The Definitive SailTime Analysis
First off, this is a very long post, but we’ve found it to be extremely thorough. If you are considering buying a new boat and trying to figure out if SailTime is worth it from a budgeting and quality of use standpoint, we go through all the factors. You can follow along in the SailTime Calculator by downloading it from the Downloads section or clicking here.
What is SailTime?
SailTime is a fractional usage program that allows boat owners to reduce costs by renting out their boats for certain periods of time to vetted members. Boat owners get guaranteed usage time throughout the sailing season and early booking priority. SailTime manages all aspects of the boat including maintenance, fuel, waste, repair, marketing, and renter vetting.
What are the Advantages?
Ability to reduce running costs significantly
No time required for maintenance or repair
Potential to earn income from renters
Material amount of personal usage time per month (14 days)
What are the Disadvantages?
Usage restricted throughout month, so renters have time to use boat
Limits on valuable time slots such as weekend and prime evening times
Income varies depending on number of renters and membership types
Analysis Overview
Overall, we focus on the following considerations and calculations (click on each to jump to the relevant section):
How much use can I get out of the boat? How restricted am I?
What’s the verdict? New boat with SailTime, new boat without, or a used boat?
Should I just become a SailTime member instead of buying a boat?
To help with this analysis and to provide a real-world example, we will use my own Oceanis 30.1, which I bought in 2021 and put into the SailTime program. This analysis is supported by one of Nautilys’ free calculators available in the Downloads section or by clicking here.
1. What are the factors that going into a boat purchase price?
The first part of SailTime is that they generally only allow owners to buy new boats and put them into the program. The argument is that they want to attract members with the latest equipment, but there may be another reason in that SailTime is a captive sales channel with dealer benefits.
New Boat Discount
Like a car the price a dealer has for a boat is negotiable. When I received quotes for buying the boat and putting it into SailTime the discount was less than if I were to just buy it. Pricing though is typically subject to supply versus demand and my guess is after buying a boat during the Covid-19 pandemic, when supply chains were disrupted, there is likely more buyer power. Although top brand models don’t waiver as much as lesser-known ones.
Required Equipment
SailTime requires an expensive vessel tracking system (~$5k USD), which would not be necessary if you bought the boat for personal use. There were two other item, the dodger and the bimini, that I was debating since I was primarily going to use the boat for day use around NYC, but SailTime suggested were required. Those two items added about $8k USD to the purchase price.
Comparison of itemized new boat purchase costs with and without SailTime enrollment
State Sales Tax
Sales tax becomes a real cost when purchasing a boat. The rules vary state-by-state, but there are a few common characteristics to consider:
a) There is often a cap on the taxable base. For instance, in New York state the sales tax is imposed on only the first $230,000 of taxable base. For a new boat, the purchase price is the taxable base.
b) In many states, if you are trading in a used boat that you paid tax on, you can reduce your taxable base by the difference between the new boat price and the trade price.
c) Some people believe they can buy a boat in a different state and then bring it to a new state, trying to arbitrage tax rates. I highly recommend checking state tax laws as many will have tax requirements depending on number of consecutive days used in the state.
2. Ongoing Costs
The typical rule of thumb is that annual costs for a boat average 10% of the purchase price. I’ve generally found this to be a reasonable estimate assuming normal use but found SailTime annual costs to be higher.
There are a few reasons that the annual costs differ:
a) You have a more limited choice on which marina to keep your boat. SailTime only operates out of certain marinas and requires your boat to be docked in that marina. If you wanted to reduce costs you could find a smaller, more remote marina, however, it could also go the other way if you are seeking a cushy yacht club with lots of services and a social environment.
b) Cleaning and detailing costs tend to run higher for SailTime. This is logical as you have multiple users throughout the season and likely more use than if you only used it yourself. The upside is they use professional cleaners, and I’ve had very few issues with my boat being dirty.
c) In-season maintenance I’ve found to be similar, but I find SailTime does a great job of keeping the boat in running condition and fixing items that break. Note that if a SailTime member breaks an item outside of normal wear and tear, they will charge that member.
d) There’s an annual royalty payment to SailTime, which is clearly a significant annual cost
Overall, the maintenance and cleaning are important as I’ve felt SailTime keeps the boat in shape to command a good residual value when it comes time to sell it. The increased costs though require an analysis of annual renter income, which we will get to.
Comparison of ongoing costs for a boat enrolled in SailTime versus not
Related to ongoing maintenance is our assumption for depreciation. We assume the same depreciation for a boat in SailTime or not, but there is an argument that a SailTime boat is better maintained than many independently operated boats.
For new boats we assume faster depreciation in the first few years of age and then a stabilization over time.
Annual depreciation percentage assumption (as a percentage of ongoing value) for a new boat
Financing Costs
Taking a loan out to buy a boat is going to be the same cost, with or without SailTime. The first thing to know about financing a boat is that it’s going to come at a premium to financing other assets like a house or car. Largely because when things get financially bad for a person, they tend to stop paying on non-essential items, like vacation homes and yes, you guessed it, boats.
We’ve provided a basic loan payment calculator in the Downloads section, but a key point to make is to make sure you can afford the monthly payments throughout the year, particularly if you take out a variable rate loan where the interest rate may increase (we’ll walk you through that in the Loan Calculator).
One risk with SailTime is thinking you have renter income to offset the loan cost. While you may have renter income, it is typically only paid out annually, while boat loans typically require monthly payments. If you can’t afford the monthly loan payments without any SailTime income, don’t do it.
3. Boat Use & Restrictions
There’s a good chance that your SailTime vessel will have some level of usership, meaning your costs should be lower than operating the vessel for yourself only. The real consideration than comes to how restricted you are in using your own boat. To understand this, we must cover SailTime lingo, meanings, and calculations.
SailTime Memberships & Rights
There are three types of SailTime members: Owner, Classic, and Lite. For Classic and Lite the difference is in the number of monthly events (sailings) that a user gets. Classic members get 7 events, while Lite members get 3. Owners get double the allocation of a Classic membership, but also typically have priority for certain holidays and selecting dates for the online booking system.
In order to allow users to access their maximum allocated bookings per month, SailTime only allows a certain number of users per boat, per type of membership. In Figure 4 we provide one combination where there are four Lite users and four Classic users. There are many other combinations, such as 6 Classic users and 0 Lite users.
SailTime Time
The next step is understanding how SailTime breaks out time in a month/week. In order of largest time span to smallest, SailTime divides up monthly time by:
Weekdays versus Weekends
Mornings versus Evenings
Holidays
Weekday: our standard understanding of a weekday, Monday to Friday, with two major exceptions: Friday evening is considered a Weekend Evening, while Sunday evening is considered a Weekday Evening.
Weekend: if you know the two exceptions above, a Weekend starts with Friday evening and continues through to Sunday Morning.
Lastly, SailTime allocates time to members depending on their membership. Recall Owners get 2x Classic member allocations.
Once we know how SailTime parses time out, we can then map out a typical month for each type of user.
Implications for Owners
After reviewing the example monthly allocation, a potential Owner can see how they might be restricted. However, immediately one begins to think how they can shift those colored blocks around, so let’s be clear:
a) As an Owner you effectively get one full weekend per month. You will not be able to book two full weekends in a month. So, for people who want to take multiple weekend trips, you would need to buy out another Classic membership.
b) You always must return the boat back to the SailTime marina. Meaning you cannot sail your boat to a different marina and leave it there for an extra day or so.
c) You can piece together a multi-day trip but expect it to take up much of your allocations for the month. You also need to plan carefully for your return, since the boat must be returned to the home marina. For instance, Liberty Landing to Block Island is virtually impossible unless one sailed most of the days, continuously, timing currents and having decent wind.
d) On the flip side, the schedules rarely fill up completely in real life, even if the boat is “fully allocated”. You can book empty last-minute days within a three-day period without an impact on your allocations.
4. SailTime Revenue and Owner Income
You may notice the distinction in the subtitle above, that there is revenue generated from SailTime memberships and Owner Income, which are two very different figures.
At the most basic level, SailTime charges Lite and Classic members an annual membership fee. For my home base in New Jersey, this is indicated on their website as:
Lite: $8,000
Classic: $10,500
If you look at the time allocation in the previous section, you can see that the Classic membership is a far better deal than the Lite as you get more than 2x the usage allocation. However, some people just want to spend as little as possible for a few days of sailing a season.
For an Owner you trust SailTime to market and find qualified members. In my experience SailTime takes member vetting seriously and to my knowledge has denied members who they do not feel are qualified after going on trial sails with them. The primary skill where there are issues is docking and moving around a marina.
The marketing part can vary depending on base manager I’ve found. To highlight this, I’ll recount the last four years of my experience with SailTime membership and revenue in the next section.
5. New Boat with SailTime, New Boat without, or Used Boat?
In my first two years as a SailTime Owner, it took a while to find repeat Classic members. Part of this was a different base manager and part was getting the word out on a new vessel in the fleet.
For the first two years I had a mix of a couple Lite members and about four Classic members. Prices do go up over time, but I effectively broke even after you account for the royalty and running expenses. The upside was the boat was kept in perfect running condition at no cost to me for two years.
In the last two years we got an incredible new base manager that optimized memberships with more of a focus on Classic memberships. Prices also increased a bit, which resulted in ~$13k USD of income one year and ~$12k USD of income the next. Keep in mind this is ordinary income and, in most circumstances, will be taxed.
I assume my fifth year of SailTime will be similar to the last two and have laid out example cash flows in Figure 10 that are mostly realized through year four, with five being a forecast period. For simplicity I have assumed I sell the boat at the end of year five.
The table below summarizes all calculations that arrive at total cost of ownership (“TCO”) for my SailTime Oceanis 30.1. The fully connected calculations are available in the downloadable Excel model.
I) SailTime Real World Revenue, Owner Income and Total Cost of Ownership Example
Considerations
I prepaid my boat loan after one year given the interest rate compared to other means of financing.
The sale value is purely based on an accelerated depreciation, where more depreciation is taken upfront. Also note that some items onboard may not have resale value (e.g., SailTime vessel tracker).
Expenses may be increasing slightly with inflation, but I backed into my profit split. Notice that SailTime takes 50% over the breakeven.
Interpretation
A new boat with SailTime cost me (from a TCO viewpoint) $40,184 over a five-year period. Given the amount I used it and the quality of a new boat (e.g., ability to take clients out comfortably, etc.) SailTime was absolutely worth it, especially when you take a look at what my costs would have been for a new boat without SailTime.
II) No SailTime Total Cost of Ownership Estimation
Below is an estimation of buying a new boat and operating it on your own. You can see the SailTime columns are blanked out.
Considerations
Assumed the same loan prepayment, but would be smaller amount since boat cost less without SailTime
Expenses don’t inflate as I didn’t inflate them under my SailTime example
Sale value may be a few thousand lower for the SailTime vessel compared to this value as things like the tracker are not valued
Interpretation
A new boat without SailTime is much more expensive. The decision then really comes down to usage. I find myself doing one sailing charter vacation away from home, plus some type of sailing learning experience each year, taking me away from my SailTime boat. Add in work travel and I can easily work within the constraints of the SailTime usage structure.
III) Used Boat (No SailTime) Total Cost of Ownership Estimation
Next, we jump to a completely different analysis we have provided at Nautilys: new versus old. What if we just bought a used boat instead?
Interpretation
What’s telling about the used boat example is that it is still more expensive than a new boat in SailTime. What one would need to do to rationalize this is start looking at older and older boats until the TCO is lower than the new boat in SailTime. A rough estimation from looking online suggests you would have to consider boats that are > 10 years old, which I didn’t want to do.
6. Should I just become a SailTime member instead of buying a boat?
All this work on buying and we must ask ourselves a simple question…should I just become a SailTime member and avoid the hassle?
On a simple five-year TCO basis, it would seem that ownership is a no brainer. It’s slightly more than a Lite membership and less than a Classic membership.
Considerations
SailTime memberships are paid at the beginning of the season. This is why they start with Year 0. Owners are assumed to put down payment at the same time.
Sale of vessel and SailTime income takes place at the end of the season, which is why it is staggered by one year.
Interpretation
While the TCO analysis appears to be a clearcut case for Owners, it’s not really the best way to analyze it since there was a lot of cash outlaid early by the Owner and then recovered years later. For this reason, we have to account for the time value of money (“TVM”)
The idea behind the time value of money is that you can invest money today and grow it into larger amounts later.
This is important for our ownership versus membership question because in our example we pay the down payment immediately and then paid off the loan in the first year. That’s a lot of cash out the door early on. What if we were just a Classic member and used someone else’s boat and took all that extra cash we would used for a boat and invested it?
An easy way to analyze this is to bring all the cash flows that we would expect for each option to the present value. This would then give us comparable figures to compare and account for the time value of money. The table below discounts the cash flows of each type using a 5% discount rate (our assumption of the average person’s cost of capital)
THE FINAL INTERPRETATION
What we see now is it is more expensive to be an Owner because we have to outlay so much cash early. However, an Owner gets 2x the Classic benefit so in fairness we should double the Classic member outlay and assume roughly 2.5x the Lite one. The last row of the table adjusts for these factors, showing an Owner as the lowest cost. In addition to being less expensive there are other benefits such as priority booking, which make being a SailTime owner the preferred choice.