Life expectancy of an aircraft on lease back
- Thread starter Tom-D
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MSPAviator
Cleared for Takeoff
If I was the sole owner of an airplane I could not stomach leasing back the plane to a flight school type operation to let it get beatup and abused.
Heck I am in a flying club and I cringe when I see the way people treat the club planes. Stepping on the fabric upolstered seats while getting into the plane is probably my biggest peeve.
Heck I am in a flying club and I cringe when I see the way people treat the club planes. Stepping on the fabric upolstered seats while getting into the plane is probably my biggest peeve.
Geico266
Touchdown! Greaser!
The only reason an FBO would want a lease back is so they can milk the owner. Most people in GA are very short sighted. Make a buck today, and screw tomorrow.
frfly172
Touchdown! Greaser!
Why would the fbo buy,when they can get pilots to buy newer planes and lease them back. When the bird gets long in the tail cancel the leaseback. Unless your looking for a great tax loss ,I'd be careful considering a lease back.
Skylane81E
Final Approach
Depends, can the FBO afford to buy it? The planes we lease we would love to own outright.
Devil is in the details, need the right plane at the right place at the right time with the right FBO
As you know a plane flown and maintained regularly will indeed last longer that one that is flown irregularly. My wife learned in an ex-Embry Riddle plane that our flying club had on leaseback. Ol' Riddle 73 (renamed 73FR) and something over 5000 hours and was blasting along strong on a 2600+ SMOH until the owner finally relented on the browbeating of the club management to overhaul it. The plane flew a few more years on the line after the overhaul and now it's flying every day doing traffic reporting (they did put a diesel engine in it to increase the linger/fuel economy).
Tom-D
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That's a fairy tale, you simply wear it out quicker.
Well, the people I know who do it by doing their own maint and renting to whomever seem to make money with the plane in perpetuity.
JoseCuervo
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Would it make more sense to create a "flying club" and lease it to the club? Somehow, in an attempt to get the abuse lowered because "members" would take better care than "renters"?
stcurtis
Pre-Flight
Leased back to a flight school, never. It'll generally cash flow well half the year and suck cash the remaining half leaving you close to break even at best. About the time the the plane comes close to creating a profit, a student or newly minted PP will strike the prop, taxi into a chain or run it off a taxi way and into a light. Had each of those things happen and more I'm sure I don't recall.
If you are wanting to make money on the deal, pass. If you are using it for tax reasons, it can be helpful on the bottom line, even more so when it's running at a decent but not huge loss.
Biggest problem/expense with lease back planes from an owners point of view is insurance. I pay less money per year on my Commander than I was paying each month on a 172S on lease back. All that said, they were good tax deductions.
Biggest leap from airplane owner to lease back owner is changing your mindset from "it's my plane" to "it's a business asset." Washed and waxed each of those 172s one time, when the photos were taken for the sale ads. Maintenance was allowed to be deferred for various reasons because they were assets and the expenses had to managed with that in mind. Personal plane, different story entirely, always washed and waxed, maintenance never deferred longer than the flight home.
Steve
poadeleted21
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I think the idea of making money by leasing back a plane is to keep it flying as much as possible. A plane in the hangar ain't making nobody money.
Tom-D
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IF …. If I do decide to allow others to fly 34V they will be well trained tail wheel pilots, and they would be required to show renters insurance with me as named insured.
That really isn't a lease back, but I lacked a better term.
any suggestions in this light?
That really isn't a lease back, but I lacked a better term.
any suggestions in this light?
Better to choose 5 pilots to name as named insured on a policy (many policies allow 6 total under a standard policy) and have them pay the premium. It'll end up cheaper and safer for everyone.
Tom-D
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The aircraft is mine, and will stay that way, they wreck it I get paid. I really don't care what they pay for insurance.
Look closely as to how renter's insurance pays off. There's no need for you to give up any ownership of the plane.
JoseCuervo
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I would suggest reading some of the Renters Policies, to see if they actually cover you, adequately. Not all are created equally.
Jimmy cooper
En-Route
The insurance company and policy must be understood completely. Most good insurers want you to name pilots that will be flying the airplane, their hours and if a tail dragger , how many hours in that make and model. All sorts of policy restrictions that must be clear. The cheaper the rate, the cloudier it usually becomes.
poadeleted21
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No ownership issues for you having them named on your policy. It will probably be beneficial to them also in that they won't come after them if the insurance company has to pay out to you for something they busted up.
Tom-D
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Low timed tail wheel pilots have much higher premiums than I do. they can get their own insurance.
poadeleted21
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At your peril, price your insurance out with and without them. Do the math, hand them a bill. I have a buddy who crashed a $50,000 BMW his wife was supposed to pay the insurance bill on. If something goes wrong with insurance, I'd make sure the only ass I wanted to kick was my own.
You won't need to be named insured on their policy, just make sure their logbooks match your insurance requirements for unnamed pilots to fly it. When they crash it,your insurance pays you and sues them them for it, if they're insured, their insurance will pay.
Tom-D
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that would work if the same pilots used the aircraft all the time, but that may not be the case.
You may find that impossible. Check around and see who is writing renter's insurance on tail wheels. Your program is sounding a non viable one.
poadeleted21
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Sounds like all he needs is his insurance to set a minimum currency for unnamed pilots. He needs to verify they meet they meet the minimums and his job is done? The renters can go naked and get sued but Tom gets his money.
cirrusmx
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campoalavista
the fbo can go to the bank and get a loan to buy a plane themselves. i would never lease back a plane to an fbo. it doesnt make sense to iincurr all the liability and financial risk, as well as opportunity cost so that a flight school can profit on your generosity and you can save the yearly upkeep on a piston single. also, you need to consider that the plane is usually tied to the flight school schedule, ie full ownership privilige is defeated. if anything i would loan the. money at 10% so they can buy an airplane and go about their business. with the interest i could pay a lot of hassle free rental hours. imho leaseback just does not add up, you are being generous on an industry where margins are already tight an cynism is widespread.
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jesse
Touchdown! Greaser!
Insurance doesn't work like that Tom. If someone has renter's insurance that renter's insurance is to PROTECT THEM from YOU. It's not designed to protect you. Depending on the circumstances of what happens you may not get payed at all (like if it was a mx failure that caused the damage).
If you want to protect an asset you own you must carry your own insurance.
steingar
Taxi to Parking
I thought about leasing out an aircraft at one point. A quick analysis indicated that I'd make little or no money and would watch my aircraft deteriorate to the sad state most leaseback aircraft find themselves in. That's assuming someone didn't badly prong it along the way.
He's not really looking at a 'lease back' deal with an FBO or school from what I can tell, he's look at directly renting, and doing the maintenance himself. The only issue he really has to look into is insurance. It can always be done, the question is can he rent out for enough money to cover all the expenses and make a profit. He has all the bases covered to be able to do it at a profit except the insurance angle. The only one I know that will work is to limit to 5 others and set the 'club initiation fee' the split of what it would be to cover the insurance. Then the wild card is will it rent enough? Best case would be that each flies 75-100 hrs a year.