Does fractional ownership ever work?

B

Billylll

Active member
Member
Joined
Dec 9, 2006
RO Number
24494
Messages
10,273
I'm thinking about possibly doing a fractional ownership on my Gulfstar 36 Mark II. What are the pitfalls? Is this a crazy or silly idea or could it work?
I have seen it done with a Mainship 31 Sedan Bridge.
Bill
 
IMO it is very hard to do successfully. The best way to ruin a good friendship is to partner on a financial deal.
 
I guess it can, especially if it's someone you already do a lot of boating with. I have two friends that own a boat together and it seems to work great for them. The rub comes if the two "owners" don't have similar lifestyles and habits when it comes to care and feeding of the boat. I would think it's also critical there is a contract in place that covers all the logistics of owning, maintaining and paying for the boat. Personally it's not for me, we rented our lake house out a few times to friends - no problems, we just realized we are too particular to share something like a boat or vacation home. Love to have guests, just not renters or co-owners.
 
Bruce I tend to agree with you, however BillK I do have a friend that just sold his 25' Parker who has expressed some interest into going into the Gulfstar with me. It's kind of a last ditch effort on my part. I do have interested parties in outright purchases I'll see how that plays out 1st.
Bill
 
It will be a matter of tolerance. If you can give up the idea it is your boat that will always be kept as you wish it might work.

How the deal gets terminated is something that needs consideration.
Under the circumstances you have described go for it. Perhaps a one year trial deal could be worked out.

With you as a partner the other guy will be getting the best deal.
 
I imagine it would only work with a new or close to it boat, that only needed routine, prescribed maintenance, with very few decisions to be made. For a refit project like yours, I can't imagine it working out well - because you will never agree on what to spend on new Air Conditioners, Electronics, etc. One of you will want to remove and sell the hardtop/upper station, the other will want to keep it.

That being said, I was going to do it a couple years ago with a friend, when I boat we both liked came on the market, and I was low on cash and time. We had a pretty specific plan as to how we would split the purchase price, expenses, and then I was going to buy him out for a percent of his original investment after 2 years. Never proceeded because the boat sunk at the dock before we made an offer. So we are still friends, unlike if we would have bought the boat, and it sunk a few weeks later.
 
quote:
Originally posted by alk

I imagine it would only work with a new or close to it boat, that only needed routine, prescribed maintenance, with very few decisions to be made. For a refit project like yours, I can't imagine it working out well - because you will never agree on what to spend on new Air Conditioners, Electronics, etc. One of you will want to remove and sell the hardtop/upper station, the other will want to keep it.

That being said, I was going to do it a couple years ago with a friend, when I boat we both liked came on the market, and I was low on cash and time. We had a pretty specific plan as to how we would split the purchase price, expenses, and then I was going to buy him out for a percent of his original investment after 2 years. Never proceeded because the boat sunk at the dock before we made an offer. So we are still friends, unlike if we would have bought the boat, and it sunk a few weeks later.

Click to expand...

Andy what you're saying makes sense. Probably too many negatives to be worked out vs benefits.

Although not many if any purchases need to be made. The equipment is all purchased but not installed I'm short on money and time (health issues) otherwise I'd finish it myself.
Bill
 
I did it with a small center console (big difference from what you're talking about) with a good friend. We purchased it together, shared it for a few years and then she decided she did want to get into boating for herself. We went to the dealer, got the value and I bought her half and kept the boat a few more years. We're still good friends today.
 
Bill:

Fractional ownership is no different than a marriage. You have to have compatible goals and desires, work at it all the time, be reasonable, respectful, expect differences and be willing to compromise. If it doesn't work out, selling will cause a lot less headaches than a divorce.

Gene
 
Bad, bad, bad. For every success story, there are 100 that went south. Especially for someone like you who likes to invest, tinker and upgrade your vessel. If you do go down this path, make sure you have a written contract with every scenario you can imagine no matter how close of a friend. Even with that, there will be the unexpected.
 
Hank it being a partnership would be my last ditch effort. I do have 2 interested parties in an outright sale. I actually prefer that, keeping all my goodies that are not installed for the next project once things straighten out with my health and wealth.
Bill
 
Billy, if you are anal about the boat...... (like me).

Well, 'nuff said.

RWS
 
quote:
Originally posted by Billylll

Hank it being a partnership would be my last ditch effort. I do have 2 interested parties in an outright sale. I actually prefer that, keeping all my goodies that are not installed for the next project once things straighten out with my health and wealth.
Bill

Click to expand...
Just my .02 from a non-vested party - It sounds like the outright sale would be your best bet. As you said, you can save your parts for the next install, or offer to sell some of them to the new owner. Who knows, maybe the next boat will be fairly complete and not require too much.

Best of luck whatever unfolds!

Paul
 
How's your friend for cash? Another option is to have him buy it from your for say 13 grand, and it's HIS boat for the next x years ( 2 or 3). At which point you then buy it back from him, for say 9 grand. So he gets to use the boat for three years, with little risk, and average depreciation. You get the boat in two or three years when ideally your time and money are in better shape. Instead of sharing ownership, he gets it for 2 years at a cost of 4,000, and then it's your boat in 2016, with less invested. And even if you aren't in the position to hold up your end of the deal, theoretically he shouldn't have to much problem selling it on the open market for 9,000, so he is still whole.

This was the plan I was going to put together with my buddy, but like I mentioned, the boat sank first. Of course if the boat would have sank when he owned it, he would have made a nice insurance profit, and I would have taken a bath, so little risky friendship wise - but might be easier than walking away. Of course if you have buyers looking to give you back anywhere close to what you have invested - might be easiest to walk away now, and try again in a few years. Old boats are getting cheaper by the day. By 2020 you will be able to buy an early 80's fifty foot Hatteras for less than the cost of a decent Toyota.
 
And when you buy the boat back in 3 years and find there has been little routine or preventive maintenance done, are you still friends?
 
I guess it comes down to friend vs trawler I'll take my friendship over the boat any day.

The more I think about my latest idea for saving the boat I keep coming back to disaster.

Thanks for your insight.........
Bill
 
I have some friends who are so confidant in each other that they let each other use their boats from time to time. Is there any possibility that your friend could help you get the boat home, do some work and come along for short trips to help out and if you each became comfortable doing that some other arrangement could be worked out?
 
Fractional ownership works in the case of time shared condos. However, in that case, the management is competent, professional, experienced and relatively independent of the "owners". That is hugely different than splitting costs with a friend whose personalities are likely to get in the way.
 
It works, just don't do it with a friend. I've done it several times on aircraft and it's great. I also did it with an airplane and boat at the same time, even better since the only conflict is who gets which toy each weekend.

If you find someone with compatible use like one partner wants a few long trips per year and one wants to use it mostly weekends it's great. Just run it like a business, one partner is usually the managing partner but rules and responsibilities are clear to all. Might also be better if it's not 50/50 so you are clearly in charge.
 
You must log in or register to reply here.
Back
Top