Pondering partnerships

Bill

Bill

Touchdown! Greaser!
Joined
Mar 2, 2005
Messages
15,104
Location
Southeast Tennessee
Display Name
Display name:
This page intentionally left blank
I was out Sunday at a local Mom-n-Pop type airport, and was chatting with one of the owners. He and a partner own a 182 together, but they are thinking of getting two more partners and moving up to a 2001-2002 model Cirrus SR22. They think each guy would have to put $50-60k into a hat, and that would do it to buy an early model.

I have mixed feelings on this one, as one of my most favorable situations would be to get into a partnership on a travel aircraft, and another one on a taildragger acro plane of some type. On an SR22 partnership:

Pluses:
  • Fast travel bird
  • Flying the latest technology
  • I could give a rip about the 'chute, but the sound of it makes the wife happy
  • Ramp appeal
Minuses:
  • Biggest, buying a 4-5 year old aircraft means buying it on the downside of the depreciation curve, as I hear most airplanes don't bottom out and start back up until 10-12 years. I really don't like the thought of buying a depreciating asset.
  • Good training and recurrent training needed to stay ahead of the airplane and all it's toys. (more so than most)
  • It seems to not have the greatest safety record (don't have hard #'s on that yet)
  • High insurance cost
Any others I should be thinking of? If this were a 10-12 year old similar aircraft, I'd be all over it. As it stands, I've asked him to keep me in on the loop.

On another front, I'm calling a fellow in NY on a really nice looking '59 Skylark that is full IFR with vacuum system, decent radios, etc. I could own this aircraft fully for significantly less than the partnership above.

Decisions, decisions. :dunno:
 
Bill, I would love to own a SR22. When i goto airports whats the one plane that people tend to look into the most? For me anyways, I always see folks starring at the cirrus, sexy, sleek and fast. The chute should be considered a big plus for you too. Heck if you don't jump on this offer I will :)
Go on and buy it, so we can all take turns in it next year at Gastons!
Michael
 
Bill Jennings said:
Pluses:


  • Fast travel bird
  • Flying the latest technology
  • I could give a rip about the 'chute, but the sound of it makes the wife happy
  • Ramp appeal
Minuses:
  • Biggest, buying a 4-5 year old aircraft means buying it on the downside of the depreciation curve, as I hear most airplanes don't bottom out and start back up until 10-12 years. I really don't like the thought of buying a depreciating asset.
  • Good training and recurrent training needed to stay ahead of the airplane and all it's toys. (more so than most)
  • It seems to not have the greatest safety record (don't have hard #'s on that yet)
  • High insurance cost
Any others I should be thinking of? If this were a 10-12 year old similar aircraft, I'd be all over it. As it stands, I've asked him to keep me in on the loop.
:dunno:
Click to expand...


Bill I think the cirrus is a good plane. I will look at your pluses and minuses and try to add a few.

I think those you talked to are correct, you can buy a really nice used 22 for ~230-240 if you take your time and look around. In my opinion this is the perfect age of aircraft to buy. You can find almost new planes with 250-450 hrs on them at a 35%+ discount. I have a feeling over the next 5-10 years the depreciation will not be too bad on these aircraft probably around 50k. I know this is a lot but think of it this way. For each partner that is a loss of 12k over a certain number of years. If you took an old 182 and put a new paint job, interior, and avionics it would cost you that much and you would never get that out if you tried to sell the aircraft.


The chute is a feel good device for the wife in my opinion. It will cost you ~$2000 a year to maintain the system but if it saves your life once... The insurance for a plane like this is normally 6-8k for one person and I would expect it to cost 10-12k with 4 people but I'm only guessing.


Since January 1, 2004 there have been 17 SR22 accidents on record with 5 of them being fatal. I'm not sure if that is good or bad but in my opinion cirrus is trying to sell as many planes as possible...this includes trying to sell one to me/family when I was a 20hr student pilot saying it would take me slightly longer to learn on the cirrus...


My 2 big questions are how much do you want to spend a year and how many hours/trips do you fly a year (4 active partners 1 weekend a month access)?
 
Bill Jennings said:
  • Biggest, buying a 4-5 year old aircraft means buying it on the downside of the depreciation curve, as I hear most airplanes don't bottom out and start back up until 10-12 years. I really don't like the thought of buying a depreciating asset.
  • Good training and recurrent training needed to stay ahead of the airplane and all it's toys. (more so than most)
  • It seems to not have the greatest safety record (don't have hard #'s on that yet)
  • High insurance cost
Click to expand...
5 years might be enough to take you to the bottom of the deprecation curve, at least when you ignore inflation. A big factor is the current and future demand, which AFaIK is high for these airplanes. The fact that there aren't a lot of used Cirri for sale and none much older than this should help. I'd take a hard look at this one if it fits your flying needs.

As to training, I agree that you might need more training and experience in this than say a Skylane, but you'll probably get past that hump in the first year, although I'd consider an instrument rating a must.


On another front, I'm calling a fellow in NY on a really nice looking '59 Skylark that is full IFR with vacuum system, decent radios, etc. I could own this aircraft fully for significantly less than the partnership above.
Click to expand...




You could own it for a little less, but operating it on your own may prove to be as costly as the partnership. Don't forget you'll be footing the whole bill for hangar, maintenance etc. I think the real deciding factor is whether you'd be happier with a newer faster airplane that's shared vs older, slower, less well equipped that you can use whenver you want without asking.
 
lancefisher said:
, although I'd consider an instrument rating a must.

I think the real deciding factor is whether you'd be happier with a newer faster airplane that's shared vs older, slower, less well equipped that you can use whenver you want without asking.
Click to expand...

Well, as some know, I'm working on the IR right now, and am planning to be check ride ready by mid-November.

Yes, it really all boils down to fast and shared vs. slow and all mine. One weekend a month is about right as far as wanting to do longer distance travel, but being able to pick the weekend...priceless?

A fun thing about the 175 I'm looking at is it has Horton STOL, and that combined with 40 degree flaps would make it a fun plane for short field/grass strip flying. On the other hand, I could get into a Citabria/Super-D partnership as well and have that for grass strip flying.

Man, I torture myself sometimes...:confused:
 
I believe that partnerships make the most sense for most people. I wish I had some partners in my airplane.
 
Ken, Is that the same country club OJ golfs at?
 
Iceman said:
The insurance for a plane like this is normally 6-8k for one person and I would expect it to cost 10-12k with 4 people but I'm only guessing.
Since January 1, 2004 there have been 17 SR22 accidents on record with 5 of them being fatal. I'm not sure if that is good or bad
Click to expand...
Over the 18-month period I examined about a year ago, the accident rate for the Cirrus SR-20/22 was triple that of the Grumman AA-5-series. The vast majority of the Cirrus accidents were pilot-related and had nothing to do with the aircraft itself, and I think that's partly due to the type of pilot to whom Cirrus is selling (a lot of relatively inexperienced pilots who match the "doctor buying a Bonanza" mold of the 70's) but the insurance carriers don't much care about that -- they rate on numbers, not reasons. Therefore, insurance rates (price per thousand dollars of insurance) on Cirri are about triple those of Grumman AA-5x's. OTOH, 50% of the Cirrus accidents involved the 10% of Cirrus pilots who don't get the COPA annual recurrent training, and the insurers are recognizing that statistic with substantially reduced premiums for relatively experienced Cirrus pilots who take the COPA recurrent training every year. On the third hand, the insurance industry is showing extreme reluctance to insure Cirri in multi-pilot situations above a certain point -- not sure what that point is.

So, before you jump into a Cirrus deal, talk to an insurance broker and make sure insurance will be both available and affordable for the partnership you plan, and make sure that all partners agree in the partnership agreement to take the annual COPA recurrent training with appropriate financial penalties if they don't, causing the insurance cost to double or triple or be cancelled outright.
 
Also you need to make sure that you will be able to get along well with all partners. Could become a nightmare if you have even one bad apple in the pot. I have never been in a partnership but have known several who were and would never do it again. Also talked to a few who say that everything must be spelled out prior to beginning a partnership. If that is done then things seem to go well. Good luck.
 
Bill:

I've owned planes individually and in a partnership. Of course, the most important thing in the partnership is compatible partners, good documents, and the plane being reasonably available. In the business world, you never really know someone until you do a deal together and something doesn't go well. If you can work through problems and maintain a good relationship, you'll have a good partnership. I've had a awful lot of folks approach me to be a partner that I wasn't convinced could work through the above. Have an excellent partner in my P-Baron. Choosing the partners is as important as chosing the bird.

On the one hand, all decisions, expenses and plane availability are yours. On the other, you can get more aircraft, share expenses and give up some availability.

The Cirrus is a great bird. Tornado Alley is close to finishing a turbo for it that they claim can make it a 200 knot plus bird at 17,500 (I was up there looking at it Saturday). In other words, the aftermarket folks are jumping aboard which is great for owners.

Best,

Dave
 
Just a couple of comments.

I agree with Ron on the safety and insurance issues. One of the considerations is a fast capable airplane takes people into much more volatile weather conditions. The automation tends to give people the "Magic Carpet Syndrome" just take off set it and turn it off on landing. Staying proficient in hand flying and emergencies takes work and the number of hours of cross country with the autopilot on does not help a bit.

A 4-5 year old Cirrus probably does not have the Glass (Avidyne Entegra). I think the big depreciation hit has already been taken since these are not current technology (which is one of the big draws to the Cirrus).

I'm in a partnership with the best partner in the world and agree that you should be more discerning choosing your partner than the airplane.

One thing we did that I highly recommend is to take the AOPA boiler plate partnership agreement and had a long talk about each point. We crossed off a few items as not necessary, modified a few and added a few. Then took it to a real live lawyer to draw up our agreement.

I've always done business with the idea that you don't expect a contract to solve disputes, that's done by the people. The contract is there to spell out the things you agree on in advance. If you have to hire lawyers to enforce the contract you've already lost no matter what happens in court.

IOW, you don't cut the cards because you don't trust the person. If you don't trust the person don't play cards with them.

Joe
 
Bill Jennings said:
I was out Sunday at a local Mom-n-Pop type airport, and was chatting with one of the owners. He and a partner own a 182 together, but they are thinking of getting two more partners and moving up to a 2001-2002 model Cirrus SR22. They think each guy would have to put $50-60k into a hat, and that would do it to buy an early model.

I have mixed feelings on this one, as one of my most favorable situations would be to get into a partnership on a travel aircraft, and another one on a taildragger acro plane of some type. On an SR22 partnership:

Pluses:
  • Fast travel bird
  • Flying the latest technology
  • I could give a rip about the 'chute, but the sound of it makes the wife happy
  • Ramp appeal
Minuses:
  • Biggest, buying a 4-5 year old aircraft means buying it on the downside of the depreciation curve, as I hear most airplanes don't bottom out and start back up until 10-12 years. I really don't like the thought of buying a depreciating asset.
  • Good training and recurrent training needed to stay ahead of the airplane and all it's toys. (more so than most)
  • It seems to not have the greatest safety record (don't have hard #'s on that yet)
  • High insurance cost
Any others I should be thinking of? If this were a 10-12 year old similar aircraft, I'd be all over it. As it stands, I've asked him to keep me in on the loop.

On another front, I'm calling a fellow in NY on a really nice looking '59 Skylark that is full IFR with vacuum system, decent radios, etc. I could own this aircraft fully for significantly less than the partnership above.

Decisions, decisions. :dunno:
Click to expand...

Better buy is the 182, ? are they sell soon?
 
NC19143 said:
Better buy is the 182, ? are they sell soon?
Click to expand...


Don't know. I asked one partner what they had into it, and he said about $90k with the panel upgrades. Depending on TT and SMOH, sounds about right for a mid-70's 182.

Still like the 175, though. Fly to TBO, then hang the Franklin on there...it would be a fine little plane.
 
Last edited:
Bill Jennings said:
Still like the 175, though. Fly to TBO, then hang the Franklin on there...it would be a fine little plane.
Click to expand...

Talk to me before you spend any money on the PZL.

I think you'd be happier with the IO-360-KB in front, ala the XP mod. think supportability.

BUT I did see a 108-3 come by the gas pumps last week, that had the 220 Frank in it and it was very nice conversion.

It sure had a short roll on TO.
 
Ken Ibold said:
Move to Jacksonville and I'll pay your country club membership.

B)
Click to expand...

If you saw me play, you'd pay me not to join.
 
Ken Ibold said:
I'd never join a club that would have me as a member. :cheerswine:
Click to expand...
Credit where credit is due, Mr. Editor. Was that not Groucho Marx's line even before Woody Allen said it?
 
I think the Cirrus is a fine looking airplane, but that insurance cost is just crazy. Does the aircraft suit your missions otherwise?
 
AirBaker said:
I think the Cirrus is a fine looking airplane, but that insurance cost is just crazy. Does the aircraft suit your missions otherwise?
Click to expand...

It does, but I think insurance and currency training will kill this one. Cirri, even in partnership, look to be a little too expensive.
 
Ron Levy said:
On the third hand, the insurance industry is showing extreme reluctance to insure Cirri in multi-pilot situations above a certain point -- not sure what that point is.
Click to expand...

FWIW, a few members of my club formed another club to purchase an SR20. There are seven pilots that bought into it. Their plan was to also purchase a 182, but the insurance company said they would not add anyone to the policy for at least a year.

Plus after buying in for $10K apiece, they had to ante up another $2K each for an engine teardown after a bearing was found in the oil filter. Yikes. Had to fly off quite a few hours before allowed to solo, recurrent requirements, etc.

But hey, they've got a Cirrus to fly, and I don't.
 
You must log in or register to reply here.
Back
Top