Calculating the Rent vs Buy equation

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Star Keeper

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I'm in a spot I'm sure many of you are familiar with. I got my private certificate and want to start traveling and am trying to find the best bang for my buck. Rental rates in my area for a 172 are between 140 and 180 wet. So I'm doing the calculation of how many hours I would have to fly before it makes sense to own. So my question after reviewing several people's calculations is what do you include in your numbers and what do you exclude? For example it seems that many of the examples I've seen don't take into account the monthly note. They also don't calculate the equity being built up.

So far I have the following line items listed. Note that I have a couple of steps before purchase including a part 141 IFR training to complete as well as getting my wife acclimated to flying in the tin can.

Rent:
Annual - Renters Liability insurance
monthly - club fee (if applicable)
hourly - Rental Rate

Own:
Annual - Insurance
Annual - annual
Annual - Registration/Taxes
Monthly - Note
Monthly - Storage
Hourly - Fuel
Hourly - Oil
Hourly - maintenance
Hourly - Reserve

Am I missing anything?
 
Opportunity cost. How much would the money you buy the plane with (down payment or out right purchase) make in the market over the time you own it?
 
You really can't come at this from an accounting perspective. If you are looking for something to make economic sense, frame your pilot's license, hang it over the mantle, and find another hobby.

Rental airplanes are primarily for local flights. If all you are looking for is local flights for sightseeing and the occasional $100 hamburger, then renting is the way to go as you will never rent enough to make ownership worthwhile.

If you are hoping to take some family vacations or travel for business, then rental is difficult to impossible. Rental aircraft are difficult to use for longer duration trips as scheduling gets difficult to impossible and you have no control over the maintenance and scheduling thereof which will not be tailored to accommodate your travel needs. You just don't have the control to ensure that you can use the plane when you want to. Rental minimums preclude, or make very expensive, that hour flight to the cabin and then sit there for three or four days and fly an hour or so back home.

Owning will cost more, but you can do more with it.
 
There is something to be said for calculating the convenience. I'm not looking at it from a best value against an airline flight. I'm more looking at it from when am I flying enough that it makes more sense to pay myself the money instead of the FBO. Our mission profile right now is 2 pax plus bags and weekend trips to the bahamas, keys, and maybe a long weekend run to New Orleans. Getting the experience is part of it obviously and that is one of the uncalculatable pros that make people buy an airplane when it doesn't make financial sense. If we were going to talk financial sense only we would all be riding greyhounds around the country.
 
BUY BUY BUY BUY BUY!!!!! well, not necessarily buy right now, I think you'd be insane to buy a plane now, but in general, BUY BUY BUY!
 
Star Keeper said:
There is something to be said for calculating the convenience. I'm not looking at it from a best value against an airline flight. I'm more looking at it from when am I flying enough that it makes more sense to pay myself the money instead of the FBO. Our mission profile right now is 2 pax plus bags and weekend trips to the bahamas, keys, and maybe a long weekend run to New Orleans. Getting the experience is part of it obviously and that is one of the uncalculatable pros that make people buy an airplane when it doesn't make financial sense. If we were going to talk financial sense only we would all be riding greyhounds around the country.
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It isn't so much a matter of calculating for convenience as it is calculating for possibility. You seem to be assuming that there are available airplanes that you can rent for these excursions. Have you checked that out? Perhaps there are, but it is kind of rare. If the class of plane you seek to rent is typically used as a trainer, is the flight operation going to let you take it for the weekend and only put a couple or three hours on it? If I am running a flight school and I am expecting to put four or five hours on it both weekend days, I am not letting you take the plane. Maybe I will let you take my complex trainer which doesn't fly as much because I am mostly only using it for commercial training and checkouts, but then you have insurance minimums which can be a problem if you are a newly minted pilot. So my point is that you need to find out if it is even possible to rent planes to do what you want to do. I would suggest trying to rent for a year and see if it is possible.

You might also explore the possibilities of a partnership or a flying club. These might offer more flexibility in use without taking on the whole cost of aircraft ownership.
 
For most people, unless you're using it for true business, there is no financial justification for ownership. You either want to own because of the intangibles (access, it's your plane, etc.) or you don't. Other than simply ensuring you can afford it (it's expensive, there's no way around that), if you do the math on true ownership costs, you'll sell it. There's some truth to the joke about whether you can just light $100 bills on fire without flinching...
 
Justify and airplane are two words that don't belong in the same sentence.

Buy the plane.
 
If you want to leave the pattern longer than getting lunch....you'll buy. Rentals just about limit how far you can travel.....forget taking a trip longer than a day.
 
With wanting to take trips like that, you're going to want your own plane, if possible. Otherwise, plan well in advance and rent from a place other than a flight school. When I was training, I rented the plane from the FBO at the airport. There was someone who rented it for almost a whole week and flew it down to St. Louis and back, and a couple of times, it'd be scheduled gone for a day or two because someone had taken it for an overnighter somewhere. Of course, at the time, there was only one other student who was renting for training, so there were plenty of days that the plane didn't fly and if I'd wanted to take it for a couple of days, it would have been a non-issue, especially during the week.

However, this is not normal for most rental airplanes and most airports. I'd suggest looking around and seeing if you can even find a place that would allow you to rent their planes for overnighters or longer trips, and then go from there. If you can afford it, I'd say get the plane - you might be surprised how often you fly if you can wake up one morning and say, "I feel like flying today!" and be able to buzz out to the field and go fly without trying to schedule it first.
 
This is why finding a good partner or two for a co-ownership is the unicorn of an ownership experience. I'm blessed with this situation. It takes work, like any relationship, but it is absolutely worth it.
 
Rent vs. buy economics are only applicable if you are looking at buying the same plane that you would rent, e.g. your typical Cherohawk. Generally, the more capable plane you might want to fly, you probably can't rent anyway.
 
Back when I was looking 15-18 years ago, rentals were few in this area. Of course they came with a booklet of rules. Back then, I could easily rent for 50+ hours a year before getting near even with ownership.

As posted, other tangibles, not on the balance sheet factor in. If one can swing it, ownership does have benefits, even if it costs more. I don’t worry about availability for a trip, nor any hours per day rules. If I want a grass strip, good there too.

An in between option is a partnership or a flying club operation, those options vary widely too.
 
I always find it interesting how pilots try to justify the expenses involved in aviation. I've never met a boat owner that tried to justify the expenses of owning a boat (aka a hole in the water in which you throw money).

It doesn't hurt to calculate the cost of ownership, because those are real bills that will have to get paid. I've seen too many people buy an airplane, then can't afford to OH the engine when something happens, or some other maintenance, then the airplane sits derelict for years while the owner tries to justify spending the money.

However there are intangible benefits to ownership as well. The opportunity to fly something other than the standard 172 or Cherokee that are the common rentals. The unbridled access to the aircraft, and ability to travel without regard to having to get the airplane back on time. Being able to take long trips without having to worry about minimum daily rental fees.

Don't forget the options to take a partner, and be able to split the costs of ownership. It definitely makes those cost more palatable. You just have to make sure the details are covered in the partnership, and you are partnering with the right person (the best partner never flies :D:D).
 
Star Keeper said:
…many of the examples I've seen don't take into account the monthly note. They also don't calculate the equity being built up…
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Many purchasers don’t finance and equity in a depreciating asset with significant OpEx is laughable.

Sure, today’s market is great for a handful of owners, but it’s spurious and buying near the top of the market is not the way to build equity.

Long established partnership opening or club is what you are looking for.
 
Just my 2c. But, buying or renting, airplanes are like boats, they're a big hole you pour money into. If you're trying to be economical, don't spend money on GA.

If, on the other hand, you're like me and have been bit by the flying bug, faggedaboudit! Nothing beats owning your own airplane! You will fly many more hours owning your own airplane. You'll still spend the money. But, the cost-per-flight-hour might be a little cheaper.

The biggest upside is that owning your own airplane will give you many opportunities to go places, see things, and maybe learn much more about your chosen hobby (addiction) than merely renting a clapped out Cherokee once or twice a month to go get that $100 hamburger.

Its still possible to buy an airplane for $20k, get insurance for less than $2k/yr and find a bare-bones T-hangar for less than $300/mo. Its possible, ....but, its getting harder to do.
 
You will fly more if you own.

My wife insisted I buy because she didn’t trust the maintenance on local rentals. We bought a simple airplane. Our “break even” annual flying hours compared to renting is right at 50 hours a year. That is factoring in everything, including an engine overhaul in 2020. We have owned our current airplane for over 15 years.

There are SEVERAL airplanes at our local airport that sit most of the time. I think people have a tendency to over estimate their planned use of an airplane, then when they buy one, life gets in the way and the airplane sits a lot. Especially after the new wears off.

Good luck with your decision!
 
Checkout_my_Six said:
If you want to leave the pattern longer than getting lunch....you'll buy. Rentals just about limit how far you can travel.....forget taking a trip longer than a day.
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Depends. We did a lot of traveling while renting. First place, where I got my PPL & IR had a 3 hour / day minimum and rented the planes wet. So, you really didn't want to make a short flight and stay a week. The next place had a 2 hour / day minimum and rented the planes dry. That made it easy to travel with the plane.

But yes, owning or being in a partnership, or even a club, with no minimum hours / day makes traveling much easier.
 
Also....our local shop has a 90 day recurring checkout. That's a big PIA.
wayne said:
Depends. We did a lot of traveling while renting. First place, where I got my PPL & IR had a 3 hour / day minimum and rented the planes wet. So, you really didn't want to make a short flight and stay a week. The next place had a 2 hour / day minimum and rented the planes dry. That made it easy to travel with the plane.

But yes, owning or being in a partnership, or even a club, with no minimum hours / day makes traveling much easier.
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I had a spreadsheet that calculated everything including the "break-even" point for the available rentals in my area. These calculations were different for each of the aircraft that I was actively pursuing. Then I bought the plane that I wanted and have not opened the spreadsheet since. I still have it. I just don't care about that part anymore.
 
Star Keeper said:
I'm in a spot I'm sure many of you are familiar with. I got my private certificate and want to start traveling and am trying to find the best bang for my buck. Rental rates in my area for a 172 are between 140 and 180 wet. So I'm doing the calculation of how many hours I would have to fly before it makes sense to own. So my question after reviewing several people's calculations is what do you include in your numbers and what do you exclude? For example it seems that many of the examples I've seen don't take into account the monthly note. They also don't calculate the equity being built up.

So far I have the following line items listed. Note that I have a couple of steps before purchase including a part 141 IFR training to complete as well as getting my wife acclimated to flying in the tin can.

...
Am I missing anything?
Click to expand...

The key will be getting your wife to fully buy in.

Lots of good advice above. It really depends upon your situation. Do you plan your trips? Or do you decide Friday afternoon to "drive to the lake/beach/mountain" and now would rather fly? If you plan, renting or in a club or partnership still works well. If not, then having your own will work better. My wife and I are planners. We've never had a problem getting a plane from a rental fleet, club or partnership. I'd rent until you are sure your wife is good with flying if traveling with a plane is your goal.

There are lots of fixed costs with flying. Capital to buy the plane, insurance, hangar, annual, database subscriptions (GPS, etc) and more. Having someone to split those with (club or partnership) makes flying quite a bit more affordable.

We've made trips with a plane that would have been challenging, some to the point of "we not doing that", any other way. We did a day trip to see a niece graduate; 1,000 mile round trip. We went to a football bowl game, for the day; noon game and had lunch at the stadium, almost 800 nm round trip. Trips to Florida with more than one stop. Disney with the kids, then the oldest flew back commercial, while we went on to Fort Lauderdale for a few days. Then we swung back through Sarasota to visit my MIL on "the way home"; not exactly on the way, but at 200 mph it was a minor detour. And so much more.

Most people here could say the same for trips they've made flying that would have been hard to darn near impossible driving or flying commercial.

Even in a partnership it's not cheap. Sometimes when the kids were younger and four of us flew, that one flight might be cheaper than commercial, but not always. It is often more fun and more convenient, but not cheap.

As some have mentioned above, when buying you can get options that may not be available to rent in your area; solo or partnership. Finding a six seater in a rental fleet is hard. Same for many faster planes. If you really like traveling having a faster plane such as a Mooney/Bonanza/Cirrus/etc can really make a difference. It may be more a capability thing than a cost thing.
 
Checkout_my_Six said:
Also....our local shop has a 90 day recurring checkout. That's a big PIA.
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Ouch!

Even if they are flying regularly? Or only if they take a break?

If it's even for those flying regularly that is a huge PIA.
 
Half Fast said:
This is akin to calculating the cost of marriage versus the cost of dating...


HINT: It’s not a mathematical decision.
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Or having children.

Most economists agree, having children is the worst financial decision a person can ever make. Obviously people still do it.
 
Crashnburn said:
Opportunity cost. How much would the money you buy the plane with (down payment or out right purchase) make in the market over the time you own it?
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or how much money would be lost.

Not many absolute guarantees in the market.
 
On the bright side.....my plane is worth almost 3 times what I paid for it. :eek:

last time I visited there was a group of AirForce dudes in their flight suits waiting to be buzzed in.:rolleyes:
 
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If you have to justify the purchase of an airplane just don't. Unless you fly over 100 hours a year there just isn't a logical justification.
 
midwestpa24 said:
Or having children.

Most economists agree, having children is the worst financial decision a person can ever make. Obviously people still do it.
Click to expand...

That was the excuse I gave my folks when we decided not to have kids. I told my dad "I just don't see the financial upside of that particular investment vehicle."
 
Star Keeper said:
I'm in a spot I'm sure many of you are familiar with. I got my private certificate and want to start traveling and am trying to find the best bang for my buck. Rental rates in my area for a 172 are between 140 and 180 wet. So I'm doing the calculation of how many hours I would have to fly before it makes sense to own. So my question after reviewing several people's calculations is what do you include in your numbers and what do you exclude? For example it seems that many of the examples I've seen don't take into account the monthly note. They also don't calculate the equity being built up.

So far I have the following line items listed. Note that I have a couple of steps before purchase including a part 141 IFR training to complete as well as getting my wife acclimated to flying in the tin can.

Rent:
Annual - Renters Liability insurance
monthly - club fee (if applicable)
hourly - Rental Rate

Own:
Annual - Insurance
Annual - annual
Annual - Registration/Taxes
Monthly - Note
Monthly - Storage
Hourly - Fuel
Hourly - Oil
Hourly - maintenance
Hourly - Reserve

Am I missing anything?
Click to expand...
My advice is not to do those calculations.

Renting and owning are such different experiences that you can't compare them. Think of owning as a commited monogamous relationship, with all its ups and downs, and renting as casual hookups with different planes. Choose your lifestyle. :)

(Following this metaphor, there are a lot of polygamous airplane owners out there, but we don't have to go there now.)
 
David Megginson said:
(Following this metaphor, there are a lot of polygamous airplane owners out there, but we don't have to go there now.)
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Once you own one airplane, you'll soon realize that one really isn't enough. You have to have a backup airplane for when your primary airplane is in the shop. It's only sensible.
 
David Megginson said:
(Following this metaphor, there are a lot of polygamous airplane owners out there, but we don't have to go there now.)
Click to expand...

I'm just trying to decide if this is a category for one owner with many airplanes, or one airplane with many owners. :confused2:
 
Half Fast said:
This is akin to calculating the cost of marriage versus the cost of dating...


HINT: It’s not a mathematical decision.
Click to expand...

Yeah, but you can still fly the airplane well after purchase...
 
My understanding is that buying has never been a way to save money, and that was true before prices went to the moon. One reason for buying is that renting is a pain in the rear if you want to take trips. I do it, but I usually have to plan weeks in advance for a trip of significant length, and when the time comes and the weather isn't suitable, it's often difficult or impossible to change the schedule to accommodate.

I find that I'm often choosing between a plane that's available when I want it, or one that's well equipped (and therefore popular).
 
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For my part, in my opinion there is almost no point in doing this calculation. I can understand why you would want to do it, but don't buy a plane because you think you'll save money over renting. You won't. Partly because you'd never actually rent the equivalent number of hours as you will fly a plane that you own - you'll fly your own plane waaaaay more.

If you love flying and really want to buy a plane and determine you can reasonably afford it, just buy it. If not, then don't.
 
So as we are primarily planners the scheduling an aircraft months in advance isn't too big of a deal. With regard to the relationship metaphor what does it mean if I own an airplane but occasionally my buddy lets me fly his so he can fly mine? o_O
 
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