Leasing private C150

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krrave
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Leasing private C150

Post by krrave » Tue Jan 05, 2016 3:22 pm

Hi All,

I've been having this idea I need some help with. When I buy an airplane, I want to eventually make it available to other low time pilots to build hours (and other renters, but low time is my target demographic). Most likely a 150/152 with high hours... Does anyone out here know if insurers will allow me to wet / dry lease the plane to others, privately?

If this idea went well, hypothetically I would let more pilots fly it than myself . Has anyone ventured in doing such an idea? I'd like to hear your experience.

Thanks!
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Re: Leasing private C150

Post by PilotDAR » Tue Jan 05, 2016 5:18 pm

I think you'll find that everything will become more complex and expensive if you want to be in the aircraft leasing business. Once you cross the line into commercial use of the aircraft, there are much more burdensome regulatory requirements, maintenance requirements, and different insurance. All of that costs money.

With one plane, there will be potential frustration with availability, and dispatch reliability. Occasionally lending an aircraft to a pilot who is accountable for its condition is one thing. But, having numerous pilots competing for it, then pointing at everyone else when something is broken, worn out or damaged is on going frustration for the person who offered the plane in the first place. They fly it a few hours away, and something breaks - they'll be phoning you for an idea to get it fixed and home, and they'll be in a hurry. Your plane is broken at a far away place, what do you do? And, what's in it for you? Profit? Even your use of the plane with costs covered? I doubt it'll be worth it in the long run.

When you look at the ongoing maintenance cost for an aircraft which is used by many people, it can be very different from your careful use of the aircraft. Someone scratches the windshield attempting to clear ice, or crank a cold engine until the starter motor is ruined - and you're having to pay, and any hope at a profit is lost for the year.

Cessna 150/152's are economical to operate, but less so when many pilots are sharing one. Take coffee and donuts, and have a heart to heart chat with a director of maintenance at a flying school, you may have an awakening as to operating costs - and they are spreading those costs and dispatch availability over several aircraft.

Speaking personally, I chose the absolute opposite approach; I bought a modest 150 29 years ago. Since then, the number of other pilots who have flown it is two - once each ('cause I have their respective aircraft those days). Otherwise, I know exactly how the plane was left, and anything it needs, is my responsibility. Pilots have asked to use it, but when I consider perhaps making a few bucks over the operating cost for a couple of hours, against the cost of even the most simple thing which might break, and the resulting effort on my part to fix it, and loss of use - it's not worth it, not even close. 29 years later, there has been one occasion in all those years, when I wanted to fly my plane, and it would not go, otherwise, it was always ready when I was. I planned my maintenance costs, and upgrades, and never had a surprise.

My advice, buy the plane first, with your plan to entirely bear the reasonable operating costs. Fly it that way for a while, and then consider if you want to let every eager new pilot loose in it. Perhaps not so much. It's nice to be generously minded toward lowtime pilots, but you're not a charity. There are businesses out there to provide rental/leased aircraft, leave it to them, at least until you are a very experienced owner yourself.
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Re: Leasing private C150

Post by CpnCrunch » Tue Jan 05, 2016 6:02 pm

As long as it's not commercial (i.e. you won't be making a profit), there shouldn't be an issue and your insurance won't be any higher than for 1 pilot. Just let your insurance company know.

Renting out an aircraft makes sense, because most private owners don't fly enough themselves to make it worth owning an aircraft on their own.

Just be careful who you rent to. As long as you only rent to responsible people, maintenance costs should be lower if you rent out your plane (assuming everyone only flies a handful of hours a year). Planes don't like being left sitting for months. If you're flying 50+ hours a year on the other hand, then it makes more sense to just own the plane yourself.
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schnitzel2k3
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Re: Leasing private C150

Post by schnitzel2k3 » Wed Jan 06, 2016 9:21 am

Think liability as well.

Families don't care if their loved ones had an agreement with you.

Once they are gone, if your aircraft is involved, you will likely be facing some kind of lawsuit, perhaps multiple if a 3rd party is involved.

Insurance companies will do their best to find some kind of policy loophole, especially when millions are involved.

Good luck,

S.
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Re: Leasing private C150

Post by CpnCrunch » Wed Jan 06, 2016 9:34 am

schnitzel2k3 wrote:Think liability as well.

Families don't care if their loved ones had an agreement with you.

Once they are gone, if your aircraft is involved, you will likely be facing some kind of lawsuit, perhaps multiple if a 3rd party is involved.

Insurance companies will do their best to find some kind of policy loophole, especially when millions are involved.

Good luck,

S.
The same thing could happen driving down the highway with your friend.
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Re: Leasing private C150

Post by 5x5 » Wed Jan 06, 2016 9:46 am

CpnCrunch wrote:Just be careful who you rent to. As long as you only rent to responsible people,
Easy words to say and they certainly are true - the catch is how do you make the determination? Talk to anyone who has run a school and get a feel for how easy it is to make that call. And even if the person is responsible, the folks who typically want to get in on something like you're considering offering are low-time beginners or somewhat stale pilots or infrequent fliers with rusty skills. How do you plan to manage that?

I'm not fond of the liability boogeyman that always seem to creep into discussions these days. It's getting to the point where we shouldn't do anything because of the possibility, not the actual likelihood, of legal action/suits.
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Re: Leasing private C150

Post by Meddler » Wed Jan 06, 2016 10:03 am

Pilot dar is right. Good thing too-it would have taken me half an hour to type that!

Once you own your own plane you will suddenly feel differently about having anyone else fly it. You won't want to do it, and it won't make sense financially.

Getting other pilots on your insurance is pretty easy. If you just want to let someone fly your plane, it's simply a matter of sending a form with their info to be insurance company and getting them added.

I have had lots of people wanting to build time on my plane. It was a pretty easy call to say nope. I have worked out what it costs me to run the thing per hour, the way I operate it, with nothing going wrong, and it's about twice what a 150 should rent for(it's not a 150).

I could rent or lease it to someone at that price but then they would break it and no on would be happy.
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Re: Leasing private C150

Post by Posthumane » Wed Jan 06, 2016 10:24 am

I would say that rather than leasing it to a bunch of low-time pilots, if you want to save money then find ONE person who you know well, trust, and who is conciencious and has the same mind set towards operating the aircraft as you do, and buy the plane together as a partnership. I've leased my plane out to people before, and was not really happy with the results. Some (minor) things were broken and not fixed. I've also lent my plane to a family member, which worked out a bit better. However, everytime I have someone else at the controls of my plane when I'm in it, I cringe and have to stop myself from constantly criticizing the way they do things - not necessarily wrong but just slightly different than how I do them.
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Re: Leasing private C150

Post by CpnCrunch » Wed Jan 06, 2016 11:35 am

Yes, you definitely have to be careful who you rent to. Only rent to someone who you know well, and who will treat the plane like you do. You're not renting to anyone who walks in off the street, like a flight school, so you can be more choosy. I once had a person who wanted to rent my plane and he told me he had flown a bunch of times at night without having a night rating.
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Illya Kuryakin
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Re: Leasing private C150

Post by Illya Kuryakin » Fri Jan 08, 2016 9:36 pm

Go for it.
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Re: Leasing private C150

Post by cncpc » Sun Jan 10, 2016 11:18 pm

Other than Ilya's, disregard 50% of the stuff said here.

Any aircraft owner can rent an aircraft to someone with a recreational pilot license or higher. That is not a commercial air service, and you can rent at a profit. What you cannot do is ever provide a pilot for the aircraft. The person you rent to must be someone who is authorized by your insurance company, otherwise you are flying without liability insurance and that is a fine. Many fines if you do it many times.

The insurance company will require a checkout, and with low timers, it will likely have to be with an instructor. You can get into trouble by providing the instructor. Clear trouble if the instructor is billed along with the checkout flights. I think its a grey area if you suggest an instructor, but the renter pays the instructor separately and in an arrangement that is at arms length to you. So all this means that, because the instructor is PIC for the checkout, he or she has to be on your insurance. If your renters are truly finding their own instructors, then you are going to have a lot of instructors on your insurance.

I doubt that there is a lot of demand to rent a 150, but who knows. More demand for a 172.

You're very likely doing the math wrong on calculating your costs.
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Re: Leasing private C150

Post by CpnCrunch » Mon Jan 11, 2016 7:23 am

cncpc wrote:Other than Ilya's, disregard 50% of the stuff said here.

Any aircraft owner can rent an aircraft to someone with a recreational pilot license or higher. That is not a commercial air service, and you can rent at a profit.
That might be true legally, but your insurance company might have a different viewpoint. You likely won't get the $725 insurance if you're making a profit...ask your insurance company and see what they say. They certainly do want to know if you're making a profit (they will ask you).
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Re: Leasing private C150

Post by Posthumane » Mon Jan 11, 2016 7:54 am

Air1 never asked me if I was making a profit when I was leasing my aircraft. In fact they didn't care much at all about the lease arrangements, they only wanted the information of the pilots who were going to be leasing the aircraft, as well as the instructor who was flying with them. The insurance was only slightly higher than when only my name was on it.
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Re: Leasing private C150

Post by CpnCrunch » Mon Jan 11, 2016 8:04 am

Posthumane wrote:Air1 never asked me if I was making a profit when I was leasing my aircraft. In fact they didn't care much at all about the lease arrangements, they only wanted the information of the pilots who were going to be leasing the aircraft, as well as the instructor who was flying with them. The insurance was only slightly higher than when only my name was on it.
Perhaps it depends on the insurance company. This was Aon.

If they don't ask, it might be worth checking your policy in case it mentions any restrictions.
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Re: Leasing private C150

Post by Illya Kuryakin » Mon Jan 11, 2016 8:26 am

I personally know three people who now own their own airplanes, totally financed by renter pilots. One has a 172, the other two, 150's.
It doesn't cost much to own and operate a decent 150. Nice ones go for the price of a new Harley. For the money, you get to go in a straight line, at three times the speed you'd ever average on that same Harley.
I find most "guidance" on this site, to be mostly "opinions" put forth by persons who have no background, or knowledge on the subjects rhey are "guiding" you on.
To the original poster. Do it. Sell block time. To time builders. An hour is an hour. Be it in a 150, or something modern and expensive.
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Re: Leasing private C150

Post by CpnCrunch » Mon Jan 11, 2016 9:09 am

Illya Kuryakin wrote: I find most "guidance" on this site, to be mostly "opinions" put forth by persons who have no background, or knowledge on the subjects rhey are "guiding" you on.
Not sure if you were referring to my posts as well in your comment above, but my comment is also based on personal experience (i.e. facts, not opinions).

To the OP: as long as you do your homework, it will be fine.
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Re: Leasing private C150

Post by Illya Kuryakin » Mon Jan 11, 2016 10:15 am

CpnCrunch wrote:
Illya Kuryakin wrote: I find most "guidance" on this site, to be mostly "opinions" put forth by persons who have no background, or knowledge on the subjects rhey are "guiding" you on.
Not sure if you were referring to my posts as well in your comment above, but my comment is also based on personal experience (i.e. facts, not opinions).

To the OP: as long as you do your homework, it will be fine.
No Crunch...not you, just this site in general. No need to feel guilty....unless you are, of course.
Cheers
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Re: Leasing private C150

Post by Bede » Mon Jan 11, 2016 2:39 pm

cncpc is correct. I've done this and been involved with a club that did this. It's not a commercial operation. For the club I was involved with that rented out the aircraft (non-FTU), the insurance was about $2k/yr. Interestingly enough, all the insurance wanted was an annual checkout with every pilot over the age of 80 years old.
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Re: Leasing private C150

Post by CpnCrunch » Mon Jan 11, 2016 3:18 pm

Bede wrote:cncpc is correct. I've done this and been involved with a club that did this. It's not a commercial operation. For the club I was involved with that rented out the aircraft (non-FTU), the insurance was about $2k/yr. Interestingly enough, all the insurance wanted was an annual checkout with every pilot over the age of 80 years old.
$2k/yr seems very high for a C150. Or was that a different plane.

Anyway, here is a direct quote from the insurer:
Do you profit in any way from the sale the block time on your =
aircraft, or do you simply charge your costs to the pilots, to recoup =
whatever your gas, maintenance, insurance costs are etc
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Re: Leasing private C150

Post by LousyFisherman » Tue Jan 12, 2016 9:05 am

CpnCrunch wrote: $2k/yr seems very high for a C150. Or was that a different plane.
$2K a year is what it costs to insure a C150 that ANY LICENSED PPL is allowed to fly. It is roughly double the cost to insure 1-4 individual pilots on a C150. Above 4 pilots cost goes up

YMMV
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Re: Leasing private C150

Post by photofly » Tue Jan 12, 2016 9:23 am

My broker told me that if I wanted to profit from a block hire arrangement, I would 100% definitely need to make that known to the insurer and the premium would be different.

I don't really care if anyone thinks that's guidance, or an opinion, or what the difference between the two is.
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Re: Leasing private C150

Post by CpnCrunch » Tue Jan 12, 2016 9:24 am

LousyFisherman wrote:
CpnCrunch wrote: $2k/yr seems very high for a C150. Or was that a different plane.
$2K a year is what it costs to insure a C150 that ANY LICENSED PPL is allowed to fly. It is roughly double the cost to insure 1-4 individual pilots on a C150. Above 4 pilots cost goes up

YMMV
LF
We're paying $725/yr insurance for any accident-free 250+ hr PPL under 70 with 25hr on type and current in last 90 days. No increase in cost for allowing anyone to fly, but they don't want the owner to make a profit. Perhaps if you're paying $2k/yr they don't mind whether or not you make a profit.
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Re: Leasing private C150

Post by Illya Kuryakin » Tue Jan 12, 2016 10:56 am

I don't think having renter pilots make your airplane payments for you is making a "profit". Simply factor you payments into your rental rate. Along with engine overhaul reserves, etc. Just makes sinse. NOBODY is getting rich renting a 150 to typical cheap ass PPLs.
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Re: Leasing private C150

Post by photofly » Tue Jan 12, 2016 11:03 am

Illya Kuryakin wrote:I don't think having renter pilots make your airplane payments for you is making a "profit". Simply factor you payments into your rental rate.
Add up all your costs on the aircraft including depreciation, interest payments, engine allowance, oil, fuel, annual inspection, consumables, interior refubishment fund, paint fund, insurance, hangarage and anything else you can reasonably think of - and divide by the number of hours you fly in a year.

If you charge more than per hour that you're making a profit, and if so, and you're insured with my insurance company - they want to know and will adjust your premium accordingly.

Not complicated.
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Re: Leasing private C150

Post by ScudRunner » Tue Jan 12, 2016 4:25 pm

exactly what photofly said regarding profit.

your radios say cost $2000 you will "need" to replace them in 1000 hours so $2000 / 1000hrs = $2 bucks depreciation an hour. now in 1000 hours of flying your radios still work just fine and you use them for another 1000 hours and still they work just fine.

Are you making 2 bucks an hour "profit" ? don't think so.

Your interior costs $1000 to replace
Your paint costs $10,000 to repaint.
Your glass costs $1500 to replace.
Your propeller costs $3000 to replace.

You get the idea, you might be "pocketing" at the end of the day $30 "reserves" per hour. If your wise you will put it away ready just in case something goes bang. You might not need to replace the prop and can get it overhauled for half that ,but what if you need a new one at TBO or sooner?
You better have some reserves to keep your plane flying.

If you're considering buying a plane I think the first thing you should do is get familiar with the TBOs of the aircraft your looking at purchasing. Get an idea about replacement costs and consumable costs etc then sit down and make a spreadsheet and see how much it is actually going to cost you per hour.

These guys have a speadsheet you can download and start plugging in numbers.
http://www.cessna150-152club.com/

http://www.cessna150-152.com/Cost_of_Ownership.xls
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