Partnership info you'd be willing to share

eman1200

eman1200

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Bro do you even lift
A partnership situation has recently become significantly more realistic for myself plus 1-2 people. I know people here have offered their partnership agreements, rules, cost breakdowns etc but since I wasn't close to purchasing I never asked to see it. For those of you who have any of this information and would be willing to share it, it would be a big help. I'd like to tailor our rules/agreements based on whatever research I can find, plus AOPA resources etc... Feel free to PM me or share here.

Thanks in advance, and I apologize if you are seeing this post in other forums as well, I'm just trying to gather as much info as possible.
 
Our 'corporation' has been in place since 1990..... so all of our paperwork is on paper. All I can offer you are some requirements of some members and things. This is my first airplane ownership experience, and I've only been in it about a year and a half. Take it for what it's worth.
After every flight we wipe the bugs off the leading edges, cowling, and window (mixture of, what I think is, 409 cleaner and water. Heave on the water)
We keep the tanks filled to the top. Discuss with your potential partners if you want to keep them clear full or at the tabs (I'm using piper references since that's what we've got). Keeping it clear full is easier to get an accurate filling each time. However there have been a few times where I've wanted to take more people than what the useful load would allow with full fuel. So I had to go burn the fuel off to get it at the tabs. Since I'm building hours it wasn't too much of inconvenience (except when one of the partners ignored my multiple emails and refilled the plane TWICE.... but I digress) but still limits the spur of the moment trips with 3 other people.
Online scheduling is aweome. We use goboko.com it's basic, but it's free and it works.
Make sure you set back an hourly reserve. We just have one for the engine. Prop, mx, and avionics work all gets billed as needed. I wish we would've had an account for the prop, but it's not too big of an expense in the grand scheme of things. Ditto with avionics (especially with ADS-B coming up in a few years, our AI just getting replaced, and my general dislike for the old/scratchy/original secondary radio).
Honestly the hourly rate (in my mind) just depends on how much you trust yourself and other members to be able to handle bigger bills when they come (like an annual costing 10,000 instead of the usual 2,000). If you are POSITIVE they will have no issue forking out the cash, and don't think you'll all be owning the plane when it comes time to OH then don't worry about an hourly reserve. If you don't trust them to fork over the cash then set an hourly rate or EVERYTHING (engine, prop, hangar, mx, annual, etc.)
It helps to divide duties. Have one guy be in charge of scheduling mx, another in charge of bills. Now that I think about it this might be required for setting up a corporation anways.
Oh, and put the plane in an LLC or some form of corporation. Helps make it easier to allow partners in/out I think.
Post your procedures (preheating instructions, tire pressures, etc.) in the hangar. Keeps everyone on the same page and makes it clear to everyone what is expected of partners.
Have a white board with all the mx times (I can send you a pic of ours if you want). Ours has annual, pito/static test, transponder, elt, oil change, AD'S (if on an hourly basis). I also use it to track VOR receiver checks.
Assuming you charge an hourly reserve, have a sheet in the hangar to fill out before you depart. Name, Day of departure, day of return, destination, ending tach time, and total tach time for the flight are what we have on ours.
(Thankfully we don't have this problem but it's something I've thought about) don't let the hangar become a storage shed. Keep it simple. A desk, lockers (not locked, but each partner has one for their stuff), workbench, and various tools, spare parts, and extra oil are all that's in ours.
Paint lines of the area outside your hangar to help line up the plane when putting it away (won't eliminate hangar rash but should help). Also, have something that stays stationary on the back tires so you don't push the plane too far back.

I'm sure you've probably thought of some of these things but they're just random thoughts running through my head at 1 am. If you have any more questions let me know!
 
All good thoughts, farmer, thanks!
 
Just had a seminar from AOPA,on partnerships. They have several representatives who can give you guidance and even give a presentation to groups. The big push for partnerships is being sponsored by AOPA.
 
frfly172 said:
Just had a seminar from AOPA,on partnerships. They have several representatives who can give you guidance and even give a presentation to groups. The big push for partnerships is being sponsored by AOPA.
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Interesting info. Also, couldn't agree more as far as getting more people into ownership.....push partnerships to bring costs down. Thanks!
 
I have scanned documents of my partnership agreement I entered into. I wouldn't mind sharing it with you if you wanted to look at it. It has our personal names and addresses on it so I don't want to put it for public consumption but send me a PM and I'll forward it to you.
 
Thanks neilw2.... but to be clear to everyone , I'm not asking for anything you're not willing to share. Appreciate all the responses I've gotten so far, every little bit will help.
 
My thoughts on this....if you can't do this with a hand shake....paper won't make the deal any better.

Paper is there for others to understand your arrangements....in case that partner passess.
 
Checkout_my_Six said:
My thoughts on this....if you can't do this with a hand shake....paper won't make the deal any better.

Paper is there for others to understand your arrangements....in case that partner passess.
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Agree to disagree. I'm glad that has worked for u though.
 
eman1200 said:
Agree to disagree. I'm glad that has worked for u though.
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Most people would disagree with that as well.

I've been a partnership on this 172 for just over 3 years. It started out as a project plane and then after that we added 2 more people to it. So it's not a partnership of 4 and everything is written out in an agreement. Covers pretty much the full range of everything that can go wrong. For operation costs everyone put their own gas in it and we split any MX items 4 ways. Didn't want to over complicate it with hold backs, hobbs vs tach, overnight minimums and the like.

In the agreement is a $10 per hour engine overhaul fee you pay when you sell out. Otherwise we'll prorate that when we overhaul the engine but with 1700 hours left doubt we'll all be partners still by then. It's worked out great so far.
 
I've recently looked at a 1/5 partnership where the hourly rate is $10/hour, which only goes toward engine overhaul. I like that for two reasons. One, the person who flies the most pays the most for the overhaul. Two, if you sell your share before the overhaul comes due, you can tell the buyer that they're also buying 1/5 (however many partners you have) of the money in the bank, so they shouldn't be concerned with a higher time engine.

Most of the other issues aren't caused by how many hours are flown, so they just split the cost of any repairs.
 
A few months ago I was thinking about partnering with another individual in a V35 Bo. After checking all of my bases I ended up coming to the determination that it was best to not partner up with someone that I have no background with. This individual was another local pilot who was purchasing this V35B and needed a co-owner. My advice to you eman, would be to heavily evaluate the potential partner and his/her flight experience and financial status.
 
Setup a LLC with the plane as the asset. Elect officers, partners get shares, stock certificates, file a tax return, create bylaws, etc... I'm happy to share ours with you if you want. I'm in a 4 way partnership that was formed 17 years ago (I've been in it for 4 of those) and it's been working well. There are a lot of benefits going the LLC route when forming a partnership. Your CPA (or internet research) will give you all the details there.

The big thing is finding Partners that all 'fit'. Meaning they fit from a personality perspective (this is kind of a marriage of sorts) and that the way they want to use the plane is in alignment with the rest of the group. If someone joins and wants to fly to go see tiehr kids every weekend and take 3 weeklong trips a year over the major holidays...probably not a good fit for most partnerships.

We split monthly overhead costs (insurance, hangar, oil, etc...) and pay that every month and then add engine hour costs (we do $20/hour to cover TBO) on top of that. We pay annual out of pocket - don't keep a fund for that and any avionics or other maintenance comes out of pocket and split equal ways.

We do scheduling off of a google calendar that everyone has access to and can download a calendar app or something on their phone/device so they can see whats going on. It's pretty simple.

Again, the big thing is to find like minded pilots with similar missions. If everyone wants to take trips and bee bop around on the weekends and you bring in a guy who wants to spend the next 2 years getting his IFR, commercial and CFI in your plane as well as taking trips then that could be an issue.

For us, we prioritize using the plane for 'fun' vs training. So, if someone wants to book for a long weekend to take their family somewhere that takes precedence over someone wanting to training.

Again, with the right group of people that won't be a problem - even just a text message or quick phone call sorts out 99% of the issues. In 4 years there's been a couple times where there's been a conflict for me but it was easy to work out and all in all those few times are well worth the discount i get owning a plane as a part of a partnership vs having to pay it all by myself. This is one of those years as an example where we just had a $10k annual after having 2 cylinders replaced, a couple AD's and a laundry list of other stuff including rebuilding mags, etc...

Good luck!
 
I agree with Ken on "fit". I'd also add to make sure there is a fit financially. You don't want a partner who is barely making the initial buy in and has a different opinion on upgrades and maintenance because it is more of a stretch for him financially.
 
good point Sam. We actually just had to invoke a clause in our bylaws to force a buy-out of one of our members for exactly that reason.
 
How do you do scheduling? Especially around the holidays? Say a partner wants to go on a 3 week vacation?
 
Checkout_my_Six said:
My thoughts on this....if you can't do this with a hand shake....paper won't make the deal any better.

Paper is there for others to understand your arrangements....in case that partner passess.
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Spoken like a man that has never been screwed by a partner.

If it isn't written down, it never happened.
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That includes agreements.
 
JOhnH said:
Spoken like a man that has never been screwed by a partner.
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ya.....guess I'm not into that. :D

I did however have arrangements with friends who used my plane.....with nothing signed and no one got screwed.

Again....if it can't work with a handshake....paper won't make it any better. You'll still be getting screwed.
 
Checkout_my_Six said:
ya.....guess I'm not into that. :D

I did however have arrangements with friends who used my plane.....with nothing signed and no one got screwed.

Again....if it can't work with a handshake....paper won't make it any better. You'll still be getting screwed.
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Taken as a whole, I disagree.
A handshake may be sufficient for how the partnership operates, especially if there are only a few partners. But the most important part of a partnership contract has to do with how to dissolve it when the time comes. Also, how to handle major upgrade or repair issues, that can cost into the scores of thousands of dollars. If your partner's financial position changes, you may be left holding the bag.
 
teejayevans said:
How do you do scheduling? Especially around the holidays? Say a partner wants to go on a 3 week vacation?
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A club I was in as a kid had a lottery. Once a year, they would draw holiday names from a hat. If you got Christmas and wanted Thanksgiving, if you could work it out with that guy, it was good. I never heard of it becoming an issue. A lot of guys didn't want any of the holidays, so they just didn't draw.

Another thing I haven't seen mentioned was setting up limits on selling your share. In this club, there were 8 members. If you wanted to sell your share, you brought the potential buyer to a meeting. The other 7 guys had the right to refuse to let him buy your share. If that happened, the other 7 members had a limited amount of time to buy your share from you. They could then sell your share, or just keep it at 7 members. As the club members go older, they bought out a few of the shares and it became a 4 person club.
 
pm me an email eman. I have our operating agreement and stuff i can send.

teejayevans said:
How do you do scheduling? Especially around the holidays? Say a partner wants to go on a 3 week vacation?
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With our plane, 4 owners, we each had 1 week a month. If you needed to use the plane during a different time, you called/emailed the guy and asked. People swapped or traded weeks all the time. Use a Google Calendar to keep track of weeks.
 
You see lots of options here.

As others have mentioned, having people that feel the same way about the plane operations, from cost to maintenance to reservations or anything else is key. Basically it's find good partners and come up with rules that all of you can agree upon. That doesn't mean you all think all the rules are great, but rather a compromise that you agree to. Writing them down helps if someone "forgets" or when getting new partners. A written document is a huge help for dissolving the partnership or dealing with issues. As I've heard someone else say before, you should have a group that you plan to never have to pull the agreement out again after signing it.

I'm in my second non-equity partnership. Both have/had online calendars. Neither had rules on reservations. We all knew there were 3 or 4 of us that were partners and all wanted to fly; i.e. don't hog up the time without talking with the others first. It worked out great on the first one that lasted over 4 years, and then the owner moved. So far so good in the second one, wrapping up my first year in it.

Other groups want/have more rules on the reservations. It's what works best for your group. What works well for other groups may not work well for your group.

Some groups have low, medium or high dry rates on the plane. I've heard of a few that had wet rates, which I thought odd for a partnership, but apparently they didn't. Some have the low hour guy(s) pay the delta for insurance, some don't.

On the finances I've heard that the only thing worse than a partner that can't fund upgrades well is a partner that can and wants to upgrade more than you do. :eek:
 
wayne said:
.....As I've heard someone else say before, you should have a group that you plan to never have to pull the agreement out again after signing it.
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yep, that's the goal.

wayne said:
I'm in my second non-equity partnership.
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could u explain this at a high level? is it basically a partner who pays the monthly fee and hourly rate but can get in and out of the partnership easily and doesn't have any ownership interest in the plane?
 
eman1200 said:
could u explain this at a high level? is it basically a partner who pays the monthly fee and hourly rate but can get in and out of the partnership easily and doesn't have any ownership interest in the plane?
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Exactly, at least for both I've been in. I guess you could have an agreement for a year, or X days notice to exit or something like that.

I'm in those as I have the cash flow to fly, but not the capital to buy equity. When we downsize our house (in about 2 years), then I'll have the capital to be able to buy a plane or a share. I'd prefer a partnership. It will help me fly more plane for the money.
 
wayne said:
I'm in those as I have the cash flow to fly, but not the capital to buy equity.
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I feel I'm in this very spot myself at the moment. I'd love to seek out a potential partnership of this manner, but it sure seems hard to find folks wanting to do it - or I just don't know how to begin looking.
 
DrewG said:
I feel I'm in this very spot myself at the moment. I'd love to seek out a potential partnership of this manner, but it sure seems hard to find folks wanting to do it - or I just don't know how to begin looking.
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One of the benefits of being in a big city with multiple airports. There are more options here. The first partnership was a bit far from my house, but a really good deal on a very nice SR22. The current partnership is quite a bit more money, but it's a Baron 58 and much closer to home. In smaller cities or more rural areas it's just going to be tougher as there are generally fewer options.

Go to the airports that you would want to fly out of. There are often bulletin boards with posting of planes for sale and sometimes people looking for partnerships. You could also put up a flyer looking for one as well.
 
DrewG said:
I feel I'm in this very spot myself at the moment. I'd love to seek out a potential partnership of this manner, but it sure seems hard to find folks wanting to do it - or I just don't know how to begin looking.
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I feel your pain, @DrewG . I'm not even in one yet but I've been looking for almost 2 years now. This situation was totally and completely at random. Basically, here's how it happened:

potential partner #1: I was hanging out at my home field watching planes one day. a dude stopped by, we started talking, he rents there, mentioned he might be interested. we spoke once or twice, didn't seem like we were getting anywhere, then one day he said something like "fk it, let's do this, I'm in!"

potential partner #2: so I've been talking back and forth with a guy who might be selling his mooney. he says he used to fly out of the local Class D field and gave me a name/number as a reference. my first thought was "I aint calling your bestest buddy to ask for a reference, wtf". a coupl'a months went by and I went back to the txt this guy sent me to look at a pic of the plane, and I saw the referral name listed there. it sounded eerily familiar. I pondered for a minute, then realized it is one of the newer local instructors around here. well fk me, lemme call him and see what he's gotta say. so I did, and he was like "man, I've been thinking about a partnership for a while now, let's do it!".

so, totally random, even though I've been asking people around here for a long time, had flyers up at a coupl'a places........no action. until all of a sudden, there was lots of action. and again, it's not a done deal yet, we have a lot of work to do (hence the topic of the thread) but it seems like there's finally interest and progress.

but whatever you do, don't tell @TRocket about the awesome situation he's gonna miss out on. cause once it's done, it's done. anyways, he doesn't fly, he just trains and trains. a perma-student, if u will. :D
 
wayne said:
Go to the airports that you would want to fly out of. There are often bulletin boards with posting of planes for sale and sometimes people looking for partnerships. You could also put up a flyer looking for one as well.
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My new home airport is a Class D with a couple of scheduled airline flights daily and an active university club, but it's kind of hard to gauge the aviation community otherwise. There isn't an EAA chapter, no flying clubs based on the airport (at least, not that I could find through an internet search). I haven't checked FBO lounge, since the flight school I rent from has it's own hangar. I may post a flyer and see if there are any bites.
 
all's it takes is a divorce or a job change with those guys.....and now you're a plane owner paying the bills.....or out a plane. :lol:
 
Checkout_my_Six said:
all's it takes is a divorce or a job change with those guys.....and now you're a plane owner paying the bills.....or out a plane. :lol:
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not sure why 'those guys' are any different than any other potential partner on the planet. it's the risk you take and hopefully you've done "that thing that you don't think is necessary to do, just a handshake should be good" to cover those situations. finally, the plane we're talking about getting is a plane I could 'almost' do solo, so it's not like we're diving into something that if anything went wrong I'd be in deep sht.
 
I found my first partnership via the previous rendition of AOPA's partnership system. I found my second one on BeechTalk. I called on a few that were posted at the airport and on AOPA's new partnership system, but those didn't pan out. Someone at Angel Flight was trying to get another pilot to partner with me, but he didn't really want to do that. We talked a bit and flew together a couple of times, but he wasn't really interested.

It can certainly be a bit of work.

I like it as I've found better airplanes this way. They are typically in better condition and available more often than rentals. Both partnerships had nothing about minimum hours a day. Both partnerships were with people that travel via general aviation, not just go bore holes in the sky for a couple of hours for fun. We might do that some too, but the primary use was to travel.

I went to pick up my daughter and roommate a week and a half ago at the end of their semester. The Baron I'm flying was getting out of annual that day, but didn't know when (or if when I was planning), so I booked a SR22 from a local club. Plus wasn't sure it was a great idea to take off to another state right as it gets out of annual. Get there, it was a cold day (for Atlanta), and the plane wouldn't start. Maint guy came out, I'm sure thinking "stupid pilot", and he couldn't get it started either, even with the powercart. They had another SR22 and it was available, so I got that one and it started fine. On the way to the kids ALT1 in the second SR22 died, fortunately close to them, so I landed there, got a rental car and drove them home. :( ALT1 is required for even day VFR on a SR22.

My fun day of renting planes. :mad:

Most places don't even have SR22s around here. Another place that does charges more for them than it costs me to fly the Baron, quite a bit more. :eek:

Lots of 172s around to rent. Some of them are nice planes. Just not as fast as I'd like to travel, plus most don't have enough useful load. At least one of the big club/rental places won't allow rentals for Angel Flight. I do quite a bit of those.
 
Checkout_my_Six said:
all's it takes is a divorce or a job change with those guys.....and now you're a plane owner paying the bills.....or out a plane. :lol:
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Or the owner moves to Texas. Which is what happened to my first non-equity partnership. :oops:
 
eman1200 said:
but whatever you do, don't tell @TRocket about the awesome situation he's gonna miss out on. cause once it's done, it's done. anyways, he doesn't fly, he just trains and trains. a perma-student, if u will. :D
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Whoa whoa now, don't hate because I got my IR this year! ha ha If I didn't spend 36 weekends a year on the road I'd be able to fly all the time like you. Hit me up after the holidays and we'll go fly somewhere!
 
TRocket said:
Whoa whoa now, don't hate because I got my IR this year! ha ha If I didn't spend 36 weekends a year on the road I'd be able to fly all the time like you. Hit me up after the holidays and we'll go fly somewhere!
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I'm sorry, maybe you misunderstood me..........I'm not looking for a partner who actually FLIES a lot, I mean c'mon, I ain't stooopids.
 
For me (see my thread on this topic and all the good advice I probably forgot to listen to) the question of how to set this up came down to how many people were involved, how well they know each other, how different their flying habits are (both where they fly and how much), and how easily they want to be able to add, remove, or change ownership. For me and my co-owner, we have a very short document that mostly says we are not partners and sets out how we share costs, our right of first refusal if one of us wants to sell his half, and so on.

If there were more people involved or we wanted it to be easier to add/remove/change owners, I would go with either an LLC or a corporation and there would be monthly dues and hourly contributions. Corporations have slightly more paperwork overhead than LLCs in general, but they have the advantage that you can issue shares and shares can change hands (with the bylaws limiting how that can happen if desired) whereas an LLC's members typically need to be more involved in any changes of the membership list or percentages. For me, the corporation makes more sense than an LLC in this instance.

I wouldn't do any other type of corporate entity. The other choices typically combine the disadvantages of LLCs and simple co-ownership without any new advantages. And whatever you do, make sure not to accidentally stumble into a general partnership. If someone else crashes your airplane, the last thing you want is the passengers' families holding you liable for their loss.
 
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