Leaseback - worth it?
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Join Date: Aug 2005
Location: Los Angeles
Age: 51
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Leaseback - worth it?
I had posted this in private flyers, but i think it might be more appropriate to post here.
I'm thinking about buying a plane to build time in after my PPL.
More than likely a PA28 140 or 150 (would love an Archer if I can stretch the funds).
This will be financed, and I would like to put it on leaseback with a local FBO.
I would really appreciate hearing from anyone who has done this, and what their
thoughts are on this approach.
How does leaseback work?
Who pays for what?
What would I get from the FBO for each hour they used it?
How does insurance work?
Thanks for your time reading this, look forward to hearing from you all.
I'm thinking about buying a plane to build time in after my PPL.
More than likely a PA28 140 or 150 (would love an Archer if I can stretch the funds).
This will be financed, and I would like to put it on leaseback with a local FBO.
I would really appreciate hearing from anyone who has done this, and what their
thoughts are on this approach.
How does leaseback work?
Who pays for what?
What would I get from the FBO for each hour they used it?
How does insurance work?
Thanks for your time reading this, look forward to hearing from you all.
Hi shiny side.
You are off to a good start in asking these questions. No easy answers though. Each flight school is free to do business with leaseback owners as it sees fit to do and each owner is free to accept, reject or negotiate the terms of any agreement. In the best case, owners can reduce the cost of ownership and flying by quite a bit. The key to acheiving a happy arrangement with a flight school is to clearly understand the agreement and have good reason to trust that the school owner will will act in good faith. This may be determined by getting to know a couple leaseback owners at the school you propose to do business with.
I strongly reccomend stepping slowly and lightly before entering into this kind of arrangement. You must learn about the costs and liabilities of ownership on both the direct and indirect sides. Then you must determine what level of annual utilization and income can be expected and create income/cost balance sheets to cover the range of likely incomes and costs. In essence, a business plan. Allways have a capital reserve available to cover foreseeable contingencies like signifigant maintenance events and cashflow oscillations.
Be careful to avoid situations where a conflict of interest may develop with sellers, shops, schools or brokers. There are many fine people involved in GA and also some wolves that will rip off a rube if given the chance. Many will just paint best-case scenarios to help close a deal. A natural tendancy in selling any deal. I have allways advised students to delay an aircraft purchase until they achieve a certain level of general aviation savvy so they really will have some idea what they are getting into. The only other alternative is to have an experienced and trustworthy advisor you can count on to guide you through the process and show you the ropes.
Sorry I cannot give you the figures you seek, but it really does vary quite a bit depending on a great many factors which are quite specific to the particular airplane purchased and where it will be operated. Proper cost analysis will account for projected future maintenance costs which may only be estimated based upon what is known. Lots of research to be done. Start by finding out about fixed costs like insurance, taxes (consult a tax advisor for all the implications), tiedown fees and debt service on any loan you may take on. Then tackle direct operating costs. More on that later as I have to sign off now.
Best regards,
Westhawk
You are off to a good start in asking these questions. No easy answers though. Each flight school is free to do business with leaseback owners as it sees fit to do and each owner is free to accept, reject or negotiate the terms of any agreement. In the best case, owners can reduce the cost of ownership and flying by quite a bit. The key to acheiving a happy arrangement with a flight school is to clearly understand the agreement and have good reason to trust that the school owner will will act in good faith. This may be determined by getting to know a couple leaseback owners at the school you propose to do business with.
I strongly reccomend stepping slowly and lightly before entering into this kind of arrangement. You must learn about the costs and liabilities of ownership on both the direct and indirect sides. Then you must determine what level of annual utilization and income can be expected and create income/cost balance sheets to cover the range of likely incomes and costs. In essence, a business plan. Allways have a capital reserve available to cover foreseeable contingencies like signifigant maintenance events and cashflow oscillations.
Be careful to avoid situations where a conflict of interest may develop with sellers, shops, schools or brokers. There are many fine people involved in GA and also some wolves that will rip off a rube if given the chance. Many will just paint best-case scenarios to help close a deal. A natural tendancy in selling any deal. I have allways advised students to delay an aircraft purchase until they achieve a certain level of general aviation savvy so they really will have some idea what they are getting into. The only other alternative is to have an experienced and trustworthy advisor you can count on to guide you through the process and show you the ropes.
Sorry I cannot give you the figures you seek, but it really does vary quite a bit depending on a great many factors which are quite specific to the particular airplane purchased and where it will be operated. Proper cost analysis will account for projected future maintenance costs which may only be estimated based upon what is known. Lots of research to be done. Start by finding out about fixed costs like insurance, taxes (consult a tax advisor for all the implications), tiedown fees and debt service on any loan you may take on. Then tackle direct operating costs. More on that later as I have to sign off now.
Best regards,
Westhawk
