Does anyone have an a/c on leaseback

Don Jones

Don Jones

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I was wondering if anyone has an a/c on a lease to a flight school.
I have been contacted by an owner interested in placing his 172
on lease to our flight school. Never having done this before(neither has the owner of the a/c) I thought someone here might know the in's and outs and have some idea of how to set it up. I have checked AOPA's site and found several ideas of how to do it, just generic info though. I investigated the insurance thing and found out we would have to place the a/c on the schools policy. What kind of arrangements are usually made for maintenance, hourly's paid to the owner, etc.
Any info would be appreciated,
Thanks
Don
 
Here's a document from one of our members. Jason hasn't been around in awhile so I'll post.
 

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It's my understanding that it's difficult to come out ahead, financially speaking, when doing a leaseback. Please correct me if I'm wrong.
 
Don Jones said:
I was wondering if anyone has an a/c on a lease to a flight school.
I have been contacted by an owner interested in placing his 172
on lease to our flight school. Never having done this before(neither has the owner of the a/c) I thought someone here might know the in's and outs and have some idea of how to set it up. I have checked AOPA's site and found several ideas of how to do it, just generic info though. I investigated the insurance thing and found out we would have to place the a/c on the schools policy. What kind of arrangements are usually made for maintenance, hourly's paid to the owner, etc.
Any info would be appreciated,
Thanks
Don
Click to expand...


I know a couple of people that have lease backs at the FBO I rent from. The agreement is the FBO gets 20% of the wet rental fee and the owner has to pay for everything.

greg
 
SkykingC310 said:
It's my understanding that it's difficult to come out ahead, financially speaking, when doing a leaseback. Please correct me if I'm wrong.
Click to expand...
It's not difficult at all if you enter it in a business-like fashion with due diligence and proper negotiation of a contract that is good for all, and refuse to sign a contract that is not. It is virtually impossible if you sign one of those "canned" leaseback contracts that Cessna, etc., print for their dealers. Read Jason's advice (above) for more details on this, and if you still want to go further, get a copy of J. Scott Hamilton's "Practical Aviation Law (4th ed.)" (ISU Press, available on the internet for about $40 delivered) and read carefully chapters 5, 11, and 12. If you're still interested, obtain the services of a qualified and competent attorney to assist you in the process of negotiating and drawing the contract.
 
SkykingC310 said:
It's my understanding that it's difficult to come out ahead, financially speaking, when doing a leaseback. Please correct me if I'm wrong.
Click to expand...

remember your insurance rates will be a lot higher... you will pay for ALL the gas being used by the plane... and it will need a lot more scheduled maintenance (and likely some un-sched) which you also pay for 100%. Your 100 hours will come up every other month if you are lucky - versus once a year or whatever.
 
woodstock said:
remember your insurance rates will be a lot higher... you will pay for ALL the gas being used by the plane...
Click to expand...
This is all subject to negotiation. There's no reason that the lessee rather than lessor couldn't pay for insurance and fuel in return for a lower fee paid to the lessor -- it's all negotiable.

and it will need a lot more scheduled maintenance (and likely some un-sched) which you also pay for 100%. Your 100 hours will come up every other month if you are lucky - versus once a year or whatever.
Click to expand...
That's just a matter of smart budgeting and development of an appropriate hourly rate. The people who get caught short are those who didn't properly plan on the right maintenance costs and overhaul reserves, which is why significant if not substantial ownership experience is necessary to enter such a deal successfully.
 
Exactly Ken! dosen't seem folks read what he was asking. Don FWIW my expereince w/ lease backs is in relationships with two different FBO owners and one lease back pilot. Here is what I have seen from the outside.

-One FBO uses lease back owners essentially as the bank. They work out a deal with the owner wherein the FBO pays the owner of the plane a set monthly payment for the plane wether it rents 1hr per month or 100. The FBO pays for all Mx, Insurance etc. The plane owner can rent any other plane in the fleet for a discount but must also rent his plane from the FBO also for a discount. The FBO retains a right to buy the plane from the owner at a preset price ( never less than the price the owner purchased the plane for themselves.)

- The other FBO uses a more traditional method. The Owner places the plane on lease back and the FBO rents the plane out to students and its customers. The FBO pays the owner something like 80% of the hourly rental and the FBO keeps 20%. The ower flies his plane for free ( plus fuel) and the owner pays for all Mx, Insurance etc.

I suppose if the FBO has a plane that rents a lot it can make out on the first plan. You would have to figure the number of hours the plane would rent over the course of the year. Certainly that would vary if the school were based in Tuscon vs Philadelphia where the winter months can be quite lean.

Well hope this helps.
 
OK, let me rephrase -- Don, if you can get the owner to sign a standard Cessna leaseback contract, it's like free money for you. Just hope he hasn't been reading this thread.
 
Ron Levy said:
OK, let me rephrase -- Don, if you can get the owner to sign a standard Cessna leaseback contract, it's like free money for you. Just hope he hasn't been reading this thread.
Click to expand...

Yes, the guy approached us about putting his a/c on lease to us. It could be a great deal for us, giving us another plane to use and make a little money on without the potential downside. He is willing to upgrade the avionics if we need, it has a new engine (Penn Yan). I have not seen it and don't know what radio's etc it has now. The plane is mostly sitting in a hanger now in Washington state, rarely being flown and the owner lives here. He lost his medical and is motivated to do something like this. I am way to picky to ever put one of mine an a lease, but to be on the other side might not be bad.
Don
 
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