Info on leasing a plane to a flight school?

slushie

slushie

F2TH C56X C500
I'm putting together a business plan for my class and I also intend on using it in the near future.

I want to get a 1980's Skyhawk and lease it to a flight school here in town. I have already talked with one flight school owner and there are three others I wish to talk to. Based on the info from the first school, I put together some basic numbers and figured I could average $500 a month while repaying the loan.

So what I'm asking here is for any insight from anyone at a school, or anyone who has done this before. Anything I need to look out for?

thanks.

Love,
Slushie
 
Being a religious person such as yourself. You may want to take heed to the proverb: "The borrower is Slave to the lender"
I never would advise going into debt for any reason.
Just my $0.02
 
desertdog71 said:
Being a religious person such as yourself. You may want to take heed to the proverb: "The borrower is Slave to the lender"
I never would advise going into debt for any reason.
Just my $0.02
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too late....
log.jpg


by the way...can I borrow your two cents? :P
 
not sure

I would be very interested in talking to you to see how you came up with making money on it while paying off the loan. I have a 150 and have looked a lot at putting it on leaseback. I can't figure out how to break even let alone profit. I know a couple of guys with 172s on leaseback, one of the guys says he doesn't make any money but he likes it because he can write the losses off and he feels that is adequate compensation for him. I should add the guy makes a bunch of money in income and tax shelters are a good thing for him. What are you figuring for insurance costs? Maintenance and fuel? How much are you figuring the rental rate will be and what percentage of that will you get? Finally what are you figuring for an hourly engine fund to pay for the overhaul that you will get too much faster with others flying? Seriously, i fyou have this figured out I owuld really like to share notes. I have spent a lot of hours working on this in the past.
 
shooter13 said:
...I would really like to share notes. I have spent a lot of hours working on this in the past.
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I'm aware that I am relatively naive on this subject, but I do have some experience working around it...

anyways the basics I was considering were:
Half of the engine reserve(half-time engine) covered by the loan.
(15000/2 =7500)

they pay for ins. gas and oil.(different numbers if I pay of course)
I pay for maint, tiedowns, tax, reg, etc.

looking for $50/hr rent.
they said 50 hrs a month is a reasonable estimate.
tiedowns $50 a month around here.
mx reserve (I went for $20/hr)
a loan payment of 900-1000 (this could kill me cuz I don't know if I could get that kind of interest rate.)

Obviously there's a lot of possibility for error in there, I'm just starting to gather info. ....and that's why I'm posting this...and why I need to talk to other people. Imet the guys that own the 172 I did initial training in, so I'm gunna see if they'll give me a hour of their time.
 
I would be interested in seeing the results, as I have never been able to figure a way to make a profit without needed the plane flying 8+ hours a day, everyday (no time for maintenance).

Good Luck!
 
I'm just thinking, that other than people trying to make "tax shelters," what reason would there be to lease a plane to a flight school? if it doesn't work out, why are people doing it? ya know?
 
I didn't see any mention of insurance in your projected cost of ownership. I work with someone that has a 172 and a 150 on leaseback. The insurance cost for the 172 is about $6000 per year.
 
Just about all of my employer's training airplanes are on leaseback. I don't know how the owners make out. We have 6 full time instructors, 5 casual to part time instructors, and 16 airplanes.

Mike
 
Van_Hoolio said:
Just about all of my employer's training airplanes are on leaseback. I don't know how the owners make out. We have 6 full time instructors, 5 casual to part time instructors, and 16 airplanes.

Mike
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I'm guessing the more of your own money you put into it, the easier it is to make some.
 
Hard to make money, when you are working for the man. In this case the man being the bank holding your note. I never met anybody wealthy that said they made their money by borrowing. C-150's are cheap, you could buy the one from my FBO if you like, nobody wants to fly it, even at $50 an hour. That is what I have seen anyways. If it were a 172 then there might be potential there.
 
desertdog71 said:
Hard to make money, when you are working for the man. In this case the man being the bank holding your note. I never met anybody wealthy that said they made their money by borrowing. C-150's are cheap, you could buy the one from my FBO if you like, nobody wants to fly it, even at $50 an hour. That is what I have seen anyways. If it were a 172 then there might be potential there.
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that sucks. you'd think for the money people would be smart...but you dont get that way until you've thrown down a couple G's. Our 150's are fun, and even a fatty like me can fit in it. and the Traumahawks at Henderson seem to stay in the air A LOT
 
At the two flight schools I worked at, the owner paid ALL the expenses, including gas and oil which made it a tough deal to break even on a leaseback. I consdidered buying one of the 172's that was owned by the school that I knew made a tidy profit, but when I worked the numbers it became a breakeven proposition as leaseback.

At the other school with much higher rental rates, I didn't have access to all the numbers, but I did speak to an owner of a newer 172 that said he made a fair profit on the two planes he had on leaseback, but they were investments and he never flew them. If you want to fly a plane you have on leaseback, you'll probably never breakeven, but it might significantly offset your flying expense and depending on your situation could be a tax benefit.

If you want an investment, leaseback might work, but if you want the lowest expense for the most flying freedom, a 3 or 4 way partnership is the way to go. The expense of a simple plane like a 172, PA28, or for the more "refined and sophisitcated", an AA5, is pretty manageable when split 3-4 ways.
 
150

I looked at leasing back my 150 as I said. The owner of the school told me that a 150 was the biggest money maker. At one time they had 3. One got sold, one crashed and so they were down to two. I looked into all the details. At this particular school, I would have gotten insurance through the fleet policy. With a stated hull value of $15000 insurance would have been $3250/year. Fuel was paid for by the owner. Maintenance was paid for by the owner. Being a rental aircraft, you had to pay for 100 hour inspections as well. (The good side is that you should be good to go at annual time and can roll the two together with good planning. I estimated 100 hours at $600 which was probably a bit low. I used actual oil consumption and took current engine time minus TBO and figured how many hours until overhaul. Then I figured how much needed to be saved for each hour flown. On my personal plane there is no need. I have 1000 hours to go. i will have to do a lot more flying to reach that on my own. Anyways, If you message me with your email address, I will send you the spreadsheet I made up for this purpose. You can change it for your numbers and maybe make it work out.
 
nope

nope I started drinking early. God bless Painkillers! They were down to one. It gets a lot of hours. Around 45 - 60 per month depending on weather.
 
shooter13 said:
I looked at leasing back my 150 as I said. The owner of the school told me that a 150 was the biggest money maker. At one time they had 3. One got sold, one crashed and so they were down to two. I looked into all the details. At this particular school, I would have gotten insurance through the fleet policy. With a stated hull value of $15000 insurance would have been $3250/year. Fuel was paid for by the owner. Maintenance was paid for by the owner. Being a rental aircraft, you had to pay for 100 hour inspections as well. (The good side is that you should be good to go at annual time and can roll the two together with good planning. I estimated 100 hours at $600 which was probably a bit low. I used actual oil consumption and took current engine time minus TBO and figured how many hours until overhaul. Then I figured how much needed to be saved for each hour flown. On my personal plane there is no need. I have 1000 hours to go. i will have to do a lot more flying to reach that on my own. Anyways, If you message me with your email address, I will send you the spreadsheet I made up for this purpose. You can change it for your numbers and maybe make it work out.
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Thanks man!

slushie@cox.net

I think even if the business plan leads me to not do the business, I still get an A :P
 
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