Fractional Yacht Ownership

     A wise friend once told me, "Common sense prevents people from owning yachts". But it wasn't until I owned one myself that his wisdom fully sunk in.

     Few people deny the pleasure of cruising around on a dream yacht, but that satisfaction often comes at a tremendous cost in terms of time and money. Today many people are questioning the sensibility of owning expensive yachts that sit idle most of year. Research shows that the average yachter only uses his vessel 30 to 36 days per year, yet he bears the unpleasant burden of 365 days per year of depreciation, insurance, docking, and maintenance expense. For most, it's a real yachting dilemma.

    In recent years more and more businesses have emerged to address this very problem. Boating enthusiasts now have several viable options available to them which can alleviate the high costs and hassles associated with traditional boat ownership and still afford them considerable amounts of time on the water.

    One such alternative is called Fractional Ownership. The concept is not new, but in fact has existed for years in the private jet industry. World renowned investor Warren Buffett, chairman of Berkshire Hathaway, purchased his first fractional jet in 1995 and three years later bought the company. Now his company is the world's leading fractional jet company and part of a multi-billion dollar per year industry. The concept has also gained rapid appeal in the luxury home market where organizations like Marriott and Ritz-Carlton are developing fractional ownership real estate communities throughout the country.

    Yachting is the next logical application of the fractional concept because of the large disconnect between the cost of yacht ownership and actual usage. Several companies in the U.S., Canada, and Europe are establishing programs to meet the growing demand for a more hassle-free, economically sensible yachting experience.

And for some boaters, the cost saving are compelling. Through Drake Yachtshares, located in Palm Beach Gardens, Florida, owners can purchase 1/4, 1/3, or 1/2 interests in the yachts of their choice. Not only are the acquisition costs substantially reduced but all the on-going expenses such as docking, insurance, and maintenance are divided among the partners. Owners need only pay a flat monthly fee, and Drake takes care of all the yacht details. Even a 1/4 share entitles owners to 75 days of use per year for as long as they own the vessels. When yachts are sold, owners receive their pro-rata share of the sale proceeds. The appeal of such a hassle-free, cost effective program is undeniable in these busy, economically challenging times.

    Not all fractional programs are alike and participation in one may involve some steps not typically experienced with single ownership. For instance, because of the multiple owner aspect, legal operating agreements are needed to outline terms of use and ensure fair, equitable, and responsible operation of the vessels. Also, most programs require reservations in advance in order to avoid scheduling conflicts with other owners. In addition, financing options with fractional programs may be more limited than with traditional yacht purchases.

     But despite the extra steps involved with fractional ownership, the benefits far outweigh the costs. On a typical $1 million yacht purchase, a 1/4 fractional owner will save nearly $400,000 in depreciation, financing, and day-to-day management expenses in the first 3 years alone, and still enjoy a significant amount of time on the water.

     Given the widespread success of the fractional jet industry over the past 15 years, it seems certain that fractional yacht ownership will follow a similar path. The disparity between yacht usage and the costs of ownership makes yachting the ideal application for fractional programs. Fractional ownership may not be for everyone, but for those looking to ease the financial burden of a notoriously expensive hobby, it may be just what the doctor ordered.

    For more information about fractional yacht ownership, contact Drake Yachtshares at 561-776-0028 or visit the website www.DrakeYachtshares.com.




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