Request for comments - buying your first a/c

[gkainz]

Nope, not all the standard drill about broker or no broker, always get a pre-buy inspection, do not use the seller's a&p, contract terms, etc...

I'm looking for comments, stories, suggestions, etc on the financial side of the story.

• Finance or cash
  
  [*]Typical Downpayment percentage
  [*]Typical terms of a/c financing
  [*]Does the typical cash buyer really plop down $65-70k cash?
  [*]Alternate forms of financing? (home equity, etc)​
• Buying vs renting
  
  [*]annual hours flown factor
  [*]am I fooling myself that I'll fly more hours if I own vs rent?​
• Sole ownership, Partnership, or Club?
  
  [*]no Bellanca Vikings in clubs here that I've seen
  [*]how to chase down a current Viking owner and propose a partnership?​

I really dislike financing things. We paid for a wedding last spring, currently funding most of a freshman college year (which will change somewhat for junior and senior years) and preparing for another first 2 years of college in 5 years. Retirement accounts still have not recovered from the dot bomb stock market gifts. Logic says "keep renting" but airplane lust is looming regularly.

 

[ejensen]

Greg, I believe you will fly more, I did. Keys in your packot is huge temptation on a nice day. Plus you schedule the down time.

Sole ownership is wonderful but when the engine craps out early and the $24,000 is all yours. There is something to be said for somebody to share the good and the bad with. If you can find someone who's needs complement yours so you're not fighting over the weekends. An retired surgon who fly to lunch once a month is perfect!

I agree with the loan even though we had to finance half. We did 50% down (sold Oracle just before the big drop) and home equity for 5 years on the balance.

 

[Merf]

I fly lot more.
Wish I could have paid cash.

Anybody ever made an "easy monthly payment"?

 

[Dean]

Nope, not all the standard drill about broker or no broker, always get a pre-buy inspection, do not use the seller's a&p, contract terms, etc...

I'm looking for comments, stories, suggestions, etc on the financial side of the story.

• Finance or cash
  
  [*]Typical Downpayment percentage
  [*]Typical terms of a/c financing
  [*]Does the typical cash buyer really plop down $65-70k cash?
  [*]Alternate forms of financing? (home equity, etc)​
• Buying vs renting
  
  [*]annual hours flown factor
  [*]am I fooling myself that I'll fly more hours if I own vs rent?​
• Sole ownership, Partnership, or Club?
  
  [*]no Bellanca Vikings in clubs here that I've seen
  [*]how to chase down a current Viking owner and propose a partnership?​

I really dislike financing things. We paid for a wedding last spring, currently funding most of a freshman college year (which will change somewhat for junior and senior years) and preparing for another first 2 years of college in 5 years. Retirement accounts still have not recovered from the dot bomb stock market gifts. Logic says "keep renting" but airplane lust is looming regularly.

Finance or cash

Typical Downpayment percentage ----10-20%
Typical terms of a/c financing ------ up to 20 yrs
Does the typical cash buyer really plop down $65-70k cash? Not me!
Alternate forms of financing? (home equity, etc) A friend of mine pulled equity out of his rental property for his.


​

Buying vs renting

annual hours flown factor I fly about 25% more now that I am an owner.
am I fooling myself that I'll fly more hours if I own vs rent?


​

Sole ownership, Partnership, or Club? Depends on you, I work for the state and could be transferred, so a partnership is out.

 

[EdFred]

My answers in dark red (as they apply to me)

Finance or cash

• 
  [*]Typical Downpayment percentage
  [*]Typical terms of a/c financing
  [*]Does the typical cash buyer really plop down $65-70k cash?
  [*]Alternate forms of financing? (home equity, etc)​
• Buying vs renting
  
  [*]annual hours flown factor - about 100 is break even (for cost, but the availabilty factor far outweighs that)
  [*]am I fooling myself that I'll fly more hours if I own vs rent? I do. I did 100 hours in just under 2 years when renting, and average about 115 hours per year since owning.​
• Sole ownership, Partnership, or Club? I am control freak, so I am 99.999% sure I will never take on a partner.

 

[ScottM]

• Finance or cash I paid cash, $59,000 and kept a $12,000 maintence reserve
• Typical Downpayment percentage I gave the seller $5,000 as a down payment while I did my inspections, title search, get other paperwork and logisitcs arranged
• Typical terms of a/c financingNot a clue
  
• annual hours flown factorI am flying more, about 120hours
• am I fooling myself that I'll fly more hours if I own vs rent?Nope

 

[Anthony]

Greg,

One of my hangar neighbors just sold his Viking, but the neighbor on the other side of me has the most beautiful Viking I've ever seen. He recently lost his partner (guy backed out after plane purchase), so he's owns it 100% now, but I've talked to him and he's not very happy eating all the costs. He's a current Northwest pilot and former AF pilot. I don't know him well, but he seems like a nice guy.

On terms.

I put 10% down and financed the rest over 10 years. I could have gone 20 years, but I want to get the thing paid off. That was over four years ago. I got a really good interest rate, so I didn't see the need to go home equity. I used Sovereign Bank. Other costs include:

Hangar: $300/month
Insurance: $1,100/year
Maintenance: Who knows, whatever comes up you pay.
Annual including corrective maintenance for the sqwauks have ranged from $1,400 to $4,200.
Gas: Depends on how much you fly. I fly about 130 hours per year at 10GPH. So at $3.00/gal, its about $325/month.


That's the major stuff, add oil changes, avionics work, etc and its a bit more. The real wild card is the maintenance. If you drop $4K on an annual and fly 100 hours per year, you've just incurred $40/hour. If the plane sits, you still have all the fixed costs.

I'm a sole owner of my Tiger. I think partnerships can work, but I've always liked the fact that I don't have to ask anyone if I can use the plane. Someday, if I step up to some whiz bang plane with all the bells and whistles, I may consider one partner. I'll prolly just keep the Tiger and upgrade it over time.

 

[gismo]

If you own I think you will fly more hours if (big if) you have the spare cash for fuel etc. This is even more true if you are the sole owner because in that case there's no one to chase down and query WRT use conflicts when you get the urge to fly nor do you have to coordinate schedules for longer flights.

What you want to avoid if at all possible is ownership of a plane that straps you for cash preventing you from using it as much as you want. I've seen this happen too often although it seems like most cases involve someone on their second or third airplane. Restricting the use of an owned airplane is very counterproductive financially since for every hour you don't fly, your cost per hour goes up, in some cases dramatically.

 

[gkainz]

Restricting the use of an owned airplane is very counterproductive financially since for every hour you don't fly, your cost per hour goes up, in some cases dramatically.

Is the inverse true? If I fly it enough, can I drive the cost per hour to zero?

 

[Steve]

If you do decide to get a loan these guys can make it pretty painless finding one that suits you.

http://www.airloans.com/

I think the break even point on renting depends on the capabilities of the plane, the more capable the more hours per year to rent before buy. Most private flights don't need six seats, K-I, & radar, though, so it's a judgement call for your particular situation. And, just because you own doesn't mean the plane will have 100% availability. But there's the intangible "pride of ownership", too, beyond the practical considerations, that is an influence on the decision to buy. What's right for you is not necessarily what someone else would think.

Any plane is for sale for the right price, even the one you own. B)

 

[Anthony]

Is the inverse true? If I fly it enough, can I drive the cost per hour to zero?

Yes! Also if you fly fast enough you can actually feel yourself getting younger by the minute. The airport may just look a little different when you return.

 

[AirBaker]

I ended up owning by buying out my partner, so I can't speak in terms of the usual ways of purchasing.

I do fly more now that I own, but some of that is just stopping by the airport and terrorizing some of the East Foothills.

I made a big spreadsheet with all of the fixed and variable costs of renting and owning. Based solely on meaningful flights, (not just buzzing around because you can), I broke even at roughly 85-100 hours. Mostly because the Bonanza was cheaper to fly 2-3-4 hundred plus miles than renting a 172/182.

 

[gismo]

Is the inverse true? If I fly it enough, can I drive the cost per hour to zero?

Sure, as long as you have a free gas supply, plenty of spare parts, and are your own mechanic. Oh yeah, you'd have to fly an infinite number of hours as well so you'd better triple that spare parts supply.

 

[mikea]

Down payment (my choice) around 25%

Used small community bank near the airport that the airprot management got into the airplane loan business.

They do a 5 year loan with a 15 year amortization. You renew the loan balance at the 5 year point.

EZ payments. The payments are the least of my cash outflow.

The medical benefits are worth it.

 

[wsuffa]

I would not put an airplane in the category of "liquid asset". You can't count on selling it if you need to... or you need the money.

From my perspective, it's better to pay cash if you can and own it outright as opposed to using the plane for collateral on a loan. There will be a bit less effort on the paperwork side, too.