4 STEPS TO A REWARDING CHARTER BOAT INVESTMENTS
Following several strong years of growth for the Australian charter industry, fleets are now offering up to 10% ROI on charter boat investments on catamarans such as the Seawind 1160 and new 1170. In the overview below, we go over the four key areas of consideration on bringing together a charter boat investment to be rewarding both financially and for your family’s lifestyle.
1. CHOOSING a GREAT CHARTER BOAT
Choosing a boat that is a good charter catamaran is part of the consideration…a boat that offers nice accommodation, is easy to operate, comfortable for a family to cruise the Whitsundays and practical to maintain. These features will enable returns to be reliable. New boats are of course the preference as there is less tendency for equipment to fail, warranty covers some items and you can’t beat that new boat smell…along with the publicity that comes with the latest and greatest designs. Think beyond charters too…a boat that will have longevity to wear and tear, strong resale in the cruising market, or makes you and your family happy to cruise on without worrying about maintaining umpteen toilets. A boat you can see your own family cruising on makes a GREAT charter boat.
The Seawind 1160 and newly released Seawind 1170 fit these categories nicely. While neither are probably the leading charter boat as they don’t offer four cabins and four bathrooms (imagine all that cleaning!), they do offer three cabins and two bathrooms which is a good number for a family or several couples. They have surfaces that are designed to withstand wear and tear with laminates on bulkheads and furniture and high grade vinyl flooring. They are also highly attractive to the cruising market and will enjoy strong resale with a simple post charter makeover.
They are also more affordable than other charter boats with the Seawind 1160 in survey delivered from $755,000 + GST and the new 1170 from $1.05m + GST delivered.
Don’t forget Survey…all charter boats operate under AMSA commercial survey rules, meaning the boat needs to be built to a certain standard to be compliant and signed off by a local surveyor and certified by AMSA (Australian Maritime Safety Authority). We work with the boat builders including Seawind, HH and Longreach to have the compliance mostly completed on the factory floor and then final inspections completed in Australia. This means we can guarantee the boat meets commercial requirements.
2. PARTNERING WITH A CHARTER MANAGEMENT COMPANY
One of the enjoyable outcomes of a charter boat investment, is the people you get to work with who are passionate about the industry and the boats they manage. Enjoying a week or two with your family cruising around the 74 islands of the Whitsundays and then walking off with full confidence that your boat will be waiting for you in great shape when you return is hard to value. These charter fleets have been operating for decades and built up not only skilled operations teams but also contacts and working relationships with key trades people in the area to ensure your boat gets maintained professionally and promptly so it doesn’t miss a beat when the season is cooking. There are years worth of repeat bookings and the fleets have established reputations amongst charterers for the quality of their boats, which is a win win for boat owners and customers alike.
Multihull Central will help place your boat with a reputable charter company that we have worked with over the past decade and who has demand for a boat of the make and model you desire.
3. ACCOUNTING ADVICE
As your boat becomes a business asset, there are taxation considerations to explore, from GST rebates to depreciation including accelerated depreciation through to hobby based models depending on the level of returns and nature of the operation.
Buying a boat as a business or investment is a pretty challenging concept for some accountants, particularly those not interested in boats or familiar with the tax ruling with regards to charter boats. However for many financially savvy buyers and accountants, this is the only way to own a boat.
The ATO has a Taxation Ruling with regards to boat hire arrangements which can be found HERE
We recommend talking to a specialist accountant who is working in this field who can put together an initial business model and potentially run the boat’s books for you, or advise your accountant moving forward. Multihull Central can put you in touch with these experts.
4. FINANCE
Financing a charter boat is common but also requires some expertise due to the nature of boats not offering the bricks and mortar security often sought by banks. Like any loan, at the end of the day it comes down to Security and Serviceability. If you are looking at a new boat that requires milestone payments during the build, using the boat as security becomes an issue. The simpler and more successful approach more recently has been to set up a loan from the boat that is secured against equity in an existing property. This allows more competitive interest rates and longer term repayment terms providing lower repayments.
Though the returns from the charter fleets are offering strong returns of late, unless its an existing boat purchased as a going concern with financials for several years, then the banks will want to see you can service the loan initially without financial income from charters. Of course the financial projections of charter fleets help support the loan application.
To read more about how to finance a charter boat read HERE.
Multihull Central can recommend expert financiers and brokers familiar with charter boats and the industry to help secure you competitive finance.
