A Fractional Yacht business allows multiple individuals or entities to share ownership of a yacht. Instead of purchasing a whole yacht, buyers can buy a fraction of the yacht, which grants them usage rights for a specific amount of time each year at a fraction of the cost of buying the entire yacht. In addition the annual expenses are divided by all of the owners as well thus making yacht ownership far more affordable.
What we found was that those who failed were primarily sales-driven organizations. Most were in the yacht sales business, they bought yachts for say $3 Million and tried to sell 4 shares at $1 Million each and make a Million dollar profit.
- We don’t and won’t own any boats, we are a marketplace for every boat that’s for sale. The others need to sell new shares in order to maintain their operations. Most of the fractional yacht programs were setup by manufacturers as a way to increase sales, so selection was limited to that builder’s models, and experience in yacht management was severely lacking.
- The more successful models are management-driven; they have a strong land-based management division and rely on management fees, not new sales, to sustain their fleet. Not coincidently, virtually all-previous fractional yacht programs relied on a sales-driven model. Another factor for our success is that our entire inventory is provided by current yacht owners who are accustomed to absorbing 100% of the expenses of ownership, (less charter revenue). What this means is that unlike an operator who purchases and maintains inventory, our inventory is provided and paid for by yacht owners who view the fractional model as an attractive exit strategy, not a profit center.
- We work with yacht brokers on the buy and sell sides. We give them another tool to help their clients sell their boats faster and for more money.
- We are similar to the marketplaces that are provided by that of NetJets, Airbnb or eBay.
When a yacht is accepted into the program and has completed the contribution survey process, we create a detailed maintenance manual specific to that boat and its systems, encompassing every element on the yacht. Every pump, valve, motor, gear, through-hull fitting, electronic part, door track, opening hatch or other moving parts, and all cosmetic aspects of the yacht are quantified and documented. Detailed maintenance schedules are then created and crew members are assigned specific tasks. Each day, week, and month those tasks are dispatched to the appropriate individual and the status of each is reported back to our home office through the on-board software. The crew is not only responsible to the captain, but also to the land-based manager. These procedures ensure that maintenance is being done “by the book”.
- When a yacht is accepted into the program and has completed the contribution survey process, we create a detailed maintenance manual specific to that boat and its systems, encompassing every element on the yacht. Every pump, valve, motor, gear, through-hull fitting, electronic part, door track, opening hatch or other moving parts, and all cosmetic aspects of the yacht are quantified and documented. Detailed maintenance schedules are then created and crew members are assigned specific tasks. Each day, week, and month those tasks are dispatched to the appropriate individual and the status of each is reported back to our home office through the on-board software. The crew is not only responsible to the captain, but also to the land-based manager. These procedures ensure that maintenance is being done “by the book”.
- After signing our Letter of Intent and Non-Disclosure Agreement we will e-mail all documents to you or your attorney for review. Our attorneys are also available for your counsel to confer with at anytime.
All Yachts must qualify to be in our program; they must have a recent survey done to prove there is no major maintenance issues and that the Yacht is in above average condition. All yachts must be less than 10 years old. They must have a captain and or crew, Owners can not drive the yachts. The Yachts market value must be above $1 Million
Why is it important to have a well-run well-managed yacht?
Boats that are not run well and kept in great running condition, and are not managed well, will lose their value much faster than yachts that are, when you go to sell it, people know when there’s a lot of differed maintenance issues. we stay ahead of things that are going to go wrong. We know things can only last so long like toilets and air conditioners and generators, you may as well replace things as they go bad and be able to enjoy the vessel and when its time to sell your share or the entire boat you get full value out of it.
Why are there so many maintenance issues on a yacht?
Because these are basically floating hotels in the middle of an ocean. Salt water environments attack everything, especially electronics on boats and their toys. things have to be replaced much faster than in fresh water, and the bigger, the boat the more things that need to be replaced from navigation equipment and radars to scuba diving equipment.
What happens if someone doesn’t pay his or her share of the operating expenses?
If an owner fails to meet his obligatory payments, he is denied use of the vessel. The defaulting owner will have a certain amount of time to bring their account current. If the owner in default fails to pay his bills the other owners have the right to sell the defaulting owners share on our marketplace to recoup the money. The other owners can also choose to absorb those shares and then get more usage of the yacht and pay that additional expense.
What happens if the Yacht is damaged on a trip?
If the damage is caused by captain error or even Mother Nature, The yacht is fully insured but the policy does have deductibles that will be charged to the owners and that will come out of the reserves. If an owner damages the furnishings while on board, then he is responsible for the cost of that repair.
How do the annual expenses work
Each used yacht will have a current annual expense report, we will go over them with the current captain in fine detail to make sure it is accurate. It will include all of the annual expenses: Crew, Dockage, Annual maintenance work and our Management fee. The number of owners and there % of ownership will divide this total. The owner will be responsible for paying their share of the expenses on a quarterly basis. New boats we will project what they should be based on other boats of that size and scale.
Am I responsible for damage to the boat?
- Yes, we want the yacht back in the same condition it was before your boarded. When you are on the boat you are responsible for any damage you or your guests cause. Yes if you family member spill red wine on the carpet or cause any damage or break anything on the boat, the captain and crew will make a note of that. If the next owner that uses the yacht and notice anything broken they must report it to the captain crew right away. They will keep a log of any and all damage and the cost to repair it. The cost will be billed to the owner that cause the damage.
Selling my shares
- You can sell your shares on our marketplace at anytime. We would refer you to a yacht broker that is familiar with fractional yachts. They would help you figure out the total value of the boat to help come up with the value of your share %. Then the broker would list your share of the yacht for sale on all the yachting MLS sites and our website. You would use our agreements to close the deal, any questions you can contact us at any time.
What happens if some of the owners decide to sell the boat
- If 75% of the owners decide to sell the boat they can put the boat on the market both as a fractional yacht and the entire yacht. Whichever sells form of the sale that occurs first is the way the yacht will be sold. A good way to sell out of a boat is simply for each individual owner to sell as they no longer want to be an owner of that boat.
Can I captain my Yacht
- These yachts are incredible difficult to operate. It takes a lot of skill especially in high winds and or challenging currents. It take years of experience captaining large yachts. Its best to leave that to the professionals and let you enjoy your time with your friends and family while on the yacht.
Is this a Time Share?
- No, you will be on he title of the boat. You can sell your share of the boat at any time through our marketplace at the current value of the boat.
How many owners are there per yacht?
- A maximum of five owners per yacht. Based upon our experience, a maximum of five owners is the ideal number to promote efficient scheduling and maintain an intimate ownership experience for each owner. Most yachts will have 2-4 owners.
- Gratuities or Tipping
- No tipping is allowed to the staff, you are already paying them. If the boat is being used for Charter trips the crew would receive a gratuity from the charter guests and that is considered a bonus to them.
How much money can a Yacht make in chartering?
As a general rule, the best yachts are chartered gets booked only 5 or 10 weeks a year, and that could bring in somewhere between 50% – 100% of the annual expenses, but will not bring in a true profit to a boat. And that is based on the owners not using the boat on the 10 most sought after weeks of the year.
Yacht charter revenues
Many yacht owners use that money to pay for the annual expenses of the boat, whichever partner put in that time block for the charter receives a credit for that time. They can also use the money to pay for improvements on the boat or buying new amenities or toys for the boat
