Rent/Partner/Purchase

gdwindowpane

gdwindowpane

Pre-takeoff checklist
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gdwindowpane
I'm a student pilot getting closer to my check ride.

Flight school/airport I'm training with is going through some drama that I would like to remove myself from. I'm also close to using up my block time for the Cessna 152 I'm training in. I really don't want to purchase another block of time from them.

As luck would have it there is a guy my CFI knows who has a Cherokee 180 that he keeps at the airport. He doesn't fly it very often, according to my CFI 5 hours a year or so. According to my CFI he is very excited to have the plane flown more often. At one time he was interested in selling it, another time he was looking for a partner.

I think I would prefer to simply rent it from him. However from an owner's point of view would this be the least desirable situation? I can rent an Archer from the school fro $100/hr wet. I'm sure the school/airport factored in fuel at cost so I'm not sure if I could get him to rent it to me for the same price. I guess I could try and negotiate a dry rate. I'm not sure how the insurance would work either. This may be a deal killer on the rental option for him.

I'm somewhat reluctant to entertain the purchase/partner options as I don't want to get slammed with big maintenance items, overhauls, etc. I don't know the hours SMOH. I will certainly get more information when we meet on Saturday. It does have a current annual but not sure when it was done.

Any thoughts/advice will be appreciated.

Thanks!

Chris
 
5hrs per year? That would make me cautious.

Insurance would be the biggest roadblock. Have the owner look at his policy. More likely than not, there will be a clause against such activity. Otherwise, I’d say that it sounds like a sweet deal!
 
I was gonna suggest to just talk to him, but it looks like you're gonna do that. find out what he's looking for, let him know what you're interested in, and you never know what kind of arrangement you might get into. or walk away from. good luck!
 
Moving from "personal use" to "rental/commercial use" is indeed a big step in insurance, for the owner. We (me and the Hubby) made this jump recently, so that I could do flight instruction in our 172. Our insurance basically tripled, and Hubby figures that it will take two students per year going from zero->PP in order to break even. But we got an "open pilot" type policy, covering any students in a general way, like a flight school would; if your Cherokee Guy can get a more restricted-style policy where (only) you and your CFI and himself are named and no one else, it might be much cheaper for him insurance-wise, and therefore a possibility?

I guess the point I'm trying to make is, insurance can be a bit of a minefield. Calling AOPA's insurance department helped us sort it out (as owner) when we wanted to make the leap. I think if I were Cherokee Guy, I would be very interested in talking about all kinds of possibilities and finding one that everyone can work with. Keep the plane flying!
 
How big a block? Can you just rent the 152 to finish up your training? Switching to any other plane will take a little bit of work at this point in your flying to get used to the landings and handling. Better to finish up in what you are used to flying. Then switch after you have your cert.
 
wayne said:
How big a block? Can you just rent the 152 to finish up your training? Switching to any other plane will take a little bit of work at this point in your flying to get used to the landings and handling. Better to finish up in what you are used to flying. Then switch after you have your cert.
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Yeah good point. It’s not like you have to purchase block time. Just pay for the time you need (hour by hour) to finish up.
 
Yes I can certainly finish up in the 152. My thinking was why not get checked out on the Cherokee 180 while I'm finishing up? Hopefully this will be the plane I continue to rent/partner/purchase moving forward after getting my cert. My school only has 2 planes and they are used on the weekends quite frequently. Overnight rentals probably wouldn't happen easily and there is a 3 hour minimum per day. Taking the 180 for the weekend shouldn't be a problem at all with no minimums (I hope). Hopefully we can work something out on Saturday.
 
Of course you can get checked out in the 180 during training. Nothing wrong with that. It will take more time and money, but other than that not a big deal. I'd recommend sticking with what you've been doing, get your PPL, then switch to the 180. You can do it either way though.
 
kath said:
Moving from "personal use" to "rental/commercial use" is indeed a big step in insurance, for the owner.
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You don't need to do that for a single person, though. Generally, you can have up to 5 names pilots on an insurance policy for no increase in price.

@gdwindowpane, I think this sounds like a great thing to consider. Having the plane flown regularly will be very helpful from a maintenance perspective.

From an owner's perspective, the major fixed costs are hangar and insurance, the major variable costs are maintenance, fuel, and engine reserves. On a PA28-180, the variable costs should be about $50/hr for maintenance and $14/hr for the engine reserve, plus 10 gallons at whatever your local 100LL price is. What the owner may want is half the current insurance plus the entire difference in insurance plus half the hangar rent, and then that hourly rate, or he may just come up with a higher hourly rate to cover the fixed costs.

Or, you might get lucky and find that he just wants to get it flying and will give you a really good deal. At a minimum, I would offer to pay the difference in insurance plus a wet or dry rate of his choosing, and see what you get. If it's anything less than the $100/hr wet you get from the school, you're getting a pretty good deal. Even if you do have to pay a little more for the Cherokee, it will be a good deal for you just because of better availability, provided it's equipped and maintained similarly.

Good luck!
 
flyingcheesehead said:
You don't need to do that for a single person, though. Generally, you can have up to 5 names pilots on an insurance policy for no increase in price.

@gdwindowpane, I think this sounds like a great thing to consider. Having the plane flown regularly will be very helpful from a maintenance perspective.

From an owner's perspective, the major fixed costs are hangar and insurance, the major variable costs are maintenance, fuel, and engine reserves. On a PA28-180, the variable costs should be about $50/hr for maintenance and $14/hr for the engine reserve, plus 10 gallons at whatever your local 100LL price is. What the owner may want is half the current insurance plus the entire difference in insurance plus half the hangar rent, and then that hourly rate, or he may just come up with a higher hourly rate to cover the fixed costs.

Or, you might get lucky and find that he just wants to get it flying and will give you a really good deal. At a minimum, I would offer to pay the difference in insurance plus a wet or dry rate of his choosing, and see what you get. If it's anything less than the $100/hr wet you get from the school, you're getting a pretty good deal. Even if you do have to pay a little more for the Cherokee, it will be a good deal for you just because of better availability, provided it's equipped and maintained similarly.

Good luck!
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That is, of course, unless the insurance company finds out the plane was being rented out and therefore a commercial operation. There are plenty of threads on this, if you search. The owner will also run into trouble with the 100 hour inspection thing. It would be best to make the other person at least a minority partner in the plane, to keep things legal. This has also been couched as being a "non-equity partnership" so that is a good term to search for to get more information.
 
John221us said:
That is, of course, unless the insurance company finds out the plane was being rented out and therefore a commercial operation. There are plenty of threads on this, if you search. The owner will also run into trouble with the 100 hour inspection thing. It would be best to make the other person at least a minority partner in the plane, to keep things legal. This has also been couched as being a "non-equity partnership" so that is a good term to search for to get more information.
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If it's not available to the general public, it isn't being "rented". That's why it's pretty easy to do for 5 or less people. Plenty of non-equity flying arrangements out there.
 
flyingcheesehead said:
If it's not available to the general public, it isn't being "rented". That's why it's pretty easy to do for 5 or less people. Plenty of non-equity flying arrangements out there.
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I guess it's not my nit to pick. It only becomes a problem when the lawyers get involved. I understand it might be possible to structure it as a dry lease to get around it, but then the "renter" needs to provide his/her own fuel and pilot (the owner does not have a say in who the pilot is and cannot provide the pilot, including CFI). I am not a lawyer, but I do understand that this scenario has been bounced around quite a bit on this forum and others. I agree that there are plenty of people doing what you say, but it is not without risk.
 
flyingcheesehead said:
If it's not available to the general public, it isn't being "rented". That's why it's pretty easy to do for 5 or less people. Plenty of non-equity flying arrangements out there.
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Huh? I'm no lawyer, but just because I pick four specific people to rent to, doesn't mean they're not renting it. Doesn't the definition of "rental" have to do with how money changes hands in exchange for access to the plane, not the breadth of the access among the population?
(I mean, I rent my condo to only ONE person, and I have some choice about who it is.)

Also, my understanding is that flight instruction is (by itself) a form of commercial operation necessitating 100-hour inspections, etc. But maybe only if the owner also provides the instructor?
So how this might muddy the water... our situation might be different from the OP and Cherokee Guy, because the Cherokee Guy is not also providing the instructor? <...dizzy...>

All I know is, when Hubby called Avemco, they had a conversation something ilke this:
"Hello, we'd like to modify our policy so that my wife can offer flight instruction in my plane. The students would need to be able to rent the plane, and including to solo in it."
"That's a commercial operation. We don't do that."
"But, she'd only have one or two students at a time. Couldn't we just add the students individually by name to a policy of some sort?"
"No, the number of students doesn't matter, it's still a rental/commercial operation, and we don't do that."
"Not even with this 'owned-aircraft CFI policy' thingy on your website?"
"No. That's if you're *just* instructing. Not also renting. Like if you wanted to give your mother-in-law lessons for free."

So I guess I don't understand how non-equity arrangements work, then... Or whether the presence/absence of instruction is a factor... Or why wet vs. dry makes a difference... My CFI certificate is still on white paper and says "Temporary" on it, so I would like to learn more.

Edit: the AOPA folks told us that only one underwriter could give us a rental/commercial style policy in Alaska, and that we'd have had more options if we lived in the Lower 48. Not sure if that has anything to do with anything here.
 
kath said:
Huh? I'm no lawyer, but just because I pick four specific people to rent to, doesn't mean they're not renting it. Doesn't the definition of "rental" have to do with how money changes hands in exchange for access to the plane, not the breadth of the access among the population?
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For insurance, the only entity whose definition matters is the insurance company. The conversation should certainly be had as to what they consider "rental" but I don't think the OP's case (long-term, non-equity additional pilot) would be.

Also, my understanding is that flight instruction is (by itself) a form of commercial operation necessitating 100-hour inspections, etc. But maybe only if the owner also provides the instructor?
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Correct. If the instructor is totally independent of the owner, it's not a commercial operation requiring 100-hours. If the student is writing one check for the plane and the instructor, it most definitely is.

I've actually seen one rental operation that specifically didn't hire their own CFIs to get around that. Fernandina Beach, I think the airport was called... Been about 13-14 years since I was there. That made it kind of a pain to schedule, since you had to schedule the airplane and then separately schedule with an independent CFI. I never did end up flying there, largely because of that.

So how this might muddy the water... our situation might be different from the OP and Cherokee Guy, because the Cherokee Guy is not also providing the instructor? <...dizzy...>
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Correct. Since (presumably) the Cherokee owner is not an active instructor if he's only flying 5 hours a year, unless he were to hire an instructor, the OP and the Cherokee owner would not be subject to 100-hours.

All I know is, when Hubby called Avemco, they had a conversation something ilke this:
"Hello, we'd like to modify our policy so that my wife can offer flight instruction in my plane. The students would need to be able to rent the plane, and including to solo in it."
"That's a commercial operation. We don't do that."
"But, she'd only have one or two students at a time. Couldn't we just add the students individually by name to a policy of some sort?"
"No, the number of students doesn't matter, it's still a rental/commercial operation, and we don't do that."
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Avemco is particularly averse to covering any sort of flight instruction. Our club insures through Avemco, and they DO NOT EVER cover the instructor, period, end of story... Even if the instructor is a club member and already named insured on the policy! So, they can fly the plane as the pilot all they want, but even with two club members aboard who are both covered as named insured pilots, if one is giving instruction to the other, the CFI is left hanging - Only the club and the non-instructor pilot are covered. They're very strict about that.

So I guess I don't understand how non-equity arrangements work, then...
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Yeah, that's why the conversation is worth having. If it's equity, the "renter" is an owner and it's no different than any other aircraft owner getting instruction in their own airplane - They just don't own the whole thing.

Or whether the presence/absence of instruction is a factor...
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That it is. And it matters whether the instructor is an entirely independent third party... But this only relates to 100-hours, not insurance.

Or why wet vs. dry makes a difference...
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It doesn't, with regards to 100-hours, and likely not with insurance either. It does have bearing in some states on whether you have to charge sales tax on aircraft rental, but that's a state-by-state thing that you'd have to check into.
 
I had a buddy work out a deal with a friend to be named on the policy. They worked out a deal that was amicable to both. The insurance company didn't have any problems with it the way they explained it.
Talk to the guy, you might be able to work out a smoking deal and in time buy the plane.
 
flyingcheesehead said:
It doesn't, with regards to 100-hours, and likely not with insurance either. It does have bearing in some states on whether you have to charge sales tax on aircraft rental, but that's a state-by-state thing that you'd have to check into.
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A dry lease is a mechanism for transferring operational control of the plane within Part 91 use. It helps you avoid stepping into Part 121/135 territory. This is often used for corporate planes.
https://blog.globalair.com/post/The-Difference-Between-Wet-and-Dry-Aircraft-Leases.aspx

Probably the easiest way to avoid all of this is to have the Cherokee guy sell a very small minority ownership to the OP. If the OP is paying to rent the plane and has no ownership, then that is what it is, renting; a commercial operation.
 
John221us said:
A dry lease is a mechanism for transferring operational control of the plane within Part 91 use. It helps you avoid stepping into Part 121/135 territory. This is often used for corporate planes.
https://blog.globalair.com/post/The-Difference-Between-Wet-and-Dry-Aircraft-Leases.aspx

Probably the easiest way to avoid all of this is to have the Cherokee guy sell a very small minority ownership to the OP. If the OP is paying to rent the plane and has no ownership, then that is what it is, renting; a commercial operation.
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Renting has nothing to do with Part 135 (or 121) unless you start charging people to go places. Totally different story. If you read your link, they're referencing that providing crew is the difference between a "wet" and "dry" lease, and that a "wet" lease (aircraft plus crew provided by the same source) generally requires operating under Part 135, 121, or 91H. None of those apply to the type of aircraft we're talking about unless they're in an air carrier operation, weigh more than 12,500 pounds, are multiengine jets, have >6,000 pound payload, or have >= 20 passenger seats. Ref. 14 CFR 1.1, 91.501, 119.1, 121.1, and 135.1.

There are also numerous non-equity flying clubs, that are essentially "renting" planes by your definition, yet they're able to do it just fine. An ownership stake is not necessary to be non-commercial.
 
kath said:
So I guess I don't understand how non-equity arrangements work, then... Or whether the presence/absence of instruction is a factor... Or why wet vs. dry makes a difference... My CFI certificate is still on white paper and says "Temporary" on it, so I would like to learn more.
Click to expand...

Could be the instruction. So far in two non-equity arrangements the insurance companies have been fine with it. In both neither owner was a CFI. In both everyone was listed as a named pilot on the policy and we all had to provide hours and other info to the insurance company. There's also almost no turn-over in the pilots in the groups.
 
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