leaseback

goinaround · Post by **goinaround** » Sat May 05, 2012 7:37 pm

haven't been here much in over a year, I used to rant and rave and cuss the ctsw that I now enjoy so much

)
I'm now considering leasing something back, only a thought at this time but...
Where do I begin to come up with costs etc. This is jumping totally blind so I have alot to understand and consider. there is only 1 light sport in this area.

jnmeade · Post by **jnmeade** » Sat May 05, 2012 8:32 pm

aopa has quite a lot of material on this subject. You can also get some discussion on either Pilots of America or AOPA Forum on the topic.

KSCessnaDriver · Post by **KSCessnaDriver** » Sat May 05, 2012 9:36 pm

There is a reason that many people refer to a leaseback as a fleece-back. Simply too many ways to lose money in the deal. However, given the right circumstances, it might be possible to make money with the right airplane.

designrs · Post by **designrs** » Sat May 05, 2012 10:19 pm

For leaseback you want a flight school with a DEDICATED LSA program (assuming that the leasebsck will be LSA) and one that already has a few very similar aircraft that they book constantly and put a lot of hours on.

Lots more on this topic on this board and elsewhere... use the search function for "leaseback".

goinaround · Post by **goinaround** » Sun May 06, 2012 11:47 am

thanks for responses, as I said this is just a what if right now I'm thinking a year to research, and I don't expect to make money

I am a member of AOPA so will certainly check their info.

designrs · Post by **designrs** » Sun May 06, 2012 12:07 pm

goinaround wrote:thanks for responses, as I said this is just a what if right now I'm thinking a year to research, and I don't expect to make money I am a member of AOPA so will certainly check their info.

If you don't expect to make money, what are your primary interests in a leaseback?

drseti · Post by **drseti** » Sun May 06, 2012 12:54 pm

Although the revenues generated by a leaseback aircraft seldom cover the actual costs of operation, overhead, and depreciation, there is a positive payback for those owners whose income from other sources is sufficient to place them in a high marginal tax rate. One should think of a leaseback more as a tax shelter than a source of income. If done right, it can help you pay for your airplane while lowering your taxes. Those do best who plan to take the plane off leaseback after the first year or two, and fly it themselves thereafter.

If operated by a reputable flight school with its own maintenance department (experienced in make and model), a plane can come off of leaseback in better mechanical condition than it was in at the beginning. However, if flown into the ground and not properly maintained, by a flight school trying to cut corners, it will end up being an airplane you won't want to fly yourself! Look at the condition and maintenance history of the FBO's other aircraft, before deciding to partner with them. (Examine the logbooks as though this were a pre-purchase inspection, to see how your plane will be maintained and documented.)

As for the leaseback contract itself, see http://avsport.org/docs/AIRCRAFT%20LEAS ... EEMENT.pdf for a sample. This shows typical terms and conditions.

spooky981 · Post by **spooky981** » Tue May 08, 2012 11:56 am

I did a fair amount of research on this. It seems that for every positive experience, there are at least seven negative experiences. My conclusion was that it's generally a very bad method that pilots use to afford to own an airplane.

A plane share or flying club are better solutions for ownership in my opinion.

drseti · Post by **drseti** » Tue May 08, 2012 12:42 pm

spooky981 wrote:It seems that for every positive experience, there are at least seven negative experiences.

I agree that seven eights of the people leasing back an aircraft are doing it for entirely the wrong reasons (usually, to try to get free flying time), so they will of course end up disappointed. This is a business arrangement, pure and simple. One should meet with his or her accountant, to find out if it makes sense for you. If you're not in a tax situation that would require you to have your own accountant, then you're probably not a good candidate for a successful leaseback!

goinaround · Post by **goinaround** » Wed May 09, 2012 10:18 am

A partnership may indeed be more of what I should look at and consider. as I said this is just a thought that I felt I should bounce off of some smarter than me people.I have no idea where to even begin to figure fixed costs etc.
I'll know much more in 12 months or less.

Jack Tyler · Post by **Jack Tyler** » Wed May 09, 2012 2:11 pm

"I have no idea where to even begin to figure fixed costs etc."

One of the resources that AOPA offers in their collection of 'co-ownership' or 'partnership' articles, contract samples and such is an Excel spreadsheet. This is *very* detailed (so you won't miss many cost issues, from purchase onwards) and allows you to construct cost models, by worksheet, for a variety of aircraft, # of co-owners, and so forth. It doesn't identify each cost - e.g. you'll have to get an insurance quote for the annual premium of the aircraft in which you're interested - but it provides the cell for where that cost goes. I found it very helpful once it got to be time to sharpen the pencil.

Another thing you might helpful at the 'how much will it cost?' stage is their Aircraft Partnership Program. This is a bit like a dating service in that owners who have a share in their a/c to sell can list that share, and also folks who are considering buying a share can go search for what's available. Obviously, the on-line service first narrows this down by geographic location. In your shoes, I'd enroll (it's yet another free service for the cost of annual membership) and then 'shop' for brands (or even 'types', like an LSA) and see what a share of a given a/c of a given age is being priced at. Interesting exercise, I found.