Advice on buying a 152?

Dave Butler wrote
My question above was directed to a poster who seemed to be expressing an
opinion based on no experience.

I've never owned a leased-back plane. Until fairly recently, I've
never had a root canal done either. However, I know quite a few
people who have owned leasebacks. I also know quite a few people who
had root canals done. Interestingly, my impression of what it was
like to get a root canal wasn't really changed much by having one -
the impression I got from my friends was pretty accurate. It was
painful and expensive, as are most root canals, and to be avoided if
possible. Much the same applies to leasebacks.

With a leaseback, you are whatever the terms of the lease say you are.
If you don't like the terms of the lease, don't sign it.

True but disingenuous. You are highly unlikely to get favorable
terms.

The reality is that there isn't much (if any) money to be made in
airplane rental. The money is made by selling fuel, maintenance,
tiedown/hangar space, and maybe instruction. The rental airplanes are
just there to keep the business going.

The advantage might be that you gain experience in aircraft ownership
while reducing your out-of-pocket expense.

Untrue. The only experience in aircraft ownership you will gain is
the experience of writing checks. You will be paying huge money for
insurance that allows rental. This can easily double or triple your
fixed costs. Of course that means the plane has to keep flying to
generate revenue, and that means you can't wait until you have time to
fix it yourself. The result is that you don't actually learn to fix
anything - which is the most important part of gaining experience in
aircraft ownership.

Heck, it's even possible to come out financially ahead.

I suppose it might be possible. I've never seen it happen.

I've seen the occasional mechanic who did all or almost all his own
maintenance come out ahead - by assuming his time was worth nothing.
I have NEVER seen a first-time owner come out ahead on a leaseback.

My point is not that it's impossible to have a good experience with a
leaseback - but anyone who has to ask about it on the net is not going
to have a good experience, and that's certain.

Michael

Michael wrote:
Dave Butler wrote

My question above was directed to a poster who seemed to be expressing an
opinion based on no experience.


I've never owned a leased-back plane. Until fairly recently, I've
never had a root canal done either. However, I know quite a few
people who have owned leasebacks. I also know quite a few people who
had root canals done. Interestingly, my impression of what it was
like to get a root canal wasn't really changed much by having one -
the impression I got from my friends was pretty accurate. It was
painful and expensive, as are most root canals, and to be avoided if
possible. Much the same applies to leasebacks.


With a leaseback, you are whatever the terms of the lease say you are.
If you don't like the terms of the lease, don't sign it.


True but disingenuous. You are highly unlikely to get favorable
terms.

I don't take kindly to being called disingenuous. Let's elevate this discussion
above name-calling, OK? You've made a lot of valuable contributions to this
group, Michael, but calling people disingenuous because they don't agree with
your position is not a positive contribution.

I stand by my position. You're not likely to get favorable terms if you just
accept the terms that are offered. You're free to negotiate any terms you like.
If you don't get what you want, you are free to walk away.


The reality is that there isn't much (if any) money to be made in
airplane rental.

Quite true.

The money is made by selling fuel, maintenance,
tiedown/hangar space, and maybe instruction. The rental airplanes are
just there to keep the business going.


The advantage might be that you gain experience in aircraft ownership
while reducing your out-of-pocket expense.


Untrue. The only experience in aircraft ownership you will gain is
the experience of writing checks.

....and this is based on your experience of -no- leasebacks?

You will be paying huge money for
insurance that allows rental. This can easily double or triple your
fixed costs.

That's why you collect rent for the use of your aircraft. Assuming, of course,
that your lease contract requires -you- to pay for the insurance.

Of course that means the plane has to keep flying to
generate revenue, and that means you can't wait until you have time to
fix it yourself. The result is that you don't actually learn to fix
anything - which is the most important part of gaining experience in
aircraft ownership.

.... in your opinion.



Heck, it's even possible to come out financially ahead.


I suppose it might be possible. I've never seen it happen.

I've seen the occasional mechanic who did all or almost all his own
maintenance come out ahead - by assuming his time was worth nothing.
I have NEVER seen a first-time owner come out ahead on a leaseback.


My point is not that it's impossible to have a good experience with a
leaseback - but anyone who has to ask about it on the net is not going
to have a good experience, and that's certain.

.... in your opinion.

Dave Butler wrote
True but disingenuous. You are highly unlikely to get favorable
terms.

I don't take kindly to being called disingenuous. Let's elevate this discussion
above name-calling, OK? You've made a lot of valuable contributions to this
group, Michael, but calling people disingenuous because they don't agree with
your position is not a positive contribution.

Point taken, and I apologize. However, I still don't agree that it is
possible for the owner of a single airplane to get favorable leaseback
terms from an FBO, especially a first time buyer. The only people
I've ever heard claim otherwise were those who benefit by leasebacks
and those who haven't tried but believe it can be done. If you have a
specific counterexample, I would love to hear about it.

I stand by my position. You're not likely to get favorable terms if you just
accept the terms that are offered. You're free to negotiate any terms you like.
If you don't get what you want, you are free to walk away.

Doesn't quite work that way. Nobody will sign a leaseback contract
with you for an airplane you don't own. Once you've invested the
capital, you are indeed free to walk away - but you've already
invested the capital.

The reality is that there isn't much (if any) money to be made in
airplane rental.

Quite true.

Then what makes you believe a leaseback can work? If there isn't
money to be made there, then how are you to make money there?

Untrue. The only experience in aircraft ownership you will gain is
the experience of writing checks.

...and this is based on your experience of -no- leasebacks?

No, it's based on the experience of my friends who tried.
It's like that root canal thing.

And what is your experience with leasebacks?

Michael

Michael wrote:

Point taken, and I apologize. However, I still don't agree that it is
possible for the owner of a single airplane to get favorable leaseback
terms from an FBO, especially a first time buyer. The only people
I've ever heard claim otherwise were those who benefit by leasebacks
and those who haven't tried but believe it can be done. If you have a
specific counterexample, I would love to hear about it.

An aquaintance of mine had several aircraft on leaseback at Kupper airport through
the 90s. The terms of the lease were that he provided the plane and the FBO performed
and paid for all maintenance and provided insurance. He got something like $10/hour
from the rent. At one time, he had three older 172s on lease. His worst experience
was when a student wrinkled a firewall. That plane was down for 6 weeks, producing no
income, but it was the FBO that had to swallow the repair bill.

He banked most of the rental money. As each engine hit TBO, the plane was upgraded to
180 hp (at the owner's expense) and the rent was increased. His portion of the rent
also increased, of course. As the rental income accumulated, he had each aircraft
painted. The next step was to fix up the interior. At that point, he would have the
FBO restrict the rental to moderate time pilots who could be expected to treat the
planes well. Eventually he pulled each aircraft off the line and sold it for
considerably more than he had invested. In at least one case, he sold the plane as
soon as he finished the interior work. I think he did not have any avionics
improvements made.

He retired to Carolina last year. Dunno whether he sold the last one or took it with
him, but he had sure turned it into a good-looking plane last time I saw it.

George Patterson
None of us is as dumb as all of us.

Michael wrote:
Dave Butler wrote

True but disingenuous. You are highly unlikely to get favorable
terms.

I don't take kindly to being called disingenuous. Let's elevate this discussion
above name-calling, OK? You've made a lot of valuable contributions to this
group, Michael, but calling people disingenuous because they don't agree with
your position is not a positive contribution.


Point taken, and I apologize. However, I still don't agree that it is

Apology accepted.

possible for the owner of a single airplane to get favorable leaseback
terms from an FBO, especially a first time buyer. The only people
I've ever heard claim otherwise were those who benefit by leasebacks
and those who haven't tried but believe it can be done. If you have a
specific counterexample, I would love to hear about it.

OK, my successful counterexample is from my own experience, which I have
described previously in this forum (google is your friend), but I'll briefly
describe it again. See below. My lease was not to an FBO, so I guess you can
argue it is not a "leaseback", but just a "lease". In common aviation usage,
this sort of lease is commonly referred to as a leaseback.



I stand by my position. You're not likely to get favorable terms if you just
accept the terms that are offered. You're free to negotiate any terms you like.
If you don't get what you want, you are free to walk away.


Doesn't quite work that way. Nobody will sign a leaseback contract
with you for an airplane you don't own. Once you've invested the
capital, you are indeed free to walk away - but you've already
invested the capital.

I agree. I was assuming you already owned the aircraft, which is not the OP's
situation.



The reality is that there isn't much (if any) money to be made in
airplane rental.

Quite true.


Then what makes you believe a leaseback can work? If there isn't
money to be made there, then how are you to make money there?

You said not much, not none. I agree the margins are thin and the risks are high.



Untrue. The only experience in aircraft ownership you will gain is
the experience of writing checks.

...and this is based on your experience of -no- leasebacks?


No, it's based on the experience of my friends who tried.
It's like that root canal thing.

And what is your experience with leasebacks?

I owned a PA28-180, leased to a flying club, for -I don't know- several years,
long enough to go through 2 engine overhauls on it. I started out with a
partner, ended up as sole owner. The aircraft was used by a flying club for
instrument training and whatever club member do with airplanes, no primary
training. I used 350 hours / year as a planning number.

After sale of the aircraft and recapture of the depreciation, I made a small
amount. You could argue that the amount I made was not worth the amount of risk
in the investment, and I'll certainly stipulate that I was lucky. There were
intangible benefits that made it worth it to me. I did -none- of my own
maintenance, so by your criteria, I guess I learned nothing from the exercise. I
don't feel that way about it, though.

Incidentally, this same aircraft was sold to another club member, who also
leased it to the same club. Not sure, but I think her lease experience was not
as positive as mine. It's now been sold to yet another club member, who
continues to lease it to the club. The current owner is a friend and coworker
and comments positively about the status of the business, but I haven't examined
his books.

Dave

"G.R. Patterson III" wrote
Point taken, and I apologize. However, I still don't agree that it is
possible for the owner of a single airplane to get favorable leaseback
terms from an FBO, especially a first time buyer.

An aquaintance of mine had several aircraft on leaseback at
Kupper airport through the 90s.

So he wasn't a first time buyer or an owner of a single airplane, right?

Michael

Michael wrote:

"G.R. Patterson III" wrote
Point taken, and I apologize. However, I still don't agree that it is
possible for the owner of a single airplane to get favorable leaseback
terms from an FBO, especially a first time buyer.

An aquaintance of mine had several aircraft on leaseback at
Kupper airport through the 90s.

So he wasn't a first time buyer or an owner of a single airplane, right?

I believe that he was both at one time. After he saw how well the deal worked on his
first plane, he bought another, then a third.

George Patterson
None of us is as dumb as all of us.

Dave Butler wrote
OK, my successful counterexample is from my own experience, which I have
described previously in this forum (google is your friend), but I'll briefly
describe it again. See below. My lease was not to an FBO

Well, that does make a difference. Clubs are a whole 'nother kettle
of fish. Main difference is this - the club isn't trying to make
money (usually), so what little money there is to be made can be made
by the owner.

I agree. I was assuming you already owned the aircraft, which is
not the OP's situation.

If you already own the aircraft and can afford to walk away from the
contract if you don't like it, that implies that you can comfortably
afford the aircraft yourself. So would you agree that the first piece
of advice should be - if you can't comfortably afford or don't want to
afford an airplane unless it's going to go on leaseback, you should
not even consider buying?

Then what makes you believe a leaseback can work? If there isn't
money to be made there, then how are you to make money there?

You said not much, not none. I agree the margins are thin and
the risks are high.

Which goes back to my point about clubs. If the club is willing to
cede the entire profit margin to the owner, and cares only about
having the aircraft available for the membership (which may well be
typical) there just might be some margin available. With an FBO, you
would need to either do your own maintenance (essentially operating at
breakeven or a loss, but being paid for your work) or own multiple
aircraft to realize economies of scale. Neither is particularly
viable for a first time buyer.

After sale of the aircraft and recapture of the depreciation, I made a small
amount. You could argue that the amount I made was not worth the amount of risk
in the investment, and I'll certainly stipulate that I was lucky.

So you were lucky to have made a small amount. How small? Did you at
least do better than putting the cash into T-bills?

I did -none- of my own
maintenance, so by your criteria, I guess I learned nothing from the exercise. I
don't feel that way about it, though.

So what do you feel you learned about airplane ownership? I'm
genuinely curious - as far as I can see, all the things that have to
do with knowing how to own an airplane have to do with maintenance.
Everything else seems trivial to me.

Michael