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Partial ownership/club - how to maintain control and allow others in

TazzyTazzy

I'm New Here
I'm wanting to build an rv-10, but my better half isn't too happy with the recurring fixed costs; notably hangar and insurance in Sacramento. So, I'm trying to explore my options to cut these down.

I know there's partial ownership to share the plane with 1 or 2 others. However, I'd like to keep control of the plane that I plan to build.

I'm trying to think of something that would be fair for the partner. For example, I'm thinking to offer one or two people to buy a non-voting share of the plane as well as a monthly 'fee'. Scheduling would work just as if we were 50/50 partners. One person would be primary for the week, while the other would be secondary, and that would rotate each week.

As a trade off for the non-voting rights, I would pay for all upgrades. Repairs would come from a mx fund that is funded by hourly operating rate, which I would do myself if possible. If repairs (parts) exceeded the fund, then the partner would have to pay their share.

What do you all think? I'm thinking like a $30-$40k 'buy in', and a $200/month fee (which almost covers half the insurance and hangar, assuming 1 partner), and an hourly wet rate to cover engine/prop rebuilds and repairs. The other benefit for the partner is that they don't have to get pre-buys or pay for 50% of the plane. If the plane isn't good for them, they can simply leave and I return their buyin.

Of course, would have an exit strategy for the partner wanting to leave or I want them to leave if they are bad partners. I can just simply return their buyin money and we split ways. The buy in money would also double as a deposit for any damages they have caused. The partner would not be responsible for any depreciation of the plane, but wouldn't get appreciation either. Nor would they get any interest from the buyin price.

Anyways, my mind is just wondering and I'm trying to find a solution that is both fair to the partner and myself.

I appreciate your feedback. If you have a better idea, I'll be happy hear that.

If you could get 50/50 schedule rights without the worry of pre-buys, not having to pay an A&P for most things, or 50% payment of the plane: would you be interested? Why or why not?
 
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I don't know how helpful this'll be, but the way I look at owning an airplane, is that the monthly and yearly recurring costs are merely what it takes to be in the game. Commit to that and you can have an airplane.

As for the arrangement that you seem to offer, of a buy-in and monthly fee, if I were to do that, I'd insist on a share of the equity and that includes decision rights per the share percentage.

Since a small group is highly dependent upon the people involved, to me the thing is that first, I'd want to have a group of friends that was solid. Then if we all together wanted to get an airplane, we could. I regard the opposite, of starting with an airplane and putting together a group, as inherently risky.

So first, start with the better half and negotiate something suitable. Maybe it'll be a smaller, pre-built airplane, and in a few years you can see how your needs change and what you folks can accept then. Also don't neglect certified planes. Many of them offer remarkable cost effectiveness for what they do, compared to a project as large and expensive as an RV-10.

Dave
 
I wouldn't even think of giving someone 30-40k without then owning something for that money. That's a stiff deposit for the right to essentially rent the airplane.

On the flip side, do you really want to partner with people that will treat the airplane you love and care for as a rental? Selling ownership (and thus voting rights) seems like a better compromise so that everyone has a common interest in the upkeep of the asset.

For context, I am in a 5 person partnership (yes FIVE) in a Cherokee. We started with the friends group, then got the airplane, and the experience has been magical. I too would hesitate on starting with the airplane and finding the friend group.
 
How would buy-in money be guaranteed?

That proposal sounds fair to me if the non-equity buy-in partner had a fool proof, bullet proof guarantee that his buy-in money would be returned no matter what happened to the owner (job move, death, divorce etc). I can't think of a mechanism for that to happen. I would be OK passing up interest on the money. No need to worry about appreciation I think.

I own a plane now with two life long friends and my daughter, 25% each on purchase, hangar, insurance, maint etc. It is working perfectly. Three of us are retired so we have every day off and my daughter is off on weekends. Never any conflicts. We work it out. I really think a partnership with good partners is the way to own a plane unless you have lots of extra money burning a hole in your pocket.
 
As for the arrangement that you seem to offer, of a buy-in and monthly fee, if I were to do that, I'd insist on a share of the equity and that includes decision rights per the share percentage.

That's what I was thinking and afraid of.

I wouldn't even think of giving someone 30-40k without then owning something for that money. That's a stiff deposit for the right to essentially rent the airplane.

Good point and perspective. But, the 'rent' would be owner pricing, not 'retail' rates like an FBO. I'm not trying to make money. But, more importantly, I don't want someone who won't take care the plane. I would hope that having only one other person, things would be better taken care of because if I didn't break something - i would know who did. :) Regarding the $30-40k, see my next comment.

That proposal sounds fair to me if the non-equity buy-in partner had a fool proof, bullet proof guarantee that his buy-in money would be returned no matter what happened to the owner (job move, death, divorce etc). I can't think of a mechanism for that to happen.

Another great point. I'll be opening a separate savings account for just this. Perhaps the 'buy-in' should be something that wouldn't hurt as much, say $5k. That way if I die, divorce, etc, and the other person didn't get their $5k back, their pocket book wouldn't really hurt and is pretty small in aviation units.
 
As Sam suggested... there is a lot of info and discussion in the archives, but in a nut shell, if money is changing hands for the use of the airplane but the users have no identifiable ownership in it, the FAA would consider that an experimental airplane being provided for rental which is not allowed.
 
...in a nut shell, if money is changing hands for the use of the airplane but the users have no identifiable ownership in it, the FAA would consider that an experimental airplane being provided for rental which is not allowed.

Thanks very much for pointing this out! I didn't realize this.
 
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