A Complete Guide to Fractional Boat Ownership

Have you ever dreamed about taking a large yacht or some other type of boat out into the water with your friends and family? Have you heard about fractional boat ownership, but you aren't sure what it entails?

Being able to own a boat partially and still use it during certain parts of the year is what a good portion of people in America do. The best part about fractional ownership is you have the opportunity to sell your share at any time.

Sound interesting? Great! In this brief fractional boat ownership guide, we will go over fractional ownership and who you can reach out to for all your available options.

What Is Fractional Boat Ownership?

Fractional boat ownership involves bringing like-minded people to purchase boat assets that typically have high maintenance expenses, high depreciation rates, and management responsibilities. For example, most boats require insurance, tank cleanings, oil changes, and other types of maintenance.

When you own a boat on your own, you are on the hook for all those maintenance orders and upgrades. With fractional ownership, you won't have to worry about paying for all of that. Companies that have the proper expectations and systems in place of fractional ownership can work very well for those involved.

The biggest perk of taking part in fractional boat ownership is the opportunity to have more assets for the money. With fractional ownership, you legally own an asset, and you can choose to sell it or transfer that ownership if you would like.

The portion of the vessel depends on you and the company. Some people own about 10% of the ship, while others have 50% ownership.

Fractional vs. Whole Ownership

Whole ownership is the idea that you own a boat outright. Instead of sharing a share in a vessel with other people, you are the only listed boat owner. You have to take the brunt of all the responsibilities with whole ownership.

This means making sure the boat is fully insured and well maintained. If you don't have your own dock, you may have to pay someone to dock your boat when you aren't boating as much off-season.

Most people don't "need" boats as most types of vessels are seen as luxuries. This is where fractional ownership shines. Fractional owners don't have to worry about maintaining, keeping, or insuring the boat because their portion already pays for all of that.

If you just want the luxury of taking the boat out for a vacation a few times a year and not having to worry about the maintenance, you may want to look into fractional ownership. Instead of paying thousands, if not millions, of dollars on a boat, you only have to pay a small portion, depending on how many shares you have.

Fractional Boat Ownership Costs

The cost of your fractional boat ownership depends on the number of shares you have in the boat, the company's terms and conditions, and the type of boat. For example, let's say you are interested in a 63-foot yacht with four cabins. You want to have an eighth of the share in the company.

The company advises it's about $180,000. Annually, the company also states that there are additional costs such as maintenance, crew, boat insurance, and anchorage, adding $24,000 a year.

Owners in this scenario would be able to use the boat for four weeks out of the year. Keep in mind that every company is different, and they all have their own sets of rules. The amount you pay per share may also depend on the boat's location.

Pros and Cons of Fractional Boat Ownership

One of the biggest pros of fractional boat ownership is being able to use a beautiful, state-of-the-art boat at your leisure at a fraction of the cost. Not only does this avenue cut costs down for you, but it also reduces time on your time investment.

As mentioned earlier, there are companies that take care of the maintenance on your behalf. This means you won't have to worry about finding contractors or dealing with any maintenance when the boat is in the yard or at a port.

New Locations

Depending on your contract, your boat may be able to be cruised to and from different ports. It is not uncommon for fractional ships to be moved to new locations if the majority of the owners agree to that idea. Make sure that you review your contract to see if this is a feasible solution for you.

Sell Your Share

You have the option to sell your share of ownership at any time during your contract. Since fractional boats are always well serviced and maintained, the value of your share may not devalue.

If you owned a boat on your own and decided to sell it, you would have to deal with the depreciated cost of that vessel on your own. Again, make sure to read over your contract and ask your program manager about the terms and conditions of your shares.

Less Maintenance Cost

Instead of taking care of the maintenance cost of the boat on your own, that amount is typically shared amongst the owners. Some companies take care of those costs on behalf of the owners, but for the most part, those costs are split amongst the owners.

Boat Variety

If there are any weather issues or maintenance issues with your vessel, you may have the opportunity to use another boat at the port. Most boat companies have a fleet of vessels at their locations for you to use. These boats have the same approximate value.

Test Out Your Boat

There are a few organizations out there that allow you to test the boat out on the water. You have the opportunity to join their boat clubs to try out the vessels. If you find a ship you like, you can move into fractional ownership.

Cons of Fractional Boat Ownership

Although there are a significant number of benefits of having fractional ownership on a boat, there are a few cons you should consider. For example, if you are someone who likes to captain your ship, you may not be able to do that with fractional ownership, especially if you are interested in a larger boat. Most larger boats require a crew on the ship.

Unwanted Destinations

If you don't have a large majority share in the vessel, you may not have a say in where the boat goes if the other shareholders agree to cruise it to another port. Although they may move it to a location you like at one point, they also may move it somewhere you may not be a fan of. If all the other owners agree, you are out of luck.

Catch-22 With Shares

You have the same rights as any other shareholder to sell your ownership in the boat. Although that is a beautiful benefit, it comes with stipulations.

If the majority of the shareholders decide they want out of the agreement, the ship could be sold from under you. Different contracts have different stipulations, but in most cases, if the majority of the owners want to sell their shares, the boat will sell, and the proceeds will be divided.

What Is a Boat Club?

As mentioned above, there are some companies that allow you to "test the waters" with their boats in a boat club style. A boat club is an organization where like-minded people pay a membership fee to use a vast fleet of vessels.

The boat club maintains a fleet of boats of different sizes and types. This option differs from fractional boat ownership because most boat clubs come with amenities and events that you and your family can participate in.

Boat Club Vessel Access

The variety of boats that a boat club member has access to depends on their level of membership and the club's location. For example, those clubs located near a small lakeside community may only have a small limited fleet. A boat club located by the oceanside would most likely have more of a variety of boats.

Most boat club members reserve their boats ahead of time to ensure they have the type of boat they want. There are peak times where there is limited availability for popular boats, so boat club members try to reserve boats months in advance.

With a boat club, there is usually no limit on how often you can rent a boat. So if you want to rent out a boat for a weekend and turn around and do it again the following weekend, you can do that!

Each boat club operates differently, so make sure that you review the club's fleet size, reservation system, and types of boats they have before you make your final decision.

Why Join a Boat Club?

Many people like to join a boat club because of the various types of boats available to use at their disposal. Most of these clubs also have fun events for their members to participate in.

Maintenance and Liability

Instead of you having to worry about maintenance costs or liability insurance, the boat club will take care of those things on your behalf. If any boat needs maintenance, the boat club will take that vessel off the list of available ships to take care of it.

Thanks to their large fleet of ships, you won't have to worry about waiting for a specific boat to be ready for you to use.
If there is an accident on the boat or anyone gets hurt, the boat club will also take care of that. Liability insurance is already included in the membership. Make sure you read over the policy before you get onboard.

Boat Training

Most boat clubs have mandatory boat training before you can head out on the open water. This training is to ensure that you know how to captain certain boats.

Even if you have experience, their team will want to ensure that you are comfortable driving their boats. The training is also beneficial if there is a particular boat that you don't know how to drive, but you want to learn how. The trainers will ensure that you know all you need to know to navigate safely.

Low Costs and Monthly Fees

When you purchase a share in a boat, you are expected to pay a pretty decent portion of money for a percentage of ownership. With boat clubs, you only have to pay an affordable initial fee and a monthly fee, and you can take out whichever boat you want within the terms of your contract. The cost of buying a share or buying a boat on your own costs significantly higher than fees charged by boat clubs.

Join a Reputable Boat Club Today

Although fractional boat ownership can work for some people, it may not be ideal for others. Boat clubs offer you the option to drive all types of boats at any time of the year.

The best part about these clubs is that they have different locations throughout the United States to use if you travel. Contact us today if you are ready to learn more about joining a boat club and the associated fees! Boat club memberships come with many great amenities for you and your family to enjoy.