Pros, Cons, and Tips for Renting Out a Plane

iamtheari

iamtheari

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Who here has experiences renting out a plane that you own, other than leasebacks to flight schools? The standard advice is to buy the plane that meets 90% of your mission and rent for the other 10%. There is another pilot for whom my plane meets the 10% mission. For me, renting it to him for 10-20 hours a year would help defray some of my ownership costs. But is there a catch?
 
There's a whole slew of threads on this topic. Type in "leaseback" into the search bar.
 
I'm not finding threads about this topic. Searching for leaseback just gives you a whole lot of threads about leaseback experiences. I am not talking about leaseback, which I understand generally to be an arrangement where the owner of the plane leases it to a flight school that manages the plane and uses it for flight training and possibly rental to students. That is not what I am after at all. I am talking about renting my plane to one other pilot for 10-20 hours a year.
 
There is a possibility that your friend gets a good
deal and utilization of your plane. There is also a good possibility something breaks while he is using it.

I'd look at this a an opportunity to help a friend. I doubt you'll make much if any on the arrangement.

I've done this with a good friend. I probably broke even and covered some costs but I don't recall getting rich.
 
You may want to check with your insurance agent. While, generally, any pilot can fly your plane occasionally, I would think an arrangement like that would require the person to be a named insurer and may affect your rates. Also, I would make sure that the person had renters insurance. I've let a few folks fly my plane but I've known them well and taken the risk. Not sure I would do it if it was a rental situation since friendship is friendship and business is business.
 
Easy answer: just don't. How much, net, is 10-20 hours per year actually going to put in your pocket to "defray" your expenses? A couple hundred dollars total? In exchange, you run the risk of someone else breaking your airplane. If you can't, or don't want to, afford sole ownership, get an actual partner. Insurance issues also get complicated when you're "renting" your plane to another pilot, even if they're a named insured. At some point it stops being a situation where you let your buddy fly your plane and turns into a commercial operation.
 
For only 10-20 hours a year I don't think he could offset much of your costs. At least not without those hours costing him quite a bit.

Renting for the last 10% is hard. I think there can be some additional safety issues as well. Not only is the plane different, typically larger, but the avionics can be quite differrent too.

For us, we go commercial for the last 10%, which is international/east-west coast/winter trips.
 
I think you will find partnering for 10% is way better than renting for 10%. Renting puts you in a different position as an owner.
 
If you trust the guy to not be a %^^& to your plane, add him as named insured, and ask him to pay for X% of fixed costs, replace any fuel used and pay Y dollars per hour flown. The issue is, who pays if a mag tales a dump while he's flying it? or the DG goes out, etc...

Personally, If I didnt break it, I think its on the owner to fix. If I flat spot a tire, or bounce a landing and bend something, thats on me.

I would be willing to pay a hundo or 2 a month to able to fly something that I couldn't easily (or cheaply) rent, twin, 6seat, acro, etc for the price of fuel and maintenance fund per hour.
 
I have a plane on leaseback. I can barely make it work with a slew of renters. The added costs that come with adding a commercial insurance policy wipe out anything you'd gain by renting for 10% of the time. I need my plane's hours to be 90% rented out to make that math work. And it still barely works. Instead, as others have stated, you need a partnership. It doesn't have to be even. You can be a 90% partner. But you need to both be named on the insurance for it to make sense.
 
arnoha said:
But you need to both be named on the insurance for it to make sense.
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At least that one won't be a problem, assuming you can get a non-owner listed on the insurance (which I believe is possible). The pilot in question and I are currently co-owners of the plane. His mission has been changing so he sold me half of the plane not that long ago, and now he wants to sell the second half to me and get a Husky. I'm trying to figure out if it's sensible to rent the plane to him for those few flights he takes that the Husky isn't great for.
 
Couldn't you just add him as a non equity partner in the plane as others have stated? have him put in $x/hr into the maintenance kitty and he pays for his own fuel. Bada-Bing. Done.
 
If you rent out your airplane it is now a "business asset" and no longer your pride and joy. If you can't think of it that way then don't do it.
 
iamtheari said:
I'm not finding threads about this topic. Searching for leaseback just gives you a whole lot of threads about leaseback experiences. I am not talking about leaseback, which I understand generally to be an arrangement where the owner of the plane leases it to a flight school that manages the plane and uses it for flight training and possibly rental to students. That is not what I am after at all. I am talking about renting my plane to one other pilot for 10-20 hours a year.
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My bad, I missed the part in your first post when you clearly stated "other than leasebacks".:oops:

Rather than "renting" it to your buddy, why don't you just have him be a partial owner? In this case he would only have 10% ownership so it would be a very small amount, but he would still pay his share of operating costs.
 
Ryanb said:
Rather than "renting" it to your buddy, why don't you just have him be a partial owner? In this case he would only have 10% ownership so it would be a very small amount, but he would still pay his share of operating costs.
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That's a possibility. The downside is that I'd still need permission to sell it if I wanted to, but life's all about trade-offs.
 
How do you work the partial ownership aspect (less than 50/50)? If you're 75% owner and the other guy is 25%, do you try to estimate the maintenance costs and he pays 25%? How can you plan for when the engine will go? I would think both partners would put in X per hour of flight, which build up a mx fund, but if the engine goes and the mx fund doesnt cover it does the rest just get split according to the %'s. And if a guy is a 72/25 partner, how do you work actual flight time? If my 25% partner is flying as much per month as I am, it sounds like he is really a 50/50 partner and should contribute accordingly.
 
iamtheari said:
That's a possibility. The downside is that I'd still need permission to sell it if I wanted to, but life's all about trade-offs.
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That is a downside, however since you would have 90% of the ownership, you would have most of the say. I also assume you know this other pilot pretty well, so it shouldn't be too hard to make an agreement.
 
The only viable option that I've come across for leaseback/partnership that's been convenient is Diamond Share. Love what they've setup, and actively looking into when I can hop into a DA40 or DA42.
 
iamtheari said:
That's a possibility. The downside is that I'd still need permission to sell it if I wanted to, but life's all about trade-offs.
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Not necessarily. Depending on how you structure it, you could write your partnership/operating agreement in a manner that gives you sole authority to sell the plane.
 
Checkout_my_Six said:
There is a possibility that your friend gets a good
deal and utilization of your plane. There is also a good possibility something breaks while he is using it.

I'd look at this a an opportunity to help a friend. I doubt you'll make much if any on the arrangement.

I've done this with a good friend. I probably broke even and covered some costs but I don't recall getting rich.
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I've been on both sides of deals like this, doing it the way Six suggested.

My first airplane was a relatively nicely equipped trainer plane. I had a friend who was a mechanic and had recently gotten his private rating, who I let use the plane when he wanted to. No charge, he just needed to replace the gas and help me out with some of the maintenance from time to time. That deal worked pretty good, he got some hours and I got some maintenance for free.

A few years later, I needed to get my multi rating and wanted access to a twin for an occasional family trip. By that time I had a mechanic certificate so I worked out a deal where I would maintain the airplane if he would let me use it. It turned it that the plane was in rather poor shape, so I spent a lot of time getting the thing into a condition that I considered safe. Ultimately, if I added up the amount of hours I spent working on it and charged him my hourly rate I think he got the better end of that deal. But I did get about 100 hours of multi time out of it, with less cash spent out of my pocket for it.

In my opinion, if the number of hours of use is going to be relatively small I'd say just let the guy use it and have him pay the difference in the ownership costs between what they are with you as the sole user vs. you and him, plus gas. Having airplanes sit around unused is hard on them, and you might find that having someone else that uses it from time to time is actually more valuable to you, even if you let him do it for free, than if you didn't let him use it or charged him a full rental rate.
 
Off topic but I've always wondered, will insurance lower their rates if a rental aircraft is only allowed to be rented to private pilots and above or to pilots who have a certain number of hours in the type of aircraft insured? I realize not allowing student pilots to rent would severely cut down the business, but I'm just curious as to whether or not insurance companies would do this.
 
I let a friend of mine use my planes when he wants. He pays for any extra on insurance as named pilot and go's thru annual training, which he pays for, required by insurance company. He helps me out on ipc's and checkrides and such. I'm sure if plane broke while he was flying he would help out if needed. We've done this for several years and the insurance cost now is only around 100$ per year more total.
 
jkaduk said:
If you rent out your airplane it is now a "business asset" and no longer your pride and joy. If you can't think of it that way then don't do it.
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Its not really renting, its letting someone use it for the cost of fuel and a normal hourly maintenance fee and maybe helping out with some fixed costs (hanger, annual, etc). If you figure with engine overhaul, oil consumption, fixed costs, etc it costs $40/hr to operate your plane + fuel, that's what your friend pays for. He should want to be "named insured" and maybe get a waiver of subrogation so your insurance cant go after him if an accident happens. On most policies I've seen you can only name a few pilots so you aren't running a rental program by having 20 guys as named pilots.
 
DMD3. said:
Off topic but I've always wondered, will insurance lower their rates if a rental aircraft is only allowed to be rented to private pilots and above or to pilots who have a certain number of hours in the type of aircraft insured? I realize not allowing student pilots to rent would severely cut down the business, but I'm just curious as to whether or not insurance companies would do this.
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From an actuarial perspective, no. Statistically, training flights, particularly VFR, are some of the very safest flights you can take. Banning students would likely raise your insurance rates.

That said, the plane matters, too. Complex and high performance models make poor trainers, so those would actually see such restrictions.
 
I have a leaseback Warrior in a flight school that has a very positive cash flow and subsidizes all my other flying ( I have an Arrow as my Airplane)...I have flown the Warrior 3 times and that was to and from maintenance...it is a business...and treated like such...if I could find another Warrior like the one I bought I would buy it immediately and put it into service. I would see not benefit to 10% rental...insurance cost alone would exceed any benefit.
 
ChemGuy said:
Its not really renting, its letting someone use it for the cost of fuel and a normal hourly maintenance fee and maybe helping out with some fixed costs (hanger, annual, etc)
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Whatever you want to call it you have to be ready for the possibility that the other person might damage your plane. If the thought of that bothers you then don't do it. That's why I used the term pride and joy.
 
arnoha said:
From an actuarial perspective, no. Statistically, training flights, particularly VFR, are some of the very safest flights you can take. Banning students would likely raise your insurance rates.
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Bully. Who would've thought?
 
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