Owning A Crewhouse

By: Tom Andrews, CPA

While many yacht crewmembers have stayed in a crew house from time to time the prospect of owning a home has always been an attractive investment opportunity to crew and as an accountant I am frequently asked to prepare taxes and bookkeeping local crew houses.  Low interest rates and vacancy shortages have prompted many to at least investigate the idea.  Even if you do not want to be an owner operator there are many companies that will manage your crew house for you.

For those that do not like to get your hands dirty hiring a management company is probably the way to go. The management company will be in charge of filling vacancies, paying bills, attending to late night repairs, dealing with city inspectors, and collecting rent.  Management companies are a great buffer between you and the mundane tasks that you may not otherwise have time to attend too.

Over the years I have noticed it takes a special type of person to be an owner operator and in a sense I do see some parallels to running a crew house to that of running a yacht program.  Your tenants are usually short term, this means a lot of turn over, maybe similar to that of a charter.  You will also need a variety of skills that are commonly acquired while working in the yachting industry, hospitality, administrative, budgeting, working irregular hours, and dealing with different personalities.  For those looking to be owner operators my experience has led me to believe that former head stews make for the best owner operators. 

Aside from the tax implications there are many things to consider before purchasing a crew house.  Often times the house you are purchasing might be in disrepair and require renovations.  If you have budgeted a certain amount for the purchase you will also need to have a sufficient reserve for any renovations that may be necessary.  Also the cost of bringing your house up to city code can also be expensive.  I recently recall a client whose house was under management and they assumed that the manager was keeping the home in compliance.  As it turns out there were several costly code violations that were not being attended to, the home was almost shut down for those violations.

While running a crew house can provide a great source of cash flow and capital investment it is so important that you do your homework.  It is rare that you will find a home that is turnkey, many home purchases require months of work and preparation, if you will be out of town or unable to be hands on with the initial purchase and renovations a crew home might not be the best investment.

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