Tuesday, November 3, 2009
LSA Ownership—Condo Style!
Low down payment, affordable monthly installments, zero hassle: sound familiar?
www.theapa.com), a type of online matchmaking service to bring like-minded pilots together for sharing the costs of aircraft ownership." />
“The data showed us that fourplex ownership creates win-win scenarios for both parties,” he says. “The investor buys the property, looking for a reasonable return on investment and decent cash flow. Four people needing an economical place to live buy units with little down payment and low monthly costs: That’s a win-win!”
To extrapolate the fourplex strategy to airplane ownership, Corry automated the entire process, from legal and financial aspects to flight scheduling and maintenance. But why only four people?
“Four is optimum for giving everybody plenty of flight time and keeping costs reasonable, such as insurance. When insurance companies see more than five owners, they look at it as a flying club—and the insurance rate triples!
“Our cooperatives almost are like owning your own airplane—you seldom have scheduling conflicts. The airplane is owned and managed by the principal. You come and go as you please. The manager takes care of everything. It’s a form of hybrid between partnership and fractional ownership. But fractionals usually are very expensive: You’ll pay a minimum of $500 a month for management fees alone—ours is zero.
LetsFly’s involvement in “profits” is minuscule: $595 to set up the cooperative. It also makes money when private financing is involved. “Otherwise, we pass everything along to the cooperative. We don’t charge for scheduling or anything else.
“Partnerships often enter into chiefs/indians conflicts,” says Corry. “Nobody wants to lead, or everybody does. There’s no center of responsibility. But just like in the front cockpit of an airliner, the buck stops with the captain. The co-op owner runs the ship—that’s why fourplexes have worked so well, and often, why partnerships haven’t.”
LetsFly has put together 376 aircraft cooperatives. That’s a lot of airplanes, and they’re likely out flying four times more often than if just one person owned each aircraft. That means airport cafes are busier; mechanics are working more; and more people are flying. Once the five-year commitment is done, members can sell their shares or stay on board and enjoy the airplane.
“In light sport, everybody wants the $40,000 airplane. Well, we’re giving it to them,” says Corry, “with our nonqualified financing of $2,900 down and reasonable monthly payments.”
If you do the math, a typical fully loaded LSA will set a LetsFly co-op member back about $35,000 to $40,000 over the life of the five-year agreement. That’s roughly $7,000 to $8,000 yearly. If you rent a Cessna at the local FBO for $120 per hour for less than 70 hours a year, then you’ve spent that $8,000. And you don’t own anything except memories.
Now, imagine a cooperative in a less expensive LSA, ultralight or used airplane, with even lower ownership and operating costs. If you take away just one point from this philosophy, make it this one: If you can afford to rent an airplane or own a boat, then you can afford to buy and fly an airplane.
Let’s breathe some life back into our flying. Let’s leave behind this lone-eagle craziness of overleveraging solo ownership in mostly unused toys, which hasn’t served us well at all. Let’s all get flying again and bring back the $25 hamburger for good!
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Labels: Aircraft Bargains, Columns, Features, Journeys, LSAs, People and Places, Fractional Ownership, Ownership, Pilot Talk, Aircraft Partnership, Partnership