Leaseback advice?

MarkH

MarkH

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MarkH
I am member of a great club that could benefit from another plane. I have an opportunity to buy a plane to fill that needed gap.

Keeping in mind that:

1) I am purchasing this plane for leaseback purposes
2) I am already a member of the club, and I am comfortable with how the planes are treated
3) I am viewing this as a financial investment and an investment in helping other members of the club.

What do you wish you knew about leasebacks before you entered into the contract?
 
My search did not find a master thread (not saying there isn't one).

I found some threads that were basically "no one will take care of your plane like you will", which is true but it is not the information I am looking for.

And I found a "Leaseback advice thread" thats almost a decade old, but has some good advice.

Edit: The old tread in case someone finds this in a search - https://www.pilotsofamerica.com/community/threads/captain-jason’s-leaseback-advice.15708/
 
My best experience on a leaseback was with a club. They had a Delta A&P who handled the minor maintenance and good relationship with a shop for major and annuals. It was the closest I came to a breakeven leaseback. The guys with Warriors, Archers, and 172's actually turned a profit often. This was around 2000-2004 so things may have changed.

Check your insurance costs though. That was a real eyeopener.
 
That’s the one. Funny, it had been stickied at the top for ages. Yes it may be old, but it was also written during the last frothy airplane market. I doubt things have improved.
 
donjohnston said:
This was around 2000-2004 so things may have changed.

Check your insurance costs though. That was a real eyeopener.
Click to expand...
Agreed. I had a friend around that time who leased out his 210. His premiums tripled going from a personal use policy to a commercial one. That negated a lot.
 
What is your goal for providing the leaseback? Is it to make income? If so, a club is usually non profit. Thus, there isn't the margin like there would be for say a for profit flight school. (What you propose is the same thing a member of our club did, and he's not going to renew the lease back to the club).
 
Insurance goes up…waay up.
100 hr inspection instead of annual.
You have to schedule it just like everyone else unless you write the lease contract in your favor.

Of course usage depnds on the airplane. What are you looking to get?
 
i was in the leaseback game for years. it comes down to rental rate, insurance rates ect and can you have enough margin to pay the maintenance. big, question mark is will you be required to do 100hr inspections on the plane? for most clubs the answer is no, it gets a little more murky if there is instruction being given in the plane, it depends on how the club handles instructors and payment. if you need to do 100hr's then my experience say you cannot make it work, unless you are an A&P. if you do not need 100 hr inspections you may be able to make it work. just to throw figures out, if your leasing 500hrs a year, and an average annual is 5k then your looking at $10 hr for annual reserve, say $20hr for engine reserve, consumables, like tires, brakes, so lets say 40 to 50 bucks and hour for those things. add in insurance hangar or tie down ect it might be doable but tight.
 
It will be beat like a red headed stepchild, worked like a rented mule, ridden hard and put up wet, slam bam thank you ma’am-ed.
 
WDD said:
What is your goal for providing the leaseback? Is it to make income? If so, a club is usually non profit. Thus, there isn't the margin like there would be for say a for profit flight school. (What you propose is the same thing a member of our club did, and he's not going to renew the lease back to the club).
Click to expand...


My goals would be to make a small profit and increase availability across the rest of the club. I fly with the club and my last trip was canceled because the plane I booked had issues and there was not another available.
 
MarkH said:
My goals would be to make a small profit and increase availability across the rest of the club. I fly with the club and my last trip was canceled because the plane I booked had issues and there was not another available.
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Defraying your cost of ownership is generally a more realistic goal than profit.
 
Probably make more money holding a note for the plane and let the club run it.
 
I've looked at the numbers at my very busy club and have been surprised that folks doing the leasebacks at least on the G1000 172s are actually making money not just subsidizing their flying. I think the father you get aways from the most basic training aircraft...172...the numbers are not a good.
 
Dusty4315 said:
I've looked at the numbers at my very busy club and have been surprised that folks doing the leasebacks at least on the G1000 172s are actually making money not just subsidizing their flying. I think the father you get aways from the most basic training aircraft...172...the numbers are not a good.
Click to expand...
This was my experience at the club I had a leaseback with. Except they had Warriors and Archers. I recall one guy was doing so well he ended up with 3 of them.
 
It's all about getting easy to maintain trainers. A club I'm a part of has a C152 that's seemingly in maintenance all the time, but in October it flew 185 hours. It's probably an absolute cash cow.
 
I got a price a year or two ago for more than $7,500 for insurance on a crusty old 182. That’s more than 5x sole owner cost.

Someone (here?) said flight schools and clubs are happy to outsource the ownership risk and cost headache. They get (20%?) of the revenue for having scheduling software.

ymmv
 
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