us, the cost of doing business offset the income and thus presented us with a neutral tax result. MQ – Would you do it all over again? Bob – We certainly would. We are very happy with our boat and that’s the main thing. But we really enjoyed using our free weeks in the Caribbean for five years and came away happy with Sunsail for the way they managed the boat and the contract. If there is one downside it might be that a five-year-old boat that has been in a bareboat fleet has a slightly lower resale value than a privately owned boat. But we do not intend to sell our 380 anytime soon, so this doesn’t really affect us. For sailors like us who have busy working schedules and a long-term plan to acquire a boat that may be more expensive than we would otherwise consider, buying into a charter fleet program makes a lot of sense.
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