Starting a Mooney Partnership - Questions

[Bradg33]

I'm interested in forming a partnership with 3 other pilots (4 total) to purchase an M20C/E/F/G.  I'm curious as what kinds of costs other owners, particular those in partnerships, see.  I hope to finance the aircraft, something in the $40-60k range, and include in the partnership's monthly fees the note payment.  Assuming every partner has a reasonable amount of time in complex airplanes, and an instrument rating, what kind of rates should we expect to see on a $50k hull value?  Assuming the airplane has manual gear/flaps, how much should I assume an average annual inspection will cost (assume no major squawks)?  How do you handle funds for routine maintenance?  What else am I forgetting?  What else should I know? 

 

Edit: I'm in the Kansas City-area, in case anyone is looking for a partner.

[gregwatts]

Hire a lawyer!

[mooneygirl]

If you have AOPA legal on your membership you are able to consult with a lawyer.  I believe that when the consult has to do with the purchase of an airplane the freebie is at least one hour.  We used this and it was awesome!  Well worth the $79 per year addition to the membership.

[rbridges]

Quote: gregwatts

Hire a lawyer!

[Bradg33]

Quote: gregwatts

Hire a lawyer!

[jetdriven]

We basically used the APA and AOPA contract. They are about the same.  Becca and I have posted thoughful discussion previously on this board. Search.

More important than any piece of paper, is the philosophy shared by potential members. Earning potential also matters greatly. For example, in our partnership, we all 3 make between 80k-100K.  One partner is regarded as a excellent mechanic and MX planner (who can't balance a checkbook), one is a whiz with numbers, spreadsheets, money and finance (and can't measure gear prelaod), and one is good at keeping track of logs, bank accounts, and allocation of funds (but suffers analysis paralysis).  We each contribute, and we have 100% coverage. 

If you have a LOP 65% operator who gets into a partnership with a "25 square full rich" owner there is going to be  conflict. Once saves while one wastes.  Some folks like the newest 50K set of radios, new paint, and Aspens in the first year. ome want a rental where they show up, fly, and leave it sitting with seatbeltsa on the floor and bugs covered. . One likes to "call the shop when it's ready", while one wants to maximize owner-assist or performed maintenance.  Depending on your attitude toward owner maintenance and upgrades, your M20F can cost betwen 8K a year of it never flies, to 25K r much more.  Proceed with caution. 

  Email me for more if interested.

[Bradg33]

Quote: jetdriven

We basically used the APA and AOPA contract. They are about the same.  Becca and I have posted thoughful discussion previously on this board. Search.

More important than any piece of paper, is the philosophy shared by potential members. Earning potential also matters greatly. For example, in our partnership, we all 3 make between 80k-100K.  One partner is regarded as a excellent mechanic and MX planner (who can't balance a checkbook), one is a whiz with numbers, spreadsheets, money and finance (and can't measure gear prelaod), and one is good at keeping track of logs, bank accounts, and allocation of funds (but suffers analysis paralysis).  We each contribute, and we have 100% coverage. 

If you have a LOP 65% operator who gets into a partnership with a "25 square full rich" owner there is going to be  conflict. Once saves while one wastes.  Some folks like the newest 50K set of radios, new paint, and Aspens in the first year. ome want a rental where they show up, fly, and leave it sitting with seatbeltsa on the floor and bugs covered. . One likes to "call the shop when it's ready", while one wants to maximize owner-assist or performed maintenance.  Depending on your attitude toward owner maintenance and upgrades, your M20F can cost betwen 8K a year of it never flies, to 25K r much more.  Proceed with caution. 

  Email me for more if interested.

[rbridges]

Quote: Bradg33

I definitely have concerns about finding the right mix of partners.  I'm good with numbers, and I'm handy with a wrench.  I'm looking to maximize the efficiency of airplane ownership, and I definitely want to maximize owner-performed and assisted maintenance.  I've got a listing up on the AOPA Partnership thing, and I'm starting to ask around amongst people I know.  I know a few people who want a plane, but simply cannot afford it, and that's a situation I want to avoid.  I don't want to be put in the position of needing to pay for repairs and having the other partners say, "oops, I don't have the $$."

[DrBill]

I was lucky. My first plane I had a partner and after much discussion here is what we documented and agreed to:

A: Split EVERYTHING 50/50.  Plane purchase, Insurance, monthly hangar expenses, maintainence.

B: Each buy gas.  Keep the tanks at 18 gal / side,  36 total for the next guy/flight.  We each topped off at end of flight.

C: Before ANY cost for maintainnece was initiatied, we called each other and agreed to have it done.  Airworthy or not.  Change the battery, tires, so the cost of the repair was no surprise to either.  One of us usually paid the mechanic and the other gave him a check within a week.  Annuals were split 50/50.

D:  NO adjustments for hours flown.  You own a plane and don't want to fly it ?  Your problem, not mine.  Hence we liked the 50/50 split.  In actuality we were real close to 50/50 of plane use for the first 5 years. Then he dropped off with no complaints.  No "reserves".

In the end, he had trouble keeping his medical and he agreed to manage the sale of the plane.  When sold, I bought him out of the other shared property (hangar and golf cart).  That's where I keep my Mooney.

This really worked.. we were both earning about the same too.  Our yearly expenses TOTALED about $11K for about 70 hrs /year each. That included gas.  MY M20E cost me about $8K last year for 60 hrs gas and maintaince included.

Insurance is about $1200 this year, I think it was $1500 last year (I had 10 hrs in complex at the time and 0 in Mooney).

We are still firends and he flys with me occaisionally.

Good luck.

BILL

 

[jacobwall]

Quote: Bradg33

I'm interested in forming a partnership with 3 other pilots (4 total) to purchase an M20C/E/F/G.  I'm curious as what kinds of costs other owners, particular those in partnerships, see.  I hope to finance the aircraft, something in the $40-60k range, and include in the partnership's monthly fees the note payment.  Assuming every partner has a reasonable amount of time in complex airplanes, and an instrument rating, what kind of rates should we expect to see on a $50k hull value?  Assuming the airplane has manual gear/flaps, how much should I assume an average annual inspection will cost (assume no major squawks)?  How do you handle funds for routine maintenance?  What else am I forgetting?  What else should I know? 

 

Edit: I'm in the Kansas City-area, in case anyone is looking for a partner.

[scottfromiowa]

I have a Co-ownership agreement that I could sanitize and e-mail.  It is a Word document. PM me.  I make no claims of good or bad...just a template to take a look at/adapt.   I used AOPA format for the design.  Most areas addressed were covered in the agreement.  BIGGEST areas is compatability FOR SURE.

[FLYFST]

Bradg33, talk at length with members of other partnerships as you will get more insights than from the Web.  Give the Operating Agreement and your Flight Operations Rules plenty of attention, better to set each partner's  expectations in writing up front to avoid unpleasant surprises later.  If the airplane will be owned by a company (to reduce individual liabilities) then your State may have specific expectations on content of the Operating Agreement.  Send me a PM if you wish to discuss offline.

Hank

[Jerry 5TJ]

Quote: Aviator4Life

Give the Operating Agreement and your Flight Operations Rules plenty of attention, better to set each partner's  expectations in writing up front to avoid unpleasant surprises later.  If the airplane will be owned by a company (to reduce individual liabilities) then your State may have specific expectations on content of the Operating Agreement.

[FLYFST]

Quote: jerry-N5911Q 

IMO:  A good partner is more important than a good agreement. 

Agreed!  The agreement is just a piece of paper, but it helps to capture the expectations of all, particularly if the partnership is how the members get to know each other.

[AmigOne]

I have been in several partnerships, always with colleagues from the same large institution I used to work for.  Dr Bill's post is a good summary of the way we used to run our partnership and Aviator4life says it all.  A good partner is far better than a good agreement.   Particularly important is the fact that everything should be 50/50 no matter how much you fly. Another thing is that partners should have similar levels of income.  The first and only partnership where this became an issue was the first one and that was quickly solved since the partner sold his share.  The issue of how you fly the airplane lean/rich imho is not relevant as long as you don't hurt the engine since you pay for the fuel you use.  Besides unless you have fuel injection and GAMI I don't think this should be an issue.  We never had an hourly fee for maintenance or overhaul reserve as this tends to discourage flying.  When the bills came due we pay for them in equal shares and as the engine depreciates we all share equally in the loss of value.   If there is a small difference in insurance premiums due to significant levels of experience should not be significant and the sharing of all other fixed costs is where the savings are.  Another benefit is the times that you'll fly together whether going places or training under the hood.  At least when I was the copilot i used the oportunity to learn as well. I'm now on my own and since I'm older and crankier might as well.  I don't want to have to ask anybody if I want to make changes on the panel or change the carpet.