Recovery of maintenance cost, engine

[fast99]

Am looking at a 140 with high time engine. Right now only plan to own it long enough to train a couple people for a PPL. It will be over 2000 hours by the time I am done with it. If the engine needs to be replaced would there be any expectation of recovering some of the cost. Its a basic 140 with 6 pack older paint and really needs updating. However, I know the owner and the plane has been maintained very well.

Mods if in the wrong place please move it.

 

[Darryl Snover]

You MIGHT get lucky with the engine. Some engines run well past TBO. Others, not so much. Gotta be willing and able to write the check for an engine a week after you buy the plane. I think, though, if you're looking at training primary students, a large concern will be insurance. When I co-owned a Cherokee 140, we thought about using it for primary flight training, and insurance costs made it not worth it us. So, we just enjoyed the plane while building hours for our next rating....

 

[TCABM]

You discount the purchase price to account for the engine. You need to be able to replace the engine on day 1 if required. You amortize the cost of that replacement over 2000 hours going forward. That is part of developing your pricing plan.

So is insurance, oil changes, maintenance, 100hr inspections, annuals, fuel if wet rental).

All these are separate from your setting your fee for instruction.

 

[fast99]

You MIGHT get lucky with the engine. Some engines run well past TBO. Others, not so much. Gotta be willing and able to write the check for an engine a week after you buy the plane. I think, though, if you're looking at training primary students, a large concern will be insurance. When I co-owned a Cherokee 140, we thought about using it for primary flight training, and insurance costs made it not worth it us. So, we just enjoyed the plane while building hours for our next rating....

Know today insurance is an issue but hadn't looked into cost yet. Sounds like that might be a deal breaker and I better go in that direction first. Thanks

 

[TCABM]

Know today insurance is an issue but hadn't looked into cost yet. Sounds like that might be a deal breaker and I better go in that direction first. Thanks

Don’t forget hangar and other start up costs as well.

 

[ateamer]

Don’t forget that if it needs an overhaul while students are in training and you don’t have another plane for them, then you have the lost revenue (likely not going to return, either) as well.

 

[brcase]

Know today insurance is an issue but hadn't looked into cost yet. Sounds like that might be a deal breaker and I better go in that direction first. Thanks

might work pretty well if the couple people you are going to train are able to go in as partners on the airplane. That usually is be most cost effective way to make this work. We had a C-150 on the field for about 20 years like that as a 5 way partnership. Most would buy into, do their training and then sell their share. No specific CFI was teaching in it, I trained a few people in it.

Brian
CFIIG/ASEL

 

[flyingcheesehead]

Am looking at a 140 with high time engine. Right now only plan to own it long enough to train a couple people for a PPL. It will be over 2000 hours by the time I am done with it. If the engine needs to be replaced would there be any expectation of recovering some of the cost. Its a basic 140 with 6 pack older paint and really needs updating. However, I know the owner and the plane has been maintained very well.

This is actually a great time in a plane's life to buy it, IF it is properly priced.

Generally, the pricing for airplanes takes into account the cost of an engine overhaul. If you have a ~$100,000 airplane that has an engine that costs $40,000 to overhaul with a TBO of 2000 hours, if it's got a new engine it'll go for $120,000 and if it's got a fully run-out engine it'll go for $80,000. This does NOT take into account the amount of money you spend for removal and reinstallation, accessory replacement, etc. which will generally run between $6K-$10K; it is ONLY the amount that the overhaul shop charges. And in reality, you don't always get the full amount back at 0 SMOH because there is the possibility of infant mortality; and after about 2/3 of TBO the line will trend downward somewhat because people seem to be afraid of engine overhauls and/or just don't want to deal with it themselves.

But, engines don't just drop dead at TBO. Especially the kind of engines you see in trainer aircraft... If they're run frequently, they can go a LONG time. Normally aspirated 320s and 360s can sometimes go WELL beyond 3,000 hours. And if you buy an airplane with a run-out engine, fly it, and sell it without overhauling... It's still just an airplane with a run-out engine and you might get back every dollar you have in it. If you do have to overhaul the engine, you'll still get back most of what you put into that.

In the past, when I've bought airplanes I've created a spreadsheet to basically mimic Vref. I put in the asking price, TTAF, SMOH, and what avionics it has compared to how I want it to be equipped. The spreadsheet tells me what the plane is worth, and the differential between that and the asking price. That's a good way to tell whether the airplane you're looking at is really the screaming deal it seems like, or if it just looks that way because it has high time engines. In any case, I prefer to buy airplanes with higher-time engines and run them until they need an overhaul... All the time you get past TBO is "free."

 

[fast99]

This is actually a great time in a plane's life to buy it, IF it is properly priced.

Generally, the pricing for airplanes takes into account the cost of an engine overhaul. If you have a ~$100,000 airplane that has an engine that costs $40,000 to overhaul with a TBO of 2000 hours, if it's got a new engine it'll go for $120,000 and if it's got a fully run-out engine it'll go for $80,000. This does NOT take into account the amount of money you spend for removal and reinstallation, accessory replacement, etc. which will generally run between $6K-$10K; it is ONLY the amount that the overhaul shop charges. And in reality, you don't always get the full amount back at 0 SMOH because there is the possibility of infant mortality; and after about 2/3 of TBO the line will trend downward somewhat because people seem to be afraid of engine overhauls and/or just don't want to deal with it themselves.

But, engines don't just drop dead at TBO. Especially the kind of engines you see in trainer aircraft... If they're run frequently, they can go a LONG time. Normally aspirated 320s and 360s can sometimes go WELL beyond 3,000 hours. And if you buy an airplane with a run-out engine, fly it, and sell it without overhauling... It's still just an airplane with a run-out engine and you might get back every dollar you have in it. If you do have to overhaul the engine, you'll still get back most of what you put into that.

In the past, when I've bought airplanes I've created a spreadsheet to basically mimic Vref. I put in the asking price, TTAF, SMOH, and what avionics it has compared to how I want it to be equipped. The spreadsheet tells me what the plane is worth, and the differential between that and the asking price. That's a good way to tell whether the airplane you're looking at is really the screaming deal it seems like, or if it just looks that way because it has high time engines. In any case, I prefer to buy airplanes with higher-time engines and run them until they need an overhaul... All the time you get past TBO is "free."

Thankyou,