The Syndicate Model
If you have owned a large luxury boat then you will already know that shared ownership makes a lot of sense. Luxury boats are beautiful machines and there is nothing like cruising in one, but justifying the annual costs is not easy. Large boats require maintenance and lots of it.
Probably the worse-kept secret in the boating industry is how few days the owners of large boats actually use them. When you calculate the cost of boat ownership based on the number of days that they are used, the cost is large – which means that it is not a good deployment of your assets. With this boat share you will be able to use the boat almost any time you want with only 1/5th of the costs.
A keen boat owner will use their boat for approximately 21 days per year. This equates to just 6% of the time. This explains why marina’s always seem to be full of boats that are not being used by their owners. A syndicate of 5 people who use the boat for 21 days each will increase the total usage to 105 days per year which is still only 29%. As you can see by the numbers that still means the boat will sit idle for 71% of the time!
Usage of the vessel will be managed using an online booking system on www.boatsyndicate.com.au. Our system will allow an owner to make a booking to use the boat at anytime. Each day of usage will cost a certain number of points depending on whether it is a weekday, weekend, or public holiday. So as each owner uses the boat they will accumulate points against their name. The points allocated are then used as a means of prioritising use to one owner in the event that multiple owners want to use the boat on the same day. ie. the owner who has the lowest points balance will be given priority. This system worked very well in my previous syndicate and I can only remember one occasion where an owner enforced the points system to get priority. On most occasions a simple telephone call between the owners sorts out any clash.
So our syndicate model will allow use of the boat at any time and by any owner. You just have to make a booking using the online system.
The syndicate will be a private syndicate so unlike a typical fractional ownership company no profit is made from the annual operating costs. The actual operating costs will be simply shared between the 5 owners. Each owner will actually own 20% of the boat and will participate in the operation of the syndicate. This is not a timeshare scheme.
Maintenance and operating costs will be shared equally between all partners. However, fuel usage will be based on a user pays system. Use of the boat is also shared in a manner that ensures equal access for all partners. The boat will be regularly cleaned by a boat cleaner and the cost shared equally between all partners.
Each syndicate partner will be required to sign a syndicate agreement. This will set out the way the syndicate will run and will clearly explain issues such as usage, refuelling, sharing of costs etc.
Advantages and Disadvantages
What are the advantages of a syndicate?
- You get the big boat experience for the cost of a smaller boat.
- Reduced time commitment to owning and maintaining the boat.
- The boat is generally maintained to a higher standard due to a more generous maintenance budget.
- Holidays at Rottnest without the hassle of finding accommodation.
- The boat engines are run more often.
- Maintenance costs are shared equally between the partners.
What are the disadvantages of a syndicate?
- Use of the boat has to be shared.
- There is a risk of one owner not looking after the boat.
These are the only disadvantages I am aware of. Considering the massive cost saving of being in a syndicate I think these disadvantages are worth living with.
Purchasing the Boat
The boat will be purchased with each partner owning 20% of the boat. Each share will cost 20% of the boat purchase price plus the other costs associated with the syndicate setup. The additional costs will include the cost of advertising for partners, web site construction, preparation of syndicate agreement, etc.
It is intended to purchase a brand new Riviera M400 sports cruiser for approximately $600,000. The boat will be purchased from the local Riviera dealer at Aquarama Marina in East Fremantle. The dealer will be able to provide a pen for the boat at Aquarama.
Please email me for more detailed specifications and costs of the boat.
