How to rent out my airplane

Talk to an insurance agent. www.southwestaviation.com has an insurance
policy that is designed for owner/renters. It is sort of a
"semi-commercial" policy. Then there are the FARs. You might need 100
hour inspections, if you provide the plane and the instructor. If it
is just a rental, then I don't think you need 100 hours. Check the
FARs. It can be done, but the insurance is not trivial, about double.
But that is better than the 6 times that full commercial leaseback
insurance would cost. And you have to list each pilot as a "covered
pilot" before you are insured. So you are going to have to keep
calling your agent. If you get too many renters, it may kick up your
rate. Probably more trouble than its worth.

"Isaac McDonald" wrote in message ...
I am thinking of buying an airplane....I want to rent it when it is not in
use to recoup some of the cost of buying the plane. How hard is it to do
this? What are the insurance costs? How often do I need to get it checked
out by an aviation mechanic? How much is the maintenece? Do I have to go
through an FBO? Or can I just place a classified ad....eg. "plane for
rent...$50 an hour".

Thanks in advance.

Isaac

You won't be happy with what renters do to your airplane, and as
others have said, insurance is very expensive. Far better to buy an
older, cheaper model to own outright (Piper Pacer or Tripacer, Cessna
170/72) or share with 1 or 2 partners.

Isaac McDonald wrote:
I am thinking of buying an airplane....I want to rent it when it is
not in
use to recoup some of the cost of buying the plane. How hard is it to
do
this?

It can be simple to arrange. It's very difficult to recoup costs.
This is because the traditional "leaseback" arrangement is set up so
that you pay an FBO to rent your airplane out.

What I mean by that is that you arrange with an FBO to manage and rent
out your airplane "wet". You pay them a management fee (usually 20% of
the rental rate). You also buy from them insurance, fuel, oil,
maintenance, hangar space or ramp space, etc.

If they rent out the airplane enough to cover your fixed costs, that's
great.

If they don't, they still make money from you. You're still
responsible for the fixed costs. They have no risk at all.

What are the insurance costs?

Generally 5-8% of the hull value annually.

How often do I need to get it checked
out by an aviation mechanic?

It would require annual and 100hr inspections (i.e. every 100 hours it
flies), in addition to miscellaneous repairs.

How much is the maintenece?

It varies by region. $50 to $120 per hour. A 100hr inspection usually
takes between 2 and 8 hours, depending on how badly the mechanic is
ripping you off. Annuals go for $400 - $3000 if there's nothing wrong.

Do I have to go through an FBO? Or can I just place
a classified ad....eg. "plane for rent...$50 an hour".

You'll need commercial insurance covering student pilots to rent it out
to the public. When I looked, I couldn't get it underwritten without a
CFI on staff (to perform check-outs) with less than 700 hours flight
time.

Isaac,

You need to talk to actual leaseback owners in your area, and the FBO in
question before going this route.

There are lots of people who have had bad experiences, yet there are also
lots of planes in leaseback contracts around here that have been there for
as long as anyone can remember.

Do you think those people are not happy?

Find and listen to the people who have been successful if you can get them
to talk. Then try to emulate them.





"Isaac McDonald" wrote in message
...
I am thinking of buying an airplane....I want to rent it when it is not in
use to recoup some of the cost of buying the plane. How hard is it to do
this? What are the insurance costs? How often do I need to get it checked
out by an aviation mechanic? How much is the maintenece? Do I have to go
through an FBO? Or can I just place a classified ad....eg. "plane for
rent...$50 an hour".

Thanks in advance.

Isaac

"Isaac McDonald" wrote in message ...
I am thinking of buying an airplane....

Abandon all hope, ye who enter here...

I want to rent it when it is not in
use to recoup some of the cost of buying the plane.

How much will it "not be in use?" Oddly enough, renters typically want
to rent the plane the same time you want to use it.

Also, renting it out will probably not help you recoup the cost of
buying the plane, but it may help you recoup some of the costs of
owning it, i.e. maintenance and tiedown.

How hard is it to do
this?

About as hard as it is to go to Vegas and cover the costs of your trip
at the craps table. I've heard about it being done but never seen it
personally.

What are the insurance costs?

Substantial, as others have mentioned.

How often do I need to get it checked
out by an aviation mechanic?

You'll need it inspected every 100hrs. This is basically the same
inspection as an annual but does not need to be signed off by a IA.
You can however do a combined 100hr/annual, but it is still only good
for 100hrs. In other words, if the plane will fly up to 100hrs/year,
the inspection costs are pretty much the same.

How much is the maintenece?

If you're asking if it will be the same as for a regularly-owned
plane, it will probably be similar or a little higher due to increased
wear-and-tear. If you're asking say how much it costs to maintain a
172, then you have more basic things to learn before thinking about a
leaseback.



In my admittedly brief experience, leasebacks are complex and open you
up to really getting fleeced, particularly if you depend on the rental
income to cover the ownership costs. These are best viewed not as
owning your own airplane, but as participating in a business venture
that you may occasionally get to fly around in.

OTOH, shared ownership can and often does work very well. It can work
out poorly but there's more you can do to prevent that.

Best,
-cwk.

It would require annual and 100hr inspections (i.e. every 100 hours
it flies), in addition to miscellaneous repairs.

Nope.

-----------------------------------------------------------
May 3, 1984
In Reply Refer To: ACE-7

Mr. Perry Rackers
Jefferson City Flying Service
PO Box 330
Jefferson City, Missouri 65101


Dear Mr. Rackers:

This is in reply to your request of May 1, 1984, that we render an
opinion regarding the applicability of the 100-hour inspections
requirement of Section 91.169(b) of the Federal Aviation Regulations
to rental aircraft.

Section 91.169(b) of the Federal Aviation Regulations provides that,
except as noted in Section 91.169(c), a person may not operate an
aircraft carrying any person, other than a crewmember, for hire, and
may not give flight instruction for hire in an aircraft which that
person provides unless, within the previous 100 hours of time in
service, the aircraft has received either an annual or a 100-hour
inspection.

If a person merely leases or rents an aircraft to another person and
does not provide the pilot, that aircraft is not required by Section
91.169(b) of the Federal Aviation Regulations to have a 100-hour
inspection. As noted above, the 100-hour inspection is required only
when the aircraft is carrying a person for hire, or when a person is
providing flight instruction for hire, in their own aircraft.

If there are any questions, please advise us.

Sincerely,
/s/
Joseph T. Brennan
Associate Regional Counsel

February 14, 1975

Mr. Robert W. Slater


Dear Mr. Slater:

We refer to your letter dated January 28, 1975, which requests our
interpretation of FAR 91.169(b) as that regulation might apply to your
flying club.

You state that the Georgia Lockheed Employees Recreation Club, Inc.
(GLERC) is a nonprofit organization which owns five Cessna airplanes.
These airplanes are operated by members of GLERC Flying Club, Inc. It
is not clear whether Georgia Lockheed Employees Recreation Club, Inc.
is the same organization as GLERC Flying Club, Inc. If these two
corporations are in fact different, I assume that the Recreation Club
permits the Flying Club to utilize the airplanes by lease or other
similar arrangement.

You pose the following question:

If a student furnishes an airplane which is not operated for hire to
be used for his own flight instruction and he then pays a flight
instructor for instruction, must the airplane have received a 100 hour
inspection within the previous 100 hours in order to comply with FAR
91.169(b)?

For the purposes of our reply, we assume that the "student" referred
to above is a member of GLERC Flying Club, Inc. and the airplane
furnished is one of the Cessnas operated by the Flying Club.

Section 91.169(b) pertinently provides:
... [1] no person may operate an aircraft carrying any person
(other than a crewmember) for hire, and [2] no person may give flight
instruction for hire in an aircraft which that person provides unless
within the preceding 100 hours of time in service it has received ...
100-hour inspection ... (Numbers and brackets added.)

In the first instance, the student is not carrying anyone for hire.
Moreover, the flight instructor is a crewmember. Thus, there is no
requirement for the airplane to have a 100-hour inspection.

In the second instance, the flight instructor is not providing his own
airplane, the airplane being furnished by the student. Thus, this part
of Section 91.169(b) does not appear to be applicable.

In view of the above, it is our opinion that FAR 91.169(b) does not
apply to the factual situation presented.

Very truly yours,
R.R. HAGADONE
Attorney
Office of the Regional Counsel

.. These (leasebacks) are best viewed not as
owning your own airplane, but as participating in a business venture
that you may occasionally get to fly around in.


Pure Wisdom!

OTOH, shared ownership can and often does work very well. It can work
out poorly but there's more you can do to prevent that.


Not really. It may or may not work out better more often, but there are no
real stats on this, so its up to how many anecdotes you have heard.

Think of it this way, a leaseback is like a business contract with someone
you are expected to be wary of. A partnership is like a marriage, and if
you act as if you are suspicious its bad form. Hear more about divorces
than business failures? Yep, but are there really that more of them? Nope.

I think that the new trend towards fractional ownership reflects this. In a
fractional, you have no pressure to treat other owners with anything more
than common courtesy and respect. If one of them goes cuckoo, you expect
the managing company to make you whole, not some lunatic who wasn't raised
right.

What I cannot understand is why more FBO's have not started to cater to the
fractional crowd. Why do you need an Ourplane or other group to essentially
do what the FBO does now? Get a contract, get four owners, then get 4 more
and another plane, and so on.

"Dude" wrote in message ...

OTOH, shared ownership can and often does work very well. It can work
out poorly but there's more you can do to prevent that.


Not really. It may or may not work out better more often, but there are no
real stats on this, so its up to how many anecdotes you have heard.

Fair 'nuff.

Think of it this way, a leaseback is like a business contract with someone
you are expected to be wary of. A partnership is like a marriage, and if
you act as if you are suspicious its bad form. Hear more about divorces
than business failures? Yep, but are there really that more of them? Nope.

Well, like business and marriage, it all comes down to setting
realistic expectations.

The higher complexity of leasebacks entail more risk for the
uninitiated, which the OP clearly was. Your first plane is not the
time and place to learn this, unless you can afford to lose money on
an hourly basis, which is a very real prospect in a leaseback.

I think that the new trend towards fractional ownership reflects this. In a
fractional, you have no pressure to treat other owners with anything more
than common courtesy and respect. If one of them goes cuckoo, you expect
the managing company to make you whole, not some lunatic who wasn't raised
right.

I think the biggest factor in the fractionals is the same as for
bizjets- it's both cheaper and *better* than outright ownership. All
you do is make your payments and show up when you want to fly and
there's a clean, well-maintained arplane all gassed and warmed up
waiting for you. Ever look at how much one of those programs actually
costs when you're done with it? A small slice of an SR-22 could buy
and own a whole used 182. Not the same plane to be sure but puts it in
some perspective.

What I cannot understand is why more FBO's have not started to cater to the
fractional crowd. Why do you need an Ourplane or other group to essentially
do what the FBO does now? Get a contract, get four owners, then get 4 more
and another plane, and so on.

My gut instinct as a businessperson is that it ain't that simple and
to make it work well takes a little expertise in setting up and
administering it.

Another factor is that fractionals in lightplanes at least are
currently focusing on new aircraft for fixed durations which means
maintenance under warranty which means predictable costs around which
one can build a plan. The market for new A/C is sizable but limited.

Also, there's a real value I think to the network aspect of AirShares
or OurPlane. As a heavy business traveler I really like the idea of
being able to fly the tube from Boston to LA or SFO and then head over
to OurPlane and pick up an SR-22. Think about going on vacation in a
place farther away than you want to fly to yourself. If someone can
build a really broad network this could become a huge selling point,
as it has for places like Moorings who've been doing this kind of
thing with sailboats for decades.

Best,
-cwk.

The higher complexity of leasebacks entail more risk for the
uninitiated, which the OP clearly was. Your first plane is not the
time and place to learn this, unless you can afford to lose money on
an hourly basis, which is a very real prospect in a leaseback.


If you want complexity, read the ourplane contract.

Or, try to figure out how to untangle yourself from a partnership with a
lunatic without outright walking away from your share of the plane.

Leasebacks are actually pretty simple. The main rule is that if you cannot
afford to own the plane without the leaseback, then you shouldn't go there.
That way, anytime it seems you are going the wrong direction, you can pull
out. It may take several tries to find the right FBO.


I think that the new trend towards fractional ownership reflects this.
In a
fractional, you have no pressure to treat other owners with anything
more
than common courtesy and respect. If one of them goes cuckoo, you
expect
the managing company to make you whole, not some lunatic who wasn't
raised
right.

I think the biggest factor in the fractionals is the same as for
bizjets- it's both cheaper and *better* than outright ownership.

I still can't see how its really cheaper than a partnership. It has
benefits that a partnership does not, but I don't see the extra cost being
worth it.

All
you do is make your payments and show up when you want to fly and
there's a clean, well-maintained arplane all gassed and warmed up
waiting for you.

My local Raytheon offers this service. Yes, you have to approve repairs,
but for a little extra, they do give red carpet treatment.

Ever look at how much one of those programs actually
costs when you're done with it? A small slice of an SR-22 could buy
and own a whole used 182. Not the same plane to be sure but puts it in
some perspective.

It costs more than that, the total cost seems pretty well disguised in these
deals to me, and geting out is toughter than selling your plane at a loss.
That is the bad thing about a partnership. When you figure out one of the
partners is a loon, you will have a hard time selling your share.

What I cannot understand is why more FBO's have not started to cater to
the
fractional crowd. Why do you need an Ourplane or other group to
essentially
do what the FBO does now? Get a contract, get four owners, then get 4
more
and another plane, and so on.

My gut instinct as a businessperson is that it ain't that simple and
to make it work well takes a little expertise in setting up and
administering it.

I am thinking that its lack of capital, and lack of cycles. There seems to
be two FBO ownership types: Those lacking funds, and those lacking energy.
One could easily pay a lawyer to draw up the contract. Especially given the
contracts available for free you could start with.



Another factor is that fractionals in lightplanes at least are
currently focusing on new aircraft for fixed durations which means
maintenance under warranty which means predictable costs around which
one can build a plan. The market for new A/C is sizable but limited.


So, you think that the partners would not want to be in the deal if the FBO
had carte blanche to fix just about anything? And the FBO would not want to
be in the deal if they could get stuck with a big bill on a fixed price
budget? That is a tough nut. I see the fixed time as the main bugaboo in
the present fractionals. The contracts I read seem to leave the owners in a
lurch at the end.

Also, there's a real value I think to the network aspect of AirShares
or OurPlane. As a heavy business traveler I really like the idea of
being able to fly the tube from Boston to LA or SFO and then head over
to OurPlane and pick up an SR-22. Think about going on vacation in a
place farther away than you want to fly to yourself. If someone can
build a really broad network this could become a huge selling point,
as it has for places like Moorings who've been doing this kind of
thing with sailboats for decades.


There is a limited market to me -Those that would really like the wide
network. None of my jobs ever would have let me do that, and I try not to go
commercial except overseas or skiing. Sailing is a lot different to me, but
you could be right.


Best,
-cwk.

"Murphy" wrote in message ...
I am thinking of buying an airplane....I want to rent it when it is not in
use to recoup some of the cost of buying the plane. How hard is it to do
this? What are the insurance costs? How often do I need to get it checked
out by an aviation mechanic? How much is the maintenece? Do I have to go
through an FBO? Or can I just place a classified ad....eg. "plane for
rent...$50 an hour".

As for insurance, you could insure it just for yourself to fly, and then
require your renters to carry renter/borrower insurance for the full hull
value.

That actually does not work well. In order to collect on a renter's
policy, you need to prove the renter was at fault. If the plane goes
off the side of the runway because a wheel fell off that owner's
insurance would be expected to pay. The renter could also sue the
owner.

-Robert