Whittington & Associates, LLC

North Florida Doctor (February 2008)
The High Life at a Lower Price

By R.P. Whittington

Even people with secure jobs and steady paychecks start taking a harder look at their household budgets during a recession, especially their discretionary spending, to see where they can scale back until the economy improves.

When it comes to luxury items, there are ways live the high life and keep more money in your bank account.

Boating

"The happiest day of my life was when I bought my first boat. The second happiest day of my life was when I sold it!"

That old joke among boat owners probably stays popular because there's so much truth in it.

In addition to the purchase price, boat owners have to contend with transportation (if they don't live on the water or have a dock slip), and the maintenance and storage costs associated with their favorite pastime.

To avoid those additional expenses and tying up funds in a long-term loan, several boat clubs are located throughout Florida that offer sportsmen the opportunity to enjoy the water without all those added responsibilities – and costs.

The Jacksonville Boat Club, located in Palm Cove Marina on Beach Boulevard at the Intracoastal Waterway, is one such private club that provides members with a fleet of power boats to enjoy, and at the fraction of the cost of owning just one.

"Our analogy is that we're like a boating country club," said co-owner Christine Walker, who opened the club with her husband, Ryan, in May 2005. "You pay a one-time initiation fee and monthly dues just as you would at a country club, which gives you access to a fleet of boats to choose from – including yachts, fishing boats, bass boats…you name it." Members are provided with all the required floatation devices they need along with any boat "toys" they may require (floats, skis, jet skis, etc.) for their trip. And if a member isn't familiar with how to operate a particular boat, they receive pointers from the club's boat captain before they head out on the water.

"The instruction we provide is a good perk, whether the member's a novice or an expert, and gives them all they need to know on boat handling on the water," Christine says.

But the biggest advantage when you join a boat club is the cost savings. For example, if you purchased a $35,000 boat and paid insurance and slip fees alone, a membership would save you $12,000 over a three-year period, including club dues.

"It's really cost-effective, especially in this economic climate when it's more difficult to secure a boat loan and you have to make a commitment of 10 years or more," she said. "With us, you only commit to a 12-month membership."

However, Christine admits that most of the club members, which include doctors, attorneys and executives, don't "really have an issue with the cost."

For them, the biggest factor is time.

"If the weather forecast looks nice and some time opens up for them, they can make a phone call and 45 minutes later they're on the water," said co-owner Ryan Walker.

That's one of the reasons that two-year club member Dr. Brett Snyder, a plastic surgeon and partner with Ponte Vedra Plastic Surgery, says the Jacksonville Boat Club was a perfect choice for him.

"When you're busy in your profession and you have kids, you really don't have the time to go out on the water all the time," he said. "From a practical basis, you don't have complete freedom as a member because you have to bring the boat back by the end of the day. But how many boat owners really do that? From my experience, not many."

Dr. Snyder, who previously owned a boat when his family lived in a house with water access in California, says he also enjoys the "stress-free" aspects of the club.

"They basically assume all the headaches of ownership, the cost of insurance, storage, maintenance, and especially the clean up," Dr Snyder said. "When we were out last time, it started to rain and we came back into port, tied up the boat and walked away. There's nothing better than that."

Like other private boat clubs, Jacksonville Boat Club offers several membership plans. It's most popular is a full membership package, which costs $1,895 for the annual fee and $299 a month and gives boaters access Tuesday through Sunday. It's Adult Leisure Membership, which costs $995 per year and $199 per month, gives members access to the club Tuesday through Friday. (Jacksonville Jaguars Quarterback David Garrard recently purchased this package, said Ryan, "for obvious reasons, since that was the only time he could get out on the water during football season.") Jacksonville Boat Club also offers a special membership package for medical practices.

"Even when you compare the smaller packages to renting a boat, it still comes up less expensive if you're going out on the water several times a month," Christine said. "I think more people who love getting out on the water will be looking at clubs a lot more than before, especially when they become aware how cost-effective it truly is, we expect to do quite well this year."

Cars

If you planned to get into an exotic car in 2009 but decided the economy hasn't given you the comfort to go to the lot and sign on the dotted line, you can still live your dream – whether it's driving a Ferrari or trying out a Hummer for the first time.

In fact, some current clients of high-end car rental companies are former owners of flashy vehicles who decided to end their leases or sell their cars – opting to go the route of weekly or weekend rentals instead.

"The economy has certainly had an effect on us, but more so in the type of people who are leasing our vehicles," according Kristin Royal, marketing director of Xotic Dream Cars, one of several companies that lease high-end vehicles for rental by the day, week or month.

"We've seen a different type of clientele over the last four or five months," Royal said. "From our discussions with them, they used to own exotic cars. Maybe their businesses went bankrupt, or they lost the cars to repossession. Regardless of the reasons, they can't afford to own one anymore, but they still want to keep up that lifestyle."

The price to rent an exotic car depends on what type you select. The Ferrari 360 Modena, which Royal says is one of their most popular choices, costs $950 per day or $6,650 a week. Their most expensive: The Rolls Royce Phantom, available at a daily rate of $2,750 or a weekly rate $13,950.

While that is quite a bit of money for a rental, it doesn't compare to the cost of buying a Rolls (anywhere from $350,000 or higher) or a Ferrari ($215,000 and up, depending on the model and features).

"To put it in perspective, the maintenance on these high-end cars can be as high as $5,000 a month just to keep them in the best running condition, so when you look at it from that angle, it's not as expensive as it looks," Royal said.

She adds that they also run specials and offer other special package deals when you become a member of Xotic's car club.

"We have the Titanium Package, for example, which offers special pricing to select customers," she said. "We don't publicize it on our website, but we do offer some customized pricing for some of our vehicles."

Most of the companies that lease exotic cars aren't physically located in Northeast Florida, but most, including Xotic Dream Cars and Prestige Luxury Rentals, provide delivery to Jacksonville and other cities throughout the state. Several will even provide a personal driver for fees ranging from $100 to $150 per day.

Homes and Condos

With the housing market nearing the bottom in terms of home values, and finance rates hovering between four and six percent, it's hard to beat the current buyers market if you are looking to downsize or upgrade to a new home.

The great bargains available in the housing market now are especially good for first-time home buyers with good credit who don't have to worry about selling the home they are in right now.

But what about that second home in the mountains or at the beach?

If the current economy scuttled your plans to purchase a vacation home, you may want to consider "Fractional Ownership."

It may sound like some sort of algebraic problem, but fractional ownership, sometimes referred to as shared ownership, is an old concept. Unlike timeshares or vacation clubs that require people to buy memberships and pay dues, a fractional ownership arrangement involves having two or more buyers or investors who come together to purchase a property.

For years, fractional ownership has been used by pilots to purchase aircraft, by boat owners to buy yachts, and for other commodities that people want but don't need to access all the time.

According to Keller Williams Real Estate Agent Phil Pierce, this buying option isn't prevalent on the First Coast today, but potential home buyers who would like to live on a waterfront property and can't swing it on their own might give it a look.

"I can see this type of arrangement working in more affluent areas like Amelia Island, and especially for people who want to buy into a summer get-away or mountain retreat," Pierce said. "Up to this point, fractional purchases are more apt to be done in exclusive resorts like those in Vail, Colorado, but I anticipate fractional purchases, along with timeshares, will gain in popularity given the economy we're in now."

According to Ragatz Associates, a market research and consulting firm that specializes in shared-ownership real estate, there was an increase of 32 percent increase in fractional purchases nationwide in 2006.

"If a person is holding a first mortgage and they need to hold onto that equity and can't afford to carry a second mortgage, if they find the right piece of property and can find the right people, they can all leverage what they have to purchase a really nice vacation home," Pierce said. "There are some unbelievable values out there now."

Unlike in a partnership, a fractional arrangement usually means ownership is divided into fourths, eighths, or 13ths – with each owner having an equal number of days a year to use the unit. In some cases, mostly with resort properties, owners buy their shares from a management company, which handles maintenance and the scheduling of everyone's time.

The more fractions that are sold, the more fractional ownership resembles a time share. Both can be bought as deeded properties, can be rented out, shared with family and friends, sold, or even left to someone in a will.

The big differences between time shares and fractional ownership properties are prices, financing and fees. While time shares can be had for a few thousand dollars, fractional ownerships can run $50,000 or more.

However, with a timeshare you may pay more than five times what the property is worth and no one notices because the price is split up among so many people. With fractional ownership you pay what the going rate of the property is worth. Fractionals also appreciate better than time-shares, according to Ragatz Associates.

Kathy Timmons, a lender with Countrywide Mortgage/Jacksonville Beach, said she received several inquiries about fractional ownership during the housing boom a few years ago. But if fractional ownership does gain traction in the First Coast, Timmons expects attorneys will benefit from the trend.

"Certainly, on an arrangement like this, you would need to get attorneys involved to make sure everyone's investment is protected," she said.

Whether you're looking for a vacation home, a high-end vehicle, or a boat to navigate in these troubled economic times, there are still ways to live the high life – and without the high price and long-term commitment that goes with it.

Media Contact: Ron Whittington (904-563-0402)