Buying a plane and then renting it out???

[turpentyine]

Is this economicly viable? Me and my friend are thinking about buyig a plane to learn to fly on it. Get instrument ratings on it and log time. But we are thinking about renting it out to people to cover the costs at least partially.
Is this worth it? Will the insurance on the plane be a lot more expensive? Also should we form a corporation so that in case something happens they wont take our livelihoods away?

 

[azpilot]

I personally would not do this for a variety of reasons:

1) Do you want people beating the crap out of your airplane? They won't take care of it either. I.E. leave it dirty.

2) You won't be able to fly your plane during prime rental days/hours because the flight school needs the plane during these hours.

3) You may have increased liability on the aircraft in terms of insurance. If you are a member of AOPA call their insurance division and ask. There may also be additional information regarding this on their site. I would also search Google.

4) More inspections are required, 100 hour vs annual because the plane is being rented.

The only people that I currently know that do leasebacks have them as "investments" and don't care about flying the planes themselves.

If it was me I would fly it and then sell it when you are done. Talk to a local flight school about any leasebacks they currently have and see if you can speak with the owners.

Other resources:
http://www.aeroprice.com/aerolibrary/leasebacks.htm
http://www.aopa.org/members/files/guides/aclease.html
http://www.avweb.com/news/avlaw/181898-1.html

Many more via Google.

I enjoy my airplane and the fact that I knew who flew it last. (ME!)

Good luck,
AZPilot

 

[Dominicinco]

I personally would not do this for a variety of reasons:

1) Do you want people beating the crap out of your airplane? They won't take care of it either. I.E. leave it dirty.

2) You won't be able to fly your plane during prime rental days/hours because the flight school needs the plane during these hours.

3) You may have increased liability on the aircraft in terms of insurance. If you are a member of AOPA call their insurance division and ask. There may also be additional information regarding this on their site. I would also search Google.

4) More inspections are required, 100 hour vs annual because the plane is being rented.

The only people that I currently know that do leasebacks have them as "investments" and don't care about flying the planes themselves.

If it was me I would fly it and then sell it when you are done. Talk to a local flight school about any leasebacks they currently have and see if you can speak with the owners.

Other resources:
http://www.aeroprice.com/aerolibrary/leasebacks.htm
http://www.aopa.org/members/files/guides/aclease.html
http://www.avweb.com/news/avlaw/181898-1.html

Many more via Google.

I enjoy my airplane and the fact that I knew who flew it last. (ME!)

Good luck,
AZPilot

I think what my friend is talking about is not leasebacks but renting it out privately to individuals who meet our requirements(IFR certified pilots who want to build time, or even to those who only hold a PPC)
We most certainly will not lease it to FBO's because we want to keep it available for our intensive flight purposes only.

 

[Rolling-Thunder]

I just asked the owner of the plane that I rent, about insurance costs.


He owns two C-172's, one he rents, the other he uses for his photo shoots only.

The insurance on the rental plane is $6500 / year versus $750 for the other.

 

[de727ups]

Renting

First of all....if you rent the plane but don't "provide" it for flight instruction....you don't have to do 100 hours. So, you could rent it to other pilots, and not have to do 100 hours. Those pilots could even get instruction from free lance CFI's but YOU, nor your employees, could offer the instruction. Still, I'd do the 100 hours anyway as they help you catch things early, which will save you money in the long run.

Full hull coverage (insurance) will be very expensive but seems not so bad if you can rent the plane 40 or 50 hours a month.

You could form a corporation but there is some question about how well this will shield your assets. Talk to an attorney. To run the corporation properly is a lot of work.

You have to have the right situation to make this work. I've been there and done that. Get to know a mechanic that will trade wrenching time for flying time. Find a couple of free lance CFI's that will stick around a while and fly with you and keep your plane flying. Find an airport that won't shut you down or impose a lot of silly rules you can't comply with. Most of the time the FBO's will want to shut you down. It may be necessary to keep a low profile.

 

[turpentyine]

i want to rent the plane not to fbo's or students just pilots who want to fly

 

[Flyin Tony]

What kinda plane would it be?
If its a 150-182 I would do it.
Anything RG no way.

 

[azpilot]

You have to have the right situation to make this work. I've been there and done that. Get to know a mechanic that will trade wrenching time for flying time. Find a couple of free lance CFI's that will stick around a while and fly with you and keep your plane flying. Find an airport that won't shut you down or impose a lot of silly rules you can't comply with. Most of the time the FBO's will want to shut you down. It may be necessary to keep a low profile.

That's great advice regarding finding a mechanic who is will to trade for time. I had friends that did this with their light twin years ago. Saved each of them a lot of money and now they are flying for majors.

 

[midlifeflyer]

turpentyne,

If you're talking about a small group of pilots who you will allow to rent your airplane, even among the small group of companies that actually write aviation insurance, there is a wide variation.



Essentially, renting your airplane out, even if it were at cost, is a commercial use of the airplane that is excluded by most private owner policies. But, for example, AVEMCO, will allow you to name a group of pilots whom you will rent to and still treat it as private.



Call around and find out.

 

[NuGuy]

Hi Turp,

Go over to the AOPA forum. Lots of guys with that kind of experience to draw from, and they are happy to share it.

Best,
Nu

 

[Slim]

As one poster correctly said, renting the airplane makes it a commercial operation. Be careful here.

It sounds like you could create flying club and have joint ownership of the airplane with all those interested in doing what you're doing. That route may avoid the commercial aspect of what you're considering.

I know you said lease back was not what you're considering. My father has a Citabria on lease back. Here are some of his experiences...

The first two FBOs charged the renter an hourly rate based on the Hobbs time. They paid my father based upon tach time...automatic profit for the FBO. They also charged my father a monthly parking fee. The airport charged no parking fee to anyone unless a hangar was used.

Maintenance was all my father's responsibility. After the first leaseback, he paid for the annual, the first 100 hour check, then half of the second 100 hour check. After the second 100 hour check, the FBO/school paid for all 100 hour checks.

Some of these issues may be worth your consideration. Good luck...fly safe!

 

[Immelman]

Why not start a flying club and put all members (renters) on the insurance policy by name?

This should save you a bundle on ins (I think.. the ins people will know for sure), and should be adequate for the case you describe: you want to allow a select group of licensed pilots to fly the airplane, and not rent it out to the general public for flight instruction...

 

[weekendwarrior]

Yeah, I think a flying club would be the best option. This way you could screen pilots whom you want to be in the club (sounds snobby, I know, but it's your airplane). They could buy into the club for x amount of dollars, and then have a dry rate for rental to cover overhauls, incdidentals, annuals, etc. They leave it full of gas when they are done, and you eliminate a fuel bill that way. They could then sell their share when they are done. If they buy into it, they would be more apt to taking care of the airplane, since they own part of it.

The amount doesn't have to be much, just an earnest deposit. Where it helps you is, you don't have give them the money back. They have to sell their share to someone else.

Or, if you don't want to do this, just find a flying club to buy into. That would even work better, and save you alot of legal work. Either way, make sure your legal bases are covered. Don't start a flying club without setting up an LLC or Corporation, to protect you and your assets from ambulance chasing lawyers.