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.
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