Purchasing a yacht with 3 other friends

[icedog11]

As with any partnership, the details have to be agreed upon up front, be legal and binding, having an outside arbitrator agreed upon at the outset is also important even if it is a coin flip( expressed in an earlier post) exit agreements, placing value on labor, usage agreements, everything must be considered and agreed to before hand. talking to people who have done this and what went well and more important what went wrong will help you address as much as possible and even then you will miss something. It can work but it is hard work up front.

[Mithril Bham]

Originally Posted by icedog11

As with any partnership, the details have to be agreed upon up front, be legal and binding, having an outside arbitrator agreed upon at the outset is also important even if it is a coin flip( expressed in an earlier post) exit agreements, placing value on labor, usage agreements, everything must be considered and agreed to before hand. talking to people who have done this and what went well and more important what went wrong will help you address as much as possible and even then you will miss something. It can work but it is hard work up front.

Even if you are involved with old school people, whose word is actually their bond (they do still exist), getting things on paper is a great reference and eliminates many misunderstandings. Learned that lesson the hard way more than once.

[Stumble]

I have written a number of these contracts for others Andrew been involved in a few dissolutions of them. The primary downfall of them all is not when someone says they want out, but when they just slowly stop using the boat and get tired of paying for it.

Suddenly you turn around and there are thousands of dollars in unpaid contributions that need to be refunded, a boat with a lot of deferred maintenance, and no good way to collect.

They can work well, but frankly I think they are generally a bad idea unless both people could afford the boat on their own I feel they chose to.

[icedog11]

Originally Posted by magellanyachts

Even if you are involved with old school people, whose word is actually their bond (they do still exist), getting things on paper is a great reference and eliminates many misunderstandings. Learned that lesson the hard way more than once.

Intended my post to mean a written agreement.

[icedog11]

Originally Posted by Stumble

I have written a number of these contracts for others Andrew been involved in a few dissolutions of them. The primary downfall of them all is not when someone says they want out, but when they just slowly stop using the boat and get tired of paying for it.

Suddenly you turn around and there are thousands of dollars in unpaid contributions that need to be refunded, a boat with a lot of deferred maintenance, and no good way to collect.

They can work well, but frankly I think they are generally a bad idea unless both people could afford the boat on their own I feel they chose to.

this can easily be addressed at the outset. Over contributing to a kitty to be used in the event of a short fall and collection remedies, or a suspension/ forfeiture of ownership right are often parts of a contractual agreement. This has to be done up front, own a third, miss X number of payments your ownership portion goes up for sale for what you owe or you are just removed from ownership and the remaining partners absorb your portion.

[Lepke]

I owned in partnership with a close friend many years ago. Most of my boat time was spent making repairs my partner caused.
It's like being married. Each needs to voice expectations.

[jacktheflyer]

But in the end, hey i have a decent boat and 2/3rds of the expenses are covered by other people. Still not a bad deal and i get to sail, often with a substitute crew when i can find them, more often then the rest of them. I just gotta get over i do more work then the rest of them.[/QUOTE]

This sums it up for me. We started with three in the syndicate which is now two. I do all the work which I don't mind except when the unpleasant jobs like clearing a sewerage blockage are left for me and I rationalize as per the above. It is a struggle though to keep an even keel sometimes.

My advice is to have a firm and agreed exit strategy.

[donradcliffe]

I'm going landsailing next week with my old boat partner--still good friends after 35 years. We had a handshake agreement, and raced the Santa Cruz 27 successfully for 8 years. When I wanted out, he found someone to buy my half of the boat, which he still owns.

Maybe the reason we didn't run into trouble was that both of us could have afforded to buy and campaign the boat by ourselves.

[hafa]

The viability of any kind of multi party ownership is heavily influenced by the personalities involved. That said, documentation of all aspects is imperative to the success of the undertaking. A few things that have worked for us:

1. Keep a ledger in the form of a spreadsheet documenting all maintenance expenditures by members.
2. Agree upon a set hourly rate for all maintenance tasks performed by members and record the hours on said spreadsheet.
3. Use said spreadsheet to determine who buys the "next round" of parts or services; do this regularly to ensure equity.
4. Agree ahead of time that the buy out cost is equal to the buy in cost; keeping this completely separate from the maintenance ledger will avoid complicated negotiations should one partner wish to exit.

[jduve]

I am in 2 yacht sharing schemes and both have been very successful. The first is a syndicate where each member buys a share of the boat which they can sell when they want to exit. The other even more successful model is a yacht club that owns the boat and each member buys a right to use the boat. When a member wants to leave they simply resign and get their money back.

In both schemes each member pays an annual subscription in advance which covers the maintenance, registration, insurance and other running costs. In the club model each member also pays an annual amount for depreciation of the boat.

If a member does not pay up each year they lose access to the boat, and their annual subscriptions are deducted from the amount returned to them when they exit.

The key is to have a clear constitution, a legal document that clearly sets out the details of the partnership; Entry and exit processes, decision making, finance, rights to use.

Many boats are stationary sitting at the dock for most of the time. In the sharing models the asset utilisation is about 95%. This creates great value for each of the members. Their costs are minimised. The model obviously suits those that want part time use of a boat for exclusive access a year.

Another advantage of the club model is that club members sail the boat together to move it from one cruising ground to the other. We have competent crew to move the boat so we can cruise the boat widely. Our boat is in Hobart at the moment and it is going to the Whitsundays for the winter. We sail it over the Australian coast and the SW Pacific and we have had it in NZ, New Caledonia and Vanuatu.

Here is a link to our website which explains the model in more detail.
even keels cruising club - home We do not have any vacancies at the moment, howeve, If you want to set up a club along the same lines, PM and I can provide a link to a draft constitution.

[Garethk]

Originally Posted by hafa

The viability of any kind of multi party ownership is heavily influenced by the personalities involved. That said, documentation of all aspects is imperative to the success of the undertaking. A few things that have worked for us:

1. Keep a ledger in the form of a spreadsheet documenting all maintenance expenditures by members.
2. Agree upon a set hourly rate for all maintenance tasks performed by members and record the hours on said spreadsheet.
3. Use said spreadsheet to determine who buys the "next round" of parts or services; do this regularly to ensure equity.
4. Agree ahead of time that the buy out cost is equal to the buy in cost; keeping this completely separate from the maintenance ledger will avoid complicated negotiations should one partner wish to exit.

You need to factor in Depreciation when you buy out

[sistef51]

Positive experience for more than 20 years. Reduced costs, one way cruises (the partner reaches you where you are and sails back), lot of fun during maintenance. The boat doesn't stop unused for most of the time during the year but just the contrary.
For myself and the others partnership was the only way to afford a boat.
It's something for ADULT PEOPLE only, selfish NO THANKS!

[Garethk]

Just sold my bavaria cruiser 45 and looking to half share a 40-45 ft production cat for 2 years. looking to purchase in Fiji and spend two years to bring it back to Australia. drop myself a line if anyone is interested, 150K half share budget plus ongoings. Cheers

[hafa]

Originally Posted by Garethk

You need to factor in Depreciation when you buy out

Good point; dependent on purchase cost VS local market worth.

Originally Posted by sistef51

Positive experience for more than 20 years. Reduced costs, one way cruises (the partner reaches you where you are and sails back), lot of fun during maintenance. The boat doesn't stop unused for most of the time during the year but just the contrary.
For myself and the others partnership was the only way to afford a boat.
It's something for ADULT PEOPLE only, selfish NO THANKS!

This mirrors our experience. There's no way I could afford the ongoing costs without a partner and our boat is much happier with regular exercise. Stingy folk need not apply.

[Dockhead]

Originally Posted by boatman1

I'm familar with only one such shared ownership scenario, and it worked out well. Three late middle aged guys owning a sport fisherman worth maybe a half million. One former astronaut, one retired airline pilot and my father, a contractor/developer. All three guys lived within a few miles of each other, and the boat was berthed in the same area (Florida Keys). All three owners were "comfortable", were "nice" guys and enjoyed each others company and often fished together. Without their common interests and financial security it may well have not been such a succesful joint venture.

I also know of a case like this. In fact the guys I know not only own a boat jointly, they actually BUILT the boat themselves, together. 30 years later, they still sail together and have a great time. Three families.

I think it depends less on how you do it, than it dies on WHO you do it with. And on your own ability to form and maintain a close relationship with many complex intertwined interests, and necessity to be very considerate and flexible about your partners' interests. People who have had successful business partnerships and happy marriages, are a good clue.

I would go into a boat partnership in a heartbeat, with those particular guys. For them, joint ownership is not only far cheaper, it's also much more fun.

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