Cessna 150 - 1/10 Share - Good Deal?

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Airmaster23

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Hi,

I've come across a 1967 Cessna 150G with just under 5000 TTAF, and 1700 SMOH.

There are 10 partners that have owned it since 2005.

They only fly it about 120 hrs / year.

Currently, 3 of the partners live in the other side of the country.

The partnership has a bank account with approximately $20k in it (for overhaul).

The share price is $4000, monthly cost is $50, and it's $30 dry per hour (so, $50-55 hourly depending on gas prices.) (Mogas STC).

The partners are going to overhaul the engine at 1800.

Is this a good deal?
 
$4K for a 1/10 of a Cessna 150?

What other assets do they have (maybe a fat maintenance account?) that bring this gem up to a $40k valuation?
 
Airmaster23 said:
The share price is $4000, monthly cost is $50, and it's $30 dry per hour (so, $50-55 hourly depending on gas prices.) (Mogas STC).

Is this a good deal?
Click to expand...

That sounds high to me. $4000/share price x 10 partners = $40,000 valuation? I would think $40k should get you into a run out 172 instead of a run out 150.

I was in a flying club (group partnership) that had 6 planes - 152, 172, PA28-181, PA28-180, C177RG, and C210. Buy-in was roughly $1,000 depending on what level of membership you wanted to buy in at (higher buy-in = lower rental rates). With that group, monthly membership was ~$75/month and I could rent a 152 for $35/hr WET. Granted, that was 13 years ago...

Of course, as in all business deals "value" is a relative term, based on what the market (you) is willing to pay.
 
$4k for a 1/10 share of a 150 is probably overpriced by a factor of 2.
Gas is going to cost you more than the share. Just give up replacing a car one time and you can afford the 150 outright (but better they be at least an E model or newer. They get kinda funky earlier than that. And A & B models have NON-adjustable seats)
 
That is high for a 1/10 share, but consider this. Will you get $4000 in flying benefit out of it and could be a less expensive way to do a lot of flying. One thing to consider is how they would handle your decision to leave. Do they simply buy out your 1/10 share? Are they going to chastise you if you fly it 120 hours a year?
 
What do other flying club shares in the area go for ?

What would it cost you to set up a co-ownership on a similar plane ?

There is intrinsic value in an existing partnership, in this case there is even real value beyond the plane present (a 20k reserve). While the simple multiplication of the shares suggessts that you are buying a 40k 150, in reality you are buying a 30k 150 with a freshly overhauled engine and 10k worth of goodwill.

With 120hrs/year, your availability is going to be good. What are you trying to accomplish with this plane ?
 
with only 100 hrs till overhaul i'd want to know what the plan was to get that thing overhauled or replaced with minimum downtime.
 
He did say they have a $20K reserve fund for overhaul. That should increase the value of a share some.

John
 
Depending on condition, I might put the value of the airplane at $15k. I would add another $5k if if is well maintained with all squawks addressed. Add the reserve to that and you have $40k which is their valuation. The problem with the engine overhaul is that as soon as that reserve becomes iron it loses 50% of value as far as valuing the airplane. In other words, a clean 150 with a fresh engine is not worth $40k. I think they are overvaluing the share based on that. They already got the benefit of the engine up until now and you did not so I do not see any reason for you to take a hit on rebuilding it. You are only saving about $40 per hour off a rental so that $1k extra would take a long time to burn off.
 
$4,000 x 10 = $40,000

However, there's $20,000 already set aside for OH, so he's really buying 1/2 into the plane and 1/2 into the OH reserve.
 
120 hours/year over 10 partners ain't much. Even among the 7 locals, it's still only about 17 hours/year each. But take a good look at the schedule for the last year or two and see how the availability will be vis a vis your needs.
 
EdFred said:
$4,000 x 10 = $40,000

However, there's $20,000 already set aside for OH, so he's really buying 1/2 into the plane and 1/2 into the OH reserve.
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Right but unless they are going to sell the 150 and use the $40k to upgrade, I would half that reserve as far as valuation of the airplane.
 
Ron Levy said:
120 hours/year over 10 partners ain't much. Even among the 7 locals, it's still only about 17 hours/year each. But take a good look at the schedule for the last year or two and see how the availability will be vis a vis your needs.
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that would be my concern. you may end up having to fly on alternate tuesdays and early on monday mornings.
 
alfadog said:
Right but unless they are going to sell the 150 and use the $40k to upgrade, I would half that reserve as far as valuation of the airplane.
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I suppose he could wait until after the OH, and then offer $2000.
 
I think it's a pretty good deal given that you can't hanger a 150 for $4000 a year where I live.
 
Seems to me the only thing that matters is the bottom line. Let's say you fly it 10 hours a month.

If it cost $80/hr to rent a 150 then 10 hrs would cost $800
For this it's going to cost $550 (10 hrs x $55/hr + $50/mo)
So you save $250/mo and it would take $4000/$250 = 16 years to break even

Fly more you do better, fly less you do worse but essentially you are stuck for the next 1,920 hours of flying in a 150.
 
EdFred said:
$4,000 x 10 = $40,000

However, there's $20,000 already set aside for OH, so he's really buying 1/2 into the plane and 1/2 into the OH reserve.
Click to expand...

Right, so it's $2000 for the OH reserve, plus 2000 for the airplane.

You can look at this in two ways -
A $2000 buyin for the aircraft minus the engine. VRef (if you believe it) puts the hull value of a 150G at around $6000. So this is overpriced by a factor of 3 or more unless there are some major mods in there.

Or you can consider the whole airplane, which is not much better. The entire aircraft as it sits is worth about $7200 or 720/person. Again, 4k is way overpriced by 5 times or more.

I can show you a 1967 150G, less hours on the airframe, only 300 on the engine that you can probably get for under 16,000. Your same $4000 buys 1/4th of a better aircraft.

Overall - my numbers say not a deal.
 
Silvaire said:
Seems to me the only thing that matters is the bottom line. Let's say you fly it 10 hours a month.

If it cost $80/hr to rent a 150 then 10 hrs would cost $800
For this it's going to cost $550 (10 hrs x $55/hr + $50/mo)
So you save $250/mo and it would take $4000/$250 = 16 years to break even

Fly more you do better, fly less you do worse but essentially you are stuck for the next 1,920 hours of flying in a 150.
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You are assuming that he won't ever be able to re-sell his share. Once the engine is overhauled, all the nervous nellies come off the sidelines and he'll be able to sell for 3k minimum. Key question is : how are the bylaws written ? Who do you re-sell a share to. The corporation or someone you find on your own. How are the shares formally valued for redemption purposes.

The plane is barely flying with the current ownership group. I would try to find out why. Chances are 5 of the local owners used it to get either their PPL or to teach their kid and now have too much inertia to get out of the deal at $50/month.

Again, how much is it worth to you to hold the keys to 'your' plane ? 4k and $50/month sounds like a decent enough deal to me. You can try to negotiate it down by a couple of 100 to reduce the goodwill component of the deal. The market capitalization of Apple is more than the book value of the furniture in their offices, the valuation of a flying club share is no different.
 
How much do you fly and how much is it to rent a 150 where you live?
 
I think $3k is more than fair. One of the big bennies of ownership is the ability to take the plane somewhere for a day or a week and not worry about daily minimum rental. Sounds like this bird is not flown much and would be ideal for that. If that is worth the extra $1k to you well then $4k is still a cheap buy-in for ownership.
 
When the airplane gets timed out - you sell it for $10k, take the $20k and buy a new airplane . . . . and give $10k back to the partners.
 
jsstevens said:
He did say they have a $20K reserve fund for overhaul. That should increase the value of a share some.

John
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Some, zero time 150s don't go for that much. You can buy your own for probably 25k that is in fantastic condition with a low time engine.
 
It's a trap. Run.

Source: I was in a 150 partnership just like the one you're looking at.
 
Ask for contact info for the 10 partners. contact them and offer them buyouts starting at 3k and going down from there. Let them race to the bottom with their offers. You may get the 20k, the cessna share, and 5 shylock points for free by the time you're done horn-swaggling.

Thinking particularly of those 3 that are not in the state anymore. Bet they're tired of writing $600/yr in checks. :D
 
bflynn said:
I can show you a 1967 150G, less hours on the airframe, only 300 on the engine that you can probably get for under 16,000. Your same $4000 buys 1/4th of a better aircraft.
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Under $16K Really? I have not seen any deals like that. Could you show us?
 
Foxhole said:
Under $16K Really? I have not seen any deals like that. Could you show us?
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Oh, you'll find 150s on barnstormers which 'by the numbers' are a better deal.

Once you look closer, you'll find that they have sat for 2 years, the ELT battery is timed out, the tires need replacement and the plane is located 1/2 way across the country from where you are. So now you go through the moves to buy that 16k 150, until you have it at your airport, you have spent 19k. Still a great deal, but to hold the keys to the plane, you are now spending $233/month (600 insurance, 100/mo tiedown, 1000 annual). Sure looks like a lot more than $4000 cash and $50/month, doesn't it ?

Yes, this share is probably overpriced by $1000. If there is room for negotiation (and with 3 inactive partners there probably is), try to get the price down a bit. But compared with sole ownership, it is still a steal. Last year, I went from a Warrior in sole ownership to an A36TC in a partnership and both my cash outlay and my monthly bill have gone down.

Once you are looking at larger partnerships, the specifics of the plane don't matter as much as the specifics of your prospective partners. If the 7 that are flying the thing hate each other and nickle and dime each other on every fillup that wasn't all the way into the filler-neck, maybe its not the right group for you. If 3 of the 7 are airline pilots who just hold their share to teach their kids and spouses, 1 is a mechanic and 1 a bored accountant who keeps the books, everyone meets for a BBQ once a year to settle the books, then $5000 would be a good price to get into the club.

If you guys join a golf-course, do you look at how much the land would be worth if it was sold for development tomorrow to determine whether your admission fee is a good value ? Or do you look whether it is a course you want to play on a regular basis and a group of people you think you can run into at the clubhouse ?
 
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Hi,

You guys make some great points.

Rental prices in my area are about $100/hr C150 wet, and $150/hr C172 wet.

A member is responsible for selling his share on his own to a new partner. I don't think there's an option to sell the share back to the partnership. Members can price their share at whatever they want.

I first heard about this airplane about 2 years, and then I ran into some medical issues, so I had to put my flying on hold. The same guy has been trying to sell his share since October 2010 (over 2.5 years ago).

2 years ago, I asked some of the other partners (who moved) if they'd be willing to come down in price. They felt that their shares were worth at least $3300, but they didn't want to undercut the guy who was actively selling. They also bought in at $4000, so they want to see their money back. Although now they've spent at least $1500 in the monthly fees...So, maybe they're motivated now even more to get the $4K back.

I only have 100 hrs, and I'm just looking to build confidence and fly for fun.

$50/hr to fly seems very attractive, and this partnership is strongly committed to keeping this plane in the air.

However, I agree that the share isn't worth $4000, but I haven't heard of another partnership with a $4000 buy-in, $50 monthly, $50 hourly.

And, a rental requires usually 3 hrs a day minimum, where-as there's a guy in this partnership who takes the plane on a week long fishing trip every summer, and puts about 6 hrs on it then.
 
Airmaster23 said:
Hi,

You guys make some great points.

Rental prices in my area are about $100/hr C150 wet, and $150/hr C172 wet.

A member is responsible for selling his share on his own to a new partner. I don't think there's an option to sell the share back to the partnership. Members can price their share at whatever they want.

I first heard about this airplane about 2 years, and then I ran into some medical issues, so I had to put my flying on hold. The same guy has been trying to sell his share since October 2010 (over 2.5 years ago).

2 years ago, I asked some of the other partners (who moved) if they'd be willing to come down in price. They felt that their shares were worth at least $3300, but they didn't want to undercut the guy who was actively selling. They also bought in at $4000, so they want to see their money back. Although now they've spent at least $1500 in the monthly fees...So, maybe they're motivated now even more to get the $4K back.

I only have 100 hrs, and I'm just looking to build confidence and fly for fun.

$50/hr to fly seems very attractive, and this partnership is strongly committed to keeping this plane in the air.

However, I agree that the share isn't worth $4000, but I haven't heard of another partnership with a $4000 buy-in, $50 monthly, $50 hourly.

And, a rental requires usually 3 hrs a day minimum, where-as there's a guy in this partnership who takes the plane on a week long fishing trip every summer, and puts about 6 hrs on it then.
Click to expand...

Sounds like you have assessed the value to be worthwhile for you - that's all that matters. Go for it and post pictures of 'your' new bird! ;)
 
Airmaster23 said:
However, I agree that the share isn't worth $4000, but I haven't heard of another partnership with a $4000 buy-in, $50 monthly, $50 hourly.
Click to expand...

Well, like I said, it is worth $3k at the most if you base it strictly on the valuation of the airplane but supply and demand factors in and the fact that you will no more get an airplane that is essentially yours to use as you please for $4k than you will for $3k. I think the "not undercutting" is kinda bogus. Offer the guy who is selling the $3300 then if this arrangement really fits your needs more than renting.
 
Airmaster23 said:
I first heard about this airplane about 2 years, and then I ran into some medical issues, so I had to put my flying on hold. The same guy has been trying to sell his share since October 2010 (over 2.5 years ago).

2 years ago, I asked some of the other partners (who moved) if they'd be willing to come down in price. They felt that their shares were worth at least $3300, but they didn't want to undercut the guy who was actively selling. They also bought in at $4000, so they want to see their money back. Although now they've spent at least $1500 in the monthly fees...So, maybe they're motivated now even more to get the $4K back.
Click to expand...

To paraphrase a former candidate for NY state governor: 'The price is too d### high !'

There is a very simple reason neither of these people has been able to sell their share yet. Go to the bank, take out $3300 in cash, take a photo of it and email it to the 4 partners who are trying to sell their share. First to raise his hand has his share sold.

Find out about the scheduling. Make sure that any partner can take the plane for a week and not just a chosen few. How is the schedule set up, a fixed 1 in x weeks or is it something haggled out at the annual meeting ?
 
weilke said:
To paraphrase a former candidate for NY state governor: 'The price is too d### high !'

There is a very simple reason neither of these people has been able to sell their share yet. Go to the bank, take out $3300 in cash, take a photo of it and email it to the 4 partners who are trying to sell their share. First to raise his hand has his share sold.

Find out about the scheduling. Make sure that any partner can take the plane for a week and not just a chosen few. How is the schedule set up, a fixed 1 in x weeks or is it something haggled out at the annual meeting ?
Click to expand...

Cereal. If I were paying $600 a year into an airplane that no longer suited my location, let alone my needs, I would be happy to let my share go for $2k.
 
Seems pretty steep to me. I bought 1/9 of a 1975 Arrow for $3700. The engine has less than 200 hrs on it and the reserve is over $10k. I do live in Iowa, so maybe prices are lower than where you are.
 
weilke said:
Oh, you'll find 150s on barnstormers which 'by the numbers' are a better deal.

Once you look closer, you'll find that they have sat for 2 years, the ELT battery is timed out, the tires need replacement and the plane is located 1/2 way across the country from where you are. So now you go through the moves to buy that 16k 150, until you have it at your airport, you have spent 19k. Still a great deal, but to hold the keys to the plane, you are now spending $233/month (600 insurance, 100/mo tiedown, 1000 annual). Sure looks like a lot more than $4000 cash and $50/month, doesn't it ?

Yes, this share is probably overpriced by $1000. If there is room for negotiation (and with 3 inactive partners there probably is), try to get the price down a bit. But compared with sole ownership, it is still a steal. Last year, I went from a Warrior in sole ownership to an A36TC in a partnership and both my cash outlay and my monthly bill have gone down.

Once you are looking at larger partnerships, the specifics of the plane don't matter as much as the specifics of your prospective partners. If the 7 that are flying the thing hate each other and nickle and dime each other on every fillup that wasn't all the way into the filler-neck, maybe its not the right group for you. If 3 of the 7 are airline pilots who just hold their share to teach their kids and spouses, 1 is a mechanic and 1 a bored accountant who keeps the books, everyone meets for a BBQ once a year to settle the books, then $5000 would be a good price to get into the club.

If you guys join a golf-course, do you look at how much the land would be worth if it was sold for development tomorrow to determine whether your admission fee is a good value ? Or do you look whether it is a course you want to play on a regular basis and a group of people you think you can run into at the clubhouse ?
Click to expand...

I do see your point. Thx

Airmaster:

If I were looking for a deal like that and I hope I will be next year. I would start by asking all the local CFI's. Often they are in the know about clubs or individuals in your area. You may get some feedback you did not know or a lead on someone that is looking for a partner or renter.
 
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