Shared Ownership

Ardee

Ardee

Filing Flight Plan
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Jan 21, 2015
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Nashville, TN
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Ardee
I have been thinking about trying to find people to go in on a shared ownership Cirrus. Does anyone out there have any experience in this field? If so, I am looking for advice, and also to see what advice you can give me? Any and all help is appreciated.
 
Me too! Thinking of going in on a PA28-180 or a PA32-260 that I'm considering with a group. Appreciate the help also.
 
Good luck, partnerships can be a rewarding experience ,if you can find the right partners.
 
has anyone had any experience with setting one up, and how everything should work?
 
I am very sorry that i upset you. I apologize and will try to never post in the wrong forum again.
 
Ah well, while we're on the subject. I've run two airplanes thought partnerships and likely will bring in at least one partner in the current airplane, if not two. I prefer two, 3 partners is a nice sweet spot in which expenses are minimized with no loss of access.
 
I started a plane partnership on the 172... began with 2 people, now has 4... runs like a champ.
 
azpilot said:
How do you set things up to exit gracefully? If there are two of you, and one wants out, and the other doesn't have the money to buy you out, what do you do? The only recourse I can see is selling the airplane and cashing out.
Click to expand...
Now for the rest of the story. We bought a 150 together right after getting our PPLs. It was a great learning experience, but he started gently nudging me about my flying the motor off it. My reply was I want to fly it more not less! So we agreed to sell the 150 and I would buy a 172 - he became a non-equity partner.

He liked to fly only on the weekend for a burger run and I liked to go places, so we started bumping schedules, not getting back on time, etc. Then I decided to redo the interior which was a ton of time, sweat equity, and $$$. After slaving for 3 months every weekend I had an interior I could be proud of. But the closer I got to flying it home, the less I could stand the thought of him and his buddies piling in my "brand new airplane" and messing up my new interior.

When I told him so, well. . .that's the part we hadn't figured out. :rolleyes:
This went on for a few years, but when I spent a lot of personal blood, sweat, and $$ on an interior overhaul (and he none), I decided I didn't want to have a renter anymore using my nearly "perfect" airplane.
 
steingar said:
Ah well, while we're on the subject. I've run two airplanes thought partnerships and likely will bring in at least one partner in the current airplane, if not two. I prefer two, 3 partners is a nice sweet spot in which expenses are minimized with no loss of access.
Click to expand...
I'm curious about that because you seem like an active pilot, though I don't see you much on the field (probably cause you've gone someplace). I loved splitting the expenses, but I like to know the plane will be there when the fancy strikes me. Having two others seems like you'd have frequent conflicts, unless like many partnerships, 2 of the 3 don't fly much?
 
azpilot said:
How do you set things up to exit gracefully? If there are two of you, and one wants out, and the other doesn't have the money to buy you out, what do you do? The only recourse I can see is selling the airplane and cashing out.
Click to expand...

That's just one alternative.

In one partnership we wrote in a first right of refusal - if a partner wants to sell he/she has to offer it up to the other partners first with the price they would like. Any/all other partners can buy that share if they wish. If no takers the selling partner is free to find another buyer at that price or higher. If they subsequently get an offer they want to accept at a lower price they have to offer that deal up to the other partners first.

A variation is seller has to offer deal to partners only after receiving a bona fide offer. Allows partners to control who comes into the group without impairing someone from exiting.
 
We have a four person arrangement for a DA40 at CYBW. Corporation owns the plane, we each own 25%. Monthly fee for fixed expenses (hanger, insurance, jepp, etc.) , hobbs based fee for variable including fuel, prop and engine replacement. Each has priority for every fourth week and we negotiate long trips spanning more than a week. We have an operating agreement (OA) that details how to sell, the rights of the other owners in terms of approvals of new partners, and fixed term after which we sell the plane and split the proceeds and bank account if we don't agree on a new OA. Just renewed the OA after 5 years and the transfer of one original partner for a new partner. So far, so good. Good availability and reasonable expense.
 
iflyvfr said:
I'm curious about that because you seem like an active pilot, though I don't see you much on the field (probably cause you've gone someplace). I loved splitting the expenses, but I like to know the plane will be there when the fancy strikes me. Having two others seems like you'd have frequent conflicts, unless like many partnerships, 2 of the 3 don't fly much?
Click to expand...

We kept a schedule on Google and signed up for the airplane when we wanted it. There usually was a conflict with Oshkosh, but that was really easily worked out and was about the only one.
 
Ardee said:
I have been thinking about trying to find people to go in on a shared ownership Cirrus. Does anyone out there have any experience in this field? If so, I am looking for advice, and also to see what advice you can give me? Any and all help is appreciated.
Click to expand...


I own a share of a Bonanza in a 5-way partnership. For day-day operation, I would love to have fewer partners, when it came to overhauling the engine, I was glad about the 4 others who wrote a check.
For scheduling, we meet in december for the corporations annual meeting. Everyone draws a number from a hat and we go around the table in that order picking weeks until all weeks are gone. It has been quite predictable and if someone picks a week you have further down on your list, there is some friendly negotiation and draft-pick trading. During the year, if someones plans change, weeks are traded to make it work. During the week, the plane is usually in the hangar and available for anyone to use after checking with the guy whose name is on the schedule. This has been working for 20+ years, partners have bought and sold their share, the plane has been replaced once and several engines have been overhauled.

My recommendations:

- Your partners are the most important part to this. Find the right partners and you are 90% there. You can have a 30 page contract that spells out everything, if one of your partners is a passive aggressive dick, you are going to have a miserable time. Try to find partners who are not financially strained. Planes are expensive any way you cut it, if you have an unexpected repair and it becomes an issue for one of your partners, there is potential for friction.
- Write a good operating agreement (or bylaws) that specifies governance (e.g. all decisions >10k have to be unanimous) buy-in, buy-out, right to approve new partners and dissolution of the venture. That agreement is a pre-nup. As long as everything works, everyones copy sits in a dusty binder on everyones shelf. If you ever have to open it, you know you are in trouble.
- Agree on a cost sharing mechanism. What works for us is a monthly fee that pays for hangar, insurance, basic annual, databases. Once the plane flies, there is an hourly dry rate that gets remitted to the treasurer. Plane is left with fuel 'at the tabs'. So if you decide to fuel up at Teterboro, that's on you, not the partners. Other partnerships rent the plane wet and reimburse fuel at the home-fields rate.
 
weilke said:
I own a share of a Bonanza in a 5-way partnership. For day-day operation, I would love to have fewer partners, when it came to overhauling the engine, I was glad about the 4 others who wrote a check.
For scheduling, we meet in december for the corporations annual meeting. Everyone draws a number from a hat and we go around the table in that order picking weeks until all weeks are gone. It has been quite predictable and if someone picks a week you have further down on your list, there is some friendly negotiation and draft-pick trading. During the year, if someones plans change, weeks are traded to make it work. During the week, the plane is usually in the hangar and available for anyone to use after checking with the guy whose name is on the schedule. This has been working for 20+ years, partners have bought and sold their share, the plane has been replaced once and several engines have been overhauled.

My recommendations:

- Your partners are the most important part to this. Find the right partners and you are 90% there. You can have a 30 page contract that spells out everything, if one of your partners is a passive aggressive dick, you are going to have a miserable time. Try to find partners who are not financially strained. Planes are expensive any way you cut it, if you have an unexpected repair and it becomes an issue for one of your partners, there is potential for friction.
- Write a good operating agreement (or bylaws) that specifies governance (e.g. all decisions >10k have to be unanimous) buy-in, buy-out, right to approve new partners and dissolution of the venture. That agreement is a pre-nup. As long as everything works, everyones copy sits in a dusty binder on everyones shelf. If you ever have to open it, you know you are in trouble.
- Agree on a cost sharing mechanism. What works for us is a monthly fee that pays for hangar, insurance, basic annual, databases. Once the plane flies, there is an hourly dry rate that gets remitted to the treasurer. Plane is left with fuel 'at the tabs'. So if you decide to fuel up at Teterboro, that's on you, not the partners. Other partnerships rent the plane wet and reimburse fuel at the home-fields rate.
Click to expand...

That is pretty much how we did it in the club I ran as a treasurer for 12 years. The only thing different is that we were a non-profit corporation and no one owned an equity share. Each person was a member at $600.00. To leave the club, you could sell your share, or go in the rears for monthly dues. Once you reached $600, your share was liquidated. Bi- laws only allowed for 12 members per plane.
 
My dad and I considered going partners for all of about 45 seconds until we realized we both flew primarily on weekends, and routinely head in different directions. And that was a scheduling conflict with only two of us. I can't imagine taking on a third or 4th partner. A lot of my trips are last minute. Almost literally. I'll get/make a phone call, and that evening/next morning I'm leaving for who knows where. That can't happen in a partnership.
 
For us, the airplane is owned by the LLC, which in turn is owned in equal thirds by the three partners. Monthly base is tiedown, insurance, registration, subscriptions and holdback towards annual, divided by three. Minor expenses (<$100) can be done by any of us. Above that, we discuss as a group. We chip into the general fund an hourly rate that covers basic mx and saves towards major repairs in the savings account. We "keep it wet" to the tabs. If you fill above the tabs, you essentially donate that fuel to the next flier.
 
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