Buying airplane? Issues?

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sunlight

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Sunlight
We've been seriously considering buying an airplane in the next year or so. I was completely unaware that you could finance a used airplane, which has been our biggest hurdle. To be honest, I'm not entirely sure what we can afford, but our friends in similar financial situations are buying Bonanza's and the like, so I am thinking a 172 won't be much of an issue.

So really, I'm just wanting to pick people's brain's and find out what kind of issues they've run into in the buying process. Any big gotchas, financial or otherwise?
 
Uh, well, sorry, but I don't have anyone else to ask. Apologies for what appears to be a stupid question.
 
sunlight said:
Uh, well, sorry, but I don't have anyone else to ask. Apologies for what appears to be a stupid question.
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No apology needed, the reaction was more as to how many opinions, sometimes diametrically opposed, you will get.

I'm not an owner myself, so I'll drop out at this point...
 
Thanks, but I already found the same links. I was curious about people's actual experiences.
 
When you get a pre buy make sure it's a mechanic that is on your side and will be ruthlessly honest regarding the aircraft condition. And even then don't count on it staying in good condition once you've brought it home. Maintenance happens so have some money reserved for "surprises". Are going to use it for instruction too or just personal use?
 
sunlight said:
Thanks, but I already found the same links. I was curious about people's actual experiences.
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Ok, I'll bite. I bought a '67 Cherokee for around $25K. It was cheap enough that I did not need to finance it. Apparently you will pay higher interest on the lower end loans. There are many on this forum who are diametrically opposed to financing toys (based on a previous thread). Be ready for the additional costs of ownership, however.

John
 
Jeanie said:
When you get a pre buy make sure it's a mechanic that is on your side and will be ruthlessly honest regarding the aircraft condition. And even then don't count on it staying in good condition once you've brought it home. Maintenance happens so have some money reserved for "surprises". Are going to use it for instruction too or just personal use?
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+1 on this. The guy who did my pre-buy missed a bunch of stuff and I had a very expensive first annual.
 
I've bought a few planes and sold one. AOPA has some excellent advice, and some good services for the buying process. Shop around for loans, and find a lender that specializes in aircraft loans. Just don't use AOPA but shop their rates, and terms.

Use an Escrow service to hold payment and title, and get a Lien Search and the Lien insurance just in case. It is cheap if the trail is pretty clear. Also a pre-buy inspection by YOUR mechanic is essential, preferably and Annual Inspection.

There are sales agreement templates that AOPA also has that are good to use that include some various options, and scenarios.

Budget for some gotchas year one to correct things not uncovered in the Pre-buy. Make sure all the avionics work as advertised.

Good luck!
 
Oh, about a million of them, ranging from pre-purchase inspections to sales contracts to financing to, well...tell you what -- start here:
http://www.aopa.org/members/pic/ownership/
...and when you do, start with the "Buying or Selling an Airplane" one (which I see NoHeat linked above). Then bring your specific questions back here.

And if you're not an AOPA member already, you should be.
 
John221us said:
diametrically opposed to financing toys (based on a previous thread). Be ready for the additional costs of ownership, however.

John
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yes/no

If you are going to fly a lot, your wife is on board I don't see anything wrong with financing an airplane as long as you get financing with good terms, and you can honestly afford it.

Buy something you and your family will like, that is in good shape and maintain it well.

In the long run you'll do better financing a 40k airplane that has been really and truly cared for than buying a 25k one for cash and trying to fix it up as you go along. Assuming of course that you are not a handy man with a lot of free time on your hands and your best friend is an A&P.
 
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dell30rb said:
In the long run you'll do better financing a 40k airplane that has been really and truly cared for than buying a 25k one for cash and trying to fix it up as you go along.
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I don't personally have an issue with financing. You may be right on stepping up a little. I have heard you are supposed to buy your second plane first. I bought my plane to get my PPL, but the avionics are not up to pursuing my IR, so this is becoming an issue for me.
 
John221us said:
I have heard you are supposed to buy your second plane first. I bought my plane to get my PPL, but the avionics are not up to pursuing my IR, so this is becoming an issue for me.
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This thought has been driving my search. I do see lots of Cherokee 140's at a very affordable price. But I'm thinking forward to when I want to carry additional load for further distances for slightly faster speeds. Upping the budget to include aircraft with 180hp engines covers all of this.
 
John221us said:
I don't personally have an issue with financing. You may be right on stepping up a little. I have heard you are supposed to buy your second plane first. I bought my plane to get my PPL, but the avionics are not up to pursuing my IR, so this is becoming an issue for me.
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The ol hindsight thing

You can't do too much wrong with a well equipped and maintained 172 or Cherokee though. Once you start flying cross country a lot then you'll want something faster, with more power. But even then you can look at your plane and still see that for the cost to own and operate it, you still get a lot of value.
 
Also, since you mention ownership cost, I have available a paper I wrote on the costs of owning a simple 4-seat single like the 172 you mentioned at the top of this thread, and will send a copy to anyone who emails.

Emails only, thank you -- no PM's, snail mail, phone calls, smoke signals, or ESP thought waves, please.
 
AggieMike88 said:
This thought has been driving my search. I do see lots of Cherokee 140's at a very affordable price. But I'm thinking forward to when I want to carry additional load for further distances for slightly faster speeds. Upping the budget to include aircraft with 180hp engines covers all of this.
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I suspect your mission could change, once you have your plane. I have had three people in my Cherokee no problem (granted, they were not large people) and I regularly fly it on 300 mile cross countries. More climb would definately be nice and more speed would be nice, but not as much (by the time you preflight, do your run up, etc. an extra 1/2 an hour of flight time is not that big a deal). I really should have stepped up on the avionics, though.
 
Used airplane prices are at an all time low, so it's a good time to buy. The standard advice concering pre-buys, escrow, etc is good.

When looking at your budget be honest with yourself about the operating costs.

If you handy with tools you can do a lot of minor maintenance yourself under Part 43. The savings from legal owner maintenance can be substantial.

That's if you have a place to do the maintenance. If you don't have a hanger available then there is much less you can practically do on your own.

Remember that a used Warrior or Archer is much cheaper than new one, but the maintenance costs for the used airplane will be more than the new one. It's pretty easy to have a $5000 annual on a PA28, and not unheard of to have one that costs $15000 if the inspector finds lose main gear or major corrosion.

My ownership flying club recently did Penn-Yan exchange overhauls on a Warrior and Archer. They were on the order of of $22K for the Warrior and $26K for the Archer (we didn't get full core exchange due to a crack that they found).

The only way I can afford ownership is to be part of a partnership or ownership flying club. I can't afford to bear the fixed costs all on my own.
 
AggieMike88 said:
This thought has been driving my search. I do see lots of Cherokee 140's at a very affordable price. But I'm thinking forward to when I want to carry additional load for further distances for slightly faster speeds. Upping the budget to include aircraft with 180hp engines covers all of this.
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You're going to pay something on the order of $15k more for a 180HP version of the same plane (Warrior vs Archer, Cheetah vs Tiger) of comparable vintage and quality. However, based on having owned a Cheetah and now owning a Tiger, the difference in ownership cost beyond that purchase price is pretty near zilch. Therefore, my advice is to by the 180 if you can afford the purchase price, because if you can't afford the ongoing operating,maintenance and ownership cost of the 180, you won't be able to afford the 150/160, either. OTOH, if you can afford the 180 and go with the small engine, you will regret it -- guaranteed, and the cost of buying the small engine now and trading up later will be significantly more than the cost of buying the 180 in the first place.
 
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Ron Levy said:
You're going to pay something on the order of $15k more for a 180HP version of the same plane (Warrior vs Archer, Cheetah vs Tiger) of comparable vintage and quality. However, based on having owned a Cheetah and now owning a Tiger, the difference in ownership cost beyond that purchase price is pretty near zilch. Therefore, my advice is to by the 180 if you can afford the purchase price, because if you can't afford the ongoing operating,maintenance and ownership cost of the 180, you won't be able to afford the 150/160, either. OTOH, if you can afford the 180 and go with the small engine, you will regret it -- guaranteed, and the cost of buying the small engine now and trading up later will be significantly more than the cost of buying the 180 in the first place.
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The wisdom and info you provide on the Grumman line is one reason the Tigers are on my "follow the market" list as I get my financial act together.

Other 180HP airframes are also on that list (such as the Cherokee 180D's, and the 180HP Cardinals).

I'm in no hurry to purchase. I'm using this year to gather more knowledge and more cash.
 
AggieMike88 said:
This thought has been driving my search. I do see lots of Cherokee 140's at a very affordable price. But I'm thinking forward to when I want to carry additional load for further distances for slightly faster speeds. Upping the budget to include aircraft with 180hp engines covers all of this.
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I have a Cherokee 140 (that I'll probably being selling soon). I've had it since 1994. Although I'd love to sell the 140, I have to agree that buying the 180 would be the better choice. The only real difference in owning/operating a 140 or 180 is the initial purchase price. Everything else is pretty much the same.

Although I wanted a 180, I made the deliberate decision to buy the 140 when I could rather than waiting to afford the heftier purchase price of the 180. In the almost 18 years I've owned my 140, there have been only a few times that I've wanted to carry more than my 140 could carry.

One thing I like about the 140 vs the 180, the 140 has a lighter feel in the controls.
 
I think I'd have different issues with each of the aircraft pictured below, So, it really depends upon what you buy.

I'd find a local mentor to walk you thru the buying process. preferably an A&P-IA who will be maintaining the aircraft after the buy.
 

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With regard to engine power choices:

For the same airframe, speed increases by the cube root of engine power, so for example going from 150 HP to 180 HP (a 20% increase in HP) will provide only a ~6% increase in speed. Roughly speaking, more power gets you much better climb rate and higher altitude operations than it does cruise speed. For better cruise speed, look for airframes that are inherently efficient, drag-wise.
 
You have to satisfy yourself regarding what you buy. There will always be faster, more capable aircraft if you can afford them. A good compromise is a Tiger. Fixed gear for less expensive insurance and maintenance, while at the same time good speed for cross country flying, and, fun to fly.
 
Rewind: Before buying, a few things.

Figure out how much you're really going to fly. Really. Be realistic. Think about how much stuff you do on weekends and weeknights. Those things don't go away unless you make them.

Most rule-of-thumb calculations show you need to fly 100 hours a year to be better off than break-even in ownership. That's two hours every week, rain or shine. Don't count on every weekend being flyable. You'll either have to fly longer flights every other weekend or commit to flying weekly even if it means a night flight. Most folks only take a few longer trips a year.

Now go rent whatever it is you're going to fly. Your insurance company is probably going to rape you if you don't have ten hours of time in type anyway, so rent a bit and make sure it's the plane your want to fly for many years to come. This could take months and will get you and your budget used to the cash outflow.

Now do the break-even analysis for your chosen bird.

Figure put what it'll cost to own vs rent and how many hours you'd have to rent vs own in your area to break even on ownership. (If your dream airplane isn't typically available on a rental line, there's probably a reason. Higher operating, insurance, or maintenance costs, may require higher skill and/or training to fly safely, etc. But that would help make your decision to own easier if your heart is set on something.)

Go back to the answer of how much you're going to fly and see if you break even. If you don't, rent.

Now throw in the cost of a complete engine replacement. They can happen "tomorrow" at any time.

If you (meaning you or you and co-owners) are not liquid enough to buy an engine in 30-60 days from tomorrow, with cash... don't buy.

I know, not one, but two people who co-owned with over-stretched co-owners. They both experienced unplanned maintenance that grounded their aircraft for lack of funds for a year or more.

They both ended up buying out a co-owner and paying the full price for the repairs to get their aircraft flying again. One did it just to sell it, and bought out two co-owners. The other bought out a single co-owner who was laid off, and managed to hold on to the aircraft as a single-owner.

If you do own, an engine/slush fund paid by the hour is highly recommended. It kinda stinks to have cash sitting in what's essentially a money-losing account (when inflation is factored against current savings returns) but its a "fair" way to divvy up the costs if one person flies more than the other co-owner(s). (I'm the high-timer this year in my LLC, but I'm happy to pay my share of extra hourly costs for things that wear out. Fixed costs are split equally.)

Those are just some of my thoughts on ownership.

And most importantly... Make sure you like your co-owners. You're going to be seeing a lot of them for the next many years. This is probably the most important advice of all.

We have a great group. Everyone has a "job" or two that seems to fit that person's personality and that they generally enjoy and as far as I can tell, no one hates anything they're doing for the group. (Bookkeeping, dealing with the bank account, doing minor owner-allowed maintenance to lower costs, washing the bird, finding creative new solutions and projects like how to transport MoGas to the bird, researching things, storage of important documents, etc. Lots of "stuff" to be done. Don't overload one person with all the "jobs".)
 
sunlight said:
We've been seriously considering buying an airplane in the next year or so. I was completely unaware that you could finance a used airplane, which has been our biggest hurdle. To be honest, I'm not entirely sure what we can afford, but our friends in similar financial situations are buying Bonanza's and the like, so I am thinking a 172 won't be much of an issue.

So really, I'm just wanting to pick people's brain's and find out what kind of issues they've run into in the buying process. Any big gotchas, financial or otherwise?
Click to expand...

I know this is not going to be popular, but I would never finance an airplane unless I had all the money invested and the math showed a favorable return vs. just paying cash.

This isn't a car or house, you don't need it, why go into debt for it?

Lot's of people have gotten themselves into trouble this way, better to just rent and save what you need if you don't have it already.
 
Expect to find some surprises the first year or two. Some may be minor, but you wouldn't be the first to find something like corrosion on the wing spar carry through that was missed during the pre-buy and previous annuals...

Rest assured that the previous owner and his/her A&P were morons and you have to undo at lease some of what they "fixed".

Avoid the "handyman's special".
 
Alexb2000 said:
I know this is not going to be popular, but I would never finance an airplane unless I had all the money invested and the math showed a favorable return vs. just paying cash.

This isn't a car or house, you don't need it, why go into debt for it?

Lot's of people have gotten themselves into trouble this way, better to just rent and save what you need if you don't have it already.
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Good point, but the other argument would be that with interest rates where they are, putting cash into a plane would be silly. This is a personal choice that has to be part of an overall approach to handling your money. For instance, I paid for my house aggressively, but I finance my toys simply because they are not "needed". My "needs" are my house and my 401K, so they receive maximum doses of my cash.

That being said, the advice to rent instead of buying is compelling, especially one is not a handyman/mechanic.
 
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psachseJr said:
Good point, but the other argument would be that with interest rates where they are, putting cash into a plane would be silly.
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Don't assume, calculate.

Ask your credit provider how much the gap insurance is going to cost. Then you'll know how much you risk, because this number quantifies the risk.
 
zaitcev said:
Don't assume, calculate.

Ask your credit provider how much the gap insurance is going to cost. Then you'll know how much you risk, because this number quantifies the risk.
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Exactly what did I assume? I stated is't a personal choice, as part of an overall approach to finance. Translation: It depends on what else you might do with your money. Generalism's can't be applied. So as you say, calculate - but one can't speak about financing "toys" in isolation. Paying cash may be the most foolish decision of all.

BTW, if you need gap insurance on a used aircraft you paid too much.
 
I find it strange that the OP didn't realize you could finance a used aircraft? LOL, you can freakin' finance a bicycle if you want too! I just made my first purchase last week, a Cessna Cardinal. Ready to start my IFR and the $140 local rent is just getting out of hand. Already found my first surprise, a leaky fuel tank we didn't catch...:(
 
sandfarmer said:
I just made my first purchase last week, a Cessna Cardinal. Ready to start my IFR and the $140 local rent is just getting out of hand. Already found my first surprise, a leaky fuel tank we didn't catch...:(
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congratulations on your Cardinal Purchase. I just purchased a Cardinal last month!
My surprise was a low front nose strut. We checked the oil/nitrogren in it, and it's now leaking oil. So time to take it apart and place a new seal in the strut. Hopefully that will fix the issue.
But I love the plane! It's much faster than my C150 - and I am also working on my IFR rating int it!
Gary
 
I chickened out of buying a diamondstar last year.

Do everything you can to minimize the fixed costs of single ownership.

For example:
-fixed gear instead of retract
-sunshade instead of hangar
 
I have owned five airplanes. All were pretty reliable as far as airplanes go. Two were in partnerships. Three were sole ownership. One day I added up how much I'd spent owning airplanes.

If you buy an airplane -- any airplane -- I would recommend not EVER adding up how much you have spent on it.
 
psachseJr said:
Good point, but the other argument would be that with interest rates where they are, putting cash into a plane would be silly. This is a personal choice that has to be part of an overall approach to handling your money. For instance, I paid for my house aggressively, but I finance my toys simply because they are not "needed". My "needs" are my house and my 401K, so they receive maximum doses of my cash.

That being said, the advice to rent instead of buying is compelling, especially one is not a handyman/mechanic.
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Actually I would argue that getting a low cost loan on your house to pay for your toys would make better sense if you can deduct the interest. If you live in a homestead state then you are still protected from loosing your home if the s*it hits the fan.
 
I've bought 2 airplanes so far and I've been in the middle of hundreds of purchases and sales by performing the pre-purchase. All I can say is make sure the airplane is as represented and get everything in writing. The pre-purchase inspection by someone knows the type is very important part of doing that. It's funny that people will buy the $500,000 aircraft (fresh annual) without any checks. No matter how good the aircraft is, you can expect some catching up as you begin to use the airplane.
 
ronnieh said:
Well, thank you Adoy. I think:lol:
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kmead said:
I've bought 2 airplanes so far and I've been in the middle of hundreds of purchases and sales by performing the pre-purchase. All I can say is make sure the airplane is as represented and get everything in writing. The pre-purchase inspection by someone knows the type is very important part of doing that. It's funny that people will buy the $500,000 aircraft (fresh annual) without any checks. No matter how good the aircraft is, you can expect some catching up as you begin to use the airplane.
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+1 on this. I've been searching for a good, clean Comanche for quite some time now, and spent a considerable sum in prepurchase fees. Best money I've ever spent. Many, many "not as represented" birds out there, but you need to have someone who knows where to look, and what to look for. On one, the rivet pattern on a belly skin was not quite right, should have been a "z" pattern rather than a straight line. That led to the discovery of unrepaired airframe damage that had just been skinned over. Thousands to repair that, but easily overlooked.

(BTW, still looking, if anyone knows of a nice 250, ifr gps, a/p, manual flaps and lower time engine, pm me! Cash deal.)
 
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