E.Q. and Heartland are happy to announce our new programs designed for getting folks out on the water in a more affordable way.  We all know boats, moorage, fuel, insurance, and many other costs associated with boating are going up.  At the same time more and more of us work longer hours and the end result is many boats just sit.  In fact, the U.S. Census Bureau reports that the average boat owner in the U.S. uses his or her boat just 20 days a year.  But you know the costs never stop; typically 12 months a year you're paying for insurance, maintenance, moorage or storage, and such.

So, what to do about it?  The answer for many of us may be in fractional ownership programs.  This concept really got going with very expensive assets like private/corporate jets, destination vacation properties, and mega-million yachts but it's trickling down to things like luxury/exotic autos and boats.  The basic premise of the whole thing is to share costs between a few to several folks so that the financial burden is spread out.  What isn't in here is any get-rich-quick scheme or financial shenanigans.  There isn't anything in this for E.Q. or Heartland that's out of the ordinary either; we still sell the boats the same way and we get paid for maintaining and managing the boats in the program (just like a company gets paid to manage an apartment complex or such).  So, our motivation for introducing these programs isn't to make a killing and disappear but rather to make boating more affordable for more folks (which we do hope increases our normal boat sales level) and to have a steady monthly income from the management side of things which makes it easier to hire folks on a full time basis and provide secure jobs.  The way this got started was due to my (Les Lampman typing here) situation; I can't justify having an RF-246 just sitting here most of the time that I don't get to use often enough but I thought if I could share the costs with some others I could afford it.  That lead me on a quest for more information on how to do that.  Once I learned more about it I realized it would be a good thing for lots of our customers, not just me.

BASIC DESCRIPTION:

There are two basic programs, Fractional Ownership and Fractional Leasing.  The major difference is that in the Fractional Ownership program each of the partners (generally four) owns an equal share in the boat; in the Fractional Lease program one person owns the boat and the other partners (usually 7) lease time on the boat.  In both programs the boat is owned by a Limited Liability Corporation (LLC) set up for the purpose; in the Fractional Ownership program each partner holds an equal share in the LLC and in the Fractional Lease program the boat owner holds 100% of the shares.  The LLC is used to make sure that each partner (in either program) is not liable for damages or injuries caused by another partner or lessee.

Both programs typically run for 3 years although custom programs can be set up.

In the case of the Fractional Ownership program each partner provides 1/4 of the funds (we'll assume four partners here) needed to purchase the boat.  Each partner pays an equal sum each month which covers moorage, insurance, maintenance, and cleaning.  The only other expenses are fuel and a low per hour engine cost (this way folks putting on the most hours are paying for more of the engine maintenance).  The boat is professionally maintained on a strict schedule and cleaned on a regular basis.  It's our goal to keep the boat in better condition than even the fussiest owner would have time for.  At the end of the 3 year program several things can happen: 1) The partners can decide to continue and renew the program 2) One or more of the partners can choose to purchase the boat from the others 3) The boat can be sold on the open market.  If the boat is sold each partner receives 1/4 of the proceeds of the sale (again assuming four partners).

In the case of the Fractional Lease program the owner puts up a 20% down payment on the boat and finances the rest on a 10-year mortgage.  Each of the remaining lease partners (we'll assume 7 here) pays a monthly fee for the term of the program (usually 3 years).  The only other expenses are fuel (each member is responsible for refueling) and a low per hour engine fee (this way folks putting on the most hours are paying for more of the engine maintenance).  At the end of the program the lease partners are done and the boat owner may choose to keep the boat, purchase a new boat for a new 3-year program, or sell the boat.  Usually there isn't the opportunity to renew the program for another 3 years since it's difficult to keep all 8 folks together and having new folks join on a 3-year old boat makes it difficult to make the lease payments equitable.

BOAT USE:

The use of the boat is guided by a set of rules in place for the program so that it's fair for everyone.  The only reason to go into these programs is to make boating more affordable and fun and to share expenses but that only works if everyone is playing by the same rules.  The split is a bit different between the Ownership program and the Leasing program owing to the number of folks involved.  None of the programs are meant to be restrictive in any way; quite the opposite, the idea is to give everyone involved more time on the water for less money by sharing.  If you have a different schedule in mind please don't hesitate to propose it; we're always looking for ways to improve our service.

In the case of the Fractional Ownership program each of the four partners gets about 10 scheduled weeks a year (actually 72 days) which is divided up into 6 days per month of which 2 days per month can be a Sat and Sunday; this allows each partner at least one weekend per month.  Unused days can be rolled over from previous months and pulled from future months if an extended vacation time (up to 2 weeks) is desired.  Keep in mind that times slots can be freely traded between partners.  Also, when the boat is not scheduled for use it can be used on an unlimited "as available" basis (it doesn't use up your days of use); the simple rule is you can not reserve the boat on an "as available" basis prior to 24 hours before use.

In the case of the Fractional Leasing program each of the eight partners (the owner and 7 lease partners) gets 84 time slots per year divided into 7 time slots per month.  This is equivalent to 42 days per year but each day is divided into two "time slots" (9 am to 5 pm and 5 pm to 9 am) to maximize the number of "uses" when you can't always take the boat for a whole day.  Of course it you want to you can always schedule two back-to-back time slots for 24 hour use.  You can also rollover unused time slots from previous months and pull future time slots for 1 week schedules which you can use every two months.  Keep in mind that times slots can be freely traded between partners.  Also, when the boat is not scheduled for use it can be used on an unlimited "as available" basis (it doesn't use up your "time slots"); the simple rule is you can not reserve the boat on an "as available" basis prior to 24 hours before use.

VESSELS:

The only boats eligible for this program at the moment are new Rosborough RF-246 Sedan Cruisers and Custom Wheelhouse boats sold through E.Q. and Heartland.  These will be fully equipped boats with integrated navigation systems (GPS, chart plotter, radar, and depth sounder), autopilots, VHF radio, heating, refrigeration, cooling (in the Tennessee boats), dinghy w/motor, and other essential items.  Each is fully stocked with dishes, utensils, paper goods, and such; you need only bring bedding, food and personal gear.

Each vessel will be professional maintained to the highest standards.  These boats are not equivalent to a fleet of rental cars; each and every boat has an private owner or owners and the Fractional Lease boats have a group of folks leasing that one and only boat.  Each has pride in the boat and is the one vessel that friends and family are brought to over the course of the program (typically 3 years).  Each skipper is responsible for returning his or her vessel to the dock in the same or better condition as when it left.  In addition E.Q. and Heartland will provide periodic professional cleaning to keep the boats in tip top condition as well as performing regularly scheduled maintenance on the engines and boat systems.  Since we're paying attention each and every day (and getting paid to do it) we can actually do a better job than even some of the fussiest owners (who typically just don't have the time available).

COSTS:

Fractional Ownership (with 4 partners):

	1/4 of the cost of the new RF-246 boat which is about $44,000 (this includes tax and licensing estimates)
	$350 monthly fee (covers all costs except fuel and hourly engine charge...and of course damage)
	$3 per hour engine charge

Fractional Lease (for lease partners; not the owner partner):

	$1500 security deposit
	$500 monthly fee (covers all cost except fuel and hourly engine charge...and of course damage)
	$3 per hour engine charge

Fractional Lease (for owner partner):

	20% down payment on the new RF-246 (approx $32,000)
	No monthly fees (boat payment, moorage, insurance, maintenance, is paid)
	$3 per hour engine charge

WHY DO THIS?:

Or put another way...what's in this for me?  That's not a selfish question, after all you're putting money out and should get something in return.  First of all our philosophy is win-win; I know that sounds corny but it's the absolute truth, if you're not getting something out equivalent to what you're putting in you might as well not do it.  We have no desire to make a living from folks paying for something they're not happy with.

So, what's in it for you?  Time on the water on a meticulously maintained boat without the hassle of taking care of moorage, insurance, maintenance, repairs, and cleaning (things that an average boater spends many, many days doing) and at a much, much lower cost than you could ever hope for with an individually owned boat.  There's no magic here; we don't get the boat slip any cheaper than the individual does but with the Ownership and Lease programs that cost gets divided 4 or 7 times.  Ditto for insurance, maintenance, and so forth.  Since the average boat owner uses a boat 20 days a year and these programs give you either 42 (lease) or 72 (ownership) either is very generous.  If you need more you can always purchase two Ownership shares or pay for two Leasing slots doubling your use of the boat and still be way ahead of individual ownership cost-wise.

With either program you essentially just show up on the boat, use it, return it to your mooring slip, and head home leaving the details to us (after all you are paying for that service!).  The lease boats do need to be fueled up by the returning skipper (we do offer fueling service) because there are many more users and the days are split into two time slots so without some very high monthly rates we can't afford to have someone filling the lease boats constantly.  The Ownership boats are only used by four and for full days so we'll do the refueling (and charge the appropriate owner).

Are these programs for everyone?  Of course not but hopefully we've given you enough information to make a decision about whether or not it will work for you.

WHAT NEXT?:

If you think one of our programs is for you please contact us at fractional@eqmarine.com.  We'll be happy to answer any questions for you and help you decide (honestly) if this is a good fit for you.  Also, please tell us if you'd like to see a change in either program; we'll be happy to try and accommodate you.

In the case of the Fractional Ownership boats there must be four partners available to make it a "go".  We'll reserve a position on the next available boat with a $10,000 deposit which will be placed in an escrow account.  There is a time limit on making the partnership work which is typically 3 months; if four partners aren't in place by then the deposit is 100% refundable.  However, you're welcome to wait longer if you care to.

In the case of the Fractional Lease boat there must be an owner (who puts down the 20% and secures financing on the boat) and at least 3 lease partners to make it a "go" (unless the owner chooses to make up the difference in what he or she receives from the program versus his or her monthly boat payment).  To position yourself for this program we need the $1500 security deposit and again there's a 3 month time limit on putting together the rest of the partners; if not then the $1500 is fully refundable.

 

 

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