Club vs Buying Debate

[cferr59]

For most pilots, it would be cheaper to join a club, but here are the reasons I bought at varying levels of importance

1.) I can make whatever decisions I want about equipment.
2.) I work during the week so mostly fly on weekends, just like other club members!  And, if I need to go somewhere for work, I only need to worry about the weather, not schedule.
3.) I like to work on the plane.
4.) I can choose whatever plane I want.
5.) I can leave stuff in the plane.
6.) I have a plane.

Certainly there are disadvantages to and others have mentioned them.

[GeeBee]

23 hours ago, MikeOH said:

Just remember, it's oxymoronic to justify the cost under any circumstance  So, don't even try.

The best advice in the whole thread! 

 

[Mufflerbearing]

I have found that the condition of rental planes and club planes are kind of like a rental car.  The fastest car on earth is a rental.  Most people don't treat other peoples stuff the same as an owner would.  Of course, this is a general comment.  I have seen some owner planes....

 

[kortopates]

1 hour ago, Mufflerbearing said:

I have found that the condition of rental planes and club planes are kind of like a rental car.  The fastest car on earth is a rental.  Most people don't treat other peoples stuff the same as an owner would.  Of course, this is a general comment.  I have seen some owner planes....

 

Actually when it comes to avionics, owner vintage Mooney's are at the bottom of the barrel. Rental planes without some form of WAAS GPS are nearly non-existent since most renters won't rent without them since the majority are in doing some kind of training. Even the C-152 has dual 430W's! But outside of avionics its very much a mixed bag. There are rentals I tell my clients I won't fly in either because of a lack of trust in the owner's maintenance, i.e. the "rent-a-wrecks" and the occasional one without shoulder belts. I still can't believe a rental owner could value the need for shoulder belts less than some panel toy. But I've yet to see an owner flown plane where the maintenance was worrisome like a few of the rentals I've seen. I know they exist amongst the owner flown fleet too because I've seen a few, but I am safe since such owners can't afford instruction any more than they can afford proper maintenance  Luckily they're more rare than the rent-a-wrecks I won't fly in.    

[Ragsf15e]

One positive for a club that @Bob - S50 brought up above is usage.  I love my airplane but it’s sometimes tough to find the time to fly it with kids, work, weather, etc.  I make every effort to fly it no less than once every two weeks, but it’s a challenge for me in the winter.  I feel guilty and don’t even look forward to it at times when I’m just doing it because I have to.  I think a partner or club would help with that.  When there’s time for trips, breakfast runs with neighbors, etc, it’s definitely not a problem, but each winter that guilt of not using it enough creeps in.

[kortopates]

10 hours ago, Bob - S50 said:

Thanks for the kind words.  Yes I'm lucky.  I'm partnered with 3 other guys that want to fix things when they break.  However, part of our luck concerning upgrades is because of how our group is structured.  I really wanted to replace our inop KFC200 with the GFC500.  I was willing to spend money to do that.  The others were also willing, but less willing.  Our arrangement allowed me to foot the majority of the cost in exchange for a larger share of the LLC that owns the plane.  We all get to enjoy the benefits of the GFC.  When we finally decide to sell the plane, I'll get most if not all of my money back because I'll get a larger share of the sale plus a larger share of the reserve fund.

Sounds like you guys have a really thorough LLC agreement. Did it evolve over time or where you able to find one you liked through AOPA or similar? It sounds like your agreement helps to keep everyone happy by using the equity to diverge from equal shares when it benefits all - which you show a great example for doing so. When somebody sells their share or ownership, do you at that time get the next purchaser to pay a more fare share split of the equity so that you don't need to maintain a majority equity ownership - that is if you wanted to recoup some your additional investment then -  and if you actually wanted too? 

[Bob - S50]

1 hour ago, kortopates said:

Sounds like you guys have a really thorough LLC agreement. Did it evolve over time or where you able to find one you liked through AOPA or similar? It sounds like your agreement helps to keep everyone happy by using the equity to diverge from equal shares when it benefits all - which you show a great example for doing so. When somebody sells their share or ownership, do you at that time get the next purchaser to pay a more fare share split of the equity so that you don't need to maintain a majority equity ownership - that is if you wanted to recoup some your additional investment then -  and if you actually wanted too? 

When we wrote up the LLC agreement and the operating procedures, we just made it up as we went.  Tried to think of everything that might be a factor and wrote it into the agreement.  Over the years we've tweaked it a bit but it's still essentially the same.

When a member wants to sell their share, they can sell it for whatever they can get for it.  The remaining members have to approve the buyer.  The new owner inherits whatever stake the seller had.  So if someone has a $25,000 stake but they sell it for $20,000 they just lose money.  The buyer just gets a great deal.  The problem will come if I ever want to sell.  I doubt anyone will want to pay as much as I have in the plane and I won't be willing to take a huge loss.  It will probably either take some sort of arrangement with my current partners to buy my share down or we'll end up selling the plane and splitting the money.  We split the reserve fund (based on hourly charges) in proportion to ownership so I would get most of that money.  Money in the non-reserve fund (money from monthly dues) gets split evenly regardless of percentages.

[Ibra]

Just few things to consider on rental vs sharing vs sole owner, if you can afford and know which aircraft/mission you are after better just own, if you don't get into a partnership or club with minimal people that you know individually, but remember unless everybody are on the same level of hours/mission/experience and budget, it will always get tough on upgrade discussions or what everybody wants from his and others flying...

If availability is problematic get into other clubs share to avoid disapointments? I share 4 aircrafts (vintage tailwheel, glider, motor-glider for fun flying and Mooney for trips) and also rent school aircrafts for aerobatics or fancy touching avionics buttons, would have been a big budget to be sole owner 

On renting it may work for some flying missions or profiles but it simply does not work if you are flying in serious weather & strict missions, just get your own aircraft or one that you share, I never understood how one can just go rent a non-familiar aircraft and fly it in tight IFR while staying on top of his game 

[FlyinGoon]

I am currently in the same situation and have decided to buy. I am actually in a club now that is an EXCELLENT club, but it doesn't meet my needs. We have 3 aircraft, going on a 4th very soon. We have 30 members. Price is $1000 buy in (equity club), hourly price is around $120 wet, monthly dues are 120.  First .2 hours of each rental are credited back.  We have a 172, an Archer, an Arrow, and we are getting another Archer. We have not time restrictions on how many days we can have the plane out and no daily minimums for overnights. Overall, probably one of the best deals in terms of a club.

Here are the reasons it doesn't work for me:

• I've been told to expect some maintenance every 10 hours of flight time from another owner. Whether this is true or not I don't know, but I can tell you that our planes are constantly down for some little maintenance item that takes 1 hour to fix, but 4 days to get the part. We put 10 hours on these planes every few days.
• My primary mission is to travel 250+ NM.  Well if I have to contend with weather, maintenance (planned and unplanned), and 30 club members, it doesn't become realistic that I can comfortably rely on flying on these trips. Also, even though I can take the plane out for a week, doesn't mean I wouldn't feel guilty doing so. If I only wanted to go fly in circles in the metro area, it probably wouldn't matter.
• Similar reason as above, we want to take some longer trips 500+ NM.  I won't do it in a 100kt or even a 120kt plane.  I'm landlocked in Missouri. Nearest beach is Destin, FL.  I could get there in a Mooney in the time it would take me to fly a 172 halfway through Arkansas.  Owning in this case makes the following conversation a possibility (in Missouri) "Weather looks nice, want to go to the beach today and come back tomorrow?"

I abhor spending large sums of money. I wouldn't do it on a car. I even hate doing it on a house, but if this is your passion, it may be something you can justify to yourself.

If it helps, here is a Google Sheet I put together with two tabs.  First tab is all the purchase related costs I could drum up. Change only cells in green.  Second tab is my notes in recent conversations (last 2 weeks) with 6 lenders (hint: Dorr Aviation has the best deal right now and I found out in talking with Jimmy Garrison yesterday thats who they use).

https://docs.google.com/spreadsheets/d/1H9PRIAo2EM9TbLFximREahscxit4wGy7Ppl8eR2NOmc/copy

[paulsalem]

Thanks for the great advice everyone.

[shawnd]

Thanks for the great advice everyone.

Let us know what you end up deciding. If it’s the buy route, we have tons of folks here who can help further!

[MikeOH]

1 hour ago, shawnd said:

 

Let us know what you end up deciding. If it’s the buy route, we have tons of folks here who can help further!

 

Yes, sir!  We are more than willing to tell you how to spend your money

[MikeOH]

5 hours ago, FlyinGoon said:

I abhor spending large sums of money.

Hmm, perhaps ownership isn't for you

I'm somewhat serious with my humor.  You really need to be mentally and financially prepared to spring for an engine OH at any time.  Otherwise, you run the risk of your plane becoming a hangar queen or ramp rat; just look around at your local airport and you'll find many planes rotting away on the ramp.  Many, I suspect, are due to owners that could afford to buy, but not properly maintain them.

Before you buy anything, give yourself honest answers to these two questions:

1) Am I prepared to spend $15K to $20K year in and year out?

2) Am I willing to spend $30K to $40K at any point to OH the engine?

(The above numbers are for 'vintage' Mooneys: A, B, C, D, E, F and maybe J). Can't tell you what to expect for newer models; never owned one of those!

[shawnd]

100% agree with MikeOh. For M20K 252, I did similar calculations and came to $22K for 100 hours or $18K for 50 hours annually. Compared to M20J rental, $25K for 100 hours and $15K for 50 hours. This is based on Seattle area costs. I win if I fly more plus I get to enjoy my independence.

Engine O/H costs are roughly ~ $45K and reman for $65K for the TSIO360MB. Forking our that much money will hurt but doable for unplanned circumstances. I will have to restrict my friends to those who invite me to their house and feed me beer for free

[paulsalem]

7 hours ago, shawnd said:

 

Let us know what you end up deciding. If it’s the buy route, we have tons of folks here who can help further!

 

I'm discussing a partnership with a couple people.

What's the most economical Mooney to operate?  I'm more concerned with maintenance costs than fuel.  I'm thinking avoiding any of the turbo and 6 cylinder models because of that.

[rbridges]

10 minutes ago, paulsalem said:

I'm discussing a partnership with a couple people.

What's the most economical Mooney to operate?  I'm more concerned with maintenance costs than fuel.  I'm thinking avoiding any of the turbo and 6 cylinder models because of that.

I have a C model with carbureted O-360 and manual gear/flaps. Arguably the least expensive Mooney to operate. I would say any of the normally aspirated 4 bangers will be similar. If you guys can afford a nice J, that's the sweet spot in the Mooney lineup IMO. 

[carusoam]

On 6/13/2020 at 8:19 PM, paulsalem said:

I'm discussing a partnership with a couple people.

What's the most economical Mooney to operate?

Focusing on these two points....

The M20C can net 18mpg....

The M20E can do better...

Flying around using Carson’s speed, Vz nets great efficiency results...

 

Splitting the costs in half.... sounds brilliant!  But....

Those are shared fixed costs....

You specifically asked for operating costs...

So... your answer is the M20E....
 

Essentially a very light Mooney, with the ability to operate LOP... makes it a great retirement plane... Ask Bob!

Bonus points are awarded for aerodynamic cowl mods...

When finances are really tight... Anything that breaks can end your flying dreams for years.... avoidance is a great game plan... avoid things with extra cylinders... extra parts... extra systems... focus on the speed, efficiency, and safety...

Don’t forgo training because it is expensive... not training can be 10X worse....

PP thoughts only, not a CFI...

Best regards,

-a-

[paulsalem]

I'm not going to be buying a plane anytime soon, but I've been looking just to educate myself.

This seems like a great airplane at a good price, but I'm not very knowledgeable.  What are your thoughts?

https://www.trade-a-plane.com/search?category_level1=Single+Engine+Piston&make=MOONEY&model=M20J+201&listing_id=2374469&s-type=aircraft

Edited June 14, 2020 by paulsalem

[Mufflerbearing]

Someone spent some money on this plane.  The TKS system takes away UL and speed, but works great if you get into trouble.  It has speed parts like Lopresti cowl and such. 
 

I see a plane like this and think, for just a little more money I could get....

[carusoam]

Paul,

That is what is called somebody’s forever-plane...

See if that is the same plane here.... (you can ask @Hockeybabe39 questions directly)

When you buy a plane to have forever... it gets things you hardly ever use.... because you can.

When you spread out the cost over decades... they are tiny.

 

Some planes that look like forever-planes are company flown planes... and maintained with corporate budgets...

PPIs still are a best practice... stuff does get old and wear...

Best regards,

-a-

[EchoMax]

The “buy vs club” debate is a version of the old “own vs rent” debate.

The multi-millionaire publishing mogul and drug-addled dissolute Felix Dennis once wrote, “If it flies, floats or fornicates, always rent it. It’s cheaper in the long run.”*

Perhaps this explains why there are some rich people who are so unhappy.  Life is not always about what is cheaper, but there is some truth there.  If one can barely afford to fly, then rental is the only option.  End of discussion.  If you have more money than brains, buy a new TBM.  What the heck?  It’s only money!

Let’s assume that you are able to afford ownership but are frugal by nature.  The first question is:  solo vs partnership?

If you need your own airplane, for whatever reason, and can afford it, then go solo. But keep in mind that it’s bad for the engine to sit idle for a long time, so if your flying schedule might include long gaps, even if you can afford it, do not go solo.

That leads us to partnerships, which share some similarities with marriages—there are good ones and bad ones. Partnership Agreements are important but will be a blunt tool in the absence of mutual communication, cooperation, negotiation, flexibility, fairness, and compromise.

For me, a two-man partnership is the sweet spot, if you can find the right partner.  The fixed overhead gets chopped by half.  Ditto for purchase price and upgrades. Makes my frugal heart flutter! What I like most about the two-man group is that complete communication doesn’t require more than a single phone call.  For three partners complete communication may require up to three 2-way calls, and for four partners six calls. All things being equal, scheduling will be more difficult in a 4-man group than in a 2-man group.

If you can afford to own a plane, you probably have assets that you need to shield, so you should consider putting the plane into an LLC.  You can set one up yourself for about $100.  It’s not necessary, but as my accountant said, “Heaven forbid someone should crash your plane into a school bus filled with children!”

A standard AOPA agreement worked well for us.  We may have tweaked it a little bit.  Neither of us hired an attorney.

The agreement does not cover what happens if one partner dies unexpectedly.  The decedent’s heirs may need to sell their share quickly to raise cash, even if at a forced-sale discount, while the surviving partner may not want to sell his share under any circumstances, but does not have enough money to buy out the heirs’ share, and does not have enough time to find a new partner on such short notice.

Here’s a little trick:  Set up the LLC as “joint tenants with the right of survivorship”. When a “joint tenant” dies, the surviving owner automatically owns the whole property, and property can avoid probate.  No will required!

Now let’s say one of us dies unexpectedly, and the decedent’s family needs money.  Won’t they be angry when they discover that they have just lost the equity in Dad’s share of the plane? Not if this risk has been mitigated by purchasing inexpensive term life insurance equal to the value of the equity.  Me?  I just self-insure and pocket the profit in the premium.

* Felix Dennis, How to Get Rich (2006)

[ArtVandelay]

Remember, the LLC protects you from your partner, not yourself.
If your partner crashes the plane, they can’t come after you, they can go after the LLC assets, including if you have more than 1 plane. However if you crash the plane or you did the maintenance that contributed to your partner accident they can come after you.
LLCs work well when you are hands off, maintenance done by a shop and pilot is a 3rd party, both hired and paid by the LLC. If you write the check, you are responsible.

[Danb]

On 6/7/2020 at 7:42 PM, GeeBee said:

The best advice in the whole thread! 

 

The best and worse advice all roller  up in one, without the wonders of flight along with all the people we’ve met wouldn’t have occurred without my Mooney 

[EchoMax]

12 hours ago, ArtVandelay said:

Remember, the LLC protects you from your partner, not yourself.
If your partner crashes the plane, they can’t come after you, they can go after the LLC assets, including if you have more than 1 plane. However if you crash the plane or you did the maintenance that contributed to your partner accident they can come after you.
LLCs work well when you are hands off, maintenance done by a shop and pilot is a 3rd party, both hired and paid by the LLC. If you write the check, you are responsible.

I'm a radiologist, not an attorney or an accountant. All I can say is that my accountant recommended the LLC, and for $100 I'm not going to argue.  It's kind of like how a 401K is more "protected" from lawsuits than an IRA. It's not foolproof, but it adds a layer of security.  My understanding is yes, in most cases they can come after the LLC assets, but not my personal assets. If you have more than one plane, you can put each one into its own LLC.

Avoiding probate in the event of an untimely death may prevent costly delays if the estate gets tied up in probate court. Many people don't bother to update their will. The structure of an LLC created as “joint tenants with the right of survivorship” takes care of this automatically—no will required.  Coupled with term life insurance, nobody has to take a haircut.

[ryoder]

My advice is to buy one if you are dreaming of ownership. It costs money but it’s worth it and you stop thinking of cost per hour almost immediately and just enjoy the experience.

I owned a 65C for a few years and now a Skycatcher. Both are cheap to maintain.  I kind of enjoy the 162 more because my main mission is to enjoy the scenery and help friends learn how to fly. I spent a lot the first year on deferred maintenance items but it runs like a top now and just needs oil changes, pads and a basic annual. This 162 has no vacuum pump or gyros to go bad and the prop and gear are fixed. That means less cost but also horrible cruise speed. I think the C is a good sweet spot of performance and simplicity, especially if you modify it with a modern panel and no vacuum pump or gyros.