Airplane ownership as an investment??

N2124v

N2124v

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N2124V
I am fairly new to this forum where I have seen several members mention owning an airplane as an investment. I guess I have always looked at airplane ownership like owning my car. Buy and use it, then sell it and move on. Or, as a piece of equipment for the business. Well, it got me thinking, what airplane would you buy today as speculation that it would be worth more in 20 years?

My opinion would be an original piper cub or similar airframe. I think they will always have an appeal for the non urban flyer and the cost to hold could be minimal.
 
N2124v said:
I am fairly new to this forum where I have seen several members mention owning an airplane as an investment. I guess I have always looked at airplane ownership like owning my car. Buy and use it, then sell it and move on. Or, as a piece of equipment for the business. Well, it got me thinking, what airplane would you buy today as speculation that it would be worth more in 20 years?

My opinion would be an original piper cub or similar airframe. I think they will always have an appeal for the non urban flyer and the cost to hold could be minimal.
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http://www.whidbey.com/fairchild-nc19143/
 
Maybe some antique or historical aircraft, i.e., a collector's item -- and you'd put it in protective storage, not fly it. Other than that? Fuggedaboudit.
 
If you fly a LOT then I guess you could consider ownership as an investment in the sense that it can be an economical alternative to renting. But as a pure investment tool I agree with Ron.
 
If you fly more than 100-150 hrs a year it would save money depending on what you pay to rent. I would have saved money this year and I am in a non-profit club.

Also if you plan on using it for business it can definitely be an investment. For example, I recently figured the cost of flying vs driving to PA from NC. It cost slightly less to take a $100 an hour club pa-28 than it would to drive my own car getting reimbursed at the company rate of .55 cents a mile. And the trip could have been done in a day, driving I would have needed to get a hotel room.

So if you are flying a lot anyway, or you take many business trips in the 200-600 mile range you can 'justify' the cost of ownership.
 
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Sure it can be an investment. Many investments are bad ones.
 
N2124v said:
I am fairly new to this forum where I have seen several members mention owning an airplane as an investment. I guess I have always looked at airplane ownership like owning my car. Buy and use it, then sell it and move on. Or, as a piece of equipment for the business. Well, it got me thinking, what airplane would you buy today as speculation that it would be worth more in 20 years?
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No.

Oh, you want more? Ok. There is no way to compare to cars other than immediate depreciation after the first flight. Or oil change. There are sufficient quantity of cars that it's possible to estimate the value (high & low Blue Book, for example) on just about any car. However there's really no comparative organization (altho some try) for GA aircraft. Because GA aircraft are considered luxury items similar to boats (ignore the business use aspect for now) they are much more succeptible to the economy than other transportation.

Of course all this goes out the window at the high end of the GA market, altho you can still get a reasonably good deal on a used 737, G-IV, etc.

As one of the other posters mentioned here, an aircraft in a specialized category is different. Same as with a car. But a 20 yr old C172 or 20 yr old Piper Archer is not going to be worth anything close to what you paid for it. Look at the current marker for 1990 aircraft.

Maybe a 50+ aircraft. (hm....my cherokee will be 50 in 2019 - think I could get back my original purchase price?)
 
:rofl::rofl::rofl:

Yes, in the sense that you will continue to invest a lot of money in it. You won't get it back, but......

Maybe some true antique with some pedigree (a Lockheed Vega flown by Amelia Earhart, or something like that) might be an investment. A clapped out Cherokee 140 with some Narco CrapOMatic avionics?? Mooney C model? Piper Tri Pacer???Not bloody likely.
 
Several pilots that I know bought a cheap twin with over time engines/props flew the snot out of it and sold it for what they paid for it. You can still do that in this market.

That's maybe not making money but it sure as hell is saving a bunch.
 
I will have to disagree with the ones that said no. Investing in an airplane is just like any other type of investment. Buy low - sell high and don't get attached to any of them. If you do your homework you can fly for free or even make a buck or two. I have owned 4 airplanes and 3 of them I made a 15% return on my investment plus flew them 80+ hours for free. The 4th one I flew 50 hrs and broke even, that was in 2008 when everything tanked.
 
Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha............
 
The only thing I'm worried about in buying the plane is buying it, flying it 10 hours, and discover I have to shell out for a 5 figure repair bill on something.
 
The only thing I'm worried about in buying the plane is buying it, flying it 10 hours, and discover I have to shell out for a 5 figure repair bill on something.
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This is common, an a/c owner needs to have a reserve in order to avoid lengthy downtimes. Been there. Need to hold back $X000 of available funds after the purchase price, for calamities.
 
Dean said:
I will have to disagree with the ones that said no. Investing in an airplane is just like any other type of investment. Buy low - sell high and don't get attached to any of them. If you do your homework you can fly for free or even make a buck or two. I have owned 4 airplanes and 3 of them I made a 15% return on my investment plus flew them 80+ hours for free. The 4th one I flew 50 hrs and broke even, that was in 2008 when everything tanked.
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One wonders exactly how you are accounting for your returns....
 
During the 80s and 90s used general aviation airplanes appreciated. Those days are over.

A clean well kept low time airplane will always be sellable, but the days of 'flying free' are over, probably forever.

It is still possible for two guys who want cheap multi-time to buy a clapped out twin with a fresh pencil whipped annual, use it for a year to log 150 hours of multi-time, and then dump it. That can save thousands over renting. I guess you could call that an 'investment'.
 
Tom-D said:
Several pilots that I know bought a cheap twin with over time engines/props flew the snot out of it and sold it for what they paid for it. You can still do that in this market.

That's maybe not making money but it sure as hell is saving a bunch.
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Could you elaborate on this method? :D
 
It works only, if nothing breaks. If something breaks, you are in for a big, big bill.
 
Seriously though, if the engine(s) is already 'overtime', then how do you 'fly the snot' out of it? How do you know they're not going to go at any moment?
 
I have bought and sold experimental airplanes like a car dealer for years. If you watch the numbers, add value to the airplane and to the buyer you can do quite well, even in this market. The airplane market goes up and down, right now we are down. Buying the right plane at the right price and holding & flying it for 10 years you could do quite well, and you have been flying for 10 years. ;)
 
BrianNC said:
Seriously though, if the engine(s) is already 'overtime', then how do you 'fly the snot' out of it? How do you know they're not going to go at any moment?
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You never fully know. The best you can do is to mitigate risk. There are actions to take which help to manage the risks.

You plan the purchase, you carefully research the various aircraft best suited for your purpose. You tally what will and what won't 'work' to your benefit. You research failure modes of various systems on the aircraft. Cost/benefit would be further down on the list. Engine mortality, which is most germaine to your question, is high on your list. You examine the data for the type engine you on your aircraft, including SB, etc. Very important is you examine the mx history of your aircraft and how it was flown. Take a few flights with the seller. He flies, you observe.

For me, me an engine past TBO is different than a 'runout' engine. I like the bathtub curve with respect to engine mortality.


Just like when you plan a vehicle purchase, you cannot eliminate all risk. You take product information and apply that to your mission. You make the drive from home to work or pleasure. You take the same routes, you are a creature of habit. Not even mentioning the complacency which may set in, you are at risk because you rely on conditions (including the alertness and skill sets of other drivers) to work in your behalf. One day you may get T-boned by another driver doing the same thing you do. Stuff happens. You do all you can do but still....

Accept the risk of leaving the ground or accept the risk of staying on the porch.
 
BrianNC said:
Seriously though, if the engine(s) is already 'overtime', then how do you 'fly the snot' out of it? How do you know they're not going to go at any moment?
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You stand a bigger chance of having a failure with a new engine than one that has flown good for 2000 hours.
 
Richard said:
Engine mortality, which is most germaine to your question, is high on your list.
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I am assuming that Tom-D mentioned doing it with a twin for this reason? So that if your engine does fail it won't be the only one running at the time.
 
BrianNC said:
I am assuming that Tom-D mentioned doing it with a twin for this reason? So that if your engine does fail it won't be the only one running at the time.
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My understanding is Tom simply mentioned he knows pilots who had done this with a twin. My comment wasn't concerning a specific aircraft, multi engine or single engine.

I too knew a couple pilots who did this with twins. Their intent was to build time and ME time looks better than SE time. For that reason I think a ME aircraft holds value better than a SE aircraft.

But there is a second subject in this thread; engine life. How much life is left in an engine is usually referred to as how much time before it dies? The general heading is "engine mortality".

I am not sure I understand your last sentence. As it reads now, if an engine does fail, how will it be the only one running?:dunno:
 
When I am done with college (2 years cc and 2 years at a 4 year college) my parents will have spent half of what it would cost to send me to ERAU for 4 years - I will finish with twice as many hours and all the same ratings. (and a plane)
 
I think the term, "flying the snot out of them" is ambiguous. It could mean flying a huge numbers of hours or it could mean flying less hours but more often.

The time building programs (whether personal or through a school) I know about place a premium on short duration of time to fly off the requisite number of hours. One scenario of which I am familiar is as follows: two pilots buy a low cost twin. They each fly 100 hours as PIC. That is 200 hours lying time on the aircraft. Having acheived their goal they sell the aircraft. Like a whore, she get used and abused. Multiple pilots flying the crap out of her, each taking turns then moving on. And each finds a willing buyer who pays them the going rate for twins. There is more to it but that is the gist.
 
DavidWhite said:
When I am done with college (2 years cc and 2 years at a 4 year college) my parents will have spent half of what it would cost to send me to ERAU for 4 years - I will finish with twice as many hours and all the same ratings. (and a plane)
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Very smart, David. Try not to laugh too much at your coworkers carrying a huge debt for a semi-worthless aviation degree.

And you will be able to take jobs they cannot afford. And you will move up much faster, all things considered. Golden Boy.
 
Richard said:
I am not sure I understand your last sentence. As it reads now, if an engine does fail, how will it be the only one running?:dunno:
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In regards to doing this with a twin, "it WON'T be the only one running" if it stops from 'running the snot out of it.' In other words if you do this with a twin, if one engine faces its mortality in flight, you will at least have another engine running, being the odds are low that they will both face their mortality at the same time. The point being it may be 'wiser' to do this with a twin as opposed to a single.
 
flyersfan31 said:
One wonders exactly how you are accounting for your returns....
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That is pretty simple, take how much I sold it for, subtract purchase price, out of pocket expenses for fuel, hangar, insurance, etc. The amount I had left after everything paid equals a 15% return.
 
Another run-up in prices occurred from 2003-2007. Since then the market has been in the tank.

JimNtexas said:
During the 80s and 90s used general aviation airplanes appreciated. Those days are over.

A clean well kept low time airplane will always be sellable, but the days of 'flying free' are over, probably forever.

It is still possible for two guys who want cheap multi-time to buy a clapped out twin with a fresh pencil whipped annual, use it for a year to log 150 hours of multi-time, and then dump it. That can save thousands over renting. I guess you could call that an 'investment'.
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How do you know that about any engine?

BrianNC said:
Seriously though, if the engine(s) is already 'overtime', then how do you 'fly the snot' out of it? How do you know they're not going to go at any moment?
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Dean said:
That is pretty simple, take how much I sold it for, subtract purchase price, out of pocket expenses for fuel, hangar, insurance, etc. The amount I had left after everything paid equals a 15% return.
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Annualized return?? Did you buy with cash? Any capital cost or opportunity cost included in your calculations?????
 
On the day they don't quit, it doesn't matter. On the day they do quit, it doesn't matter either. BTDT with both, couldn't tell that the size of the nibble marks on the seat cushion were any different.

BrianNC said:
Technically one doesn't obviously, but would you rather be flying behind a 500 hour engine or a 2200 one generally speaking?
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BrianNC said:
Technically one doesn't obviously, but would you rather be flying behind a 500 hour engine or a 2200 one generally speaking?
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Wayne got it right. I really don't care which - both can fail.

On my Aztec, the right engine has 2100 hours on it today. When I bought the plane, the left engine had 200 hours on it. If anything, I feel more comfortable flying the engines now than I did when I bought the plane. When we got the 310, its engines were at TBO and are now 300 hours over TBO. Again, I feel just as comfortable flying with them now as I did when we got it.

Now, if I'm looking to purchase a plane that I'm intending on flying for a long time, I would actually prefer to buy one with high time engine(s) that is priced accordingly. This gives me suitable time to get to know the airframe with old engines that I'm not worried about damaging with engine-out work, etc., and then do the overhauls and decide whether or not I want an upgrade in the process. We're actually intending on doing that on the 310 - putting in the 550s. Wayne should be proud that we're not doing turbos (yet).
 
flyersfan31 said:
Annualized return?? Did you buy with cash? Any capital cost or opportunity cost included in your calculations?????
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I think you might be taking the magnifying glass a bit closely to this.

I have my stock/mutual fund/etc. investments because I want my money to work for me without me looking at it or having to maintain it. So to the OP's point, I agree that buying and banking airplanes is likely not a great business to be in. Works for aircraft brokers... sometimes.

If you're going to own an airplane anyway, which is Dean's case (at least I presume), then buying low and selling high is the way to go. It is still possible to do based on having the right seller (when you buy) the right buyer (when you sell), and limited ownership.

Even if you end up selling the plane for what you've paid for it, then that means that you've flown for only fuel and maintenance, without any depreciation. That's not bad, and probably a better investments than my stocks/mutual funds/etc. have been the past few years. :redface:
 
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