Buying to hire out
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Buying to hire out
I've just embarked on my PPL, I was weighing up the price differences between the usual 3 options; owning, part owning or school plane.
Whilst I was at the flight school we got talking about a plane i viewed and I was interested in, the school said i fi got a plane he would be interested in hiring it from me. However the one i looked at was a 50% share and the other guy isn't interested.
They said if I get a plane and put it in the school, they will pay £35 for each hour they put on it, guaranteed 500 hours per annum. This seemed like a decent deal to me, however I am new to aviation and i'm sure i'm missing a few vital points.
They propose I insure, hangar and maintain the plane. They use it for flight school, I use it to do my PPL and I just pay for an instructor and my own fuel.
I have spoken to 2 people so far, 1 said sounds a crap deal to me, the other said yes this sort of thing happens regular sounds fine but get a contract.
I discovered today it needs to be registered as public transport or something and a higher standard of Cof A. I'm not sure what all this entails and i'm finding it hard to unearth information.
Any advice and information anyone could spare would be greatly appreciated as i dont want to end up with a white elephant.
Whilst I was at the flight school we got talking about a plane i viewed and I was interested in, the school said i fi got a plane he would be interested in hiring it from me. However the one i looked at was a 50% share and the other guy isn't interested.
They said if I get a plane and put it in the school, they will pay £35 for each hour they put on it, guaranteed 500 hours per annum. This seemed like a decent deal to me, however I am new to aviation and i'm sure i'm missing a few vital points.
They propose I insure, hangar and maintain the plane. They use it for flight school, I use it to do my PPL and I just pay for an instructor and my own fuel.
I have spoken to 2 people so far, 1 said sounds a crap deal to me, the other said yes this sort of thing happens regular sounds fine but get a contract.
I discovered today it needs to be registered as public transport or something and a higher standard of Cof A. I'm not sure what all this entails and i'm finding it hard to unearth information.
Any advice and information anyone could spare would be greatly appreciated as i dont want to end up with a white elephant.
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As someone who has examined this in detail some time ago, the short answer is that I wouldn't recommend it unless
a) you buy an old wreck, and
b) you don't mind it wrecked some more
I have never come across anybody who has found otherwise.
Of course, what I call an "old wreck" may be many peoples' idea of a perfectly serviceable aircraft, and indeed most of UK's GA community have little choice but to fly these.
One example which worked for somebody was a PA28 Archer which was on permanent lease to a school, which was allowed to fall apart to the level where almost nothing apart from the altimeter (and other VFR-mandatory stuff) worked, but the owner had an agreement under which he was able to take it away for a few weeks each year for a holiday abroad and in this way he got a combination of cheap flying and the ability (not normally possible with self fly hire) to take it away for a few days or more.
Yes it needs to be a G-reg, maintained to Transport CofA standards, and insured for the ab initio training. You will no doubt want the school to cover it under its own insurance.
If you can afford your own plane, a much better way IMHO is to put together a small group of solvent people you know and trust, and either buy it together, or you buy it and rent it out to the others. If you don't insure it for ab initio (PPL) training and insist that everybody is legal on the type to start with, but the aircraft can be used for additional training like IMCR and IR, the insurance is pretty reasonable. Insurers don't like PPL training but are supportive of any additional training. This scheme (pure rental) can also have benefits on the VAT front, etc.
No matter what you do, you will never make money. There are too many people in the aviation training scene who are quick as foxes to exploit any opportunity to take advantage of a sucker. A properly managed, properly funded school will buy its own aircraft and maintain it to a decent standard.
But you can achieve cheaper flying for yourself.
a) you buy an old wreck, and
b) you don't mind it wrecked some more
I have never come across anybody who has found otherwise.
Of course, what I call an "old wreck" may be many peoples' idea of a perfectly serviceable aircraft, and indeed most of UK's GA community have little choice but to fly these.
One example which worked for somebody was a PA28 Archer which was on permanent lease to a school, which was allowed to fall apart to the level where almost nothing apart from the altimeter (and other VFR-mandatory stuff) worked, but the owner had an agreement under which he was able to take it away for a few weeks each year for a holiday abroad and in this way he got a combination of cheap flying and the ability (not normally possible with self fly hire) to take it away for a few days or more.
Yes it needs to be a G-reg, maintained to Transport CofA standards, and insured for the ab initio training. You will no doubt want the school to cover it under its own insurance.
If you can afford your own plane, a much better way IMHO is to put together a small group of solvent people you know and trust, and either buy it together, or you buy it and rent it out to the others. If you don't insure it for ab initio (PPL) training and insist that everybody is legal on the type to start with, but the aircraft can be used for additional training like IMCR and IR, the insurance is pretty reasonable. Insurers don't like PPL training but are supportive of any additional training. This scheme (pure rental) can also have benefits on the VAT front, etc.
No matter what you do, you will never make money. There are too many people in the aviation training scene who are quick as foxes to exploit any opportunity to take advantage of a sucker. A properly managed, properly funded school will buy its own aircraft and maintain it to a decent standard.
But you can achieve cheaper flying for yourself.
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I was thinking about £15-20k, I agree, its not worth buying a sweet piece of kit for a school.
I did a few sums and came up with too good to be true, which it probably is.
500 hours guaranteed at £35 is £17500
So
£17500 minimum income
£ 1500 hangar fee
£ 5000 maintenance
£ 3000 insurance
thats £8000 spare for other stuff and i get to do my PPL at a reduced rate
does anyone think these figures are reasonable, please if you know better then i would like you to
on my fire before i part with my readies.
I did a few sums and came up with too good to be true, which it probably is.
500 hours guaranteed at £35 is £17500
So
£17500 minimum income
£ 1500 hangar fee
£ 5000 maintenance
£ 3000 insurance
thats £8000 spare for other stuff and i get to do my PPL at a reduced rate
does anyone think these figures are reasonable, please if you know better then i would like you to
on my fire before i part with my readies.
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500 hours is probably 25% of an engine, so you'll need an engine fund. It's also 10 50 hour checks, and your assuming nothing untoward is found.
Be aware though, unless it's a busy school, you will struggle to achieve 500 hours, what with WX cancelltions, no-shows, etc. For example, our 172 was first registered in 1973, and has TTAF of just over 4,000 hours - tha't's an average of 121 a year! I know that this is probably not representative, but if you're going to be spending £15k - £20k you will be getting a v. high houred machine, that will need some TLC
If it were that simple, I'm sure most people would be doing it, and why would the school not just buy the plane themselves at those rates, and have an assett?
I think you've already recognise that it may be just a little too good to be true!
Good luck though if you do go for it, and enjoy the flying!
DW.
Be aware though, unless it's a busy school, you will struggle to achieve 500 hours, what with WX cancelltions, no-shows, etc. For example, our 172 was first registered in 1973, and has TTAF of just over 4,000 hours - tha't's an average of 121 a year! I know that this is probably not representative, but if you're going to be spending £15k - £20k you will be getting a v. high houred machine, that will need some TLC
If it were that simple, I'm sure most people would be doing it, and why would the school not just buy the plane themselves at those rates, and have an assett?
I think you've already recognise that it may be just a little too good to be true!
Good luck though if you do go for it, and enjoy the flying!
DW.
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even if they don't achieve 500 hours, they still pay for 500 hours
any ideas on what a 50 hour check costs?
or the engine at 2000?
any ideas on what a 50 hour check costs?
or the engine at 2000?
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Typical 50 hour is about £400 to £500 for ours. New / zero timed engine - I believe (not entirely sure though - someone else will have a better idea) is £15k - £20k. You've also got to think about prop time, tyres, oil costs, and a whole host of other things.
It's a very brave school that will guarantee you to pay for time they don't use - there isn't much money to made in PPL training these days, so I'm surprised - will they guarantee it in writing?
Owning an aircraft is nothing like owning a car - don't be tempted to find comparisons...
DW.
It's a very brave school that will guarantee you to pay for time they don't use - there isn't much money to made in PPL training these days, so I'm surprised - will they guarantee it in writing?
Owning an aircraft is nothing like owning a car - don't be tempted to find comparisons...
DW.
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The most common trick, deliberate or accidental, in flight training / leasing in of planes from private individuals, is to "promise" X hours but not achieve it.
A plane that costs £20k will cost rather more than £500 on the average 50hr check - unless it is a parachute with a lawn mower engine on the back
It is not unusual for Annuals to cost £5000+ on planes of this type / age / usage (e.g. a Cessna 150/152). To anybody who can add up, it looks ridiculous but it suits the average PPL training operation which has zero money in the bank and lives totally hand to mouth, hopefully with regular cash advances from punters who pay cash for a 45 hour block in return for a 10% discount.
Remember that no matter how clever you think you are, the flying school owner has been around the block 10 times and is way ahead of you. He's already worked it out.
A plane that costs £20k will cost rather more than £500 on the average 50hr check - unless it is a parachute with a lawn mower engine on the back
It is not unusual for Annuals to cost £5000+ on planes of this type / age / usage (e.g. a Cessna 150/152). To anybody who can add up, it looks ridiculous but it suits the average PPL training operation which has zero money in the bank and lives totally hand to mouth, hopefully with regular cash advances from punters who pay cash for a 45 hour block in return for a 10% discount.
Remember that no matter how clever you think you are, the flying school owner has been around the block 10 times and is way ahead of you. He's already worked it out.
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the price of a zero timed engine is a vital thing i need to know for sure, anyone got a definative price on this?
also how much is the public transport c of a?
also how much is the public transport c of a?
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Depends on the plane - £15k anyone?
If the plane is not already on a Transport CofA then forget it. The bill could be huge. Everything that was fitted, for which you don't have the JAR1 or 8130-3 forms, has to be removed (as I understand it). I once looked at this, and the prop (£7000) would have had to come off.
If the plane is not already on a Transport CofA then forget it. The bill could be huge. Everything that was fitted, for which you don't have the JAR1 or 8130-3 forms, has to be removed (as I understand it). I once looked at this, and the prop (£7000) would have had to come off.
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i've got my eye on a
cessna 152c,
1978,
6581 frame hours,
899 engine hours,
passed uk transport c of a jan 2006
by my reckoning it will need a zero engine in 2 years
cessna 152c,
1978,
6581 frame hours,
899 engine hours,
passed uk transport c of a jan 2006
by my reckoning it will need a zero engine in 2 years
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Just another thought - would this not be classed as an income, and therefore attract the interests of the Inland Revenue? If so, that's another 23% - 40% you would have to deduct. (May be wrong on this, but it does seem like an income)
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yeah ive already looked into that, if i do it i'll start a new company to run alongside my current business, then ppl becomes staff training :-) and tax debductable, so not all is bad
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No you can't do that (put PPL training through the business). Not in this case and not in most cases. You must see a competent accountant.
The income may be taxable but if so then so will be the operating expenses (allowable against the income), and rest assured the expenses will exceed the income
The creation of a limited company doesn't in itself change the above position. It does clean it up but the Revenue doesn't like arrangements like this, where a ltd co. owns one plane, leases it to one customer... and don't ask me how I know
To create a business that will stand up for Revenue (and VAT, if applicable) purposes you need multiple customers, all at arm's length. The Revenue are on a crusade against everybody to do with boats, planes, horses.
The main scenario where a ltd co. is worth doing is where others fly it. Then, if somebody crashes it and creates a huge uninsured loss, the owner (you) should be protected. Provided you acted properly in your capacity as a Director
The income may be taxable but if so then so will be the operating expenses (allowable against the income), and rest assured the expenses will exceed the income
The creation of a limited company doesn't in itself change the above position. It does clean it up but the Revenue doesn't like arrangements like this, where a ltd co. owns one plane, leases it to one customer... and don't ask me how I know
To create a business that will stand up for Revenue (and VAT, if applicable) purposes you need multiple customers, all at arm's length. The Revenue are on a crusade against everybody to do with boats, planes, horses.The main scenario where a ltd co. is worth doing is where others fly it. Then, if somebody crashes it and creates a huge uninsured loss, the owner (you) should be protected. Provided you acted properly in your capacity as a Director
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There's been many threads on here in the past of the ability to set tax against training fees - it just isn't possible any more. Can't be bothered doing it myself, but just use the search function - you'll find that whilst you may think it's a good idea, the Revenue won't allow it.
Whilst your searching, have a look for group share costs. You'll find that, whilst you dont want to believe it, this scheme is not going to make you any money, will possibly save you a little, but will porbably cost you a fortune.
Sorry to put it so bluntly, if you go ahead I wish you every success, and hope you don't meet a painful financial end.
Whilst your searching, have a look for group share costs. You'll find that, whilst you dont want to believe it, this scheme is not going to make you any money, will possibly save you a little, but will porbably cost you a fortune.
Sorry to put it so bluntly, if you go ahead I wish you every success, and hope you don't meet a painful financial end.
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First off, if you can find a school who'll guarantee you 500hrs a year, then they will soon be bust!
There is no way I'd agree to a commitment like that for even a busy club like ours, especially with something like a ropey old cess-pit.
Buying an a/c to lease to a flying school in order to earn money is a complete non-starter. Leasing may help you to offset some of the costs, but unless you are a maintenance organisation, then there isn't any money in it. Long term there may be, but there can be some disasters along the way.
A couple of our machines are leased in this way from private owners, but they certainly don't see it as a money making scheme and I have made that clear from the start.
One a/c we have we lease with a commitment of 30hrs a month (360 per year) not particularily onerus, but during the winter it can get pretty interesting!
There is no way I'd agree to a commitment like that for even a busy club like ours, especially with something like a ropey old cess-pit.
Buying an a/c to lease to a flying school in order to earn money is a complete non-starter. Leasing may help you to offset some of the costs, but unless you are a maintenance organisation, then there isn't any money in it. Long term there may be, but there can be some disasters along the way.
A couple of our machines are leased in this way from private owners, but they certainly don't see it as a money making scheme and I have made that clear from the start.
One a/c we have we lease with a commitment of 30hrs a month (360 per year) not particularily onerus, but during the winter it can get pretty interesting!
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Ok so I think its agreed the best i'm going to do is save money on my PPL, I'd really like to know what a cessna 152 full engine job is likely to cost, any confirmed prices anyone?
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If you are getting £35/hr then what is happening with the rest of the cash? By my reckoning the going rate per hour for a PPL is £125ish based on 45 hours at £5,500 for a package. So Mr Flying School has £90/hr to pay an instructor (say £10-20/hr) and pocket the rest towards his costs such as overheads/marketing etc. Looks like he is making a fair wedge out of this deal, and you need to get his rate up in order to make your numbers stack up and give you some comfort over engines funds etc as mentioned above.
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So you would get £35/hr, but have to cover all the fixed costs, hangarage, insurance etc.
Doesn't sound like a very good deal for you to be honest. It would mean the other 40-50 quid per hour goes to the school. Hmmm, I think you need to renegotiate the rates a bit there.
An example, we pay £20ish/hr for a 150, but we are responsible for parking and Insurance. Good for both us and the owner. Your deal sounds a bit one sided.
Doesn't sound like a very good deal for you to be honest. It would mean the other 40-50 quid per hour goes to the school. Hmmm, I think you need to renegotiate the rates a bit there.
An example, we pay £20ish/hr for a 150, but we are responsible for parking and Insurance. Good for both us and the owner. Your deal sounds a bit one sided.