Leaseback Thoughts

[Murdoughnut]

I've been bouncing around aircraft purchase ideas the last two years. At present I'm a bit more interested in pursuing one in particular - a Beech C24R. Didn't know anything about them before researching this particular one, but it seems to be a good tradeoff of costs and benefits. Ideally I'd like a 140 kt cruise speed, but by shaving 15-20 knots off of that you get an aircraft that's roomy with great cargo space and a better useful load than the SR-20 I've been flying through my club. Have really been impressed with Beechcraft since flying our club's A36 as well.

Speaking of my club, there's an opportunity to lease it back. Advantages include:

1. Our club is down aircraft, and demand is high - will need to do a pro forma, but I think it's reasonable to suggest it would fly at least 500 hours a year
2. Our club has a premium membership for retractable aircraft, with insurance requiring 25 hours retractable. Even if the club requires 250 hours like they do with the V35 and A36, the plane will fly, and my risk will be reduced

Can I afford to buy the plane straight up without a leaseback? Yes, but it's tight. Curious of anyone here's thoughts. Anyone have experience with the tax benefits of setting up a corporation and just buying the plane as a company?

 

[killbilly]

I've been bouncing around aircraft purchase ideas the last two years. At present I'm a bit more interested in pursuing one in particular - a Beech C24R. Didn't know anything about them before researching this particular one, but it seems to be a good tradeoff of costs and benefits. Ideally I'd like a 140 kt cruise speed, but by shaving 15-20 knots off of that you get an aircraft that's roomy with great cargo space and a better useful load than the SR-20 I've been flying through my club. Have really been impressed with Beechcraft since flying our club's A36 as well.

Speaking of my club, there's an opportunity to lease it back. Advantages include:

1. Our club is down aircraft, and demand is high - will need to do a pro forma, but I think it's reasonable to suggest it would fly at least 500 hours a year
2. Our club has a premium membership for retractable aircraft, with insurance requiring 25 hours retractable. Even if the club requires 250 hours like they do with the V35 and A36, the plane will fly, and my risk will be reduced

Can I afford to buy the plane straight up without a leaseback? Yes, but it's tight. Curious of anyone here's thoughts. Anyone have experience with the tax benefits of setting up a corporation and just buying the plane as a company?

Contact me directly, and I will put you in touch with a presentation deck that goes through a lot of the ins and outs of leaseback. It's more geared to a busy flight school, but it focuses pretty well on the things you should be thinking about.

My experience with clubs is that they did not do leaseback, rather, full member equity stakes operating the club as a non-profit. But there's a lot of ways to cook an egg, as they say, so there may be a model here that works.

 

[MidlifeFlyer]

depending a little on the current aircraft mix, I'd poll the club for interest. I've always been either a club member or renter and discovered years ago that the odd make/model typically gets underutilized, no matter how great it might be. Beyond that, it's all about the leaseback contract - access to your own airplane, potential increased maintenance and insurance costs are among the things to look at.

 

[Old Pete]

I’ve seen several different leaseback agreements and I ve never seen one I would sign.
I’m not sure what your goal is with a leaseback, but if It doesn’t make sense as a pure investment, don’t do it.
If you want to own an airplane and defray the costs consider a partnership

 

[drunkenbeagle]

I've been bouncing around aircraft purchase ideas the last two years. At present I'm a bit more interested in pursuing one in particular - a Beech C24R.

I've been happy owning its fixed gear cousin (A23). Solid, clean airplane. Not fast. Pay the $50 or so for the type club (BAC), and do some reading to figure out what to expect before buying. The gear shock disks aren't cheap, plan on $10k when replacement is needed. This isn't a frequent thing though.

Parts are generally available though, which is good. Textron/Cessna still sells a lot of them. Everyone I've known that owner a Sierra loved it, and wished they kept it. There aren't many ADs, most were owner flown and hangered. Great visibility, they fly great, super comfortable. Easy to land for halfway decent pilots. The W&B is generally nose heavy, so you may end up carrying a good bit of ballast in the back seat. I have 40lbs of lead dive weights around the rear seat belts. Useful load generally sucks, just like any underpowered single piston.

I think 500 hours/year would take a lot of luck - it's an airplane, it will be down for maintenance. It's been all relatively minor stuff for me, minor spinner repair, leaky oil cooler, one annual with no discrepancies and a fuel sender. That was about $6k in MX, but also about 5 months of downtime out of 18. The downtime is probably more expensive than the MX if you are doing a leaseback.

 

[fholbert]

Speaking of my club, there's an opportunity to lease it back. Advantages include:

Only the flight schools make out on a lease back. It's a looser! Saw a brand new Cessna 182 G1000. ($650K?) leased back to a flight school. At one month old the windshield was scratched up from renters throwing their headset on the dash. At two months dirt was collecting where drinks had been spilled on the seats. Three months, the wheel pants were gone, no step means different things I guess. A year later it looked like it was 10 years old, shortly after that a pilot ran it off the runway taking out the VASI's, of course the nose gear collapsed, prop strike, engine tear down... It was in the shop for more than 4 months.

If you really want to do this I'd look at an Arrow, something made for flight schools.

• Landing gear auto extends
• Less parts to break
• Piper parts are a LOT cheaper then Beech parts.

 

[MidlifeFlyer]

Only the flight schools make out on a lease back. It's a looser! Saw a brand new Cessna 182 G1000. ($650K?) leased back to a flight school. At one month old the windshield was scratched up from renters throwing their headset on the dash. At two months dirt was collecting where drinks had been spilled on the seats. Three months, the wheel pants were gone, no step means different things I guess. A year later it looked like it was 10 years old, shortly after that a pilot ran it off the runway taking out the VASI's, of course the nose gear collapsed, prop strike, engine tear down... It was in the shop for more than 4 months.

If you really want to do this I'd look at an Arrow, something made for flight schools.

• Landing gear auto extends
• Less parts to break
• Piper parts are a LOT cheaper then Beech parts.

Fortunately, club pilots tend to take care of club aircraft better than renters. I am a member of a club that was formed by an aircraft owner who then leased an owned airplane to the club. Then bought another and leased it To the club. If it didn't work, I doubt that the club wouldn't even exist.

good and bad. Pluses and minuses. All in the details.

 

[rframe]

... the odd make/model typically gets underutilized, no matter how great it might be

This is the truth. People want to rent Skyhawks and Cherokees 10:1 over anything else. I've seen some cool planes available that nobody flies. Right now we have a flight school on our field that has a sweet Navion available with a G5 and 430 at a great price, yet it's virtually never booked. You need to book their Skyhawk 2-3 weeks in advance if you're particular about your timeslots. When you survey potential users, also recognize that people always overestimate their usage, so reduce what they say they'll fly by some decent margin to get a more accurate idea of your rental opportunity.

 

[msmspilot]

I would love to have something other than the typical 172/PA28 to rent, but I’m probably not your normal renter/club member.

 

[killbilly]

Only the flight schools make out on a lease back. It's a looser! Saw a brand new Cessna 182 G1000. ($650K?) leased back to a flight school. At one month old the windshield was scratched up from renters throwing their headset on the dash. At two months dirt was collecting where drinks had been spilled on the seats. Three months, the wheel pants were gone, no step means different things I guess. A year later it looked like it was 10 years old, shortly after that a pilot ran it off the runway taking out the VASI's, of course the nose gear collapsed, prop strike, engine tear down... It was in the shop for more than 4 months.

If you really want to do this I'd look at an Arrow, something made for flight schools.

• Landing gear auto extends
• Less parts to break
• Piper parts are a LOT cheaper then Beech parts.

This isn’t true. Our leaseback owners do pretty well.


Sent from my iPhone using Tapatalk Pro

 

[Cessnaflyer]

Loved the smaller siblings the 19 and the 23s. But like others said I feel it would be underutilized being the lone model of a fleet.

 

[L-16B]

This is the truth. People want to rent Skyhawks and Cherokees 10:1 over anything else. I've seen some cool planes available that nobody flies. Right now we have a flight school on our field that has a sweet Navion available with a G5 and 430 at a great price, yet it's virtually never booked. You need to book their Skyhawk 2-3 weeks in advance if you're particular about your timeslots. When you survey potential users, also recognize that people always overestimate their usage, so reduce what they say they'll fly by some decent margin to get a more accurate idea of your rental opportunity.

That’s the way my flying club is in dallas. Cherokee and 172’s are always booked. 182, arrow, 210 are usually available.

 

[MidlifeFlyer]

This is the truth. People want to rent Skyhawks and Cherokees 10:1 over anything else. I've seen some cool planes available that nobody flies. Right now we have a flight school on our field that has a sweet Navion available with a G5 and 430 at a great price, yet it's virtually never booked. You need to book their Skyhawk 2-3 weeks in advance if you're particular about your timeslots. When you survey potential users, also recognize that people always overestimate their usage, so reduce what they say they'll fly by some decent margin to get a more accurate idea of your rental opportunity.

My best example is a 172XP at a flight school in Colorado. The XP is almost a perfect mountain airplane. And the school had mostly Cessnas. The school even offered a mountain checkout at a special rate. The owner removed it due to nonuse.

 

[drunkenbeagle]

That’s the way my flying club is in dallas. Cherokee and 172’s are always booked. 182, arrow, 210 are usually available.

182 is quite a bit more expensive to operate for an extra 10 kts or so.

 

[MidlifeFlyer]

182 is quite a bit more expensive to operate for an extra 10 kts or so.

...and tend to get used when carrying capacity, not speed, is the mission,

 

[drunkenbeagle]

...and tend to get used when carrying capacity, not speed, is the mission,

Yeah, totally depends on the airplane though. The newer 182's aren't much better for useful load than some older 172s are.

 

[mrivc211]

I've been bouncing around aircraft purchase ideas the last two years. At present I'm a bit more interested in pursuing one in particular - a Beech C24R. Didn't know anything about them before researching this particular one, but it seems to be a good tradeoff of costs and benefits. Ideally I'd like a 140 kt cruise speed, but by shaving 15-20 knots off of that you get an aircraft that's roomy with great cargo space and a better useful load than the SR-20 I've been flying through my club. Have really been impressed with Beechcraft since flying our club's A36 as well.

Speaking of my club, there's an opportunity to lease it back. Advantages include:

1. Our club is down aircraft, and demand is high - will need to do a pro forma, but I think it's reasonable to suggest it would fly at least 500 hours a year
2. Our club has a premium membership for retractable aircraft, with insurance requiring 25 hours retractable. Even if the club requires 250 hours like they do with the V35 and A36, the plane will fly, and my risk will be reduced

Can I afford to buy the plane straight up without a leaseback? Yes, but it's tight. Curious of anyone here's thoughts. Anyone have experience with the tax benefits of setting up a corporation and just buying the plane as a company?

Say goodbye to your airplane once a flight school/renter gets a hold of it. They dgaf what you say to them. They will treat your airplane like garbage and then deny they did it. You can EVERY step to mitigate these morons from escaping damage they do. It won't work. Been there. Done that. You begin to hate humans when you see how careless, dishonest, and clueless of their stupidity they are. If I went thru the endless list of things they have done to my planes, I would relive the events and my blood pressure would rise all over again. Renters are a CANCER to an airplane. The higher the hours they've flown, the more imbedded their bad habits are. They love to crank the ish out of your starter, killing the battery, simply because they don't know how to start an airplane. They love to hold the starter, even after engine start, destroying your ring gear, then love denying they ever did it. They love stomping on the brakes to exit a taxiway when they could have rolled to the end, then when you tell them they owe you tires, they will accuse you of stealing from them. When you tell them the damage they did to the plane, is 5 times the cost of the profit made on their rental, they will reply by saying, "those bald patches were already there". When you bring up the blue pen marks all over the side walls of the interior, they will deny owning a pen, while their kneeboard is on the front counter with their blue pen attached. When you dig into the side pockets and find wrapper after wrapper of starbucks spinach fetta wraps with their name on it and bring it up to them, they won't reply to your text. When they slam the ish out of the airplane on a landing, causing the cowling mounts to break they will simply tell you it was a very smooth landing with a dumb look on their face. After you explain to them not to rev the RPMs above 900 on a cold morning because the oil is at the bottom of the pan and the cam shaft is unprotected at the top until the engine warms up and oil circulates, you will walk out onto the ramp to see the plane being started up and kept at 1400 rpm. Then as you walk over to them and stare at them, they will give you a clueless dumb look. Make sure you enjoy talking to them about the numerous aborted takeoffs they will attempt once again destroying your tires and taking out taxiway lights in the airplane because they couldn't get the RPMs at the top of the green on a static run up, yet they still decided to try and takeoff. Then when you explain they won't get max RPM on the ground because theres no air passing thru the propeller, they will go out and do it again. Then the FSDO will call, blaming you, and demanding to have a sit down with them. I should write a book.