BY GARY MAY
Fractional ownership has become popular among those who want to share in the good life on offer along Ontario’s waterfront, with resort communities popping up all over the province. Just slap down your payment and you can use that beautiful luxury cottage for a portion of the year, without the hassle of maintaining it.
The fractional ownership concept has spread to all sorts of products — from motorhomes, to race horses, golf club memberships to vineyards, greyhound dogs to jets — and even art. Now, you can own a fraction of that yacht you’ve been itching to sail.
Tom Kaufman, who used to own the Orillia airport, was struck by the number of people who wanted to sell shares in their private planes. It only makes sense, says Kaufman, when you consider the amount of time most people actually use their plane. The rest of the time it sits there gathering dust.
Kaufman started managing joint ownership agreements for planes and began to wonder how he could apply it to 36-foot yachts. He learned that fractional ownership boats were popular in the United States and were catching on along British Columbia’s Lower Mainland.
Two years ago, he began to establish a company that would cater to boating enthusiasts who wanted all of the fun and none of the hassle of owning a luxury yacht. After ironing out a minefield of issues, including insurance, this summer Kaufman’s Kitchener-based Hutton Yacht Group Inc. is offering its first fractional yacht.
As far as he knows, it’s the first time in Ontario the concept has been introduced in this province.
Buy a share, split the usage
A fractional-ownership agreement can work in three ways. Initially, Kaufman is offering four shares in a boat under a limited liability partnership. Buyers may purchase one, two or three shares — Kaufman believes two will be the most popular option. One share entitles the owner to one week’s use out of four, from May 24 to Thanksgiving. Owners may swap weeks, or negotiate with other partners to combine weeks for a longer trip.
As an alternative, a prospective boat owner could approach Kaufman about buying a specific boat they have their eye on. If Kaufman considers it a good investment, he’ll purchase two of the four shares for resale, leaving the proponent with two shares.
A third approach could see someone who already owns a boat they’re not using ask Kaufman to buy it for his fleet. “Maybe they’d want to keep a quarter and I’d find the other buyers,” Kaufman says.
What’s the cost of a fractional ownership yacht? Kaufman offers the example of a 35-foot Four Winns, a power boat valued at “$200,000 and change,” he says. A one-quarter share would sell for $61,449, giving Hutton Yacht a 15-per-cent commission. The monthly fee, levied 12 months of the year, is $500 and covers insurance, storage, maintenance and cleaning. “All the owners pay for is the fuel,” he says.
“There’s been phenomenal interest so far,” Kaufman says. “The average person uses their boat 20 to 30 days a year. Why not share it and cover some of your costs?”
Other clients might include someone who already owns a smaller boat and wants to buy a portion of a more expensive one, he says. Then there are those who don’t need to concern themselves with the expense, but simply don’t want the “aggravation” that comes with boat ownership, Kaufman says.
“They don’t want to arrive after not having used it for three weeks and have to sweep all the spiders out, or clean up the dirt.”
Each yacht will be sold after four years and, after a 12-per-cent commission to Hutton Yacht, the four owners will share the net capital proceeds.
Club membership another option to get you out on the water
There’s another alternative for those looking for all the fun and none of the drudgery of yacht ownership — the ownership club. That’s where Keith Metz steps in. Metz is sales and marketing manager for the Toronto office of SailTime, which has offices around the world.
Like Kaufman’s fractional approach, SailTime members don’t have to put out the cost of a yacht. One person owns the boat outright, and SailTime finds seven others to share it through memberships. The owner maintains title, collects membership fees and pays SailTime a management fee for marketing and maintaining the boat.
Metz says for many of their owners and members, cost isn’t a factor. For them, it’s the convenience of not having to worry about maintenance and upkeep. All they need to do is concentrate on having fun.
Toronto architect Wayne Olson has been “sailing since I was a kid” and now, in his early 50s, is a member of SailTime. He’d owned a 16-foot day sailer and a 25-foot keel boat, “but I was finding I wanted to spend more time sailing and less time fixing my boat,” he says. SailTime membership fit into his plan for a bigger boat without the investment.
For $6,000 a year (there’s a one-time $1,500 startup fee), Olson’s membership allows him one-eighth of the use of Champers
, a 33-foot Hunter sailboat valued at about $160,000. From May to October, the month is divided into 56 time slots and each of the eight members — owners are treated the same as everyone else — is apportioned seven slots. Members are free to swap time slots.
Time slots are 10:30 a.m. to 6 p.m., or overnight from 6 until 10:30, says Olson. Sometimes he’ll partner with another member and take a longer sail to Kingston and back.
“It’s a cottage away from home,” he says of the yacht that’s moored at Toronto’s Outer Harbour Marina. “I’m finding I’m actually spending more time sailing than I did when I owned my own boat. All I have to do is sail.”