Buying an Investment boat: ADVICE NEEDED :)

[TobyJ]

Hi there,

 

My partner and I are considering buying a narrowboat as an investment (obviously we'll use it ourselves occasionally). Ideally, we'd like it to be used for short holidays during the summer months, and then be rented out during the winter at a reduced rate.

 

Our biggest issue is that we spend about 8 months every year abroad. So, we would need someone to manage everything for us. I intend to build a website - but that will take a while before I can start relying on that for bookings.

We're completely new to this, so forgive me if this is a stupid question... are there marinas out there that manage boats entirely? Would they be able to 1. Get holiday bookings for me;

2. Handle the switchovers: meet, greet & train the new arrivals, clean the boat, inspect the boat etc.

3. Carry out any necessary repairs etc etc.

 

Could anyone recommend any good companies / marinas? Initially, we'd be looking to moor a boat in the South / Southeast of England, but if all goes well we'd like to get more and spread these out across the UK so a national company would be preferable.

 

And of course the most important question: what % of my earnings shoul I expect to pay for such a service?

 

Many thanks in advance for all the help! Early days for us - we're just trying to figure out whether or not this is a viable investment... bricks & mortar can be a bit boring!!

 

Cheers

 

Toby

[Machpoint005]

Bricks and mortar tend to increase in value over a period of years (whether used/rented out or not).

Boats will inevitably lose value -- rule of thumb for a new boat, half its value in ten years.

 

Others will be along to talk about commercial licensing (more expensive than a private boat); insurances (much more than for a private boat); not ot mention the practicalities of finding someone to manage the project.

 

If you want to use the boat yourselves in summer, you are throwing away by far the most lucrative hire period. There will be little demand for a winter hire, as much of the system is subject to stoppages for maintenance, so is effectively closed.

 

If you are thinking of a 'bricks and mortar' type investment, then bricks and mortar it should be, in my opinion.

[MtB]

Toby,

 

Welcome to the forum.

 

There are no companies out there doing what you are looking for as far as I know. Firms renting out narrowboats for holidays generally own the boats themselves. Renting out a privately owned boat for a few months a year while the owner uses it for the remainder adds a further level of complication that makes the deal simply not worth the hassle when finance to buy their own boats is so freely available!

 

In addition to rent your boat at all would involve it having a commercial licence (expensive), a commercial safety certificate (expensive), and commercial insurance (expensive).

 

I suggest you buy a boat and keep it in a marina while you are not using it, just like everybody else!

 

MtB

[Tuscan]

Several hire boats run sponsored boats in their livery. You buy the boat and they market and manage the bookings and then return it to you after several years. Google Aqua narrow boats as an example .

[TobyJ]

Thanks for the speedy reply guys.

 

Could you please give me a rough idea of commercial licensing, insurance and safety certificate costs?

 

 

So, if my idea is simply not feasible for me, what kind of return could I look to be getting for long-term rentals within a marina? As Matchpoint said: boat values generally go down; bricks and mortar values generally go up. Therefore to make this viable I would need the yield to be substantially more than that of a house.

 

Probably another silly question here... is it possible to obtain mooring in London marinas? Or is there are these near impossible to obtain? My thinking is: if I had it moored in a prime location then I could still take advantage of short-term holiday lets without the need for it to be taken out of the marina.

Thanks Tuscan... will look into it!

[Alan de Enfield]

There are hire companies who take 'control' of private boats and run them as part of their fleet, they then pay you a small % of the income from the hires.

 

You would normally be 'allowed' maybe a couple or three weeks a year for your own use.

 

A weeks hire in the summer can be around £1000 per week (depending on boat size, type etc) so having a boat on this lease system saves you £3000 per year, to either have a free holiday or offset against depreciation, the small 'income' is then just that - a small income'

 

As has been mentioned the canals pretty much close in the Winter (apart from the diehards who work around the closures).

 

Wanting to take your holidays in the Summer will drastically reduce the already very short season for hire so you may not find any company prepared to take your boat on as they will get virtually no return.

[Grace and Favour]

Hi Toby,

 

Welcome to the forum, and I'm sure our members can help point you in the right direction.

 

I get the impresssion tat you'd like to run this business proposition in the right way, and are (clearly) seeking to make this a viable business.

 

May I politely, and strongly, suggest that you carry out a really in-depth research before you make any commitment/investment whatsoever, and although I fear I may be pre-judging the outcome, I suggest you'll find the exercise a real -"don't touch it under any circumstances"

 

Boat businesses are very expensive businesses to run, not only because the rules and regulations (both operational/licences and health and safetly reqiuirements) are expensive, but also because one is required to provide an infrastructure (a mooring base, waste disposal etc) - and those moorings are also expensive to buy/hire/maintain.

 

And not least, the depreciation of boats is normally quite stunning.

 

Have a look at the weekly hire prices that boat hire companies charge in order to keep their business solvent - - and then if you were contemplating employing an existing boat operator to carry out those functions for you, (and make a profit/amortise their own operating costs) you'll probably find the proposal is simply not viable.

 

There are many many many more folks that lose money on boats, than ever make money, and companies house is littered with the history of failed builders and hirers.

[Alan de Enfield]

Thanks for the speedy reply guys.

 

Could you please give me a rough idea of commercial licensing, insurance and safety certificate costs?

 

 

So, if my idea is simply not feasible for me, what kind of return could I look to be getting for long-term rentals within a marina? As Matchpoint said: boat values generally go down; bricks and mortar values generally go up. Therefore to make this viable I would need the yield to be substantially more than that of a house.

 

Probably another silly question here... is it possible to obtain mooring in London marinas? Or is there are these near impossible to obtain? My thinking is: if I had it moored in a prime location then I could still take advantage of short-term holiday lets without the need for it to be taken out of the marina.

Thanks Tuscan... will look into it!

 

We may all seem to be negative but this concept crops up on a weekly (ish) basis.

 

In a marina you will still need all the commercial approvals, licences etc.

You will need to produce a business plan and gain approval from C&RT that you can run a hire boat business.

You will also need the approval from the marina owner to conduct a business from their marina (one boat owner was evicted from a London marina for carrying out a boat sales / brokerage business - no boats were in the marina but he was 'selling them' from the marina)

 

A residential - Central(ish) London mooring (if you can find one) will cost you around £10-£12,000 per annum. Outer areas are a bit less.

 

Buy bricks & mortar whilst prices are low - that will give you an investment A boat will not.

 

How will you stop your hirers starting the engine and cruising off ?

[Lady Muck]

Thanks for the speedy reply guys.

 

Could you please give me a rough idea of commercial licensing, insurance and safety certificate costs?

 

 

So, if my idea is simply not feasible for me, what kind of return could I look to be getting for long-term rentals within a marina? As Matchpoint said: boat values generally go down; bricks and mortar values generally go up. Therefore to make this viable I would need the yield to be substantially more than that of a house.

 

Probably another silly question here... is it possible to obtain mooring in London marinas? Or is there are these near impossible to obtain? My thinking is: if I had it moored in a prime location then I could still take advantage of short-term holiday lets without the need for it to be taken out of the marina.

Thanks Tuscan... will look into it!

Most London marinas are full, most London moorings and marinas have terms that do not allow you to let the boat out. I've been told that Roydon permits it, I do not know how true this is, but soon as you take the boat out of the marina you start to incur very expensive commercial charges for your license and insurance.

You need to be aware that the last hire firm on the Lee and Stort stopped doing holiday hire because they couldn't make it pay. They used the boats of third parties, they did not own the whole fleet.

Me? i wouldn't touch the idea with a barge pole. A total non-starter. You should never ever treat a boat as if it is a property - it is more like a car or motorhome, it's a chattel not a property and can never be an investment.

Edited July 31, 2014 by Lady Muck

[Richard10002]

How much liquid cash have you got, and how much do your day jobs bring in?

 

Why dont you buy a small flat for about £80,000, and rent it out for about £6000 year. You should be able to borrow about half the purchase price without too much difficulty.

 

Then buy a small boat for about £20,000, and use it solely for your own leisure?

 

If you dont already own your own property, that would be the best investment you could make. Live in it for the summer and let it for a minimum 6 months over the winter. Or live on your boat in the summer, clear off for the winter, and let your own house permanently.

 

I dont see how a boat can be an investment or a business, in the way you seem to considering?

[Bettie Boo]

Toby

 

first welcome to the forum

 

As Tuscan has said, there are some established hire companies who will take your boat, market it, hire it out, clean between lettings and so on, you would need to agree with them how many weeks a year you and your partner would be able to use it, and they will more than likely not even be interested if you are looking at using the boat for more than 10 weeks during the "hire/cruising season", it's money out of their pockets.

 

Doing this on your own and paying someone to manage the lettings & cleaning & maintenance of your boat would be very expensive when as Mike says you consider the cost of Commercial Insurance & licensing. Your part 10 BSS is not that much of an expense over and above a normal BSS really; but there are other safety clauses which must be met over and above having your own personal boat.

 

I would suggest you start by having a good look at the CRT web site, start by looking at Business license costs (you will need to know your boat dimensions), keep in mind this is only good for CRT waters which does not include London. Your boat will need to comply/conform with the "small passenger boat code", which is a lengthy document & can also be found on the CRT web site.

 

Give a couple of Marine insurance companies a call, explain what your looking at doing and getting a ball park figure; they will want to know boat dimensions & tonnage; you will need a min. of 2 million public liability as well as contents.

 

And of course you'll need to do loads of research as to the demand of your product. What sets your boat apart for all the other hundreds of boats that are available to hire? Is there a niche in the market that everyone else has missed which you can fill?

 

Not trying to talk you out of your dream, but please make sure you put the time and effort into the required research before jumping in.

 

Good Luck with you plans and dreams

[MtB]

I get the feeling Toby is hoping someone on here will have already done the research, and will spoon-feed him all the issues, facts, figures and answers to his many questions!

 

The thing is, many of us have investigated on a 'back of envelope' way and concluded it's not a goer on so many fronts that it simply isn't worth doing any in depth research. There are terminal stumbling blocks everywhere you look!

 

As others have said, buying an asset that depreciates isn't really an 'investment' at all. Starting and running one's own boat hire business is a totally different kettle of fish and one's reasons for doing it need to be carefully analysed and understood. Doing it to get a few free weeks of boating time simply isn't worth the time and effort. Best to do as I do. Earn earn the money doing what you are good at, then spend it on boating!

 

MtB

[mark99]

Buy a share in a narrowboat for your hols and plough yer investment money on something more sensible.

[Geordie.narrowboat]

Speak to Justin from aqua Narrowboats re sponsored boats. He will advise on returns for a boat sponsored by you and managed by his company.

 

Google. Aqua Narrowboats - I have no commercial or other interest

[carlt]

plough yer investment money on something more sensible.

 

Wanna buy a bridge?

[Ray T]

Kate Boats of Stockton and Warwick also have sponsored boats in their fleet.

The boats are in Kate Boats livery and has been mentioned the "owner" gets limited access.

 

http://www.kateboats.co.uk/

 

One consideration with letting a boat out, hire boats do not always get treated with respect and on occasions may get some of their inventory mis-appropriated.

Hirers expect a fully equipped boat and don't expect to have to bring their own bedding, cutlery etc......

Edited July 31, 2014 by Ray T

[leolady too]

investment + boat = oxymoron?

[MtB]

investment + boat = oxymoron?

 

Quite.

 

People often use the term 'invest' when they mean 'spend'. Kidding themselves!

 

The OP seems quite hard-headed though, so I doubt will end up chasing his tail doing it all himself.

 

Interesting to learn Kate Boats, Aqua etc run 'sponsored boats'. I'd be very interested to speak to the owners of one or two sponsored boats. I bet they don't get much of a return on their 'investment' beyond perhaps a couple of weeks FOC of their own boat once a year.

 

A far better business proposition is using the available cash to buy another house to rent out. Something I think he knows and understands.

 

MtB

[Ray T]

 

Quite.

 

People often use the term 'invest' when they mean 'spend'. Kidding themselves!

 

The OP seems quite hard-headed though, so I doubt will end up chasing his tail doing it all himself.

 

Interesting to learn Kate Boats, Aqua etc run 'sponsored boats'. I'd be very interested to speak to the owners of one or two sponsored boats. I bet they don't get much of a return on their 'investment' beyond perhaps a couple of weeks FOC of their own boat once a year.

 

A far better business proposition is using the available cash to buy another house to rent out. Something I think he knows and understands.

 

MtB

 

I spoke with one such owner last year. He wouldn't tell me what the return on his investment was but did say he only got use of "his" boat for 4 weeks in the year - all off peak.

 

At the end of the sponsorship period the hire company would repaint his boat in non house colours.

Edited July 31, 2014 by Ray T

[David Mack]

Hi there,

 

My partner and I are considering buying a narrowboat as an investment (obviously we'll use it ourselves occasionally). Ideally, we'd like it to be used for short holidays during the summer months, and then be rented out during the winter at a reduced rate.

 

Our biggest issue is that we spend about 8 months every year abroad. So, we would need someone to manage everything for us. I intend to build a website - but that will take a while before I can start relying on that for bookings.

We're completely new to this, so forgive me if this is a stupid question... are there marinas out there that manage boats entirely? Would they be able to 1. Get holiday bookings for me;

2. Handle the switchovers: meet, greet & train the new arrivals, clean the boat, inspect the boat etc.

3. Carry out any necessary repairs etc etc.

 

Could anyone recommend any good companies / marinas? Initially, we'd be looking to moor a boat in the South / Southeast of England, but if all goes well we'd like to get more and spread these out across the UK so a national company would be preferable.

 

And of course the most important question: what % of my earnings shoul I expect to pay for such a service?

 

Many thanks in advance for all the help! Early days for us - we're just trying to figure out whether or not this is a viable investment... bricks & mortar can be a bit boring!!

 

Cheers

 

Toby

 

Yes there are companies that do this - its called sponsorship. The company runs the boat as part of their hire fleet. Usually they will specify and source the boat and it will operate from their base in their livery. You just pay the purchase cost. They handle all the bookings, handover, maintenance, moorings etc for an agreed period. In return you get a proportion of the takings and/or free use of it for a few weeks per year. At the end of the agreed period you may be able to sign up for a further period of sponsorship. Alternatively you just take the boat away as a privately owned boat.

 

Occasionally sponsored boats change hands while remaining in the sponsorship arrangement, so you could perhaps buy into a scheme at less cost than for a new build.

 

You say you would mainly want to hire it out over the winter. That doesn't sound practical to me. The hire boat market is very much a summer business, and outside the main summer holiday period most hire yards have many craft tied up unused. Many companies don't even bother to hire out at all for 6 months of the year. On the other hand hiring it out over the summer and using it yourself in the winter would be a much more workable option.

 

The return isn't that great - as a pure investment you probably wouldn't bother, but as a way of getting a few weeks boating without the full cost of ownership or any of the management hassle it may be more attractive.

 

The other alternative you may want to look at is shared ownership. You buy a share - typically 1/12 which gets you 4 weeks boating per year. Some share schemes are managed by companies which do all the work (but take a fee); others are self-managed by the individual shareholders.

 

A few sponsorship links (I have no experience of any of these, so they are not recommendations):

 

http://aquanarrowboats.co.uk/boat-sponsorship

http://www.starlinemarine.co.uk/services/sponsored-narrowboats.html

http://www.marinecruises.co.uk/sponsor.htm#

http://www.abnb.co.uk/PHP/investment-boats.php

[TobyJ]

Many thanks for all the input guys... really appreciate it. That's given me a lot to think about!

[kevinl]

Sounds to me like an absolute none starter way too many risks without any real prospect of a return, you'd be better off buying premium bonds or an ISA.

You could look at doing a shared ownership on a house there are sites where you can look for partners to buy with at least then you have a real chance of making a profit or buy some land as things get increasing crowded it's not a bad investment these days.

K

[Machpoint005]

>> Earn the money doing what you are good at, then spend it on boating! <<

 

 

 

My philosophy exactly, Mike!

[John Williamson 1955]

One consideration with letting a boat out, hire boats do not always get treated with respect and on occasions may get some of their inventory mis-appropriated.

Hirers expect a fully equipped boat and don't expect to have to bring their own bedding, cutlery etc......

And some of them aren't averse to increasing their home inventory of such.

 

You also need to allow for replacement mattresses on a fairly frequent basis as a lot of people seem to become incontinent when they're on holiday.

[Paul C]

Don't