CFI-Owned Instructing

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Nick P

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Nick001
I currently own a Cessna 150. I'm about to have my CFI cert and looking to instruct in my plane on the side. Debating Single member llcs (SMLLC) vs sole proprietorship. I have a good paying job, but most of my money as gone to flight training. I have next to no assets to my name (Recently graduated. The plane is pretty much all I have). I think a sole proprietorship would be fine for now as it seems SMLLCs don't offer the liability protection most people think. It would cost around $600 to set up the LLC in NY so I'd like to not waste money if not needed. I had an instructor tell me the LLC is to protect you if your student crashes during a solo?

I received a quote from Avemco for CFI-Owned insurance for $2200/yr. I can have 4 students at any one time and 9 total in a year. It covers students soloing. Premium does go up 10% for each new pilot after 3 have been named on the policy. I got other quotes, but they don't cover student solos. Any freelance instructors believe there is something I am missing? Advice?
 
That's how I understand it as well. I could see the benefit of an LLC where there are several members instructing in the plane, but not for a single member.
 
Nick P said:
I currently own a Cessna 150. ...... I have next to no assets to my name (Recently graduated. The plane is pretty much all I have).
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I have a mental picture of you living in the hanger like Burt Munro lived in his garage next to his Indian. :)
Nick P said:
looking to instruct in my plane on the side
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Side of what?

IF you want to fly for a carrier and get to 1500 hours, you might want to also CFI for a local flight school with their planes, assuming they let you "moon light" with your own plane. Which they may not, as you'd be stealing their students. Is this what you are thinking about as "on the side"?

You might even want to think about selling the 150 and just fly as many hours as possible with a school. The difference in pay of your own plane vs a school might not be that much vs getting to the 1500 as fast as possible and getting a regional 1st officer pay check. Heck, lease the plane to the school and make some $, and let them maintain it.

Your plane is NOT going to be up and running 100% of the time. What if it goes down for 2 or 3 weeks for a broken what not? Down for 2 weeks for annual? 100 hour inspection? Doesn't sound like you have a ton of cash sitting in reserves if you need to spend $3000 for something.
 
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Get insurance and don't waste your money in an LLC....you have nothing to protect from that LLC.

You will find that commercial insurance is probably going to be cost prohibitive. I had a 150 while in college and my room mate instructed in it. We used another aircraft for the students to solo. I basically went blind with "regular" insurance with my room mate being named. Nothing happened and all was well....
 
"on the side" meaning evenings and weekends outside of my full time non-flying job. I was planning on testing this over a few months to see how many hours I am getting before deciding if selling the plane and working for a flight school is a better move. It all depends on if I can get enough hours while working full time.
 
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Nick P said:
"on the side" meaning evenings and weekends outside of my full time non-flying job. I was planning on testing this over a few months to see how many hours I am getting before deciding if selling the plane and working for a flight school is a better move. It all depends on if I can get enough hours while working full time.
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Got it. If going full time at flight school, you're 2-3 years to get to 1500? Others can chime in with a better guess. Then you're $90k for 1st officer at regional?

OR keep your current full-time job paying $xx, and no evenings / weekends for 6 years (?) while getting to the 1500?

I guess it depends on if you're testing the waters to see if you want to do Delta for a career or not. M2C is that if that is what you want, and you've got your 1st class medical in hand already, just bite the bullet and teach full time at a school. Think of yourself in the next 2-3 years as a semi starving graduate school assistant and get it done.
 
Nick P said:
I think a sole proprietorship would be fine for now as it seems SMLLCs don't offer the liability protection most people think.
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Depends on the person and situation. Given LLCs are governed at the state level in some situations an LLC also provides certain tax benefits and financial protections (as well as liability) that a sole proprietor doesn't. I have two LLC entities, one for aviation and one for non-aviation ventures. Any separation you can have between your personal life and your side business life is better. However, the best way to make this call is to discuss these questions with an accountant and attorney to get a personalized input on your risks. An hour or two with each will get the answers you seek and all is a legit business expense to include the LLC costs. Good luck.
 
Nick P said:
I received a quote from Avemco for CFI-Owned insurance for $2200/yr. I can have 4 students at any one time and 9 total in a year. It covers students soloing. Premium does go up 10% for each new pilot after 3 have been named on the policy. I got other quotes, but they don't cover student solos. Any freelance instructors believe there is something I am missing? Advice?
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For my plane, the cost of the Avemco insurance is not favorable to straight up regular commercial insurance with no limitations on how many students. A lot of this is going to come down to whether or not you have enough volume to make it worthwhile, and if the cost of 100 hours is going to eat you.
 
An additional thing to consider: After your students get their tickets, will you rent your airplane to them? Most will likely want to keep flying your airplane for proficiency, and because they're familiar with it.

In a similar circumstance, I found that renting to rated pilots chewed up the number of Avemco named pilots really quickly.

YMMV
 
The limitation on student quantity seems too restrictive.

You will need a quality mechanic that has availability to keep you in the air.
 
Lease the 150 to the flight school? That way you can have something to use once you've banked all of the hours you are looking for.
On the bright side, flight schools are scouring the country trying to find trainers and willing to pay a little more than they had originally budgeted for when they started their search.
 
Nick P said:
"on the side" meaning evenings and weekends outside of my full time non-flying job. I was planning on testing this over a few months to see how many hours I am getting before deciding if selling the plane and working for a flight school is a better move. It all depends on if I can get enough hours while working full time.
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In my younger years, I was able to work 50+ hours a week as a software engineer, and log a solid 700 hours or so a year of instruction. It was doable, as long as I literally made every detail of my life about that. If you're like me, you'll find after awhile that you get sick of your entire life being about that. Anyhow - keep the need for balance in mind - I did not!
 
I wouldn't take legal advice from a pilot (who wasn't a lawyer), and I wouldn't take flying advice from a lawyer (who wasn't a pilot). You're in need of legal advice, so I'd suggest obtaining it from a lawyer licensed in NY. AOPA may be able to recommend one experienced with these issues.
 
I owned, instructed in, and rented out a C150 for four years. I was nervous every day that someone would wreck my airplane and I would be sued into oblivion for someone else's negligence. But if you don't have any assets I guess you won't have the same level of anxiety that I did.

Anyway, I found AVEMCO's policy too limiting. It was worth it for me to pay a bit more and get a wider policy which allowed anyone to rent the airplane that was approved by me. The policy was through AOPA's insurance agency, which I believe they spun off into an independent agency.
 
A company or entity holding your aircraft is a smart move in my opinion. Which type of entity is up to you. There are tax benefits for purchasing an aircraft. In theory if you are at fault then you’re at fault, insurance would cover you. If you have personal assets those could be attacked but that is where insurance comes in. If you personally own the aircraft then I imagine if an incident happened that some lawyer would try to find something you didn’t do correctly (SB’s, mx, records, etc). Having an entity should place blame on the entity vs yourself, doesn’t mean a lawyer won’t go after everything to see what sticks.
 
Are schools using 150/2s?

Around here it is 172s or Cherokees. I rarely see a 150/2 even just flying for fun.
 
Nick P said:
I currently own a Cessna 150. I'm about to have my CFI cert and looking to instruct in my plane on the side. Debating Single member llcs (SMLLC) vs sole proprietorship. I have a good paying job, but most of my money as gone to flight training. I have next to no assets to my name (Recently graduated. The plane is pretty much all I have). I think a sole proprietorship would be fine for now as it seems SMLLCs don't offer the liability protection most people think. It would cost around $600 to set up the LLC in NY so I'd like to not waste money if not needed. I had an instructor tell me the LLC is to protect you if your student crashes during a solo?

I received a quote from Avemco for CFI-Owned insurance for $2200/yr. I can have 4 students at any one time and 9 total in a year. It covers students soloing. Premium does go up 10% for each new pilot after 3 have been named on the policy. I got other quotes, but they don't cover student solos. Any freelance instructors believe there is something I am missing? Advice?
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I don’t believe NY is a location I would be doing this. Too many crappy days and this crazy thing called winter in a Canadian border state.
 
TonyG said:
An additional thing to consider: After your students get their tickets, will you rent your airplane to them? Most will likely want to keep flying your airplane for proficiency, and because they're familiar with it.

In a similar circumstance, I found that renting to rated pilots chewed up the number of Avemco named pilots really quickly.

YMMV
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Not really interested in renting the plane out to students. I just want to instruct, solo students, and safety pilot with people to get my hours efficiently.
 
jesse said:
In my younger years, I was able to work 50+ hours a week as a software engineer, and log a solid 700 hours or so a year of instruction. It was doable, as long as I literally made every detail of my life about that. If you're like me, you'll find after awhile that you get sick of your entire life being about that. Anyhow - keep the need for balance in mind - I did not!
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Engineer as well. I figured I could either fly the plane 50/hrs a month, get a safetly pilot and fly 100/hrs a month, or a mix of both with a few students to instruct. I think I can come out ahead financially (and keep my benefits) while still getting 50-70 hours a month flying on the weekends and evenings. No free time, but I can work like that for a year or so
 
Dry Creek said:
Lease the 150 to the flight school? That way you can have something to use once you've banked all of the hours you are looking for.
On the bright side, flight schools are scouring the country trying to find trainers and willing to pay a little more than they had originally budgeted for when they started their search.
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Most of the schools around me own their planes outright. I suppose I could call around and see
 
Nick P said:
Most of the schools around me own their planes outright. I suppose I could call around and see
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Wow. The only schools I've run across that own their own planes are the pilot mills. All the smaller schools use leasebacks.
 
Pinecone said:
Are schools using 150/2s?

Around here it is 172s or Cherokees. I rarely see a 150/2 even just flying for fun.
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Where I work, we have two 172s (and a third one in summer when it gets busy), a 152 and a 150. I kinda like the 150 best.

I guess we could say we are a smaller school - five CFIs and maybe 30-40 students at any one time. But I have been there more than 12 years, and we have never had a lease-back from a private owner. We lease one 172 from a nearby flight school that is far less active, and we own the others.
 
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Nick P said:
Not really interested in renting the plane out to students. I just want to instruct, solo students, and safety pilot with people to get my hours efficiently.
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This will create a problem for you. Once you solo your students, they will want to rent the plane. And after they get their certificate, they will want to rent the plane. If you refuse, you send them somewhere else. Maybe OK if you have enough of them.
 
That's a steep price to pay to teach on a c152. They have one available where I rent and the weight limitation is the biggest issue.
 
CFIJose said:
That's a steep price to pay to teach on a c152. They have one available where I rent and the weight limitation is the biggest issue.
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Weight limit is always an issue with 152. I way 205 - 210. With full fuel I have to have a student less than 145 lbs.
 
TommyG said:
Weight limit is always an issue with 152. I way 205 - 210. With full fuel I have to have a student less than 145 lbs.
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Ouch. So two 190 lb guys and gas won’t work? I think that just took a 152 off the list for out club…….
 
WDD said:
Ouch. So two 190 lb guys and gas won’t work? I think that just took a 152 off the list for out club…….
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You just need to be careful when buying. Try to get above 500# useful if you can. When I last shopped 150s, there were a pile of 450# or less useful (one 380! :eek:) and every pound matters in this airframe.

The alternatives (Traumahawk, Skipper) weren't much better. They all seem to want to be in the 450/480#ish useful range.

22.5 gallons fuel IIRC, so 130# gone from the start. I'd not wanna run a 150 in a training-oriented club, but probably just fine in a renter-oriented one.
 
I have a useful load of 508. Most 150's tend to be right around 500 lbs useful load. My plane can handle full fuel and two passengers weighing 186.5lbs. I think thats fine for 80% of the possible students.
 
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