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post #1 of 44 Old 09-18-2018 Thread Starter
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Boat Partnership

I am approaching the age when for a number of reasons I need to think about "exiting" my boating. What occurred to me is that a partnership could be a sensible exit strategy for me and an "entry" approach for another sailor... obviously local to where Shiva summers and winters.

Rather than wait until some unknown date and put the boat up for sale... I can ease into a partnership in the near term and then exit the partnership by either selling my interest to the partner or we agree to a new partner. I know that when I do exit the boat will be in good hands with someone who knows the complexities of the boat... and it is complex. No need to deal with brokers... but a lawyer will be needed to review and bless the partnership agreement.

I like the notion that I can get physical help in the near term with boat projects and maintenance... and of course share the expenses as well. I would also, of course use the boat less... half the time... and also sail with my partner some of the time as well. Help when needed is always appreciated. And the older we get the more we can use help doing whatever.

I think the main hurdles aside from finding someone local who I get on well with... is establishing the value of the boat when the partnership begins... and determining its value when and if I choose to exit and sell my share.

My partner can pay his share of the equity over an agreed term or they choose in one payment. As partners everything is then shared equally... use time and maintenance time and all expenses... Obviously the partners need to agree on what is a necessary project, required maintenance and how much to spend on it.

A problem that I foresee is establishing the value of Shiva and the inventory of
stuff that goes with her. I have owned the boat 33 years and dumped enormous amount of money and sweat equity into her. I looked up listings for Contest 36s of similar vintage on Yachtworld. I did not review the details of the listings. The hulls mostly lie in Europe and the value for them is higher than the one for sale in CT, USA. How do I determine a fair market value?

Should I consider a USE ONLY partnership where all expenses are shared... use time is shared, but ownership remains with me. But why would a friend pay to sail with me and assume half the ownership costs?

I would like members thoughts on this.
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post #2 of 44 Old 09-18-2018
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Re: Boat Partnership

I'm a very much a negative Nelly, not to hurt your feelings but this is the way I look at it this issue in general, and why I got out when I did.

You will never get the money you put into her and in this market you will be lucky to sell her much less find a partner.

We all dream of that partner or buyer showing up on the dock waving thousand dollar bills around like dollar bills, that falls in love with the boat we've given our life to. The more likely reality is the person that shows up has empty pockets.

I sincerely hope I'm wrong and you find what you're seeking!

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post #3 of 44 Old 09-18-2018
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Re: Boat Partnership

Sounds like all the downsides of marriage and divorce with few of the benefits. Unless you find a sucker, but even then IMO would only be worthwhile doing with a very small percentage of humans out there. And just like marriage you won't really know until it's too late to back out.

No objective accurate measure of market value exists, very dependent on timing and place and the very complex variable characteristics of the two parties to each transaction.

guaranteed to be a small fraction of what you think it is now.

Sorry to be such a Debbie Downer, but I see it as just realistic.
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post #4 of 44 Old 09-18-2018
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Re: Boat Partnership

Operating a charter service stands a still slim but better chance of success, fewer headaches but still a lot.
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post #5 of 44 Old 09-18-2018
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Re: Boat Partnership

Fortunately, my wife is considerably younger than I so the partnership thing is a natural, as she fully intends to continue sailing after I pass. She has taken on the majority of the maintenance and repair duties because she understands that it behooves her to be able to learn as much as she can to maintain the boat, while she still has my expertise available to her. Being a full participant (no admiral this one) will also radically increase my boating longevity, I believe.
So, my suggestion is to find a young wife who loves sailing!
Actually, there was a case of an older gentleman (a Kiwi perhaps) some years back who wanted to continue cruising his (50 foot?) boat but was running out of the physical ability to do so. I suggested he find a younger person to aid with sailing and maintaining the boat until his demise and leave the boat to him.
Your case though seems much different as you aren't a liveaboard and are not cruising. However, I imagine it would be nearly impossible to find someone to fit the bill for your proposal. Have you considered an outright sale and purchasing a smaller, perhaps marina/yacht club stored boat? I understand many of these facilities will launch and prepare the boat for you if you call them, and even have maintenance people on staff to help you with that. Just step aboard and go sailing, then return it to the dock and walk away. Easy, peasy.
That way you could have anything from a lovely little traditional gaff daysailer to a speedy little multihull at your disposal, when you wished, without all the expense and worry of a partner and the maintenance of your present boat.

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post #6 of 44 Old 09-18-2018
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Re: Boat Partnership

Have to throw out the old adage....... a partnership is often the first ship to sink.

Not always, I know two successful 25 yr partnerships in two different airplanes. Can't say I know the secret, but in each case they fully pay other people to do work on them and split the bills. Sharing workload might be more difficult, if less expensive. One partner may want to DIY, the other pay a yard. Those sort of details should be worked out in advance.

The other major agreement that must be fully understood, is how either partner gets out of the partnership at will. The most volatile partnerships occur, when the partners no longer want to be partners and they can't quickly dissolve things. When one wants out, they don't want the other to be putting wear and tear on the boat, which presumably reduces value or interest from other parties to assume their position. Hostage situations get ugly.

One solution, money sits in escrow and is immediately refundable, less unpaid shareable expenses, and the new partner can walk. Then again, what about you? Another is when either partner wants out, the boat must remain dormant and be put up for sale, if the surviving partner can't buy them out. These clauses might require certain notice periods.

In the end, I'm afraid it's how like minded the two partners are and how well they get along that is the most likely recipe for success. Both successful partnerships I can think of were already friends and thankfully remained so. I'm afraid it's a serious long shot to find a stranger that will work out that well.

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post #7 of 44 Old 09-18-2018
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Re: Boat Partnership

I'm in a 3-person partnership (very successful). But I had realistic expectations.

* Sharing the work is a dream. You know the boat, they do not. They don't understand how much work there is. They won't do it the way you like. They will have conflicts. Just forget that hope altogether. Maybe you'll get lucky a few times. Sharing the cost of materials should not be a problem.
* Don't assume the boat will stay in Bristol condition. You won't all have the same priorities. The boat may loose value.
* Sailing together. A room mate and a friend are two different things. Though I often sail with my partners, don't plan on it.
* Don't do it if you can't afford to loose the money. Just sayin' that you would be better off selling the boat and getting something smaller.

It can work. But you need to be VERY realistic. Better choices are to sell the boat and enter a partnership with someone else, or buy a smaller boat. Small is nice.
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Re: Boat Partnership

definition of partnership = 50% of any profit ( sailing time ) and 100% of liability ( related costs if Partner pulls out)
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post #9 of 44 Old 09-18-2018
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Re: Boat Partnership

Although I think that you are looking for a very difficult relationship to maintain, I am in a similar relationship other than the ownership of the asset. We find ourselves fortunate that it works for us, and even then we have disagreements that have not broken the relationship.

I owned the boat for 10 years, and because my wife could no longer sail with me, my kids either had no interest or time to sail, and friends always wanted to go for an hour....I decided to sell the boat. I had never met the new owner but agreed to help him at his first spring launch and sail with him a few times to familiarize him with the boat. I sailed with him a dozen times that summer and helped pull the boat that fall to complete the cycle of help somewhat because it still kept me in the game. The second spring I again helped launch and sailed with the new owner, but was having sellers remorse and wanted another boat. I was offered use of his boat when he was not available to sail with me (he lives in Texas and the boat is in Michigan), but that did not seem right to me. I wanted a boat that if it broke was mine to deal with. It did not seem fair to me to use the boat and not participate in the expenses of the boat.

I started looking and discussed with him what I was looking for and why. Over that two years he found that like many of us his wife was not enthralled with sailing, his kids had little to no interest, and it was not easy to get others to commit the time to just go sailing let alone weekend or longer. He suggested that we work something out as we got along very well, we sailed with each other 15-20 days a year, he could use help maintaining the boat, and it would be a shame for both of us to own a boat that each of us used half as much as we currently were.

We agreed that he would own the asset but we would split expenses down the middle. Annual slip rental, maintenance expenses, launch, pull, and storage expense, etc. Normal wear and tear items like lines, batteries, bottom paint, wax are also split. He owns the asset and I help keep the boat clean when he is gone, I arrange most of the maintenance contractors, cover the boat in the fall, shake snow off in the winter, pull the cover in the spring, and try to take care of the boat as if it were mine. We still follow the same procedures I did when I owned the boat as it seemed to work for both of us. I store half of the "boat stuff" and he stores half. This has worked fairly well for both of us because we have become good friends and we both love the boat and want it to look and perform as it should. It costs both of us half as much as having our own boat and now only one of us has the depreciating asset. We still sail more with each other than without and I find myself every year sailing more days than I ever did when I owned the boat.

When we have problems they are totally contrary to what most would expect. I believe that we should split all costs including things like new sails, any major fiberglass work, etc. He believes that it is his asset and he should be totally responsible for those types of items. In this case he is over valuing my time working on the boat which certainly does not cover the costs of new sails, etc..At a minimum I should at least share in a pro-rated depreciation of those sails each year the the partnership is in force. We are still disagreeing on these items and I am confident we will come to a resolution. We both agree that we are fortunate that the relationship continues to work and that neither of us has financial issues that have impacted it. I want to pay more and he does not want me to. Tough problem!

I do wish you well in your search for a way to make something work. When I sold the boat I had rationalized that it was time to sell, but I was very surprised when I found out that I had to have another sailboat. The boat is on Lake Michigan and I live on a large inland lake. At home I have a power boat, SeaDoo's, sailfish, fishing boat, but that did not cut it for me. If you do decide to cut the cord try very hard to keep in the game.
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post #10 of 44 Old 09-18-2018 Thread Starter
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Re: Boat Partnership

Thanks for the comments. Yes it is like a marriage and they are hard to make work. You do need a good match and a motivated partner. Some people simply want to go to a slip, walk on the boat and sail. Others like me prefer a mooring and a complete as possible do it yourself approach. There's not much to do except renew and repair and keep the boat bristol. The partner has to learn the boat perhaps in time as well as I do.

Assets like boats need to be used and not sit around not being used. When you find you are not using the boat as much as it should be it's time to think about ending the love affair perhaps selling or finding a partner so the boat gets used and you can ease out of your commitment over time as partner becomes fully "hatted". You can't expect the partnership to hit the ground purring when the agreement is signed. I don't have this expectation of ANY partner... I wouldn't want a partner who signs an agreement has a 1 hr run through and asks for the keys .... like a bareboat charter. Not happenin'. In the beginning partners have to do things together... until original owner has confidence in the other to single hand and the new partner needs to feel confident that they can do it... This clearly takes time. More complex the systems... the longer this will take.

Yes, the agreement needs escape clauses so that if things are not working out no one take a bath. I see this as a great opportunity for the original owner and the new partner... each getting what they need from the partnership and their stage of sailing/cruising and boat ownership. I know I need a DIYer... but most cruiser types are.... not so maybe for racers. Shiva is a great boat with a great pedigree and a proven record offshore. A partnership can only work with the right partners. No doubtaboutit!
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