There is no denying that buying a yacht is an expensive purchase, even then, this initial capital investment alone is not giving you the real picture.
From the day you get possession of your boat, you are going to be spending a lot of money on the licenses, maintenance, docking expenses and crew.
Many experts say that you should factor in a minimum 10% of the cost of your yacht’s purchase price as maintenance expenses annually. This can run up to 15% – 18% if you purchased a pre-owned yacht.
Spending money on variable costs such as gas and engine maintenance makes sense, but if you are only going to use your yacht for say, 40 days in a year, you are probably draining hundreds of thousands into a hole in the water.
More than the capital investment and the variable costs, these unavoidable expenses is what is daunting to a lot of prospects considering a yacht purchase. However, if you can find a way to make money with your yacht, you would be able to set off most of these expenses, thereby making the purchase attractive. Renting out your yacht is a great way to consistently make money with your yacht.
Who Would Rent Out Your Yacht Anways?
If you are temporarily moving into a different city or taking a long vacation, you can consider renting out your yacht for this extended period of time.
If you are living in a big city like London, there are lots of people who are looking to hire out a boat for residential purposes.
This is because the apartments in most big cities in the US and Europe are expensive and it makes sense for city dwellers to rent out a boat that is docked in a canal at a cheaper price. If you are not going to use your yacht for an extended period of time, this situation can be a win-win because the tenant gets to stay in the city at a cheaper price and you consistently get a cheque at the beginning of every month.
On the other hand, if you are going to use your yacht frequently, say every weekend and are only looking to rent out your boat during the weekdays, you can use peer to peer rental services such as Airbnb and Boatbound. Every booking can bring you anywhere between Â£50 to Â£200 a night depending upon the type of your boat.
How To Rent Out Your Boat
If you are looking to rent out your yacht to someone long-term, you are essentially trying to enforce a landlord and tenant relationship with this person. After this person moves into your boat, all the laws relating to landlordship apply to you.
In addition to these laws, there are certain additional regulations to be kept in mind before you let your boat to someone for residential purposes.
You will need to get home mooring and planning consent by way of getting a ‘Residential Letting’ license from the authorities.
Also, the rentee is your tenant for all legal purposes, you will have to make sure that you have a proper rental agreement in place and follow proper handover procedure.
Once the legalities are taken care of, you can list your boat in some of the many online rental classifieds such as Craigslist, Gumtree, Right Move, Zoopla, etc. Or you can also employ a real estate agent specializing in boat rentals. Due to the demand, if you are pricing your rent reasonably, it should be fairly easy to find a tenant within a few weeks of bringing your boat to the market.
If you are only looking to hire out your boat for shorter terms, it means that the hirer is going to use your boat for leisure purposes. In this case, you would have to obtain a Leisure Business Licence and proper commercial insurance for your boat. You can then list your yacht on online lodging marketplaces like Airbnb and the ones that are exclusive to boats like Boatbound and Sailo.
Disadvantages of Renting
There are certain disadvantages to renting out your yacht that you should consider before proceeding.
If you are looking to rent out your yacht for an extended term
- Remember that prospective tenants are looking for boats they can stay in for a minimum of 10 months. Therefore, if you are moving out for less than this period, it might be hard to find tenants.
- There are a lot of legal formalities to be followed before you could let out your boat for residential purposes. Since there is a lot of time and money involved, it might not be worth the hassle for everyone.
- When you rent out your boat, you become a landlord for all legal purposes. Landlordship, which comes with its own set of responsibilities, is not for everyone.
If you are looking to hire out your yacht for shorter terms
- Remember that the demand for your yacht is higher during the weekends and the fishing season which is when you need your yacht the most for your personal use and vice-versa. Since there is little demand for your yacht during the weekdays and the off-season, your earnings might not be significant.
- Since you now have to get commercial insurance for your boat (which is expensive), there is a risk that you may never be able to recoup the additional expenditure.
Should You Do It?
If you do it right, you should be able to set off a minimum of 75% of your yacht’s maintenance costs by renting it out for money. Renting out your yacht is only a way to minimise your fixed maintenance costs and never a business for the novices to make money.
If you are buying a yacht with the objective of making a profit by way of renting it out, you are probably going to get burned. This is because boat rental is serious business and requires huge time and money investment along with specialized knowledge and experience to make it profitable.
Tell us how you got on renting your boat out, was it a profitable enjoyable experience or a waste of time and money and a lot of heartache for nothing?