C-152 Leaseback: what's the scoop?

[gatt]

The owner of FBO was a family member's partner on the police force, is a
retired Marine, former mayor, retired sheriff, city commissioner, owns a
successful FBO and the fuel operation. Did my IFR, Commercial and will
have finished my CFI with him very soon. His integrity and honesty are
unimpeachable.

Right now he only has one C-152 in the fleet because the previous owner
with a leaseback arrangement sold out for a larger aircraft. So there
are four IFR 172s, and Arrow, a 182 and a 310, but only one primary
trainer. There are a number of CFIs who are keeping busy enough that in
the summer you have to book the airplane out a week in advance, so
there's no shortage of work, and I will be working out of there as an
independent instructor as soon as possible.

Prospective students are heading over to the more expensive "academy"
because they have 152s available, but the training and rental fees are
ridiculous. Seems like a leaseback on a 152 would be a win-win situation
given that my family has known and respected him since shortly after
World War II. He did most of my ground school gratis--does that for
most--and except for a flat $100/mo. fee, the instructors keep 100% of
the hourly instruction rate.

I hear all kinds of horror stories about leasebacks, but this seems like
a much better than average prospect but I want to make sure I know what
I'm doing before I get into something like that.

Comments/experience?

Thanks in advance!

-c

[Gig 601Xl Builder]

Post by gatt
Comments/experience?
Thanks in advance!
-c

Treat it as you would any other business deal. Run the numbers. Since
you trust the guy running you can probably trust the estimated number of
hours he gives you for hour/month. Keep in mind though that the price of
fuel will have a direct effect on the number of hours the plane will be
rented.

[gatt]

Post by Gig 601Xl Builder

Post by gatt
Comments/experience?
Thanks in advance!
-c

Treat it as you would any other business deal. Run the numbers. Since
you trust the guy running you can probably trust the estimated number of
hours he gives you for hour/month.

Thanks. The good news there is that I can look through the schedule and
see for myself how many hours a month the present 152 flies. It's
averaging about 6 hours a day through the 21st at $68/hr.

Post by Gig 601Xl Builder
Keep in mind though that the price of fuel will have a direct effect
on the number of hours the plane will be rented.

Yeah. Hasn't yet, but, it's a matter of time. On the flipside, a lot of
people are doing their primary training in the 172s based on
availability alone. Even one of those is averaging about 6 hours a day
at $98/hr wet. Higher fuel prices and increased availability might
shift some of that scheduling down to a less-expensive aircraft.

-c

[Gig 601Xl Builder]

Post by gatt

Post by Gig 601Xl Builder

Post by gatt
Comments/experience?
Thanks in advance!
-c

Treat it as you would any other business deal. Run the numbers. Since
you trust the guy running you can probably trust the estimated number
of hours he gives you for hour/month.

Thanks. The good news there is that I can look through the schedule and
see for myself how many hours a month the present 152 flies. It's
averaging about 6 hours a day through the 21st at $68/hr.

Post by Gig 601Xl Builder
Keep in mind though that the price of fuel will have a direct effect
on the number of hours the plane will be rented.

Yeah. Hasn't yet, but, it's a matter of time. On the flipside, a lot of
people are doing their primary training in the 172s based on
availability alone. Even one of those is averaging about 6 hours a day
at $98/hr wet. Higher fuel prices and increased availability might
shift some of that scheduling down to a less-expensive aircraft.
-c

Sounds like there are enough hours for the plane. (More than enough)
just put a pencil to it and see that it works financially. I think the
AOPA website has some info on lease-back that you might want to read. At
least they did a couple of years ago when I was thinking about doing it.

[Peter Dohm]

Post by gatt

Post by gatt
Comments/experience?
Thanks in advance!
-c

Treat it as you would any other business deal. Run the numbers. Since you
trust the guy running you can probably trust the estimated number of
hours he gives you for hour/month.

Thanks. The good news there is that I can look through the schedule and
see for myself how many hours a month the present 152 flies. It's
averaging about 6 hours a day through the 21st at $68/hr.

Keep in mind though that the price of fuel will have a direct effect on
the number of hours the plane will be rented.

Yeah. Hasn't yet, but, it's a matter of time. On the flipside, a lot of
people are doing their primary training in the 172s based on availability
alone. Even one of those is averaging about 6 hours a day at $98/hr wet.
Higher fuel prices and increased availability might shift some of that
scheduling down to a less-expensive aircraft.
-c

Just as food for thought, a fully loaded C152 (which is rarely more than
student, instructor, and fuel) performs a lot like a fully loaded
C172--other than the fact that the CG will usually remain more nearly
centered in the C152. The result is that the C152 could make the transition
to actually operating as a licensed PIC a little easier. At least that is
what it was designed t do--and there are plenty of contributors here with a
lot more experience to comment on the success of that concept.

Peter

[D***@yahoo.com]

Post by Gig 601Xl Builder
Treat it as you would any other business deal. Run the numbers. Since
you trust the guy running you can probably trust the estimated number of
hours he gives you for hour/month. Keep in mind though that the price of
fuel will have a direct effect on the number of hours the plane will be
rented.

I can't speak to the 152 directly, but we used to run 150s and
their poor performance plus the fact that the O-200 often needed upper
cylinder work halfway to TBO (and sometimes more often) meant that
they cost us as much to operate as the 172s. The student spent most of
his time climbing, either in the circuit or during upper air work, and
didn't get through the syllabus as quickly. More hours means more
money he has to spend, not good value for the student, so we let them
go and I don't miss them.
We did look into replacing them with 152s, but my research
indicated (Aviation Consumer and so forth) that they had plenty of
issues with their 24-volt system, not least of which was poor battery
life due to heat and vibration, and those batteries cost three or four
times as much as a 25AH 12-volt battery. The only advantage I could
find was the 2400-hour TBO on the O-235, but we have a Citabria 7ECA
with one of those and it suffers corrosion problems in the cylinders
because it runs too cold, and I've heard the same thing about that
engine in other airplanes. The corrosion causes pitting in the
cylinders, and the rings wear the cylinders faster as they run over
those pits, so that a sharp ridge is formed at the bottom of the ring
travel that starts shaving the aluminum piston pin plugs. More
teardowns and repairs and downtime halfway to TBO. Add to that the
solid lifters (the O-235 is the only Lyc with them) that need checking
every 100 hours, meaning that baffling has to be pulled off and the
rocker covers removed, more time and money, and any savings over a 172
disappears.
Lots of stuff to consider. It's worth noting that Cessna
didn't bother building them anymore. Not many people interested, I
think.

Dan

[Darrel Toepfer]

Post by D***@yahoo.com
I can't speak to the 152 directly, but we used to run 150s and
their poor performance plus the fact that the O-200 often needed upper
cylinder work halfway to TBO (and sometimes more often) meant that
they cost us as much to operate as the 172s. The student spent most of
his time climbing, either in the circuit or during upper air work, and
didn't get through the syllabus as quickly. More hours means more
money he has to spend, not good value for the student, so we let them
go and I don't miss them.
We did look into replacing them with 152s, but my research
indicated (Aviation Consumer and so forth) that they had plenty of
issues with their 24-volt system, not least of which was poor battery
life due to heat and vibration, and those batteries cost three or four
times as much as a 25AH 12-volt battery. The only advantage I could
find was the 2400-hour TBO on the O-235, but we have a Citabria 7ECA
with one of those and it suffers corrosion problems in the cylinders
because it runs too cold, and I've heard the same thing about that
engine in other airplanes. The corrosion causes pitting in the
cylinders, and the rings wear the cylinders faster as they run over
those pits, so that a sharp ridge is formed at the bottom of the ring
travel that starts shaving the aluminum piston pin plugs. More
teardowns and repairs and downtime halfway to TBO. Add to that the
solid lifters (the O-235 is the only Lyc with them) that need checking
every 100 hours, meaning that baffling has to be pulled off and the
rocker covers removed, more time and money, and any savings over a 172
disappears.
Lots of stuff to consider. It's worth noting that Cessna
didn't bother building them anymore. Not many people interested, I
think.

Performance difference is very noticible between 150/152 and usually
cruised better than the 172. Fuel burn was about the same, just covered
alot more ground in the same time period and the STOL tips and wheel
pants were a help. Put in a voltage converter to overcome the 24v issues
(those most aviation GPS's are dual voltage tolerant). Guy we sold it to
dropped valves. Had single CHT/EGT indicator and it always read cruise
in the normal range...

[Martin Hotze]

Post by gatt
I hear all kinds of horror stories about leasebacks, but this seems like
a much better than average prospect but I want to make sure I know what
I'm doing before I get into something like that.
Comments/experience?

if there is so much expected business than he won't need you for a
leaseback. What's the cost of a usable C150/152?
http://www.aso.com/ lists them from USD 16,500 to USD 65,500. I'd say
for 30 AMU you'll get a usable plane. Why does he want a leaseback?

if it's too good to be true ...

#m
(f-up set; I don't read r.a.o)

[Mike]

Post by Martin Hotze

Post by gatt
I hear all kinds of horror stories about leasebacks, but this seems like
a much better than average prospect but I want to make sure I know what
I'm doing before I get into something like that.
Comments/experience?

if there is so much expected business than he won't need you for a
leaseback. What's the cost of a usable C150/152?
http://www.aso.com/ lists them from USD 16,500 to USD 65,500. I'd say for
30 AMU you'll get a usable plane. Why does he want a leaseback?

Most flight schools operate with leasebacks to some degree. It allows them
to have a larger fleet with less credit extended, and the risk for them is
zero.

Leasebacks can be a good deal for the owner given the right situation. The
biggest risk is if the plane goes down for damage or something big like an
engine overhaul. The insurance is astronomically high, especially if the
plane is used as a primary trainer, and most insurance companies won't let
you reduce coverage unless the plane is down for more than 60 days. As such
there is a certain degree of risk in them so they shouldn't be entered into
lightly unless you can well afford it. The thing to ask yourself is, if the
engine blows up on day one do I have the cash or credit available to pay for
the overhaul, pay all the expenses, and do without the income for a couple
of months? If the answer is no, you shouldn't enter into the agreement
regardless of how favorable the terms are.

[gatt]

Post by Martin Hotze
if there is so much expected business than he won't need you for a
leaseback. What's the cost of a usable C150/152?
http://www.aso.com/ lists them from USD 16,500 to USD 65,500. I'd say
for 30 AMU you'll get a usable plane. Why does he want a leaseback?

He just purchased the entire fuel operation for the airport, plus two or
three C-172s and a $250K flight simulator. There was a C-152 on
leaseback but the owner sold it for a larger airplane, so there's an
empty tiedown marked "RESERVED FOR FLIGHT SCHOOL" where the second C-152
used to be.

-c

[RST Engineering]

The hot setup is where you provide an aluminum tube and the lessee provides
fuel, scheduled maintenance, and insurance. That way if the aircraft isn't
used much, all you are out is the cost of the airplane which you should be
able to recover if you bought it right.

Jim
--
"It is the mark of an educated mind to be able to entertain a thought
without accepting it."
--Aristotle

Post by gatt

Post by Martin Hotze
if there is so much expected business than he won't need you for a
leaseback. What's the cost of a usable C150/152?
http://www.aso.com/ lists them from USD 16,500 to USD 65,500. I'd say for
30 AMU you'll get a usable plane. Why does he want a leaseback?

He just purchased the entire fuel operation for the airport, plus two or
three C-172s and a $250K flight simulator. There was a C-152 on leaseback
but the owner sold it for a larger airplane, so there's an empty tiedown
marked "RESERVED FOR FLIGHT SCHOOL" where the second C-152 used to be.
-c

[EridanMan]

As a badly burned leaseback owner, let me drop a couple of 'hindsight
lessons' on you. Take them for what they're worth, only you know all
the pros and cons of the situation in question:

1- Insurance. Be ready for 5-8 Times conventional single-user costs
for lesser coverage. When I was on leaseback, insurance ran me 4500/
annually. As a single use scenario, I pay 725/annually for the same
plane with better coverage.
2- Maintenance. Forget the obvious (Annuals every 100 hours rather
than every year), Students, especially primary students, are very hard
on airplanes, and no amount of wishful thinking will fix that.
Engines start with electrics on, landing gear takes a special kind of
beating, brakes get dragged for long taxis. As a sole owner, you
quickly learn your bird, you have pride in her and you take care of
her. In my experience, students, even the most respectful ones,
didn't, or didn't know how (I do hold a certain culpability with the
Instructors, but understand as they are in and out of multiple planes
a day, they're understandably detached from the specific aircraft that
they're flying at the moment- and, frankly, a certain amount of
'excessive structural wear' is just a part of letting a student take
the controls for his first landing. Bringing me to
3- Headache - If you want your bird to fly, you need to be on top of
her. That means being ready to run down the the airport on a bi-
weekly (or better yet, daily) basis to notice and handle any
perspective MX (and/or cosmetic) issues. This means making good
friends with the local repair shop so he can get your inevitable MX
nightmares turned around ASAP. If there is one thing that will drive
a Black Business model into the red in a _REAL_ hurry, its letting
your bird get any type of rap as a hangar queen. Even a week of
downtime will have serious reprecussions over her utilization over the
next month or two. Beyond that, be prepared to play second fiddle for
flying time rights even in your own plane. Much like MX, there's no
quicker way to piss off students then to make your aircraft
unavailable on 'peak flying days' just so you, the owner, can go out
and enjoy a nice saturday 100$ burger.

I don't mean to be such a negative nancy on this... FWIW, I was
leasing back a PA-28-140, so my costs were somewhat higher than a
C150. In any case, I took all of the advice on here- I did the math,
I had a plan. I thought I knew what I was doing, and I still got
burned.

All I can say is you need to prepare not only for the financial
outlay, but the emotional/physical/attention outlay as well. For me,
it was far more effort than it was ever worth.

Consider yourself warned by a bitter fool;)

-Scott

Post by gatt
The owner of FBO was a family member's partner on the police force, is a
retired Marine, former mayor, retired sheriff, city commissioner, owns a
successful FBO and the fuel operation.  Did my IFR, Commercial and will
have finished my CFI with him very soon.  His integrity and honesty are
unimpeachable.
Right now he only has one C-152 in the fleet because the previous owner
with a leaseback arrangement sold out for a larger aircraft.  So there
are four IFR 172s, and Arrow, a 182 and a 310, but only one primary
trainer.  There are a number of CFIs who are keeping busy enough that in
the summer you have to book the airplane out a week in advance, so
there's no shortage of work, and I will be working out of there as an
independent instructor as soon as possible.
Prospective students are heading over to the more expensive "academy"
because they have 152s available, but the training and rental fees are
ridiculous. Seems like a leaseback on a 152 would be a win-win situation
given that my family has known and respected him since shortly after
World War II.  He did most of my ground school gratis--does that for
most--and except for a flat $100/mo. fee, the instructors keep 100% of
the hourly instruction rate.
I hear all kinds of horror stories about leasebacks, but this seems like
a much better than average prospect but I want to make sure I know what
I'm doing before I get into something like that.
Comments/experience?
Thanks in advance!
-c

[gatt]

Post by EridanMan
All I can say is you need to prepare not only for the financial
outlay, but the emotional/physical/attention outlay as well. For me,
it was far more effort than it was ever worth.
Consider yourself warned by a bitter fool;)

LOL! Thanks, Scott. Duly noted.

My goal is to be able to make money teaching in my own plane (leaseback
or not, whichever is the least expensive) instead of having somebody
else making the money off of my students. If it's too much of a
headache--your experience seems particularly relevant there--I'll find
some other side business, I guess.


-c

[Scrooge McDuck]

On Thu, 10 Jul 2008 23:18:45 +0000 (UTC), gatt

Post by gatt

Post by EridanMan
All I can say is you need to prepare not only for the financial
outlay, but the emotional/physical/attention outlay as well. For me,
it was far more effort than it was ever worth.
Consider yourself warned by a bitter fool;)

LOL! Thanks, Scott. Duly noted.
My goal is to be able to make money teaching in my own plane (leaseback
or not, whichever is the least expensive) instead of having somebody
else making the money off of my students. If it's too much of a
headache--your experience seems particularly relevant there--I'll find
some other side business, I guess.

Oops! You can't do this without a Part 135 certification/approval.
The catch is providing the plane that you instruct in.

You can get around this in a leaseback, but you have to let the
student and/or FBO schedule your plane -- you cannot be in the
scheduling loop, and you better get copies of the weekly/monthly
booking sheets in case you have to back up your non-involvement to the
FAA.

That said, leaseback can be safe and financially rewarding, but more
for a student of PP, not for an instructor, by cutting your cost of
plane ownership. With a leaseback, all the fixed costs of operation,
and all ther vaiable costs associated with rental use can be claimed
as expenses.

I did this for 14 years with a C172, and it worked out very well for
me.

But, as someone earlier said: 'TREAT IT LIKE A BUSINESS!"

[RST Engineering]

That's not true.

Jim

Post by Scrooge McDuck
Oops! You can't do this without a Part 135 certification/approval.
The catch is providing the plane that you instruct in.

[jss1941]

Post by RST Engineering
That's not true.

Please explain how one gets around the 'holding out" restriction
without the 135 certificate?
Even AOPA will warn you about this "commercial privileges trap".

Post by RST Engineering
Jim

Oops!  You can't do this without a Part 135 certification/approval.
The catch is providing the plane that you instruct in.

[Bertie the Bunyip]

Post by RST Engineering
That's not true.

Yeah, I don't see what 135 has to do with instructing either, unless
they've changed something!

Post by RST Engineering

Post by Scrooge McDuck
Oops! You can't do this without a Part 135 certification/approval.
The catch is providing the plane that you instruct in.

[Scrooge McDuck]

Post by Bertie the Bunyip

Post by RST Engineering
That's not true.

Yeah, I don't see what 135 has to do with instructing either, unless
they've changed something!

It doesn't having anything to do 'per se' with instructing. It has
everything to do with providing the plane in which the instruction is
being done.

Post by Bertie the Bunyip

Post by RST Engineering

Post by Scrooge McDuck
Oops! You can't do this without a Part 135 certification/approval.
The catch is providing the plane that you instruct in.

[Bertie the Bunyip]

Post by Scrooge McDuck

Post by Bertie the Bunyip

Post by RST Engineering
That's not true.

Yeah, I don't see what 135 has to do with instructing either, unless
they've changed something!

It doesn't having anything to do 'per se' with instructing. It has
everything to do with providing the plane in which the instruction is
being done.

135 is for air taxi, pretty much end of story unless they've rewritten it
since I did it.


Bertie

[Maxwell]

Post by Bertie the Bunyip

Post by Scrooge McDuck

Post by Bertie the Bunyip

Post by RST Engineering
That's not true.

Yeah, I don't see what 135 has to do with instructing either, unless
they've changed something!

It doesn't having anything to do 'per se' with instructing. It has
everything to do with providing the plane in which the instruction is
being done.

135 is for air taxi, pretty much end of story unless they've rewritten it
since I did it.
Bertie

Since you did what? Trip on your dick?

[Maxwell]

Post by Maxwell

Post by Bertie the Bunyip

Post by Scrooge McDuck

Post by Bertie the Bunyip

Post by RST Engineering
That's not true.

Yeah, I don't see what 135 has to do with instructing either, unless
they've changed something!

It doesn't having anything to do 'per se' with instructing. It has
everything to do with providing the plane in which the instruction is
being done.

135 is for air taxi, pretty much end of story unless they've rewritten it
since I did it.
Bertie

Since you did what? Trip on your dick?

Another obvious froggery by a jealous twit

[Bertie the Bunyip]

Post by Maxwell

Post by Bertie the Bunyip

On Mon, 14 Jul 2008 05:35:38 +0000 (UTC), Bertie the Bunyip

Post by Bertie the Bunyip

Post by RST Engineering
That's not true.

Yeah, I don't see what 135 has to do with instructing either, unless
they've changed something!

It doesn't having anything to do 'per se' with instructing. It has
everything to do with providing the plane in which the instruction
is being done.

135 is for air taxi, pretty much end of story unless they've
rewritten it since I did it.
Bertie

Since you did what? Trip on your dick?

Can be a problem.

Obviously not for you, dickless.



Bertie

[Maxwell]

Post by Bertie the Bunyip
Can be a problem.
Obviously not for you, dickless.
Bertie

I could throw you enough you wouldn't have room to say thank you.

[Bertie the Bunyip]

Post by Maxwell

Post by Bertie the Bunyip
Can be a problem.
Obviously not for you, dickless.
Bertie

I could throw you enough you wouldn't have room to say thank you.

Yeh,

"if you gotta tell 'em..."


Bertie

[B A R R Y]

Post by Scrooge McDuck
It doesn't having anything to do 'per se' with instructing. It has
everything to do with providing the plane in which the instruction is
being done.

I know several flight schools who don't have 135 certificates.

[NW_Pilot]

Post by gatt
The owner of FBO was a family member's partner on the police force, is a
retired Marine, former mayor, retired sheriff, city commissioner, owns a
successful FBO and the fuel operation. Did my IFR, Commercial and will
have finished my CFI with him very soon. His integrity and honesty are
unimpeachable.
Right now he only has one C-152 in the fleet because the previous owner
with a leaseback arrangement sold out for a larger aircraft. So there are
four IFR 172s, and Arrow, a 182 and a 310, but only one primary trainer.
There are a number of CFIs who are keeping busy enough that in the summer
you have to book the airplane out a week in advance, so there's no
shortage of work, and I will be working out of there as an independent
instructor as soon as possible.
Prospective students are heading over to the more expensive "academy"
because they have 152s available, but the training and rental fees are
ridiculous. Seems like a leaseback on a 152 would be a win-win situation
given that my family has known and respected him since shortly after World
War II. He did most of my ground school gratis--does that for most--and
except for a flat $100/mo. fee, the instructors keep 100% of the hourly
instruction rate.
I hear all kinds of horror stories about leasebacks, but this seems like a
much better than average prospect but I want to make sure I know what I'm
doing before I get into something like that.
Comments/experience?
Thanks in advance!
-c

Gatt you been in my C-150M it runs and flys good since I am so busy I am
concedering a leaseback if i can make some money or a sale, If I sell it I
will put it in a box and sent it to Korea they paying $35k+ for Crated....
for M model 150's and 152...

If anyoneknow of 152's for sale I have a buyer in Korea hahahahaha,,, they
looking for 40 to 50 of them will ship em 3 to a container!

I love this weak us dollar : )

[gatt]

Post by NW_Pilot
Gatt you been in my C-150M it runs and flys good since I am so busy I am
concedering a leaseback if i can make some money or a sale

Yeah, that's a sweet little airplane.

Would Aero Maintenance do it? I can talk to Gorge Winds if you want but
I don't know if he's got room anymore. Marv's probably pretty stoked,
though; they were rolling P-2s and P-3 firebombing sorties out of there
all day, and guess who got to sell them fuel.

Post by NW_Pilot
I love this weak us dollar : )

If the media ever quits whining and howling about it, people will catch
on that now's the time to start investing. The rest of the world
figured it out but so many Americans seem to be mush-minded and
terrified of the economic cycle. (Most of the damage that happened to
the American economy happened when the dollar was strongest, such as the
housing and dot com bubbles.)


-c