Financing plane and Factory reman/avionics upgrade at purchase

Islandbrah

Islandbrah

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Islandbrah
Hi all,
I am currently in process of obtaining my PPL. I am also in the market for a 6 seat single. I think I’ve settled on a Cherokee 6-300 or FG Toga. My budget is somewhere under 150k. Only because I dont want to be a slave to my plane. I have found some in my range but was wondering..... Can I finance a overhaul/reman and some avionics upgrades at time of purchase? I have at least 20-30% down. But I dont want a down payment of 20k then an overhaul/reman at 40k and some glass 20k. I’d be out of pocket 80k and may as well pay cash at that point. I.E. I find an airframe with low hours but runout and old steam gauges (no glass), can I roll it all together if i buy through a broker or dealer owned inventory? I have years of experience in the car business and I have rolled rims, paint jobs, custom work all in the purchase price and sent it to the bank for approval. If I buy a runout around 60k-70k and toss in a engine at 40k and some glass (maybe 20ish) that will be under my 150k and will essentially keep me aloft for 10-15 years. My upfront cash would only be 40k-ish. It will be less costly hourly than buying a 1400 hour bird with old goodies and overhauling in 3 years. My cost per hour will be spread over more hours. Credit isn’t a problem as I’m in the mid 800’s and have no legitamate bills (house paid for and cars too, no CC debt). I dont want to HELOC because my home is sacred and if SHTF The bank can have the plane and my house is safe for my kids. I’ll take the hit on my credit and not be looking for housing...lol. I’ve looked and cant find the answer. NO speculations please. Only answer if you really know. Thanks.
 
Contact 2-3 companies offering financing and ask them. See what you can negotiate.
 
Yeah i was hoping for an educated reply from someone with experience before stroking the loan sharks. I dont want to fend off their follow up calls. Trying to get the ducks lined up before I show up to the dance.
 
Just a couple of thoughts:

1.) Even if you were to do a HELOC (and you aren't), wasn't the itemization up to $100K only. And with the new tax law, I thought they were getting rid of the HELOC deduction?

2.) One problem with buying it run out like you specified is if you have a new engine installed and then have issues during or right after the rebuild/break-in would be even more money out of pocket. It would seem the ideal plane for your scenario is a low time engine rebuild (eg 150 SMOH) but a really crappy panel and then roll the panel upgrade into the financing. Of course the cost will be higher due to a low time engine but you are buying something that is past the break in period and ideally most issues resolved.

3.) We're not a fan of borrowing money to own a plane. That limited us to what we could buy and in the end that self implied filter was probably wise for our current financial situation. My biggest fear on a relatively large loan on a plane for personal use only is if you have a incident that is not covered by insurance you are now essentially paying for years on a plane that you can not fly...and need to spend even more to get it flying again. And even more complicated if you need to sell it. But that is just our opinion.

Question: Is this a complex + HP plane?
 
Your spec is a bit off... overhaul on an IO-540 might get done for 40k, but you won't get much glass for 20k in a certified plane
 
I guess “glass” is a bit of an overstatement. Maybe a MFD, decent GPS, etc. I’m not looking for a G1000 suite or anything. But what I’m finding in the ways of a 6 are antiquated panels everywhere. And IF in put 20-40 in the panel id still be under my threshold. Financing at 4-6% for me is better than using my cash. My returns are higher than the 6% in the market. Financing the plane then paying cash for the upgrades will cost 2-3x more upfront. I’d rather be in a low equity position and have 50k in the bank for a rainy day. IF the situation was such that an uninsured loss happens, i can walk for the loan. I cant walk from a foreclosure. I live in Florida and we are not garnishable. I have more allegiance to my family than a bank. They cant touch my house its homesteaded. The HELOC was never a consideration just put that out there to close that door before someone suggested it. The 6 has 300hp and Constant speed prop so yes to both.

My question still is....in the aviation business do the lenders allow for reconditioning all rolled into one? I would think that a low or 0 time would be more attractive to them.
 
For anyone wondering.....I went to a broker today and it is possible to roll it all into one. Both a Reman/overhaul and panel upgrade.
 
Just be aware that the resale value of the avionics after installation is about 50% of the cost of purchase and installation, so expect to pony-up a lot more than 20%-30% of the value of that portion of the down payment. Not quite as bad for the engine, but the loan underwriter is going to want that 20-30% LTV down payment to be based on the true market value after the upgrades.
 
Not trying to be a ball buster here, but have you flown a Cherokee 6 or any HP plane during your training? I would think you would want to get some hours under your belt before going that route. When I went from a 172 to a 182, I had some good hours in and it was an easier transition than I think going from getting my PPL straight to a 182. Our insurance was pretty hefty until I had my first 10 hours in too.
 
Are you saying that you do not think that the lender is going to ask for more than the plane to be collateral?
 
I have not flown a 6 yet. As soon I finish with my PPL I know I will need further instruction for this particular plane. I would get extra training even if I didn’t need it legally. I am taking no risks with my family. I will probably use it to go IFR. Given my liquidity and past credit history I’m not concerned about LTV and such. I’m bulletproof. I could put 50% or more down if i have to (i make more than 5-6% ROI staying liquid vs tying it all up in a bird). My home is paid for and so are our cars. I’m retired and have nothing but time to put on hours. My income is forever and constant. Insurance is a nominal cost when I’m looking at dropping 150k on frivolous toy. My monthly budget for this toy is about 2200-2500 a month. So with a payment of around 900ish (125k @20yrs @5% is 825) that leaves 1500 a month for insurance, tie-down @ $35 a month (3 year wait list for a hangar), and fuel/MX. Ive prepared myself to toss this money into a hole in the sky just like my past boats were holes in the water.
As far as resale, I’m not really concerned about recuperating my loss on the avionics as they are a luxury I want not need. IF anything it helps me market the plane when I’m ready for that step up in the future. I know a 182 or a 206 wouldn’t satisfy me and I’d probably sell one of those weeks/months after i bought.
 
Besides these little GA’s are cheaper than the boats Ive bought and sold. I gave away my Simrad 12’s w/ full suite in my last regulator (see icon). But I sold it in days not months. That’s where my value is. I cycle through toys since I’m not permitted to cycle through women anymore....Lol.
 
Chart... is that with you already owning the a/c? The broker i spoke with today said i could roll it all into one and use completed value for the loan. They would allow me to acquire the airframe and they would disperse the rest as the steps progrsssed.
 
I sold my 44’ toy hauler, side by side, boat, dually and listed my second home so I could focus on this endeavor. I’ve got my eyes wide open and dont expect too much.
 
FlyBoyAndy said:
Not trying to be a ball buster here, but have you flown a Cherokee 6 or any HP plane during your training? I would think you would want to get some hours under your belt before going that route. When I went from a 172 to a 182, I had some good hours in and it was an easier transition than I think going from getting my PPL straight to a 182. Our insurance was pretty hefty until I had my first 10 hours in too.
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Super simple to get a PPL in a Six. It's just a big Cherokee. I would do the initial crash n go's in a rental, and then switch to an owned airplane after solo.
 
Islandbrah said:
Chart... is that with you already owning the a/c? The broker i spoke with today said i could roll it all into one and use completed value for the loan. They would allow me to acquire the airframe and they would disperse the rest as the steps progrsssed.
Click to expand...

Basically as part of the loan they would do 50% of the cost for new avionics with that amount paid out after sale to the vendor for the work. Which is really about what the completed value would be.
 
I’m soloing Monday in the schools 172. I’m actually going up in an hour for the second time today. Have 2 a days scheduled thru Monday for T-A-G. I’d rather collapse their gear than my own. I should have 19 hours by then. I can t wait to get to page 2 in the log....hahah. Some of y’all are probably thinking this is ambitious if not absurd. Well i retired at 33 (ambition).
 
As long as i can get it all rolled in upfront. I wouldn’t even take delivery until everything is finished. I dont do anything half-assed.
So it sound like if i got the plane at 75 (15k dn) and avionics at 30(15k dn) and assume the engine is the same 40 (20dn) Id be 50k out of pocket and owe 95k on a 145 purchase with a payment of $627. My dually was more..lol. I can swing that all day. Maybe buy 2, hahaha.
 
Thanks for the input guys. I appreciate the time out of your day.
 
Islandbrah said:
Chart... is that with you already owning the a/c? The broker i spoke with today said i could roll it all into one and use completed value for the loan. They would allow me to acquire the airframe and they would disperse the rest as the steps progrsssed.
Click to expand...

Some thoughts:

When you say broker, are you meaning loan or A/C sales?

Make sure you're insured for full replacement value including installation labor. Avemco will insure stated value (up to some limit, I'm sure.)

You could buy something now with suitable IFR avionics and a good running motor, get some time in it, and if you still like it (and flying) then upgrade. You can get loans for that.

Overhauls and avionics don't get done in a week like on a boat. It could be down for months.

The engine could take a puke 10 minutes after install. Make sure you have a good warranty.

What did you do to allow you to retire (kudos!) at 33?
 
Boats around here are down more than a week due to demand. I will do a stated value like my offshore boats. I thought about buying a mod to late time and then redoing it a year later but I’d feel more comfortable with a low low time or a reman with warranty. For 40k they better warranty the work. If not I was in the wrong business.
I used to jump out of planes for Uncle Sam. That and a few wise decisions and frugal living made it all possible. Can’t steal cookies from the jar til it’s full. That way you don’t notice the missin.
 
Personally, as fast as avionics are changing I'm glad I bought the plane with a minimal functional set(WAAS GPS, working AutoPilot) and mid time engine. Shiny new auto-pilots are dropping from the $30k+ STEC down to sub $10k. ADS-B costs keep dropping. Depending on what you want for glass you can now get cheaper stuff than the Aspen that used to be entry level. About the only thing still up in the stratosphere is the price of approach capable WAAS GPS units.

I'm hoping for an STC for the GFC 500 and doing that and a pair of G5s in my plane.... maybe.
 
Islandbrah said:
It’s a 260. I want 300 and injected not carbed
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They’ can source one and refurb it for you as a turnkey deal. Seems like their services would provide you some value.
 
It sure is pretty. too bad its a 260. Maybe they can source another
 
So they have a 300 . 1979 full rebuild. But wait for out....... $220k ouch. Spoke with the proprietor and they appear to have a solid operation. Thanks for the direct TCABM. May step up...
 
...and the -260 has a greater useful load, doesn't it? Can't remember. I just wanted a Lance because everyone knows chicks dig guys with retractable gear...bwa ha ha! I'm crying...
 
Islandbrah said:
I have not flown a 6 yet. As soon I finish with my PPL I know I will need further instruction for this particular plane. I would get extra training even if I didn’t need it legally. I am taking no risks with my family. I will probably use it to go IFR. Given my liquidity and past credit history I’m not concerned about LTV and such. I’m bulletproof. I could put 50% or more down if i have to (i make more than 5-6% ROI staying liquid vs tying it all up in a bird). My home is paid for and so are our cars. I’m retired and have nothing but time to put on hours. My income is forever and constant. Insurance is a nominal cost when I’m looking at dropping 150k on frivolous toy. My monthly budget for this toy is about 2200-2500 a month. So with a payment of around 900ish (125k @20yrs @5% is 825) that leaves 1500 a month for insurance, tie-down @ $35 a month (3 year wait list for a hangar), and fuel/MX. Ive prepared myself to toss this money into a hole in the sky just like my past boats were holes in the water.
As far as resale, I’m not really concerned about recuperating my loss on the avionics as they are a luxury I want not need. IF anything it helps me market the plane when I’m ready for that step up in the future. I know a 182 or a 206 wouldn’t satisfy me and I’d probably sell one of those weeks/months after i bought.
Click to expand...

If you’re so flush with cash and constant income, why not just rent cheap for an extra 18 months then drop cash on the airplane? Because 18 months of interest income and then paying cash would be easy. If, as you say, you income is “constant and forever” then what’s the big deal on tossing down $150k for the airplane you want? If you’re looking at a brand new Cirrus then sure, financing makes great sense given that your $759k in liquid assets can earn significantly more scratch in your accounts while the bank holds your note on the airplane. But does the math really add up if you have $45k for a down payment and then spend more on payments? I mean, guessing, the interest on a $100k note @ 4% is going to be somewhere north of $32k in interest over 15 yrs. Buying stuff with other people’s money makes sense sometimes. If it makes sense or not depends on your projected income, invesrptments, dividends, etc, not to mention the stock market, unless you’re 100% liquid. If you’re all liquid then paying interest to anyone makes zero sense, because that liquidity isn’t earning any income. If you’re tied up in stocks then it’s a whole different scenario.
 
Dont buy a rebuild project unless what you WANT to do is have a project.
 
Ravioli said:
What you talking about Willis? You're a pre-solo student who as never been in a PA32. Speed difference is negligible, service ceiling a difference unlikely to be noticed before your IFR ticket is finished.

http://airmart.com/sites/default/files/Piper Cherokee 6-260 AND 6-300 Performance and Specs_0.pdf
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Not into it for the speed or I’d be looking at bonanzas. I know engines and fuel injection is better than carbs. Airtime is irrevelant, thanks. Next time try not to be so derogatory especially to someone new to your forum. That’s bad taste. I’ve been in a pa-32 btw. Just not behind the yoke.
 
Lachlan said:
If you’re so flush with cash and constant income, why not just rent cheap for an extra 18 months then drop cash on the airplane? Because 18 months of interest income and then paying cash would be easy. If, as you say, you income is “constant and forever” then what’s the big deal on tossing down $150k for the airplane you want? If you’re looking at a brand new Cirrus then sure, financing makes great sense given that your $759k in liquid assets can earn significantly more scratch in your accounts while the bank holds your note on the airplane. But does the math really add up if you have $45k for a down payment and then spend more on payments? I mean, guessing, the interest on a $100k note @ 4% is going to be somewhere north of $32k in interest over 15 yrs. Buying stuff with other people’s money makes sense sometimes. If it makes sense or not depends on your projected income, invesrptments, dividends, etc, not to mention the stock market, unless you’re 100% liquid. If you’re all liquid then paying interest to anyone makes zero sense, because that liquidity isn’t earning any income. If you’re tied up in stocks then it’s a whole different scenario.
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My investments can be converted to cash in a phone call or 2. Plus buying flip houses is easier with cash than getting a loan. And heaven forbid something catastrophic happens. My family can withdrawal instantly rather than wait for insurance payout.
 
Islandbrah said:
My investments can be converted to cash in a phone call or 2. Plus buying flip houses is easier with cash than getting a loan. And heaven forbid something catastrophic happens. My family can withdrawal instantly rather than wait for insurance payout.
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Besides don’t want to rent a community plane. This is all about freedom and to slave to an owner be it a school or FBO schedule doesn’t appeal to me. Isn’t that why we are all here? Freedom?
 
Not sure what was derogatory. Both planes have 540s. One will lift your **** more economically.

Whatever. It ain't my forum.
 
call AOPA finance. when I was initially looking at a run out engine, they told me about 90% of financing companies will not finance a runout buy, they will however finance a buy with a OH/Reman. didn't enquire about avionics, at that time, but I am pretty sure they do (not 100% of the avionics price though)
 
Ravioli said:
Not sure what was derogatory. Both planes have 540s. One will lift your **** more economically.

Whatever. It ain't my forum.
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Ok not so much derogatory as condescending. I’m aware of my time and experience in the world of piloting, my time was spent in the back jumping for Uncle Sam. Coming from the auto/marine world I’m aware of the benefits of fuel injection over carbs. Thats why I’m more receptive to the 300.
 
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