Renting your own aircraft through an FBO to avoid sitting and/or negate costs?
Posted by PidgeyPotion@reddit | flying | View on Reddit | 23 comments
I’m currently renting from an FBO that has three different aircraft from three different owners; two Piper Warriors (a PA 151 & 161) and a Cherokee 180. The rates are dry (renter has to pay for fuel after every flight), and all three airplanes are pretty old (pa-151 is a 74, the pa-161 is an 84, and the pa-180 is a 73) and they sit on the ramp unhangared, so they’re not in super pristine condition. While it would be delusional to ever expect to make a profit or perhaps break even, could renting at least lessen the costs of ownership? For example, if I’m paying $1,500 monthly for fixed costs and I net $700 from renters, that would lower my costs to only $800 hypothetically)
Another issue is I’m gone for six months every year for work, and in a perfect world I’d have a pilot buddy fly my aircraft periodically AND pay for fuel. Or perhaps co-ownership. But in reality I’d either have to pay someone to fly it and cover the fuel myself. With renting, the insurance would likely be several times higher, not to mention excess wear & tear from student pilots. Those two factors alone could potentially cost more than just owning outright. But for any owners who have rented out, can it potentially lessen the costs of ownership?
flyingron@reddit
Believe me, I have been involved on both sides of the leaseback biz (both lesser and lessee). If you think that leaseback is a mechanism to defray the cost of ownership, you are going to LOSE.
Leaseback is a business. If you don't treat it like a business, you're going to lose your shirt. This means you have to put the plane somewhere where it is going to get rented. The key to getting it rented is availability. Availability means staying on top of maintenance (nobody wants to book a hangar queen). It also means you get inline with (or perhaps behind) everybody else.
Understand that insurance for rental purposes is going to be 3x (at least) what you can get for personal use (even with a few partners).
Yes, co-ownership is a way to share the costs and risk. Renting under the table to your buddy can be done, but you need to make sure that you are covered for that. While casual use (other than with mechanics) can be covered under open pilot clauses, if you are renting or allowing someone to regularly fly the plane, it would be advisable to have specific coverage for them.
flyghu@reddit
I do well renting my plane. But not through an FBO - I handle everything directly myself. Run it like a business and you'll be fine. Run it like a hobby to offset costs and it's going to suck.
There's plenty of demand where I'm at. I can be picky and not everyone that walks in the door gets to fly my plane. Do it right and find your niche.
OkEfficiency3747@reddit
Any savings you hope to gain will be negated by higher insurance rates, and if you're financing your plane, higher loan interest rates.
PidgeyPotion@reddit (OP)
That was another thought; I finance and then rent the plane to help with the payments until it is fully paid off.
Legal_Criticism@reddit
It depends on the plane, pa28s like the FBO had are sorry cheap insurance wise to rent out and have super low time requirements for insurance, but a not complex/high performance plane orbw 6 seater will be a different story
MehCFI@reddit
Leasebacks don’t make money 99% of the time. Maybe subsidized maintenance costs, but not you’re needing 100 hr inspections and students are gonna beat the hell out of your airplane. There’s a reason flight schools LOVE it
storyinmemo@reddit
They're a good option for a situation like this, though. I wasn't flying mine enough on my own due to life + instructional hours in other aircraft. Now I lease it back, instruct in it, take it myself sometimes, and spend less on the plane. I don't make money, but I'm not carrying 100% of costs while it sits either.
PidgeyPotion@reddit (OP)
Here again, I wouldn’t expect any financial gains, but simply to somewhat lessen the ownership costs. If I net $120 hourly and the airplane gets rented 10-15 hours per month, that $1,200-1,800 won’t turn a profit, but hopefully negates at least some of the overall costs versus just owning and not renting it.
Also, I would not buy a $300k aircraft and rent it out, it’d be an older Skyhawk or Cherokee at best.
MehCFI@reddit
Personally I wouldn’t do it. If you’re trying to save money starting a club/selling share of airplane can be controllable of just who you let fly without needing 100 hrs and low hour pilot slam n goes. The minimal reductions for potentially much higher costs is not great imo, unless that school is crazy busy with in house mx you get a phenomenal discount on
PidgeyPotion@reddit (OP)
Another question is renting out a complex aircraft? It would primarily be used for private pilots getting their commercial or for building complex time and therefore wouldn’t receive the same abuse as a trainer plane. Also it could be insured for private pilots and above only and no student pilots. Perhaps this would lessen the insurance costs?
FridayMcNight@reddit
We have a Mooney in our club. It's not actually that much more expensive to insure than the other aircraft, but it is more. Hull value is a big determinant. Also the minimum pilot qualifications are higher: essentially you need 10 dual in it to be able to rent it solo. So that creates a bit of a cost hurdle that shies some folks away. Same is true for Cirrus aircraft, but the pilot quals are even higher (like a 25 dual, cirrus-specific training, 300TT and an IR).
Mooney's (J's anyway) are efficient planes that are easy to fly, don't require a ton of maintenance, and don't have a lot of recurring ADs. It's not a bad choice, but demand will be less than for a trainer.
Also people don't really rent complex aircraft to time build. They rent the cheap planes because they are cheap, and with the commercial requirement being 10 training in TAA --or-- complex, the G1000 172 is good enough.
If you have a Mooney or Bo, the insurance is gonna minimally require PPL plus 10 or 25 dual in that plane. You're unlikely to even get a policy that allows student pilot cert holders. You won't even see rates come down unless you restrict renters to pilots with something like 500TT and an IR. That really limits the audience that's interested in renting though. Complex isn't inherently a bad choice, but you're not quite on the mark with respect to what insurers will require. A Mooney or a bo leased back to a club could work. It probably wouldn't be any worse than a 172. It'd fly less, but at a higher hourly. Prob double the the acquisition price (or more) compared to a Cherokee though.
What about an RV-12? Cheap to buy, cheap to operate, cheap to repair, Cheap to insure.
MehCFI@reddit
I don’t write the policies but I can’t imagine for a second adding retract gear would balance that. Retract gear are stupid expensive to insure, especially low time.
Best airplane return probably going to be a moderately equipped 172
WoozyWinx@reddit
I would love to learn more about this.
For example, what if 2 flight students, both of whom are working towards Instrument, Commercial, CFI, etc. purchased an airplane and leased it back to the school, wouldn't that be a win win?
It would be an interesting thing to see the breakdown of numbers for say a C172 or 182.
FridayMcNight@reddit
The trick is to realize it's a business and manage it as if you want that business to succeed. That means that you have to be choosy on which instructors you allow to do checkouts, and you need to choose the CFIs that are good at training pilots how to take proper care of your airplane. In other words, you have to be the asshole that enforces the rules for your airplane, because nobody else cares about it.
Any of those aircraft can work financially, but none are automatic. If you ignore the management part of the business, your planes will get beat down, and the cost to keep them running will far exceed what you earn by having them in rental service.
If it all goes well, it's a small margin, small market business. And personally, I wouldn't do it without an IA that I know well and have a good functional relationship with.
On your question, (ignoring capital cost) the fixed costs are similar between a 172 and 182, and the variable costs are probably \~50% higher for the 182... if your pilots care for the airplane well. If they don't, it's easier for pilots to negligently run the 182 too hot and shorten the life of the cylinders. It's also easier to plonk a landing and damage the firewall on a 182.
If the 182 is a nicer airplane, you'll see more demand for it because it is a much nicer aircraft than a 172. If it's clapped out, less so. If it has a modern functional autopilot, you'll see people rent it for longer distances. No AP and people tend to rent for shorter local flights. Engine overhauls are getting eye-watering expensive, and 6cylinder engines are around 50% more expensive than 4cyl engines, so that affects how you build reserves.
I personally wouldn't put a turbo 182 into leaseback, but I know someone who did and they claimed it worked out well. It's my understanding that they had a fair number of restrictions on who could rent that plane, and they didn't allow it to be used for training (other than aircraft checkouts).
PidgeyPotion@reddit (OP)
One thing to consider is a nicer airplane may be used more for x/’s and leisure flights rather than being used as a trainer, and therefore would receive less abuse. Perhaps that’s why it worked out for the Turbo 182 owner.
FridayMcNight@reddit
I'd bet more the type of airplane (or how you restrict it's use) than how nice it is. I don't think anyone is going to use a turbo 182 for training flights, so they don't get that abuse. Conversely even the nice 172s that live the training life get beaten down.
At a time we had one club 172 that was only allowed for non-training flights. Training was restricted to the clapped out 172s. When the club got rid of those 172s they allowed training in the remaining nice 172. It went from nice to hammered in about 2 years.
MehCFI@reddit
It could work, especially if those students are training themselves and the wear and tear is expected. But by the time you add additional mx (adding 100 hours at a minimum, but tons of early students gonna break things and wear things faster in general) and wayyyy higher insurance it’s gonna be a smaller return than you’d think.
The school has no downside- they get aircraft to use at a profitable rate, and if it breaks they can kick the costs to the owner.
Only way I’d consider it is if the school is
1) The school is actually going to use the airplane a TON
2) the school has in-house maintenance with extremely discounted rates for the owner
3) you’re okay with your airplane being beat to shit daily
EM22_@reddit
IRS hates this one simple trick!
infowhiskey@reddit
They're not designed to make money. The idea is other people pay down the cost of the airplane.
14Three8@reddit
Unless you’re getting a sick deal on maintenance or some other sweetener (usually offered by the FBO because they asked you to lease it to them), any savings are negated by the insurance increase and maintenance costs of letting people who don’t know how to fly your plane fly your plane. The potential upside becomes getting other guys to try to pay for your plane. Again, the cost is letting a bunch of students damage the shit out of it. Your call.
I’m in the middle of doing this right now (granted, with an amphib searey.) Lease it back to my school to do seaplane add ons. And I’d be the only instructor for god’s sake. Insurance shoots through the roof, and I’m back to square one.
Skynet_lives@reddit
This is how my club operates, all the planes are lease backs and most of the owners are pilot members.
I am not sure how it works for cost splitting but all the owners seem to be happy with the arrangement. Several have purchased planes just for the club as an “investment” so they can’t be losing money at least.
live_drifter@reddit
No.
rFlyingTower@reddit
This is a copy of the original post body for posterity:
I’m currently renting from an FBO that has three different aircraft from three different owners; two Piper Warriors (a PA 151 & 161) and a Cherokee 180. The rates are dry (renter has to pay for fuel after every flight), and all three airplanes are pretty old (pa-151 is a 74, the pa-161 is an 84, and the pa-180 is a 73) and they sit on the ramp unhangared, so they’re not in super pristine condition. While it would be delusional to ever expect to make a profit or perhaps break even, could renting at least lessen the costs of ownership? For example, if I’m paying $1,500 monthly for fixed costs and I net $700 from renters, that would lower my costs to only $800 hypothetically)
Another issue is I’m gone for six months every year for work, and in a perfect world I’d have a pilot buddy fly my aircraft periodically AND pay for fuel. Or perhaps co-ownership. But in reality I’d either have to pay someone to fly it and cover the fuel myself. With renting, the insurance would likely be several times higher, not to mention excess wear & tear from student pilots. Those two factors alone could potentially cost more than just owning outright. But for any owners who have rented out, can it potentially lessen the costs of ownership?
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