Three Different Ways To Own A Boat
There’s mainly three different ways to own a boat. But you’ve probably come across all or some of these terms before: Yacht ownership, shared boat ownership, co-ownership, fractional yacht ownership, charter yacht ownership… But what do they all mean?
In this article, we’ll explain the three main different ways to own a boat:
1. Traditional yacht ownership
2. Fractional yacht ownership
3. Charter yacht ownership
Traditional yacht ownership
We’ll start with the basics. Traditional boat ownership is quite straightforward: you own the boat – from bow to stern. That also means you do all the work. And pay all the bills (in case you didn’t know, there is a lot of them). Still, when you’ve caught the sailing bug, there’s nothing better than having your own boat. You can travel with it, live in it, entertain your guests on it… the world is your oyster! However, with great power comes great responsibility. You should be aware of the amount of maintenance work included before, during and after the sailing season. You might have the time, energy and skills to do all this by yourself. Otherwise, you need to hire someone to do it for you. Additionally, there are a myriad of different costs involved, for example mortgage, registration, insurance, winter storage, maintenance, fuel and cleaning… just to name a few.
We don’t want to scare you, but before you make any impulsive buys, make sure you know what you’re getting yourself into. Below, we have listed some of the advantages and disadvantages of owning a boat in the traditional way.
- You own the boat
- Enjoy the privacy and exclusivity of having your own yacht: No need to share and you can customise it as you please. You can use the boat whenever you want, however you want. Spend quality time with your partner or family or go on your own sailing adventure.
- Sail where you want
- As mentioned before, the world is yours to explore. You can choose where to place your boat, which broadens your sailing options. You are also free to go out with your yacht wherever you want, taken that you have the time and resources. Explore new waters and countries, enjoy the freedom and learning about new cultures. Just make sure to research the places you are planning to visit, so you are well-prepared.
- Investment opportunity
- Owning a boat is a huge investment, but it can be a great one. Chartering is expensive, and family vacations in general aren’t cheap either. If you really love sailing and do it a lot, buying a yacht could be a better option, and even save you money on holidays.
- You own the boat
- As wonderful as it is to be a proud boat owner, it comes with a cost (a lot of them). You are responsible for all the work and cover all the costs. Yacht ownership requires full commitment.
- Limited usage
- You can only use your boat in warm weather. Well, at least that’s the most enjoyable and safest option. Depending on where you live, the number of months or days you’re able to use your boat can be limited. You can place it further away, even in another country, but then you have to figure out how you’re going to get to your yacht.
- Expensive equipment and accessories
Owning a boat is expensive. After you’ve survived the initial costs, it doesn’t end there. When everything is working well, you might get away with low running costs. However, if and when something breaks, you can end up spending a lot of time, energy and money into spare parts, repairing, cleaning and so on.
That being said, owning a yacht can be a dream come true – a chance to experience a different lifestyle.
In short, traditional yacht ownership could be for you if:
- You are, or will be, using the boat a lot.
- Sailing/yachting is the number one holiday activity.
- You don’t like sharing.
- You are prepared for the costs and enjoy doing the work.
Fractional yacht ownership
If the thought of owning a boat and having to do all the work by yourself is daunting, maybe you should consider shared ownership. Now, you might think sharing a boat with someone else is nothing new. After all, people have done this for a long time with friends and family. With fractional yacht ownership, the boat is placed into a company, such as SailTime, SeaNet and SmartYacht, and then you share the yacht with strangers.
Before we get into the details, we need to define the term fractional yacht ownership – what it is and what it’s not. You might have tried or at least heard about yacht chartering, time-share, fractional boat memberships or yacht club memberships, that grant you access to a certain yacht for certain amount of days or weeks. While the other options let you use someone else’s boat, fractional yacht ownership is different – you actually own part of the boat you are using. Fractional ownership means that you legally own a share of the yacht, which you can later transfer or sell. The share can vary from 10% to over 50%. There are different programs that provide you a certain amount of time on board every year. The number of weeks can vary from 7 to 21, depending on the number of owners and your percentage. How the time is divided between the owners is quite simple: The more you own, the more time you get on board. Normally, owners take turns selecting their preferred weeks, and the order alternates yearly. This way the time on board is divided fairly, especially during peak season.
Here are the pros and cons:
- Lower cost of ownership
- You get all the benefits of owning a yacht, but with a fraction of the cost. The buy-in cost is much lower, especially for a larger yacht. There are some annual charges, which you share with the other owners. These include for example management and maintenance fees, crew costs and insurance. The numbers depend on the size of the yacht, the number of people and the location of the base. Naturally, you are responsible for expenses like fuel and food during your time.
- You are still in control
- You can sell your percentage at any time. You are also anonymous and independent of the other co-owners. You can choose to go on your own or with a permanent crew. If you are not using the yacht yourself during your allocated weeks, you can charter it. All the work is done for you The company takes care of the yacht management, so you can fully enjoy your leisure time. They ensure the yacht is in top condition all year round and prepare it for you when it’s your time on board. Additionally, since the yachts are serviced regularly, they might deprecate slower than if it was owned by one person.
- Sharing with others
- Sharing the yacht lowers the cost of ownership, but it means you will have to share. If you have dreamed of buying a yacht of your own, this might put you off. You choose or get allocated your time slots in advance. This means you most likely won’t have the chance to go for a spontaneous trip when the weather is looking good. Make sure to find out how many owners are allowed to
- buy into each yacht, since this affects the time you’ll get on board. Risks Trying to sell a yacht can be difficult as is. What about re-selling a share of a yacht? There might be some time restrictions on when you can sell your share. In addition, even if fractional ownership has become more popular in the past few years, it might not be easy to find buyers. There is a chance you’ll get stuck, if you won’t be able to sell your percentage.
- No customisation
When you own your boat, you can customise it and make any adjustments you like. While this is not possible with fractionally owned yachts, you can have some personalisation in the interior, for example textiles and personal items, and equipment.
To summarize, fractional yacht ownership could be for you if:
1. You like sailing a lot.
2. You are okay with sharing.
3. You want to cut the cost of boat ownership.
4. You want to own a boat, but without all the work.
Charter yacht ownership
Last but not least, you have charter yacht ownership. In short, you buy a yacht and place it into charter management. This is another great way to reduce the cost of ownership, since most (if not all) expenses are covered by the charter operator. Additionally, it can help you finance the yacht and, in some cases, even make some profit.
The structure of charter yacht ownership can look very different depending on the charter management program you choose to go with. Generally, there are two kinds of programs: Guaranteed Income and Variable Income. You’ll find the key differences below. For more detailed comparison, we recommend you read the article about the programs on Sailonline.com. You can find it here.
- All expenses and maintenance covered by the charter company
- Possibility to sail in multiple locations with sister ships
- Guaranteed monthly income
- The owner is more involved in the maintenance and the costs
- Only one location, unless there is a special arrangement
- A lot higher financial return, but no guarantee
There are several things to consider when buying a yacht in charter. (link to the other article/post)
One of them is your phase out strategy. Basically, you have three options when the program ends: sailing the yacht home for private use, placing it in a second-tier charter operation or selling/trading in the boat. Make sure you know what you want to do with the yacht before entering any program.
Here are the advantages and disadvantages of charter yacht ownership:
- You own the boat Even if the yacht is being chartered out, you will be the owner of the whole yacht. There are many different charter ownership programs available, of which some are more flexible than others. You get guaranteed owner’s time, which is usually between 6 and 12 weeks. Some companies offer unlimited time for the owners. With some charter operators (usually smaller ones), you can choose the exact boat you like, even with customisation.
- Hassle-free yacht ownership There are no operational expenses. The charter management company takes care of all the expenses and all the work. Better yet, you will receive a monthly income. However, as mentioned before, the degree of involvement and the charter income are dependent on the charter management program you choose.
- Exploring the world
- The yacht will be placed in your chosen location. However, with larger charter companies and special agreements with smaller ones, you have access to an international fleet. This means you can sail on similar yachts from other bases around the world.
Sharing with others
With fractional yacht ownership, you share the yacht with a handful of other boat owners. When you place your yacht in charter management, it will be rented out to charter guests. Depending on the location of the yacht and the charter management company’s clientele, this could lead to heavy wear and tear. Additionally, when you are sharing, you will have limited use of the yacht.
Always make sure to check the charter company’s financial status. Larger operators are usually quite stable, but that might not be the case for some smaller charter operators. However, most of them have been in the business for a long time. Depending on the program you choose, you can either get guaranteed income or rely on hypothetical projections.
Too many options to choose from
With so many options to choose from, it’s easy to get frustrated. Not only do you have to choose a yacht, but then there are hundreds of operators, hundreds of bases, different charter management programs, various contracts… Charter yacht market is very competitive, so be aware of lucrative offers. Make sure you research your options and ask questions, always read the fine print, and don’t hesitate to get help from experts.
Hence, charter yacht ownership could be for you if:
1. You really like sailing, and you have a lot of vacation time.
2. You are okay with sharing – with charter guests.
3. You can afford the down payment and initial costs.
4. You have a clear vision what you want from the boat during and after the program
Hopefully, you now have a better understanding of the different ways to own a yacht. Perhaps you even found the perfect solution for yourself.
Before you head off researching your future yacht, we have a last reminder for you. Owning a boat is not a hobby, it’s a lifestyle. You need to really like sailing and be able to do it often. Having said that, owning a yacht can make your dreams become reality. You cannot truly enjoy freedom until you are sailing into the sunset with the yacht of your dreams. There’s not much that can beat that feeling.