Syndicate as way into boating

[dunedin]

Why do you need something so massively big? You can enjoy the Med as much, if not more, in a smaller boat. Particularly if just going for 1 or max 2 weeks at a time, which is all would get with a syndicate.

A more modern 40 footer would have much simpler / cheaper maintenance, so more practical for a syndicate.

 

[roa312]

I won't name names but I know of a professionally run syndicated boat (c. 60ft / 6 members) where the annual running costs were supposed to be around £15k person (p.a.). They ended up being £30k per person. The record keeping was abysmal, there were concerns that the person managing the boat was taking a commission from trades people and he ended up sacking the (very miserable) professional skipper so that he could employ his son as skipper. In addition, the person managing the syndicate was taking a commission from people selling their shares. Furthermore, the boat was is such a poor state that they were advised that an attempt to sell it in its entirety would be problematic when it came to surveys and sea trials.

For our little boat, we are able to vet future owners, the accounts are kept meticulously and I don't charge any fees for running the boat or employing trades.

I appreciate you sharing the story (even without mentioning names), and it's definitely an important lesson for anyone considering joining a syndicate. However, if I were in OP's shoes, I’d be cautious if someone approached me with the proposition of private shared ownership and a privately drafted syndicate contract, making the argument that avoiding professionally run syndicates would result in fewer conflicts of interest (or other types of conflicts). This is not a stab at you though !. Personally, I’d prefer having a third party maintain the yacht at arm's length.

When it comes to budgeting for annual running costs (especially for older yachts), I think we all understand how challenging it can be when dealing with unexpected repairs or replacements. But of course, the underlying principles regarding maintenance, repairs, and replacement costs must be fair and agreed upon in advance. First sights of commissions etc. should be dealt with immediately, and I appreciate that may be troublesome in practice.

It sounds like you run an excellent syndicate, and I have no doubt it serves you and your partners well. Hopefully, OP can find something similar that will work for him.

 

[jbweston]

I've not been in a partnership or syndicate for a boat, but I have been in one owning a light aircraft, a Cessna 182, for pleasure not for business. Also I looked seriously at forming a partnership to own a sailing boat but we (the other potential owners and I) eventually decided not to, and I bought a boat as sole owner.

What tips do I have?

The aircraft partnership was very successful and that was partly due to how one of the partners had learned from his previous aircraft partnership which didn't work well. His lessons learned were good ones:

- The partnership needs to be small enough that each partner thinks of the aircraft as his or her own, not so large that a partner thinks 'someone else can sort that out'. Particularly important with problems affecting safety which someone might be tempted to 'forget' they'd caused.

- There must be a money float held so that important bills can be paid when due without endless hassle getting people to stump up when the bills arrive. For example, for annual insurance, critical maintenance, emergency repairs. Without that the aircraft (or boat) could end up unuseable or uninsured because the 'good' partners understandably don't want to have to pay a 'bad' partner's share as well as their own in order to keep it functioning.

In addition, my own tips are:

- Think about, talk about, plan for and agree what to do when/if things go wrong between the partners, or just in general, while everyone is friendly and before anything bad actually happens. For example, what if one of the partners dies and his family are short of money and need their money out of the their share of the boat? Or one of the partners causes damage to the boat through gross misconduct (eg operating drunk) and the insurers won't pay up?

- Do the potential partners agree about the important alternative options? For example, will the boat always be returned to its home berth at then end of someone's session, or will it be cruised from place to place during the season, with the next partner taking it over in a new pre-planned location? Will maintenance be done by professionals and specialists or more cheaply by the partners own D-I-Y efforts (a trade-off between money and time/effort)? And what level of tidiness and cosmetic beauty do the partners expect? And will there be a shared understanding about leaving enough diesel in the tanks at the end of a session, and not moving the emergency equipment and essential spares from their normal storage lockers to 'a better place'?

- Some of the hardest things are those unspoken but strongly held expectations, where if a friend asked us, we'd say 'Of course, that goes without saying'. The problem is that what 'goes without saying' can be very different views about important things where even good, genuine people can be surprised that they have different expectations. The degree of tolerance towards things that don't work reliably is one of them - one partner will assume that the offending item will be repaired at once almost regardless of inconvenience and expense, but another partner assume that it can be left to the end of the season - both reasonable viewpoints but likely to cause friction in practice.

Why didn't my potential partners and I go ahead with buying a boat together? Two reasons: I wanted to cruise and move the boat around to different ports during the season, and they wanted to base it on the Hamble; and they liked and had time to do their own maintenance and I was working and preferred to 'get a man in'. They were a lovely couple and personally we got on really well, but we wanted some different things.

 

[petem]

I appreciate you sharing the story (even without mentioning names), and it's definitely an important lesson for anyone considering joining a syndicate. However, if I were in OP's shoes, I’d be cautious if someone approached me with the proposition of private shared ownership and a privately drafted syndicate contract, making the argument that avoiding professionally run syndicates would result in fewer conflicts of interest (or other types of conflicts). This is not a stab at you though !. Personally, I’d prefer having a third party maintain the yacht at arm's length.

When it comes to budgeting for annual running costs (especially for older yachts), I think we all understand how challenging it can be when dealing with unexpected repairs or replacements. But of course, the underlying principles regarding maintenance, repairs, and replacement costs must be fair and agreed upon in advance. First sights of commissions etc. should be dealt with immediately, and I appreciate that may be troublesome in practice.

It sounds like you run an excellent syndicate, and I have no doubt it serves you and your partners well. Hopefully, OP can find something similar that will work for him.

I'm not sure I get your point about a "privately drafted syndicate agreement". The agreement that we use for our boat was professionally drafted and in my opinion is superior to the RYA one.

I'm curious to know why you think that a boat being managed "at arm's length" is superior to it being managed by someone with "skin in the game"? I would add that just because a boat isn't professionally managed (i.e. for a fee) that doesn't mean that it's not professionally maintained.

 

[Mileholm]

Why do you need something so massively big? You can enjoy the Med as much, if not more, in a smaller boat. Particularly if just going for 1 or max 2 weeks at a time, which is all would get with a syndicate.

A more modern 40 footer would have much simpler / cheaper maintenance, so more practical for a syndicate.

I like the idea of a 3-cabin 45+ boat, but if I could find a 2-cabin smaller vessel, where the folks and condition was good, then I could be tempted as well.

Your 5k depreciation seems ok but 5k for mooring and maintenance , who is cleaning inside and out shopping lifts antifoul engines , you will use 5k in fuel. What if you sign up and the wife and kids don’t like it.

Yea, sorry, hadn't mentioned fuel, but appreciate that's at least another £5k.

 

[roa312]

I'm not sure I get your point about a "privately drafted syndicate agreement". The agreement that we use for our boat was professionally drafted and in my opinion is superior to the RYA one.

I'm curious to know why you think that a boat being managed "at arm's length" is superior to it being managed by someone with "skin in the game"? I would add that just because a boat isn't professionally managed (i.e. for a fee) that doesn't mean that it's not professionally maintained.

I'm looking at this strictly from the perspective of the OP, who can decide between a commercial shared yacht ownership arrangement or a private one. There's no guarantee that the private one offered to him will be as well functioning as yours.

Your specific syndicate contract may very well be professionally drafted and superior to the RYA. For all I know, that may be high or faint praise. I know of others with informal contracts between family members, and that works perfectly fine for them. From my perspective, the strength of the contract will be how well it stood the test of time, and personally, I would take some comfort in a professional organization with hundreds(?) of boats under contract. I see that as an indication they have a setup that works. That doesn't mean problem free, and that the contact and structure shouldn't be scrutinised.

I see the value in having someone with "skin in the game," as their vested interest can lead to a commitment to the boat's upkeep. I agree with your statement that privately managed arrangements can be as good as professionally maintained, but there's no guarantee. I would respond that professional management should guarantee professional maintenance (at a higher cost, of course).

I am only suggesting (with no prior experience!) that private ownership arrangements maybe can lead to conflicts that may not be as prevalent in professionally managed structures. There’s a level of objectivity that comes with third-party management, which can help ensure that decisions are made based on the best interests of all parties involved. For instance, in your syndicate, if you spend time sorting out issue X free of charge, does that mean other syndicate members should sort out issue Y free of charge? Who decides when issue X or Y should be sorted? Who decides the budget? All of these concerns may be non-issues in your syndicate, but that doesn't mean they won't be issues in other private structures.

 

[petem]

I see the value in having someone with "skin in the game," as their vested interest can lead to a commitment to the boat's upkeep. I agree with your statement that privately managed arrangements can be as good as professionally maintained, but there's no guarantee. I would respond that professional management should guarantee professional maintenance (at a higher cost, of course).

Note that a "professionally managed syndicate" and an "owner manged syndicate" will invariably use the same tradespeople for maintenance? Not even the networked syndicates will have their own maintenance people.

I would argue that in our case, the "privately managed arrangements" are superior to professional arrangements!

Just because someone is charging to manage a boat, that doesn't mean that they will be particularly diligent, knowledgeable or capable. Conversely, there are some very shoddily run owner managed syndicates out there.

I am only suggesting (with no prior experience!) that private ownership arrangements maybe can lead to conflicts that may not be as prevalent in professionally managed structures. There’s a level of objectivity that comes with third-party management, which can help ensure that decisions are made based on the best interests of all parties involved. For instance, in your syndicate, if you spend time sorting out issue X free of charge, does that mean other syndicate members should sort out issue Y free of charge? Who decides when issue X or Y should be sorted? Who decides the budget? All of these concerns may be non-issues in your syndicate, but that doesn't mean they won't be issues in other private structures.

In our syndicate, there is a boat manager (me at the moment) and I am responsible for the day to day running of the boat. That means arranging for servicing and repairs without requiring prior approval from the other members. Of course, if a repair was going to be significantly expensive then it would be discussed with other member out of courtesy. There is no obligation on anyone to carry out any repairs but of course the other owners are invariably happy to carry out small maintenance tasks. Any upgrades or refurbishments are agreed (by simple majority) within the group.

In the so called professional agreement that I referred to above, there were significant conflicts. Some owners were happy for the boat to never leave the berth, some wanted to do extensive cruising, some wanted to drive the boat themselves, some wanted as skipper. There was no concept of "like minded people" owning the boat, so these significant differences of opinion are likely to occur. In our case, if someone isn't "like minded" then we would discourage them from joining us.

 

[petem]

There are a couple of boat shares listed on eBay and Facebook at the moment which are in the vicinity of what I’m looking for. A 2001Squadron 52 1/8 share listed for £25k (looks tired) and a 2005 Princess 61 for £55k (bit big).

That 52ft Squadron is in Alcudia I believe (it's called "Bluerush" or something like that). It's had a hard life (5,000 hours) and I think had a grounding and some repairs a couple of years ago. I spoke to one ex owner who said that it wasn't a bad experience and he managed to offload his share pretty easily when he wanted to move on.

 

[Mileholm]

That 52ft Squadron is in Alcudia I believe (it's called "Bluerush" or something like that). It's had a hard life (5,000 hours) and I think had a grounding and some repairs a couple of years ago. I spoke to one ex owner who said that it wasn't a bad experience and he managed to offload his share pretty easily when he wanted to move on.

That's the one. 5,000hrs! I do think that one is past it - at least as something I'd be interested in.

 

[Mileholm]

It's amazing the amount of thoughts and experience you guys have collectively added to this thread in the past 24hrs. Lots of stuff I hadn't considered yet. I am starting to wonder if I should maybe start slightly smaller - both in terms of size of boat and size or syndicate. Maybe 3-4 like petem's where you get a real sense of the others and they of you.