Written By Dick Thompson

Are you considering buying a boat, or moving up to a bigger one? Before you pull out your checkbook, you may want to consider whether you want to share the purchase cost with others rather than going it alone. Many companies are now offering an alternative to owning your own boat--allowing more people to have a chance at the boating experience by lowering the cost of ownership.

If you're the type of person who needs to be able to go an impromptu cruise after looking out the window at a beautiful sunny morning, sole ownership is definitely for you. Sole owners can personalize their boats to their heart's content--taking pride in its uniqueness right down to that special name on the transom. But, if this isn't all that important to you, there are other alternatives.

The Fractional Alternative

One alternative is fractional ownership. It is not a boat timeshare program where a corporation owns many yachts at multiple locations, and each shareholder has the rights to use any of them. Nor is it a boat club, where boaters pay a fee for unlimited access to a fleet of boats at one location. Fractional owners actually own a share of one boat--possessing equity in that purchase.

Fractional ownership plans offer a more affordable way for a person to get out on the water. "It's a great alternative for people who love to boat but can't use the boat often enough to justify the cost, time or commitment, and is ideal for people who don't like the hassles of maintenance," says Great Lakes BoatShare president John Pas. "Also it's a more affordable alternative for boaters who want to move up into a larger vessel, but might not qualify for a higher loan."

A number of companies are filing flight plans laid out by highly successful aircraft joint-ownership programs and are floating joint-ownership boat plans this year. These companies provide cleaning, maintenance, insurance, and dockage. All the partial owner needs to do is climb on board, cruise to his desired location, return when his time is up, and walk away when the day is done. The boat owner pays for a share of the boat up front, a monthly fee, and the cost of fuel--for that, he gets his share of cruising time equally split with other equity owners of the vessel.

Fractional sharing providers set up their boat plans as limited liability companies (LLC) that can be treated as a partnership for tax purposes. However, the biggest benefit of an LLC is that is limits the individual boater's liability from the other owners and from the company. The LLC even continues if the fractional boat ownership company goes out of business.

Experiment on the Great Lakes

A few Florida companies have been at the vanguard of fractional ownership because the year-round boating season allows for more shareholders, while still maintaining substantial cruising time for each member.

Fractional Yacht Management, Inc. of Melbourne, FL., and Dream Mobility, with bases in Miami and Ft. Lauderdale, are just a couple of the many companies offering a selection of boats in the Sunshine State. But, it came as somewhat of a surprise when this plan migrated to the Great Lakes--considering the short boating season.

Buying a boat outright in Michigan means that a person bears the full cost of the six months that the boat is laid up for the winter instead of a fraction of the cost under boat sharing. This year, Great Lakes Boatshare LLC, in St. Clair Shores, MI, became the first company offering fractional ownership programs in this region of the country.

BoatShare is currently offering Regal and Silverton boats that sell in the $250,000 to $650,000 price range. "We may also start offering trawlers (Nordic and/or American) in Northern Michigan and Wisconsin. These boats are great for cruising and can extend the boating season considerably," says BoatShare president John Pas.

Because of the relatively short northern boating season--May to October--the company is restricting the ownership of each boat to four to six persons to maximize each person's usage.

How do the financial costs between sole and fractional ownership compare? Pas has worked up some figures using a new Regal 4260 Express Cruiser with a price tag of slightly over $500,000. The total down payment for a sole owner would be in the neighborhood of $110,000 when purchased from a dealer. However, BoatShare is able to lower that price to $85,000 by dealing directly with the manufacturer. As a result, sharing one's cost with three other owners lowers a member's purchase price to $21,250.

Great Lakes BoatShare makes its money on the acquisition of the vessel, as well as a management fee on the owners' monthly fee. The boat does not carry a loan, but each owner of the Regal pays an annual fee of around $7,000 which includes maintenance, insurance, weekly cleaning, pumpouts, towing insurance, summer dockage and winter storage. The company also makes a profit on charges for special services such as catering and a handling fee at the time the vessel is sold.

Article Source: Boat/US Magazine, Sept. 2004 - Find Articles