Charter Boat Ownership
...an interview with San Juan Sailing owner Roger Van Dyken
PLACING A BOAT IN CHARTER
Is charter boat ownership right for me? Maybe. It’s not for everyone. Some people can’t stand the idea of someone else aboard “their” boat. For others who enjoy guests in their “cruising home”, it provides both joy and income.
Will charter income pay for the boat? For the majority of it. We’ve done this now for 32 years with our own boat and over 27 years in the business. We’ve learned that, in the Pacific Northwest, charter income generally pays for about 60-75% of all the normal expenses of boat ownership – (1) moorage, (2) insurance, (3) professional maintenance, (4) property tax – even (5) the loan payment, based on a 20% down, 20 year loan at about 6.5%.
Are there tax benefits? Yes. First, you save the sales tax on purchase, which is 8.4% in Bellingham (8.8% in Seattle). That can be quite a few thousand dollars. Second, your charter yacht becomes your own small business. Your expenses now become tax deductible, in addition to the “second home” interest deduction. Please see your tax advisor.
Will my boat get beat up? The boats in our fleet look far better than most private boats in the marina. While there is “some” wear and tear, our owners are required to maintain their boats in “like new” condition. So with annual maintenance, both mechanical and cosmetic, boats in our fleet are in beautiful condition. (Come and see!) We attract a high caliber charter guest. We treat our guests right, give them a top quality yacht, and, almost without exception, they take special care of your boat. It’s not unusual to have a guest approach a yacht that has been in our fleet several years and ask, “She looks new. Is she?”
Can I use my own boat? Yes! We encourage your personal use—that’s the main reason to own a boat. To protect your substantial sales tax savings, the state requires that you pay the charter fee for your non-business personal use. We return all the money to you, less the sales tax and $25 for processing and our B&O taxes.
Who does the maintenance? We have over 90 preventive maintenance steps—the key to a vessel in “like new” condition. Some owners do a lot of the work themselves, some do half, but most rely on their maintenance professional to keep their boat in top shape. We are not in the maintenance and repair business. Why? Well, when I founded the business in 1982, I found that most complaints centered around maintenance bills from the charter company. So we will recommend professionals to you…but we make no money from your maintenance bills. We’ve found our approach cuts out the middleman, saves considerably on the hourly rate you pay, and keeps both you and your charter guests happy.
Can you project my cash flow? We would be pleased to provide you a cash flow projection that shows charter income, conservative tax benefits, moorage, insurance, professional preventive maintenance, and your monthly loan payments. It’s only a projection, but it’s based on our years of experience.
Why San Juan Sailing? That depends on you and your boat. Frankly, we’re a bit fussy. We have quality owners with quality boats. Long-term relationships are our goal. Although, there are many fine charter fleets, here’s what we think makes us stand out:
- We don’t want to be the biggest, but we work hard to be the best.
- We accept only quality boats, maintained to exacting standards.
- Service to your charter guests and you, as owners, is our mission.