Investing in Your Vacation with a Yacht

With summer just around the corner, now is the time to finalize plans and travel arrangements whether you plan to travel abroad or spend time relaxing on the beach. What if, instead of your usual summer vacation routine, you set sail on the yacht of your dreams and you kept the yacht? A yacht is an extraordinary purchase, and owning a yacht can improve the overall vacation experience; serve as a personal oasis on the high seas; fulfill a life-long goal; or enhance an appetite for travel. With the Seattle Boat Show underway, now is the perfect time to think about yachts ownership.

Investing in a yacht can be within reach if the buyer has a plan and the right team. Having a trusted advisor can smooth a complicated process requiring expertise in both the acquisition and financing. First time yacht owners should take extra care when purchasing a vessel or having one built. Having an experienced guide to help navigate finances can make all the difference. Working with a firm, like U.S. Trust, can help determine if the time is right and make the process smoother, giving the buyer, seller and builder one point of contact. An advisor can help ensure that the buyers objectives are met with a credit solution aligned to ownership structures and cash flow.

Crafting a thoughtful plan is of the utmost importance when considering taking the next step in purchasing, refitting or building a yacht. With such highly specialized assets, there are several important implications to be aware of when making an investment decision. Each individuals unique plan must carefully consider: the payment schedule, interest rate alternatives, competitive amortization schedules, revenue stream potential, flagging, and additional costs like moorage.

Financing the yacht should reflect the owners lifestyle. Buyers should work with an advisor on a recommended approach to structuring credit, including loan terms, repayment options and amortization schedules. There are a number of possible approaches and solutions including risk management strategies or implementing a currency hedging approach for a foreign construction project. The owner, whether buying their first or trading up, should establish an appropriate credit solution aligned with their unique structure of ownership and cash flow.

Flagging a new yacht is another aspect with financial considerations. Some U.S. Trust clients choose to register their yachts in a foreign jurisdiction for reasons including crew hiring, estate planning issues and tax considerations. As with the financing, having the right team can help the purchaser consider all their options.

When building a custom yacht, be sure to keep in mind that construction projects require an added level of experience and knowledge. Managing all the parties involved clients, surveyors, brokers and shipyards can be a full time job. Before embarking on a custom construction project, consider the vast amount of planning and funds required. Its important to ensure that your advisors are familiar with the shipbuilding process and all its considerations.

When planning for the purchase of a yacht, its important to consider if the boat will be chartered, and if so, how it impacts the financing structure. Such considerations need to be addressed early in the process since they can change the structure of ownership. If charters are going to be a frequent occurrence, it may make more sense to establish a company to buy the yacht as opposed to an individual making the purchase. As with all aspects of finance, working with a dedicated advisor to help address such decisions can make all the difference.

Just as you wouldnt set sail without a seasoned skipper at the helm, setting out to buy or build a luxury yacht shouldnt be done alone or without the knowledge and experience of a professional financial advisor. So, as sails closer, perhaps hitting the high seas in a new yacht can be part of your summer plan, and part of your long-term financial plan this year. Bon voyage!