If you love to charter regularly and want to explore the world on different boats, you may have considered buying a boat in a charter program to offset your cost of ownership.
There are many different ownership programs offered by charter operators to suit the needs of their clients. While you may be tempted by fractional ownership, be sure to understand what this proposition entails and what the associated risks are.
Fractional ownership is usually advertised as a way to get your feet wet with a smaller investment, but without the hassles of owning outright. But as you’ll understand below, the devil’s in the fine print.
Unlike a time-share arrangement (made popular through boat-sharing clubs), fractional ownership gives you a share of ownership of the yacht; a time-share arrangement only gives you the rights of usage of the boat for a certain amount of time. And when that period ends, so does your investment.
A share of a boat? What does that mean? Who owns the yacht: the members, or the corporation composed of the members, and what’s the difference?
These thorny questions may be the reason fractional ownership has fallen out of style, and is harder to find amongst yacht charter operators. As attractive as it may sound, fractional ownership is a complicated matter that involves a lot of risk and uncertainty.
In other words, be prepared to carefully evaluate the option with your legal counsel.
Consider this example of a yacht priced at $1,000,000 fully equipped, delivered and commissioned to your desired charter location.
For those looking to bring a higher down payment without financing, Navigare’s Smart Program offers a solution similar to a leasing program, as outlined below.
For buyers who prefer a lower initial investment without financing, our best recommendation would be to identify the partners yourself and acquire the boat together, as many of our owners have already done.
The trust, shared end goal, and common understanding of the co-owners are critical for a successful partnership. Navigare will handle the rest!
These programs offer the same benefits of the fractional ownership option as listed above, but without its drawbacks and uncertainties.
In the Complete Program offered by Navigare, owners enjoy guaranteed returns up to 8.5% per year for up to 6 seasons. There are up to 12 weeks of owner usage included, with reciprocity sailing in more than 50 destinations worldwide. The cost and handling of boat maintenance, dockage and insurance are on the operator, so there are zero hidden costs or surprises.
In Navigare’s Ultimate Program, owners enjoy variable returns up to 12% annually for up to 7 seasons, net of operating expenses.
Financing is available for both programs with a downpayment of 20% of the total price of the boat. Fill in the form below, and the Navigare sales team can send you a proforma and put you in touch with third-party marine lenders.
Finally, Navigare Yachting also offers the Smart Program for buyers looking for a lower total investment. There are two variations of this program: Smart Low, with 40-50% upfront payment, with a balloon payment at the end of the charter term of 15%; and the Smart option which requires 50-60% upfront payment. In both cases, there are zero out of pocket costs for the owner. And while there is no income disbursement, the charter revenue pays for the balance of the vessel. Therefore your yacht is fully paid off at the end of the charter term.