Anyone ever lease an airplane?

[d328pilot]

I am looking at buying an airplane and leasing it back to a flight school. Has anyone done this before and how did it work out? How much out of pocket did it run for an average month?

 

[AC560]

Has anyone done this before and how did it work out?

For the owner or the flight school? Generally leasebacks are losing propositions for the owner of an airplane.

 

[Publishers]

There are two factors here.
First is your personal financial status expecially how this aircraft will effect your tax status.
Secondly, is what kind of deal are you striking with the flight school and what benefits are you to receive on that end.
As example, considering that you cannot personally write off the expenses of the aircraft as businss expense, the leasing to a flight school will enable you to do so. Secondly, let's say the flight school is part of an FBO and gets fuel extremely cheap, and, you get that as a benefit when you fly your plane, that could be a benefit.
There are many more aspects but this gives you the idea.

 

[Lead Sled]

My advise, don't even think about doing a lease back unless you can approach it from a highly disciplined and purely business point of view – most who enter into these agreements do it because they think that somehow it will lower their ownership costs. Yeah right. Basically, in most instances, over the long haul all you end up doing is substadizing someone else's flying. Don't be seduced by a salesman's or flight school's promises - ask for references. Talk to some of their long-term leaseback owners. My bet is that they won't have any.

On lease backs, the airplanes tend to get flown a lot initially, then as they start to get a bit "dog eared" the usage drops off. You only options are to lower the rental price or spend the money to refurbish it and "make it pretty" again. Put yourself in a renters position, if there were two airplanes at a flight school renting for the same price, which one would you want to schedule first - one that was nice looking or one that had a bunch of obvious wear? The flight school owner doesn't really care; he doesn't own your airplane. He's only counting the percentage that he's taking right off the top. In fact, it's to their advantage to rent the more expensive airplane. If you haven't budgeted the money for periodic refurbishment your rental income will tend to drop off over time. Don't let the promise of additional rental income being able to offset your ownership costs seduce you into buying more airplane than you can afford to purchase or maintain by yourself. Also, seeing “your” airplane abused by ham-handed renters will annoy most owners.

The bottom line for most guys is at the very best, it MIGHT defer (not eliminate) some of your costs for a while; but eventually you've got to pay the piper. Worst case scenario, it can run up yours costs significantly.

LS

 

[Say Again Over]

My advise, don't even think about doing a lease back

That was my initial (totally uneducated) response when I saw the post, as an employee of many FBO's, I have personally observed the many ways an FBO can rip off a lease back owner (your results may vary). Good luck.

 

[Captn]

Lead Sled hit it on the head. (No pun intended You are better off finding 1 or 2 partners to defray costs. Needless to say, finding the "right" partners is very important.

My .02

 

[AlbieF15]

Partnerships are probably the most cost effective solution.

If I could find a nice A&P for a partner I'd marry him! (okay--kidding) However--someone who is not afraid to do some work on the plane vice handing it off to mechanics for everything will be make your costs much easier. Find a type club and you'll likely find someone interested who has the expertise.

Also--a partner can allow you to buy up into more plane...if that is your goal. A 4 or 6 seat plane might be out of your reach solo, but with a parnter would be reasonable. Also--a couple partners mean you could perhaps won 1/2 or 1/3 of a twin or a fast SE crusier and 1/2 or 1/3 of a Citabria or weekend joy ride machine. Lots of options...