Good Idea, or maybe not

[ronparise]

As many of you know, I recently bought a boat to use as my second home, in California. and like any other second home it sits vacant for much of the time. And the expenses keep happening, dock fees, and maintenance are year round things. and I plan to be there, for only 3 or 4 months at a time So Ive been thinking of how to off-set some of those expenses, >

I often see posts here on tug that say something like this... Ill be visiting xxx and staying at a timeshare there, any recommendations on what to do, are there any "not to miss" things to do or see.

So my thought is to offer my boat in San Diego, for charter and market to the folks that stay at the Wyndham and Worldmark timeshares there (and at any others that I dont know about) a Gilligans Island type 3 hour tour>

so good idea? or maybe not?

would you call?

here are some snaps of my boat,

https://picasaweb.google.com/103011696051496221261/Movies#6211826487221015762

and Heres what one charter company says about their charters

Enjoy one of our most popular charter cruises and for good reason. San Diego sunsets are as spectacular as they get. The reflections on the water and against the city skyline produce some of the most beautiful colors. Come see for yourself how romantic and simply beautiful this cruise can be.

We'll start your cruise from dockside at the Marina on Harbor Island about an hour before sun set. From there we take you out on the bay to see the Navy dolphins, cruise by the active aircraft carriers that are stationed here at North Island such as No. 76 the USS Ronald Reagan and No.70 the USS Carl Vinson (which is world renown for many reasons including giving Osama Bin Ladin his "final cruise") We'll take you literally under Midway Aircraft carrier which is amazing, and then check out the views of "The Kiss" at Seaport Village and the city skyline. If time permits we will cruise by Coronado Island and go under the Coronado Bay Bridge or check out the Hotel Del Coronado from Glorietta Bay as the sun silhouettes its famous shape in the background.

However, our favorite spot in the world to take in our spectacular sunsets is just past the point not far from the lighthouse. Whatever your choice, we can make this a very special and memorable cruise.

So let us make your special occasion or visit to San Diego something you'll always remember. We pride ourselves on making your your cruise something intimate and unique with customer service that can't be beat. We can offer various catering options as well as a delicious wine, cheese and fruit pairings. You can even book a fabulous massage to compliment your sunset cruise.

 

[Jason245]

You would need to get licensed and pay for appropriate insurance. . Might be more Hassel than worth..especially in California

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[ronparise]

You would need to get licensed and pay for appropriate insurance. . Might be more Hassel than worth..especially in California

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Im not sure what the rules are, but Id hire a licensed Captain to drive
Im not interested in how to do this yet, My interest now is in knowing whether chartering a yacht in San Diego is something timeshare vacationers would pay for.

 

[Jason245]

Im not sure what the rules are, but Id hire a licensed Captain to drive
Im not interested in how to do this yet, My interest now is in knowing whether chartering a yacht in San Diego is something timeshare vacationers would pay for.

I would call up these chartering companies and ask them how booked they are and or what their availability is.. if they sound like they are all booked up weeks in advance.. probably a good idea..

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[presley]

Is there a company that can handle all the responsibility for you? If it works out to where you can just collect some money and you hire out all the marketing/cleaning/captain/breakdowns, etc, I'd say go for it. However, if you plan to do most of that yourself, you are just too far away from it to deal with any problems that arise.

EDIT: after seeing your next post, the answer is yes, people would pay for that. I live in the area and have looked for yacht charters several times. They are always too pricey for me, but there is a demand, especially during whale season.

 

[VegasBella]

I don't think I would pay for it but others sure might.

there is a demand, especially during whale season.

Which whale? Virtually any time is a good time to see whales off the coast of California. It's just a matter of which kind of whales you'll see. I've gone whale watching at various times of the year and I've seen gray whales, blue whales. humpback whales, and fin whales all off the coast of California.

I know that people tend to think of Winter as the best time to see whales in California but really any time of year is good. And blue whales (they tend to come in Summer) are really amazing! They were hunted to near extinction but their numbers are coming back and the population in California is now the biggest population on Earth. California is your best chance to see a blue whale.

 

[ronparise]

Is there a company that can handle all the responsibility for you? If it works out to where you can just collect some money and you hire out all the marketing/cleaning/captain/breakdowns, etc, I'd say go for it. However, if you plan to do most of that yourself, you are just too far away from it to deal with any problems that arise.

EDIT: after seeing your next post, the answer is yes, people would pay for that. I live in the area and have looked for yacht charters several times. They are always too pricey for me, but there is a demand, especially during whale season.

I already pay a captain to watch my boat (check the lines and the bilges, and oversee the maintenance that has to be done when Im not there, And he takes the boat out on a regular basis to "exercise" the engines (turns out its not good for these big diesels to sit unused, they like to be run) And he takes me out when Im there. at least untill he teaches me how to run this thing.

This captain also has his own boat that he lives on (at the same marina Im at) and he takes charters out on his own boat

 

[ronparise]

You would need to get licensed and pay for appropriate insurance. . Might be more Hassel than worth..especially in California

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Heres something from the coast guard website

Generally, operations that carry 6 or fewer passengers for hire are referred to as Uninspected Passenger Vessels (UPV), 6 Passenger (pax), or 6 Pack operations. These are your typical charter boat fishing guide or tour boat operations that may use a state numbered boat. UPV operations traveling on navigable waters of the United States under U.S. Coast Guard jurisdiction are not required to be inspected by the Coast Guard. They must comply with minimal federal standards for safety, navigation, pollution prevention and the vessel operator must hold (minimally) an Operator Uninspected Passenger Vessel (OUPV) license issued by the Coast Guard.

 

[Jason245]

Heres something from the coast guard website

Generally, operations that carry 6 or fewer passengers for hire are referred to as Uninspected Passenger Vessels (UPV), 6 Passenger (pax), or 6 Pack operations. These are your typical charter boat fishing guide or tour boat operations that may use a state numbered boat. UPV operations traveling on navigable waters of the United States under U.S. Coast Guard jurisdiction are not required to be inspected by the Coast Guard. They must comply with minimal federal standards for safety, navigation, pollution prevention and the vessel operator must hold (minimally) an Operator Uninspected Passenger Vessel (OUPV) license issued by the Coast Guard.

The state of California is the one I would be more concerned about. . They have all kinds of laws that make many businesses cringe at considering opening operations there.

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[presley]

Which whale? Virtually any time is a good time to see whales off the coast of California. It's just a matter of which kind of whales you'll see. I've gone whale watching at various times of the year and I've seen gray whales, blue whales. humpback whales, and fin whales all off the coast of California.

You've been very lucky! I've been whale watching many times in San Diego and only a couple times were what I'd consider to be good or worthwhile whale watching cruises. Both were in January. A whale or two isn't what I'd consider good, but it is what places guarantee.

It's very cold and windy to go in January, so a yacht is very nice. My best ever whale watching was on a small private yacht. They got real close to the Coronado Islands and we saw lots of elephant seals there in addition to many whales. My worst have always been the big boats that are basically tourists rides or fishing boats.

 

[WinniWoman]

But now with using the boat as a charter, won't there be that much more wear and tear on it, as well as the fuel costs and the Captain's salary, liability insurance?

I don't know....how much would you be charging people for this? To me, boats are a big hassle..

 

[presley]

I don't know....how much would you be charging people for this? To me, boats are a big hassle..

Most I've seen run for $500 - $1000/per hour. Some will have a minimum number of hours. You really need at least an hour just getting in and out of the bay.

EDIT: I found a cheaper one, closer to the size of the OPs.
http://www.sandiegobaycruises.com/antonina.html
4-5 Hour Whale Watching Excursion

You will board the Antonina at the Harbor Island Sheraton Hotel & Marina and be taken out to the southern California ocean (well, because that’s where the whales live) and provided a photographic opportunity of a lifetime.

Up to 6 Passengers $325/Hour

Snacks and soft drinks are provided. Orders for deli sandwiches can be taken in advance.

 

[DeniseM]

So Ron - Just so no one misinterprets your very detailed post, this isn't an Ad, right?

 

[ronparise]

So Ron - Just so no one misinterprets your very detailed post, this isn't an Ad, right?

No Denise not an ad, There is no business, and might never be.

We'll call this "market research" using TUG as my focus group

 

[easyrider]

Ron, I had a commercial vessel in WA and the rules and liability are many. Because of the regulations , the costs of operating the vessel is high. However, if you dock it, you could rent it out as a rental on a dock. There are many people that like to live on the dock with no interest of taking the vessel out. My brother in law did this with his sail boat. He would live in it then rent it out while he was at home.

Bill

 

[Talent312]

Whale watching can be a very lucrative enterprise.

But I hope patrons don't screen the movie,"In the Heart of the Sea",
first (soon to be released) and your captain's name isn't Ahab.

 

[bnoble]

I've done a fishing trip or two, but I'm more interested in kayaking or other more active pursuits. Demographics: Family of four, parents mid-40s, teens in high school. Later in life? Maybe more interested.

I think the real question isn't whether or not we would do it. The real question is how busy are the current operators in the area.

 

[ronparise]

Ron, I had a commercial vessel in WA and the rules and liability are many. Because of the regulations , the costs of operating the vessel is high. However, if you dock it, you could rent it out as a rental on a dock. There are many people that like to live on the dock with no interest of taking the vessel out. My brother in law did this with his sail boat. He would live in it then rent it out while he was at home.

Bill

Every thing is under consideration Bill. Right now Im researching the charter boat option.

 

[presley]

However, if you dock it, you could rent it out as a rental on a dock. There are many people that like to live on the dock with no interest of taking the vessel out.

That is another option. Shell used to offer something like this, but took it away a couple years ago. It would be like a vacation rental.

IDK if staying to bay cruises is less of a legal hassle. San Diego bay is very pretty and there are all kinds of cruises for it. Sunset, brunch, SD history, to name a few. The downside to competing with that, is that people can go on the bigger more crowded boats for pretty cheap.

 

[SueDonJ]

What would your costs be to register/license/insure what would basically be a public charter service, and can you make money to cover the maintenance costs over and above that figure? I believe here in the Boston area licenses are limited and they're prohibitive for such a small enterprise. If you were to offer it casually without all those requirements fulfilled you'd be opening yourself up to what I'd consider a pretty big risk both in terms of non-compliance if found out and damages for any injuries suffered by your customers.

I'm risk-averse and would be much more likely to rent from an entity that's licensed/etc despite the higher cost.

 

[SueDonJ]

Interesting article here, Ron: BoatUS Consumer Protection Bureau I read it as, of all the options for trying to defray costs of boat use/ownership what you're proposing is the least advantageous.

 

[ronparise]

Interesting article here, Ron: BoatUS Consumer Protection Bureau I read it as, of all the options for trying to defray costs of boat use/ownership what you're proposing is the least advantageous.

I didnt read it that way, Heres what stuck out for me

“The trawler cost me $1,000 each month. I earned $10,000 the first year,” Nicholas said. “The trawler was not abused by the folks who used her,

“The trawler cost me $1,000 each month. I earned $10,000 the first year,” Nicholas said. “The trawler was not abused by the folks who used her,

 

[SueDonJ]

I didnt read it that way, Heres what stuck out for me

“The trawler cost me $1,000 each month. I earned $10,000 the first year,” Nicholas said. “The trawler was not abused by the folks who used her,

“The trawler cost me $1,000 each month. I earned $10,000 the first year,” Nicholas said. “The trawler was not abused by the folks who used her,

I didn't say it wasn't advantageous, just that it's the least advantageous. Note also their problems came from the charter service they used to manage the business - presumably that eased their compliance concerns but it wasn't without difficulty from the sounds of it.

You could very well make a go of it. I'm just pointing out why I'd be hesitant to try running or using the business you're talking about.

 

[heathpack]

We own a charter sailboat in California, so feel free to PM and ask me any questions.

The easiest way to do what you suggest is to offer the boat via bareboat charter using an established charter company. They would deal 100% with customers- advertising, check-outs, check-ins, troubleshooting problems and organizing routine maintenance, all for a substantial cut of the charter income. If people need a captain, the charter company usually maintains a list of captains who your customers could hire.

What you propose is also possibly legally, although a little harder because you have to get the customers yourself. Do-able but harder because you are not local.

Additional requirements for a charter boat over a purely-privately owned boat include:

1. Charter boat insurance. Way more expensive. For us about 5x what a private policy would be. No idea if power boat would be comparable, I'm guessing yes.

2. Something to limit your liability- either a very large liability insurance policy or you set up an LLC which has the boat as its sole asset. These things are somewhat comparable in cost to do, you just have to run the numbers to see which makes sense for your circumstance. There is an expense for a lawyer to set up your LLC if you have someone else do it. But you can do that yourself actually.

3. Sales tax. This might be your trickiest thing because the Board of Equalization (the dept of CA govt that deals with sales tax) is a bit of a nightmare. First, if you purchased the boat in California and paid sales tax on the purchase, great. If you did not pay sales tax already on the purchase of the boat, this is going to pique the BOE's interest, they are going to look at you and assume you're trying to defraud the state of CA. If you did not pay sales tax on the purchase, the rules are you must collect it on each charter and pay the state quarterly. This is just paperwork and accounting but it can be confusing and hard to get straight info from the BOE.

4. Local business tax- sometimes due, depending on locale. You probably would not earn enough to have to pay it, but this is another govt agency looking at you to see if you're cheating them out of taxes and sometimes having to prove you don't owe taxes is a bit or an ordeal.

5. Zoning- you may not be able to operate a commercial venture out of your existing slip, you'd have to check with your marina.

6. Coast Guard- Need an annual inspection. This is a trivial expense and a good idea anyway, but you can't forget it.

7. Income taxes. Your personal income taxes are complicated somewhat by owning the charter boat, but not in a different way than owning a house for vacation rental. The problem is that owning a charter boat is a huge audit flag for the IRS, its just one of those things that triggers audits. There's a fair number of confusing and slightly contradictory rules that have to do with the charter business, so this is an area where it really really makes sense to hire an accountant and ideally one who knows boats and the charter business. Can save your hide or at least be someone in your corner should you get audited. We have an excellent one here in LA, a good guy, not too expensive, knowledgeable about boats and charter business. I could give you his name if you decide to go this route.

Will people abuse your boat? Yes they will. Even captains will. Usually not too egregiously and it probably depends on your standards (ours are high). Little things that make no sense drive us crazy- like people running dock lines over the teak toes rails and wearing off the varnish, when there are chocks in the toes rails to run the lines through and spare the varnish. So also count on more wear and tear type expenses.

But our boat charters very very well and we offset our expenses of ownership quite substantially. Whenever we think of pulling it out of charter, we see the numbers and decide not to. A bit of a different thing than your scenario because our boat's primary function is to be a charter boat. So our charter-related expenses are mathematically worth it to us. You'd just have to run the numbers to see if it the additional expenses would make sense for you.

 

[DaveNV]

Ron, if the boat is only a business investment, then chartering may be a way to offset things. I know the Coast Guard has merchant safety inspections on boats used in commercial operations such as that, so there's that consideration. I have no idea if California has its own inspection or licensing process.

For me personally, having owned and moored a sailboat at Marina Village in San Diego for several years, I'd be very interested in staying aboard your boat more as a sleepaboard B&B (that's "Boat and Breakfast") rather than as a charter thing. The cost of fuel and such would add enough to the expense to make it not worthwhile for one couple, unless it was a destination charter of some sort.

Taking a group whale watching is one thing, but there is competition for that. An overnight trip to the Channel Islands or Catalina or San Clemente, or even down to Ensenada seems much more appealing. Sharing the cost among a group would reduce the per person price, and make it more affordable. But it's still an expensive operation. Part of the issue with motor yachts, as you know, is that every time they get underway it costs you money.

Hope this is helpful.

Dave