First month of leaseback

Checkout_my_Six said:
Oh well....you have that budgeted?....right? It is a flight school and they will be beating up your rental. :yes:
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Oh yes, but one can hope for better than plan, right? I may have planned for it, but it's still not going to make me happy.

Blueangel said:
Wow WTF did that idiot pilot do to botch up the tires so bad? Looks like a super hard landing and massive amount of braking. Best of luck. I've heard some horror stories about lease backs ruining nice planes. I would not do it unless I had a worn out 172 and didn't care about it.
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The problem with the worn out 172 is that it won't make enough money from the rental to pay back the mx. You're going to get $110-$120 for that 172 per hour. My SP gets $153 (and probably going up). The mx is a little higher for the newer models, but not by much. And it won't get flown as much as an S. As long as the economy doesn't completely tank, I'm looking at 40-70 hours each month.

This was never going to be my personal, shiny aircraft. It was a business from the moment it was bought. A dumb business, perhaps...ask me in a year what I think of it...

Really, what I need to figure out is my business relationship with the club. This is new for me, so I'm trying to figure out the balance between being a jerk and appropriately looking out for my interests.

For instance, in my contract, monthly detailing is spec'ed at $110. The club owner made a mistake, and should have sent me an updated contract with the current $145 price. (Water rationing in the Bay Area means no more wash rack and higher costs for cleaning.) Well, it's a one year contract we signed and I could legally stick him with the $35 each month he'd have to eat for the 12 months.

But should I? If I force him to eat his mistake this time, which of my mistakes will he not leave me any room on in exchange? Is it worth $35/month to have a more pleasant relationship with the guy taking care of my plane? I haven't found the balance yet.

If he keeps sticking me with full list for parts, though, we may have a come to Jesus moment...
 
arnoha said:
If he keeps sticking me with full list for parts, though, we may have a come to Jesus moment...
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Seems you've already answered your question. He's not looking like he's cutting you any breaks already. You really think that'll get any better?
 
The way tires get like that is the pilot gets tense and holds the brakes hard on final, then skids when he lands.
 
mkosmo said:
What if you fly something with a free castering nosewheel? Moving your feet up could be more of a problem than learning to not press the brakes with your heels on the rudders.
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ya but.....weren't we talking about a Cessna lease back? Last I checked....they don't have heel brakes. :no:
 
Checkout_my_Six said:
ya but.....weren't we talking about a Cessna lease back? Last I checked....they don't have heel brakes. :no:
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Yes, but teaching people folks to fly should be manufacturer agnostic in some regards. Feet to the floor isn't a universally good habit, and many pilots think with regards to procedures rather than systems.
 
mkosmo said:
Yes, but teaching people folks to fly should be manufacturer agnostic in some regards. Feet to the floor isn't a universally good habit, and many pilots think with regards to procedures rather than systems.
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WHY? toes are still on the rudder pedals.
 
mkosmo said:
On the roll, you'll need some brakes before the rudder becomes effective. Likewise, on the roll out, you'll need some brakes after the rudder loses effectiveness.
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Meh....I guess we were taught differently.;)
 
Checkout_my_Six said:
Meh....I guess we were taught differently.;)
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I know most of us are taught feet to the floor, but that is exactly the problem I'm bringing up. Do that when you line up a Grumman or Cirrus and you could find yourself buying some lights for the airport.
 
mkosmo said:
I know most of us are taught feet to the floor, but that is exactly the problem I'm bringing up. Do that when you line up a Grumman or Cirrus and you could find yourself buying some lights for the airport.
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one size....ain't gonna work for all. You'll fly a Bonanza differently than a 172.
 
Checkout_my_Six said:
one size....ain't gonna work for all. You'll fly a Bonanza differently than a 172.
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Absolutely, but heels on the rudder and having some kind of personal control of your toes and feet works in every airplane with toe brakes lol
 
I've met the owner of N194SP at the FBO, nice guy. I've also rented his A/C a few times for local hops and she fly's nice. It's easy to tell 194SP has been re-rigged by how true she fly's while making book numbers. Really nice to rent a well maintained A/C.

I've cringed a few times hearing student pilots chirp the wheels landing with too much speed in 194SP. If you're at KRHV and want to rent a nice 172SP with a 6 pack, look at N194SP.

BTW, KRHV's wash rack is open again.
 
I'm flying to KRHV tomorrow. I'll keep an eye out to see this bird :)
 
To damage the tires like that, it took a particularly harsh landing.

Have you inspected the firewall?
 
kgruber said:
To damage the tires like that, it took a particularly harsh landing.

Have you inspected the firewall?
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Two answers...yeah, the firewall is inspected and straight.

And...it was brakes that did that damage, not a hard landing. Not that the landing was great, but the main problem with the landing was that the renter landed far down the runway and too fast. Instead of going around, he locked it up and held it. Not sure how hard the landing was, but I'm guessing it wasn't too bad, as when you're carrying that kind of speed, you don't tend to be high off the runway when it finally quits flying.

Either way, firewall is straight, thankfully. I don't think the renter would have liked the bill if a bent firewall were discovered. (Nor me. The direct costs may be covered by insurance/renter, but what about the time it's down? Or the loss in value for the documented repair? Very hard to collect on either of those.)

In case anyone is curious, I'm moving the plane to PAO. The current situation isn't financially workable. I'm projecting losses through the one year contract as averaging around $750 per month. I did the math, and if I'd had an identical year at PAO, the loss would have been $130 per month. So, yeah, learning lessons.
 
NordicDave said:
I've met the owner of N194SP at the FBO, nice guy. I've also rented his A/C a few times for local hops and she fly's nice. It's easy to tell 194SP has been re-rigged by how true she fly's while making book numbers. Really nice to rent a well maintained A/C.

I've cringed a few times hearing student pilots chirp the wheels landing with too much speed in 194SP. If you're at KRHV and want to rent a nice 172SP with a 6 pack, look at N194SP.

BTW, KRHV's wash rack is open again.
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Glad you like it! Saw your comment on the blog, too. I was hoping for more interaction like that on the plane's blog, but it's mostly crickets.

And...I apologize, but it's not going to spend much more time at KRHV. Fly it while you can! I'm moving to PAO and (probably) WVFC. I've been losing my shirt on that plane at TWA. Walt and team are great people, but the numbers just aren't working. Insurance is $200/month cheaper at WVFC. Gas is $1/gallon cheaper. Washes are $55 cheaper. MX is $20/hour cheaper. GPS updates are $10 cheaper. Management fee is $8/hour cheaper. Tiedown is a little more, though, by $10. And PAO remains crazy busy, so I suspect I'll get similar or more hours. WVFC also has far more instructors, so the problems Walt has been having with instructors limiting hours on the planes shouldn't be a problem with WVFC. I'll be moving out at the end of November.
 
mtuomi said:
I'm flying to KRHV tomorrow. I'll keep an eye out to see this bird :)
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All the way from Atlanta? Wow. Unlikely you'll find it, as it's just another 172SP from the outside in a sea of 172SP at KRHV. Good luck on the hunt...it's parked behind the Trade Winds Aviation hangar. Transient is actually in front of the terminal, which is in front of the TWA hangar.
 
did the renter pay fot the tire and tube?
 
arnoha said:
Two answers...yeah, the firewall is inspected and straight.
In case anyone is curious, I'm moving the plane to PAO. The current situation isn't financially workable. I'm projecting losses through the one year contract as averaging around $750 per month. I did the math, and if I'd had an identical year at PAO, the loss would have been $130 per month. So, yeah, learning lessons.
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Just curious, why would you continue to put it on any line if best case scenario is that is still losing money?
 
hotprops said:
did the renter pay fot the tire and tube?
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Not sure, but I don't think so. Trade Winds eventually refunded me the tires and the tube after I complained a few times. Since several months had passed, I doubt they chased down the renter and probably ate the cost themselves.

neilw2 said:
Just curious, why would you continue to put it on any line if best case scenario is that is still losing money?
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Well, for the past year, because I'm locked in a contract. Never doing that again. Another advantage of WVFC is the contract is for 60 days, not 12 months.

Overall, I stay for several reasons. My plane gets flown. Someone else manages it. It reduces my incremental cost for flying significantly. If you factor in my personal savings from flying my own airplane over renting, that offsets the monthly loss by about $200 for the paltry flying I've been doing this year. Usually, I fly more each year, so the cost savings would be greater. That makes my $130 loss actually a gain overall.

And even at a $750 per month loss, that's $9000 per year. That's about what it would cost to own the plane with no one else flying it. So, it's not that different in this bad year vs. just owning the plane as a personal aircraft.

I actually just got another statement and had a good month. I roughly broke even! It reduced my projected loss to $635 a month at TWA, but changed the WVFC projection to a $25/month gain. If you factor in my personal flying, that means that keeping it at WVFC puts me around $250/month ahead vs. renting. And I like owning. :)

So, it still makes sense assuming I want to own an aircraft, even in the bad case. In the good case, I'm pretty far ahead. And I get to own a plane, which can have some good tax consequences that I haven't yet figured in. (The bad tax consequences, sales tax and property tax, are already figured into my costs.)
 
What about the extra engine hours from being flown as a rental vs just flying it on your own? Do your numbers include setting aside a percentage for a overhaul?
 
Wade said:
What about the extra engine hours from being flown as a rental vs just flying it on your own? Do your numbers include setting aside a percentage for a overhaul?
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Yep. I've currently budgeted for many things. My projections include for fixed costs, which are basically actual costs:
  • Cleaning
  • Tie-down
  • Insurance
  • Annual Inspection
  • Inspections
  • GPS Updates
  • Property Tax
  • Depreciation
  • Money Cost
And for hourly costs, which are projected from actual data when possible:
  • Fuel
  • Oil
  • Engine Overhaul
  • Prop Overhaul
  • Repairs
  • Depreciation
  • Management Fee
  • Recurring Inspections
Note that I don't include the loan payment. That's money that is paying off an asset. Instead, note the money cost item, which computes my opportunity cost for having the money tied up in the plane for all money spent on the aircraft and durable upgrades.

If you want to see the sheet I use for projections, I'm happy to share. Just not willing to stick it in a public forum.
 
I must be missing something....

You are not counting your note payment and even without that cost you are projected to lose $150/month BEST CASE scenario which basically pays for a couple hours flying.

What is the end game with this? In my business if I project to lose $ every month with no end in sight I would quit. Who wants to take all that risk with really very, very little upside?

If you are interested in paying $150/month for flying why wouldn't you seek out a few partners on your plane, pay off your note with their initial investments, fly your plane when you want because you only have a few other people competing for time, and not fix things as often because people will take better care of something they own? On top of that your new partners share the risk of any extra expenses.

I guess this has just reinforced my feeling that unless you own a flight school or are a CFI- you can own a GA aircraft or make an investment. Your GA aircraft cannot be a investment.

That being said you seem like you are trying real hard to make this work and I commend you for it. Good luck!
 
This will end like the VAST majority of FBO leasebacks.

Lost considerable money................airplane trashed.

It IS possible to lease airplanes and make money, but not this way.
 
kgruber said:
This will end like the VAST majority of FBO leasebacks.

Lost considerable money................airplane trashed.

It IS possible to lease airplanes and make money, but not this way.
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What ways would you say a lease CAN make $?
 
neilw2 said:
I must be missing something....

You are not counting your note payment and even without that cost you are projected to lose $150/month BEST CASE scenario which basically pays for a couple hours flying.

What is the end game with this? In my business if I project to lose $ every month with no end in sight I would quit. Who wants to take all that risk with really very, very little upside?

If you are interested in paying $150/month for flying why wouldn't you seek out a few partners on your plane, pay off your note with their initial investments, fly your plane when you want because you only have a few other people competing for time, and not fix things as often because people will take better care of something they own? On top of that your new partners share the risk of any extra expenses.

I guess this has just reinforced my feeling that unless you own a flight school or are a CFI- you can own a GA aircraft or make an investment. Your GA aircraft cannot be a investment.

That being said you seem like you are trying real hard to make this work and I commend you for it. Good luck!
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I'm not counting the note payment, but I am counting the opportunity cost of having the money tied up. They actually turn out to be pretty close to each other. (Note: $875. Money Cost: $650.) You can use one or the other, but if you use both, you're double-counting. Plus or minus one or two hundred a month is noise in aircraft ownership. Plus or minus an AMU...that will get my attention.

Even in a poor year, I'm ahead of where I would be just owning privately. Is this a business with tons of upside? Nah. The leaseback is a way for me to keep my plane flying, defray my flying costs, and own an aircraft. On that count, it's doing fine. I just know I can do better. If I wanted to make a full-time job of it, I would own the rental shop instead. It's not an investment and I don't pretend it is. It's just one way to own a plane. I run it like a business, but I know the motivation is the plane ownership, not profit. But I'm certainly going to do my best to maximize the upside. :)

I'll also note that my plane, less the incident with the one bad landing, has been treated fantastically. The blown tires were the one repair that could be attributed to the renters. The plane stays clean and neat...better than if it were a personal plane and I felt free to leave my crap in it! I'm sure people have bad experiences with renters, and that's still possible for me. I just haven't seen much of it.

Making money is certainly possible. There are a few folks in the area that own multiple aircraft on leaseback that are identical and have for years. Clearly, they didn't buy the aircraft for themselves...the leasebacks are making money. So, they're doing something right. Best as I can tell, it's picking the right model aircraft (172SP is the perennial winner here, which is why I have one) and being good/lucky with selecting one that is not going to break the MX budget. I did fine on the first but middling at best with the second. Nothing major has gone wrong. Engine runs great, prop is great, airframe is going strong. There has been an endless litany of stupid crap that has broken, though. I attribute it to having bought a FL plane. I may avoid planes in the future from coastal, salty, and humid climates. Arizona...the next one comes from Arizona. ;)

EDIT: BTW, the endless litany is here, with prices: https://n194sp.wordpress.com/n194sp/squawks/
 
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arnoha said:
Another advantage of WVFC is the contract is for 60 days, not 12 months.
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arnoha said:
Insurance is $200/month cheaper at WVFC. Gas is $1/gallon cheaper. Washes are $55 cheaper. MX is $20/hour cheaper. GPS updates are $10 cheaper. Management fee is $8/hour cheaper. Tiedown is a little more, though, by $10. And PAO remains crazy busy, so I suspect I'll get similar or more hours.
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That sounds like some huge differences. Why do you suppose it is that way? You'd think that if things are that busy then insurance should be higher.
 
The trouble with leasebacks is the maintenance people see you as a profit center. When a mechanic owns the plane and rents it out, he tries to MINIMIZE maintenance costs. When a pilot owns the plane, the mechanic tries to MAXIMIZE maintenance costs. And the 100 hours give the mechanic access to do more work more often, more opportunity to maximize profit by doing maintenance.
 
asicer said:
That sounds like some huge differences. Why do you suppose it is that way? You'd think that if things are that busy then insurance should be higher.
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Two differences that I can figure out: WVFC has a stellar insurance record. They are averaging a claim only every 40,000 hours, I believe. TWA can't match that. WVFC also has more than five times as many aircraft, so bulk discount factors in.

coloradobluesky said:
The trouble with leasebacks is the maintenance people see you as a profit center. When a mechanic owns the plane and rents it out, he tries to MINIMIZE maintenance costs. When a pilot owns the plane, he tries to MAXIMIZE maintenance costs. And the 100 hours give the mechanic access to do more work more often, more opportunity to maximize profit by doing maintenance.
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The club I'm going to is a non-profit and plane owners make up most of the board. I'm hoping that helps. It does mean more politics. We'll see...it'll be a new experience, if nothing else.
 
Try this one time I did. I was offered to put a 150 on leaseback for a "sweet" 80/20 deal. We shook hands I said 80% of revenue goes to you and you maintain, insure, fuel and repair. I get the sweet 20% right? Should have seen the stuttering and I literally heard the reverse beeping sound. You can make money but you will destroy a plane.
 
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