FEATURE - Charter Yacht Investment

Buying a charter bareboat in the Whitsundays is quite simply a lifestyle investment. You own a boat in arguably the world’s most beautiful yachting playground and you can regularly enjoy taking your own boat out for a sail with friends and family. To put the icing on the cake your investment isn’t just tied up at the marina draining the bank account — it is also out earning money while you are at the office.

So if you are considering buying a boat, then contacting a bareboat company and making a trip to your accountant may prove financially worthwhile.

“Private boat ownership costs a considerable amount of money in marina fees, ongoing maintenance and insurance, so unless you are going to be using it a lot that is a lot of capital to be tied up,” said Rees.

But, as he says, a charterboat not only pays for those expenses but it
achieves
a return on the investment.

“A bareboat investment suits someone who
wants a boat,
has the time and inclination to come and use their own boat for
up to four weeks of the year, or longer if they can get away,” Rees said. “It also suits working people
where
interest-payment deductions and depreciation
can be of some benefit.”

AWARD-WINNING IDEA
Whitsunday Escape has a fleet of 33 boats and has picked up two big awards from Whitsunday Tourism. In 2008, it also won a Queensland Tourism award under the Adventure Tourism and Unique Accommodation category.

The company is based at Abel Point Marina, a safe harbour and the gateway to 74 tropical islands.

As for the idea of owning a luxury floating holiday home in tropical north Queensland, Rees said: “Even with the cyclone (Ului) that we had, we were prepared, and there was no damage to any of the boats in our fleet.

“The Whitsundays is one of the most pristine cruising holiday
locations
in the world and because of this our boats
achieve a
higher utilisation
than any other
destination in Australia,” he added.



Whitsunday Escape has a limited number of places for its charter fleet and for details you can contact Rees (visit www.whitsundayescape.com).

TAX IMPLICATIONS
Whitsunday Escape strongly urges charterboat owners to seek their own independent financial advice. Rees says some points to take into consideration when discussing your options with your advisor are:
* The industry is operating under tax ruling TR 2003/2004 that requires each boat to operate as a standalone business and to pass the business test;
* The investor is required to prepare a business plan that demonstrates the boat has a realistic expectation of profit during the life of the business;
* Finance payments and decline in value of the boat must be considered over the life of the plan;
* The investor is entitled to a GST rebate on the purchase price of the boat;

* The investor needs to be involved in the running of the business and participate in decisions relating to maintenance and
rates;
* The boat can be taken out for private use providing the investor’s tax return is adjusted accordingly; and,
* Depreciation can be claimed and offset against the boat’s income and other income.

DO YOUR HOMEWORK
Cumberland Charter Yachts operations manager, Steve Owen said the most important point to bringing a boat into charter for investment is doing your homework.

“You need to speak to an accountant as to whether it is the best option for you and you have to make sure with your accountant that your figures are right,” said Owen. “The next step is to approach a charter company and ask them what type of boat they want.”

According to Cumberland, the big mistake many new owners make is having a boat they like commissioned without doing any homework and then asking the charter companies who wants it.

“The problem then is it might not be what we, as a charter company, want because we have a fleet plan and we are on the lookout for certain boats,” said Owen.

As he said, the best advice he can give is to urge potential bareboat owners to contact the charter companies first and to compromise on the type of boat they are willing to buy.

BUY QUALITY
Probably one of the best things about buying a charterboat is that you are buying a quality boat that has been built to higher standards than some others on the market.

If you are commissioning a boat to put in the Cumberland fleet then this group will advise you on the upgrades it requires.

“We want better quality items than what some boatbuilders would generally give you for a spec boat,” Owen said.

If you are considering buying a charterboat, it quite often pays to charter a similar vessel and see how it performs before you buy.

Because, as the bareboat companies say, you need to have a plan for what you want to do with that boat after its charter life has finished.

MAINTENANCE, A MUST
Cumberland employs five fulltime maintenance workers and four office staff.

“We take pride in your boat,” said Owen.

“We have a very high maintenance regime, whereby the boats are mechanically checked when they come back.

“It is not in your or our interest for people to pay thousands of dollars to go out on a holiday they have been looking forward to and then for the boat to breakdown.

“In the long run our owners know their boats are being looked after.

“The resale value at the end of the boat’s charter life with Cumberland is pretty high because we keep a complete maintenance history and I can tell you exactly what we have done with every boat.

“Our boat owners may not see the boat for a year at a time, but when they come up they expect it to look the same way as it did when they first bought it,” he said.

ENJOY YOUR INVESTMENT
Cumberland regularly reminds its owners that their investment is also there for their enjoyment.

“Boat ownership is a lifestyle investment, whereby in order for you to get the benefits you do need to use it. Therefore, the closer you are to Airlie the better it is for you to use the boat,” Owen says. “All our owner's utilise their four weeks a year onboard their vessel."

Owners can also help with maintenance on the boat to keep costs down.

DYNAMIC OPTION
If you are considering putting a 40ft or a 70ft Australian-built luxury boat into a charter fleet then a chat to Ocean Dynamics may prove worthwhile.

Director Carolyn Lewis said the company would consider adding it to the existing fleet if approached by the “right owner with the right type of boat”.

“We wouldn’t want a boat that competes with existing boats in the fleet — so we would need a boat that has a different appeal,” said Lewis.

“But if we were to take on another boat at this time it would be either a smaller boat around 40 to 42-foot, or a larger boat around the 70-foot.

“We prefer Australian-built boats such as Riviera and Maritimo because we know they withstand the Australian conditions. However, that is not to say that we wouldn’t consider other boats,” she said.

THE FINAL WORD
All vessels in bareboat charter in the Whitsundays need to comply with Queensland Transport standards in relation to construction, stability and safety equipment.

Plus the boats will need to be fully equipped with all the modern conveniences needed to provide guests with a self-contained holiday afloat.

If you are in the market for a boat to put into charter it pays to remember that most companies are selective. They only take on vessels that are suited to charter and are in demand. So rather than risk disappointment, the big message from the charter companies is it pays to do your homework first. But if you do take the plunge there are significant savings in operating costs to be made by owning a bareboat compared to private boat ownership.