Checking into local club and fractional PA-28-180

Hobobiker

Hobobiker

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Montpelier, OH
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Hobo
Club is checking their bylaws to see if I can join as a student. The more I look at 150s, 172s, PA-28s, etc. the more I resigned myself to renting. My CFI points me to a local flying club that does a 1/9 fractional on a '66 PA-28-180 (I think). Many long-term members, the plane is available to fly on a regular basis as most members don't fly much, and I guess the plane is in great condition with only 300+ hours on a reman engine. Sounds like they get a valuation on the plane, divide it by 9 (they never allow the total owners of the plane to exceed 9), and then that is my starting point for negotiations with the owners that want to sell their share in the club. Looks like my "buy in" could be anywhere from 3-5K. Monthly membership will be around $65/70 dollars depending on their latest Nav upgrade. Then I could rent the plane for around $60/hour wet. I need to do the math and comparison on a spreadsheet, but I'm betting if I fly more than two hours per month it wouldn't take long to save money over the $125/hour + tax that I pay on the PA-28-181 at the school...

Sounds like the club members really work with each other and take care of the plane. Anyone want to educate me on what I might want to further look into? I value my CFI's opinion a LOT (have I mentioned that he's a great instructor? LOL). He was a member prior to buying his Cherokee Six, and he has nothing but good things to say about the club...
 
It sounds like a good deal to me, who just discovered it is great to be out from under being a sole owner of a PA 28/161. It's expensive going it on your own. Make darn sure you will get along with all the other members, that is going to be more important than any other single factor.

-John
 
John Baker said:
It sounds like a good deal to me, who just discovered it is great to be out from under being a sole owner of a PA 28/161. It's expensive going it on your own. Make darn sure you will get along with all the other members, that is going to be more important than any other single factor.

-John
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Appreciate the comments John. Running the numbers at a max buy-in scenario, looks like it would take me around 90-100 hours to recoup my buy-in, first-year's worth of monthly dues, and rent in the savings compared to the Archer II rent. After that, it looks like anything over 13 hours would make the club deal a savings over the Archer II rent. I should also mention that $10/month out of everyone's dues goes into an interest-bearing account for the next engine overhaul.

All logic aside, I'll see what kind of "gut feel" I get for the plane, the club, and the other members. Kinda optimistic about getting my feet wet through the club and deciding later in life if I want to be a sole owner...
 
Try to remember that at this stage of the game, it is a hobby or pastime. It's OK to run the numbers, and the best you can hope for is to break even, which of course you will not, but it's fun trying. We spend money on our toys, it's the reason we work.

Keep it simple, ask yourself if you can afford to do this. That will give you all the answers you need for now.

It's your free time, your supposed to be having fun.

-John
 
Ask to see the logs. Do this in person and pay careful attention to the body language after you utter the words. Then actually read the logs.

An unquantifiable value will be the response you get from asking, the feeling you get from studying the logs and the continued feeling as time marches forward.

Be sure to understand how scheduling and overnight works. You will want to overnight the plane.

Also find out about remote refueling...it is included in your wet rate (seems kinda low to me - considering fuel prices). You will go on a XC and the fuel will be more expensive than it is at your home base.

Have fun.

Enjoy.

Fly.

(no particular order of precedence)

/out
 
Hey Hobo.....

I would make sure to ask what their policies are regarding CFIs. Do they have club-approved CFIs that you must fly with or can you fly with your own CFI? Also, if you plan on bringing your own CFI to the club to train you, discuss this with them in advance. He/she may need to provide their own insurance to train you if they are not covered under the club's policy.

If you have to fly with a club CFI, make sure to meet them and possibly arrange one flight before joining. You will probably also find that instruction rates will be much lower when you are part of a club. At FBOs, they charge you $50 and the CFI only sees a few dollars. Most of the time, payment to a club CFI will be between you and that person and you will probably pay much less.

Also be sure to ask if you are billed tach or hobbs time. Many clubs bill you tach time, which is an additional savings, especially for pattern work.
 
Dollars look reasonable on the surface. Ask to see the books to see how healthy the financials are, including maintenance reserves.

I agree about asking for all of the logs and reading them thoroughly. Make notes about any standout items or items you have questions about. Find the list of AD's for this aircraft and see if they are being complied with.

Ask for a copy of the by laws and read them thoroughly. Get answers to questions such as
"if I leave, what happens to buy-in?"
"If something expensive breaks, how is that handled?"
"If I am using the aircraft and am at a far away airport and something expensive happens, how is that handled? If I have to pay for it, how do I get reimbursed?"
And so forth...

If something isn't there ask about it. If something seems odd, ask about it.
 
At 9 people, I'd also ask to see the scheduling for the last year if they have it. 9 is a touch high to have that "I can go flying whenever I feel like it" feeling with keys in your pocket. If there's at least three who aren't flying regularly (watch out for them balling the airplane up if they're not keeping current) and one or two who do mostly weekday flying, you'll be okay.

Let's say everyone is flying. 9 people and let's also say each is going to want to take the airplane for a one week outing sometime every year. You're at 43 weekends left after that. 43 weekends, 86 days. Under ten weekend days a year to each pilot, all to themselves.

It's still reasonable, since probably all 9 aren't flying regularly -- just keep the above numbers in mind.

The other one to point out... co-ownerships really shine for splitting fixed costs. Fuel and hourly costs are often not that far below what FBOs rent for. Fixed costs meaning hangar/tie-down, insurance, etc. Anything you have to pay even if the airplane sits on the ground. (Your call if you include annual inspections and IFR checks and what-not in that. I tend to say yes, since a non-airworthy, unmaintained, aircraft that's not legal to fly, isn't really an aircraft, it's an expensive aluminum storage hobby.)

1 owner = 100% of fixed costs
2 owners = 50% of fixed costs
3 owners = 33.33% of fixed costs
4 owners = 25% of fixed costs
5 owners = 20% of fixed costs

The table above is to show the diminishing returns on more owners. You can do the math all the way out to your 9. The first two folks in, experience the greatest pleasure of cutting their fixed costs in half. Add 3rd owner, it's still pretty good. Even 4th owner. But by number 5, you're down to only saving 5% on fixed costs, but you have all the problems associated with 5 people's opinions. :) From 5 to 9, you're not saving much on fixed costs. You've lowered them so they're almost non-existent, yes... but you've got 9 opinions to deal with.

We limited our co-ownership in the by-laws to 5 people per aircraft. If you're shooting for paying lower than 20% of the fixed costs, you've almost not got enough skin in the game to really pay attention to big decisions and think about them properly for the well-being of the aircraft.

At larger sized co-ownership groups, someone's going to get hosed as the "maintenance guy" who handles all the phone calls, coordination in moving the airplane around, researching prices, etc. At 2 or 3... everyone's interested, and you all discuss. At 4, not too hard. At 5, try finding an hour open on everyone's calendar.

6-9? Fuggetaboutit. You'll have a maintenance Czar, who'll have to run the show to keep the bird in the air. Or you'll start building a Board/Officers methodology. To keep that running smoothly, you probably need 9 or more folks. So this organization is right at that point.
 
Hobobiker, I'll apologize in advance for what will probably turn out to be a long post. I have been treasurer of a club for close to ten years. I think I have a pretty good feel for the numbers on a Cherokee 180. Thoughts:

1) A club is definitely the way to go. You will save a little money, probably fly a nicer and better-maintained airplane, and you will have the benefit of association with other club members to increase your knowledge, find a safety pilot, share $100 hamburger flights, etc.

2) If the buy-in is 1/9th of the value of the airplane, that tells me that the club does not have much in the way of cash reserves. If they did, you would have to pay 1/9th of reserves, too. Trust me, it is not uncommon to have a $1000 maintenance surprise on an airplane. That's $100/member over and above your dues expense. Paid immediately. It's called an "assessment." Anyone looking at any club should ask hard questions about its assessment history.

3) The wet rate is barely above the cost of fuel. That's a red flag. Where does the money to maintain the airplane come from? Again, this points to assessments.

4) $10/mo/member for engine rebuild is roughly $1000/year. Rebuilding that engine today will run you $18K or more. So are you really 20+ years (considering inflation) from engine rebuild time? I doubt it. How many hours a year does the airplane fly? What about a premature engine problem -- How will that be handled? Again the A-word comes to mind.

5) Rebuilt turn coordinatory $500. Rebuilt attitude indicator $1000. Middle-of-the-road avionics repair $300. Replace wing walk (which happens to old Pipers): $1000-2000. Main gear casting/replace a cracked one: $1000 just for the part. Paint & Interior: $15K Yet again, the A-word hovers.

6) $70/month dues seems a little low. Guess hangar at $200/month, insurance at $2500, and Annual at $2500. That's $68/month. But where is the money for other routine maintenance like oil changes, tires, pitot/static check, Jepp database @ $400/year, ... ?

I would strongly suggest that you review the books of the club and ask questions about how often they have had assessments and how big they were. If the club is organized as a 501(c)7 nonprofit corporation, you can review its tax returns at guidestar.org. Find out what the form of organization is and run it and the club bylaws by an attorney. You do not want to have any personal liability and, ideally, you do not want to have liability for assessments or other financial problems that is larger than the value of your equity in the club.

Clubs are a great way to fly but you can't have just a club. You also must have a business (and a successful one) or the club can't survive. You need to look into the business side of this club (or any club) very, very carefully.
 
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The club I joined has 3 planes and is limited to 45 members. Apparently about half of them never fly. I've never had a significant issue scheduling a plane. Once in a while someone else has the 172 out when I want it, but I think there's only been once when it was gone all weekend. The Arrow and 182 get taken x/c more often, but overall scheduling has worked pretty well for the money I'm spending and the hourly rate ($83 wet for the 172, I think $120 for the 182). The buy-in was pretty low ($2K), and when you leave the club you sell your membership to the next guy. Pretty nice arrangement overall.
 
Thanks for the input everyone! Yep, my CFI can instruct me. He is also a previous member of the club. There are monthly meetings and a Board structure as well. At least three of the members hardly ever fly, and two are regular users of the plane. People even give up their scheduled times to poke holes in the sky if someone needs it for a weekend trip, which is very cordial. I'll post more details if the bylaws say I can buy-in as a student. I'll also ask to review the logs and the previous year's schedule.

Thanks again for the detailed input!

Wade
 
Hobobiker, a couple more thoughts this afternoon:

Re bylaws, you should get a copy and read them. There's nothing holy, secret, or mysterious about bylaws. They are just a description of how the club is to be run, possibly with a little legal boilerplate thrown in. They are also easy to change. If the members want you as a student, they can amend the bylaws as necessary. (If the insurance company has been given a copy of the bylaws, they will have to be notified of the change.)

Re your outside instructor, be sure he understands the insurance situation. It is very likely that he will not be covered by the club's insurance. For example if the airplane is damaged while he is PIC/teaching you, the insurance company may pay the club but then subrogate against (legalese for "go after") him. Although it is his risk and not yours (you are covered as a member) you should certainly encourage him to check with the club's agent or insurance company to ensure that he understands whether he is covered or not. If not, he may have his own insurance that covers him in this situation. Or he may choose to go naked. I think that is not uncommon among CFIs without a lot of financial assets to protect.
 
airdale said:
Hobobiker, a couple more thoughts this afternoon:

Re bylaws, you should get a copy and read them. There's nothing holy, secret, or mysterious about bylaws. They are just a description of how the club is to be run, possibly with a little legal boilerplate thrown in. They are also easy to change. If the members want you as a student, they can amend the bylaws as necessary. (If the insurance company has been given a copy of the bylaws, they will have to be notified of the change.)

Re your outside instructor, be sure he understands the insurance situation. It is very likely that he will not be covered by the club's insurance. For example if the airplane is damaged while he is PIC/teaching you, the insurance company may pay the club but then subrogate against (legalese for "go after") him. Although it is his risk and not yours (you are covered as a member) you should certainly encourage him to check with the club's agent or insurance company to ensure that he understands whether he is covered or not. If not, he may have his own insurance that covers him in this situation. Or he may choose to go naked. I think that is not uncommon among CFIs without a lot of financial assets to protect.
Click to expand...

your input has been very insightful and I will check on all of the above. My CFI is also a friend, so I'll be sure to mention the insurance...
 
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