In our 2014 Financial Health Barometer, we found that leisure time, unsurprisingly, featured high in Aussies primary retirement goals. As boating is a popular past time, we’ve invited guest writer Sylvia Pennington to discuss the option of shared boat ownership:
Thousands of Australians have a long running love affair with boats, but owning one is not a cut-price hobby.
Clubbing together with others can be an attractive proposition as it helps slice the purchase price and the ongoing costs.
But what are the secrets to maximising the benefits of a shared ownership arrangement and ensuring it doesn’t end in tears?
For a substantial vessel, the ongoing costs can run well into five figures. They include mooring or berthing fees, which range from a few hundred dollars in regional areas up to around $10K in annual rent for a 40-foot craft tied up at a fashionable capital city yacht club. Insurance, registration, maintenance (allow 10% of the cost of the boat) and the replacement of safety gear and other consumables all add to the tab.“The cost of maintaining a boat can be horrendous so going in with others makes good financial sense” Melbourne accountant and financial advisor Dr Steven Enticott says .
If you want your arrangement to run smoothly, choose your co-owners wisely at the outset, Dr Enticott counsels. Trusted family members and long-term friends are good; less so someone you’ve recently buddied up with at the yacht club, if you’re looking at spending a substantial sum.
Usage expectations should help to determine the ideal number of parties to include in a syndicate. If you’re an occasional yachtsman or woman, a four-owner arrangement may suit, while those with the time and inclination to spend every second weekend on the water should consider going halves with another enthusiast.
Splitting the bill
Want to avoid squabbles over whose turn it is to refill the petrol tank or how much everyone should chip in for a new sail or the boat’s annual going-over in dry dock? Treat it like a business by drawing up a partnership agreement at the time of purchase.
It should include details of how fixed and variable costs should be split. It’s fair to share the former – insurance, registration, berthing and annual maintenance – between all parties, while more frequent users should pay a greater proportion of the price for new sails, gas and other consumables.
A sinking fund, to which all parties contribute a regular sum, may reduce the need to chase slow payers for their share of the bills, especially if the group comprises several owners.
Include in your contract an exit strategy, should the appeal of wind and waves dwindle for any of the parties. Fellow owners should be given the opportunity to buy out their share, based on a market valuation or the right to find a replacement owner.
Although you might still need to save to buy a boat, shared ownership, does make it more achievable.
“Once it’s all on paper it should be smooth sailing,” Dr Enticott says.