How to be a Charter Boat Owner-Operator

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There’s a great allure to owning and captaining your own charter boat.  Turning your passion for sailing into a career or just a part time job is very appealing.  Because we’re in the charter boat business, we are often asked how to go about getting a boat inspected.  The starting point is that you have to realistically ask yourself if this is will be a hobby business or your primary income?  Do you hope to slightly offset the cost of owning a boat or are you looking to profit from it?   The answer to this question will determine what expense to incur and what level of inspection is right for you.

Types of Inspections

Contrary to what most people think, the vessel size has little to do with the amount of passengers you can carry.  You can have a new 60 foot yacht but it will only be legal to carry a maximum of 6 passengers unless you have the right level of inspection.  So why not go for the big inspection?  Well, that is a function of expense and return.  The Coast Guard oversees inspections for more than 6 passengers and iIt takes a serious financial and time commitment to be inspected for more than 6 passengers.  This is why you’ll find most charter operations are limited to 6 passengers.  When it comes to “return on inspection”, most people stick with a 6 passenger max inspection.  A “6-pack” inspection is done by the State of which they operate. Michigan, for example, has three basic types of inspections:

  1. Livery Inspection – “bareboat” meaning no captain is provided.  This applies to everything from a canoe to a 40’ sailboat.
  2. Charter Inspection – a captain is provided for up to 6 passengers.  The captain is part of the charter package.
  3. Coast Guard COI (Certificate of Inspection) – Coast Guard inspected for 7 or more passengers.  Regardless of the vessel size, once a vessel crosses the 6 passenger threshold it enters an entirely new level of inspection.

Only the last one, the COI, requires a Coast Guard inspection, the others are State inspections usually conducted by the DNR.

Bareboat vs. Captain Charter

It may seem backwards but requirements for safety gear, construction of the vessel and integrity of the vessels systems are much more stringent when a licensed captain is provided with the charter vs if the boat was rented “bareboat” or without a captain.  And the requirements grow exponentially when you want to carry more than 6 passengers and a Coast Guard COI is required.   This is why most charter vessels stick to the 6 passenger or less inspection.  Yes, you read it correctly.  If you were to buy a 50’ sailboat, the inspection requirements are less stringent if you were to rent it out to a random individual without a licensed captain on board.  It falls into the same livery inspection category as a jet ski or a pontoon boat.  Now, “random individual” is a loose term.  It would be up to you to do the screening to make sure they are competent to handle the boat.  The insurance company has more of a say so in this area.

The Right Boat

Assuming that you’re a safety conscious captain to begin with who finds a certain pleasure in protocol, checklists and maintenance, you might find that State inspections can be relatively easy.  The boat should be a solid, the gear well organized and the systems should be upgraded and well maintained.  If your dream is to be Captain Ron you probably won’t make the cut.  An old boat might be great for the occasional cruise with family and friends but the inspectors will have a different view of it if you intend to carry paying passengers.  One could spend a small fortune upgrading systems and safety gear which is why it might make financial sense to buy a newer boat.

Many sailors have offset the cost of owning a boat by chartering but there’s no way around it, boats are an expensive endeavor.  With a newer boat the expense comes up front.  With an older boat the expense is still there it’s just stretched out over the time it takes to make the upgrades.  And from what we’ve seen, everyone underestimates the cost of retrofitting an older boat.   The right boat also depends on how much free time you have.  It doesn’t make financial sense to buy an older boat if you’re going to hire out all the upgrades it needs for charter.  Sure all boats are a labor of love but this approach is a very costly one.  If you have the time, the money and the know-how, then go for the old boat.  But keep in mind that it’s safe to double the estimated time and expense projected to turn an old boat into a charter boat.

Go Newer

This is where you can actually financially justify to your spouse that buying a newer boat makes sense.  Well, it will be a much better case than anything else you’ve probably tried anyway.  New boats have well laid out systems and mechanicals and most are up to ABYC code which inspectors really like.  Don’t worry, there will always be an endless list of things you can putter with in the maintenance department but at least it will allow you the time to focus on the actual chartering.  We’ve seen many charter operator-owners who have had to pass up thousands of dollars in revenue because they missed charters from constantly working on their old boats or the Spring projects stretched into a July launch.  So don’t skimp, buy the newer boat and you’ll actually spend more time getting paid to sail.


Check with your lender to see if they allow commercial use.  Most lenders won’t allow commercial activity without indicating that up front and it might change the terms a bit.  This is the cost of doing business and it certainly isn’t a deal killer.  The revenues you generate should easily offset any additional fees associated with a commercial loan. There are good lenders out there that specialize in this and we can put you in touch with them.


This is definitely not the area to try to save money.  Besides, the inspections will require that you show proof of commercial insurance.  At a minimum you can get limited charter insurance added to a pleasure craft policy.  The best coverage is through an agency that specializes in commercial insurance.  A general rule on the Great Lakes is to double the rate of a pleasure craft policy for a good commercial policy.  This is because of our limited season and lack of hurricanes.

Captain License

A captain license is required to take paying passengers out on your boat.  And the Coast Guard considers any compensation as pay so don’t the ol’ “I sold these guys t-shirts for $100 each and gave them a free boat ride”.  The Coasties have heard it all.  The fact is that it’s more convenient than ever to get a USCG Captain license so there’s no excuse not to get it.  There are dozens of private testing facilities as well as the USCG safety centers to get this done.  It just requires a time commitment, some money and of course, the right amount of sea time to log as experience.  We are well connected with a captain license training facility and can put you in touch.

Get Started

To be perfectly transparent, we sell used boats that are currently in our charter fleet and we sell new boats that would be perfect for charter or pleasure craft use.  We are happy to help a buyer with the inspection process and this includes:

  • Inspection process
  • Equipment and safety gear requirements and installation
  • Insurance
  • Financing
  • Checklists
  • Captain license

In fact, most of our boats for sale come with a current inspection and just need the owner’s name changed.  We are most familiar with Michigan DNR inspections and have all the checklists and paperwork needed for a successful certification.  USCG inspections to carry more than 6 passengers requires more labor and cost but it is obtainable.  This is where we would give you the honest opinion before you bought the boat if you wanted to go that route.

Contact us today to discuss your future as a charter operator!  231-941-0535

2017 Gemini Freestyle 37

The perfect boat start your dream charter business in your home port —  easy to single hand, fun and fast to sail. Trademark 14′ beam means that this Gemini can fit in any marina, too.

$219,900 – Can be delivered anywhere!

Contact us with questions — 231.941.0535 or

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