How to get others to pay for your new sailboat
Boat Sharing Article by Grant Headifen: Director of Education for NauticEd.
So I always get questions like this “How can I get time logged into my logbook when I don’t own a boat?” There are heaps of ways including friend’s boats and yacht clubs and boat share clubs and fractional membership companies. But there is another one that most people miss out on …
Here is how to get others to pay for your new sailboat
Preamble: In 2001, I started SailTime – it is a fractional sharing membership program for sailboats. I grew it out to 30 franchises worldwide. We put 160 boats into the fleet in 5 years. It was the fastest growing dealership of boat sales in the word. We put over 3000 members into our program each paying $500-$600 per month for 1/8th access to the boat via a world first boat sharing software program. I sold the company to the franchise owners in 2007. Whence upon I started NauticEd. While operating SailTime, I had found a massively unserved niche in the market – no one was teaching people how to sail using high-tech multimedia courses and quality practical sailing schools all backed by software. No one! And even today – NauticEd is the only high tech sailing education company in the world. But I digress…
The Crux: Now-a-days, I, along with my friend, operate a single Beneteau 373 “Siyagruva” on Lake Travis with friends being our members and helping defray the costs of the boat – I mean why pay for 100% of a boat when most of the time it sits lonely in the water, right? It is a personal use boat – not a school boat.
Last weekend, I was doing the numbers on the boat with my friend and a revelation hit me. While I ran SailTime as a for profit company, he is running the boat as a “defray the costs with minor profit company”. Wow, why doesn’t everyone do this? Well not every one because that wouldn’t work but think about this – for thousands (yes thousands) of years, people have been sharing boats.
So here is a scenario that anyone can consider:
Let’s say you (or you and a friend) have access to $100k (Home equity, stocks etc) (you can buy a nice second hand boat for $100). In this market – that money will cost you about 4% on home equity or $4k per year (tax deductible).
A slip will cost about $600 per month. Insurance will cost about $500 per month and maintenance about $4000 per year. That adds up to about $22k per year or so including the cost of money.
Now if you have 4 members paying $500 per month that is $2000 per month or $24000 per year. That’s a slight profit. If you’re running a for profit business, you can qualify for a lot of tax benefits. Here is a HUGE one – in the USA, check out IRS code section 179 whereby you can depreciate the first 50% of the cost of the equipment in the first year. So all that Tax you paid last year from your personal job income – can be gained back and used to pay down the $100 k you borrowed. You can adjust all the numbers as you see fit on size and cost of the boat.
So in a sense – after a couple of years, you don’t have a money cost any more and you are making $4000 to say $6000 per year. Even if you did not get fancy with the tax, you at least have a free boat. Note: be careful with tax and depreciation and personal use of a company asset. Get some good accounting advice on that.
(Note: With depreciation, if you depreciate something to nothing, when you sell it you will need to pay capital gains tax on the sales price of the asset – speak to your accountant. It is no big deal really because you gained the money up front and paid it back at the end.)
How do you get 4 members? Well, that is simple – just put an ad on Craigslist and Facebook. It is completely realistic, at SailTime we sold people on sharing the boat with 7 others at a higher cost. The nicer the boat, the easier is the sale. How do you manage 4 members regarding scheduling time? Whatever you do don’t draw up a rotation schedule – that sucks. It means that everyone gets only 20% of the time on the boat. Instead, use a scheduler calendar and we happen to have the best in the world – how do I know? Because I developed it when running SailTime for 6 years. In fact, it is essentially what they use but it is better because I made some improvements to it. When you use scheduling software it means that everyone has access to about 90% of the time on the boat each – it is based on that no one uses the boat for all of their allocations.
We also have membership agreements that you can use that are available inside the software.
You can even use a check-on check-off form for each member so that you can track maintenance requests and boat condition remotely. Go to www.jotform.com
Our selfish advice … make sure all your members are at least Skipper Rank Level II (for bigger boats) (Skipper Small Keelboat Level II for smaller boats) on NauticEd so that they are properly trained up. Once I had a potential member call me and say they had Basic Sailing 101 certification – that was not enough. I wanted to make sure that they at least had proper knowledge and proper experience. Having a 101 certification isn’t enough. Skipper Rank Level II means they have passed the NauticEd Skipper and Maneuvering Under Power courses and have sailed at least 25 days with 13 of those being Master of the vessel on a boat greater than 25 feet. For a really nice boat you might require Level III which is 50 days.
Anyway – I’m just sayin – if you want a really nice free boat … It is literally as simple as that.
Oh and here is another way to take advantage of something like this. Call a friend who has a boat and ask them to share it for a monthly fee. They’ll probably appreciate the break on monthly costs.
Global Director of Education
NauticEd International Sailing Education
NauticEd is the world’s most advanced sailing education and certification company accepted by yacht charter companies worldwide.