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 yacht charter.
Yacht Charter 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 Yacht Charter 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, a 120’ yacht is chartered four weeks annually at a weekly rate of $90,000 or $360,000 annually. Below is an example where a private individual charters a yacht four weeks annually for a period of three years:
Annual Costs
Yacht Charter rate per week $90,000 Number of weeks of yacht charter per year x 4 ____________________________________________________________________________ Annual Costs $360,000
Annual Gratuities
Annual Costs $360,000 15% Gratuities Paid to the Crew x 0.15 ____________________________________________________________________________ Annual Gratuities $54,000
Total Annual Costs and Gratuities
Annual Costs $360,000 Annual Gratuities +$54,000 ____________________________________________________________________________ Total Annual Costs and Gratuities $414,000
Yacht Charter Costs (3 Years)
Total Annual Costs and Gratuities $414,000 Number of years x 3 _____________________________________________________________________________ Total Yacht Charter Costs $1,242,000
Fractional Yacht Ownership versus Yacht Charter
Total Yacht Charter Costs $1,242,000 Total Fractional Yacht Ownership Expenses -$444,000 ____________________________________________________________________________ Total Savings $798,000
In this example, the Total Yacht Charter Costs to charter a yacht four weeks annually for a period of three years is $1,242,000. 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 Yacht Charter are $798,000.
After reviewing the example above, most will agree that Fractional Yacht Ownership is a very attractive alternative to Yacht Charter. 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.
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 yacht charter. 
