Envoy is in Greece's Lefkas Marina. We expect to return there mid-May for several months' cruising including some time with her new owners.
We recently wrote this article published in Pacific MotorBoat magazine.
When Envoy, our Greece-based Nordhavn 46 passagemaker was for sale, one inquiry is from a Kiwi guy saying that due to work commitments he'd only able to travel to Greece to use the boat for about one month a year. He asks my opinion on this idea. As much as I want to sell Envoy and proceed with our new boating plans I don't want to mislead anybody so tell him it would be much more practical and cost-effective to charter one of the thousands of boats available throughout the Med. My reply is based not only on cost, but also on the fact it takes at least a week to get your boat ready for cruising and about the same to lay her up again for winter. He agrees and this prompts me to write this article.
We've chartered boats several times here in NZ, in Britain and in Queensland's Whitsunday Islands and never been disappointed. If you own a boat locally there's a lot to be said for chartering overseas during our winter for a much-needed sunshine boost combined with enjoying a cruising adventure in a different location. Consider the Whitsundays, Pacific islands, the countries bordering the Mediterranean, the exotic Caribbean or Alaska's Inside Passage. Alternatively you could explore British canals by narrow boat enjoying the many pubs along the way or meander through European canals enjoying croissants and coffee in the morning and wine in the afternoon.
However it's quite another option and mind shift to charter locally instead of owning your own boat, even though there's a compelling logical and financial case to do so where people enjoy boating, but would use their boat infrequently (say less than about 20 days in a year).
There are two main issues to consider when comparing ownership with charter – the intangible and the tangible (financial) aspects.
Several intangible factors favoring ownership include pride in your vessel, the ability to potter around aboard doing odd jobs, having the exact boat and equipment you prefer, knowing how to handle your own boat and her limitations, being able to keep your gear aboard and of course unrestricted availability for use.
Conversely several intangible factors favoring charter include the ability to use different types and sizes of boat, cruising in different locations, being able to step on and off without the worry of repairs and maintenance (R&M) and being able to try out cruising before making a major financial commitment to purchase a boat.
Then we come to the tangible – the financial question. The cost of boat ownership is something many owners probably don't like to think about and is only generally discussed in hushed tones, preferably without spouses present. As the saying goes, if you have to think about this you can't afford it.
Let's consider the costs attached to a typical 12 metre twin-engine planing fly-bridge launch about 15 years old costing NZ$300,000, of which there are many similar examples currently advertised.
First you have to consider annual cash costs which I've calculated as: marina $9,000, insurance $2,800 and R&M $12,000, totaling $23,800. In this calculation the marina and insurance costs can be accurately defined, but R&M is always a guesstimate based on factors like the vessel's age and condition, how much work the owner does versus using contractors, how fastidious the owner is and whether the owner wants to upgrade ageing equipment etc. Some years may be less than $12,000 but in other years factors will certainly come out of left field to exceed it.
Since we are comparing ownership with charter, where diesel is an extra cost, the above figures don't include diesel. But a good guess on costs would be about $8,400 based on using your boat for a reasonably common 200 engine hours annually, averaging 30 litres per hour and a diesel cost of $1.40 per litre.
To bare-boat charter a vessel around 12m typically costs about $1,000 to $1,500 per day depending on location, season and vessel type so let's take an average of $1,250. This would reduce if you share the charter experience and cost with others (which many charterers do). These figures show you only need to use your boat more than 19 days per year for ownership to be the better financial option.
However we are missing vital components in this equation – the non cash costs of depreciation and opportunity cost.
The vast majority of boats depreciate and like cars the level's higher for newer boats until they eventually reach a level where their depreciation is negligible.
A fair figure for depreciation on a boat of this age would probably be around 5 per cent annually, so in the first five years of ownership the depreciation cost would be about $68,000 or about $13,600 per year.
Opportunity cost refers to the fact that if you didn't spend that $300,000 on a boat it would be earning for you. In recent years that would easily be 5 per cent annually in a managed fund. So over 5 years that is about $83,000 or about $16,600 annually. Are these “real costs”? You betcha – the actual figures may vary higher or lower than this example but they are real nonetheless.
Now we have quite a different picture with your total ownership cost being about $54,000 annually and chartering being beneficial at any usage level below about 43 days per year. Of course if you borrow money and pay interest to buy your boat the figures change even more in favor of chartering.
To hell with logic though, in our case we'll follow our hearts not our heads and stick with ownership combined with occasional chartering in exotic locations.