Partnership: Would like Advice and Resources

[rchaney]

Greetings;

Three of us would like to partner on two Rv's. It will start out with two of us with one plane, then a third will join us in about 6 months and we'll buy one more RV. That's the plan.

Are we idiots? Are we naive? Help!

We'd very much like any words of wisdom and experience to help guide us. Have ever been in a partnership? What would you recommend?

Do you know of good resources on this... (some kind of "Airplane Partnerships for Dummies")

We'd like to know "best practice" kinds of things not only about the kind of contract to use, but also basic agreements and clauses that help us get along well, be satisfied, and take care of surprises or unusual contingencies. Should we form an LLC or Corp?

Thank you VERY much

-Ralph

[gmcjetpilot]

Find one, two or more pilots who pay the bills, do maintenance and never fly the plane, so its always available for your use.

As flip as that sounds its the people involved that are key. Flying in a club or group has many advantages but it all depends on the folks involved, its like a marriage.

Your three pilots two planes sounds kind of OK but its not going to save you much money, unless the THIRD pays all their bills and never uses the plane. That would be nice, but there is liability.........

INSURANCE IS A BIG DEAL. There is no self insured in a group or at least shouldn't. If you own the plane and fly it you can go with just liability only, but a group will need full hull. If there are any low timers in type or total time than insurance goes up and all pay (more). Usually all cost are split down the middle.

I don't get the two plane deal? I would say one plane two or three people?

Who will do the maintence, oil changes, wash, tires & brakes. Are you going to all the maintence. May be some in the group should not pick up a screwdriver or wrench within 100 yards of the plane?

Consumables like fuel, oil, tires, brakes is not going to be cheaper because its pro rated or by the hour by the person usually. Typically a maintence budget is assigned and paid to the group by the hour. Some times special assessments are needed for extraordinary repair.

Does the second or third have the right to sell their share? What if you don't like the new partner?

I have been involved in two partnerships in a limited fashion. One a friend owned a piper and charged my by the hour, plus some fixed cost. He owned it but I rented it. The other was a C182, with a fairly large group of 8 folks.

Last its like time share condos? It can be a good deal if you get in cheap and you can sell your share for more than you pay AND the fixed monthly or yearly cost are reasonable AND you fly a lot. Like all planes, hanger, tax, insurance all cost money (lots) even if you fly ZERO hours. Like a time share if you don't use it the value is not that great, might as well rent.

[lucky]

Originally Posted by rchaney

Greetings;

Three of us would like to partner on two Rv's. It will start out with two of us with one plane, then a third will join us in about 6 months and we'll buy one more RV. That's the plan.

Are we idiots? Are we naive? Help!

We'd very much like any words of wisdom and experience to help guide us. Have ever been in a partnership? What would you recommend?

Do you know of good resources on this... (some kind of "Airplane Partnerships for Dummies")

We'd like to know "best practice" kinds of things not only about the kind of contract to use, but also basic agreements and clauses that help us get along well, be satisfied, and take care of surprises or unusual contingencies. Should we form an LLC or Corp?

Thank you VERY much

-Ralph

I only like partnerships where it's 2 people and one plane. Keep It Simple Stupid principle seems to apply well.

[videobobk]

I am currently in my third partnership, me and a partner in our RV-9A. The first two were three person/one plane deals. Have never had a problem!

Maybe it is luck, but it has worked for me. In this case, I have more plane than I could have afforded (easily, anyway) and the costs are much more bearable. Only a rare occasion when we both want to use the plane and the maintenance is often easier, although I don't mind working alone.

Have an agreement going in. That probably means written with all the options covered. Having two plane for three people sounds great to me!

Bob Kelly

[mikegraycmg]

When you're putting together a partnership, ya gotta plan for every case and work out the answers in advance, as much as you can. Then, it's easy for a lawyer to document it in your partnership agreement. That helps, but the most important thing is who you are in partnership with.

[fliier]

My experience was with a six-way partnership in a Cessna.

First of all, I agree with adding more partners. The reason is, after an initial rush to use the plane, you will find that half of the partners barely use the plane, even though they continue to pay their bills. I saw this over and over again, guys don't feel pressured to put the hours on since their investment isn't as great. Then after 3-4 weeks go by they're more timid about flying. Eventually they just stop.

In my case, I would routinely put 200 hours/year on the plane with 5 partners. It was no problem.

Our deal was that for one week every 6 weeks each partner was guaranteed reservation priority. That way you could plan a trip in advance and know you had the airplane locked up. If you didn't need you time it was available to the other partners. Reservations were made using a phone service, though these days you could find a web-based system.

We kept a bank account. Every time the "kitty" dropped below $600 every partner put in $200. On top of that, whoever flew put $10/hour into an engine overhaul/radio upgrade fund. There was a maximum amount that could be spent by each partner without approval from two other partners.

In our case everyone was named as an co-owner on the registration.

Everyone showed up for annuals with their electric screwdriver. One guy kept the books and did the invoicing. Another managed the maintenance.

I think a partnership makes a lot of sense for an RV. If you think of a $70,000 RV in a hangar at $300/month flying 100 hours/year, you're looking at a total cost per year of about $14,500*. If you add just a single partner, and still fly 100 hours per year, you save over $5,000. That's real cash money in your bank account at the end of the year. Your per hour costs go from $140/hour to $92/hour. Add a third partner and your savings are over $6,500

These figures do not include the additional 1/3 of the increased insurance premium you would pay.

Also, they don't account for the fact you will fly more in a partnership because there's a lot more gas money available.

John Allen



* Includes

$5,600 in interest you would earn on $70k at 8%
$3,600 in hangar rent
$4,000 in fuel
$1,000 in maintenance costs

[STINGRAY]

There is a book I picked up at Oshkosh a few years back called "Keeping Peace In Partnerships" written by Bruce Luedeman. I'm sure you could find it on EAA's website. It gives sample agreements, and it's full of good tips, humour, 'what if's' etc. I highly suggest it for everyone thinking about or already in a partnership.

I am currenty in two flying clubs one - with 3 guys (4 total) we have a '58 C-172 and the other is a ten person club that owns a J3 Cub. The reason I like clubs is where else can the common man find the resources to experience different types of aircraft?

Before that I belonged to an eight person club - we had a '57 Tri-Pacer.

Clubs are whatever you make of them - both good and bad. Every story or experience that has been posted in this thread is worth taking head of. The most important advice I would have is make an effort to get along with each other. Realize that everyone has a different expectation of what they expect of the club experience. And be tolerant of members who may take themselves too seriously.

Every club has their 1 or 2 members who end up doing 90% of the work that needs to be done. I've never seen it any other way.

If you want to make it work, it will - Go for it and good luck!

[maggiedad2]

Two things make a great partnership (at least in my limited experience):

1. Plan to unravel the arrangement (legally) when you begin - as my attorney told me years ago, there is never a better time to dissolve a partnership than when it begins. Everyone still loves each other, logic prevails over emotion, etc.

2. Know your partners. If you don't, see #1.

I had a great experience in a Cherokee 180.

[LifeofReiley]

Originally Posted by rchaney

Greetings;

Three of us would like to partner on two Rv's. It will start out with two of us with one plane, then a third will join us in about 6 months and we'll buy one more RV. That's the plan.

Are we idiots? Are we naive? Help!

We'd very much like any words of wisdom and experience to help guide us. Have ever been in a partnership? What would you recommend?

Do you know of good resources on this... (some kind of "Airplane Partnerships for Dummies")

We'd like to know "best practice" kinds of things not only about the kind of contract to use, but also basic agreements and clauses that help us get along well, be satisfied, and take care of surprises or unusual contingencies. Should we form an LLC or Corp?

Thank you VERY much

-Ralph

I just sent you an email...

[Noah]

AOPA has a boilerplate partnership agreement on their website, might need to be a member to access. I used this as a starting point to write a customized agreement for a club. The tough thing is, you need good partners, but the reality is, the number of potential partners with the money available when they need it is often quite small, so sometimes you're forced to take what you can get, which means that the agreement needs to cover every possible eventuality.