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

[Happ]

A few quick things to consider. First a few years ago I sailed a Jenneau 57 to the islands with the owner. He was going to put the boat in charter. He told me the boats only charter well for the first year. So for him it was a tax right off.

Second why would you want to pay $5k a week for an 8 year old boat that’s in the same place? Why not charter boats in different places? You also have no obligation to any expense. Have you checked out the charter company who is making the guarantee? Guaranteeing all expenses on a 8 year old boat. It sounds to me like someone wants you t help pay for a boat he wants to buy and use when he wants to. Do the math. If 3 partners get 5 weeks a year. That’s 15 weeks a year. The fourth partner then could pay the expenses and use the boat 37 weeks a year and only pay the slip and maintenance. He maybe starting his own charter service. Takes people out and keeps the profit which helps him offset the expenses. His expenses too.

Thirdly its a 50’ catamaran! Can you sail that big of a boat?

What happens if you want to get out? How easy is it to share a quarter share in a boat? Just something to consider.

[s/v Breakaway]

I would be concerned about the age of the boat. My experience in BVI is that "top tier" charter companies generally offer boats that are 0 - 5 years old. "Second tier" charter companies charge a lower rate and have boats 5 - 10 years old. I'm guessing that is because people chartering expect a newer boat, and at around the ten year mark, expenses start escalating as major systems start needing replacement: i.e. charterers don't want ten-year-old navigation equipment.

[BlueH2Obound]

Just a few thoughts.

• It appears that you are purchasing ownership in an LLC, NOT in a boat (aren’t necessarily the same).
• Ad states “guaranteed revenue to cover the mortgage” . . . Hmmmm, but YOU and THREE others already paid $500k for your ¼ memberships ($125k each x 4 = $500k) . . . . so WHY IS THERE A MORTGAGE?!?
• ¼ ownership assumes 4 owners . . . . @ 5 weeks each, that means 20 weeks . . . . Who is using the boat the other 32 weeks out of the year? I assume it is being chartered out by the charter company? Who gets the proceeds? Do some of them go to pay the “mortgage” which shouldn’t even be there since four members ALREADY PAID ENOUGH TO BUY THE BOAT OUTRIGHT?
• What is the loan term on this “mortgage” which is so graciously being paid for out of the proceeds of the charters? 4 years? 20 years? Once again, I have to ask, where did the $500k go that you and three others paid to buy part of the LLC? At the end of stated 4 years you will have a 13 year old boat, with perhaps 16 years remaining on a mortgage loan that still has (for the sake of argument) 450k left on principle . . . and the boat is estimated to be worth $400k at the end of that same 4 years . . . so owners will have to pony up $50k between them to sell that boat . . . IF it is indeed worth the $400k estimated.
• Standing rigging is generally clapped out somewhere around the 10 year mark . . . which is next year if it hasn’t already been replaced . . . who pays for that? Ahhh, the charter company pays for that, it says so in the ad!
• But with Covid 19, and travel restrictions to the BVI, is it getting any revenue this last year? Does it even pay for mortgage? The charter company set up the contract, you can bet that THEY will not be paying expenses for “circumstances beyond their control”. So the owners will get an assessment . . .
• Is your 5 weeks specified well in advance? What if the boat has to go in for unscheduled maintenance? Say the Charterer just prior to your reservation dinged the prop, necessitating new prop, shaft, rudder repair etc. Estimated three weeks to repair (and that’s quick). Do you only have two weeks left of your 5 weeks now?

Lots of questions, but you get the gist. Hire an attorney to go over ALL paperwork, Articles of LLC Incorporation, Charter contract, last XX number of years financials for the LLC, the boat specifically, and the Charter company (if they’ll make them available) at a minimum. Figure $5k minimum for the attorney to look stuff over.

Given what’s available so far, on the ad, and on the thread, it doesn’t appear to be a great deal at all . . . YMMV Good luck in whatever you decide!

[ToddNash]

I'm more of a lurker on CF, not much of a poster... But, it is my favorite forum. BeechTalk is #2 for me (mostly about single-engine airplanes.)

I love this topic and string. Partnerships can be amazing for reducing costs and getting folks into nicer boats/airplanes/properties than they would have on their own.

I was in a Cessna 210 partnership for 5 years and it was beautiful. Great guys, great maintenance, easy availability. Roughly $6k fixed costs per years versus maybe $18k if I did it solo. Now, I'm in a Cessna 400 partnership: much faster, slightly more expensive. If a big item breaks, at least I'm only in for 1/3...

I was in a less fantastic Catalina 22 partnership. No one wanted to fix anything, the sails were blown out, but it was cheap!! Now, I'm looking at a Beneteau 373 partnership.

I don't know anything about Next Gen Yachting but I'd join them a lot faster than buying a 50' foot catamaran by myself and leaving it in some expensive marina for most of the year. The charter company based fractional ownership sound easy and cheap and perfect for my initial purposes. Get a nice sailboat, plenty of help, available 5 weeks a year, bail out in 4-5 years. Might be better and cheaper if 4-5 guys did it without the charter company, but it would be alot of work and everyone would have to be ready to Captain a big sailboat, bareboat-style. Maybe too much to ask.

Being a crew on someone else's boat is cool. Good experiences, but what about my wife and her friends?? It's apples vs. 5 course meals and cocktail hours.

Anyway, thanks for the discussion. Hopefully, we will continue to hear from people who have real-life fractional ownership experience.

Caveat, until Corona is mostly over, anything travel related is a bad financial bet.

Nash

[Whisper 2]

I wouldn't go anywhere near a Lagoon, in my opinion they are badly built, weak in construction and not very good into wind.

[Palarran]

Originally Posted by Whisper 2

I wouldn't go anywhere near a Lagoon, in my opinion they are badly built, weak in construction and not very good into wind.

That's somewhat of a funny opinion coming from a Han's Christian owner. No offense but wasn't it a Han's Christian that sank with Rebel Heart? And they really don't look like they would be any better into the wind then any overloaded Lagoon. Cool boats though. I really like the Fair Isle which is a 48'. Beautiful boat.

[Cynara]

I don't know, how they know what the miniatous would cost. They can guess, but bad things can happen that wasn't expected.

[Cadence]

Just a thought, What if one or two of the owners goes tits up and bankrupt. Where does that leave you?

[Whisper 2]

Well I am only going on experience, in a matter of just a couple of years I have witnessed a fr'd mooring cleat rip out of a Flotilla Lagoon in Tenerife, one nearly sank just the other side of the Panama Canal, another that nearly sank after hitting a pontoon pile in Bundaberg and was only saved because it was dragged up the beach. I think they are flimsy in construction. True the HC's are heavy old luggers but I have been aground, (completely dry) and she survived without any damage, she points OK and I feel safe in my sailing.

[Pacificsailor2]

Hi Friend,

It would thru murky water appear that you may be stepping into someone else's dream to grab and dash. We are in the midst of a global poop storm. Planes are grounded everywhere, people in fear and you are thinking seriously of dropping your$ into a 2 year olds play pen. Really?

I recommend buying a decent 1/2 - 1/'4 share in a boat that you can ride and learn on often. Make it work and go from there.
Gods Speed

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.

[guitarrich]

My wife made a career of selling new charter yachts into private ownership schemes. She worked for Sunsail, Moorings and Dream. There is a number of variations on the theme, but generally you pay half the cost of a new boat, and then it’s yours after (typically) 5 years. During that time you get free use of your yacht or a similar one anywhere in the world.
We think it’s a good scheme for people who have enough free time to enjoy all the free sailing, especially if retirement is, say five years away!

On her retirement, we bought into an existing private syndicate which gives us more sailing than we could possibly afford any other way.
It’s a 37ft former charter yacht based in our favourite part of Greece.
We paid around £8k for a 1/5 share, and the ongoing charges are £150 per month. That’s it. Based in a convenient marina, all bills paid.
Can’t beat it for now, though we still think we might get our own yacht (again) when I retire.

I was always deeply cynical about a syndicate, but now I’m a fan. The share will sell, and with an old, well maintained boat the residual value won’t change much. And frankly, after several years of benefit, I’d be prepared to walk away from the £8k if the worst happened.
Anecdotally, it now seems that almost everyone we get talking to whilst out and about is doing the same.

And finally, it’s really for the environment!!

[thataway41]

From current YachtWorld Ad: 2012 500 Lagoon Catamaran for sale:

Year:
2012
Length:
51'
Engine/Fuel Type:
Twin / diesel

Located In:
San Juan, Puerto Rico
Hull Material:
Fiberglass
YW#:
82388-3736491

Current Price:
US$ 499,000
$499,000 in our management program for at least 12 months, $549,000 without any commitment.

A 1/4 share fractional ownership opportunity is available on this yacht for $125k with $25k down. No operating expenses, guaranteed revenue to cover the mortgage, and 5 weeks of sailing at no charge, captain included.

Pricing reflects the yacht being in our managed for at least 12 months. Options available for unlimited sailing, guaranteed income, or maximum revenue generation.

It is an owners version and has the most sought after 4 cabin layout which has a very large “master cabin” starboard aft, but still has a nice double cabin starboard forward with its own ensuite. She is one of the last Lagoon 500 that was ever built and was commissioned in 2012. She has spent her life in the Caribbean. Over the last couple of years it was owned by a couple who cruised the Caribbean. The previous owner used to occasionally operate limited basis luxury crewed charters with a professional captain and crew onboard. She has been lovingly cared for and has low hours on all of her systems as she was never a “burn and churn” bareboat. Her inventory and equipment are second to none, she has all of the luxury appointments you would expect to find on a luxury catamaran.

Photos are of same boat, brokered by NexGen. So what is going on??

I have never owned a fractional share boat--seemed like not the best "investment". I look at a boat as a member of my family when I own it--but sell when it no longer meets my needs. I once bought a 20 year old boat that had been in charter service in the Caribbean for at last 10 years. The hull was good, I rebuilt all. of the systems from engine on up to new rig and sails...cost as much as the boat did. We had to fair and 2 part LP the hull. Still it was a great boat with new systems when I got through. This only works if you have the time and skills to do the rebuild. Many red flags on this deal--would make me pass on the 500 Lagoon. Despite what they tell you, charter service is hard on a boat, captain or not. (By the way, the captain can make or break a boat's reputation).
Also your time will be off season, High season will go to the paying customers.. Ask to see the prior charter bookings and projected confirmed (with deposit) bookings. Between hurricanes, and COVID business has not been all the profitable in the USVI over the last several years.

Good luck on with which ever way you do go.

[riverwave]

Originally Posted by makoman

I am a business consultant with heavy financial background who has been involved in several of these types of transactions over the past 4 decades.


What I can say GENERALLY is that the numbers generally make sense, but whether the deal is for you depends a lot on the specifics of the transaction. Who are your partners, how good are each of the various people in the yacht management company, what kind of person are you and how will you personally evaluate your experience, etc.


Off the top of my head, I can think of 2 such arrangements that worked very well, a couple more that were so so, and about 5 to 10 that were disasters.


Would be happy to discuss in detail with you if you want to send me a PM with your contact information.

SENT A PM

[riverwave]

Originally Posted by Happ

A few quick things to consider. First a few years ago I sailed a Jenneau 57 to the islands with the owner. He was going to put the boat in charter. He told me the boats only charter well for the first year. So for him it was a tax right off.

Second why would you want to pay $5k a week for an 8 year old boat that’s in the same place? Why not charter boats in different places? You also have no obligation to any expense. Have you checked out the charter company who is making the guarantee? Guaranteeing all expenses on a 8 year old boat. It sounds to me like someone wants you t help pay for a boat he wants to buy and use when he wants to. Do the math. If 3 partners get 5 weeks a year. That’s 15 weeks a year. The fourth partner then could pay the expenses and use the boat 37 weeks a year and only pay the slip and maintenance. He maybe starting his own charter service. Takes people out and keeps the profit which helps him offset the expenses. His expenses too.

Thirdly its a 50’ catamaran! Can you sail that big of a boat?

What happens if you want to get out? How easy is it to share a quarter share in a boat? Just something to consider.

Happ, interesting input from another viewpoint. If not go for fracuional ownership, what is better option considering I can only sail for 5 weeks each year since I still have about 15 years to retire. Bareboat charter in diffrent charter companies looks like event more expensive.It will cost you 7-8k per week

[riverwave]

Originally Posted by thataway41

From current YachtWorld Ad: 2012 500 Lagoon Catamaran for sale:



Photos are of same boat, brokered by NexGen. So what is going on??

I have never owned a fractional share boat--seemed like not the best "investment". I look at a boat as a member of my family when I own it--but sell when it no longer meets my needs. I once bought a 20 year old boat that had been in charter service in the Caribbean for at last 10 years. The hull was good, I rebuilt all. of the systems from engine on up to new rig and sails...cost as much as the boat did. We had to fair and 2 part LP the hull. Still it was a great boat with new systems when I got through. This only works if you have the time and skills to do the rebuild. Many red flags on this deal--would make me pass on the 500 Lagoon. Despite what they tell you, charter service is hard on a boat, captain or not. (By the way, the captain can make or break a boat's reputation).
Also your time will be off season, High season will go to the paying customers.. Ask to see the prior charter bookings and projected confirmed (with deposit) bookings. Between hurricanes, and COVID business has not been all the profitable in the USVI over the last several years.

Good luck on with which ever way you do go.

Yes it's the same boat. more and more I feel it's not the best time to consider this option for now. but I need to discuss and study this fractional ownership. and be prepared for my plan to own and sail part time in a few years.