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While the term or idea of a Dockominium may seem to be a new idea, they first appeared on the market more than 20 years ago. Many of these new projects were poorly structured condominium associations with condo owners in seasonal boating areas who had no need for their boat slips. Enterprising marketing companies showed many condo owners how to turn their unused slips into assets by converting them into "Dockominiums." Since most of these projects did not provide the new dock owner with any real world amenities such as Dockmasters, Fuel Docks, Security, Restaurants, Marina Clubs, Swimming Pools, Tennis Courts, etc.....the lack of sufficient amenities doomed most of these early dockominiums to failure. Fortunately, there were a few smart developers, who understood the needs of the boating community and they built some very successful projects with the amenities boaters needed to call their dock home. These early successes have endured the test of time and using the benefit of their experiences as a historical model - today's Dockominium and Rackominium projects are wildly successful operations and in extreme demand. There will always be marina owners who will never convert their slips to private ownership - they will not want to part with the perpetual income that the slips they own will provide their families for generations. The opportunity to actually purchase and own your own boat slip is a unique and special opportunity. Less than 6% of U.S. marinas have ever offered their slips for sale. What are the advantages of owning or investing in your own dock space? What forms of ownership are available? What types of amenities are available to owners or investors? What slip lengths are available and what are the costs? Why should I consider purchasing a slip or rack instead of leasing? What are the requirements for purchasing? Do Dockominiums meet the requirements for 1031 Tax Deferred Exchanges? |
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What is a Dockominium? Dockominiums are individually owned wet slips for sailboats and cruisers. They can be found for any size boat or vessel and can be constructed as a simple fixed pier to luxury indoor, climate controlled, high security facilities with many amenities. The concept is much the same as a condominium except that it is a home for your boat and based upon a deeded title to the basin bottom and in some instances may be based upon a basin bottom that is leased from the government or a municipality. Slips and racks may be located in recreational coastal marinas, lakes, rivers and can also be offered by resorts, hotels and waterfront restaurants. Slips can also be found at private residences, apartment complexes and condominiums. There is no set standard for a "dockominium" so be sure to do your homework with regard to the location, management, amenities and governing associations. (back to top of page) What is a Rackominium? Rackominiums are individually owned dry-stack boat storage racks. They are the easiest way to handle motor boats less than 50' and 22,000 pounds. They can be open air racks, covered, three-sided buildings or completely enclosed and climate controlled. Special crane systems, lifts and fork lifts are used to safely haul & store or lift and launch your boat as often as you wish to use it. Whether it is once every couple of weeks to several times a day, these facilities provide you the same access to the water as a wet slip but provide better protection than if you had your very own boat lift. The concept is much the same as a condominium except that it is a home for your boat and based upon the land that the rack sits on and the structure itself (like a condo). Rackominiums are almost always located within a marina complex or independent rack facility. They require a higher level of management by a marina operator and most newer facilities are providing a full package of amenities. As will any boat slip product, be sure to do your homework with regard to the location, management, amenities and governing associations.(Back to top of page) What are the advantages of owning or investing in your own slip? The purchase of a dockominium or rackominium provides the discriminating owner or investor with multiple benefits, including, but not limited to: EQUITY: You will build equity in a rapidly dwindling resource as demand continues to outstrip supply, APPRECIATION: Increasingly stringent governmental regulation limiting the number of marinas which can be built, coupled with the consistent demand for boat slips, creates the potential for an appreciation in your slip's value. While no value can be predetermined, a little historical research will show that most urban and suburban slips on the Atlantic Coast have AVERAGED ANNUAL appreciation rates between 8% and 14% over the past 20 years. NO OTHER real estate product we are aware of has performed as well. RENTAL INCOME. Your slip can provide rental income when not in use, and this can even be managed for you. For investors the income can even be guaranteed. POTENTIAL TAX BENEFITS. Ownership can offer possible tax savings. If the purchase is financed by a qualifying home equity loan or if the boat and slip can qualify as a second home, the interest is generally tax deductible. Additionally, the real estate taxes paid in connection with the slip are also tax deductible. Always consult with your tax advisor LIQUIDITY: A dockominium or rackominium can be sold or transferred, at any time, or passed by inheritance the same as any other titled real estate product. CONTROLLED EXPENSES: Ownership can assure control of expenses as rental rates climb even higher. If structured properly, the after-tax cost to many boat owners will be less than the rental rate they would be paying for the same period. After the loan is paid off, the ongoing cost of owning the slip is a fraction of rental. SECURITY: Ownership will secure for you and your family a permanent home for your yacht and the lifestyle that boating provides. VALUE: Ownership of a slip or rack allows its owner many of the benefits of water-front ownership, without the tremendous costs associated with this type of ownership. Once you get past the initial "sticker shock" you will see that long term ownership of boat slips can provide exceptional value.(Back to top of page) What forms of ownership are available? FEE
SIMPLE CONDOMINIUM
(Dockominium/Rackominium) LEASE
HOLD EQUITY
YACHT CLUBS What types of amenities are available to owners or investors? Many dockominium facilities offer a club or resort style atmosphere to you, your family and friends. They may include swimming pools, tennis courts, showers and restrooms, laundry facilities, picnic areas, assigned and guest parking, cafes, lounges, ship's stores, car and/or bicycle rentals, fuel dock(s) (both gas and diesel), pump-out stations at each slip, as well as complete maintenance programs, staffs, facilities and services for your yacht. The purchase of a Rackominium affords the owner the same amenities as any wet slip dockominium owner and includes ownership of the marina property through automatic membership in the Dock Owner's Association The
types of marinas that are available vary considerably. Obviously,
those that offer the nicest and greatest amount of amenities
are reflected in the sale prices of their slips. Location is
another major factor. Are there any property taxes for dockominiums? Yes. Taxes must be paid on dockominiums and rackominium just like any other real estate that you might own. Please consult our representative for a current quotation regarding estimated appraisal values and Mil rates for the particular location where you are interested in purchasing. Outside of the United States, property and other taxes may differ depending on the country. (Back to top of page) What slip lengths are available and what are the costs? There are dockominiums (wet slips) available for virtually any size boat, yacht or vessel up to about 250 feet. The larger they are however, the more difficult they are to find. Dry stack rackominiums can be purchased for vessels up to approximately forty-eight feet in some facilities and can be purchased relatively inexpensively. Although this is true in the current market conditions, we predict that Dry Rack spaces will at some point in the not too distant future reach or even surpass wet slip prices as the Dry Racks offer far superior benefits. Dry Racks provide greater protection and will contribute to a longer life, lower the required finish maintenance, increase resale values and may someday potentially lower insurance rates for boats stored in such facilities. Depending on the geographic location and type of marina development, dockominiums can range widely in price from as low as one thousand dollars per linear foot to as much or more than fifty thousand dollars per linear foot for luxury indoor climate controlled wet slips. Rackominiums (dry racks) also range in price but not quite as drastically as dockominiums. They start as low as five-hundred per linear foot to three thousand per linear foot. These amounts are not intended to reflect specific pricing, but rather to show the range in values. Examples
of Dockage that has been sold in the recent past: 30'
Rackominium, Chesapeake Bay $16,000.00 (Pre-development
2004) From the examples above, it is easy to see that the appreciation rates for dockage is above the averages for real estate. While the opportunity to purchase at pre-development prices has a distinct advantage over dockage that has already been previously offered for sale...it appears that the opportunity to own dockage can be a valid investment strategy. (Back to top of page) Why should I consider purchasing a slip or rack instead of leasing? Why consider purchasing a dockominium or rackominium now? Although ownership of permanent yacht slips, berths and moorings may appear to you like a relatively new concept, knowledgeable yacht owners and real estate investors the world over continue to seek and purchase prime yacht dockage for their vessels and income opportunities. Dockominiums are available for purchase in many of the world's major ocean, lake and river accessible communities. The number of new dockominiums available for purchase, especially in the coastal regions of the United States, continues to decrease as demand continues to grow. They have soared in popularity more recently because of a number of factors. Yachting continues to expand world wide as more owners are entering the market. Larger and more costly vessels are being constructed every day, thus placing pressure on an already oversubscribed and limited rental marketplace. Small, formerly independent marinas are being purchased by large international companies and developed for their maximum utility. High priced resorts and condominiums are ousting the recreational boater. In addition, there are stringent environmental, regulatory and land use restrictions reducing the available supply of marinas at large. As the number of high quality, deep water wet slips decreases, their value continues to grow. Recent moratoriums on new marina construction and dock permitting has influenced some dockominium owners and investors to purchase additional available slips simply for the investment value that they represent. Yes, you can still choose to lease, but why would you want to? What are the estimated annual costs of ownership? If purchased without financing, a unit owner's annual cost of ownership would be the tax deductible real estate taxes of about 2.25% (Florida) of the property's fair market value. There will also be a monthly Association assessment for common area maintenance, property insurance, security and related expenses. If financed, a unit owner will also be responsible for the principal and interest payments associated with the financing. As noted above, the interest component of the payment would be tax deductible if the loan is structured as either a qualifying home equity or second home mortgage loan. The principal part of the monthly payment would increase the equity of the dockominium unit. The association fee would remain the same whether owning or leasing. Once again, we ask that you consult with your tax advisor in connection with your particular tax situation. (Back to top) Do dockominiums meet the requirements for 1031 tax deferred exchanges? Yes, depending on the type of exchange you are considering. If you wish to defer capital gain taxation indefinitely, please consult first with your tax and/or legal advisors. (Back to top) |
