Amen to that. What a great video. Thanks for sharing. I stopped flying I think 12 years already. Hope I could get back on it someday, and its always been my dream to own a plane, and I've always said that leasing it would be a great idea. But as you said, the info out there is almost zero. Glad to hear a positive feedback about it. New subscriber here. Keep it up.
You are very welcome! I'm thrilled to hear you appreciate the info I'm trying to share and I hope you find it useful if you ever decide to get back into it!
I am pretty much in the same boat...first flight in a little over 13 years to the day was last week. It took a long time but glad to be back in it. Don't give up!
The planes I’d buy and put in leaseback would not be planes I’d ever consider as “personal” aircraft. They are a financial tax planning device, business equipment, first and foremost. Don’t buy the plane you want, buy the plane the market needs, and continue to find and buy, and place these pieces of equipment into the market. Think of yourself as a landlord, these are rental properties. Landlords don’t live in their rentals, they take the profit from a properly cash-flowed and tax-planned business and they pay themselves a draw, or salary, and that pays the mortgage on their home, elsewhere. This video is a great start in this direction, I would really enjoy hearing more.
Mike - You addressed the right things to consider in your video. But I will NEVER look at another leaseback after the one I did. I'll share my experience. I bought a 172 and placed it on leaseback with an FBO. Once this happened, they wanted to schedule it all the time. It was no longer available for the weekend trips I bought it for. In hindsight, this could have been negotiated. But generally, an FBO will want your plane on Saturdays and Sundays for sure - when they're the most busy. During the one year it was on leaseback, the elevator was damaged when a student parked it and pushed it back into a signpost. Another student hit the mirror on a fuel truck and cracked the nav light on the wingtip. Another student tore the center black foam off the yoke. People treat rental planes like rental cars. Every dollar I "received" for my cut from the hourly went toward maintenance. So I never actually came out ahead. I literally just paid for maintenance while the hours ran up. After I took it off leaseback, I had the plane when I wanted it, maintenance went down exponentially, and it was always in perfect condition. Based on my experience, there was NO advantage. So my advise to a pilot is to buy what they can afford and have a nice airplane available all the time in great shape.
Hi, Hock. Appreciate your insight. There's no doubt that if you have a good fit at your FBO that your plane will be hard to book on the weekends. It's a good problem to have, though, as that means it's making money. If it's 'too' popular, you can let it continue to make revenue and rent a different plane while that is happening for your trips; essentially it's paid for by the revenue from the one you own. I have found that if I can plan far enough ahead and I can, indeed, reserve and fly my own plane. As you suggest, maybe one could negotiate some sort of arrangement where you don't have to be as proactive, but I don't know how that would work out.
It sounds like you had an awful experience with maintenance at that FBO. If students/renters are constantly beating it up I would think the FBO could better police that kind of stuff. Still, I'm surprised you weren't able to keep money in the bank as it sounds like it was busy. I'm sorry to hear it didn't work out, but glad you're happy with the arrangement you have now!
@@Project2457official that’s certainly something to consider. The problem is when little things break it’s hard to nail down who’s responsible unless they admit to it. With multiple renters/day it’s hard to keep track.
I’m just finding this video after 2 years of being uploaded, but THANK YOU for including a picture of a Globe/Temco Swift. The GC-1B Swift is my absolute all time favorite aircraft but not too many people know about them and there is hardly any of them left. They need more love and attention because they are truly AMAZING airplanes and I believe everyone should have an experience in a Swift!
Thought about this too, but decided that all the reasons I wanted my own aircraft were exactly the same reasons I didn’t want other people anywhere near it.
I hear you. There are certainly some concessions to be given when going this way. The question is whether or not it gets some folks to ownership that never would otherwise; I think that can be the case, indeed.
I do agree about your airplane getting torn up through leasing. A guy leases his really nice Archer II to the school, students leave their trash, tear up the landing (me included), and one student spilled a cup/bottle of coffee in the plane.
I'm a current, inactive flight instructor who flight instructed for a living 15 years ago. All of the aircraft except for 2 at the flight school where I worked were lease-backs. After seeing what those aircraft went through with flight training, complex/instrument training and multi-engine training there's no way in hell I would ever let an aircraft I owned be used by a flight school. They don't call them "crash and goes" for nothing.
That’s why it’s important to feel out the culture at any flight school. Find out if the chief pilot instills a culture of respect for the fleet. Some mom and pops can be great; some big factories can be great. Every school is different.
One of the aircraft at the flight school I just finished up at has a never-ending stack of new tires in the hangar. Probably goes through 2 sets a year or more.and a never-ending revolving list of small INOP items. They get treated like rentals. So you have to ask yourself, do you want to be a seasoned pilot that's always got your airplane in use, in maintenance, or down for repairs. And when the weather is nice and you'd like to fly, so does everyone else so you're essentially living in a renter pool. Its just not for me if I can only own 1 airplane.
In 2000-2002 I owned the Piper Archer II N3569D. I had the speed mods installed and used for it for my instrument and commercial training. That was excellent plane and regretted selling it.
She is a great plane, indeed. 69D was the plane I first purchased and used on leaseback. Was a great money-maker for me, and I got my CSEL and CFI in that plane. Just sold it last Fall to a friend and I, too, regret it a bit. :)
That’s an ignorant look. Your just need to be wise. Consider an instrument rated/complex/multi engine endorsement. These are endorsements people get after hours and hours of flight time. What’s that mean? It means it’s less likely that your plane gets abused at least out of ignorance.
A friend of mine had 3 planes on lease back, and was building a homebuilt. Of course he started with only 1 plane. But he said the secret was to have a good Accountant. He had his planes at Compton, CA. He had his first plane at the Torrance airport. He did okay. But Compton worked out better. And as you said, it is important to plan ahead. And accept renting one of the other planes at the FBO if necessary.
Good on You for choosing to research deeper into this & then have the courage to go against the often times incorrect general perceptions of the Crowd. Who knows...as far as virtual comments go...for all We know negative commentary could be coming from those w/a vested interest in scaring ppl away from such a strategy > thanks for sharing 👍
Are there particular model plans that do better financially in leasebacks? For example, would a higher end plane like a SR-22 do particularly well as I assume there are fewer available and presumably command more $? Or are the 172s of the world do better financially?
Generally speaking, the planes that fly often and regularly are the ones that have the best chance to be successful in a leaseback. Something like a SR-22 is harder because it won't fly as often (usually) and generate enough income to offset the expenses. But it could work in the right environment.
Plus One Flyers out of Southern California (a flying club) does all leasebacks. Seems to work for the 50 or so airplanes and owners. Also, a buddy of mine paid for his cherokee 140 in 2 years leasing it to an fbo/flight school. However leasing back a plane doesn't really solve the issue of owning without partners. You basically have a ton of partners (anyone who rents your plane). You have to get on the schedule if you want to fly. You still have to pay hourly except the money mostly comes back to you minus fuel hangar insurance oil engine reserve maintenance reserve etc etc.
Thanks for sharing that great context! When I say own 'without partners' what I'm really getting at is you have sole decision powers over things like upgrades, etc. With partners, everyone has to agree on those types of decisions and pony up the capital required. It can get messy if everyone is not on the same page, or if one wants out of the plane. With a leaseback, you retain the power and 'share' the costs with all those renters.
I agree. It can work. You must do your home work and find the demand and location(s). Most important how much you willing to invest. Don’t look at it as a way to make money.
I really enjoyed your video great advice. So cool to get aviation info from a fellow musician. I checked out your Gibson and Marshall amp in background. I play guitar too smooth jazz. I have a fender Stratocaster and Alvarez acoustic. I hope to own a Cessna Skyhawk in near future. Thanks Smk
Thank you so much for the info Mike! I have been bouncing back and forth on this topic. I appreciate the time you put into this and the info you passed along! Thank you!
Ok so you own the plane.. I would like to do this if possible to pay for the loan on a plane to eventually own it. Can you do this? Also why flight school lease backs and not rent for private flights?
Excellent presentation. Thanks for taking the time and devoting the effort to educate us. I'm considering putting my Cherokee 140B (PA-28) into a leaseback arrangement. It is both a major metro area and an Air Force base flying club, but at a conveniently located civil airport with tower, major maintenance, etc. We shall see how it goes. Have not signed the papers yet. Watching this and other videos constitute part of my decision process. Edit: New subscriber. Will try to watch all your videos today. Particularly interested in the avionics upgrades you chose.
i wonder how long it would take for the leaseback to pay for the airplane outright? then after all said and done would be able to use the profits from selling it to get into a new one or an upgraded version if people are so worried about the wear and tear aspect of it. seems like a long but easy way to pay for an airplane.
Jake, your thoughts are correct. Depending on how the numbers stack up, one could pay off a loan within a few years of having it on a successful leaseback. Then you can upgrade/move on/whatever you deem best for your goals. It's not easy, but it's a great way to pay for a plane.
I'm from South Sudan 🇸🇸 and I have just started my aviation company last month and I have been wondering how I can rent a small plane and how much does it cost?
Awesome video thank you for sharing your experience with this option. I am a realtor in a large metroplex area and have used a similar option in a Realestae setting for clients that are either selling or buy their homes quicker than they thought possible. It gives both parties ample time to either move or complete other transactions while the property transferring possession. I never even thought about leasing back equipment (Aircraft) in this same manner. I have always wanted to learn to fly and have logged millions of miles as a passenger. This seems like a viable solution to one of my questions about the cost of flying and leasing an Aircraft if I did acquire my private piolets license.
I think there’s one part that you left out of the video - The cost of the original purchase of the leaseback airplane. Where does that money come from? If you’re financing it, you have to have sufficient credit to buy a 100k airplane (if you want a decent one). Do financiers allow you to lease it back? Or if they do, they jack up the cost of insurance? I think for all intents, you’re essentially signing onto a mortgage for a house that you’re going to turn right around and rent out, correct? How many lenders allow that? How does it work for an airplane “mortgage” then? If you have to buy the airplane yourself without a lender, how would you ever make your money back, on the eventual sale of the airplane years down the road? Can you speak to those aspects of the leaseback process?
How’s your business going now? Every lender I’ve contacted limit hours for flight club use. Have you found lender that does not? I’d like to get your input.
Been there, done that. My recommendation is to avoid the lease back option to ownership. There is no such thing as a free lunch. Between the sky high insurance costs, increased maintenance costs, limited availability to be able to fly “your airplane”, wear and tear and or abuse of the aircraft etc...... the sticker price is extremely high. I watched my insurance costs nearly triple, and maintenance is now required every 100 hours rather than once per year. The costs to the owner of a lease back aircraft can be staggering if the agreement between the FBO and the aircraft is not properly structured. Entering into a lease back agreement has enormous risk associated with it, be very cautious when heading down this road. Sometimes, these lease back agreements work out, but it is rare.
Hey, Dennis. Appreciate your input on your experience. There's no question that with increased costs and complexity that leasebacks carry some risk. As you stated, it's important to have a good agreement and relationship with the FBO. I did a follow up that detailed all my actual costs and how it worked out well for me, but you're right in that they don't always work out if too many things do go as planned. Having your ducks in a row with market research and the right plane with the right FBO vastly increases the chances of success.
You have to get a commercial policy that covers flight training - being added to a school’s existing policy is usually the easiest way. As mentioned in this video and the companion ones, it will be many times more expensive than a personal policy. But the cost is easily overcome with a busy plane in a busy environment.
I had my C172 on leaseback at one flight school, under two different owners. The original owner agreed to let me do the maintenance to avoid paying for it, he did the inspection and said "Good job" or "What the heck, man? Re-do it." I had quite a savings for a rebuilt engine saved up. Then they sold the school to someone else. They did maintenance w/o asking and charged my account for it and I wasn't happy with the work done many times. The savings dwindled. The last straw was a CFI giving another CFI a flight review were taxiing around at another airfield looking at planes for sale, rammed my wing into a pole. "Take it off leaseback." It can be good or bad. Shop the people running the school.
Totally agree with you, here. Your leaseback partner is probably THE biggest factor in whether it will work or not. Thanks for your thoughts and sharing your experience!
The same techniques you'd use to save up for any big-ticket item; extra work when you can to generate some income, smart investing, and generally being around the environment you're hoping to be a part of..
Ha! You know your guitars! I was wondering if anyone would comment on that, eventually. For the next one I might try to get the Tobias 5-string in there, too. Glad you liked it enough for a double-take! Thanks!!
@@MikeWebb-FlyingFinanciallyFree Excellent! I own a Taylor 512ce. I'm also looking at buying another aeroplane - sold my Glasair 1RG a couple of years ago and now looking at a Mooney M20J-201. I agree that lease back isn't for everyone, but can work if you get the right FBO/type mix happening. Cheers from down under.
So, lets say I purchase a plane for about $100k. I get a leaseback agreement and I use it to pay off the loan of the plane over the course of several years. Eventually the loan is paid off and I officially own the plane. Can I back out of the leaseback agreement and take my plane all to myself? Or will it never be mine?
Hi, Jennette- Great question! Once the term of the leaseback is up you can do whatever you want with the plane. Typical agreements are in 12-month intervals, that can be renewed on an annual basis. This could be for another longer term, or on a month-to-month agreement. Regardless, typically, there's a clause for how the agreement can be terminated when either party wants to end the agreement. The most common I've seen is 30 or 60 days notice from either side.
Hey Mike! Great info, just a question. How does the flight school feel about engine TBO time? Do they require you to overhaul at recommended TBO time or are you allowed to "over-tbo" if the engine is running fine and passes annuals.
As this isn’t part 135 or 121 you are allowed to go over TBO as long as the numbers are good, as you suggested above. But I haven’t seen anything more than a couple hundred over.
Nice and very informative video, thank you! My biggest question is: When the plane is rented out so well, what is the advantage for the flying school. Why didn’t they simply buy the plane and make all the money instead of paying you a certain percentage. Of course they don’t have the costs but paying you is kind of their (avoidable) costs and at one point it’s probably higher for them then just owning the plane, especially if it rents out well.
Thanks, Chris, for watching! That’s a great question. The answer is they don’t have to carry the costs of the plane, and they have no risk. If it were to break, or come across serious downtime they don’t suffer as much when they don’t own it. Risk management
@@MikeWebb-FlyingFinanciallyFree hi Mike, thank you very much for your answer. For me it sounds like a good and realistic investment possibility. In simple words you could just go to busy flight schools and ask them what kind of airplanes they need and buy them for them. If you actually can make money that could be even interesting for non pilot people.
Hey, that’s a great video. So how did it go down the road? Maybe you could consider shooting another video with the real expense breakdowns? Would be really great to know as I’m considering the same leaseback option.
You need to reserve is like anyone else. But with minimal foresight most, if not all, conflicts can be avoided. Also, some FBOs May allow you to have a longer reservation horizon than others. All negotiable.
I'm in the DC area - a relatively active training/renting environment. In 2019, the plane averaged just under 70hr/mo. However, after the avionics upgrades I did, it averaged about 88/mo for the last 6 months of the year. You can check out my vid on the panel upgrade to see why. :) Thanks for the sub!
Hi Andy. A 310R, while a great plane (my uncle had one for a few years and I got to fly it once or twice), is a tough sell in a leaseback. As discussed, if the goal is to actually make money you want a plane that is flown often and is accessible to as many pilots as possible. A twin with turbocharged engines does not fit that bill. However, if there's a school that wants to specialize in "higher-end" multi-engine training with something like a 310, it could attract some good attention. Your goals determine whether a leaseback is a success; my normal criteria would say a 310R is not a good candidate.
I’ve jumped into this by accident but I feel lucky. Would love to pick your brain and learn if you’re willing to share. I’m hoping you still check your UA-cam Channel.
I am planning to do my PPL in Hungary , I am going to buy a used a/c from Spain , how could it help me in my training ? . I want to become a flight instructor
Benni Thomas I would offer that if you buy a plane and do your training in it the obvious benefits are you will really get to know the plane and have a consistent training experience from that standpoint. You could hire an independent CFI to do your training, or you could explore putting your plane on leaseback with a flight training center if there’s one near you. After you get your CFI you may be able to instruct in your own plane (don’t know the rules in Hungary.)
I have many planes in this set up. You need to treat it like a rental. That’s it nothing else. Reliable and CFI that wants to fly your plane. That’s it nothing else. Fill it up with time and CFIs.
I was talking to a pilot friend about this, and his had a pretty simple question which I could not answer. If you can make money renting a plane like this, why wouldn't a flight school just own and rent planes themselves vs offering to leaseback planes?
It's a great question, and one that is asked often. The answer: Most schools have multiple planes in their fleet, but can't afford to own all of them. They'd rather lease someone else's plane to offset the capital cost and risk of ownership to someone else. They sacrifice profit potential in return for easier growth of the fleet and their cut of the revenue. If the school has the money to own and operate their entire fleet, they usually do so. It all comes down to return on capital and risk. To each their own.
Great video! Nothing is ever all good or bad. We have a few clients we work with that want to buy planes and consider leaseback as it MAY be a way to depreciate the plane as a business expense. We are looking into the tax laws right now. Again, thanks.
Did you ever come to a conclusion here? (If a disclaimer is needed - I won’t consider this as tax advice, will seek own counsel but curious about your experience)!
A plane used in a leaseback is definitely eligible for depreciation, as is any business asset. I keep track of all expenses and any personal use (although that hasn’t been the case for years with this plane) to keep that separate.
@@williamwebb8767 Hi William. None of our clients have ended up doing it. As a financial planner and CPA, we have looked at the numbers and it is possible to make it work. The devil is in the details for depreciation. One of clients found lawyers that specialize in Aviation and their firm is Carriere, Little & Leach. He met with Sue. I have 0% affiliation or even knowledge of them except my client liked his consultation. I would recommend anyone that who will be using depreciation with airplanes to talk to an expert tax attorney upfront. The reason I prefer a tax attorney is they can better represent you under audit. The only other item of potential wisdom ( I hope it is wisdom) is the big issue our clients have had- is they want a plane to personally fly that might be different than the planes that flight schools want and that has stopped them in their tracks with the leaseback option. As Mike says below, any business property such as a plane can be depreciated and good record-keeping is the key to making this work. Good luck!
@@MasterCarguy44-pk2dq I disagree. There's a way to make aircraft ownership free. If you are in an active club or flight school. With a plane that people desire your ownership costs can be paid for.
I agree. No details... and to be honest anybody watching this video wants some details. Kind of like saying "rental properties has worked out great for me... you should look into it"
You seem like a solid guy... I say that because I see what I think is a genuine Gibson LP behind you.... that is all I have to go on. You leave out so much information. You do not talk about the size of your market - I'm in Lexington KY a 250k area with a decent airport and community. Not sure that is big enough. Please advise.
James, you are correct; it's a genuine Gibson Les Paul Standard behind me... but not sure I'd take that as any referendum on the quality of my character. That said, I mentioned in this video how the area you live in can make a big difference in the amount of training activity, which can play a big part in how much revenue it will produce. If you find the right plane for the right school, it can, indeed, work. If you want those 'elusive' details, they are in plain sight in my follow up video where I detail all the actual numbers here: ua-cam.com/video/7KTch0guZF8/v-deo.html
@@MikeWebb-FlyingFinanciallyFree Very true.. which is still an amazing concept. I was sitting here smiling and taking notes from the video like "yeah... yeeaahhh YEEAAHH!!" Haha ... great channel... I look forward to see what this new year brings you!
Bad idea usually. My experience was leasing back a Cherokee 140. Monthly revenue about $1200. Monthly repair and Maintenance about $1500. Renters and learners tear the Plane apart.
Hi, Bruce. I'm sorry to hear you had a bad experience with your Cherokee. Having a flight school that has standards for its customers in how they treat the planes is necessary, indeed. Sounds like it was unfortunately a bad fit with this one. Your plane must've spent more time down for maintenance than up - and for that I'm sorry.
Great video with useful information. I've been out of flying for about 8 years but getting back into it and seriously considering ownership and possibly leaseback for all of the reasons you discuss. One important topic you missed that I consider important is on one hand you can worry about renters lack of caring in their treatment of your plane and being hard on it BUT it's at least being used and flown. We all know that one of the best maintenance routines for anything mechanical (cars, boats, planes) is to be used and not just sit there. Would you rather own a plane and know that it's been flying with proper maintenance done because in leaseback OR own a plane that sits there most of the time and only used 40-50-80 hours a year?
Thanks, Kenny for the compliments. I agree that one of the worst things you can for for an airplane is let it sit for extended periods of time. A leaseback is a good way to ensure it’s flown.
I don't live in an area with an overly large population density. But, the flight instructors here are literally turning people away or postponing time with them. Would considering the demand for planes for instruction and CFI demand be a valid reason for a leaseback?
All the problems you noted are very real. You will end up moving it out of the school. Plane needs to be checked by mechanic every 100 hours. You have to reserve time to fly your own airplane. It's really a hassle. You have to do all of repairs, and you will have them from the abuse.
I had a Cessna 152 me and my father owned and we lease the aircraft to a field in Tampa Florida financially it was great we made a lot of money we got the aircraft for like $1,500 we had to put a new engine in it but it was not that much money but I only flew the airplanes one time after that my sister got her license with that airplane which was pretty cool but it was amazing how much that airplane flew. As far as money it made a lot but as far as me or my father flying the airplane forget about it. It just flu all the time. Financially was great what if you were looking for something to fly yourself that was not the answer.
I think the only advantage goes to the flight school or FBO. The renter pays too much, and the owner pays for the maintenance, plus, he can never use the damn plane when he wants to....
It's all relative: What you say is 'too much' for the renter, they are likely happy to pay vs. the cost of owning a plane. Owner is willing to pay for the maintenance as long as they are coming out ahead, in the end. Scheduling the plane isn't that hard, and if it is, you are making money and can easily afford to rent an equal plane or better while yours is 'working.'
Leasers in our club claim to make no profit, and they have to pay for parts, we use our club maintenance mechanic,,we keep switching planes so much the president of the club decide to lease a fleet a of diamonds and solved the problem
Flying clubs by definition are non-profit and usually charge less for the usage of the plane(s). I have a plane in a club and accept that it will it not be as profitable. Diamonds can be great money-makers as they are generally newer and less maintenance-intensive.
To make it worth the while the plane must be treated as business equipment to be used roughly. Not treated like it's your baby being violated by students. But therein we find the problem. Good business people understand that while a leaseback can make money and has some tax advantages, there are far better ways to make money, and just buy a " business plane" to fly around by themselves and reap the bigger tax advantages. Leaseback owners don't approach it as a business, which means the plane #1 purpose is to generate income, vs. to lower your cost to fly. So it's basically incompatible with the leaseback set up.
Hi Geosync. I agree that to reap the best rewards you have to view the plane on leaseback as the asset that it is. However, there are no 'bigger' tax advantages by buying a "business plane" to fly around in vs. using the same plane on leaseback. All the same depreciation/deductions apply.
Bad idea. You risk abuse by student pilots and renters. Plus you are limited by your agreement on when you have access to it. So basically your in line with the renters and students.
math makes about zero sense. You basically are getting paid, but it goes to 100 hour inspections, etc... he mentions adding value such as a 172 with a g1000 but a decent one used goes for about 260K so when you throw the cost of the plain itself in the mix, it is a total loss leader. Anyone who says they are making money doing a leaseback is (in my opinion) ignoring a lot of the numbers.
With all due respect, as someone who has been doing this for years now, the math does make sense. IF, you have a good fit. A $260k plane will almost certainly struggle to make money, but I’m not taking about anything like that, as the video describes.
I would love to see detailed number. I have a lot of clients that don't view all of the number so remain positive. Did you do a NVP (net present value) or IRR (internal rate of return) of the investment. Would you care to share your P&L, balance sheets and cash flow statements? FYI, when someone says "with all due respect" everyone know that you are actually calling other person an idiot. @@MikeWebb-FlyingFinanciallyFree
another way to look at is by is the hour. For ever you rented you have to put in $18 for upcoming inspections (every 100 hours), fuel $49, oil $3.5, insurance (hull $14 for only $80K so for a 250K plane you could estimate this to be about $50), reserve's for maintenance $20. So say the school is renting this at $165/hour and the school gives you a 80/20 split that leaves you with 132 gross profile per hour when your expenses are 132. That dos not include the financing of the plane at say 9%. This is whey you do the NVP and IRR mentioned so you can see the true cost in opportunity lost by doing the investment or the actual profit over time. So even if you are gifted a plane, you cannot rent for whatever you want to...the schools compete with each other and I am in Washington DC (a major market) so I have a strong grasp of what the rentals and actually know very specifically the rental history of each plane. The G1000s are more popular and a lot more expensive than the "steam gauge" planes, etc.. the complex and twin engine planes rent, but not nearly as much as the 172s with the G1000s. @@MikeWebb-FlyingFinanciallyFree
and I did not take a lot about the costs going up faster than the rental rates...ie cost of oil and gas. So at best you supplementing the plane by the leaseback. At worst you have huge exposure with very little upside.
@@hanshoffmeyer8258 I don't even know where to begin on countering your perspective, here. Your numbers are assumed on a basis that I can't track the logic of, and are nowhere near what I actually have been paying for years. And, yes, I'm in DC, too, so that aint the problem. How many planes do you own that are on leaseback? How has your actual experience (not hypothetical/theorized) worked out? I appreciate the interest in my video -- tell me how your real-world experience has been.
That's why you keep a maintenance reserve. If it flies enough and you're properly putting some of it aside it's manageable. And, again, if it pays for itself (or makes money) it costs nothing to you = free.
"No one makes money while the aircraft sits on the ground." Au Contraire! Local flight school changed leases to to pay lessors based on Tach time, and continuing to charge students based on Hobbs time. Amazingly, when that policy changed the instructors began having newbies start up on ramp and idle for 10 min before taxi. Pretty sure instructors were getting paid more for Hobbs time than ground instruction. Probably as a kickback based on differential between Hobbs & Tach. Students and lessor getting burned by the FBO. FBO's complete control of maintenance also got abusive, claiming that their insurance wouldn't let them use retread tire owner already had and instead insisted on installing a $200 tire they already had. Talk to other lessors who've been dealing with the FBO; If the FBO won't pass along your info and help put you in touch, consider that a warning.
Hey Steve, thanks for this comment. I didn't see it until now, but appreciate your input. If what you say is true, sounds like that local flight school is a great example of who not to do business with. Shady business practices are never good, and certainly something to watch out for. And I totally agree that if you aren't able to get references with current lessors that's a huge red flag.
Every hour put on the plane reduces the value. Every accident reduces value. Every hour means closer to engine overhaul and possibly prop. Always assume renters have no respect for other peoples' property.
In todays world airlines are down 50% on pilots due to furloughs and that trend will stabilize for the next 3-5 yrs. Which means flight schools are going to be doing furloughs so this idea is a big "No-Go". Maybe again in 8 yrs but you won't be able to own any gasoline or diesel vehicles by then.
Man, with such a crystal ball you should be getting rich off gambling and investing instead of poo pooing other people’s actual business efforts. You’d do good to realize your experience is not the same as others.
Cardumdum.. yet, you seems to miss the fact that private air travel is up 300% and flight schools are having record sign ups. But please, tell us about how you know everything from outside the industry, armchair quarterback.
In your scenario, the other 9/10 of the time I’m getting paid which means the overhaul isn’t coming out of my pocket. Having a healthy low-mid time engine is important so the big bill doesn’t come too quickly.
So you just walk up to a Flight School and say, "Hey, buy me an airplane and I'll lease it back to you at a standard rate." Or do you walk up to an airplane sales lot and say, " Hey, give me a plane and I'll lease it to ABC flight school and when they pay me I'll pay you."" See, you really don't explain how to do what you are suggesting. At what point can you pay zero dollars to get a plane?
Hi, Zen. We need to discuss the definition of an asset vs liability, here. If you own something -- even if you had to pay something initially to acquire it -- and it puts money in your pocket every month, positive cash flow, then I consider that something that is costing me $0 and actually making me money. Or, an asset, and not something that takes money out of my pocket. Did i get the plane for free? No. But it costs me $0 to own at the end of the vast majority of months, and therefore I consider it 'free.' Make sense?
Your question is tongue in cheek... but for good reason. When somebody claims it is free to own an airplane and explains none of that in the video... that is clickbait. Yes I get the accounting and depreciation... so that should be explianed just a tad to make the video a bit more genuine.
@@MikeWebb-FlyingFinanciallyFree he's far too short sighted and busy thinking he knows everything already.. Great video! I've been contemplating this as well, but definitely am concerned with the student pilot mentality. As a CFI,CFII,MEI I'm thinking I could demand that I be the instructor for said aircraft. You keyed in on an important note.. having a 'rare, but in demand' plane. .. there's only 1 DA42 in the area and not many complex singles. .....hmmmm!
The best way to own an aircraft is to do what I do. I get rental income from real estate of about $114,000 a month and I set aside certain properties to be fun money. Even then I’m not dumb enough to even buy a Cessna. In order to not be stuck under the weather you need to spend a lot more than I’m willing. The next thing you need to do is just move where you want to be so you don’t need to buzz around getting somewhere slow without a potty. If you want to buzz around buy a light sport or motor glider.
@@BRC332 doors do I have!! My neighbor said the same thing to me. I have no idea because I own a bunch of residential but my industrial parks and commercial is where I’m trending last 10 years. Residential is good though but there are no bargains in my area and they won’t change my life so I don’t mess with them now. Maybe I will when the bottom falls out of this economy I will. I’m hoping it drops like the ladies drop their panties when the lights turn off in my hangar.
Amen to that. What a great video. Thanks for sharing.
I stopped flying I think 12 years already. Hope I could get back on it someday, and its always been my dream to own a plane, and I've always said that leasing it would be a great idea. But as you said, the info out there is almost zero. Glad to hear a positive feedback about it.
New subscriber here. Keep it up.
You are very welcome! I'm thrilled to hear you appreciate the info I'm trying to share and I hope you find it useful if you ever decide to get back into it!
I am pretty much in the same boat...first flight in a little over 13 years to the day was last week. It took a long time but glad to be back in it. Don't give up!
Same here Mike -Ive quit 3 dif. times. Now im 50 and ready to try this
driving to Osh for 22 years is not the way to go>>(
The planes I’d buy and put in leaseback would not be planes I’d ever consider as “personal” aircraft. They are a financial tax planning device, business equipment, first and foremost. Don’t buy the plane you want, buy the plane the market needs, and continue to find and buy, and place these pieces of equipment into the market. Think of yourself as a landlord, these are rental properties. Landlords don’t live in their rentals, they take the profit from a properly cash-flowed and tax-planned business and they pay themselves a draw, or salary, and that pays the mortgage on their home, elsewhere. This video is a great start in this direction, I would really enjoy hearing more.
Mike - You addressed the right things to consider in your video.
But I will NEVER look at another leaseback after the one I did. I'll share my experience. I bought a 172 and placed it on leaseback with an FBO. Once this happened, they wanted to schedule it all the time. It was no longer available for the weekend trips I bought it for. In hindsight, this could have been negotiated. But generally, an FBO will want your plane on Saturdays and Sundays for sure - when they're the most busy. During the one year it was on leaseback, the elevator was damaged when a student parked it and pushed it back into a signpost. Another student hit the mirror on a fuel truck and cracked the nav light on the wingtip. Another student tore the center black foam off the yoke. People treat rental planes like rental cars. Every dollar I "received" for my cut from the hourly went toward maintenance. So I never actually came out ahead. I literally just paid for maintenance while the hours ran up. After I took it off leaseback, I had the plane when I wanted it, maintenance went down exponentially, and it was always in perfect condition. Based on my experience, there was NO advantage. So my advise to a pilot is to buy what they can afford and have a nice airplane available all the time in great shape.
Hi, Hock. Appreciate your insight. There's no doubt that if you have a good fit at your FBO that your plane will be hard to book on the weekends. It's a good problem to have, though, as that means it's making money. If it's 'too' popular, you can let it continue to make revenue and rent a different plane while that is happening for your trips; essentially it's paid for by the revenue from the one you own. I have found that if I can plan far enough ahead and I can, indeed, reserve and fly my own plane. As you suggest, maybe one could negotiate some sort of arrangement where you don't have to be as proactive, but I don't know how that would work out.
It sounds like you had an awful experience with maintenance at that FBO. If students/renters are constantly beating it up I would think the FBO could better police that kind of stuff. Still, I'm surprised you weren't able to keep money in the bank as it sounds like it was busy. I'm sorry to hear it didn't work out, but glad you're happy with the arrangement you have now!
Hock Your experiences convince me to never do a leaseback.
Just curious, why didn't you have a you break it you replace it policy and make people pay for repairs?
@@Project2457official that’s certainly something to consider. The problem is when little things break it’s hard to nail down who’s responsible unless they admit to it. With multiple renters/day it’s hard to keep track.
I’m just finding this video after 2 years of being uploaded, but THANK YOU for including a picture of a Globe/Temco Swift. The GC-1B Swift is my absolute all time favorite aircraft but not too many people know about them and there is hardly any of them left. They need more love and attention because they are truly AMAZING airplanes and I believe everyone should have an experience in a Swift!
Thought about this too, but decided that all the reasons I wanted my own aircraft were exactly the same reasons I didn’t want other people anywhere near it.
I hear you. There are certainly some concessions to be given when going this way. The question is whether or not it gets some folks to ownership that never would otherwise; I think that can be the case, indeed.
Haha students bouncing it and wheelbarrowing down the runway
What is the average monthly cost ?
I do agree about your airplane getting torn up through leasing. A guy leases his really nice Archer II to the school, students leave their trash, tear up the landing (me included), and one student spilled a cup/bottle of coffee in the plane.
I'm a current, inactive flight instructor who flight instructed for a living 15 years ago. All of the aircraft except for 2 at the flight school where I worked were lease-backs. After seeing what those aircraft went through with flight training, complex/instrument training and multi-engine training there's no way in hell I would ever let an aircraft I owned be used by a flight school. They don't call them "crash and goes" for nothing.
That’s why it’s important to feel out the culture at any flight school. Find out if the chief pilot instills a culture of respect for the fleet. Some mom and pops can be great; some big factories can be great. Every school is different.
One of the aircraft at the flight school I just finished up at has a never-ending stack of new tires in the hangar. Probably goes through 2 sets a year or more.and a never-ending revolving list of small INOP items. They get treated like rentals.
So you have to ask yourself, do you want to be a seasoned pilot that's always got your airplane in use, in maintenance, or down for repairs. And when the weather is nice and you'd like to fly, so does everyone else so you're essentially living in a renter pool. Its just not for me if I can only own 1 airplane.
Appreciate the content. The information was well presented and informative! 🇺🇸
In 2000-2002 I owned the Piper Archer II N3569D. I had the speed mods installed and used for it for my instrument and commercial training. That was excellent plane and regretted selling it.
She is a great plane, indeed. 69D was the plane I first purchased and used on leaseback. Was a great money-maker for me, and I got my CSEL and CFI in that plane. Just sold it last Fall to a friend and I, too, regret it a bit. :)
Did a leaseback in 78, contract was no students. And I had a plane avilable when I need one. Worked out great.
That’s a nice condition that you were able to put on it. Certainly can remove some of the risk.
Your one of the 1/2 of 1% percenters. This video is otherwise bs.
That’s an ignorant look. Your just need to be wise. Consider an instrument rated/complex/multi engine endorsement.
These are endorsements people get after hours and hours of flight time. What’s that mean? It means it’s less likely that your plane gets abused at least out of ignorance.
Some flight schools have an awesome maintenance department that can be a huge perk in this arrangement if you aren’t an A&P.
This is a great video. Thank you so much for this information. Wonderful!!!!!!
Glad you enjoyed it!
Thanks buddy for making this great video!!!
A friend of mine had 3 planes on lease back, and was building a homebuilt. Of course he started with only 1 plane. But he said the secret was to have a good Accountant.
He had his planes at Compton, CA. He had his first plane at the Torrance airport. He did okay. But Compton worked out better. And as you said, it is important to plan ahead. And accept renting one of the other planes at the FBO if necessary.
Your friend is absolutely right; good accounting is extremely important. Glad to hear it worked out for him.
Good on You for choosing to research deeper into this & then have the courage to go against the often times incorrect general perceptions of the Crowd.
Who knows...as far as virtual comments go...for all We know negative commentary could be coming from those w/a vested interest in scaring ppl away from such a strategy > thanks for sharing 👍
Thanks for that, Transparent Media Truth! I think you might be on to something with that last part, too. 😎
Thank you so much! This is a life line to my pilot and business owner dreams!
Glad you enjoyed it!
Great video Mike!
I've put about 20 hours on 69D, and you're right those upgrades make a HUGE difference in rental appeal.
Thanks, man! I appreciate that and am glad to hear you dig the upgrades!!
Amazing video. Great voice. Do you have a podcast?
Ha! You would know how to pull one off, wouldn't you? Thanks, Mr. Motivator.
Are there particular model plans that do better financially in leasebacks? For example, would a higher end plane like a SR-22 do particularly well as I assume there are fewer available and presumably command more $? Or are the 172s of the world do better financially?
Generally speaking, the planes that fly often and regularly are the ones that have the best chance to be successful in a leaseback. Something like a SR-22 is harder because it won't fly as often (usually) and generate enough income to offset the expenses. But it could work in the right environment.
Do most flight schools have boeing 727 737 757 and 747 airbus series and Embraer and mc Donald Douglas series and stimulators
I would say, no, David. Redbird is the norm.
Thanks Mike, just started research to buy my first plane.
Best of luck, Richard!
Great video I am looking a buying a plane and weighing cost/use pros and cons. This video gave me something to consider that I was unaware of.
Finally, some information I can use!
Glad I could help!
Plus One Flyers out of Southern California (a flying club) does all leasebacks. Seems to work for the 50 or so airplanes and owners. Also, a buddy of mine paid for his cherokee 140 in 2 years leasing it to an fbo/flight school. However leasing back a plane doesn't really solve the issue of owning without partners. You basically have a ton of partners (anyone who rents your plane). You have to get on the schedule if you want to fly. You still have to pay hourly except the money mostly comes back to you minus fuel hangar insurance oil engine reserve maintenance reserve etc etc.
Thanks for sharing that great context! When I say own 'without partners' what I'm really getting at is you have sole decision powers over things like upgrades, etc. With partners, everyone has to agree on those types of decisions and pony up the capital required. It can get messy if everyone is not on the same page, or if one wants out of the plane. With a leaseback, you retain the power and 'share' the costs with all those renters.
Hey, So I want to fly a diamond DA 50 but way way to expensive for a 18 year old what do I do will that aircraft be able for me to lease my plane?
I agree. It can work. You must do your home work and find the demand and location(s). Most important how much you willing to invest. Don’t look at it as a way to make money.
Nice video
Do you own N3579D?
Thanks, Darren, for the compliment! Small world - I actually own N3569D - and bought it from you! That plane has been wonderful to me.
@@MikeWebb-FlyingFinanciallyFree You Got A Good One
Id like to rent it one day!
@@darrenbsands Just let me know when and we'll make it happen!
I really enjoyed your video great advice. So cool to get aviation info from a fellow musician. I checked out your Gibson and Marshall amp in background. I play guitar too smooth jazz. I have a fender Stratocaster and Alvarez acoustic. I hope to own a Cessna Skyhawk in near future. Thanks Smk
Glad you enjoyed it, Kenneth! Good to see another musician getting into aviation - best of luck on getting that plane!
Great video ！doing my ppl now and wanna get in to leaseback when I get my ppl !
Thank you so much for the info Mike! I have been bouncing back and forth on this topic. I appreciate the time you put into this and the info you passed along! Thank you!
Glad you enjoyed it, Nicholas!
Ok so you own the plane.. I would like to do this if possible to pay for the loan on a plane to eventually own it. Can you do this? Also why flight school lease backs and not rent for private flights?
Excellent presentation. Thanks for taking the time and devoting the effort to educate us.
I'm considering putting my Cherokee 140B (PA-28) into a leaseback arrangement. It is both a major metro area and an Air Force base flying club, but at a conveniently located civil airport with tower, major maintenance, etc. We shall see how it goes. Have not signed the papers yet. Watching this and other videos constitute part of my decision process.
Edit: New subscriber. Will try to watch all your videos today. Particularly interested in the avionics upgrades you chose.
Thanks for the kind words! I hope it helps towards your decision on the leaseback and any avionics you do, as well! Best of luck!
Good idea for a beater plane.
Hi, can you provide an update?
Has it worked out?
Really like your video. Very clear explanation!
Glad you enjoyed it! Thanks!
i wonder how long it would take for the leaseback to pay for the airplane outright? then after all said and done would be able to use the profits from selling it to get into a new one or an upgraded version if people are so worried about the wear and tear aspect of it. seems like a long but easy way to pay for an airplane.
Jake, your thoughts are correct. Depending on how the numbers stack up, one could pay off a loan within a few years of having it on a successful leaseback. Then you can upgrade/move on/whatever you deem best for your goals. It's not easy, but it's a great way to pay for a plane.
Excellent words. Appreciate the insight. Due diligence research and analysis paid off.
Thanks, Rob! I’m glad you found something useful from it.
I'm from South Sudan 🇸🇸 and I have just started my aviation company last month and I have been wondering how I can rent a small plane and how much does it cost?
Hello Matiang, did you find the info?
Awesome video thank you for sharing your experience with this option. I am a realtor in a large metroplex area and have used a similar option in a Realestae setting for clients that are either selling or buy their homes quicker than they thought possible. It gives both parties ample time to either move or complete other transactions while the property transferring possession. I never even thought about leasing back equipment (Aircraft) in this same manner. I have always wanted to learn to fly and have logged millions of miles as a passenger. This seems like a viable solution to one of my questions about the cost of flying and leasing an Aircraft if I did acquire my private piolets license.
Thanks, Kevin!
Great video thank you so much for sharing.
Thanks, Bee!
Mike Webb you’re welcome Mike.
I think there’s one part that you left out of the video - The cost of the original purchase of the leaseback airplane. Where does that money come from? If you’re financing it, you have to have sufficient credit to buy a 100k airplane (if you want a decent one). Do financiers allow you to lease it back? Or if they do, they jack up the cost of insurance? I think for all intents, you’re essentially signing onto a mortgage for a house that you’re going to turn right around and rent out, correct? How many lenders allow that? How does it work for an airplane “mortgage” then? If you have to buy the airplane yourself without a lender, how would you ever make your money back, on the eventual sale of the airplane years down the road? Can you speak to those aspects of the leaseback process?
OK, I see a Taylor and a Les Paul in the background, you're doing well. So is a Music Vid coming next? ;-) And thanks for the Leaseback video.
How’s your business going now? Every lender I’ve contacted limit hours for flight club use. Have you found lender that does not? I’d like to get your input.
Been there, done that. My recommendation is to avoid the lease back option to ownership. There is no such thing as a free lunch. Between the sky high insurance costs, increased maintenance costs, limited availability to be able to fly “your airplane”, wear and tear and or abuse of the aircraft etc...... the sticker price is extremely high. I watched my insurance costs nearly triple, and maintenance is now required every 100 hours rather than once per year. The costs to the owner of a lease back aircraft can be staggering if the agreement between the FBO and the aircraft is not properly structured. Entering into a lease back agreement has enormous risk associated with it, be very cautious when heading down this road. Sometimes, these lease back agreements work out, but it is rare.
Hey, Dennis. Appreciate your input on your experience. There's no question that with increased costs and complexity that leasebacks carry some risk. As you stated, it's important to have a good agreement and relationship with the FBO. I did a follow up that detailed all my actual costs and how it worked out well for me, but you're right in that they don't always work out if too many things do go as planned. Having your ducks in a row with market research and the right plane with the right FBO vastly increases the chances of success.
Thanks for the great video Mike. I'm a pilot wannabe but I'll keep this in mind.
Glad you liked it, Vince! Never too late to get started.
How does it work with insurance?
You have to get a commercial policy that covers flight training - being added to a school’s existing policy is usually the easiest way. As mentioned in this video and the companion ones, it will be many times more expensive than a personal policy. But the cost is easily overcome with a busy plane in a busy environment.
I had my C172 on leaseback at one flight school, under two different owners. The original owner agreed to let me do the maintenance to avoid paying for it, he did the inspection and said "Good job" or "What the heck, man? Re-do it." I had quite a savings for a rebuilt engine saved up.
Then they sold the school to someone else. They did maintenance w/o asking and charged my account for it and I wasn't happy with the work done many times. The savings dwindled. The last straw was a CFI giving another CFI a flight review were taxiing around at another airfield looking at planes for sale, rammed my wing into a pole.
"Take it off leaseback."
It can be good or bad. Shop the people running the school.
Totally agree with you, here. Your leaseback partner is probably THE biggest factor in whether it will work or not. Thanks for your thoughts and sharing your experience!
What would be a really good way to save up to buy your own plane?
The same techniques you'd use to save up for any big-ticket item; extra work when you can to generate some income, smart investing, and generally being around the environment you're hoping to be a part of..
Totally distracted by the Les Paul and Taylor in the background. Had to watch it again for the content!! Two episodes of enjoyment :)
Ha! You know your guitars! I was wondering if anyone would comment on that, eventually. For the next one I might try to get the Tobias 5-string in there, too. Glad you liked it enough for a double-take! Thanks!!
@@MikeWebb-FlyingFinanciallyFree Excellent! I own a Taylor 512ce. I'm also looking at buying another aeroplane - sold my Glasair 1RG a couple of years ago and now looking at a Mooney M20J-201. I agree that lease back isn't for everyone, but can work if you get the right FBO/type mix happening. Cheers from down under.
So, lets say I purchase a plane for about $100k. I get a leaseback agreement and I use it to pay off the loan of the plane over the course of several years. Eventually the loan is paid off and I officially own the plane. Can I back out of the leaseback agreement and take my plane all to myself? Or will it never be mine?
Hi, Jennette- Great question! Once the term of the leaseback is up you can do whatever you want with the plane. Typical agreements are in 12-month intervals, that can be renewed on an annual basis. This could be for another longer term, or on a month-to-month agreement. Regardless, typically, there's a clause for how the agreement can be terminated when either party wants to end the agreement. The most common I've seen is 30 or 60 days notice from either side.
do you happen to have an excel worksheet?
I do, but I can’t share it for proprietary reasons. I’m working on a way to share it with you all, though. Stay tuned.
Mike how can i get in touch with you.
Hey Mike! Great info, just a question. How does the flight school feel about engine TBO time? Do they require you to overhaul at recommended TBO time or are you allowed to "over-tbo" if the engine is running fine and passes annuals.
As this isn’t part 135 or 121 you are allowed to go over TBO as long as the numbers are good, as you suggested above. But I haven’t seen anything more than a couple hundred over.
Nice and very informative video, thank you!
My biggest question is:
When the plane is rented out so well, what is the advantage for the flying school. Why didn’t they simply buy the plane and make all the money instead of paying you a certain percentage.
Of course they don’t have the costs but paying you is kind of their (avoidable) costs and at one point it’s probably higher for them then just owning the plane, especially if it rents out well.
Thanks, Chris, for watching! That’s a great question. The answer is they don’t have to carry the costs of the plane, and they have no risk. If it were to break, or come across serious downtime they don’t suffer as much when they don’t own it. Risk management
@@MikeWebb-FlyingFinanciallyFree hi Mike, thank you very much for your answer.
For me it sounds like a good and realistic investment possibility.
In simple words you could just go to busy flight schools and ask them what kind of airplanes they need and buy them for them. If you actually can make money that could be even interesting for non pilot people.
You are on to something, potentially. Finding a busy school with a need is a great start!
Hey, that’s a great video. So how did it go down the road? Maybe you could consider shooting another video with the real expense breakdowns? Would be really great to know as I’m considering the same leaseback option.
Hey Ivan. I did a follow up that details all the expenses and how they broke down. It goes into much more detail.
What is the average monthly cost ?
What happens if you want to take the plane for a few days (say for a long trip)
You have to get in the Que and reserve it just like any other renter would.
You need to reserve is like anyone else. But with minimal foresight most, if not all, conflicts can be avoided. Also, some FBOs May allow you to have a longer reservation horizon than others. All negotiable.
How many hours / mo avg did your plane get rented for 2019? What area of US? Subscribed btw. Thanks
I'm in the DC area - a relatively active training/renting environment. In 2019, the plane averaged just under 70hr/mo. However, after the avionics upgrades I did, it averaged about 88/mo for the last 6 months of the year. You can check out my vid on the panel upgrade to see why. :) Thanks for the sub!
Wow, not bad, thanks for quick reply. I'm on west coast and considering a similar arrangement to do while I work on ratings.
I own a Cessna 310R. What are your thoughts on leasing it to a flightschool ?
Hi Andy. A 310R, while a great plane (my uncle had one for a few years and I got to fly it once or twice), is a tough sell in a leaseback. As discussed, if the goal is to actually make money you want a plane that is flown often and is accessible to as many pilots as possible. A twin with turbocharged engines does not fit that bill. However, if there's a school that wants to specialize in "higher-end" multi-engine training with something like a 310, it could attract some good attention. Your goals determine whether a leaseback is a success; my normal criteria would say a 310R is not a good candidate.
@@MikeWebb-FlyingFinanciallyFree I figured this was the case even for a normally aspirated 310R. I appreciate your feedback. Thank you, sir.
I’ve jumped into this by accident but I feel lucky. Would love to pick your brain and learn if you’re willing to share. I’m hoping you still check your UA-cam Channel.
Hi Chris. Yeah, I’m happy to share. Let me know how you want to connect.
Would still love to connect. Phone is 480 area then 341 and finally runway 5483. Hoping this doesn’t get removed since I tried in code.
Excellent presentation!
Thanks, Stephen!
Excellent - thank you!
I am planning to do my PPL in Hungary , I am going to buy a used a/c from Spain , how could it help me in my training ? . I want to become a flight instructor
Benni Thomas I would offer that if you buy a plane and do your training in it the obvious benefits are you will really get to know the plane and have a consistent training experience from that standpoint. You could hire an independent CFI to do your training, or you could explore putting your plane on leaseback with a flight training center if there’s one near you. After you get your CFI you may be able to instruct in your own plane (don’t know the rules in Hungary.)
@@MikeWebb-FlyingFinanciallyFree , Thank you for your guidance , I really hope to have more conversation with you on this subject .
Thank you .
You are welcome!
I have many planes in this set up. You need to treat it like a rental. That’s it nothing else. Reliable and CFI that wants to fly your plane. That’s it nothing else. Fill it up with time and CFIs.
I was talking to a pilot friend about this, and his had a pretty simple question which I could not answer. If you can make money renting a plane like this, why wouldn't a flight school just own and rent planes themselves vs offering to leaseback planes?
It's a great question, and one that is asked often. The answer: Most schools have multiple planes in their fleet, but can't afford to own all of them. They'd rather lease someone else's plane to offset the capital cost and risk of ownership to someone else. They sacrifice profit potential in return for easier growth of the fleet and their cut of the revenue. If the school has the money to own and operate their entire fleet, they usually do so. It all comes down to return on capital and risk. To each their own.
Great video! Nothing is ever all good or bad. We have a few clients we work with that want to buy planes and consider leaseback as it MAY be a way to depreciate the plane as a business expense. We are looking into the tax laws right now. Again, thanks.
Thanks! Worth looking into.
Did you ever come to a conclusion here?
(If a disclaimer is needed - I won’t consider this as tax advice, will seek own counsel but curious about your experience)!
A plane used in a leaseback is definitely eligible for depreciation, as is any business asset. I keep track of all expenses and any personal use (although that hasn’t been the case for years with this plane) to keep that separate.
@@williamwebb8767 Hi William. None of our clients have ended up doing it. As a financial planner and CPA, we have looked at the numbers and it is possible to make it work. The devil is in the details for depreciation. One of clients found lawyers that specialize in Aviation and their firm is Carriere, Little & Leach. He met with Sue. I have 0% affiliation or even knowledge of them except my client liked his consultation. I would recommend anyone that who will be using depreciation with airplanes to talk to an expert tax attorney upfront. The reason I prefer a tax attorney is they can better represent you under audit. The only other item of potential wisdom ( I hope it is wisdom) is the big issue our clients have had- is they want a plane to personally fly that might be different than the planes that flight schools want and that has stopped them in their tracks with the leaseback option. As Mike says below, any business property such as a plane can be depreciated and good record-keeping is the key to making this work. Good luck!
If you are looking at this as a tax write-off, you need to google the irs hobby-loss rules.
Great video
Thanks, Travis!
I noticed he didn't give any financial breakdown of his activities. The number of hours rented and etc.
You rent and it costs $$$. There is no such thing as FREE. This video is 100% click bait.
If you watch my other video I break it all down.
Free to your opinion, but if the end result at the end of the month is money in your pocket vs. out you could argue it is, in fact, free.
@@MasterCarguy44-pk2dq I disagree. There's a way to make aircraft ownership free. If you are in an active club or flight school. With a plane that people desire your ownership costs can be paid for.
I agree. No details... and to be honest anybody watching this video wants some details. Kind of like saying "rental properties has worked out great for me... you should look into it"
You seem like a solid guy... I say that because I see what I think is a genuine Gibson LP behind you.... that is all I have to go on.
You leave out so much information. You do not talk about the size of your market - I'm in Lexington KY a 250k area with a decent airport and community. Not sure that is big enough. Please advise.
James, you are correct; it's a genuine Gibson Les Paul Standard behind me... but not sure I'd take that as any referendum on the quality of my character.
That said, I mentioned in this video how the area you live in can make a big difference in the amount of training activity, which can play a big part in how much revenue it will produce. If you find the right plane for the right school, it can, indeed, work. If you want those 'elusive' details, they are in plain sight in my follow up video where I detail all the actual numbers here:
ua-cam.com/video/7KTch0guZF8/v-deo.html
This is the tactic utilized by luxury/exotic car owners.... I have had this thought for aircrafts....
Hadn’t compared the idea to that, but you’re right, in a sense. The difference with planes lies in the training aspect, not just rental use.
@@MikeWebb-FlyingFinanciallyFree Very true.. which is still an amazing concept. I was sitting here smiling and taking notes from the video like "yeah... yeeaahhh YEEAAHH!!" Haha ... great channel... I look forward to see what this new year brings you!
Bad idea usually. My experience was leasing back a Cherokee
140. Monthly revenue about $1200. Monthly repair and
Maintenance about $1500. Renters and learners tear the
Plane apart.
Hi, Bruce. I'm sorry to hear you had a bad experience with your Cherokee. Having a flight school that has standards for its customers in how they treat the planes is necessary, indeed. Sounds like it was unfortunately a bad fit with this one. Your plane must've spent more time down for maintenance than up - and for that I'm sorry.
Great video with useful information. I've been out of flying for about 8 years but getting back into it and seriously considering ownership and possibly leaseback for all of the reasons you discuss.
One important topic you missed that I consider important is on one hand you can worry about renters lack of caring in their treatment of your plane and being hard on it BUT it's at least being used and flown. We all know that one of the best maintenance routines for anything mechanical (cars, boats, planes) is to be used and not just sit there. Would you rather own a plane and know that it's been flying with proper maintenance done because in leaseback OR own a plane that sits there most of the time and only used 40-50-80 hours a year?
Thanks, Kenny for the compliments. I agree that one of the worst things you can for for an airplane is let it sit for extended periods of time. A leaseback is a good way to ensure it’s flown.
Mike web, I would love to talk to you personally. Let’s make both our income 100x this year
How has covid affected the flight hours?
The school was closed for 2 months and no revenue flights were made. However, I was able to fly it personally.
Since it reopened the hours are back to normal.
Translation: "I work really hard and invest a lot to run a not-for-profit business where I get to fly a plane."
Correct, except that it does actually make money (i.e. profit) The flying part is still the best part.
😁
I don't live in an area with an overly large population density. But, the flight instructors here are literally turning people away or postponing time with them. Would considering the demand for planes for instruction and CFI demand be a valid reason for a leaseback?
Anyplace where there is un-met demand is a breeding ground for success with a leaseback. Provided you could provide a safe, desirable plane, that is.
All the problems you noted are very real. You will end up moving it out of the school. Plane needs to be checked by mechanic every 100 hours. You have to reserve time to fly your own airplane. It's really a hassle. You have to do all of repairs, and you will have them from the abuse.
I have found the arrangement beneficial for me, 'hassles' and all. But everyone's expectations can be different.
Looks like you have owning a plane dialed-in..... Now, lets talk about the Les Paul & amp!
Haha... good eye. 😎
Who do you have your aircraft insured with? How much more does it cost to insure your plane for rental purposes?
Hi, Chris. All your questions are answered here: ua-cam.com/video/7KTch0guZF8/v-deo.html
I had a Cessna 152 me and my father owned and we lease the aircraft to a field in Tampa Florida financially it was great we made a lot of money we got the aircraft for like $1,500 we had to put a new engine in it but it was not that much money but I only flew the airplanes one time after that my sister got her license with that airplane which was pretty cool but it was amazing how much that airplane flew. As far as money it made a lot but as far as me or my father flying the airplane forget about it. It just flu all the time. Financially was great what if you were looking for something to fly yourself that was not the answer.
If you manage a leaseback plane that is that busy, that's when you use the proceeds from that to buy the plane you REALLY want. ;)
@@MikeWebb-FlyingFinanciallyFree thats what we did but shhhhhh not supposed to tell everyone
Ill take things that never happened for 1000$ Alex
I think the only advantage goes to the flight school or FBO. The renter pays too much, and the owner pays for the maintenance, plus, he can never use the damn plane when he wants to....
It's all relative: What you say is 'too much' for the renter, they are likely happy to pay vs. the cost of owning a plane. Owner is willing to pay for the maintenance as long as they are coming out ahead, in the end. Scheduling the plane isn't that hard, and if it is, you are making money and can easily afford to rent an equal plane or better while yours is 'working.'
free?! good way to get views 👏 😎
Leasers in our club claim to make no profit, and they have to pay for parts, we use our club maintenance mechanic,,we keep switching planes so much the president of the club decide to lease a fleet a of diamonds and solved the problem
Flying clubs by definition are non-profit and usually charge less for the usage of the plane(s). I have a plane in a club and accept that it will it not be as profitable. Diamonds can be great money-makers as they are generally newer and less maintenance-intensive.
@@MikeWebb-FlyingFinanciallyFree A neighbor had a DA42 twin, 2010. It was a maintenance nightmare. It was in the shop 70% of it life.
Can't justify the $1 million price tags, especially with supposedly easier less expensive automotive engines under ghe cowling to work on.
Hate to say it but sounds like he had a bad one. I know several owners of diamonds (20, 40, 42, 62) and they have been reliable.
Low hour pilots that just got license needs hours so you lease or rent your plane for them it’s simple
Yep. There is large demand that needs to be met.
To make it worth the while the plane must be treated as business equipment to be used roughly. Not treated like it's your baby being violated by students. But therein we find the problem. Good business people understand that while a leaseback can make money and has some tax advantages, there are far better ways to make money, and just buy a " business plane" to fly around by themselves and reap the bigger tax advantages. Leaseback owners don't approach it as a business, which means the plane #1 purpose is to generate income, vs. to lower your cost to fly. So it's basically incompatible with the leaseback set up.
Hi Geosync. I agree that to reap the best rewards you have to view the plane on leaseback as the asset that it is. However, there are no 'bigger' tax advantages by buying a "business plane" to fly around in vs. using the same plane on leaseback. All the same depreciation/deductions apply.
@@MikeWebb-FlyingFinanciallyFree agreed.
I had aircraft. Problem was I just lost a lot of money ...no worth own that ...
I hate the word "free". Nothing is ever free. It can be at the expense of someone else, but it still has an expense..
it's called clickbait
Bad idea. You risk abuse by student pilots and renters. Plus you are limited by your agreement on when you have access to it. So basically your in line with the renters and students.
math makes about zero sense. You basically are getting paid, but it goes to 100 hour inspections, etc... he mentions adding value such as a 172 with a g1000 but a decent one used goes for about 260K so when you throw the cost of the plain itself in the mix, it is a total loss leader. Anyone who says they are making money doing a leaseback is (in my opinion) ignoring a lot of the numbers.
With all due respect, as someone who has been doing this for years now, the math does make sense. IF, you have a good fit. A $260k plane will almost certainly struggle to make money, but I’m not taking about anything like that, as the video describes.
I would love to see detailed number. I have a lot of clients that don't view all of the number so remain positive. Did you do a NVP (net present value) or IRR (internal rate of return) of the investment. Would you care to share your P&L, balance sheets and cash flow statements? FYI, when someone says "with all due respect" everyone know that you are actually calling other person an idiot.
@@MikeWebb-FlyingFinanciallyFree
another way to look at is by is the hour. For ever you rented you have to put in $18 for upcoming inspections (every 100 hours), fuel $49, oil $3.5, insurance (hull $14 for only $80K so for a 250K plane you could estimate this to be about $50), reserve's for maintenance $20. So say the school is renting this at $165/hour and the school gives you a 80/20 split that leaves you with 132 gross profile per hour when your expenses are 132. That dos not include the financing of the plane at say 9%. This is whey you do the NVP and IRR mentioned so you can see the true cost in opportunity lost by doing the investment or the actual profit over time. So even if you are gifted a plane, you cannot rent for whatever you want to...the schools compete with each other and I am in Washington DC (a major market) so I have a strong grasp of what the rentals and actually know very specifically the rental history of each plane. The G1000s are more popular and a lot more expensive than the "steam gauge" planes, etc.. the complex and twin engine planes rent, but not nearly as much as the 172s with the G1000s.
@@MikeWebb-FlyingFinanciallyFree
and I did not take a lot about the costs going up faster than the rental rates...ie cost of oil and gas. So at best you supplementing the plane by the leaseback. At worst you have huge exposure with very little upside.
@@hanshoffmeyer8258 I don't even know where to begin on countering your perspective, here. Your numbers are assumed on a basis that I can't track the logic of, and are nowhere near what I actually have been paying for years. And, yes, I'm in DC, too, so that aint the problem. How many planes do you own that are on leaseback? How has your actual experience (not hypothetical/theorized) worked out? I appreciate the interest in my video -- tell me how your real-world experience has been.
Whoa! Slow the bloody cursor down!
Sorry.. I don't like to assume folks will take the time to actually read everything on the screen. More of a, "trust me, it's in here" type thing. :)
It’s free until you get the maintenance, and repair bills.💲💲💲
That's why you keep a maintenance reserve. If it flies enough and you're properly putting some of it aside it's manageable. And, again, if it pays for itself (or makes money) it costs nothing to you = free.
"No one makes money while the aircraft sits on the ground." Au Contraire! Local flight school changed leases to to pay lessors based on Tach time, and continuing to charge students based on Hobbs time. Amazingly, when that policy changed the instructors began having newbies start up on ramp and idle for 10 min before taxi. Pretty sure instructors were getting paid more for Hobbs time than ground instruction. Probably as a kickback based on differential between Hobbs & Tach. Students and lessor getting burned by the FBO. FBO's complete control of maintenance also got abusive, claiming that their insurance wouldn't let them use retread tire owner already had and instead insisted on installing a $200 tire they already had. Talk to other lessors who've been dealing with the FBO; If the FBO won't pass along your info and help put you in touch, consider that a warning.
Hey Steve, thanks for this comment. I didn't see it until now, but appreciate your input. If what you say is true, sounds like that local flight school is a great example of who not to do business with. Shady business practices are never good, and certainly something to watch out for. And I totally agree that if you aren't able to get references with current lessors that's a huge red flag.
Every hour put on the plane reduces the value. Every accident reduces value. Every hour means closer to engine overhaul and possibly prop. Always assume renters have no respect for other peoples' property.
In todays world airlines are down 50% on pilots due to furloughs and that trend will stabilize for the next 3-5 yrs. Which means flight schools are going to be doing furloughs so this idea is a big "No-Go". Maybe again in 8 yrs but you won't be able to own any gasoline or diesel vehicles by then.
Man, with such a crystal ball you should be getting rich off gambling and investing instead of poo pooing other people’s actual business efforts. You’d do good to realize your experience is not the same as others.
Cardumdum.. yet, you seems to miss the fact that private air travel is up 300% and flight schools are having record sign ups. But please, tell us about how you know everything from outside the industry, armchair quarterback.
The most expensive item is an engine overhaul. You fly the plane 1/10 of the time, but pay 100% of the cost to overhaul. $20,000 - 30,000. Or more.
In your scenario, the other 9/10 of the time I’m getting paid which means the overhaul isn’t coming out of my pocket. Having a healthy low-mid time engine is important so the big bill doesn’t come too quickly.
So you just walk up to a Flight School and say, "Hey, buy me an airplane and I'll lease it back to you at a standard rate." Or do you walk up to an airplane sales lot and say, " Hey, give me a plane and I'll lease it to ABC flight school and when they pay me I'll pay you."" See, you really don't explain how to do what you are suggesting. At what point can you pay zero dollars to get a plane?
Hi, Zen. We need to discuss the definition of an asset vs liability, here. If you own something -- even if you had to pay something initially to acquire it -- and it puts money in your pocket every month, positive cash flow, then I consider that something that is costing me $0 and actually making me money. Or, an asset, and not something that takes money out of my pocket. Did i get the plane for free? No. But it costs me $0 to own at the end of the vast majority of months, and therefore I consider it 'free.' Make sense?
Your question is tongue in cheek... but for good reason. When somebody claims it is free to own an airplane and explains none of that in the video... that is clickbait. Yes I get the accounting and depreciation... so that should be explianed just a tad to make the video a bit more genuine.
Folks stay away. This video is 100% click bait bs. Nothing is free and with a plane especially.
Your opinion, man. Watch the video. Follow the logic.
@@MikeWebb-FlyingFinanciallyFree he's far too short sighted and busy thinking he knows everything already..
Great video! I've been contemplating this as well, but definitely am concerned with the student pilot mentality. As a CFI,CFII,MEI I'm thinking I could demand that I be the instructor for said aircraft. You keyed in on an important note.. having a 'rare, but in demand' plane. .. there's only 1 DA42 in the area and not many complex singles. .....hmmmm!
Thanks, Harvey! It’s worth a shot trying those stipulations.
@@MikeWebb-FlyingFinanciallyFree I certainly agree! Now I just have to get the club to buy off on it! 🤑
The best way to own an aircraft is to do what I do. I get rental income from real estate of about $114,000 a month and I set aside certain properties to be fun money. Even then I’m not dumb enough to even buy a Cessna. In order to not be stuck under the weather you need to spend a lot more than I’m willing. The next thing you need to do is just move where you want to be so you don’t need to buzz around getting somewhere slow without a potty. If you want to buzz around buy a light sport or motor glider.
How many doors do you have? I’m at 5
@@BRC332 doors do I have!! My neighbor said the same thing to me. I have no idea because I own a bunch of residential but my industrial parks and commercial is where I’m trending last 10 years. Residential is good though but there are no bargains in my area and they won’t change my life so I don’t mess with them now. Maybe I will when the bottom falls out of this economy I will. I’m hoping it drops like the ladies drop their panties when the lights turn off in my hangar.