Fractional ownership ??

[JayMatt]

I'm kicking around the idea of fractional ownership. This year it took 90+ days for the FAA to send me a medical. Once I got that I was no longer current due to 2 year "check" ride or whatever it's called. Then weather only being good on work days and I'm not flying as much as I would like my plane to be flown. I run down and run it when I can if I can't fly it because I feel like it's the right thing to do. 

Anyway, is selling off half a plane a big hassle? Is it worth it? Is it complicated legally? 

I'm not really fond of sharing a plane but it also kinda makes sense if I can't fly as much as I'd like to. Next year will probably be better for flying and I'm switching to basic med, but I would like to hear peoples thoughts that have been in partnerships and how that goes. 

[Fly Boomer]

13 minutes ago, JayMatt said:

Anyway, is selling off half a plane a big hassle? Is it worth it? Is it complicated legally? 

I would worry about selling the second half when the time comes.  Also, be prepared for your partner to sell his half to someone you can't work with.  Probably the question comes down to "how personal is your relationship with your airplane"?

[dzeleski]

24 minutes ago, JayMatt said:

 I run down and run it when I can if I can't fly it because I feel like it's the right thing to do.

Be careful with this, you could be doing more harm then good. When the engine only gets slightly warm it causes condensation to form which adds a ton of water to the oil and crank case. In general the best practice for any engine is to run it up to normal operating temp (aka actually flying) for at least 30 minutes so that all of the water in the crankcase/oil can evaporate.

As far as the ownership is concerned, you need to be careful with that as well. There needs to be several legal documents involved protecting you and your airplane. Including an LLC. There have been a few posts about this here but its usually referred to as a "partnership" if you need a better search term.
 

 

 

Edited December 4, 2023 by dzeleski

[Shadrach]

40 minutes ago, JayMatt said:

I'm kicking around the idea of fractional ownership. This year it took 90+ days for the FAA to send me a medical. Once I got that I was no longer current due to 2 year "check" ride or whatever it's called. Then weather only being good on work days and I'm not flying as much as I would like my plane to be flown. I run down and run it when I can if I can't fly it because I feel like it's the right thing to do. 

Anyway, is selling off half a plane a big hassle? Is it worth it? Is it complicated legally? 

I'm not really fond of sharing a plane but it also kinda makes sense if I can't fly as much as I'd like to. Next year will probably be better for flying and I'm switching to basic med, but I would like to hear peoples thoughts that have been in partnerships and how that goes. 

Partnerships can make a lot of sense, but they are like any other relationship. The parties need to be compatible and have communicative. It's taken a few years to get here but we have a well balanced partnership with little in the way of surprises.  My partner flies professionally but only uses the Mooney 20-30hrs a year.  I am very hands on which reduces both our fixed and variable maintenance costs by quite a bit. His benefit is that he pays quite a bit less than half of what it would cost him to keep and maintain a Mooney by himself for the small amount of flying he does.  My benefit is that I have what feels like unlimited access to my plane but get half of the bills covered. It's a win win for both of us.

You might dip your toes in with a non-equity partnership. Most of the benefits that you're seeking without the hassle of property changing hands.

[JayMatt]

13 minutes ago, dzeleski said:

Be careful with this, you could be doing more harm then good. When the engine only gets slightly warm it causes condensation to form which adds a ton of water to the oil and crank case. In general the best practice for any engine is to run it up to normal operating temp (aka actually flying) for at least 30 minutes so that all of the water in the crankcase/oil can evaporate.

As far as the ownership is concerned, you need to be careful with that as well. There needs to be several legal documents involved protecting you and your airplane. Including an LLC. There have been a few posts about this here but its usually referred to as a "partnership" if you need a better search term.
 

I run it much longer than 30 min and also run it through some high RPM's at operating temperatures. I practice good engine care. 

[JayMatt]

11 minutes ago, Shadrach said:

You might dip your toes in with a non-equity partnership. Most of the benefits that you're seeking without the hassle of property changing hands.

What is this? 

[midlifeflyer]

On 12/4/2023 at 10:50 AM, JayMatt said:

What is this? 

Kind of a glorified private rental. I was in one for a few years. It can take various forms, typically an LLC, but the essence is that you have one or a limited number of people who have access while you retain most if not all of the control. People tend to think in terms of equal partners with an equal say but it doesn't have to be that way. In fact you can have partners with no control interest at all.

BTW, "fractional ownership" has a very specific meaning in FAA parlance. They are regulated under Part 91, Subpart K. Chances are that's not what you are looking for.

[flyboy0681]

1 hour ago, Fly Boomer said:

 Also, be prepared for your partner to sell his half to someone you can't work with.

In our partnership agreement, the outgoing partner needs to seek approval of the incoming partner.

[Shadrach]

4 hours ago, JayMatt said:

What is this? 

Basically it’s a way to share the aircraft as well as the costs without giving up controlling equity in the plane. AOPA would be helpful in this area. Worth giving them a call or searching the site.

[dzeleski]

1 hour ago, JayMatt said:

I run it much longer than 30 min and also run it through some high RPM's at operating temperatures. I practice good engine care. 

I dont wanna derail the main topic of your post but.... I would recommend you not do that. The engine just isnt getting hot enough on the ground and its not running long enough. Go fly the thing for an hour, go to the practice area do a stall, couple steep turns, slow flight, and come back. It keeps the engine running, doesnt cost very much, and keeps you sharper.

Take a peak at the: "Should you ground run?" section.

https://www.aviationconsumer.com/maintenance/engine-storage-101the-30-day-rule/

"In our view, the ground running of an engine is not a substitute for flying it when it comes to dispelling moisture. Running it on the ground simply doesn’t get the engine hot enough, plus it tends to cause uneven heating at higher power, so you’re likely just wasting fuel doing so."

Edited December 4, 2023 by dzeleski

[Fritz1]

I was in a partnership in a 182RG for 4 years, typically 3-4 partners, pay in $6k for a share, $50/h dry, everybody tops tanks, $300 per month fixed if I remember correctly, aircraft was commercially maintained, partners did not even change oil, worked quite well, aircraft flew about 250h per year, I flew about 150h per year ,was like having my own aircraft, in return I managed maintenance, owner of LLC that owned aircraft and a couple of others clearly subsidized the operation, In return I made sure aircraft as ready to fly whenever he wanted to which rarely was the case, with hindsight the partnership worked because of the subsidies and the commercial maintenance, subtle balance like every relationship, all parties have to have the feeling that they are getting a good deal 

[1980Mooney]

3 hours ago, JayMatt said:

I'm kicking around the idea of fractional ownership. This year it took 90+ days for the FAA to send me a medical. Once I got that I was no longer current due to 2 year "check" ride or whatever it's called. Then weather only being good on work days and I'm not flying as much as I would like my plane to be flown. I run down and run it when I can if I can't fly it because I feel like it's the right thing to do. 

Anyway, is selling off half a plane a big hassle? Is it worth it? Is it complicated legally? 

I'm not really fond of sharing a plane but it also kinda makes sense if I can't fly as much as I'd like to. Next year will probably be better for flying and I'm switching to basic med, but I would like to hear peoples thoughts that have been in partnerships and how that goes. 

Any partnership is hard -  especially those in which a lot is at stake (investment, ongoing cost/responsibilities and liabilities for actions of the partners).  It is  dependent upon the rules you devise to manage it fairly and  the partner you select.

Legally?- you need to put the plane into a LLC to protect your estate against actions of your partner (primarily while your partner is flying in the event of an accident).

• The LLC will carry insurance for Hull loss if either you or your partner has an accident
• Your estate remains liable for your actions as PIC
  • You have your own Liability insurance for that 
• Your partner carries his own insurance for his Liability

Is it worth it?

• Well there is a "hassle factor" in any partnership but first you need ask what is your "mission"?
  • Right now it sounds like you are just piling up money and setting it on fire.
    • You don't use the plane to go anywhere and apparently don't fly much at all.
      • You have fixed costs burning money
      • You have variable operating costs  - you are running it on the ground for extended periods to exercise the engine while not flying it
  •  What is your "mission" in 2024 and beyond?
    • Weekend warrior flying to get $100 hamburgers?
    • Work on your Instrument ticket?
    • Fly you or your family somewhere on holidays?
• If you know your mission then ideally you find a partner that complements your mission
  • If you and your partner have the same mission there could be conflict over when you both want the plane for the Fourth of July or Christmas, etc. - more sharing
  • If you can only fly weekends then a partner that is retired can fit well.

If you are still interested there are a few good posts on MS regarding what rules you need to include in the LLC

Edited December 4, 2023 by 1980Mooney

[Ryan ORL]

I (through my LLC) am the sole owner of my Mooney, however I let another guy (frequent GA pilot/instructor, active airline pilot) that I trust use my plane.  We both have non-exclusive dry leases with the LLC, and we pay a monthly fee to access the plane (for hangar, ins, etc) and a dry hourly rate for the usage of the plane.  There may be other/better ways of setting this up, but that is how I do it.  It is not a money making operation, it is more like a lose-less-money operation.

I paid (too much) for an aviation attorney to setup this arrangement, however I probably could have done it myself, if I knew then what I know now.

[JayMatt]

1 hour ago, dzeleski said:

I dont wanna derail the main topic of your post but.... I would recommend you not do that. The engine just isnt getting hot enough on the ground and its not running long enough. Go fly the thing for an hour, go to the practice area do a stall, couple steep turns, slow flight, and come back. It keeps the engine running, doesnt cost very much, and keeps you sharper.

Take a peak at the: "Should you ground run?" section.

https://www.aviationconsumer.com/maintenance/engine-storage-101the-30-day-rule/

"In our view, the ground running of an engine is not a substitute for flying it when it comes to dispelling moisture. Running it on the ground simply doesn’t get the engine hot enough, plus it tends to cause uneven heating at higher power, so you’re likely just wasting fuel doing so."

thank you for concern

[1980Mooney]

1 hour ago, Fritz1 said:

I was in a partnership in a 182RG for 4 years, typically 3-4 partners, pay in $6k for a share, $50/h dry, everybody tops tanks, $300 per month fixed if I remember correctly, aircraft was commercially maintained, partners did not even change oil, worked quite well, aircraft flew about 250h per year, I flew about 150h per year ,was like having my own aircraft, in return I managed maintenance, owner of LLC that owned aircraft and a couple of others clearly subsidized the operation, In return I made sure aircraft as ready to fly whenever he wanted to which rarely was the case, with hindsight the partnership worked because of the subsidies and the commercial maintenance, subtle balance like every relationship, all parties have to have the feeling that they are getting a good deal 

"all parties have to have the feeling that they are getting a good deal" - that is really important.  It sounds like the other 3 partners were subsidizing your flying since you flew it 3/5 of the time - but they felt good about it perhaps because they didn't have the time and you made sure it was ready to go.  A quick calc shows that you paid 41% of the total (fixed monthly and variable operating) cost annually while flying 60% of the time.  IF it works then it works.

Back in the 90's there was a Comanche, N5788, tied down next to me at KIWS.  It was in a partnership like yours with 4 partners.  One day a partner flew to New Braunfels and back.  On approach to KIWS, the pilot said she heard a loud bang when extending the landing gear and claimed there was a loss in power.  She landed short of 15 at KIWS striking the concrete culvert before the runway.  The nose gear was sheared and the mains were punched through the wings.  None of the 4 onboard were injured.  When the NTSB ran the engine they could find no problem.

• I heard that there was enough insurance money for repairs but the partner that formed the partnership was so upset that he just wanted to cash out and leave it with the other 3 partners.
• Last I saw it, it was on wooden pallets next to my plane.  It was sold salvage, took a few years but it was repaired and is still flying.
• However that was the unhappy end of the partnership

In the 2000's there was an older Bonanza partnership with 4 partners in the hangar next to me at KSGR.  One partner had more means than the others but somehow the costs were shared.   It worked well and they flew a lot. The lead partner then came into some more money and bought a brand new G36.  The partnership was harmonious enough that it continued with the new Bonanza although the lead partner apparently bore the cost of acquisition.

Edited December 4, 2023 by 1980Mooney

[JayMatt]

52 minutes ago, 1980Mooney said:

Any partnership is hard -  especially those in which a lot is at stake (investment, ongoing cost/responsibilities and liabilities for actions of the partners).  It is  dependent upon the rules you devise to manage it fairly and  the partner you select.

Legally?- you need to put the plane into a LLC to protect your estate against actions of your partner (primarily while your partner is flying in the event of an accident).

• The LLC will carry insurance for Hull loss if either you or your partner has an accident
• Your estate remains liable for your actions as PIC
  • You have your own Liability insurance for that 
• Your partner carries his own insurance for his Liability

Is it worth it?

• Well there is a "hassle factor" in any partnership but first you need ask what is your "mission"?
  • Right now it sounds like you are just piling up money and setting it on fire.
    • You don't use the plane to go anywhere and apparently don't fly much at all.
      • You have fixed costs burning money
      • You have variable operating costs  - you are running it on the ground for extended periods to exercise the engine while not flying it
  •  What is your "mission" in 2024 and beyond?
    • Weekend warrior flying to get $100 hamburgers?
    • Work on your Instrument ticket?
    • Fly you or your family somewhere on holidays?
• If you know your mission then ideally you find a partner that complements your mission
  • If you and your partner have the same mission there could be conflict over when you both want the plane for the Fourth of July or Christmas, etc. - more sharing
  • If you can only fly weekends then a partner that is retired can fit well.

If you are still interested there are a few good posts on MS regarding what rules you need to include in the LLC

Appreciate the insight. I flew 45 hours this year, But I went 90days without flying because of the FAA and missed two long flights I had planned. I have the same mission as always and most my flying is trips somewhere. I just don't fly the $100 burger as much anymore and enjoy the longer trips. Granted now that I'm back to being current on everything that'll probably change, I was just curious what partnerships were like as I see them occasionally on trade a plane. After hearing from people on here I'd probably rather not. 

To the others that commented on running the motor. I did it cause I wasn't current and couldn't fly, it's not that I didn't want to. Without a medical, flying for the sake of the motor is illegal. 

[PilotX]

I allow a good friend to use the Mooney at an hourly hobbs rate. He has contributed immensely but that is because he is just a great guy. He also flew when I was out of town for five months. So while we don't have anything written, he meed the minimum requirements. My previous partnership was more formalized but again, long time friend, he stopped flying wants to start again. 

[Vance Harral]

There are plenty of good partnerships, and the legalities, financial arrangements, and risk management can always be worked out among reasonable people.  But I don't think those things should be your first concern.  Your first concern should be whether you're genuinely capable of treating an incoming partner as an equal - up to and including the belief that you're as likely to damage the airplane as they are.  Not every sole owner considering a partnership is able to do this.  That doesn't make the prospective seller a bad person, but they should be honest with themselves about it.

I see your situation a lot on aviation forums: a sole owner gets a little beaten down by costs and availability, and thinks about selling a share of an airplane they have owned outright for a while, to an incoming partner.  I like to ask the seller if they're OK with bringing in a partner who expects to develop a new set of operating rules, as equals, different in some ways from how the original owner operated.  How would you react to the new partner asking to change how the airplane is fueled, when/if the avionics databases are updated, what position the seat is left in, whether the tow bar is left attached to the nose gear in the hangar, leaning procedures, and so forth?  In short, are you capable of changing your mindset from it being "your" airplane to it being a shared airplane, and negotiating new operating procedures in good faith?

This often doesn't work out as hoped.  Nobody thinks they are unreasonable or overbearing, but sellers understandably feel they have worked out the "right" way to operate the airplane, and tend to want the incoming partner to follow suit.  And they grouse when they new guy accidentally (or purposely) doesn't follow their lead, which damages the relationship.  As a CFI, I get asked the other side of the question a lot: "Should I buy into this partnership"?  I generally advise the potential buyer to ask about changing some trivial aspect of operation, like not topping off the tanks after every flight, or changing the panel moving map to North Up instead of Track Up.  The outcome of such discussions doesn't matter, but the act of having the discussion and observing the attitude of the participants says a lot about how the partnership will go.

The ideal partnership is one which is formed amongst a group of like-minded people, none of which has an airplane.  If they can get through the process of deciding on an airplane to buy together, odds are they're like-minded enough for success.  This isn't always practical, of course.  But I think both buyers and sellers should compare whatever deal they're considering against this ideal model.

[JayMatt]

6 minutes ago, Vance Harral said:

There are plenty of good partnerships, and the legalities, financial arrangements, and risk management can always be worked out among reasonable people.  But I don't think those things should be your first concern.  Your first concern should be whether you're genuinely capable of treating an incoming partner as an equal - up to and including the belief that you're as likely to damage the airplane as they are.  Not every sole owner considering a partnership is able to do this.  That doesn't make the prospective seller a bad person, but they should be honest with themselves about it.

I see your situation a lot on aviation forums: a sole owner gets a little beaten down by costs and availability, and thinks about selling a share of an airplane they have owned outright for a while, to an incoming partner.  I like to ask the seller if they're OK with bringing in a partner who expects to develop a new set of operating rules, as equals, different in some ways from how the original owner operated.  How would you react to the new partner asking to change how the airplane is fueled, when/if the avionics databases are updated, what position the seat is left in, whether the tow bar is left attached to the nose gear in the hangar, leaning procedures, and so forth?  In short, are you capable of changing your mindset from it being "your" airplane to it being a shared airplane, and negotiating new operating procedures in good faith?

This often doesn't work out as hoped.  Nobody thinks they are unreasonable or overbearing, but sellers understandably feel they have worked out the "right" way to operate the airplane, and tend to want the incoming partner to follow suit.  And they grouse when they new guy accidentally (or purposely) doesn't follow their lead, which damages the relationship.  As a CFI, I get asked the other side of the question a lot: "Should I buy into this partnership"?  I generally advise the potential buyer to ask about changing some trivial aspect of operation, like not topping off the tanks after every flight, or changing the panel moving map to North Up instead of Track Up.  The outcome of such discussions doesn't matter, but the act of having the discussion and observing the attitude of the participants says a lot about how the partnership will go.

The ideal partnership is one which is formed amongst a group of like-minded people, none of which has an airplane.  If they can get through the process of deciding on an airplane to buy together, odds are they're like-minded enough for success.  This isn't always practical, of course.  But I think both buyers and sellers should compare whatever deal they're considering against this ideal model.

All very good points. And no I don't think I could treat a co-owner as an equal. I'd still think of it as my plane. I would 100% be overbearing and I didn't think of that until you mentioned it. I don't think I could let go because I spent 6 months stripping and painting this plane myself.  

I don't care about the cost as much as I care about it being flown a little more, if things pop up like I just recently went through. I think maybe allowing someone to fly my plane while I'm down could work. Maybe talk a little more to some of the local pilots where I'm at.  

[wombat]

41 minutes ago, JayMatt said:

All very good points. And no I don't think I could treat a co-owner as an equal. I'd still think of it as my plane. I would 100% be overbearing and I didn't think of that until you mentioned it. I don't think I could let go because I spent 6 months stripping and painting this plane myself.  

I don't care about the cost as much as I care about it being flown a little more, if things pop up like I just recently went through. I think maybe allowing someone to fly my plane while I'm down could work. Maybe talk a little more to some of the local pilots where I'm at.  

It sounds like you need to hire a commercially rated pilot to fly the aircraft for you sometimes.   As long as the pilot has a commercial single engine certificate with complex and high performance as required and class I or II medical, you can legally hire them to do it.

Be careful that insurance covers you while they are flying it for you and it might be kind of you to remind them that unless they are named on your insurance policy, your insurance company might try to recover any losses from them or their insurance.

Also of note is that loggable pilot time is compensation and even if you don't pay them money, that is still compensation and they need a commercial certificate if they are going to log the flights.

One more word of caution: They would be subject to federal taxes on their net income as well as a 15.3% self-employment tax on net earnings above $400.

 

Kind of sad to be debbie downer about this but it's a legal minefield.

[Boilermonkey]

1 hour ago, JayMatt said:

All very good points. And no I don't think I could treat a co-owner as an equal. I'd still think of it as my plane. I would 100% be overbearing and I didn't think of that until you mentioned it. I don't think I could let go because I spent 6 months stripping and painting this plane myself.  

I don't care about the cost as much as I care about it being flown a little more, if things pop up like I just recently went through. I think maybe allowing someone to fly my plane while I'm down could work. Maybe talk a little more to some of the local pilots where I'm at.  

If you can't look at a partnership as equal partners, don't do it.   I've been a part of a few partnerships, in fact I'm in a two person partnership now.   The only way it works is if you are like minded and treat it as equals.   

That doesn't mean you fly the same amount, that can be addressed by having an hourly dry rate and determining what fixed costs are equally split no matter what.  However, you have to be able to agree on upgrades, how to treat the plane, what situations take priority when there are schedule conflicts, etc.

[Pinecone]

I could never sell a share in MY plane.

Maybe the answer is a dry or wet lease, where you exercise control over how the plane is flown, but you have some others also flying the plane to offset some costs and to keep the plane active.

I friend of mine bought into an equity partnership in a Cherokee 180 not long after he got his Private.  He paid 1/3 the cost of the plane.  Then they split all the fixed costs equally.  The scheduling was, each partner got a week, Monday - Monday, in rotation.  If  you wanted to fly, and it was not your week,  you called the partner who controlled that week and asked if it was OK to fly.  Most times, even to take the plane for a few days, it was fine.  Over probably 10 years, I only know of one trip my friend was not able to get the plane.

Funny thing was, one partner lost his medical, but did not want to sell he share, so he continued to pay his share of fixed costs.  Then the second partner had issues and did the same.  So my friend ended up having the airplane all the time, but only paying 1/3 of the fixed cost.

So I might amend my first sentence, that maybe I would work out some deal so my plane gets flown versus sitting idle for long periods of time, but not to the point I want to outright sell it.

[mooneypunk]

I’m in a partnership now 10 years on a M20F. Partners come and go. It’s always unnerving to loose that exceptional partner. What amazes me the most is. Some buy into this and hardly fly at all. Perplexing. The advantage of a partnership is obvious. You have this airplane available to you at the price of a used car. Any cost are now divided by four partners in our case. It’s like having a private plane all to yourself at a fraction of the cost. The negatives are. Well, it’s like a marriage. For better or worse. It’s been an amazing investment for my family and I. Great affordable fun.

[Hector]

Don’t want to highjack the thread but if you don’t want a partner but want to let a friend occasionally fly your plane (M20F) what would be a fair hourly rate. This person would not contribute to any of the fixed cost which include hangar nor any maintenance. It would be very much like an occasional rental. I can look at rental rates for similar aircraft but those include some profit and I’m not looking to make a profit. Although I have owned a C for 12 years I have never bothered to calculate my operating expenses.


Sent from my iPad using Tapatalk Pro

[Ibra]

I have been in few partnerships (Currie Wot, Astir Glider, and two Mooneys), the best partnerships comes from having max 2-3 co-owners with same mission and similar level of aspirations, experiences, finances with different flying schedules

I also flew other people aircraft (Skylane, Arrow), I would not call it renting as I only paid for fuel (always left lot of extra) and helped with annuals, ferry flights or joined some trips…

Edited December 12, 2023 by Ibra