About to buy a share for the first time. Checklist?
Join Date: Nov 2010
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G, thanks for the advice, which I certainly will bear in mind.
I would love to think in terms of renting, but the only place in the south that seems to rent microlights is clearprop, and I think the microlights are all from their wiltshire base. That's a heck of a drive, and they also insist on 50 hours P1. Well, once I pass, I have to somehow get that 50 hours :-)
Be more than happy if you happen to know where else you can rent microlights. Otherwise, purchase is a real challenge for me. Ah well, still plenty of time to look. No lessons today, as the damn thing can take off without actually taxiing!
Ta...IPZ
I would love to think in terms of renting, but the only place in the south that seems to rent microlights is clearprop, and I think the microlights are all from their wiltshire base. That's a heck of a drive, and they also insist on 50 hours P1. Well, once I pass, I have to somehow get that 50 hours :-)
Be more than happy if you happen to know where else you can rent microlights. Otherwise, purchase is a real challenge for me. Ah well, still plenty of time to look. No lessons today, as the damn thing can take off without actually taxiing!
Ta...IPZ
G, thanks for the advice, which I certainly will bear in mind.
I would love to think in terms of renting, but the only place in the south that seems to rent microlights is clearprop, and I think the microlights are all from their wiltshire base. That's a heck of a drive, and they also insist on 50 hours P1. Well, once I pass, I have to somehow get that 50 hours :-)
Be more than happy if you happen to know where else you can rent microlights. Otherwise, purchase is a real challenge for me. Ah well, still plenty of time to look. No lessons today, as the damn thing can take off without actually taxiing!
Ta...IPZ
I would love to think in terms of renting, but the only place in the south that seems to rent microlights is clearprop, and I think the microlights are all from their wiltshire base. That's a heck of a drive, and they also insist on 50 hours P1. Well, once I pass, I have to somehow get that 50 hours :-)
Be more than happy if you happen to know where else you can rent microlights. Otherwise, purchase is a real challenge for me. Ah well, still plenty of time to look. No lessons today, as the damn thing can take off without actually taxiing!
Ta...IPZ
G
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My share cost me £2000, which values the aircraft at £12,000 (no. of shares x their market value).
When you buy a share in the aircraft, you are also buying a share into the engine fund, the paint fund, the spares parts collection, and even a share in any liabilities (eg. still outstanding landing fee/maintenance bills) that the syndicate has collected.
Now I'll readily admit that the plane itself is by far the largest asset in a syndicate, but you can't simply say that the value of the share should be the value of the aircraft divided by the number of shares. You do need to take all other assets and liabilities into account.
That's why I said, if you don't feel comfortable looking over financial statements yourself, get an accountant or somebody else with a financial background to look them over.
And then still. Buying an aircraft as a whole is partly an emotional business and it's therefore very hard to put a proper rational value on it. Maybe when the aircraft was new you could tally up the parts and the labour, apply an uplift for design, marketing, sales, profit and so forth, and come up with a more or less rational price. But what's the value of a 30-year old aircraft? What's the value of a 70-year old aircraft?
So to an extent share prices will be affected too by the emotional value that people associate with an aircraft.
Look at e.g. AFORS. What are people asking for Jodels today? What did they cost new in the 60s? Assuming people get at least 50% of the asking price, writing off a syndicate share over 6 years seems a bad investment, if you've payed for the proper maintainance over that period.
Last edited by Maoraigh1; 22nd May 2011 at 21:42. Reason: Change no of years
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Hi IanPZ, I meant either a microlight or a group A aeroplane. (They're both aeroplanes, just one weighs more than the other) The aeroplane I have a share in is currently registered as a microlight but its a cheap paperwork exercise to register it as a group A aeroplane.
As regards other assets; The group funds and history of cash calls should be well investigated. Don't just talk to the chap who is selling the share, but talk to whoever in the group is responsible for managing the group's financials.
The group I bought into had built engine fund of around 2/3rds of the cost of a replacement engine already saved up. We've never had a cash call. I was careful to check on this before buying the share and financially, things have worked out well.
Also, don't confuse 'market value' with 'estimated value'. The market value of anything is what someone is willing to pay for it. The estimated value is what the sum of all the financials involved. The second is only useful in helping you figure out if the market value is likely to leave you with an asset worth someone else's money. My £2000 share bought me assets worth around an additional £2000. This demonstrates the difference between real and market values.
As regards other assets; The group funds and history of cash calls should be well investigated. Don't just talk to the chap who is selling the share, but talk to whoever in the group is responsible for managing the group's financials.
The group I bought into had built engine fund of around 2/3rds of the cost of a replacement engine already saved up. We've never had a cash call. I was careful to check on this before buying the share and financially, things have worked out well.
Also, don't confuse 'market value' with 'estimated value'. The market value of anything is what someone is willing to pay for it. The estimated value is what the sum of all the financials involved. The second is only useful in helping you figure out if the market value is likely to leave you with an asset worth someone else's money. My £2000 share bought me assets worth around an additional £2000. This demonstrates the difference between real and market values.
Official PPRuNe Chaplain
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I've been in various group for 20+ years. Limited Company has a lot going for it - it keeps the other group members honest, for a start. A non-limited group is OK if you trust all the other members totally.
There is much good advice on here and other forums, but most of it is applied common sense.
IO540 is absolutely right that the most critical issue is the other members of the group. That's where most problems will arise.
What helps is a "group gaffer" - a competent member who is in charge and whose word carries weight. He will tell you, for example "The aircraft is IFR legal and will remain so". Hence you don't find the navaids placarded "inop" for months on end (which I have seen).
In a limited company group, you do NOT want any "friends" members who aren't shareholders or directors. That will interest HMRC.
There is much good advice on here and other forums, but most of it is applied common sense.
IO540 is absolutely right that the most critical issue is the other members of the group. That's where most problems will arise.
What helps is a "group gaffer" - a competent member who is in charge and whose word carries weight. He will tell you, for example "The aircraft is IFR legal and will remain so". Hence you don't find the navaids placarded "inop" for months on end (which I have seen).
In a limited company group, you do NOT want any "friends" members who aren't shareholders or directors. That will interest HMRC.
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Thanks so much for the excellent advice and pointers.
I think we have a deal, so I want a very simple contract drawn up (I know some of you will say "it can't be simple, there is a lot to consider", but the heads of terms mean that many aspects will be extremely simple), but ideally by a lawyer who is experienced in aviation.
Any suggestions?
I think we have a deal, so I want a very simple contract drawn up (I know some of you will say "it can't be simple, there is a lot to consider", but the heads of terms mean that many aspects will be extremely simple), but ideally by a lawyer who is experienced in aviation.
Any suggestions?
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No personal experience, but I think the LAA has boilerplate contracts available for setting up these kinds of groups. Alternatively check AOPA, BMAA and similar likely suspects.
Why reinvent the wheel?
Why reinvent the wheel?
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I while back I saw an example on the LAA website. As the previous psoter said, why re-invent the wheel?
Things to consider if they are not already included are clauses that cover what happens if a member can no longer pay their monthly fee, what happen's when a member damages the aircraft at both before the insurance excess threshold and after it.
What currency limitations do you impose and how are restrictions lifted (do you stipulate a ride with another member if having not flown for 6 months? or should it be with an instructor?)
Fuel is best managed by setting up an account at your home base and all fuel being paid from hourly group funds. All off-base fuel purchased is then re-imbursed on submission of reciepts.
Make damn sure that you have a designated accountant in your group who is paid in some way (either cash or 1/2 an hour per month). You can't rely on the group to collectively account because that won't work.
Things to consider if they are not already included are clauses that cover what happens if a member can no longer pay their monthly fee, what happen's when a member damages the aircraft at both before the insurance excess threshold and after it.
What currency limitations do you impose and how are restrictions lifted (do you stipulate a ride with another member if having not flown for 6 months? or should it be with an instructor?)
Fuel is best managed by setting up an account at your home base and all fuel being paid from hourly group funds. All off-base fuel purchased is then re-imbursed on submission of reciepts.
Make damn sure that you have a designated accountant in your group who is paid in some way (either cash or 1/2 an hour per month). You can't rely on the group to collectively account because that won't work.
