Sorry I don't understand the question. If you are asking what I would pay to buy into the groups. Well group A I would be offering around £4k for the share and Group B would probably get closer to the £4700 region. What I would pay for a share is nothing to do with the discussion we are having. But I would certainly not pay over the 1/4 value of the aircraft.

Say I pay your £5.3k figure to "buy" 1/4 of the engine fund on top of the value of the aircraft and the engine goes tits up I have paid for 1 quarter of the aircraft and I have paid £300 towards someone else's flying and I still have to pay 1/4 of the repair bill.

Better idea...... I pay 1/4 the value of the aircraft. The engine goes bang, the group uses the money in the bank to pay the repair bill and I am liable for 1/4 of the balance after that money has been spent. So the money in the bank covers the wear and tear that has already occurred which is why it was collected in the first place and I cover my % of the bill.

I am glad I am not in group........

This actually seems to go against what you were saying earlier - that the share is only worth the portion of the market value of the aircraft, because you now seem to accept that the cash fund (Yes the term Engine fund has been used but I think most people who have been in groups accept that this fund is used for unplanned expenses of all types) adds value.
What you do now seem to be saying is that a 1/4 share is NOT worth 1/4 of the market value of the aircraft (i.e. what it would be worth if sold on the open market) - this is actually a different argument from the one you have put forward before - are we getting somewhere now?:hmm:
Also, if you buy your own aircraft and the engine goes bang just after buying you have to cough up ALL the costs, with no money having come with your purchase.

No I have not changed my position but it is a nice try on your part to make it seem that way. So let me make it totally clear I do not consider the amount of money a group has in the bank to be any part of the value of the aircraft.

However I would find a group with cash in the bank more attractive than a group with non. I am not stupid!

However I would not pay more than the market value of the airframe to get into the group that had more cash in the bank. For either group I would be aiming to pay below the market value of the airframe. I am not stupid.

Enough of this. When I was accused of grinding people down to my point of view I got a 10 day ban. Rob???????????

OK Bose - I do not agree with you, but I can almost see where you are coming from -one more question and I might get there -if you were to buy one of these £20,000 aircraft as a sole owner then what would you expect to pay (no fund of course)?

What would I pay? Well thats a leading question. Nowhere near the asking price. The point of the question?

The point is to try and see how you perceive value. Note, I did not say the asking price was £20,000 - if I were selling anything which I believed I would get £20,000 for I would be asking more for it and aiming to accept as much as I could, hopefully more than £20,000, how much it actually goes for either above or below this amount depends on demand and is the "actual" market value.

No the actual market VALUE is the valuation of what it is perceived to be worth what it sells for is a different matter.

For example if we have a house valued at £1mil what it sells for could be more than market value or less.

I gave up long ago, Bose does not understand that the market value of the aircraft is what someone will pay for it, not what the vendor thinks it is worth.

If the asking price was 20k and he buys it for 18k then its value is 18k. If he offers 18k, his offer is not accepted, and it's subsequently sold for 19k then it's value is 19k.

It follows that you can't determine the market value until you've sold it (although you can have a guess at what it might sell for).

As for the concept of the engine fund being a liability, I'd be delighted to offer to take such a liability off anyone's hands for say 50% of the value of the liability? The fund itself is an asset, held for the purpose of meeting a future and as yet uncrystallised liability.

An understanding of basic accounting, the concept of Sales, Purchase, Income, Expenditure, Asset and Liability nominals and how they build into a Profit & Loss account and a Balance Sheet would be helpful if people want to pontificate.

You're continuing to talk bollox
All definitions from dictionary.com

But we are not running a balance sheet when we are valuing a share. What you are suggesting would probably work around a share or a trading entity like a ltd company where shares in the business are sold based on the balance sheet. What we are referring to is a private share with a structure generally formed around a gentleman's agreement.

We are obviously not going to agree on this so I am calling it a day.

Well I think that is the first thing you have said in this thread I would agree with - I can, now (just) see where you are coming from though I do not accept it as correct.:ugh:

Some light at last....

This is obviously where we are looking differently at things.

I don't understand why you would think you'd have to pay a full 1/4 of the repair bill? I can't see anything happening in such a senario other than what you suggest is a better idea in the second paragraph. The engine fund pays for the repair bill so far as is possible, and then the balance is split four ways. After all that's the whole point in having an engine fund.

If you don't see it being used for the repair of the engine, how do you see it being used?

dp

And this increases the market value of the aircraft - hopefully to somewhere near the sum of the value before the new engine + what the engine cost.:ok:

Exactly.

Some people want to have their cake and eat it. That's fine in the dog eat dog world of commerce, but not the sort you want in an airplane group.

Felix
If you're still with us, apologies for the way everything's gone away from your original question.

I've shared boats and aircraft. How well it works will be dependent on how well you get on with your partners. Most of us have neither the time, the money, or the obsessiveness to want to spend all of our leisure time playing with the toy. However there are some who want to do lots of hours and want the machine to be available whenever they want.

If you buy it yourself you end up with all of the cost and all of the risk, and have it available to you whenever you want. You'll also know that it hasn't been mistreated.

If you share it you share the costs and risks but you give up some autonomy and availability. The dictum of "buyer beware" applies equally to buying an aircraft outright as much as to buying into a group, but you need to be more careful with a group because, while things may unexpectedly go wrong with the aircraft, they can equally go wrong with the personal relationships within the group.

Don't pay more for the share than it's worth. Make sure you understand the value of what you're getting. Don't value the aircraft by asking prices, think of what similar aircraft sell for, rather than the price they are advertised at. Make sure you understand what expenditure is likely, will the engine need an overhaul, will it need a repaint or re-cover, will it need a prop overhaul? What will the costs be? Is the pattern of expenditure likely to be similar to what it has been (in which case the group accounts are likely to be a good guide) or is there something expensive looming like an engine overhaul? Are changes like the increasing cost of Avgas going to increase or decrease the attractiveness of the aircraft to future purchasers?

All of these are things you should also be condidering of you're thinking of buying outright.

One could go on ad infinitum, at the end of the day it's what you feel comfortable with.

Nothing wrong with that, it's having someone else's cake and eating it that gets you into trouble.;)

If you don't see it being used for the repair of the engine, how do you see it being used?

This is another valid angle. Sometimes, the engine fund isn't used towards a new/overhauled engine. The group might get disbanded (let's say the plane gets wrecked and the insurer won't cover it, or is scrapped because some huge problem is found which would cost too much to fix. Then, the fund might get used towards buying another plane.

In the group accounts, one would normally work things on a going concern basis i.e. you assume that the "business" will continue, and you make a provision for the anticipated engine work by building up the fund. But the fund isn't held in any kind of escrow and can be used for anything at all. In an extreme case, the group might get disbanded altogether in which case the current members will pocket the fund!

There is NO way to work this with perfect fairness, in any group that has some member rotation. Somebody will benefit from the others, depending on luck, or inside knowledge.

It's a bit like the treatment of fuel duty drawback within groups. Many groups, to my amazement, allow the pilot going abroad to pocket the drawback. This pilot is then screwing those who might fly it abroad (still on the same fuel load) later; they can't make the drawback. When I used to rent my plane out, I didn't have any rules set on this and one renter (an instructor, no less) pocketed the drawback of about £100 which completely covered the cost of his trip to LeTouquet and back... another instructor/renter pocketed a drawback without even telling me and it was by accident that I avoided making a duplicate claim.

I think a lot of the arguments in this thread come from the lack of appreciation that there is no perfect way to run these maintenance funds, in any group that has any member rotation. Only if all members remained for the entire period the plane is in the group could one work it out fairly to all.