Purchase a Info on Purchasing a Plane and Leasing Back to a School

[pjbphd]

I'm training to get my pilots certificate and doing pretty well so far. I'
ve posted a couple of times in this newsgroup in the past few weeks and I've
received some very good advice. Therefore I thought I'd throw another
question at you.



I'll be commuting with my license. Flying form my home on Sundays and
returning the following Thursday or Friday evening. All of course is
dependent on weather conditions. I expect to purchase a plane in the near
future for this purpose.



I've had a couple people tell me a good way to go is to purchase a plane
then lease it back to a willing flight school or club. I'm not sure what
this entails, but I'd like to know if anyone has done this, what it entails
and if you'd do it again. As I mentioned, the plane will be in one place
during the week and another on weekends. I suspect it'll get more use on
weekends, but I'm not sure.



If anyone has any experience in this area please give me the plusses and
minuses of such a situation. I haven't been in touch with any schools or
clubs and in fact I don't even own a plane yet, but I'm looking at my
options.



Thanks in advance.



pjbphd




--
Too many spams have forced me to alter my email. If you wish to email me
directly please send messages to pjbphd @ cox dot net

[pjbphd]

Sorry about the Header. I'm not trying to purchase info, I'm trying to
Purchase a plane! My bad ;=0

pjbphd


"pjbphd" > wrote in message
news:JArYc.165380$sh.19008@fed1read06...
> I'm training to get my pilots certificate and doing pretty well so far.
I'
> ve posted a couple of times in this newsgroup in the past few weeks and
I've
> received some very good advice. Therefore I thought I'd throw another
> question at you.
>
>
>
> I'll be commuting with my license. Flying form my home on Sundays and
> returning the following Thursday or Friday evening. All of course is
> dependent on weather conditions. I expect to purchase a plane in the near
> future for this purpose.
>
>
>
> I've had a couple people tell me a good way to go is to purchase a plane
> then lease it back to a willing flight school or club. I'm not sure what
> this entails, but I'd like to know if anyone has done this, what it
entails
> and if you'd do it again. As I mentioned, the plane will be in one place
> during the week and another on weekends. I suspect it'll get more use on
> weekends, but I'm not sure.
>
>
>
> If anyone has any experience in this area please give me the plusses and
> minuses of such a situation. I haven't been in touch with any schools or
> clubs and in fact I don't even own a plane yet, but I'm looking at my
> options.
>
>
>
> Thanks in advance.
>
>
>
> pjbphd
>
>
>
>
> --
> Too many spams have forced me to alter my email. If you wish to email me
> directly please send messages to pjbphd @ cox dot net
>
>

[Geoffrey Barnes]

> I've had a couple people tell me a good way to go is to purchase a plane
> then lease it back to a willing flight school or club. I'm not sure what
> this entails, but I'd like to know if anyone has done this, what it
entails
> and if you'd do it again.

I'm on the board of our flying club. We aren't anywhere near to your
neighborhood (Pittsburgh, PA), so we aren't an interested party, but I've
been through all kinds of different leaseback arrangements with different
kinds of owners. First and foremost, you are not likely to make much money
on any leaseback deal, especially with the kind of time constraints you will
face. If you break even, consider yourself blessed.

By putting your plane out for rent, you will make some club or school very
happy. But you will also be facing significantly higher insurance bills.
One guy who looked into leasing back with us recently was quoted an annual
price more than 3 times higher for leaseback than it would be with just him
and his partner doing the flying. Of course, those higher premiums are
built into the hourly rental fee, but it still puts an owner at some
financial risk, since if their plane doesn't fly enough, they may not make
enough money to cover the additional insurance, fuel, and maintenance costs
that any leaseback will lead to.

The other thing that has turned off some potential owners is the simple fact
that you own the plane, you will be letting other people pay to fly it, and
that you therefore face some significant legal liability should one of those
renters get themselves killed. I'm not a lawyer. I know there are some
techniques that owners use to try to insulate there personal wealth from
this kind of liablity. I don't know how well these things work in practice.
But talk to a lawyer before you sign any leaseback papers.

> I'll be commuting with my license. Flying form my home on Sundays and
> returning the following Thursday or Friday evening.
>
> As I mentioned, the plane will be in one place during the week and another
> on weekends. I suspect it'll get more use on weekends, but I'm not sure.

With these kinds of time constraints, you may not be all that attractive to
a club or school, and you may not be happy with a leaseback either. You
really want this plane for your own use. Sure, you will be bringing the
plane "home" every weekend... except when you don't. Weather, or a busy
time at work, or just a decision to spend your weekend someplace else for a
change will mean that the plane is not available to your renters. If
someone has booked the plane for a lesson on Saturday morning, or a
checkride on Saturday afternoon, or even just a $100 hamburger on Sunday
morning, they are going to be right ****ed if the plane doesn't turn up
because you have it parked someplace else. As a consequence, they won't
sign up to rent your plane as often, and then you won't make enough money to
justify the added expenses of the leaseback, and you will eventually have to
pull your plane out of the arrangement entirely.

At least in my club, the biggest users of most aircraft are students.
Students like to get familiar with one plane and fly the hell out of it, so
that they don't have any new stuff to learn about the plane while they are
still learning to fly. Many students (if not all), however, are not going
to be locked into a weekend-only schedule. At some point in their training,
they are going to have to jump on any good weather day, no matter when it
comes up. If your plane is available for that Tuesday night cross-country,
when the high pressure has finally rolled in and the weather has finally
cleared, students aren't going to want to train in your plane. Instead,
they will focus on aircraft that are available all the time. Again, you
won't get enough rentals to cover your costs, and eventually the arrangment
will collapse.

The best and most successful leaseback owners are the ones that never, or
only rarely, want to fly their planes. We have one owner who is 700 miles
away from us. We have another set who are 200 miles away. We have a third
who is local, but who only flies every 90 days or so. We had another guy
who wasn't even a pilot. They aren't getting wealthy from the leaseback,
but they aren't in negative cash flow territory, either.

On the other hand, we had a guy who bought his own plane for his own use,
and then thought that he would open it up for rental during those times when
he wasn't using it. It was a disaster. When he started his instrument
training, he blocked off every single day, for a period of 3 months, from
8:00 AM to 9:00 PM for his own use. Sure, you could rent his plane, as long
as you left after 9:00 PM and had it back early the next morning. Needless
to say, not many people were interested in this. They grew even less
interested when he would disappear in his plane for unscheduled weekend
trips, ignoring the fact that other people were already on the schedule.
And they really lost interest when he called the tower, had the controllers
call the pilot who had rented the plane, and demand that it return so he
could use it.

He eventually got very angry, pulled his plane out of the leaseback, and
even turned in his resignation from the club because "nobody is flying my
plane". He never saw that his own behavior played a key part in driving
renters away. Still, I don't begrudge him terminating the lease. The
simple fact is that, under the way he had things set up, he was never going
to be able to cover the additional costs of the leaseback. Not only was he
losing money, but he was spending far more than he would have just owning
the plane for his own use. It wasn't a good arrangment for anybody, and
everybody was better off when he pulled his plane out of the club.




---
Outgoing mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.745 / Virus Database: 497 - Release Date: 8/27/2004

[pjbphd]

Thanks. That's the kind of insight I need.

pjbphd
"Geoffrey Barnes" > wrote in message
ink.net...
> > I've had a couple people tell me a good way to go is to purchase a plane
> > then lease it back to a willing flight school or club. I'm not sure
what
> > this entails, but I'd like to know if anyone has done this, what it
> entails
> > and if you'd do it again.
>
> I'm on the board of our flying club. We aren't anywhere near to your
> neighborhood (Pittsburgh, PA), so we aren't an interested party, but I've
> been through all kinds of different leaseback arrangements with different
> kinds of owners. First and foremost, you are not likely to make much
money
> on any leaseback deal, especially with the kind of time constraints you
will
> face. If you break even, consider yourself blessed.
>
> By putting your plane out for rent, you will make some club or school very
> happy. But you will also be facing significantly higher insurance bills.
> One guy who looked into leasing back with us recently was quoted an annual
> price more than 3 times higher for leaseback than it would be with just
him
> and his partner doing the flying. Of course, those higher premiums are
> built into the hourly rental fee, but it still puts an owner at some
> financial risk, since if their plane doesn't fly enough, they may not make
> enough money to cover the additional insurance, fuel, and maintenance
costs
> that any leaseback will lead to.
>
> The other thing that has turned off some potential owners is the simple
fact
> that you own the plane, you will be letting other people pay to fly it,
and
> that you therefore face some significant legal liability should one of
those
> renters get themselves killed. I'm not a lawyer. I know there are some
> techniques that owners use to try to insulate there personal wealth from
> this kind of liablity. I don't know how well these things work in
practice.
> But talk to a lawyer before you sign any leaseback papers.
>
> > I'll be commuting with my license. Flying form my home on Sundays and
> > returning the following Thursday or Friday evening.
> >
> > As I mentioned, the plane will be in one place during the week and
another
> > on weekends. I suspect it'll get more use on weekends, but I'm not
sure.
>
> With these kinds of time constraints, you may not be all that attractive
to
> a club or school, and you may not be happy with a leaseback either. You
> really want this plane for your own use. Sure, you will be bringing the
> plane "home" every weekend... except when you don't. Weather, or a busy
> time at work, or just a decision to spend your weekend someplace else for
a
> change will mean that the plane is not available to your renters. If
> someone has booked the plane for a lesson on Saturday morning, or a
> checkride on Saturday afternoon, or even just a $100 hamburger on Sunday
> morning, they are going to be right ****ed if the plane doesn't turn up
> because you have it parked someplace else. As a consequence, they won't
> sign up to rent your plane as often, and then you won't make enough money
to
> justify the added expenses of the leaseback, and you will eventually have
to
> pull your plane out of the arrangement entirely.
>
> At least in my club, the biggest users of most aircraft are students.
> Students like to get familiar with one plane and fly the hell out of it,
so
> that they don't have any new stuff to learn about the plane while they are
> still learning to fly. Many students (if not all), however, are not going
> to be locked into a weekend-only schedule. At some point in their
training,
> they are going to have to jump on any good weather day, no matter when it
> comes up. If your plane is available for that Tuesday night
cross-country,
> when the high pressure has finally rolled in and the weather has finally
> cleared, students aren't going to want to train in your plane. Instead,
> they will focus on aircraft that are available all the time. Again, you
> won't get enough rentals to cover your costs, and eventually the
arrangment
> will collapse.
>
> The best and most successful leaseback owners are the ones that never, or
> only rarely, want to fly their planes. We have one owner who is 700 miles
> away from us. We have another set who are 200 miles away. We have a
third
> who is local, but who only flies every 90 days or so. We had another guy
> who wasn't even a pilot. They aren't getting wealthy from the leaseback,
> but they aren't in negative cash flow territory, either.
>
> On the other hand, we had a guy who bought his own plane for his own use,
> and then thought that he would open it up for rental during those times
when
> he wasn't using it. It was a disaster. When he started his instrument
> training, he blocked off every single day, for a period of 3 months, from
> 8:00 AM to 9:00 PM for his own use. Sure, you could rent his plane, as
long
> as you left after 9:00 PM and had it back early the next morning.
Needless
> to say, not many people were interested in this. They grew even less
> interested when he would disappear in his plane for unscheduled weekend
> trips, ignoring the fact that other people were already on the schedule.
> And they really lost interest when he called the tower, had the
controllers
> call the pilot who had rented the plane, and demand that it return so he
> could use it.
>
> He eventually got very angry, pulled his plane out of the leaseback, and
> even turned in his resignation from the club because "nobody is flying my
> plane". He never saw that his own behavior played a key part in driving
> renters away. Still, I don't begrudge him terminating the lease. The
> simple fact is that, under the way he had things set up, he was never
going
> to be able to cover the additional costs of the leaseback. Not only was
he
> losing money, but he was spending far more than he would have just owning
> the plane for his own use. It wasn't a good arrangment for anybody, and
> everybody was better off when he pulled his plane out of the club.
>
>
>
>
> ---
> Outgoing mail is certified Virus Free.
> Checked by AVG anti-virus system (http://www.grisoft.com).
> Version: 6.0.745 / Virus Database: 497 - Release Date: 8/27/2004
>
>