Buying to hire out
Your other problem is what happens if the flying club goes down the pan. The unpaid landing and parking fees are down to you. This happened to me and it cost me £3000 to bail my aircraft out.
Why do it if it's not fun?
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Ben,
Best to speak to your favourite engineering company for realistic prices. If you don't have a favourite engineering company yet, PM me and I'll put you in touch with a Cessna specialist (although I can't claim to be independant on this one, because I work for the flying school division of the same company).
On a more general note, though, please re-read this thread thoroughly. I think you will find that the grand total number of positive posts, excluding yours, is zero. Take a step back and try to think about that from a neutral point of view - which I know is difficult, because you are very deeply involved in it. I know what conclusion I would draw.
FFF
----------------
I'd really like to know what a cessna 152 full engine job is likely to cost
On a more general note, though, please re-read this thread thoroughly. I think you will find that the grand total number of positive posts, excluding yours, is zero. Take a step back and try to think about that from a neutral point of view - which I know is difficult, because you are very deeply involved in it. I know what conclusion I would draw.
FFF
----------------
I did it once and also would not do it again. As has been mentioned before the hourly rates need to be higher because 500/year is optimistic at the very least. Your aeroplane will probably be treated as the runt of the family if the school also has their own aeroplanes, guess which one will be the last to fly? If they are responsible for the maintenance it will get the bare minimum and on the other hand if you are responsible for it then you will be blamed for the downtime as a reason for not making the mythical 500 hours. I'd advise against it. Regarding the engine I would assume that a good zeroed engine from a reputable source is going to cost you upwards of £12k plus around £2,500 to remove and replace. Plus of course all the other little bits and pieces that can be sorted while the "big" job is being done......
Beware of the taxman as they will be wanting benfit in kind off you. You will only escape this if either you:
a) never fly it yourself
b) have more than one aircraft owned by the company and available to you (a la pool car)
c) have more than one client for the aircraft.
Even the above will not guarantee immunity. You MUST go and see an accountant who is familiar with this scenario or you could have years of grief. Don't ask me how I know.
Beware of the taxman as they will be wanting benfit in kind off you. You will only escape this if either you:
a) never fly it yourself
b) have more than one aircraft owned by the company and available to you (a la pool car)
c) have more than one client for the aircraft.
Even the above will not guarantee immunity. You MUST go and see an accountant who is familiar with this scenario or you could have years of grief. Don't ask me how I know.
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guess which one will be the last to fly
Excellent point. I recall the CFI explaining to me rather forcefully that such and such plane is not to be flown unless necessary, because they lease it in and it costs them more to fly it as a result, than the rest of their fleet.
As regards Benefit in Kind
never fly it yourself
is not an issue provided you get invoiced at the same rate as outsiders.
However, the Revenue is attacking all these businesses right now. I've had to put up with several enquiries in several years - they do it just for fun, to p1ss you off. They drive £10,000 cars and don't like anybody who they see as "rich". Mine has been properly set up from the start so I have been OK so far. But it has cost thousands in the accountant's fees to deal with it, not to mention my time in drafting long responses, rebutting 5-page attacks point by point. They know that if they keep attacking you and mounting enquiries then eventually you will get fed up with it, strike some sort of a compromise deal, and close the business.
It's not worth doing unless you are buying a new plane for £250,000+VAT and want to get the £43,750 VAT back on it - then it's (arguably) worth setting up a proper business around it, rent it out, etc and pay the ongoing costs, accountancy fees, etc, invoicing yourself, etc, of running it as a company.
For a £15000 spamcan, no way.
Find a good mate or two and share it.
Excellent point. I recall the CFI explaining to me rather forcefully that such and such plane is not to be flown unless necessary, because they lease it in and it costs them more to fly it as a result, than the rest of their fleet.
As regards Benefit in Kind
never fly it yourself
is not an issue provided you get invoiced at the same rate as outsiders.
However, the Revenue is attacking all these businesses right now. I've had to put up with several enquiries in several years - they do it just for fun, to p1ss you off. They drive £10,000 cars and don't like anybody who they see as "rich". Mine has been properly set up from the start so I have been OK so far. But it has cost thousands in the accountant's fees to deal with it, not to mention my time in drafting long responses, rebutting 5-page attacks point by point. They know that if they keep attacking you and mounting enquiries then eventually you will get fed up with it, strike some sort of a compromise deal, and close the business.
It's not worth doing unless you are buying a new plane for £250,000+VAT and want to get the £43,750 VAT back on it - then it's (arguably) worth setting up a proper business around it, rent it out, etc and pay the ongoing costs, accountancy fees, etc, invoicing yourself, etc, of running it as a company.
For a £15000 spamcan, no way.
Find a good mate or two and share it.
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Here's the update after making some more enquiries.
My accountant thinks Limited company is the only way to go and he highly reccommends I buy 2 or more. 2 Planes i've seen are available and the right price/hours/condition etc.
If I put these 2 into the flight school they will be the only 2 "2 seaters" so using the other planes 1st isn't really an issue.
Thanks for all the feedback so far, albeit guite negitive. Has anyone ever made this pay or break even?? Or are you just keeping it to yourselves you sneaky dogs?
Tonight i'll sit down with cash flow forecast and see where that leads.
Keep the comments coming.
My accountant thinks Limited company is the only way to go and he highly reccommends I buy 2 or more. 2 Planes i've seen are available and the right price/hours/condition etc.
If I put these 2 into the flight school they will be the only 2 "2 seaters" so using the other planes 1st isn't really an issue.
Thanks for all the feedback so far, albeit guite negitive. Has anyone ever made this pay or break even?? Or are you just keeping it to yourselves you sneaky dogs?
Tonight i'll sit down with cash flow forecast and see where that leads.
Keep the comments coming.
Hooray for ladybumps...
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Lol...
You can bring a horse to water and all that!
Ben - I don't think anyone here is trying to hide anything from you mate - these are guys who have tried to do what you're contemplating with the resultants outlined in the above comments...
However, good luck with the training!
Regards,
FT
You can bring a horse to water and all that!
Ben - I don't think anyone here is trying to hide anything from you mate - these are guys who have tried to do what you're contemplating with the resultants outlined in the above comments...
However, good luck with the training!
Regards,
FT
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My advise is find somthing you enjoy flying, hire it, park it at the end of the day and walk away until you are ready to fly again - keep things in perspective it will cost you money to buy and keep 1 plane flying let alone 2.
Or take 540 good advice with a few mates.
Disregard your accountants advice totally unless he has done this before, which I doubt.
www.007helicopter.com
Or take 540 good advice with a few mates.
Disregard your accountants advice totally unless he has done this before, which I doubt.
www.007helicopter.com
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oh come come FT, don't you see, all these problems that are arising are a good thing, I need to look at these things.
I have an idea, anyone who has done this and found a problem, rather than just saying don't do it, share with us what problems you had, then we can point and laugh but also you might save others a few quid.
Ben
I have an idea, anyone who has done this and found a problem, rather than just saying don't do it, share with us what problems you had, then we can point and laugh but also you might save others a few quid.
Ben
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I have an idea, anyone who has done this and found a problem, rather than just saying don't do it, share with us what problems you had
It is of no ones interests in here to see another student ripped off (it happens in lots of places, more often than you may think) - in fact, most of the people on this forum only want you to have a good experience, and continue to be a pilot for a long time, hence the time and trouble they take to asnwer you! Flying isn't cheap, and there are very few ways of making it so - if there were, we'd all be doing it!
Something worth checking out for your flying career: Confirmation Bias
I'm not going to post on this thread again now, but again - good luck whatever you decide to do.
DW.
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Originally Posted by bencoulthard
I've just embarked on my PPL
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Before I add my 2p worth I need to add a disclaimer that I have never done anything like this before but with my financial hat on here are some thoughts for you to consider:-
- I like the idea of two companies or even a company and an overriding trust owning a company. Trusts are inherently difficult for people like the IR and creditors to break down and get infomration on as they have limited disclosure rules whereas companies are pretty much transparent. Anything that keeps the ownership of the aircraft separate from the main trading entity will give you a measure of protection but not necessarily be cast iron.
- there have been many bankrupt flying schools over the years that have miraculously risen from the ashes as an illustration of how effective the use of company in aircraft ownership can be
- you need to consider how you will offset any risks in order to ensure they aren't deal breakers. Landing fees not being paid (as noted above), aircraft being banged into other aircraft, students injured, some old ladys roof crashed into etc etc. With respect to the landing fees one thought is you would need to draft a rock solid legally binding agreement that is signed between the airfield and the school that rents the aircraft off you. It it likely that the airfield might want you as a signatory. Resist this at all costs, however, if you are pushed then you can try and get away with having the trading company (ie: the one that doesn't own the aircraft) as signatory. Can the aircraft still be impounded? Don't know is the answer so you would need to find this out.
- if you plan on utilising the flying schools maintenance providers I don't necessarily see this as such a downside. Again a proper maintenace schedule could surely be put together and signed. But this needs to be detailed down to how many quarts of oil, who is responsible for what etc. An engineer would need to have input into this agreement if you head down this path.
- be careful with the CAA bits and pieces and that you don't inadvertently infringe on their rules about flying for reward. Remember a PPL is meant to be about cost sharing and not making a buck whereas that is reserved for the CPL'ers, albeit those with an AOC presumably as well. The company/trust structure might get you around these rules. I think there is plenty of information in the private flying forum on the use of companys for aircraft ownership if you do a search. If you go ahead then it might be worthwhile confirming with the CAA (in writing) that the scheme of arrangement complies with the ANO etc.
Thats all I can think of for now. Good luck in whatever you decide.
- I like the idea of two companies or even a company and an overriding trust owning a company. Trusts are inherently difficult for people like the IR and creditors to break down and get infomration on as they have limited disclosure rules whereas companies are pretty much transparent. Anything that keeps the ownership of the aircraft separate from the main trading entity will give you a measure of protection but not necessarily be cast iron.
- there have been many bankrupt flying schools over the years that have miraculously risen from the ashes as an illustration of how effective the use of company in aircraft ownership can be
- you need to consider how you will offset any risks in order to ensure they aren't deal breakers. Landing fees not being paid (as noted above), aircraft being banged into other aircraft, students injured, some old ladys roof crashed into etc etc. With respect to the landing fees one thought is you would need to draft a rock solid legally binding agreement that is signed between the airfield and the school that rents the aircraft off you. It it likely that the airfield might want you as a signatory. Resist this at all costs, however, if you are pushed then you can try and get away with having the trading company (ie: the one that doesn't own the aircraft) as signatory. Can the aircraft still be impounded? Don't know is the answer so you would need to find this out.
- if you plan on utilising the flying schools maintenance providers I don't necessarily see this as such a downside. Again a proper maintenace schedule could surely be put together and signed. But this needs to be detailed down to how many quarts of oil, who is responsible for what etc. An engineer would need to have input into this agreement if you head down this path.
- be careful with the CAA bits and pieces and that you don't inadvertently infringe on their rules about flying for reward. Remember a PPL is meant to be about cost sharing and not making a buck whereas that is reserved for the CPL'ers, albeit those with an AOC presumably as well. The company/trust structure might get you around these rules. I think there is plenty of information in the private flying forum on the use of companys for aircraft ownership if you do a search. If you go ahead then it might be worthwhile confirming with the CAA (in writing) that the scheme of arrangement complies with the ANO etc.
Thats all I can think of for now. Good luck in whatever you decide.
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Jesus christ what next.
I like the idea of two companies or even a company and an overriding trust owning a company
What are you planning to crash into? Other than when taxiing, it's very hard to do 3rd party damage accidentally and then even harder without killing the pilot. With a body in the wreckage, they will find the aircraft owner soon enough. Confidentiality is irrelevant; if you want protection from another pilot causing an uninsured loss then a single limited company should do it. Shareholders are not normally liable for anything.
there have been many bankrupt flying schools over the years that have miraculously risen from the ashes as an illustration of how effective the use of company in aircraft ownership can be
Not really. Aviation just has a lot more crooks and conmen in it than most forms of business. In GA training you can defraud a number of PPL students for £5000 each. You can do it totally above board, but there is no need to keep the money, because you won't need it. It won't be there anyway because you used it all up to pay the rent, and your salary. The planes were never owned by the school (of course). No other assets are required for flight training.
The company/trust structure might get you around these rules.
Not until the nearest AOC holder reports you to the CAA and they will be around right away. Which will take under an hour - the speed of rumour around the average airfield is about 150kt. CAA absolutely loves going after alleged AOC breaches. They get good fees from AOC holders.
This kind of "rent to a school" scheme is best forgotten, for all the reasons already listed in this thread.
I like the idea of two companies or even a company and an overriding trust owning a company
What are you planning to crash into? Other than when taxiing, it's very hard to do 3rd party damage accidentally and then even harder without killing the pilot. With a body in the wreckage, they will find the aircraft owner soon enough. Confidentiality is irrelevant; if you want protection from another pilot causing an uninsured loss then a single limited company should do it. Shareholders are not normally liable for anything.
there have been many bankrupt flying schools over the years that have miraculously risen from the ashes as an illustration of how effective the use of company in aircraft ownership can be
Not really. Aviation just has a lot more crooks and conmen in it than most forms of business. In GA training you can defraud a number of PPL students for £5000 each. You can do it totally above board, but there is no need to keep the money, because you won't need it. It won't be there anyway because you used it all up to pay the rent, and your salary. The planes were never owned by the school (of course). No other assets are required for flight training.
The company/trust structure might get you around these rules.
Not until the nearest AOC holder reports you to the CAA and they will be around right away. Which will take under an hour - the speed of rumour around the average airfield is about 150kt. CAA absolutely loves going after alleged AOC breaches. They get good fees from AOC holders.
This kind of "rent to a school" scheme is best forgotten, for all the reasons already listed in this thread.
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DW quote "You will make your own decision, but you won't be able to say that you were'nt given plenty of advice beforehand - the fact that it isn't the advice you want seems to be leading you to disregard it."
I'm not disregarding any info, its all going in very well and i see where this is leading. I know people don't want to see others scammed and I really do appreciate all this feedback i've caused/received.
I'm still on the fence with this my mind is not made up but if i had agreed with everything people said right away then it would have been a short thread. Imagine............. I'm thinking of buying a plane to rent out...........don't do it....................ok bye
I've spoken to my accountant who is well up on this area (luckily) he explained a few things, his final words were don't rush into anything. He has been my accountant for a while and is trustworthy (that's why he runs my other business affairs).
As for the response about many people giving up within 12 months, well I have wanted to do this for several years and I have just suppresed the desire but it has finally got the better of me. Its not something I just thought of doing on a whim. I will get my PPL and have a plane of my own. If you knew me you would also know I'm a good businessman and I always like to see a good plan come together. If I can fit the desire to do my PPL in with a business idea then that's great. If not its PPL only.
I'm not disregarding any info, its all going in very well and i see where this is leading. I know people don't want to see others scammed and I really do appreciate all this feedback i've caused/received.
I'm still on the fence with this my mind is not made up but if i had agreed with everything people said right away then it would have been a short thread. Imagine............. I'm thinking of buying a plane to rent out...........don't do it....................ok bye
I've spoken to my accountant who is well up on this area (luckily) he explained a few things, his final words were don't rush into anything. He has been my accountant for a while and is trustworthy (that's why he runs my other business affairs).
As for the response about many people giving up within 12 months, well I have wanted to do this for several years and I have just suppresed the desire but it has finally got the better of me. Its not something I just thought of doing on a whim. I will get my PPL and have a plane of my own. If you knew me you would also know I'm a good businessman and I always like to see a good plan come together. If I can fit the desire to do my PPL in with a business idea then that's great. If not its PPL only.
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Sorry another thing I forgot to add
breakdown of lesson prices
£115 lesson in a cessna 150
£35 avgas
£35 plane hire
£16 VAT
£20 Pilot
that leaves £9 for the school
and yes that's 1 hour engine time not 1 hour from stepping through the door, I think the government and shell are making more than the school!!!
breakdown of lesson prices
£115 lesson in a cessna 150
£35 avgas
£35 plane hire
£16 VAT
£20 Pilot
that leaves £9 for the school
and yes that's 1 hour engine time not 1 hour from stepping through the door, I think the government and shell are making more than the school!!!
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Ben - I've NEVER leased any of the machines that I've owned to flying schools.
I have allowed safe and trusted friends to play with them for a fair remuneration - the friend benefits from lower costs, I benefit because the a/c is used and all my costs are covered.
There is a lot of talk on here about unscrupulous folk..............
all I know is that there are a lot of used car salesmen in the world, unfortunately a lot are in aviation!!
Stik
I have allowed safe and trusted friends to play with them for a fair remuneration - the friend benefits from lower costs, I benefit because the a/c is used and all my costs are covered.
There is a lot of talk on here about unscrupulous folk..............
all I know is that there are a lot of used car salesmen in the world, unfortunately a lot are in aviation!!
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Ben
A very rough calculation for a zero-houred engine for a C152, including fitting would be £15,000. If an engine does a total of 2,500 hours, then it costs £6 per hour flown. So for your 500 hours per year, you have a notional engine cost of £3,000, on top of the other costs that you have already budgeted.
Insurance - what is the policy 'excess' and who pays it? e.g. if there is an excess of £500 per accident, would you or the school bear this cost?
I am an accountant and a PPL, and I have flown regularly for the last 19 years.
I have done the figures - I would never buy an aircraft to lease to a flying school
A very rough calculation for a zero-houred engine for a C152, including fitting would be £15,000. If an engine does a total of 2,500 hours, then it costs £6 per hour flown. So for your 500 hours per year, you have a notional engine cost of £3,000, on top of the other costs that you have already budgeted.
Insurance - what is the policy 'excess' and who pays it? e.g. if there is an excess of £500 per accident, would you or the school bear this cost?
I am an accountant and a PPL, and I have flown regularly for the last 19 years.
I have done the figures - I would never buy an aircraft to lease to a flying school
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Nay saying
One thing I really dislike about aviation as a hobby is how negative some people are about things. There is too much elitism in it and too many people saying don't do this, don't do that. If I listened to the advice I received I'd never have rented a plane and flown half way across America when I had only just got my PPL in the UK, nor done the various ratings at the times I did them, etc. A bit more altruism would really help the hobby/sport/past-time develop. So I am not generally inclined to be negative. But on this particular topic, I'm with the the nay-sayers 100%.
I've not done it, but I did look in to it. I've never come across anybody who has made money doing it. And after all, how could you? If it was that great then the school wouldn't want to do it. I've met only one person who has done it who recommended it, but he admitted he didn't make any money, plus he was a FI at the school so he had some advantages in terms of taking care of it, scheduling etc. AND he was trying to sell me that exact aeroplane.
But even if you think you could break even on the plane, or even make a small profit, so what? If you have "business interests", a long-term accountant, the means to buy 1 aeroplane yesterday and 2 today, and so on, are you in such a financial position where you want to make all that effort to save, say, £30/hour on your PPL. That's £1,500 on the whole thing. Is all the time and hassle and risk worth that much? And once you've got your PPL you probably won't want to own an aging 152. So what's the point? Big downsides, (perhaps) small upside.
I've not done it, but I did look in to it. I've never come across anybody who has made money doing it. And after all, how could you? If it was that great then the school wouldn't want to do it. I've met only one person who has done it who recommended it, but he admitted he didn't make any money, plus he was a FI at the school so he had some advantages in terms of taking care of it, scheduling etc. AND he was trying to sell me that exact aeroplane.
But even if you think you could break even on the plane, or even make a small profit, so what? If you have "business interests", a long-term accountant, the means to buy 1 aeroplane yesterday and 2 today, and so on, are you in such a financial position where you want to make all that effort to save, say, £30/hour on your PPL. That's £1,500 on the whole thing. Is all the time and hassle and risk worth that much? And once you've got your PPL you probably won't want to own an aging 152. So what's the point? Big downsides, (perhaps) small upside.
Why do it if it's not fun?
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Drauk almost makes a very good point when he says:
When it comes to buying to rent, though, we are not talking about a hobby any more, we are talking about business. And, in business, things are frequently far clearer than they are with a hobby. Either it's possible to make money (in which case the school, assuming it is financially stable enough to borrow the initial outlay, would do it themselves) or it's not.
FFF
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One thing I really dislike about aviation as a hobby is how negative some people are about things
FFF
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I think drauk is right on the mark.
One thing, not exactly on the topic, is that this is a hobby where some financial commitment is a good idea. When one gets one's PPL, one is standing on the edge of an abyss. One has received the official flight training and passed the skills test, but the training isn't enough to allow you to confidently fly from A to B. It never will be because the system is driven by the flight training business which is just that.... a business! They don't get extra money if the graduate finds it useful or fun. So, the PPL scene doesn't have a "support system" for new pilots, which I am sure is a very big reason why so many chuck it in right away.
A big part of the problem is the very poor quality aircraft which is generally available for hire. While many would rapidly point out that they think it is perfectly OK to climb into some piece of wreckage, the fact is that pilot forums are packed with people who will climb into anything that gets off the ground, but most people don't exactly like it. I really hated flying that 30 year old knackered crap, but I accepted it as a temporary situation which would last only a year or so. Passengers like the old wreckage far far less than most pilots would imagine (ever wondered why, after 1 flight, somebody politely turns down your offer of a free flight somewhere?)
Very early on, I started looking around to see what I could get into, to fly after the PPL and also to do the IMC Rating in.
Immediately I encountered a lot of negativity, and some downright crookery. Obviously, a student will tend to ask the people he trusts: instructors. Unfortunately, unless you can get one quietly on your side and he knows what he is talking about, he will be grinding an axe for the school he works in. Or for a mate who owns a share which he wants to dispose of. That was when I first realised that just about everybody one stumbles across working in GA cannot be taken at face value. Almost nobody employed in UK GA is making so much money they can afford to be charitable.
The negativity posted throughout this thread is entirely correct for the specific situation. These leasebacks are a mug's game. However, a lot of people are also very negative about a new PPL buying an aircraft in general, and I think this is much less of a clear cut case. While many people doing their PPLs don't have a clue what sort of flying they want to do (just as, utterly inexplicably to me, the majority of people I encountered on my engineering degree at univ had no idea what they wanted to do in life) there are many who have a reasonable idea regarding their flying objectives, and there is no reason why they should not buy something early on.
The result will be excellent access, with a very low marginal (hourly) cost, which encourages currency. And currency is what it is all about. Lose your currency and you are well down the road to chucking it in. Also currency = safety.
The easiest cases are where the pilot wants to go places, or wants to do aeros.
For touring, your budget directly determines the aircraft capability.
Aeros I know next to nothing about but clearly one can buy some nice stuff to play with.
One thing, not exactly on the topic, is that this is a hobby where some financial commitment is a good idea. When one gets one's PPL, one is standing on the edge of an abyss. One has received the official flight training and passed the skills test, but the training isn't enough to allow you to confidently fly from A to B. It never will be because the system is driven by the flight training business which is just that.... a business! They don't get extra money if the graduate finds it useful or fun. So, the PPL scene doesn't have a "support system" for new pilots, which I am sure is a very big reason why so many chuck it in right away.
A big part of the problem is the very poor quality aircraft which is generally available for hire. While many would rapidly point out that they think it is perfectly OK to climb into some piece of wreckage, the fact is that pilot forums are packed with people who will climb into anything that gets off the ground, but most people don't exactly like it. I really hated flying that 30 year old knackered crap, but I accepted it as a temporary situation which would last only a year or so. Passengers like the old wreckage far far less than most pilots would imagine (ever wondered why, after 1 flight, somebody politely turns down your offer of a free flight somewhere?)
Very early on, I started looking around to see what I could get into, to fly after the PPL and also to do the IMC Rating in.
Immediately I encountered a lot of negativity, and some downright crookery. Obviously, a student will tend to ask the people he trusts: instructors. Unfortunately, unless you can get one quietly on your side and he knows what he is talking about, he will be grinding an axe for the school he works in. Or for a mate who owns a share which he wants to dispose of. That was when I first realised that just about everybody one stumbles across working in GA cannot be taken at face value. Almost nobody employed in UK GA is making so much money they can afford to be charitable.
The negativity posted throughout this thread is entirely correct for the specific situation. These leasebacks are a mug's game. However, a lot of people are also very negative about a new PPL buying an aircraft in general, and I think this is much less of a clear cut case. While many people doing their PPLs don't have a clue what sort of flying they want to do (just as, utterly inexplicably to me, the majority of people I encountered on my engineering degree at univ had no idea what they wanted to do in life) there are many who have a reasonable idea regarding their flying objectives, and there is no reason why they should not buy something early on.
The result will be excellent access, with a very low marginal (hourly) cost, which encourages currency. And currency is what it is all about. Lose your currency and you are well down the road to chucking it in. Also currency = safety.
The easiest cases are where the pilot wants to go places, or wants to do aeros.
For touring, your budget directly determines the aircraft capability.
Aeros I know next to nothing about but clearly one can buy some nice stuff to play with.