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Thoughts on a partnership build?

Has anyone ever done a partnership build? I'm currently looking at either an RV-10 or RV-14 as an VFR/IFR cruiser. I'm lining up a new garage this year for a workshop space and can afford to build the plane. However, the engine and avionics will likely need to be financed and when I look at ownership costs (hanger, fuel and oil, maint., insurance, etc.) I'll be really stretching my budget and likely wont fly nearly as much as I do right now with a flying club 172.

So, my thoughts are to find a like-minded local pilot who is looking for a plane. Get him in on the build so we can work twice as fast and split the costs. I'll end up owning 51% and be the "builder" and he'll have a partial ownership. If either of us wants to move the other will have the option of selling their half.

Should be fairly feasible I believe and will make the plane fly more and be more affordable. However I've never heard of anyone partnering on an experimental. Anyone ever done this? Any thoughts on how this could work or any pitfalls?
 
Have a clearly written buy-out clause

The only comment I have is that you have a written agreement spelling out how the termination of the agreement will be handled.

Stress, time, family and money may lead to the need for a separation...

Having a clear agreement on this will help ensure you remain friends.
 
I think it would only work with good friends who have known each other for a long time and both agreed how it would be handled.
 
One person will wind up doing all the work while the other will have every excuse in the book as to why he can?t work on the plane.
 
Been there , done that, not again. RV-10 sold and I am now the proud sole owner of an RV-14A. PM me with contact information if you like.
 
Having a clear agreement on this will help ensure you remain friends.

Definitely. Gonna make sure we draw up a strong legal agreement to ensure that it's clearly spelled out what one can and cannot do and how to sell and leave the partnership.

I think it would only work with good friends who have known each other for a long time and both agreed how it would be handled.

I'm worried about this, too. I have some good friends I could partner with but most likely it will be random people that I'll go flying with once or twice to make sure they're a good pilot. This is probably what scares me the most.

One person will wind up doing all the work while the other will have every excuse in the book as to why he can?t work on the plane.

I'd actually not mind that too much. Time spent building doesn't bother me, it would be great to cut the hours in half but even if they did nothing I wouldn't mind that much. It's more about not stretching the budget too much after the plane is built.

The other obvious alternative is just keep saving up so I don't need to finance the plane but that likely will add about 8 years to my project and I'd like to have a plane sooner than that.

Been there , done that, not again. RV-10 sold and I am now the proud sole owner of an RV-14A. PM me with contact information if you like.

PMd, sounds like you ran into quite a problem; I'd love to hear about it.
 
I'm doing this right now with my current RV8 build. We've formed an LLC, and have written bylaws. The bylaws dictate how the plane will be scheduled, maintained, and how expenses are paid for. I'm doing all the building and receive nothing for that, unless we sell it, at which time I'll get the balance (if any) between what we have spent and what it sells for. We have no intention of ever selling it though. I've kept track of every expense related to the build, including kerosene for my torpedo heater. We also have a Cessna 182RG under a separate LLC. There are three of us, all Delta pilots(I'm retired), and we have a 'pilot meeting' about every 6 weeks at a local watering hole, wives included. We have a great time together.
 
Just no.

You may start off with a good friend, but you'll end up with a bitter enemy. Don't do it.
 
I think it would be difficult with a partner. The reasons that others have mentioned certainly apply. I thought more about workmanship and mistakes. I'm picky about how things are done. I make plenty of mistakes along the way too. Sometimes I redo things because I'm not happy with the way a piece came out. Sometimes I have to live with things not being perfect. Now if someone else didn't have the same view of what the quality of workmanship should be then that would be a problem. Or if they messed up a part that I spent forever building that would be an even bigger problem. Now I'm the builder if I make a mistake it's my fault and I have to deal with it in one way or the other.
 
Nope

Your number one issue will be quality control. Only one person can be the final say on whats ok and whats not. And in the end, that person becomes the soul builder.

You'll make more friends by asking for help when you need it. If you cant afford it now, slow build it. That way you can afford it eventually. As for avionics, theres another ongoing thread on budget panels. Check that out.
 
I'm doing this right now with my current RV8 build. We've formed an LLC, and have written bylaws. The bylaws dictate how the plane will be scheduled, maintained, and how expenses are paid for. I'm doing all the building and receive nothing for that, unless we sell it, at which time I'll get the balance (if any) between what we have spent and what it sells for. We have no intention of ever selling it though. I've kept track of every expense related to the build, including kerosene for my torpedo heater. We also have a Cessna 182RG under a separate LLC. There are three of us, all Delta pilots(I'm retired), and we have a 'pilot meeting' about every 6 weeks at a local watering hole, wives included. We have a great time together.

Nice! Glad it worked out for you. Seems like this sort of partnership has all the benefits and pitfalls of a normal partnership on a certified airplane. I guess I'll keep looking into it but good to hear it's not completely uncommon.
 
I think it would be difficult with a partner. The reasons that others have mentioned certainly apply. I thought more about workmanship and mistakes.

Hmmmm, good thoughts. I'd probably set it up that I was the "primary" builder and did the majority of the work and "signed off" on parts/work that the other person did.

I'm an engineer at a manufacturing facility so I'm used to dealing with people trying to sell me on substandard work and know when to let something pass and when to put the foot down.
 
From someone that currently has a partner in his certified plane and is building an RV10 with intent to sale 1/2 to existing partner, here's my 2 cents worth...

Having a partner in my certified plane is GREAT! I believe it's all about the person, not the agreement. Agreements are necessary and will protect both of you in the event of a disagreement, but picking the right partner will mean you'll probably never pull out the legal agreement. My partner and I were strangers when we bought a plane together and have become friends in the experience. Having the plane fly more often and splitting the fixed costs has been good for the plane and our pocket books. I met with several (5) potential partners before "picking" a person I'd want to own a plane with. If you both are "givers" instead of "takers", it should work out fine. Most people that wanted in on a partnership struck me as "controlling", and that is not who I'd partner with.

On building.... I'm the sole builder. My plane partner has no interest in building and I'm building because I WANT TO BUILD, not because I need a plane. This is 100% my project that I will sale 1/2 interest in when completed. I will receive no compensation for my time, just my costs. But, I'm ok with that since it's about the experience of building for me. I am also fully aware that maintenance will mostly fall on me as the builder, but again, I'm ok with that. I enjoy the experience of working on stuff and don't mind that this part of plane ownership will not be "50/50".

Partnerships can be good or bad. (I've had 2 failed business partnerships and 1 very successful one) It's all about the person, not the agreement.
 
Why not build the plane you want and then sell 1/2 interest when it's done and flying?

Life changes during a build. You may find that changes in finances enable you to keep the plane 100% to yourself. The biggest expenses don't come until the end anyway.
 
Partnerships can be good or bad. (I've had 2 failed business partnerships and 1 very successful one) It's all about the person, not the agreement.

The biggest expenses don't come until the end anyway.

Fantastic advice! I can afford the build straight out of pocket and love building; so that's no problem. It's the engine/avionics loan cost + hanger and other fixed costs that are blowing my budget.

I could definitely finish the build, finance the engine and avionics, get the plane flying and arrange a partnership on my own time making sure I found the right person. That would work with my budget and get me where I need to be. Then, as you say, if I get a raise or two or pick up some nice side jobs I could just keep the plane sole ownership.
 
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Why not build the plane you want and then sell 1/2 interest when it's done and flying?

Life changes during a build. You may find that changes in finances enable you to keep the plane 100% to yourself. The biggest expenses don't come until the end anyway.

I'd second this.

If the finances don't work to do the complete build on your own, I would at least stay solo as long as possible. Depending on your engine, avionics, and paint choices half or more of the total cost come in the last 20% of the build time wise.
 
I'd second this.

If the finances don't work to do the complete build on your own, I would at least stay solo as long as possible. Depending on your engine, avionics, and paint choices half or more of the total cost come in the last 20% of the build time wise.

Sounds like this is the best approach based on what I'm hearing. Glad I made this post.

So, my current plan;

1) Finish the airplane factory (garage) soon.
2) Start building ASAP, which will get my timeline/scope figured out better.
3) Build as much as I can until I run out of money (likely will be just short of engine/avionics/paint)
4) Keep looking for partners during this time. Looks like I have to make sure I get exactly the right person. If this isn't something that works out then I'll just keep saving up until I can afford the plane outright; or perhaps by that time I'll be bringing in more airplane fuel (cash).
5) If I get a partner make sure we mesh well and draft up a strong agreement that ensures everything is spelled out clearly on how the plane will be managed and how to sell/transfer the ownership.

This should avoid most (but not all) of the pitfalls/downsides you all pointed out. If anyone has any additional thoughts let me know.
 
I think it would be difficult with a partner. The reasons that others have mentioned certainly apply. I thought more about workmanship and mistakes. I'm picky about how things are done. I make plenty of mistakes along the way too. Sometimes I redo things because I'm not happy with the way a piece came out. Sometimes I have to live with things not being perfect. Now if someone else didn't have the same view of what the quality of workmanship should be then that would be a problem. Or if they messed up a part that I spent forever building that would be an even bigger problem. Now I'm the builder if I make a mistake it's my fault and I have to deal with it in one way or the other.
Ditto. Attitude about workmanship would be one of my biggest concerns, particularly because it is the most subjective part of the partnership you describe.
 
Sounds like this is the best approach based on what I'm hearing. Glad I made this post.

So, my current plan;

1) Finish the airplane factory (garage) soon.
2) Start building ASAP, which will get my timeline/scope figured out better.
3) Build as much as I can until I run out of money (likely will be just short of engine/avionics/paint)
4) Keep looking for partners during this time. Looks like I have to make sure I get exactly the right person. If this isn't something that works out then I'll just keep saving up until I can afford the plane outright; or perhaps by that time I'll be bringing in more airplane fuel (cash).
5) If I get a partner make sure we mesh well and draft up a strong agreement that ensures everything is spelled out clearly on how the plane will be managed and how to sell/transfer the ownership.

This should avoid most (but not all) of the pitfalls/downsides you all pointed out. If anyone has any additional thoughts let me know.

Sounds like you have a realistic, workable plan. For others considering this in the future, a few thoughts.

Time is a funny thing - when I started my -8, I just knew that when it came time to buy the engine, I?d have to sell my flying Yamnkee, and be without an airplane for a year - but when I got there, enough money had accumulated that I could buy the engine and keep flying. Reading the future is tough, and building takes longer than you might plan.

In terms of partnerships, we did this a couple of years ago. There was a fellow at a nearby airpark that had started a bush plane eight years before, using a factory assist program. Got it looking like an airplane, and had it shipped home - and had made little progress - he didn?t have the experince or skills necessary to do the systems, FWF, and finishing work. We bought half, did the finishing (with his assistance, but we were really the primary builders at that point, as well as quality control), and got it flying. Our partner had little taildragger time, and during the build, he passed the dreaded ?70? that make insurers nervous - so it turned out he was never going to get to fly the airplane solo...so we bought his half.

A couple of lessons:

1) ?Yes? on a detailed partnership agreement, with a lot of time spent on how to terminate it.
2) Figuring out the appropriate price for one partner to buy out the other is very, very difficult in advance, especially with a unique airplane that his hard to appraise. Figuring out who contributed what in terms of added value was something we didn?t anticipate properly, and made this even more complicated.
3) We didn?t know each other in advance, we became friends during the build, but there was always a wariness about how things would end. Our cordial friendship survived the buy-out, but it took some effort to make sure of that outcome.
4) Make sure to address things like insurance, and be existing about the increased costs due to disparity in experience levels.

When we got involved, we weren?t sure how we?d work together, so I made the offer that Louise and I would spend a month or two working on the airplane with the partner to see how compatible we were in the shop, and in being around one another. If, after that month, we were comfortable, we?d buy in. If not, the added work on his plane would be our gift to him and the experimental movement, and we?d part friendly. That trial period was very valuable, in my mind.

First time I?d ever partnered on a plane, although Louise had experience in previous airplane partnerships, so it worked out. But it was....different.

Paul
 
Regarding a build partner

I would cast a no vote to a partner. Building an airplane, even one like a vans with it's very well thought out building sequence and manual is an undertaking to be reckoned with. No matter what good intentions you and partner have in the beginning, I'd bet before it's completed and flying there would be problems.
If I was in that situation I'd do something like this. Build it yourself and even if you have to finance the engine and avionics so what! Here's why..... I tried my best to find a partner when I first bought my cessna 152 many years ago. No takers. I found a plane and bought it and suddenly there were several that approached me soon after my purchase and through the years I owned it about buying half. No thanks!
Now my RV7A..... I never considered a partner in the build but had the same experience after if was completed, painted and flown. I've been approached a few times in the 6 years mine has been flying to sell half. Again NO THANKS. If you built yourself even financing some of the build I'll almost guarantee that soon you'll be approached to sell out half. If you decided to sell half, than use those funds to pay off the loans. I'll bet this too..... You'll say to yourself.... NO THANKS! :)
 
When we got involved, we weren?t sure how we?d work together, so I made the offer that Louise and I would spend a month or two working on the airplane with the partner to see how compatible we were in the shop, and in being around one another. If, after that month, we were comfortable, we?d buy in. If not, the added work on his plane would be our gift to him and the experimental movement, and we?d part friendly. That trial period was very valuable, in my mind.

That's a fantastic idea! I love it, I'll definitely incorporate something like this.

If you built yourself even financing some of the build I'll almost guarantee that soon you'll be approached to sell out half. If you decided to sell half, than use those funds to pay off the loans. I'll bet this too..... You'll say to yourself.... NO THANKS! :)

You know, I can see how that happens because I've also considered shopping around the local fields to see if anyone has a plane they might want to sell partnership on. Definitely puts me on the path of build solo and then decide what to do when it comes time for the high price items.

You and others are probably right that deciding now isn't a good idea. I should build the frame and then see where I'm at and what my options are. As you say I could even complete it and have it sit around for a bit while I found the perfect partner. Maybe I'm just a bit afraid that you're too right and I'll start stealing from my 401k to pay for the plane or something like that just to keep it sole ownership. :p
 
mightypirate,

It sounds like you're doing all the right kind of investigating/research. Decide what works for you then go. You'll never regret building for sure. It's one of the greatest feelings of self satisfaction you'll ever experience. An RV is a fantastic airplane and it's ALWAYS easy to sell a fantastic airplane..... even half of one.
 
Ian,
It sounds like you have two separate concerns relative to a partnership. One deals with building, and the other deals with ongoing operation and ownership costs after the airplane is finished. You've stated that paying for the remainder of the build is not an issue. It sounds like having help financially with ongoing fixed costs of ownership would make it more comfortable for you, budget wise. Have you considered not selling a share of YOUR airplane, but instead, allowing a partner (or two) to fly YOUR airplane for some sort of cost sharing? Such as - he pays for hangar costs and/or insurance - at least if there's an increase for putting him on your policy - for, say, 25 hours flight time per year. He pays all of his hourly operating expenses (fuel, ramp fees, etc). You maintain your ownership, and if he pays your hangar rent monthly, you can dump him if he turns into something you weren't expecting. You still own your airplane, not him. The only 'gotcha' is liability...........

That's why I've only partnered with someone in an LLC. An LLC does you no good if you're flying your own airplane. However, if an LLC owns the airplane, and you are a member, and one of your members goes out and causes damage to persons or property, in theory - you are not liable, your partner that caused the damage is. Can they come back on you as only a member in the LLC in a lawsuit? I don't think so, and I haven't heard of it happening yet, but who knows.

Bottom line is - we are all liable for our own actions. If you let someone else fly your airplane, or partner with him on an airplane, do you want to be liable for what he does in that airplane? If you let someone fly your airplane for hangar rent, you need to talk to an aviation attorney (AOPA) and have him explain to you how to mitigate that risk.

I've owned several airplane's over the last 40 years, and I've owned them by myself, and 4 times in shared ownership deals. I'm very careful about who I will share ownership with and my number one concern is personal exposure to liability. Solo ownership is the best way to go - you screw up, you pay, but sometimes it's difficult to justify financially what we love to do, and we need to share that burden too. So if you're careful, it's possible to share the cost of owning/flying without opening yourself up to unnecessary risk, and that should be your #1 concern.
 
Ian,
It sounds like you have two separate concerns relative to a partnership. One deals with building, and the other deals with ongoing operation and ownership costs after the airplane is finished.

I would agree that I have two concerns. Nicely summarized.

Have you considered not selling a share of YOUR airplane, but instead, allowing a partner (or two) to fly YOUR airplane for some sort of cost sharing?

I had not considered this. Kind of like a two person flying club? I could see that working; I come up with a rate they pay to fly that makes it worthwhile and then a monthly cost. They get all the benefits of part ownership without any of the hassles and I get a cheaper plane with less risk.
 
Be careful how you manage this. You can't 'rent' your homebuilt to anyone. They can pay for your hangar expense, or other expense, like insurance, but you are letting them fly your airplane. You can't derive any sort of income from your amateur built airplane. I'm not sure how you would handle your personal liability exposure in that situation. I think most people with this kind of arrangement just accept the risk and don't worry about it.
 
A couple of thoughts here...

Specific to Scott H's comments, it is possible to draw up a non-capital partnership agreement. This agreement brings an individual into the partnership with no capital investment, and gives that partner specific rights of use and obligations/responsibilities, with specific penalties for not meeting those obligations. All of this in exchange for a recurring partnership participation fee and an agreement to pay operating costs as agreed. The non-capital partner has no ownership rights to the assets and the partnership agreement is drawn up such that the non-capital partner can never have any claim on the assets and that, by being a partner, he and his heirs and successors are relieved of the ability to make any claim against you or your estate. (For whatever that's worth - courts don't seem to take much heed of such releases of liability anymore.)

With respect to taking on a build partner, I find much resonance with Paul Dye's comments. As we were building our Glasair Sportsman there were several times when I felt the need to take on a partner. Mostly when "life" happened and progress on the build slowed or stopped. My wife, ever the voice of reason, flat out told me that I would not work with a partner because I have my own way of doing things and standards that most partners would not wish to meet. In short, she was telling me that I had to build the airplane my way. She was, of course, absolutely right.

Now that our Sportsman is flying I realize that taking on a build partner would have been exactly the wrong thing for me to do. When I retire and have reduced income I might eventually have to take on a partner to share operating costs - that remains to be seen.

I've had more than a few offers from opportunists who saw a very capable aircraft being constructed and wanted to buy a stake in it without wanting to provide any compensation for my years of labor invested. No thanks. Those guys were pretty easy to weed out and I'm glad I politely declined their advances. If and when I opt to take a partner to operate the aircraft I have a few people in mind who I have watched over the years and who I believe have an approach to aircraft operation and maintenance that closely matches my own.

As for today... The airplane is all ours, all paid for, and an absolute delight to fly. The exhilaration of the first engine runs, successful final inspection, first flight and completion of the 25 hour initial test phase has been quite incredible. I wish you the same kind of pleasures as you complete your build, however you choose to do it.
 
A couple of thoughts here...

Wow! That's some killer advice. Very well thought out on the legal aspect (a lot of stuff I didn't know but it makes sense in hindsight) and definitely some good ideas.

You folks on here are killing it. Very passionate, sage advice that I'm definitely seeing the merit in. I'll keep the partnership idea available and take the advice given on how to do it, but I believe you (and others) are right that if at all possible keeping it sole owner and sole pilot would be the way to go if at all possible.

I'm going to play with some numbers and see if doing a super slow build will allow me to avoid financing the engine and get the plane in the time I want. Paint and avionics will likely still be financed but I could even try doing that as I go (buy a GPS one year, a backup attitude indicator the next, etc.).

I guess I could also keep flying the club plane 172 for another 5+ years and keep saving money before I start the build. Might be the best way, but of course I want to start building right now!

Thanks again everyone!
 
Thanks!

Thanks for all the help everyone. After running a lot of budget numbers and weighing all the thoughts and advice given; I've determined the best way to move forward is to save up even more money to avoid financing the engine of the RV. This means I have to put off my build longer and keep flying the club plane 172 around but that's not really that bad. This also means I can pay off the airplane factory (garage) and save even more money.

That said, I'll likely start acquiring tools and building the workshop with a really fine attention to detail to get the most efficient work space. I'll probably start on the empennage in a year or two and just really take my time on things to stretch out the build. Will likely be easier on myself as I'm sure I'll have points where the plane build stresses me out too much.

Loving this forum though, you guys and gals are killing it on supporting other builders. I'll definitely be around in the future.
 
After building maybe a club?

Ian,

Here at my home airport we have a "club" that has two planes in it. Each person in the club buys in, uses the plane for an agreed upon amount per hour. When they leave they are responsible for selling their share of the club to someone else. There is a monthly fee, that covers fixed expenses and goes into a capital fund. In this particular case, the club has enough money saved to rebuild an engine.

The two planes are certified, but legally I think it would work just as well with an experimental. You are not renting in this arrangement. It would allow you to share the costs of maintenance, hangar etc. However, you would still be letting someone else fly the plane you put all your hard labor into! Just another thing to think about down the road.

Best of luck.
Geoff
 
One person will wind up doing all the work while the other will have every excuse in the book as to why he can?t work on the plane.

+1 Maybe if one did all the work and the other 100% funded, but the final product was 50/50 might be a good deal.
 
I had a great experience with a build partner. We modified an AOPA partnership agreement to include items during the build. We completed an original slow build RV6A kit in 1997 after exactly 4 years. We enjoyed a successful partnership while we flew the plane for 10 years. In 2007 my partner moved on to other things so we sold the plane. It was great to have someone there during the build to keep things going and after the build to share the cost. We also did a lot of flying together.
Find the right person and write up a good agreement.
 
I've enjoyed reading all the posts. I have a couple of buddies that went together and built a 10. One funded and the other built (third build). They flew it for several years and sold it and split the money. They had no problems...that I know of.

I had a partner in a C172 once. We split the cost of the plane and all the upkeep. He didn't fly it much, but said he would pay for the insurance if I kept it clean and ready to go. For some reason I called and checked on the insurance one day. The agent said "what Insurance". Seams that all was fine for the first year and he just stopped paying when renewal came up. I called my partner and said the plane was mine now. He said that was fine and just walked away.

When dealing with a partner, be like Reagan (Trust But Verify)

Allen
Very slow build 7A
 
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