How to - Fractional Boat Ownership

If you are anything like me, a close relationship with the ocean is almost as important as breathing. I also believe in the age of the Xbox, having my children involved with boating is an enormously valuable part of their development.

I can think of very little worse than getting to the age of 65, finally deciding to invest in a boat, and discovering your children either no longer have any interest or are too committed to spend time with you — or even worse, your health no longer allows you to get the most out of a boat.

How does fractional boat ownership work?

Fractional ownership is when the owner purchases a share in a single boat through a management company.The typical setup involves a capital investment in a vessel that remains as equity. Usual shareholdings are between 10 and 25 per cent of the craft in question and the stake can be resold for a market-dictated value if the owner wishes to exit the partnership.

In addition to the capital investment, an annual management fee is charged to cover the maintenance and cleaning cost of the boat.

The shareholding entitles the owner to a number of days’ usage per year. For example a 10 per cent shareholder should entitle the owner to around 33 days of use per annum. The details of this usage entitlement differ from company to company.

The main benefit of this arrangement is the comparative ease of entry into the market from a financial point of view. The secondary benefits that should not be overlooked are the “walk on, walk off” nature of your boating.

Syndicated boat ownership

This alternative is probably the simplest in structure. Deals involving syndicated ownership of vessels have been around for many years. These are usually private arrangements much like a business partnership, where two or more owners put a pre-agreed sum together to own and maintain a boat.

The advantages are straightforward in that the total cost of ownership is reduced by at least 50 per cent and there is no management firm to deal with, so in most cases the relationship can remain informal.

The downside is that much like any partnership, if things go pear-shaped on the boat or in the interpersonal relationships there can be severe consequences. Much like a business partnership, the school of thought is not to co-own any vessel with a friend. Co-ownership with strangers (who come with references) seems to be the most successful formula.

Many private boat partnerships also struggle with the question of DIY maintenance versus contracting a professional vessel services company. Again, I personally favour contracting a professional service provider — even with the best of intentions and skills, DIYers seldom find the time to maintain their craft to the level they require. It is a beautiful thing to be able to stroll onto your boat, in perfect condition, for a few days’ boating, and stroll off it again at the end of the trip knowing someone else will take care of any minor issues that may have arisen while you were away.

Managed fleet mebership

A quite different option that deserves discussion is membership of a managed fleet.

The core difference is that the investor does not only have access to a single boat, rather there is a fleet of vessels available, usually at several different locations. The investor has no equity of any sort in any of the boats, instead they pay an annual fee that gives a number of credits of boat use throughout the year.

As a wide range of craft are available, each different style of boat attracts a varying cost in terms of credit. The rule of thumb is that the larger the boat used, the higher the number of credits a day’s use will cost the member.

The obvious benefits as mentioned are the large range of vessels available for use. Much like membership of a timeshare, the ability to access boats in other locations is also a significant benefit. Of course, all the boats in the fleet are under a maintenance and management programme.

Another benefit of this slightly different concept is its flexibility. You can opt out of the investment at the end of any year if your plans or priorities change and you can jump in at any time in the future when it suits.

The verdict

So, in summary, and without wanting to be responsible for any reader over-extending their financial commitments, do not let the on-paper cost of owning a boat put you off the investment. There are plenty of excellent options to consider that will substantially reduce your level of investment.

I suggest carefully thinking about the amount of usage you will realistically get from a boat in a year and the sort of craft that would suit your requirements. Shop around to make sure you find the ideal package for you.

Boating Syndication Australia

Boating Syndication Australia (BSA) has been designed to offer an original concept in boat syndication — a wide variety of boating brands, styles and locations.

“We are focussed on helping clients find the right boat for them, no matter where it may be,” said BSA managing director Andy Young.

“We bring together the right group of people to share in the luxury boating experience.

“Too often, syndication businesses are focussed on selling shares in a particular boat. It is pre-packaged with a standard agreement, standard shares and standard service.

“At BSA, whether you want just two to share or 10 is up to the owners. We can take care of the program agreement and manage the boat,” he said.

Young and his team at BSA have managed 25 syndicated boats over the past six years and now have 12 luxury cruisers under management in locations from Mosman and Rushcutters Bay in Sydney Harbour to the Pittwater, Gold Coast and now Hamilton Island in the Whitsundays.

“Not only do our clients have a range of options in boat style and brand, we also offer a terrific option in locations,” said Young.

The fleet now includes two luxury Belize 52 Hardtops (pictured below), a Riviera 5000, two Princess motoryachts, an Azimut 40S, Riviera M400 and M360 sportscruisers, as well as Maritimo and Symbol motoryachts.

“We are not tied to any brand and our focus is management, not sales,” said Young.

“We offer worry-free boating. When each owner arrives to take their vessel out, they know it is immaculately clean, stocked and ready to go immediately.

“We can arrange everything on behalf of the owners, from insurances, berthing, licences and services all at reduced negotiated rates with the trades and we pass these savings directly on to the owners,” he said.

More information is available at the BSA website at syndicationaustralia.com.au

Riviera marine syndication

John and Sharon Russell have worked in the marine industry since 1977 and specialising in luxury boat syndication since 1999. As a team they have launched in excess of 40 boats introducing more than 200 families to syndication during this time. Currently Riviera Syndication has eight Riviera boats (80 clients) under management around Australia. They have the passion, the experience and the resources to guarantee your experience. The company’s success is not by chance, it comes from know-how, commitment and passion.

Riviera Syndication has several owners who have demonstrated a degree of loyalty few organisations can match owning up to five different boats over the past 13 years. They are happy to recount the stories of their experience on the testimonial pages of the company’s website. Syndication, it says, is a practical, economical and enjoyable way to own a luxury Riviera and join the Riviera family of owners.

Syndication is a practical, economical and enjoyable way to own a luxury Riviera. For further information, phone 

(07) 3890 2902, email: info@rivierasyndication.com.au or visit rivierasyndication.com.au

From Trade-a-Boat Issue 430, Aug-Sept 2012. Photos: Beneteau; Belize; Riviera.