Fractional Ownership - a good idea?

[Relax]

I am currently thinking of buying a share in a yacht somewhere a bit warmer - most likely Greece - I have chartered there a few times and its fairly congenial. I have also sailed in the Caribbean, Canaries and (quite a lot) in East Africa.

I also have a boat on the west coast and in fact spent about four months on board last year mostly singlehanded down to Ireland - continual rain and freezing weather is taking the shine off this. The last few weekends sailing in woolly hats and ski gloves then a week in the Ionian kind of brought this to the fore. I don't think I have the time or companions willing to keep a boat there full time.

So the question is - is this a good idea and what are the pitfalls, pros, cons WHY? What do I need to watch out for. New territory for me.

 

[RichardS]

Managed ownership through one of the big charter companies is also worth looking at for comparison if you haven't done so. This worked for us and the more of the free weeks you can use the boat in the Med (or another boat somewhere else) the better the deal. There is also a get-out clause at the end of the 5 or 6 years managed period. The decider for us was that at the end of the 6 years we own the boat outright so I arranged for that to coincide with my retirement.

Richard

 

[Tranona]

Agree with charter management deals having bought my boat that way. However, you need to consider the long term view and be sure you want the boat at the end of the contract, as getting out of the deal early or trying to sell the boat at the end can be difficult and expensive. Structure boat shares can also be attractive, but like any partnership depends heavily on the way the deal is structured and managed, plus of course the compatibility of the partners. Suggest you talk to Chris Hawes of Yacht Fractions who (as the name of business implies) brokers partnerships and can also organise charter management deals.

 

[Relax]

I have looked at ownership though a charter company but I am not at all certain that I want to take ownership of a likely very tired charter boat after six years or so - the boat we have just had for a week was an example - knackered steering, charging system wonky and upholstery (poor vinyl to start with) totally shot. Especially after having paid essentially full whack for the boat - OK there will be offsets to that figure but there is no free lunch. With the best will in the world there is very little that can be done to "manage out" and maintain basic wear and tear.

Having had a wee look at what is on offer I feel there are many better potential deals in Yacht Fractions and some other sites.

I just wondered what folks experiences were in buying a share abroad - did it live up to expectation and did it all go smoothly? I guess as the other posters have alluded to above it to a big degree depends on having a group of like minded individuals - and that's a bit difficult to ensure by remote control.

 

[telford_mike]

We've been chartering / flotilla sailing for years. It's getting expensive though, so we needed a new approach with retirement looming. We want to do a lot more cruising now we have the time available.

We therefore bought a 1/5 share in a Bavaria 34 not long ago. It's based in Preveza. We have never seen the boat, though obviously we've seen lots of photos and we've spoken to a couple of the syndicate members.

Ours came from a small ad on Apolloduck, but Chris Hawes site will give you a good idea of the state of the market. You will obviously concentrate on finding the right boat to begin with, but you also need to find a syndicate that has a modus operandi that suits you. Ours works on the basis that the boat should be used as much as possible, and if this means some members getting a bit of extra time that's better than having the boat sat in a marina incurring gardinage charges.

Anyhow, it'll be interesting to see how it turns out. We depart for Preveza early tomorrow morning for 4 weeks. Hopefully by tomorrow evening we'll be sitting at Stavros's taverna in Little Vathi enjoying squid and Mythos.

 

[RichardS]

I have looked at ownership though a charter company but I am not at all certain that I want to take ownership of a likely very tired charter boat after six years or so - the boat we have just had for a week was an example - knackered steering, charging system wonky and upholstery (poor vinyl to start with) totally shot. Especially after having paid essentially full whack for the boat - OK there will be offsets to that figure but there is no free lunch. With the best will in the world there is very little that can be done to "manage out" and maintain basic wear and tear.

Having had a wee look at what is on offer I feel there are many better potential deals in Yacht Fractions and some other sites.

I just wondered what folks experiences were in buying a share abroad - did it live up to expectation and did it all go smoothly? I guess as the other posters have alluded to above it to a big degree depends on having a group of like minded individuals - and that's a bit difficult to ensure by remote control.

I can understand your reservations and I've no axe to grind either way but your figures are not right. We paid 60% of the cost of the brand new boat which was sold at a discount price anyway and had a free charter for two weeks in the Caribbean thrown in for free as a "sweetener". We then used the boat for free for at least 3 weeks every year for 6 years when we would have chartered a boat if we had not had our own ....... 6 x 3 x £4k = £72k saved. After 6 years the salon table was damaged and the upholstery was getting tatty so we documented those amongst other wear & tear issues after our final charter. When I inspected the boat before handover the table and all the upholstery had been replaced with brand new.

Taking into account the holiday savings, I reckon that at the end of the deal I had a 6 year old well-maintained boat that I had kept a very close eye on for 30 - 35% of the brand new price. But, I agree, that it's certainly not for everyone as it all depends upon timing and the free-weeks use.

Richard

 

[Tranona]

I agree with Richard. Does not make sense to buy outright unless you have cash not doing anything else. You will lose around 35-40% of your capital and the annual returns barely cover this. Much better to do a partial purchase - usually around 50-60% of boat cost over 6 seasons but no income. However the deals are only worth having if you can make good use of your "free" weeks. If you go through one of the big firms like Sunsail or Kiriacoulis you have much wider opportunities to take the weeks elsewhere. It does, though, make sense to use your own boat at least once a year to keep the operator on their toes. We used our boat a minimum of 2 weeks a year and the saving in charter rates more than covered the interest on the loan taken out to buy the boat. I have just sold the boat (after 14 years) for about 90% of its capital cost to me including the VAT I paid when I took it over.

In my experience (not just with my boat) you are unlikely to end up with a worn out boat. The one you quoted was probably not a privately owned boat as good operators look after owner's boats very well. Helps if you have the boat based in a benign sailing area such as the Ionian as the wear and tear on boats is minimal compared to more challenging locations. If you don't mind using your own boat for your holidays then a small operator like Sail Ionian could be a good bet. You may also find when you talk to Chris that there is much more flexibility in terms of usage and contract duration than there was in the past.

In my view lower risk than a boat share unless you are going into a new professionally managed syndicate. Buying into an existing syndicate can mean you are buying all the "history" and unless it is well managed and owned by people who like to do things properly you could end up with spending more of your time sorting out "boat" problems rather than sailing. If you are in an ownership plan you are a charter customer so you just turn up, use your boat, and leave it at the end. The operator takes care of everything else.

Of course it is not for everyone, but well worth investigating further.

 

[Relax]

Yes - looking at the above its clearly not a black and white matter.

Thing is my usage pattern is likely to change over the next few years. Last year I spent nearly four months living on my own boat in Scotland and Ireland but had trouble persuading family to come and sail with me - no trouble in that when you are in Greece! Currently I am (shock, horror, probe!!!) working again - albeit part time. I hope, providing the property portfolio performs as it should, that income should permit me to stop this confining nonsense sometime soon.

So making the commitment to either fund an outright purchase with capital or funding a loan for 5/6 years (either of which is possible) is something I am rather inclined against. Selling my own boat (which is currently on brokerage) would allow me to purchase a boat in (e.g.) Greece without any dipping in to capital - but again I am reluctant to make the commitment to maintaining my own boat in a remote location - I spent quite a bit of time doing maintenance last year.

I guess it comes down to the way to view risk - is it better for you to have a relatively "certain" situation viz a viz costs and outcomes with a charter company purchase or (in my current assessment) relatively lower costs, but almost no certainty, in the case of buying a share in a yacht. Also, in as has been said above, in the case of buying into an existing set you are buying in to history, hopes and expectations on many parts - a possible cause of much anguish? I guess unless all of the joint owners have similar standards, hopes and expectations (or are uniformly forbearing) then you have the possible makings of a big argument.

Currently I am disinclined (but open to argument!) against taking the charter purchase route and am more inclined to buy a share - I guess I just don't feel happy about having that "investment" sitting out there not doing very much - £60/70k can buy me most of a flat - £4-12k(??) is not quite loose change but doesn't feel nearly as much of a hit.

Each to their own

 

[Tranona]

If you really can see yourself spending significant time out there, then its a no brainer. Buy your own boat. It does not have to be hard work to maintain if you buy a "simple" modern boat (funnily enough, just what charter companies use). There are some really good bargains, including, dare I say it, ex charter boats. Maintenance problems arise from trying to keep older boats running on limited budgets, as you will see if you look at the older boats for sale out there which often have signs of general decay and lack of replacement because the owners are running out of steam or money, or both.

However, you will find many people who successfully run boats based on say 3 month's usage a year - spring and autumn to keep away from the heat and crowds. Syndicates of course can reduce costs, but often have restrictions on usage unless you fit in with a pattern of usage that is different from other members. Plus, of course the boat is not "yours" and there can be problems selling your share if you want out.

Well worth investing a couple of weeks looking around what is available and getting a feel about how things work on the ground.

 

[muyuu]

Making a long term commitment to both a country like Greece (with a changing tax regime and regulations) and other people, and having your boat that far... it really seems more trouble than it's worth.

I'd charter instead.