Over the past decade, the trend of clients purchasing shares in Fractional Jet Ownership Programs has grown significantly. This is due mainly to the ease of ownership and the significantly lower price of entry than owning a private jet. When you factor in the benefits of having a team of professionals managing all of the details associated with owning a jet, you begin to understand why Fractional Jet Ownership fleets continue to expand to meet the growing demands of both private and corporate jet ownership. Finally, when you consider that the initial investment and annual expenses are a fraction of the cost to own a private jet, then you realize why Fractional Jet Ownership is an attractive alternative.
Here is just a sample of the laundry list of details that need to be managed when owning a private jet: hiring the pilot and crew; dealing with compensation, payroll, health insurance, vacations and benefits; scheduling regular maintenance and repairs of the jet; stocking supplies and purchasing fuel for the jet; and scheduling flight plans to name a few.
The parallels between Fractional Jet Ownership and Fractional Yacht Ownership are very strong. This is why private individuals and corporations are beginning to explore Fractional Yacht Ownership Programs. Are you considering purchasing a share in a Fractional Yacht Ownership Program? Doing a simple cost benefits analysis reveals that Fractional Yacht Ownership offers an economical way to experience the luxury lifestyle of private yacht ownership.
Owning a private yacht offers entrance into a very exclusive world, but the price of admission is very high. Below is a simple comparison of the costs of Fractional Yacht Ownership versus Private Yacht Ownership for a period of three years:
In this example, a Fractional Yacht Ownership Program purchases a 120’ yacht for $10,000,000. Purchasing a 10% Fractional Yacht Ownership Interest in the yacht costs $1,000,000 and entitles the Fractional Yacht Owner to use the yacht four weeks annually.
Yacht management companies recommend that you budget 10% of the yachts purchase price for the annual operational costs and expenses associated with private yacht ownership. Therefore, the total operating expenses for the yacht are projected to be $1,000,000 annually. The Fractional Yacht Owner will be responsible for paying 10% or $100,000 of these expenses.
Below is an example where a Fractional Yacht Owner makes a cash down payment of 20% or $200,000 and finances 80% or $800,000 of the remaining balance:
10% Fractional Yacht Ownership of a Yacht
10% Interest Investment $1,000,000 20% Cash Down Payment -$200,000 _____________________________________________________________________________ 80% Remaining Balance $800,000 Financed at 6% Interest Only
Annual Expenses
10% Share of Operating Expenses $100,000 Loan Interest on $800,000 Calculated at 6% +$48,000 _____________________________________________________________________________ Total Annual Expenses $148,000
Fractional Yacht Ownership Expenses (3 Years)
Total Annual Expenses $148,000 Number of years x 3 _____________________________________________________________________________ Total Fractional Yacht Ownership Expenses $444,000
Please note that in this example, the Fractional Yacht Owner decides to sell the 10% Fractional Yacht Ownership Interest after three years for $950,000.
Fractional Yacht Owner’s 10% Interest is Sold
10% Interest is Sold $950,000 Lien Payoff Amount -$800,000 _____________________________________________________________________________ Net Proceeds of Sale$150,000
As a result of selling the 10% Interest in the Fractional Yacht Ownership of this yacht, the Fractional Yacht Owner can expect to recoup the majority of the initial $1,000,000 investment. Please note that approximately 50% of the net proceeds of sale will be owed in capital gains taxes.
In this example, the entire 120’ yacht is purchased for $10,000,000. Private yacht ownership affords the owner the luxury of using a yacht 52 weeks per year. A Private Yacht Owner determines when, where and how often to use the yacht. Many private yacht owners will make their yacht available for yacht charter in order to defray the costs and expenses of yacht ownership. Yacht management companies recommend that Private Yacht Owner’s budget 10% of the yachts purchase price for the annual operational costs and expenses associated with private yacht ownership. Therefore, the total operating expenses for the yacht are projected to be $1,000,000 annually.
Below is an example where a Private Yacht Owner makes a 20% or $2,000,000 cash down payment and finances 80% or $8,000,000 of the remaining balance:
100% Private Yacht Ownership of a Yacht
100% Interest Investment $10,000,000 20% Cash Down Payment -$2,000.000 _____________________________________________________________________________ 80% Remaining Balance $8,000,000 Financed at 6% Interest Only
Total Annual Operational Expenses $1,000,000 Loan Interest on $8,000,000 Calculated at 6% +$480,000 _____________________________________________________________________________ Total Annual Expenses $1,480,000
Private Yacht Ownership Expenses (3 Years)
Total Annual Expenses $1,480,000 Number of years x 3 _____________________________________________________________________________ Total Private Yacht Ownership Expenses$4,440,000
Please note that in this example, the Private Yacht Owner decides to sell the yacht after three years for $9,500,000.
Private Yacht Owner’s 100% Interest is Sold
100% Interest is Sold $9,500,000 Lien Payoff Amount -$8,000,000 _____________________________________________________________________________ Net Proceeds of Sale $1,500,000
As a result of selling this yacht, the private yacht owner can expect to recoup the majority of the initial $10,000,000 investment.
Fractional Yacht Ownership versus Private Yacht Ownership
Total Private Yacht Ownership Expenses $4,440,000 Total Fractional Yacht Ownership Expenses -$444,000 _____________________________________________________________________________ Total Savings $3,996,000
In this example, the Total Private Yacht Ownership
Expenses to own a 100% interest in a yacht for a period of three years
is $4,440,000. The Total Fractional Yacht Ownership Expenses to own a
10% interest in a yacht for a period of three years is $444,000. Based
on these projected expenses, the total savings for Fractional Yacht
Ownership versus Private Yacht Ownership are $3,996,000.
After
reviewing the example above, most will agree that Fractional Yacht
Ownership is a very attractive alternative to Private Yacht Ownership.
Review these numbers with your accountant and attorney to get an
unbiased perspective on the cost benefits of purchasing a share in a
Fractional Yacht Ownership Program.
Over the past decade, the trend of clients purchasing shares in Fractional Jet Ownership Programs has grown significantly. This is due mainly to the ease of ownership and the significantly lower price of entry than owning a private jet. When you factor in the benefits of having a team of professionals managing all of the details associated with owning a jet, you begin to understand why Fractional Jet Ownership fleets continue to expand to meet the growing demands of both private and corporate jet ownership. Finally, when you consider that the initial investment and annual expenses are a fraction of the cost to own a private jet, then you realize why Fractional Jet Ownership is an attractive alternative. 
