The dream of owning a yacht and sailing away into the sunset is held by many. Yet few can afford a brand-new yacht or might not feel comfortable settling on a smaller, cheaper boat for various reason.
So, you start looking at options and go down the charter contract route. Dare I even mention it …. ‘Bareboat Charter’.
Even as I type this article, I hear people springing to life on their keyboards, wildly typing out opinions and giving expert advice such as ‘Never touch a bare-boat charter yacht’, ‘These boats have been abused’, ‘They are a write-off’, etc. But are they? In reality, yachts are a combination of fiberglass and resin, with a few replaceable bits of aluminium and stainless steel, fabric and wood.
I want hard facts, detailed truth, not armchair opinion. Unfortunately, there is very little ‘fact’ published online, hence this blog.
This article is not looking to justify the pros and cons of this business model, it is purely to show the end result: What does a yacht look like at the end of its charter life and what’s required to bring it back up to what you would consider ‘good working order and eye pleasing manner’. A very subjective topic indeed.
Barbara & Wolfgang Timmermann, owners of a now ex-charter, 2004, 46ft Fountaine Pajot BAHIA, walked the walk and now shared their experience, down to the dollar, with me.
They purchased their cat ”Pink Penguin” at a time when the charter / leasing system of charter yachts in Europe was in its infancy. The boat was at the time already 4 years old and banks didn’t really want to know about it as ‘management programs’ were a new concept. This was in 2008 and catamarans were still considered “a non-sailboat” (some misguided purist argue they still aren’t).
On top of it, Barbara tried to convince banks in the land-locked country of Austria that this was a good idea. What were you thinking….
The leaseback deal was done with Trend-Travel-Yachting who have offices in Austria, Marinas, Croatia and Cape Verdes. At the time, their catamaran was going to be the biggest in the Adriatic! How times have changed.
Between Jan 2008 to Feb 2017, the cat was chartered as a bare-boat and crewed yacht in Croatia & Cape Verdes (incl open sea passages) all year-round. 2015 was meant to be the end of the charter contract. But as Barbara and Wolfgang weren’t quite ready to cut the lines and sail the open seas, the charter company extended the lease for an additional 2 year. Despite the fact it was an “old” cat for charter business, it still sold pretty well. Who says you can’t do a deal!
During 2016 and 2017, she was based in Croatia only, operating from Mai to the end of September. In 2018, the Timmermanns paid the final 100.000 Euro, representing the total amount of interest accrued, curtesy of the then prevalent, astronomical interest rates. The yacht was finally in their name but continued to be with the charter company for another season.
Dollars and Cents whilst in charter:
“Pink Penguin” has a charter layout, accommodating 12 guests with not much additional equipment apart from its basic fit out. There were no water maker or generator for example.
Then purchase price was 300.000 Euro for the 4 year old boat, with an original book value of 600.000 Euro! Over the years, they paid another 100.000 Euro in interest, curtesy of the current financial markets at the time. So the boat cost them a total 400.000 Euro!
It took me a few emails to understand the setup of this deal.
Barbara explains: “It was a pretty complicated lease-back system. We paid 300.000 Euro to the previous owner. In 2004 the boat was worth 600.000 Euro. We borrowed the money from the bank that received the mortgage rate from the agency directly as they had the actual income from charter on their account. The charter income was divided up 65 % for us and 35% for the agency, after Croatian tax. Out of the 65% all expenses and mortgage rate were paid (plus maintenance, insurance, marina fees). If it did not work in one year, we had to top up the required funds. If there was some money left, it was paid out to us. So it was all a big triangle system – or call it a business threesome.
The brand of any replacement items was at the company’s discretion, no upgrades (apart from the engines) were made. The agency bought what they thought was best but did not go for the luxury edition.”
This income almost covered all running costs including the following replacements that were required along the way:
New sails (nothing special, standard): 14.000 Euros
2 new motors (we upgraded to 55hp, Volvo Penta): 30.000 Euro
1 heater: 1.500 Euro
1 new saildrive
New salon cushions, mattresses, bimini
New Ultra Anchor plus additional 50m, 10mm chain (total now 100m)
Hundreds of little things like services, ropes, inspections, antifoul, safety gear, etc.
I said almost, because apparently there was an approximate shortfall of 30.000 Euro. No small change, but then Barbara also had 3 free owner’s weeks per year. They only had to pay the 10% tax on those 3 weeks but that’s included in the previously calculated overall expenses. These 3 weeks however gave them an opportunity to generate a little extra ‘income’ by taking friends / family / family friends on board. That again paid for the 30.000 Euro mentioned above. Strictly speaking, I would call that ‘Cost-sharing’, not income.
Now the BIG ONE. Taking the boat out of the contract, August 2018. Barbara refers to this as the ‘after take over’, ‘make it liveable’, ‘safety standards we want’ expense account:
RIGG:
“The first thing we did was to book a surveyor for the rigg. Big disaster. Zspar in France answered after the rigging company sent them the photos: ‘The mast is dead’. We were devastated. Slowly, piece by piece, the full story came to light: obviously there must have been a collision with a bridge that the agency neglected to tell us about (mind you, they did not tell us much of anything).
After many backs and forth, this was the outcome: 30.000 Euro for news mast (boom was ok), new rigg, new gooseneck, new furling system, all new ropes and labour by a Croatian rigging company. Plus 3.000 Euro for 2 additional months we had pay the marina due to delay in production of the mast. Silver lining: no worries about the rigg for the next 15 years … except check-ups.
INTERIOR:
Well used … we did thorough cleaning, new hoses, new showerheads, some cupboards got new varnish or we made new ones, kitchen improvement, exchanged all old silicon with sika flex, 3 leaks in the roof we were able to close (mainly rusty screws and dissolved silicon). We did all this ourselves, so the cost was limited to materials purchased at hardware stores and marina shops. Not a lot.
New faucet in galley: 160 Euro
New Salon cushion covers: 280 Euro
New mattress in master bedroom: 300 Euro
EXTERIOR:
New antifouling (we chose SeaSpeed, its expensive but environmentally 100% friendly): 5.000 Euro incl haulout.
5 new hatches: 2.000 Euro – self installed
1 corner rail at the transom (tailor made): 600 Euro
Replacing one broken welding at the cross beam (that was also an “Accident” of a charter crew, actually the very last one, so the agency obviously did not deal with their insurance anymore): 360 Euro
New dyneema railing, new dyneema lazy jacks: 600 Euro – DIY
Replacement of the major blocks: 400 Euro (we went for the more expensive more durable ones)
New bimini (tarp for 0 Euro as upcycled material) sewn on top of old Bimini
New Thrust leavers
New outboard engine: 1000 Euro
Few gelcoat repairs: 100 Euro – DIY
ELECTRICS:
Installment of inverter – bought 2nd hand for 500 Euro
Solar Panels 400 watt: 300 Euro on Austrian version of Craig’s list
New 220V breakers
Eberspächer Heating: 3.600 Euro (incl work of a professional)
FUTURE REPAIR / UPDATES (these have not yet been included in the current expense account!):
Hull polishing and further gelcoat repairs (during the charter period, there have been some serious “touches” with concrete walls. And whilst some were repaired in an excellent way, some are just rubbish): price … we will see
Generator / water maker: 17.000 Euro
Galley redesign
New cockpit table
Cockpit / steps floor (totally slick, very slippery!!) – Kiwi grip or cork ??”
Barbara’s final comments to me:
‘Some real bummers by stupid guest, i.e. we do know that “Pink Penguin” hit a rock with the keel at some point and that there was a crack in the bow.
Then there was the time when one year on the way from Gibraltar to Lanzarote the Saildrive broke (or something inside , but no water intake …) … The charter crew refused to sail to Cape Verde with only one engine (eyes rolling) so WE had to pay their flight back, the flight of a professional crew down to sail her to CV and the transport of the new saildrive … that was 5.000 Euro … ☹ That sucked …
All up though, the agency kept the boat running and took quite good care of her. Of course, it hurts to see your boat get old. …. but that was the only way we could finance it.
So, in conclusion: It’s was worth it!’
In summary:
Having added up all the expenses above, the Timmermanns have spent around 50.000 Euro to get “Pink Penguin” back up to speed with maybe another 25.000 to come over time. However, some items listed I would consider more to be ‘running maintenance’, such as antifoul or a leaking hatch repair.
Then there was the 100.000 Euro interest payment, half of which was recovered through charter fees. The other half is out of pocket.
Let’s not forget that they also had 3 weeks per year of free sailing holidays for the last 11 years. This at a time when maintaining their own boat full-time would have not been feasible due to work commitments. Financially, this equates to at least the amount of money they have now spent on after ‘take-over’ refits.
In other words …. a yacht for 50.000 Euro and a lot of fun along the way. Sure, she is 14 years old, but in good shape & set up to their liking.
A quick look on the internet shows the current value of an equivalent BAHAI to be around 200.000 to 220.000 Euro, making this a 150.000 Euro asset. I just love the math, though I still wonder where you found this yacht in the first place….
Thank Barbara and Wolfgang for sharing all this. It’s great to find someone to discuss openly their experience including details on Euros spent. Fair winds.
Mithril, Thanks for your great input. I appreciate you taking the time to share your experiences from man operators point of view . Nils- Pretty much EVERYTHING depends on the charter agent. How well they screen the charterers, how well they maintain the boats, how heavily they are used, EVERYTHING. The only rule of thumb that you can apply, is that one year in heavy charter service will put ten years of wear on the average boat. In a good charter arrangement, there should be some provision for a total refurb and refit at the end of the charter period, at least. Good luck with all that.