Good first partnership or not? 1/6th Cherokee 140 Share in CA

Hi,
I wanted to clarify, if possible, some of my thoughts the
cherokee partnership and see if that helps "steer" the advice.

I've taken 3 months off flying for two main reasons:
My old job was 15min from OAK, so I flew a lot with a great club:
www.alameda-aero.com. My new job is directly under short
final/departure from SQL's runway.
The problem: The club rates at SQL are about 50% higher than at
OAK and it's hard to just go have fun at $100/hr hobbs while also
paying $50/mo membership dues.

About the kitty & plane - the last post I saw mentioned the
$3600/yr as savings towards overhaul... that's not how this club is
operating. The $3600/yr (approx number) is for fixed costs. The
overhaul is expected to come from members pockets - and I understand
this from the beginning.

The concerns I'm hearing from other r.a.o members is making me
seriously think/re-think this partnership. The main things on my mind
right now a
1. Cost of an overhaul (it's the 150hp engine)
2. Potentially long downtime at overhaul
3. Member disagreements when it comes to shelling out $2k-$4k for
the overhaul...

Thanks for your thoughts & concerns - you may just talk me out of
it!
Noah

In article ,
noah wrote:
1. Cost of an overhaul (it's the 150hp engine)
2. Potentially long downtime at overhaul
3. Member disagreements when it comes to shelling out $2k-$4k for
the overhaul...

How about this: Tell the group you'll join for $N (whatever the buy-in
is, I recall it was within reason) PLUS $overhaul/6 *provided* that the
other members also kick in $overhaul/6 for the kitty right now. That way
you know the money will be there when the time comes. If that sounds
outlandish to them, well, how's it going to sound when the engine really
is broke?

--
Ben Jackson

http://www.ben.com/

"noah" wrote in message
om...


Thanks for your thoughts & concerns - you may just talk me out of
it!
Noah


Bah! You'll find something not to like in every deal you consider. Until
you're rich enough to pay for perfection, you gotta take the good with the
bad.

The overhaul isn't a deal-breaker. Just ask the other partners what has
been discussed WRT the upcoming overhaul. You may find they already have it
worked out.

So all 6 of you pay $2,000 each for an overhaul. Or even $3,000 each for a
full firewall forward overhaul. Big deal. That's not a whole lot of money
for the peace of mind of knowing your single engine plane has a new,
reliable engine in it. You don't lose that money, it raises the value of
the airplane and your equity stake in it.

You didn't mention the SMOH, but you're asking about overhaul costs,
so maybe it's getting close to TBO?

$33000 sounds like a high valuation(based on 6 x $5500) for a 1969 140
with original paint. avionics - are the nav/coms digital or analog?
any GPS? how's the interior?

You might take a look at Trade A Plane and aso.com for comparable
valuations to see if $5500 is really worth investing in something
that's worth less.

It would be interesting to know the history of this partnership. Do they
just sell another share whenever a big maintenance item is coming up?


"FUji" wrote in message
...
"noah" wrote in message
om...
Hi r.a.o guys,
Thru a local ad I found a 1/6th share in a 1969 Cherokee 140
(hershey bar wing). I've done some minimal due diligance on it and it
looks, well, like an old 1969 rental. The nose-wheel cowling is pretty
worn (looks like it's been glued several times) and the paint is
original & drab. The avionics are basic: 2 working VORs, 1 with
glideslope, but it is IFR (certified the correct term?)
The engine has a few hundred hours left and there is approx $6K
saved towards maintenance (the club intentionally doesn't charge
hourly for overhaul).

Here's the cost breakdown:
Buy-In $5,500
Hourly Tach (dry) $10
Fixed Costs - collected quarterly, average $150/owner/qtr +
eventual overhaul

Scheduling is done online, and I hear that only 3/6 partners fly
often and the other 2/6 hardly ever fly. That leaves me:

I want to save money & fly as much as possible, building XC time
before starting IFR training (eventually) and just have fun. The local
"popular" club is west valley www.wvfc.org, and their rates are around
$50/mo fixed + $90-$110/hr for a cherokee/c172. I've only flown
cessna's until now, but really liked the low-wing feel of the diamond
katana.

The plane seems like a near ideal match. I want to fly from
PAO/SQL to places like San Diego, Santa Barbara, Monterey, Mendocino,
Las Vegas - i.e. the west coast mostly... and only then after I build
up some shorter XC confidence... It seems like a good deal, but how
much could a Cherokee 140 overhaul *burn* my pocket? We're going for a
test flight this weekend & that will also help the decision...

Thanks for your advice,
Noah

Lemme see if I got this straight.

There's a group of six people (minus 1) that owns a well worn Cherokee
with
parts that been glued several times, old drab paint and basic radios.
These
same six people save $3600/yr for repairs, annuals and overhauls. There is
only a "few hundred hours left" on the motor and only $6000 in the kitty.

At this rate, it would take another 5 or 6 years to be able to afford an
overhaul. That's ok if these six people only fly about 50 hours a year
combined. Unless of course these six people want to pay out of their own
pocket to get it ovehauled quicker. Then again, these same six people
didn't want to cough up the cash for paint or other upgrades to stop it
from
looking like an "old 1969 rental".

First thing I would do is talk to the 1/6 that is no longer a partner and
ask him why he wanted out. If there wasn't a sixth person I'd ask why
five
people need another one to afford a Cherokee. Then, regardless of their
answers, I'd walk away and look for something else.

Two people could afford to own a Cherokee 140 and keep it going. Three
people gets you top notch maintenence and repairs. Four gets you a like
new
plane. Five or more gets you bickering and a hangar queen. Or an old 1969
rental. :-)

New rule: An airplane should never have more partners than seats.

This was going to be my question.
There are currently five partners. They need a cash infusion for
upcoming maintenance. Just add a sixth partner at a buyin of $5,500.
Oh, by the way, the engine overhaul will be $18,000. Let's see, six
partners, that comes out to $3000 apiece.
You recently joined, now you have spent $8,500. Viola... you are the
money partner!
Where has the other $5,500 gone? Are other repairs performed?

Otis Winslow wrote:
It would be interesting to know the history of this partnership. Do they
just sell another share whenever a big maintenance item is coming up?

Noah,

I remind my airplane partner every now and then that "the only reason
we are in this partnership is that neither one of us can afford to own
a plane by ourselves."

I would jump at a 6-way that has only one opening, and only 3 flyers
and 2 supporters.

- It not much money (as compared to buying your own).
- You can always sell it (the 5 partners would prolly buy it back from
you).
- you'll get to learn a lot about maintenance - Gluing the nose
fairing back on.
- With only 3 other pilots, the plane shouldn't get tore up much worse
than it already is.
- TBO - Unless you have a reason to overhaul (it's not 135 or
otherwise flying for hire), run it until it starts making metal, or
the compressions get low. This could be 2500 or 3000 hrs.
- HEY IFR - it has a glideslope - you can start on your rating.

Yeah there are downsides, by they all appear manageable.

Things I would avoid:

- six-partnership, but only one or two current members.
- Too expensive or complex of an airplane.
- poor location - too far from home.
- Air plane too junky - not safe - don't fly over water or town...

Mitch N7155A - N10681 -
http://groups.yahoo.com/group/N10681/

"Ed Haywood" wrote in message .com...
"noah" wrote in message
om...


Thanks for your thoughts & concerns - you may just talk me out of
it!
Noah


Bah! You'll find something not to like in every deal you consider. Until
you're rich enough to pay for perfection, you gotta take the good with the
bad.

The overhaul isn't a deal-breaker. Just ask the other partners what has
been discussed WRT the upcoming overhaul. You may find they already have it
worked out.

So all 6 of you pay $2,000 each for an overhaul. Or even $3,000 each for a
full firewall forward overhaul. Big deal. That's not a whole lot of money
for the peace of mind of knowing your single engine plane has a new,
reliable engine in it. You don't lose that money, it raises the value of
the airplane and your equity stake in it.

"Otis Winslow" wrote :
It would be interesting to know the history of this partnership. Do they
just sell another share whenever a big maintenance item is coming up?

I talked with one of the founders of the parnership (who left to have
a baby). There were 6 partners from day 1, and one of them is selling
his share.

Answering another question from the thread: There's approx $6K in the
kitty, so take that into account when considering valuation...

Thanks for everyone's thoughts... if any of you know specific things
to check out on the Cherokee that would be great as we should take a
flight in the next week.

-Noah

(Dave) wrote in message om...
You didn't mention the SMOH, but you're asking about overhaul costs,
so maybe it's getting close to TBO?


Partnerships.

If charged fairly, the incremental cost is not
affected by the number of partners.

Adding one partner gives the biggest percentage reduction
in fixed costs. More have continually diminishing effect.
Since the variable costs are at typically ~1/2 of the total,
working on the fixed portion doesn't help that much.

You can prove these things with a sliderule.

The hassles go up as n^3 at least. Can't prove, but know.

The optimum would seem to be 2-3 unless it's more like a club.

Bill Hale