Any advice on fractional ownership?
I want a bigger boat than I can afford to keep in the water. I really don't want to pay for a daysailer/weekender… then spend $2-3k on top of that to charter a boat big enough to take on vacation each year. After looking at other options, I'm interested in learning more about partnerships.
If you are, or have been in any type of a joint ownership arrangement, I would love to hear from you!
Some of the questions I have:
> Did you create a LLC, if so did you find an attorney that specialized in that? How much did it cost? Are there reoccurring government fees for the LLC?
> How did you manage the accounting?
> Is it easier to contract maintenance or were you able to work out an equitable DIY approach?
> Have you dealt with a partner leaving and if so, how?
Thank you so much for any advice you can give me!
It may work better in racing than cruising or day sailing.
In racing skippers are always looking for crew and joint owners would typcally sail together and be better for it. In cruising/day sailing there may be more differences (esp maintaenance/upgrade costs/issues) and conflict over times of use.
One example was an Olson 30 on Yachtworld and a friend was thinking of splitting 4 ways. That would be over half the crew in one bunch and equipment would cost 1/4 as much per person.
Of course it is required to have 4 like minded people involved or could be a disaster.
Mike raised a good point. I used to crew on a 36 ft. boat that was co-owned by two people. It was used almost exclusively for racing (with the occasional day sail in between) and the owners were on the same page about the intended use of the boat - i.e. no conflict over how/when each would use it. I could see conflicts emerging if the intended use was for cruising.
A friend of mine went through this and he soon soured of it. When his turn can up there'd be moldy food in the iceless icebox, a full holding tank, no water in the freshwater tanks or diesel in the fuel tank, broken equipment, etc. He got out of it after two seasons.
It obviously depends on how you choose your partners.
Not sure if this this the feedback you are looking for, but I finally broke down and joined sailtime towards this year and I am more than satisfied with both the economic value as well as there systems and procedures. I've already signed up again for next year, on a bigger boat.
I have reintroduced my family to sailing, after some bad experiences and a few years hiatus and we are all having a great time. It is very nice to just hop on the boat and go, not worries about fuel, maintenance (other than cleaning up after ourselves), slip fees, mortgage payments...and winter storage. There reservation system is top notch and very equitable.
You are limited to Hunter Sailboats, but they are replaced after 5 seasons and have state of the art add-ons.
My wife even told me last weekend, when we didn't have the boat, that she missed being on the water!!!
For certain, it will not work if one partner wants to cruise and the other to race. They will have very opposing attitudes. I do have a bro-in-law who shares his boat with another skipper. They are both cruisers, so can agree on the kit and improvements needed for that role. They sort out their "rental" periods quite easily. They do have a pretty good "will and testament" on how to dispose of the boat when the time comes.
Have you looked into the Moorings method as an alternative?
Eric, it can be like brokering a 4-way marriage. Dog or cat? Apartment or House? Minivan or sedan? Steak or chicken?
If you cna figure out a way for everyone to come into it with their heads in the same place, same expectations, full and unreserved agreement to a set of partnership papers drawn up by an attorney...it might work. The LLC is a good idea and in order to get insurance, you may need to get commercial ($$) insurance if a corporation or LLC owns the boat. Ask your broker what's possible! Remember, one day someone will need to leave the partnership, so your papers also need to consider a voluntary sale, a forced sale, a dissolution, how to get money if someone files bankruptcy but the boat needs repairs...What if one partner says "I'm out, here's my replacement" and you don't like the replacement he's already sold out to?
It works very nicely for some folks, very casually for some folks, but scares the heck out of those who might get caught up in a "bad marriage" that way.
All very good points. Thank you!
I have looked at Moorings ad Sailtime. If they had a base in the area I'd be tempted. We have a few clubs, but they are geared to daysailing. You can charter, but the cost is not much less than the much nicer boats that are available exclusively for charter in the area.
You raise a very good point about the purpose of owning the boat. I hadn't thought of it that way. I've seen many more adds for fractional boats for racing than day/cruising. For now my "race" boat is in the garage. But the wife doesn't like getting that wet. We need a sea kindly cruiser so she doesn't turn green!
Can you query your brother-in-law for any pointers he may have for me? It would be great to hear about how the work out dissolution, improvements, etc.
In addition to SailTime/Hunter, Beneteau has their own fractional ownership program, and Catalina seems to like working with Windpath (I think that's the right name). Those established companies are tailored for local day sailing/coastal cruising. The majority of people I run into that join these programs seem to be satisfied, though there are those who are not. Personally, I would think it to be a tough decision to make, as I LIKE owning my own boat and throwing money into a big hole in the water...
Also, there is a brand new world cruising fractional ownership program called seafaring360. They use Beneteau 57s and Shannon 52s to create a four-year circumnavigation.
Beneteau fractional ownership
Four way split on a pre-ordered model with full options...1 week a month for 12 months (We never used our own boat for 12 weeks..more like 8 cumulative)..cleaning and maint agreement between owners (always a clean well kept boat) all four owners have a vested interest in the boats upkeep.
This isnt a plug for them as our plans are for 2-3 yr liveaboard cruising but in retrospect I would have saved 75% on our first boat (including depreciation) and and used it as much as we did..with even 4 more weeks available...for a 3 yr contract
I really think this type of arrangement is going to be the way of the future unless you need the boat more than one week a year, live on it, or just have to have your OWN boat and eat the 75% savings. Too many people seem to feel guily taking vacations elsewhere as so many funds are being allocated to "the boat" I think Beneteau's new deal offers the best of both worlds for the coastal cruiser who wants ownership...IMHO
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