Tom-D
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Tom-D
You need to contact Amy Bellesheim at Northway Aviation.
I'll be she would be happy to continue your training. Tell Her I sent ya.
high time engine/partnership
- Thread starter newbienw
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You need to contact Amy Bellesheim at Northway Aviation.
I'll be she would be happy to continue your training. Tell Her I sent ya.
A partnership can be smart as long as you are on equal footing, you trust your partners, they don't hog the plane, and they are not trying to run it into the ground. As others said, if partners are assisting with the annual or maintenance, that is a good sign. $3K is a pretty good price, and it sounds like the engine still has some life to it, but make sure you understand the partnership agreement carefully. What happens in the event of catastrophic maintenance? What is the plane insured for? Are YOU covered by liability insurance? Is there a deductible? Is there a maintenance reserve? Should there be a reserve? Is there any kind of common fund? Do the partners pay anything to fly? What's the fueling policy? Wet or dry? How much do the annuals typically cost? Who decides on what maintenance should be deferred versus what maintenance should be carried out? How easy is it to sell your partnership share? Etc. In fact I would suggest hiring an attorney to review the partnership agreement for an hour or so. You really need to make sure you understand what you're buying, which is 1/4th of a plane and all of its problems.
As long as these issues are covered in writing, that the contingencies are addressed, etc. it doesn't matter whether they're "looking for a sucker" or not. If the purchase price fairly reflects the value of the aircraft (including engine/avionics depreciation, etc.) and if your rights are appropriately protected by the partnership agreement, that's really all that matters.
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newbienw
Filing Flight Plan
Let me ask all of you here, would you personally fly an aircraft with the engine slightly above manufacturer's TBO time ?
What would be the sign of an engine about to fail (I strongly suspect that the way I ask the question may not be 100% correct) ?
Thanks!
What would be the sign of an engine about to fail (I strongly suspect that the way I ask the question may not be 100% correct) ?
Thanks!
GrampaMark
Pre-takeoff checklist
Engines don't usually give indications of impending failure (I'm assuming you're referring to catastrophic failure in this case). Engines do, however, give indications that they're nearing the end of their useful lives. Hard starting due to low compression, an increase in oil consumption, especially if noted over a fairly short period of time, a noticeable drop in oil pressure or more than a few microscopic flecks of metal showing up in the filter at an oil change are just a few examples of signs of a tired engine.
I would fly, and have flown, many times, airplanes which had engines that were well past TBO. I once bought, with several partners, a Cherokee 180 that was 900 hours past TBO. We flew the airplane another 200 hours before overhauling the engine. It still ran well, but non pilot passengers were found to be uncomfortable with full power run ups done while leaning the mixture to burn off the oil fouling on the bottom plugs. Something about the backfiring seemed to make those folks uneasy.
Mark
TEFLONSEAN
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Ummmm.....there are no reserves for this partnership.
Anyone see an issue here?
Looks like a great deal upfront....but if anything goes bad from day 1 or less than a year from now...it's a crap shoot.
If your a gambler.....take a shot.
3k will get u a lot of hrs renting.
My .02
Anyone see an issue here?
Looks like a great deal upfront....but if anything goes bad from day 1 or less than a year from now...it's a crap shoot.
If your a gambler.....take a shot.
3k will get u a lot of hrs renting.
My .02
I have and do. As said before, low compressions, oil pressure issues, oil consumption issues, oil in the filter, bad vibrations, decreasing power / TAS, etc.
If there were reserves they would simply be priced in, i.e. 3K + 1/4 of the reserves. Makes no difference. As long as you are getting a price that fairly values 1/4 of the depreciated airplane plus reserves, it's all the same. Assuming the airplane in its state is worth more than $12K, and the reserves are $0, then $3k is a good price.
If it bothers you, you can pretend there is a $20k reserve, by paying the $3k and putting another $5k in a savings account, as if you were paying $8k.
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TEFLONSEAN
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Lol.
Walk. Wait run...
Hmm let me invest 3k as a low time pilot into something that may take a long time to sell and not use that money to build hours if the sheet hits the fan. Or it could be best thing he has ever done.
It's a crap shot. Take it for what it is.
Maybe he has money to burn ....but I'm thinking not....based on what has been discussed.
You're missing the point. As long as the value of total assets divided by 4 is less than or equal to 3k, it's a good deal.
I think investing 3k into a partnership as a low time pilot and using that instead of renting is a great idea. A run down 1970 C172 in the bay area is about $125/hr wet. Even subtracting the price of fuel ($5/gal x 6 gal or $30/hr), that's still about $100/hr. Pretty sure he's going to get at least 30 hours out of it, and the difference is at the end he still owns a fourth of a plane so it's not money down the drain. He has a plane that his CFI is familiar with and comfortable with (since he's a co-owner) and that he can use for instrument training later down the road as well. Plus he's only responsible for a fourth of the repairs and he has co-owners who apparently are involved in maintenance and presumably want to live.
Given that his buy-in only values the plane at $12k, his investment is not going to depreciate at all (even the ****tiest 140 goes for more - I see 140s with engines well past TBO that are not IFR certified listed at close to $30k, included in that are probably planes that don't even have annuals and are not airworthy). I would jump at this deal.
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TEFLONSEAN
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Think your missing the point....but you seem to have an answer for everything here.
Think it has more to do with staying with his CFI....based on the OP.
If all goes well...yes....good investment.
But this is a HIGH RISK investment no doubt. Make no mistake about it.
You're*. Just saying.
I disagree that it's high risk, so long as he understands that the engine is nearing the end of its life and the overhaul costs. The alternative is to buy into partnership with new engine which will be priced accordingly (base price plus price of new engine divided by number of owners). Would you characterize that as a low risk? The risk is identical so long as they are both appropriately priced. As I said, if it makes him feel more comfortable to get a plane with a low engine time, he can look at overhaul costs and simply set aside 1/4 of the cost now, so it's already a sunk cost. It comes to the same.
This appears to be to be quite low risk, relatively, because the buy-in price is valued so far below the asset value.
He's essentially buying into it with $3k and owning a quarter of a $20-30k asset.
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GrampaMark
Pre-takeoff checklist
We're talking relative to other airplanes, not relative to a Certificate of Deposit. Lol
denverpilot
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Easier to think of it as a sunk cost with a
small surprise of happiness if you get any of your money back. Haha.
TEFLONSEAN
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Can't disagree with you there...
But we are talking 20 hr pilot who seems desperate to stay with his CFI.
GrampaMark
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TEFLONSEAN
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Nobody is buying a piper 140 for 20-30k with a engine past TBO.
And if they are....send em to me....please please please!!!!
Haha do you have one? What is the going price on a piper 140 with no engine? I realize the list prices on controller.com aren't the actual sale prices but they're usually in the ballpark.
OP, have you priced the plane out in VRef or Aircraft Bluebook? Still pretty sure it would be more than $12k any way you slice it.
newbienw
Filing Flight Plan
It would be ideal, but I am not desperate.
I understand that the engine will need an overhaul eventually. I am just trying to figure out if there is a reasonable chance not to have catastrophic engine failure during takeoff.
The chance of a catastrophic failure in an engine that is getting regular check ups and oil changes is low, regardless of time on the engine. As some have said, it's arguably higher for newly overhauled engines. This is also the reason you do a run-up, etc. before every flight.
Personally I feel much safer in a partnership owned plane than a rental, because I know the maintenance status and history of the plane and am involved in maintenance decisions, etc. The ones I'm scared of are the rental beaters where you don't see the logs and have no idea how rigorous the maintenance has been. Plus you typically don't know how much time is on an engine since overhaul in a rental anyways. For profit rentals have requirements for 100-hour inspections, but you should be getting those anyways, hopefully with every oil change.
There are some things that are unequivocally bad ideas (like buying an expensive plane you don't intend to fly and then leasing it to an FBO or flight school, or buying an expensive plane as a low time pilot, or frankly buying an expensive plane at all
). Buying into a partnership on a trainer aircraft as a student pilot, so long as the price is right, the due diligence is done, and the partnership agreement is reasonable, is not one of those things.
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An issue? Yes, however that issue has been compensated for in the price, so as long as everyone in the partnership is able to meet their commitment to the overhaul, the issue is adequately addressed.
Buying any plane that is not for business use is no investment at all, it is an expense, it'll never make you money. The gamble is whether the expense will be greater than you can afford.
gitmo234
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This. I tried and tried to get into a local club/partnership, with cash in hand as a student. Student members arent the most desirable I understand, but they didnt answer most emails when I inquired about membership, and when they did it was more or less "You dont have enough hours and probably wont for a long time".
By the time I got an answer I had purchased my own airplane. I was at a field once and recognized the airplane and chatted with a member. They immediately went into a recruitment pitch so I simply replied with "Yeah I tried but you guys said no so I just bought my own airplane. Thanks".
It's worked out much better for me, cost-wise and availability. I would encourage people to do some serious homework and buy an airplane.
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There is definitely something to be said for the advantages of sole ownership. However there is no sole ownership opportunity I am aware of on a plane of this caliber at the given price point. You barely get a flying ultralight with a run out engine for $3k. Budget restrictions are what they are. There are basically 2 choices when your budget doesn't meet minimum requirements, increase the budget or find a different way to fulfill the requirements.
Partnerships can either be a good or a bad deal, every one is different. If you have a set of knowledgeable and capable partners, the partnership itself may be of greater value than the plane deal because of what you learn about the tricks and traps of ownership.
As long as the per hour and monthly costs are reasonable, $3k is not an unreasonable gamble on this plane as long as the due diligence on partners and plane checks out ok.
Jimmy cooper
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You said it! And the older the aircraft, the higher the time on the engine , the higher the risk. Add to that a low time pilot and its a real cluster .....especially if it's to be governed by several owners.
Tom-D
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I'd not be comfortable with that either, this may be a prime opportunity to buy a right to pay 1/4 of a new engine, or be laid up while they buy/install the new engine.
Plus the fact the club doesn't have a engine fund? to m that is a mismanaged organization I'd not want to be involved with.
I don't get it, just because there is no fund, does not mean the partners are not prepared to handle replacing the engine with a FRM next week. It may be an opportunity to buy a 1/4 of an engine, because at $3k buy in, he sure won't be paying for any of it up front.
It's all about due diligence, first on the plane, then the partners. There is no prima facia "bad deal" here, it's pretty square so far.
Sometimes I wonder what the deal has to be to be considered "fair" much less "good" around here.
SkyDog58
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Canis Non Grata
As others have correctly stated, the lack of a reserve fund is less of a concern as the $3K buy-in seems to have accounted for that. If there was a reserve, you'd have to add that to your buy-in price. The outgoing partner would not likely just give that away.
My question is how much are the dues? You mentioned what they cover but not how much they are. That would be good to know in order to calculate a per hour cost based upon this info and fuel burn and how much you plan on flying per month. Then we could also attempt to figure your buy-in into your true hourly cost based upon how much you plan on flying over the next couple of years. As a student pilot and hopefully soon to be private pilot, you will likely be flying the aircraft more than the other owners as long as you have the money to do so. If this ends up being the case, then you could quickly recover a large portion of your buy-in by doing this rather than renting.
Also, I would get some sort of assurance from the other partners, preferably in writing, that they will overhaul the engine based upon some sort of on-condition criteria and not just based upon hours. Otherwise, they may just decide to overhaul it a week after you join which will cost you more money immediately as well as deprive you of use of the airplane in the interim. This will slow down your flight training progress. Sure, the engine could just fail on its own soon but if the oil analysis has been good and compression is good and it has been flying regularly, this is not a huge risk.
newbienw
Filing Flight Plan
the dues are $270 per month that covers regular maint, supplies, insurance, hangar, etc.
A tach hour is $30, dry.
One thing, I was really surprised to see was how clean, almost hospital clean the hangar was: the floor is painted white, insulated white walls
The partners have the original log book for this aircraft, ALL receipts/signatures and VERY forthcoming about anything I asked related to the airplane (if only I knew what to ask). They welcome any pre-buy inspection.
As I said, at this point I am trying to figure out if the danger of the high time engine quitting on me mid flight/takeoff overweighs the rest of the "benefits"
SkyDog58
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You need to review the books and see how that $270 is broken down and where all of that money is actually going. If that $270/month included maintenance related costs, where does the $30/hour go? Seems as if they should have a decent bank account balance. Also you need to ask whether and how they plan on dealing with ADS-B in a few years.
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jsstevens
[snip]
Sometimes I wonder what the deal has to be to be considered "fair" much less "good" around here.
When they're paying you to take it off their hands. (And it's not a run out twin...)
If the OP is capable of dropping 1/4 of an engine's price into the hopper in the next year, and this is the plane he wants to fly, it's a decent deal. If he's not prepared to drop 1/4 the price of an engine, then it's probably a bad risk. It might run hundreds more hours just fine. It might die tomorrow. Which is true anyway. Just the probabilities change. And as fracbot & Henning have both pointed out, it's priced like the engine is runout. Any extra hours are gravy.
John
The answer is looking more and more like "No, this appears to be a good deal." Given the care and condition of everything else, the reality is that you have better than even odds of the engine making another 1000 hrs. Finish your due diligence, but if you want into aircraft ownership, this is sounding like a deal you are hoping to find, at least I would be. Inspect the plane to make sure it s worth buying into, and make sure that you are copacetic with the group maintenance philosophy, and that they have sufficient resources to deal with a funding commitment. Rarely does it cost more than $12,000 to put an O-320 to rights, (you can spend more, but if Pt-91, you don't need to.) that's $3k each; that's not too hard for most people.
Bonchie
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To me, if I'm buying a complete share of a plane, then what am I paying $30 an hour/dry for? Especially if they say there's no overhaul fund. Where's the $30 an hour going then? The $270 a month dues are supposed to be covering regular maintenance according to the OP and all other major expenses come out of pocket. $1080 in dues is plenty to hanger a 140 and keep it maintained. Heck, there's probably enough extra money in the dues alone to set aside $200-300 a month toward an overhaul fund. That $30 an hour dry fee doesn't make sense to me.
Do the math here. Let's assume a very liberal 10 hours a month flown (once he has his ticket he'll never do that probably, but let's assume 10 hours).
That's $27 per hour from the dues. $30 an hour dry. A 140 drinks about $40 an hour in fuel. That's $97 an hour at 10 hours a month. Now let's say it's a slow month and he only puts 5 hours on the plane. Then it's $124 an hour.
I fly a late 70's 430 equipped 140 for $105 an hour renting.
Of course that doesn't even factor in the thousands in buy-in costs or overhauling the engine this guy will have to pay.
The math doesn't make sense to me. If they didn't charge the $30 per hour dry fee, it would. But not with that. You can rent for the same or cheaper and have none of the risk or out of pocket expense.
I'd bet dollars to donuts that you'd be the only partner actually paying that $30 an hour or $270 a month. Sounds like a group of friends trying to sucker you into supporting them.
At first I thought this sounded like a good deal, but the high monthly dues and $30 an hour dry rate would be deal breakers to me.
Do the math here. Let's assume a very liberal 10 hours a month flown (once he has his ticket he'll never do that probably, but let's assume 10 hours).
That's $27 per hour from the dues. $30 an hour dry. A 140 drinks about $40 an hour in fuel. That's $97 an hour at 10 hours a month. Now let's say it's a slow month and he only puts 5 hours on the plane. Then it's $124 an hour.
I fly a late 70's 430 equipped 140 for $105 an hour renting.
Of course that doesn't even factor in the thousands in buy-in costs or overhauling the engine this guy will have to pay.
The math doesn't make sense to me. If they didn't charge the $30 per hour dry fee, it would. But not with that. You can rent for the same or cheaper and have none of the risk or out of pocket expense.
I'd bet dollars to donuts that you'd be the only partner actually paying that $30 an hour or $270 a month. Sounds like a group of friends trying to sucker you into supporting them.
At first I thought this sounded like a good deal, but the high monthly dues and $30 an hour dry rate would be deal breakers to me.
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So, figure $60 wet and $270 month at 10hs a month is $87, to get to your $105 rental he would have to fly 6 hours a month.
$1080 is 30-50% used up on the hangar, let's say there's $750 left over, figure $100 of that is insurance, so that's $650 month, or $7800 a year, left over for maintenance. So yeah, for a Cherokee 140 that is a healthy figure for 200hrs a year not counting reserves and set asides.
What we don't know is what the service intent of the $30hr is. Is it to build an overhaul fund? Since the buy in price has no such representation, then the $30hr charge evenly applied is fair.
Bonchie
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To me, $7800 a year after hanger/insurance costs is plenty to keep a 140 maintained and even enough to set aside reserves for an overhaul over a 3-4 year period. The exception is if something really expensive breaks, but according to him there is no overhaul fund for major repairs and he'd have to pay them out of pocket. That's what seems fishy to me.
You are also being very optimistic about fuel costs. In my experience, unless he's paying $3 a gallon for fuel, $40 an hour in fuel/oil costs is more realistic. I burn about 8-8.5 an hour at 75% power.
You are also ignoring that initial buy-in and possible overhaul costs. Sure he'll get some of that back if he sells, but not nearly all of it. That has to be taken into account. How important is it for him to have it sitting in the bank vs. tied up in an airplane? Is he ok with a depreciation rate that may cost him another $10-20 an hour in operating costs if it's flown a lot? Also, while flight schools love Cherokee 140s, it might be pretty hard to sell a share in one to an individual down the road if it isn't well equipped.
And if he flies less then 5 hours a month, he'll easily be paying more then renting would cost.
He needs to know all this and make a decision on what's most important to him and whether the math makes sense. What's the availability? Is the CFI going to be using it all the time? Is he the kind of person who even needs a plane to use at his whim? Just depends.
Maybe they are starting one? If so, I'd want to see every dime not used of that $270 a month refunded back to the partners. If the $30 an hour is for a reserve fund then it should serve as that. To me, that's a bit much for a 140 with four partners. That's $6000 per every 200 hours flown. They planning on overhauling every 400 hours or something?
That $30/dry feels more like a rental rate going into that CFI's pocket to me.
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Tom-D
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Where does it say they are? Would you buy 1/4 of a new engine to finish your training? plus 3K?
Doesn't sound like a good deal to me.
For that kind of money he can buy a sweet C-150 at Renton and not have to contend with partners.
http://seattle.craigslist.org/est/for/5119459690.html
Not really. This engine is also due for overhaul with 1996 SMOH. It got a top not too long ago but we have no idea what condition the bottom is in. I think the TBO recommendation on the O-200 which powers that aircraft is 1800 or 12 years, and it's well past 1800.
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Tom-D
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do you know the cost difference between overhauling the o-200 vs the 0-320?
at least he would be overhauling his engine. not one worn out by others, which he wouldn't own.
It's called "Due Diligence" which is not yet complete. All we have so far is snippets of data that could be positive or negative depending on unprovided detail.
How does a $15,000 dollar buy in and 100% expenses prove a comparable deal to a $3000 buy in on a partnership when a person has <$10k at hand to get into aviation? If you can afford sole ownership, fine, but what you are showing is not comparable.