Too good to be true? A fractional ownership for 2012 Lagoon 500

[riverwave]

I am a newbie, mid 40, planning for full time sailing in 15 years.
Beside local club and sailing course, I am looking for other ways of getting sailing experience. For sure I am keeping my eyes on Crews sub-forum.

I am also checking fractional ownership, read almost all threads on this forum, most of them are outdated.

With the impression of fractional ownership is not as good as the seller tells you, is this ad on Craigslist too good to be true?

A 2012 Lagoon 500 is valued at 500k. 1/4 ownership at 125k.

I need to pay 25K down payment for 1/4 ownership, the rest(Mortgage and Upkeeping cost) is covered by the charter company. Ownership is in the form of share of a LLC holding the Lagoon.
https://miami.craigslist.org/mdc/bod...264535129.html

They projected the resale value of this lagoon is about 400k in 4 years.

the guaranteed payment amounts:
The Lagoon 500 is $625/month for 5 week's, $935/month for 2 weeks

If you choose mortgage, basically you pay 25k for 5-weeks usage each year for 4 years.

If you pay 125k, after 4 years, you got back 30k(guaranteed payment 625*12*4)+100k(resell price )= 130K. And you got 5 weeks usage each year. I was told the high season is Nov-Apr and low is May-Oct.

The company is https://nexgenyachting.com/

For the recent 5 years, I don't think I can spend more than 5 weeks on offshore sailing. that's why I am looking for fractional ownership. I am also checking other fractional membership or ownership like Sailtime.

Comments? What are the pitfalls in this ads? Is the company respectable? I was told it is a new company established 2 years ago.

[tkeithlu]

The analogy is time share condominiums. You know their reputation. Is this company willing to buy you out when you find that you don't have the time you thought you had, or only want to sail when all the other owners want to?

It is a real issue - just look at all the bare masts in the marina on a beautiful sailing day. Whether this is the solution to the problem is harder to tell.

[TrentePieds]

Whyever would you enter into a contract like that when for less money you can buy and own a boat and get all the sailing experience you can cram into your workplan?

But you can do better than that even :-)!

Join a club that offers courses. Nearly all of them do. Work up through the vessel sizes and the qualifications, and let the people holding up the bar at the club know what you are doing. Soon shorthanded owners looking for a pierhead jump to crew for them will be seeking you out. If you are good crew, word will get around and your phone will begin to ring.

If you then decide, as sometimes happens, that sailing is not for you after all, all you have to do is decline the invitations "with regret". That way lotsa diverse experience won't have cost you anything other than the course fees and a modest bar bill :-)!

Bonne chance :-)!

TrentePieds

[tkeithlu]

Second thoughts, while being completely in agreement with TrentePied ideas for you to consider.

Do a cost analysis on this fractional ownership versus chartering.

How is ongoing expense handled on the fractional purchase? Both slip fees and hauling/painting/repairing?

[Palarran]

I didn't read the link but will comment that fractional ownership is a great option, just like fractional ownership of real estate. Time shares are completely different. If you can actually use the boat for 5 weeks per year, $5k is cheap per week - uber cheap. I would have loved to set up a fractional ownership deal with my cat many years ago but so many balk at the price. What I was looking at would have been similar for a 5 week period but if you used the boat 8 weeks, every week after 8 was only $2k.

On Edit:
I did read the sites quickly. I'll add, don't believe any of the "guarantees" and "estimates". If you expect them to be zero and they come in at half, that would be a bonus. Look at what Dream Yacht is doing to their "Guaranteed Income" partners right now. If the deal was actually a fractional ownership where all 4 partners carry the burden, it would be more guaranteed. Perhaps it would be better to look at seabatticals long term charter options.

[grantmc]

I see a variety of issues with syndicate ownership, but for many it works well. When I first bought a keel boat I was joint owner with a friend. We sailed together much of the time too. Sailing a big boat is easier with more than a single pair of hands. So to have a friend to go sailing with was awesome (often with our families too), especially in the early days when we were learning. We shared the maintenance too, although that became an issue. But typically, and unfortunately, a syndicate isn’t based around friendship.

All though I have seen a very good example where half a dozen families came together themselves and bought and managed a serious racing yacht. But they agreed amongst themselves and I understand were all friends to begin with. They enjoyed fantastic experiences for several years. And most of the owners would sail together. The boat was moored locally to them all, so convenient. But they also raced the boat internationally and on occasion hired delivery crew.

All boats break of course, plus we all want to make improvements. So who decides what, how much and who does the actual work?
In reality under what is proposed you don’t enjoy one of the most pleasurable aspects of boat ownership. This being buying stuff for your boat, and possibly even installing same one day. Most owners have a bunch of new gear sitting in a locker that they’ll install one day, but it was on sale and so they bought it. To me and I know to many, which is nicer to buy for, you spouse or your boat? And often the boat comes first as you’d expect.

Also I want to choose the colours, the décor, the artwork and nick nacks on show. You just don’t gain these pleasures from syndicate ownership. But that's just my opinion.

Another issue might be location. The OP hasn't said where he/she lives in relation to the boat, but it may matter. The issue is that the boat will have a base. So where he and his family start their cruise will be wherever that base is. And at the end of their time the boat will need to be back at its base. So trip distance is very limited. And what if someone is late sailing back?

For me, that's one of the drawbacks with charters, shared ownership and syndicate boats. I want to decide where I go, when I go and what I do when I get there. I don't want to have to share that decision or be mindful of getting somewhere on a certain date because my time will be up then and the boat has to be at X spot for the next 'owner'. That's just me and this isn't about me.

There may also be restrictions about the boat’s use, for example:
- must be on a mooring or in a marina, rather than at anchor or rafted up,
- can’t be sailed at night,
- number of people on the boat limited,
- no parties,
- can’t leave your stuff on the boat at the end of your time.

Can’t leave any foodstuffs on board and so always provisioning, and all that stuff, food, beer, gear and clothes needs to be lugged on and off the boat, stowed, retrieved etc for each and every trip. And if you don't o it yourself the boat manager will hire someone and you'll pay, same for cleaning between 'owners'.

Where as I know I can go down to my boat Friday after work, jump on and sail off for at least a weekend without a thought to food, clothes, towels, bedding, gear etc because I can and do keep the boat stocked. As an aside the boat is also my family’s emergency home in the event of a serious earthquake in Wellington.

Typically too, such boats have a very limited sail wardrobe. They don’t need to as most owners just motor everywhere. They mostly don’t sail. It’s the same for general boating stuff.

But the OP needs to appreciate boats aren’t real assets, boats are potential liabilities. In my view only fools borrow money to buy boats or percentages of boats (unless to live on) as boats are toys we acquire and use from our discretionary spending money.

What is the liability if the syndicate manager can’t sell all shares? What if an owner drops out, dies, runs away, down the track; who pays that share. There has to be an exit strategy too.

If one syndicate member has a relationship breakdown (or dies) then presumably their half share of the boat may become disputed matrimonial property or a part of an estate. It may be tied up for months or more in dispute, and perhaps no monthly fees being paid. Perhaps a smart lawyer gets a lien on the boat and it can't leave the dock till the Court resolves the dispute. Perhaps the syndicate manager goes broke, runs off with all the money or sells an empty paper bag. Do the other syndicate members all have their installment increased to meet any shortfall. If not who pays?

And some people too just never get to grips with being sailors. You see them at most marinas. They just don't learn and so bash their boat in to pilings, try to go on the wrong tide, do all the stupid things we hear about here many times, damaging their own and other's boats in the process. So maintenance potential for such boats is high and factored so in the monthly charges. And the syndicate manager has to make a profit.

What if one of the partners is a useless yachtie and every time you pick up the boat there's another little bit of damage? Maybe too the other families isn't as tidy and clean as yours. And how do you sort out food and other stores? I want to be able to leave whatever stuff I want to leave on my boat. The wrong owner may be blamed.

And will friends and family members be allowed to sail? Will the kids when old enough be able to take the boat out for a few days? Will that include on their own with their own friends? I trusted my kids once they hit about 18 to use the boat.

Will that include when no owners are on board? Who are the owners anyway?

Here's some common newbie mistakes.
- Fill the diesel with water or fill the water with diesel. How would that be resolved?
- Furler jams so use the winch and rips the sail.
- Forgets to check the engine water is open (or it blocks) and fails to hear the alarm.
- Relies on GPS and sails the boat on to a rock.
- Doesn't tie up the $5K dinghy properly and so it just disappears with the tide (of course no one ever does this, everyone blames a thief).
- The yacht itself comes away from the dock in the marina doing millions of dollars damage to other boats there. As a result of the last 'owner' not making fast the mooring lines.

There are hundreds of examples of course.

So hypothetically your brother Harry, a very competent sailor asks to use ‘your’ boat for a week and no one is using it. If it were you're own boat then it's a simple decision. But not so a syndicate boat.

Covering all these issues and the many I've not pointed out are going to mean a serious legal contract and consequential fees too.

In reality this 'deal' is put together by a charter company that uses other peoples money to fund a charter yacht, at the same time selling charter weeks for years in advance. Potentially it reduces the typical cost of a charter, but liability now passes to the charterer through their shared ownership.

Sorry but this is a bad deal in my view.

[riverwave]

Originally Posted by TrentePieds

Whyever would you enter into a contract like that when for less money you can buy and own a boat and get all the sailing experience you can cram into your workplan?

But you can do better than that even :-)!

Join a club that offers courses. Nearly all of them do. Work up through the vessel sizes and the qualifications, and let the people holding up the bar at the club know what you are doing. Soon shorthanded owners looking for a pierhead jump to crew for them will be seeking you out. If you are good crew, word will get around and your phone will begin to ring.

If you then decide, as sometimes happens, that sailing is not for you after all, all you have to do is decline the invitations "with regret". That way lotsa diverse experience won't have cost you anything other than the course fees and a modest bar bill :-)!

Bonne chance :-)!

TrentePieds

Yes, I live a city inland, for sure I will join the local club to gain sailing exp on river bay.
The reason looking for fractional ownership is for gaining offshore exp.
BTW, the Lagoon is based on BVI

[riverwave]

Originally Posted by grantmc

I see a variety of issues with syndicate ownership, but for many it works well. When I first bought a keel boat I was joint owner with a friend. We sailed together much of the time too. Sailing a big boat is easier with more than a single pair of hands. So to have a friend to go sailing with was awesome (often with our families too), especially in the early days when we were learning. We shared the maintenance too, although that became an issue. But typically, and unfortunately, a syndicate isn’t based around friendship.

.....
Sorry but this is a bad deal in my view.

The base is BVI, travelling is a kind of issue to get there but not a big obstacle.
I can't sail it where I want to go, limited to BVI, USVI, and PR. Eastern island with advance notice. For a beginner, I think the playground is enough.
Financial risk: They said there is no yearly contribution, all cost of maintenance/ repair /insurance care covered by the charter company. So you don't worry about some partner quit in the mid of the term. At the end of the term, the boat will be sold if partners can't make agreement to renew.


For the exit, either you sell your share by your own or you wait until the end of the term and retrieve your share by selling the boat.

Current valuation of the boat is at 500k, projected 400k when selling it 4 years later. I think it's fair estimation.

To me, it sounds too good to be true on spending 25k in total and then you got 5 week of usage of a Lagoon 500 each year for the next 4 years. Got to be something.

[Palarran]

Originally Posted by riverwave

Yes, I live a city inland, for sure I will join the local club to gain sailing exp on river bay.
The reason looking for fractional ownership is for gaining offshore exp.
BTW, the Lagoon is based on BVI

You mentioned "offshore" twice. Have you asked them yet if this is allowable? Where would you go in 5 weeks? Are you capable of taking a 50' catamaran offshore? Just wondering as it's not a small endeavor.

[riverwave]

Originally Posted by Palarran

You mentioned "offshore" twice. Have you asked them yet if this is allowable? Where would you go in 5 weeks? Are you capable of taking a 50' catamaran offshore? Just wondering as it's not a small endeavor.

for the 5weeks your usage, caption is included, free.
you can sail it to BVI, USVI PR or other eastern islands

[etoimene]

Originally Posted by riverwave

Current valuation of the boat is at 500k, projected 400k when selling it 4 years later. I think it's fair estimation.

Good luck with that!

[GiaPet]

I was with Sailtime for 6 yrs in MDR CA. through Naos Yachts and was on a 38 Benneteau. Very very pleased. Used boat about 6 days a month and was able to reserve for longer 3-4 day trips. Boat was clean and well maintained. Had the same boat and shared with 5 others. Scheduling done by computer and was efficient. They took care of things when one person tried to scam system.

[Cadence]

Originally Posted by riverwave

I am a newbie, mid 40, planning for full time sailing in 15 years.
Beside local club and sailing course, I am looking for other ways of getting sailing experience. For sure I am keeping my eyes on Crews sub-forum.

I am also checking fractional ownership, read almost all threads on this forum, most of them are outdated.

With the impression of fractional ownership is not as good as the seller tells you, is this ad on Craigslist too good to be true?

A 2012 Lagoon 500 is valued at 500k. 1/4 ownership at 125k.

I need to pay 25K down payment for 1/4 ownership, the rest(Mortgage and Upkeeping cost) is covered by the charter company. Ownership is in the form of share of a LLC holding the Lagoon.
https://miami.craigslist.org/mdc/bod...264535129.html

They projected the resale value of this lagoon is about 400k in 4 years.

the guaranteed payment amounts:
The Lagoon 500 is $625/month for 5 week's, $935/month for 2 weeks

If you choose mortgage, basically you pay 25k for 5-weeks usage each year for 4 years.

If you pay 125k, after 4 years, you got back 30k(guaranteed payment 625*12*4)+100k(resell price )= 130K. And you got 5 weeks usage each year. I was told the high season is Nov-Apr and low is May-Oct.

The company is https://nexgenyachting.com/

For the recent 5 years, I don't think I can spend more than 5 weeks on offshore sailing. that's why I am looking for fractional ownership. I am also checking other fractional membership or ownership like Sailtime.

Comments? What are the pitfalls in this ads? Is the company respectable? I was told it is a new company established 2 years ago.

There is a sucker born every day.

[jim King]

It's not a bad deal but for you I might wait until I have my Bareboat license to make the plunge. It might be another year before you have completed your Bareboat and are ready to start using your 5 weeks of usage. You need more experience before you will feel comfortable on a 50' cat. The charter company you are signing up with will reap the rewards: being able to lease your cat at around $9,000 a week while paying you just $625 a month. Then, in two years, if you decide to sell your boat for $400,000, they will take $40,000 in commission. The carter companies are almost always a brokerage as well. I own a 45' Leopard currently in charter with Sunsail and paid $550,000 up front for it but get $5,000 per month for their use of my boat. I get up to 12 weeks a year of use (which I seldom completely use) and they get $10,000 a week for the use of my boat. Currently, because of Covid 19, no one is getting much use of their boat.
BVI isn't making it easy to get there and use your boat, so timing isn't good for you to be able to use your boat for probably another 6 months to a year.
I wouldn't make the plunge into this fractional ownership until you have your Bareboat license and the covid threat is gone.
jim

[jim King]

I'm noticing that the charter company you are looking at has only larger fully crewed yachts. that might make it easier on you as you won't need the bareboat license. You will have a captain on board to do that work.
Do they charge you for your time on board? (turn around fee, park fees, fuel fees). It sounds like a good way to work your way into bareboating to have someone else on board to do the driving and maybe training you the ins and outs of your boat. BVI to Puerto Rico gives you a lot of area to enjoy in 2 years. The question at the end is will you really be able to sell this boat for $400,000? They probably won't want to sign you up again for 2 more years as they are always looking for younger boats.
When I have a crew of 8 on board my boat in the Caribbean I often think how nice it would be to have a licensed captain on board to worry about the anchor slipping in the middle of the night.