lease back

R

redear

New Member
I am looking for information on the practicality of a lease back. I have looked into the options of ownind outright and leasing back but am not totaly sure what the lease back means.
If anyone has some tips I would apreitiate it.
I am curious about the true costs; will I realy be able to pay for my training, insurance, and the maintainance of the aircraft from the profits?
If there were an accedent or incedent, would I be held liable for the accent and vouderable to suit despite having done my part properly?
Are there other pitfalls to a leaseback wich I am not seeing, are there benifits I am not aware of?
Any help is much apretiated! Thanks.
 
I highly recommend using AOPA and talking to local owners at local FBO's who leaseback there planes. I would personally be very careful on this and do your homework. I have used www.planequest.com to get some rough figures for operating costs for airplanes.
 
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I am curious about the true costs; will I realy be able to pay for my training, insurance, and the maintainance of the aircraft from the profits?

[/ QUOTE ] It depends...I doubt you would be able to pay for your training. I have a friend that leases back an older cessna 152, after maintenance, loan payment, and insurance, he made $8 dollars profit last month
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Some months he goes in the hole, some months he makes a few bucks....depends totally on maintenence issues, 100 hr inspections, annuals, fuel reimbursements, how many hours used and all that good stuff....but, he is a CFI at the flight school he leases back too, so he is around the plane everyday and he knows who is using it and how its being treated, and he also gets deals on the maintenance from A&P friends so that helps a LOT. I wouldn't do it unless you have an A&P friend.
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If there were an accedent or incedent, would I be held liable for the accent and vouderable to suit despite having done my part properly?

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thats what insurance is for

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Are there other pitfalls to a leaseback wich I am not seeing, are there benifits I am not aware of?


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Benefits - you can afford a plane that you couldn't afford otherwise. Pretty much get the loan payments paid for.

Pitfalls- your plane is racking up hours fast and losing value. 100 hr inspections come up real quick when people fly your plane everyday! Huge increase in maintenance costs is probably the biggest downfall. Your going to have to overhaul/replace your engine a lot sooner, so that is a major expense you'll have to consider.
 
Schools would buy the plane if it was a money maker to rent planes.

They lease them because they know it's cheaper for them, and you still don't make a buck. The schools are in business. I've been advised not to do that by the people that work at the FBO.

It might be a benefit if you're a corporation and need a tax break.
 
Hey, Joe's "workin' on it" Iain! Besides, isn't it 'gravity challenged'?
 
Thanks guys! That helps a lot. I am most certainly looking into all my options carefully as I want to save as much as I can in an expensive field to train in while also getting good solid training and being ready for a job when I get the instructor rating. Any wisdom from other is much apreciated.
 
One of the supervisors where I work leases a 2003 C172SP to the flight school I am flying. It has been great for him so far. He has the plane pretty much whenever he wants it as long as he reserves it for himself a few weeks in advace. The plane is in the air a lot which can be bad regarding increased maintenance costs, it is good because every hour in the air brings in more money to pay for that maintenance. Overall he is very happy and I been looking at it too.
 
A lease back arrangement can usually be a very good deal.

IF:

You pick the right aircraft.
It rents enough.

Those are the two largest things. A cheap to operate, popular training aircraft, that can still be used for trips for other renters. Say a 172 or a Cherokee.

You can not factor in the cost of the aircraft, to what it will make while renting. You will get that initial buy in cost back (or sometimes, often really nowadays, more than what you paid) when you sell the plane. So throw out that for now. Plunk down the 30-40k for an ok rental. Make some money on it. Most arrangements will take anywhere from 20-40hrs per month to cover all your costs, and make you some extra money, after insurance, fuel, maint, etc. Then, if you fly it after that point, it is just like paying a fuel only rate, since those other costs are being paid for by the other use.

Magic numbers for leaseback planes at our FBO is around 25hrs or so for the PA28 and C172 models. Beyond that, and it is starting to make a lot of extra $$. Up to a certain point, where you'll have another 50hr or 100hr to pay for. But at that point, you've made more than the cost of that extra little bit of maintenance costs.

For example, a 172, after all costs throughout the year, FBO cut, fuel, main, insurance, tiedown, etc, had a net of about $17,000 for about 600hours of use that year. That was on a new engine. So a couple more years of that til new engine time, but the $45-50k net during that time should be able to cover the cost of an engine
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