How Well Do Experimental Aircraft hold their value?

easik

easik

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easik
Let's take Vans for example? I've seen much older RV-10s sell between $165,000 and $200,000. Historically certified aircraft actually appreciate in value. So how does one determine the resale value for these things?
 
I'm guessing you've seen asking prices rather than the actual sales prices. The sales price is usually lower by a decent amount.

Beyond that, the value depends on the consumer, who is driven by the overall economy (good economy = toys increase in value, bad economy = toys take a beating on value) and the perceived value of the item.

As to Vans designs, I'd say most of the RV's in the fleet would sell for more than they cost to build. Other homebuilt types typically don't do as well. If the economy takes a dump, there will be opportunities to buy something for pennies on the dollar...
 
The experiential's built by an A&P, winner of an OSH builders award, or part of a factory quick build program get higher resale value and sell faster.
 
certified cans appreciate in historical value?....................BAWAHAHA! :rofl:

Seriously though, these toys are heavy on the credit. They're only worth what someone is willing and able to borrow for. As such, the resale swings are a bigger function of the consumer economy that particular year, than any intrinsic linearity of depreciation, especially for the ever dwindling stock of aging spam cans and disappearing airframe parts support.

Right now, we're at the apex. A recession is almost upon us. Ask this question again in June 2020 and you'll get a much different picture. Mark my words. The next 2008-like toy shedding is upon us. It's overdue.
 
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Vans - people pay $$$$$ for the brand name.

Other aircraft - I paid less than the price of the kit for a 15 year old homebuilt with something like 500 hours on it.
 
Capt. Geoffrey Thorpe said:
Vans - people pay $$$$$ for the brand name.

Other aircraft - I paid less than the price of the kit for a 15 year old homebuilt with something like 500 hours on it.
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Maybe. From my perspective, what alternative EAB 2 seater side by side TRIKE aerobatic cruiser with 5 hours of endurance exists out there compared to the RV-6A and 7A? Everything remotely close to it are either tail draggers or high Vso Lancairs with wacked out insurance premiums and ergonomics I certainly don't prefer in retirement life.

If I was into taildraggers I suppose I could find more subs (mustang, throp, both more cramped than the already snug RV), but I don't want the ground logistics hassles of TW, plus the insurance premiums. So I kinda understand the RV premium beyond mere "brand". A bit of captive audience, again.
 
Used certified aircraft used to appreciate when inflation rates were high. The whole light GA industry got hammered hard in the 08/09 financial crisis and, with few exceptions, hasn't ever recovered. The exceptions are mostly confined to aircraft suitable for training (example: 172s, 182s) as that is the only real demand driver for used piston GA planes for the most part. A few "specialty" airplanes, such as the Cessna 180s, have also seen some recent price pressure. But most everything else has been pretty flat in nominal $ terms for a decade now. And per @hindsight2020 it's likely the prices will fall again in the next recession, whenever that comes, as credit dries up and spending on discretionary toys declines.

The cost of upgrading is now very expensive compared to depressed hull values, so well equipped airplanes get snapped up quickly and the ones needing work languish as too expensive to bring up to current standard. I keep wondering if ADS-B is going to kick a whole bunch more to the sidelines come January?

Newer Vans airplanes seem to sell for about what they cost for kit + finishing equipment (avionics, etc), and there's pretty well zero value for the time the kit builder put into it. The older ones, RV-4 & RV-6, seem to go at a further healthy discount (compared to the -7 & -8) and I think they are the sleeper bargains out there.

Capt Thorpe in post #5 is correct; I see older, formerly popular, good amateur built designs going for pennies. I'll bet one can find all sorts of Vari-EZs and Long-EZs for very attractive prices these days.
 
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GRG55 said:
I'll bet one can find all sorts of Vari-EZs and Long-EZs for very attractive prices these days.
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I would argue against this. Here's my reasoning. Most of those EZ's were finished more than 20 years ago. Say, pre-2000, often pre-1990. The builder was probably a 40 or 50 something guy, sometimes older, sometimes younger, but in the last 25 years, yesterday's 45 to 55 year old became a 70 year old and sold the airplane. The next owner flew it for 5 years and parked it when the first big maintenance event happened, intending to fix it, but the airplane sat in the back of the hangar for 5 years and everything that worked when it was parked doesn't anymore. So now, the airplane needs new everything - paint, engine, avionics, etc, and it takes someone with a lot of money, desire, and ability to bring the airplane back from the nearly dead. There aren't that many guys who wanna do that, so all of those older homebuilts are waiting to be sold for a handful of pennies on the dollar by an estate one day and ended up being salvaged for the engine and re-usable hardware like wheels and brakes.

I know of several nice glass homebuilts around here that were unintentionally retired kind of like this by the owner or the subsequent buyer.
 
easik said:
Let's take Vans for example? I've seen much older RV-10s sell between $165,000 and $200,000. Historically certified aircraft actually appreciate in value. So how does one determine the resale value for these things?
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More the exception than the rule. I mean, sure, the Staggerwing and some other classics have gone up in value since they were built, inflation-corrected. However, a 1960's C172 usually sells for about the same as what it did new, again, taking inflation into account. Post-restart C172? Those are $300K birds, and will likely never see that value again unless they are the last 172's on the planet. If you don't want to worry about major loss on value, I'd stick to stuff made prior to the 80's. The market is fairly set on what a value a certain model will hold in comparison to similar aircraft. There will be ebbs and flows, like the recent increase in C182/PA28 aircraft with the economy doing well. After a recession those prices will take a hit as more come on the market and people aren't able to sell for top dollar.
 
hindsight2020 said:
certified cans appreciate in historical value?....................BAWAHAHA! :rofl:

Seriously though, these toys are heavy on the credit. They're only worth what someone is willing and able to borrow for. As such, the resale swings are a bigger function of the consumer economy that particular year, than any intrinsic linearity of depreciation, especially for the ever dwindling stock of aging spam cans and disappearing airframe parts support.

Right now, we're at the apex. A recession is almost upon us. Ask this question again in June 2020 and you'll get a much different picture. Mark my words. The next 2008-like toy shedding is upon us. It's overdue.
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The end is near lol


But legit, if you’re worried about resale I’d go with a PA18, DHC2, C180/5, stearman, etc.
The “legend” type stuff seems to hold its own over the flavor of the month, RV10 is cool till they have a RV18, less so the dime a dozen 172/PA28/SR22 stuff.
 
James331 said:
The end is near lol


But legit, if you’re worried about resale I’d go with a PA18, DHC2, C180/5, stearman, etc.
The “legend” type stuff seems to hold its own over the flavor of the month, RV10 is cool till they have a RV18, less so the dime a dozen 172/PA28/SR22 stuff.
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The legend stuff is only valuable until the generation that identified with it as 20 year olds passes its peak economic power. Stearman, for instance, seem to have dropped in value over the last 20 years.

Same with collector cars. The market for what was valuable 20 years ago (eg convertible Thunderbirds) is headed down, not up. The younger generation is not as interested.
 
The backcountry stuff seems to have grown in popularity if anything

And one can make some good money giving rides with a stearman.

Your comment reminds me a little of this lol

 
Capt. Geoffrey Thorpe said:
Vans - people pay $$$$$ for the brand name.

Other aircraft - I paid less than the price of the kit for a 15 year old homebuilt with something like 500 hours on it.
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Me too.
20 years and 900 hrs on airframe, couple hundred on engine (vw).
You would pay 2-3k more for just the kit, no engine than I paid for flying plane.

Now I won't lie there was a little lump in my throat as I fire walled the throttle the first time. Even it had flown over 100mi to get to me.
 
Also on value and appreciation....I was watching an antiques roadshow the other day. Guy learned a piece of art bought in 1980 for 15k was worth 150k...he was ecstatic. I did a quick search and that same 15k invested in S&P type index in 1980 would be worth about 500k...so maybe he shouldn't be so happy.
 
kyleb said:
I would argue against this. Here's my reasoning. Most of those EZ's were finished more than 20 years ago. Say, pre-2000, often pre-1990. The builder was probably a 40 or 50 something guy, sometimes older, sometimes younger, but in the last 25 years, yesterday's 45 to 55 year old became a 70 year old and sold the airplane. The next owner flew it for 5 years and parked it when the first big maintenance event happened, intending to fix it, but the airplane sat in the back of the hangar for 5 years and everything that worked when it was parked doesn't anymore. So now, the airplane needs new everything - paint, engine, avionics, etc, and it takes someone with a lot of money, desire, and ability to bring the airplane back from the nearly dead. There aren't that many guys who wanna do that, so all of those older homebuilts are waiting to be sold for a handful of pennies on the dollar by an estate one day and ended up being salvaged for the engine and re-usable hardware like wheels and brakes.

I know of several nice glass homebuilts around here that were unintentionally retired kind of like this by the owner or the subsequent buyer.
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Yeah, I've seen a few very forlorn VariEzes sitting and rotting on the ramp. I wouldn't take the chance of flying an aging composite plane, built by someone with unknown skills, bombarded with UV rays for decades. Paint and filler can cover up a multitude of structure-compromising sins. With an aluminum plane, it's much easier to spot problem areas.
 
easik said:
LHistorically certified aircraft actually appreciate in value.
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Airplanes are fun. But they make terrible investments. If you want to buy a toy that will go up in value look at Legos. Seriously. The ROI on limited edition lego sets is through the roof.

Vintage Fender and Gibson guitars can also do pretty well if buy them right and you know what to look for and how to spot fakes. Airplanes? Airplanes are not a way to make money on your money.
 
easik said:
Let's take Vans for example? I've seen much older RV-10s sell between $165,000 and $200,000. Historically certified aircraft actually appreciate in value. So how does one determine the resale value for these things?
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Most older RV10s only cost about that much to build, so they are holding value at nearly 100%. The oldest RV10s go back to 2005. I don't think 2005 Cessnas, Pipers, etc. have resale values of what they cost new and they are nowhere near as efficient as the 10.
 
Flybuddy said:
Most older RV10s only cost about that much to build, so they are holding value at nearly 100%. The oldest RV10s go back to 2005. I don't think 2005 Cessnas, Pipers, etc. have resale values of what they cost new and they are nowhere near as efficient as the 10.
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RV-10's seem to be an outlier because there are more people that want them vs what's out there on the market. Last spring my friend sold his 2008 RV-10 last spring for $140K. This was essentially a 'stock' build, all steam, older carb'd engine. Still had 200 people call him and there was a bit of a bid war involved. I personally have had 3 people contact me about buying my 10. One site unseen offer was for 25% more than it cost me to build. That said no way I'm selling this thing anytime soon after spending 3.5 years of my life on it.
 
hindsight2020 said:
certified cans appreciate in historical value?....................BAWAHAHA! :rofl: [...]
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Our Mooney M20E was around $24,000 back in 1966. Today, you'd be hard pressed to find any decent M20E for under $60k. So yes, I would agree with the OPs statement that historically certified planed tend to appreciate.
It's the upkeep that makes them a bad investment.
 
German guy said:
Our Mooney M20E was around $24,000 back in 1966. Today, you'd be hard pressed to find any decent M20E for under $60k. So yes, I would agree with the OPs statement that historically certified planed tend to appreciate.
It's the upkeep that makes them a bad investment.
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Umm... Adjusted for inflation, something that cost in $24,000 in 1966 would cost $190,000 today. If you want me to pay $190,000 for a '66 M20E, it had better come with its own airport.
 
easik said:
Let's take Vans for example? I've seen much older RV-10s sell between $165,000 and $200,000. Historically certified aircraft actually appreciate in value. So how does one determine the resale value for these things?
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If you had purchased a new plane in 1979 and sold it in 1990 you could double your money. That is no long true today. Adjusting for inflation and upgrades, it is a wash.
 
German guy said:
Our Mooney M20E was around $24,000 back in 1966. Today, you'd be hard pressed to find any decent M20E for under $60k. So yes, I would agree with the OPs statement that historically certified planed tend to appreciate.
It's the upkeep that makes them a bad investment.
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As previously stated, $24000 in 1966 is equal to $190,000 today. So your current used price of the same airplane today ($60k) is hardly appreciation.
 
Juliet Hotel said:
Umm... Adjusted for inflation, something that cost in $24,000 in 1966 would cost $190,000 today. If you want me to pay $190,000 for a '66 M20E, it had better come with its own airport.
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Indeed. I found having to highlight the inflation nuance rather self-evident. I'm surprised to find out he wasn't being sarcastic. I assumed he was trolling. There's no way folks can be legitimately that ignorant of the concept of monetary inflation in discussions of depreciation.
 
Juliet Hotel said:
Umm... Adjusted for inflation, something that cost in $24,000 in 1966 would cost $190,000 today. If you want me to pay $190,000 for a '66 M20E, it had better come with its own airport.
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True. It still appreciated, it just did not outperform inflation.
The OP's point was what he should assume for the development an aircraft's value over a certain period of time. If he buys today a RV-10 for $175k and sells it in 10 year: Should he plan to get $100k or $200k for it? In my opinion a pretty reasonable question.... :rolleyes::rolleyes:

If somebody bought a used Cessna 182 10 years ago, chances are that he could sell it today for a higher amount than what he paid for it.

Not sure why you guys are giving him a hard time for this assumption...
 
Can we take inflation rate out of the equation? if we argue inflation, then the idea of appreciation or retaining value would be obsolete for a lot of things. My point is can an aircraft built today still sell for the same amount or more 5-10 years from now? based on some of the numbers I've seen, the answer is yes. Perhaps it's brand specific because for products like the Cirrus, this is not the case. I'm sure demand and general economy will also be a factor. I'm just trying to figure out what specifically makes the aircraft retain it's value or go down in value. Thanks guys.
 
German guy said:
...If somebody bought a used Cessna 182 10 years ago, chances are that he could sell it today for a higher amount than what he paid for it...
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But if he bought it 12 years ago he probably couldn't.
 
easik said:
if we argue inflation, then the idea of appreciation or retaining value would be obsolete for a lot of things.
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That is true. And that is reality. Only certain things gain value over time. These things are known as investments. Most of the things a person can own are not investments or at least they're extremely poor investments. Airplanes tend to fall into that category.

You can take inflation out of the equation if you want, but the whole exercise becomes pretty pointless if you do. "Hey I paid $20,000 for this airplane in 1970 and I can sell it today for $40,000 so it went up in value." No it didn't. It lost value. A lot of value. But because its now worth $40k it lost less value than if it were still worth only $20k today. If you want to call it appreciation because something lost less value than it otherwise could have that's fine but that's not what appreciation is. Or at the very least its appreciation that's a negative value.


My point is can an aircraft built today still sell for the same amount or more 5-10 years from now?
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Ok this is a fair conversion.
based on some of the numbers I've seen, the answer is yes. Perhaps it's brand specific because for products like the Cirrus, this is not the case. I'm sure demand and general economy will also be a factor. I'm just trying to figure out what specifically makes the aircraft retain it's value or go down in value. Thanks guys.
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Its not just brand specific, it can also be model specific. Heck in some cases it can even be model year specific. And what specifically drives it? That is an age old question and I don't think the answer is simple or completely understood by anyone. Supply and demand certainly can play a role. But so can perception and reputation.

And when it comes airplanes you also have add technical factors like AD's and parts supply chain. There was a model of Citabria that had an AD on the wooden wing spars. I'm sure I'll get this wrong but I recall it required either punching a bunch of access panels into the wings and then inspecting every inch of the spars on a recurring schedule or rebuilding the wings with metal spars. The day that AD came out, the resale value of those airplanes went down quite a bit.
 
easik said:
I'm sure demand and general economy will also be a factor. I'm just trying to figure out what specifically makes the aircraft retain it's value or go down in value.
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It was stated but I'll go ahead and give my input to it. I believe you're just asking about Value, which is arbitrary and for products is 'perceived value'. Product pricing is completely different subject and there are a number of ways to determine initial pricing on products. Think 'costs to produce + intended margin.' Back to 'Value' people generally like to say its 'worth what someone will pay', which is absolutely correct and driven on Supply Vs. Demand. The higher the demand with a restricted supply you would expect the 'value' to increase, inversely if there's a low demand and a high supply you would expect the 'value' to decrease. (There are cases where the particular good has limited demand yet still has a determined high 'value'. You'll see this in real estate, often the lesser of two evils will be to sit on the property until demand increases.) Perception and reputation drive the demand side of the equation and if those are high will often result in competitors, driving the supply side.

Specific to an experimental airplane here's how you can retain 'value'. Ensure the kit or plans you're building from is a well known, respected product with a solid safety rating, that usually correlates with demand. Pick a model that doesn't have a surplus of models out there for sale, therefore limited the supply (competitor) side. Vans does seems to be a safe bet as there's a solid demand without a grossly abundance of supply.

I would then argue that 'value' retention on the aircraft is up to the builder/owner. Ensure during the build you make good decisions with attention to workman ship to maximize the quality of the product. Maintain the aircraft with solid logs, regular maintenance, keep her flying and all those things people like to see. During the build don't make decisions that might push some buyers away. For example on mine I was originally going to do switches for the magnetos and the start function requiring me to push both up at the same time to start. Later I decided that added complexity and confusion, so I ended up just putting a regular key switch in which has the added safety benefit of knowing the mags are off if I have the keys in my hand. Things that are perceived out of the norm might deter people's interest in the plane.
 
Explain why people will pay an extra $10,000 to $15,000 dollars for a Cub as compared to a Champ.
Popularity drives prices. And what is popular today may or may not be popular next year.
 
There are very few toys on which you can spend your money and expect to get the same dollar amount when selling after many years. I just sold an aircraft for the same amount as I paid after 17 years of enjoyment. That won’t happen with most other toys, and it makes aircraft a reasonable investment in fun when compared to other things on which you would spend your money to have fun. I think the real sunk cost of small aircraft ownership is monthly hangar rent, but the cost per square foot is so low that some people (i.e. those who don’t fly their planes a significant amount, there are many) use plane ownership as something to be leveraged so that they can rent space inexpensively. In comparison to the off-airport rental market, that may save them money. I use my hangar as a workshop, storage etc that would otherwise cost me more per month, as well as storage for my unsold, frequently flown #2 plane. Overall, the financials work out fine when compared to other things that I’d do for fun.

In any case, I think the right comparison is not real estate, the stock market etc. A wise person has long term financial investments covered adequately before considering the best place to spend significant amounts of money for fun, and the potential to get some of the fun money back (or not) later on.
 
Juliet Hotel said:
...Its not just brand specific, it can also be model specific. Heck in some cases it can even be model year specific. And what specifically drives it? That is an age old question and I don't think the answer is simple or completely understood by anyone. Supply and demand certainly can play a role. But so can perception and reputation...
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Capt. Geoffrey Thorpe said:
Explain why people will pay an extra $10,000 to $15,000 dollars for a Cub as compared to a Champ.
Popularity drives prices. And what is popular today may or may not be popular next year.
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Perception, reputation, popularity, "object of desire", call it what you want, are not independent variables to demand. They all factor into the demand.

Why do people pay a premium for a stock Bonanza over a comparably equipped Comanche? Same thing...
 
James331 said:
Dirty secret, you can’t take the money with you when you die, and waiting till you have one foot in the grave to enjoy it is pretty darn silly.
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That’s the motto of my generation and most my age have spent their life living it up. That is until a big expense comes up unexpected.

You may not be able to take it with you but I sure as hell don’t want to spend my last 10-20 years in a crappy apartment or run down nursing home.
 
Jamie Kirk said:
That’s the motto of my generation and most my age have spent their life living it up. That is until a big expense comes up unexpected.

You may not be able to take it with you but I sure as hell don’t want to spend my last 10-20 years in a crappy apartment or run down nursing home.
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Id rather live on a budget as a old person, most of which dont do much anyways vs live like a bum for my prime because Im scared of what ifs
 
Capt. Geoffrey Thorpe said:
Explain why people will pay an extra $10,000 to $15,000 dollars for a Cub as compared to a Champ.
Popularity drives prices. And what is popular today may or may not be popular next year.
Click to expand...

Wait, you mean that Supply and Demand rules the price of airplanes too? Unbelievable!

I am convinced this is the single item that most people do not know, but which has the biggest impact to their lives. Supply and Demand IS the mechanism that sets prices.
 
bflynn said:
Wait, you mean that Supply and Demand rules the price of airplanes too? Unbelievable!

I am convinced this is the single item that most people do not know, but which has the biggest impact to their lives. Supply and Demand IS the mechanism that sets prices.
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Supply is what it is. So the question then becomes what drives demand for a Cub vs a Champ or a Bonanza vs a Comanche?
 
My Olds Delta 88 was a POS later in it's life.....ok new....not so much 10 years later. :D
 
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