Purchasing a yacht with 3 other friends

[boatman1]

I'm familar with only one such shared ownership scenario, and it worked out well. Three late middle aged guys owning a sport fisherman worth maybe a half million. One former astronaut, one retired airline pilot and my father, a contractor/developer. All three guys lived within a few miles of each other, and the boat was berthed in the same area (Florida Keys). All three owners were "comfortable", were "nice" guys and enjoyed each others company and often fished together. Without their common interests and financial security it may well have not been such a succesful joint venture.

[Cheechako]

Originally Posted by valhalla360

Treat it as a business deal with the assumption that your buddies will do no work, pay late and in the end mess you over.

Then if they are really your friends, you will be pleasantly surprised.

I think so. This type of deal just smells of problems to me. Specify, how maintenance is done etc. I can easily see 2 of 4 people doing bottom jobs and hard feelings etc. Maybe best to specify that stuff is done by pros and members must pay up.?
Getting 4 people to agree on upgrading, how much maintenance is needed etc sounds impossible to me.
What happens when someone wants out? That will likely occur pretty fast.
Do other members get first right of refusal on the share? How do you establish a share price?
Maybe better for 4 to put a boat in charter as 4 owners...

[Mithril Bham]

Horror stories abound and are real. I can attest to that. Partner (and good friend of 50 years) promised full backing of restoration. Got divorced, left me holding the bag, and forced me to buy him out when I was not in the position to do so. I managed to do it anyway but destroyed friendship (on my part). Still trying to finish boat with little money after the recession wiped me out.

That said; good advice above. You never mentioned the amount of money you are planning to spend or the type of boat you are seeking. Written agreement mandatory, of course.

One idea is to create a reserve fund for maintenance and repair and pay whoever does the work (including partners) from that fund which gets replenished.

Plan for the worse possible outcome. Make sure all partners can lose everything without dire consequences.

[Cadence]

Originally Posted by Menlim3

I am considering this but there are so many different scenarios to consider. Would like to hear other people's pros and cons from experience. Thanks.

In my humble opinion it is akin to the adage, "The best way to lose a friend is to go into business with him".

[RolfP]

We had a positive experience with 2 shared boats, both with the same couple, over 6+ years or so, and we are still all friends and now sail together on each of our separate boats. Unlike many of the comments here, we had nothing written to start with on our first boat. It was a minimal (relatively speaking, of course) investment for all of us initially for the first boat. 3-4 years later, we traded that boat for a brand new one, which we shared for another 3-4 years. This was a more significant investment but still no paperwork other than shared financing. When this partnership broke up, we remained on the note with the verbal understanding that whatever was incurred financially would be taken care of by them. They kept the boat for another 5 years, then sold it to buy another. None of us liked to deal with paperwork.

This particular method can work if your desire to trust and willingness to like and be completely open and honest with your partners is the priority. My rule-of-thumb would be that if both couples are excited to hear that the other couple will be on the boat for a weekend or week or more together, then this kind of boat partnership will work. If not, then its time to be honest and get a gentle, slow, and considerate divorce. If you are not a person who trusts easily, then maybe lots of paperwork can alleviate some of anxiety, but not trusting does not get fixed with paperwork. I decide if I can trust someone with my life, then I just shake hands, or not. When I'm wrong, I deal with it. Call me Pollyanna.

There were issues that came up: DIY or Yard fixes - 1st boat was DIY by me, 2nd was Yard. I expected scratches and scuffs, they did not, so my job was to take EXTRA care to avoid them. I felt that there were right and wrong ways to do things (seamanship stuff from reading too much, but I've sailed for 40 years, they were new to it) and so their job was to meet my expectations. They were great. We both learned a lot from each other. Yearly and weekly tasks was shared although allocated towards expertise: the others cleaned better, I fixed better. We all agreed on capital expenses beforehand and an expected budget and account was kept for operating expenses. Monthly contributions towards an annual budget worked well.

Now, 6 years later, we still sail and spend lots of other time together.

[Mithril Bham]

Originally Posted by RolfP

We had a positive experience with 2 shared boats, both with the same couple, over 6+ years or so, and we are still all friends and now sail together on each of our separate boats. Unlike many of the comments here, we had nothing written to start with on our first boat. It was a minimal (relatively speaking, of course) investment for all of us initially for the first boat. 3-4 years later, we traded that boat for a brand new one, which we shared for another 3-4 years. This was a more significant investment but still no paperwork other than shared financing. When this partnership broke up, we remained on the note with the verbal understanding that whatever was incurred financially would be taken care of by them. They kept the boat for another 5 years, then sold it to buy another. None of us liked to deal with paperwork.

This particular method can work if your desire to trust and willingness to like and be completely open and honest with your partners is the priority. My rule-of-thumb would be that if both couples are excited to hear that the other couple will be on the boat for a weekend or week or more together, then this kind of boat partnership will work. If not, then its time to be honest and get a gentle, slow, and considerate divorce. If you are not a person who trusts easily, then maybe lots of paperwork can alleviate some of anxiety, but not trusting does not get fixed with paperwork. I decide if I can trust someone with my life, then I just shake hands, or not. When I'm wrong, I deal with it. Call me Pollyanna.

There were issues that came up: DIY or Yard fixes - 1st boat was DIY by me, 2nd was Yard. I expected scratches and scuffs, they did not, so my job was to take EXTRA care to avoid them. I felt that there were right and wrong ways to do things (seamanship stuff from reading too much, but I've sailed for 40 years, they were new to it) and so their job was to meet my expectations. They were great. We both learned a lot from each other. Yearly and weekly tasks was shared although allocated towards expertise: the others cleaned better, I fixed better. We all agreed on capital expenses beforehand and an expected budget and account was kept for operating expenses. Monthly contributions towards an annual budget worked well.

Now, 6 years later, we still sail and spend lots of other time together.

Good to hear. Yes, depends on people and some luck. Good people can do bad things when fortune goes the wrong way.

[grantmc]

When I first bought the boat I have now, I couldn't afford to by myself, so went halves with a friend. It mostly worked really well. We were both enthusiastic sailors and often times we sailed together, and it was good to share the maintenance jobs. But it was also terrific to talk over issues, as neither of us had any real experience with boat ownership. Our arrangement was quite informal and verbal.

After a couple of years my boat partner decided he wanted a boat of his own so I bought his half out. He went on and bought a new boat that I helped him deliver down from Auckland. And in fact we did several long trips together on his new boat over the following 6-7 years.

Here we are, now 15 years since we first bought that sail boat together, and whilst we're not as close as we were back then we're still friends.

I feel it is an excellent way of sharing the risk and the costs.

[Cadence]

Originally Posted by Cadence

In my humble opinion it is akin to the adage, "The best way to lose a friend is to go into business with him".

I'm sorry. I missed the three. In all likelihood four people lose friends. It is not worth the friendships, they are worth more to me than a boat.

[Kenomac]

Recipe for disaster.

[hamburking]

Originally Posted by grantmc

After a couple of years my boat partner decided he wanted a boat of his own so I bought his half out.

How was the buyout price set? Was it the same as the initial buy-in?

One method I've seen is that you make a buyout offer...the other guy can either accept, or if he feels its too low he has the option of buying your share at that same price instead. That keeps the offer fair.

[dick sargent]

After 7 wonderful years in a 4-way partnership, I would make sure the by-laws were made clear. One unique example, "all decisions will be unanimous, and if not will be made unanimous by the flip of a coin". This from a corporate lawyer used to writing voluminous contracts. Damage or loss of equipment will be shared by all members if not covered by insurance. Interestingly, not once did a guilty party take advantage of that. Potential new partners must be approved by all members. We always had top notch equipment due to sharing the cost. Once we had a weak partner due to inexperience. Posed no problem with three other partners to help him. That boat partnership lasted for over 20 years. The Harbor Patrol was always alerted by the calls from dozens of loyal ex-owners. Lol I recommend buying-in to an established 4-way partnership.

[hamburking]

If anyone is thinking of setting up a shared sailboat syndicate in or near Kingston Ontario Canada, I'm interested in joining. I want to keep sailing, but don't have the $ or time for full time ownership. I'm not your friend now, so you don't have to worry about ruining our friendship.

[jmschmidt]

Well, I was going to say "bad idea" but everyone else already pretty much said that.

[Mithril Bham]

Originally Posted by hamburking

How was the buyout price set? Was it the same as the initial buy-in?

One method I've seen is that you make a buyout offer...the other guy can either accept, or if he feels its too low he has the option of buying your share at that same price instead. That keeps the offer fair.

I've heard that referred to as a "shotgun" agreement. Great idea in many partnerships. Keeps someone in a strong position, should yours become weak, from forcing you out.

[Tetepare]

Originally Posted by hamburking

If anyone is thinking of setting up a shared sailboat syndicate in or near Kingston Ontario Canada, I'm interested in joining. I want to keep sailing, but don't have the $ or time for full time ownership. I'm not your friend now, so you don't have to worry about ruining our friendship.

How will you feel when it's your weekend and the holding tank is full, there are dishes in the sink, and the port was left open so the bunk is soaked?

I love my friends. We sail on each others' boats, we overnight together. We loan boats when needed, we all have 15HP Mercs on the dinghies in case somebody has a problem. But we have different boats and different wives. And it's staying that way.