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- Luxury yachts are among the most expensive asset purchases. Before you start cruising the world's most dazzling waters in your super yacht, there are many things you need to know and consider, and the initial capital is just one part of the equation.
Vadim Blaustein, a resident of Monaco and an experienced lawyer dealing with numerous yacht purchase and financing transactions, as well as tax planning, tells in this interview what aspiring yacht owners need to know before purchasing the luxury yacht of their dreams.
How do you finance buying a super yacht?
Vadim Blaustein: There are several ways to finance the purchase of a super yacht. Banks and marine lenders generally provide financing, either via a leasing transaction for a fixed period or via a marine mortgage, registered on a yacht in her flag registry. Another option is the fractional ownership, which essentially gives the buyer the opportunity to enjoy the benefits of a yacht ownership for a fraction of the price.
What is a fractional ownership and how does it work?
Vadim Blaustein: In a fractional ownership, the costs of purchasing and managing the yacht are divided among the owners. It allows you to purchase a share of a yacht entitling you to a number of days of use per year. The type of fractional program you choose will determine the number of owners, the number of days of use and the duration of ownership. The company that manages the fractional program handles the management and keeps record of each owner’s personal preference. However, the extent to which the company will go in personalising the yacht each time an owner comes aboard varies per company.
What are the advantages and disadvantages of fractional yacht ownership?
Vadim Blaustein: The main advantage of fractional ownership is that you own the yacht for a fraction of the cost and with less hassles of management responsibility. It also cuts some of the ongoing costs, such as the maintenance costs since they get split among the owners. However, there are also some drawbacks, such as the fact that your time aboard is pre-scheduled and you will not be able to personalise the yacht the way you would want to.
What are the running costs associated with owning a yacht?
Vadim Blaustein: The expected operational costs after the purchase of a yacht is around 10% of a yacht’s initial purchase price. The costs include fuel, insurance, dockage fees, maintenance and repairs, and crew salaries.
What do yacht owners need to know when purchasing insurance policies and coverage?
Vadim Blaustein: Insuring a yacht is a multi-faceted consideration. Therefore, purchasing insurance policies and coverage for your super yacht, such as hull and protection and indemnity insurance must be given adequate attention. Some buyers hire a surveyor to examine the yacht thoroughly prior to purchase, as it is also often considered by an insurance underwriter to understand the vessel’s state. As there is no standard form of super yacht insurance coverage, the owner must analyse the coverage of each policy offered by insurance companies and understand the exclusions and limitations that can have a direct impact on the quality of the policy that you have.
What do crews normally consist of?
Vadim Blaustein: The crew composition ultimately depends on the needs of the yacht owner. However, in general, it consists of a mid-grade captain, first officer, deckhands, chefs, stewards, and engineers.
What are the options available in terms of mooring?
Vadim Blaustein: The yacht owner’s biggest continuous outlay will be mooring fees. Depending on the size of the yacht you plan to buy, as well as your lifestyle, you can either buy or rent a marina berth. There are many companies offering various leasing options, such as annual renewable contracts and seasonal mooring rentals. In addition, there are also companies that can help you sub-let your berth if you are planning to vacate it for some time.
What are the berthing possibilities and prices in Monaco and other nearby marinas?
Vadim Blaustein: There are two ports in Monaco: Port Hercule and Port Fontvieille. Port Hercule is the only deep-water port in Monaco and has 700 berths, 110 of which accommodate yachts over 24m and its largest berth can accommodate a yacht up to 130m in length. Berthing spots during prime-time events such as the Monaco Grand Prix and the Monaco Yacht Show can cost around EUR100,000 or more for a five-day stay. You can also find some excellent marinas near Monaco, such as ports in Menton, Cap d’Ail, Beaulieu-sur-Mer, Cap Ferrat and Villefranche.
Is it possible to do a test run before buying the yacht?
Vadim Blaustein: Yes. In fact, it is advisable to take the yacht out for a test run before purchasing it to make sure that the yacht you are planning to buy meets your needs. It is important to consider though that taking a yacht out for a test is usually done at your own expense, but it can be well worth it. It would also be useful to have a survey team to inspect the yacht, in case you are buying a used one, for any engineering or mechanical issues before you agree to buy.
What is the average fuel burn rate of a yacht?
Vadim Blaustein: Sea conditions vary more widely than road conditions, so fuel consumption is measured in gallons per hour. The cost of fuelling a yacht will depend on many factors, including the duration of use and the tank capacity. The standard usage for a 71m yacht is 500 litres an hour. The best way to get an idea of the exact fuel consumption of a yacht is to install a fuel flow meter.
How much does a yacht maintenance and repair cost?
Vadim Blaustein: Estimating marine repairs is extremely difficult. In general, maintenance of new yachts is low for the first three years. However, the costs will start increasing significantly after three years. Irrespective of type, major machinery will often require major repairs in years 5-7.
How much does it cost to rent a yacht?
Vadim Blaustein: The cost of a yacht charter is dependent on a number of factors, including the charter destination, type of yacht, local taxes, and the base cost. Charters can cost from EUR10,000 per week on smaller sailing yachts and catamarans, while on the most luxurious super yachts, these costs can go up to EUR150,000+ per week. There are also many options available in terms of the price structure. For instance, you can have an all-inclusive yacht charter price structure where rates are based on the number of guests and include all other costs, such as food and drink, water sports and fuel costs.
Thank you very much for participating in this interview and for sharing with us a lot of valuable information. Your time and willingness to share your insights are greatly appreciated.