For many people, investing in a charter boat can be a fantastic way of realizing the dream of owning a luxury cruising catamaran much sooner than would normally be possible. For those who aspire to go island hopping along the east coast of Australia or through the Pacific and beyond, this dream often seems just out of reach, whether being held back by work commitments, family commitments or just a plain lack of time and money.
Seawind 1160 Dad with kids, Mum at helm
Placing a boat into charter however can ‘make it happen’ much earlier by taking a different approach to boat ownership and treating it more like a lifestyle business. Rather than approaching boat ownership as a second home on the water, or as a hobby or floating toy, charter boat owners would view their boat as say, a rental holiday apartment…that is, rather than being in the liability column, it is placed into the asset column, because it now becomes an ‘income producing asset’.
To get a better insight from a charter boat owner, we talk with Chris Benning, a long time Seawind customer who has now owned three Seawind charter boats (Seawind 1000, Seawind Venturer 38 and now a Seawind 1160) and was a senior manager in one of the Big Four Australian banks.
Chris explains why he opted for charter boat ownership, 'We had a yacht in Sydney, but we seemed to spend more time and money working on it than sailing it.'
'It seemed to be a poor investment in both time and money. It seems smarter to have a boat paying for itself. We can still use it for four or five weeks a year which is about what most people use their boats in Sydney Harbour'.
'And at the end of five years you’ve basically got a boat that you can either upgrade or keep as a personal boat.'
The former of the two is exactly what Chris did and is a great example of what you can do over time to get to your dream boat, starting smaller and working up the ladder.
Then, instead of being up for 'Clawback' (similar to Capital Gains Tax) when the older boat is sold, Chris suggests, 'You then roll the depreciation from the earlier boats into the new boat, which means the depreciation just isn’t as high on the new boat.'
Charter Boat Ownership works particularly well for those who are still working full time, or part time towards retirement. During the early years the boat is heavily negatively geared, which can be written off against other income, provided the boat is making a legitimate income. Over the years the profit accumulates and eventually becomes a cash positive venture and matures as a business that has achieved the foundation requirement of the ATO, a 'Prospect of Profit'.
By this time, your working and family life may offer you the time to cast off the lines and pursue the cruising life.
It’s important to understand that Charter Boat Ownership is not going to be a means to print money, but rather a path to own a boat economically and with financial justification.
Chris explains further, 'The long term outcome has to be that you want to own a boat at the end. If you are just looking at it as a money making venture, it doesn’t work. As a cash flow investment it’s not so good, but it actually pays for itself and covers the maintenance and the upkeep, and mooring, and you get to use the boat for four weeks a year'
The returns in the Whitsundays for Chris however have been very strong. 'We have been working on about 10-12% and that seems to be pretty achievable, particularly in the Whitsundays. I think our lowest has been 240 charter days a year. So, it’s fairly busy.'
However, it’s not just the financial benefits that proved to be the biggest benefits, as Chris highlights, 'We have the use of an upmarket boat, in a great area because we have it in the Whitsundays, and a boat that is well maintained and literally paying itself off .'
A fully managed boat located in an incredible cruising destination, is a benefit often overlooked by many. While your boat is working away in the background and being fully managed by a professional charter company with a full time service team, you can take advantage of flying into the Whitsundays and be on the water that same afternoon. 74 islands of tropical paradise are waiting for you to explore, with the Great Barrier Reef within close reach also.
'I would say the Whitsundays would have to be one of Australia’s best sailing areas, if not one of the world's. If you want a smooth anchorage, you can always find one, but if you want some decent sailing you can have that too.
For diving and snorkeling it's brilliant, and in addition you’ve got resorts if you want to go out and live it up a bit. '
There are many other locations in Australia also, though the Whitsundays seems to provide the strongest returns. With low interest rates and the government’s 50% tax deductable investment allowance, there has never been a better time to invest in a Charter Boat.