I’m calling the peak

We have college for 3, safety fund and retirement in ok spots. Current market doesn't help most of that, but I've saved my whole career.

This would be a splurge on me, which I don't really do. Family of 5 won't fit in a Tiger even if they wanted to but in my 450+ rental hrs my wife has flown 6 hrs with me and my son maybe the same? 2 girls have never been up. So this would be my midlife crisis.

The guilt is the hangup. I figured at $20k it wouldn't even be a discussion. No change on the home front etc. $50k seems different. You'll notice that missing from an acct.

To clarify: wife was aware and on board at $20, just saying $20 didn't require as much thought.

Where/how I grew up, folks didn't own planes (or boats, RVs etc.) Maybe a small fishing boat but not the $100k bass boats etc, more like $1,200 including the 12hp outboard.

Rental: I've got a business trip Tuesday. 5 hrs by car or 2 by Skyhawk/Archer. All planes booked for some portion of that day when I found out last week.

Last night - gorgeous here. All planes booked. Same this morning. Rental is the right way to go except I fly much less because when my schedule opens up, there are no planes.
 
Terry M - 3CK (Chicago) said:
We have college for 3, safety fund and retirement in ok spots. Current market doesn't help most of that, but I've saved my whole career.

This would be a splurge on me, which I don't really do. Family of 5 won't fit in a Tiger even if they wanted to but in my 450+ rental hrs my wife has flown 6 hrs with me and my son maybe the same? 2 girls have never been up. So this would be my midlife crisis.

The guilt is the hangup. I figured at $20k it wouldn't even be a discussion. No change on the home front etc. $50k seems different. You'll notice that missing from an acct.

To clarify: wife was aware and on board at $20, just saying $20 didn't require as much thought.

Where/how I grew up, folks didn't own planes (or boats, RVs etc.) Maybe a small fishing boat but not the $100k bass boats etc, more like $1,200 including the 12hp outboard.

Rental: I've got a business trip Tuesday. 5 hrs by car or 2 by Skyhawk/Archer. All planes booked for some portion of that day when I found out last week.

Last night - gorgeous here. All planes booked. Same this morning. Rental is the right way to go except I fly much less because when my schedule opens up, there are no planes.
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Sounds like you need to find a good partnership.
 
My mission is different, but I agree with Ed on this.. valuation seems super high. Also, you're more than doubling your "planned outlay" - that's flag #2.

Unless I see a deal, I'm sitting on my hands right now. I've hedged lack of access to aircraft by being a part of 4 sources of rentals now (1 club, 3 rental places/flight schools) across 3 airports, but I'm still tired of renting. Market is going to start affecting folks soon and there will be pain for those with too much leverage.
 
Tom Wells said:
Yeah...
I don't think people who just bought are going to want to turn around and crystalize their loss, even if that would be the financially prudent move.
The crowd I'm hoping to see are the people who overextended themselves on homes/planes and now need a bit of liquidity. The fact that credit card balances are up 20% does indicate some strain is occurring now. People who need liquidity tend to be incentivized to unload their assets at more... "reasonable" prices :D (though I hope no one on the POA forum is in that category!)
I know it may sound sadistic but I bought a house, a plane and a boat all damn near the peak (and just put the boat on the market this week), so I feel I'm entitled to wish for such a thing to occur as it hurts me as much as anyone else! :)
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Until you see layoffs in the news, people fearful for their jobs, I don’t see a lot of toy dumping. And layoffs in the news do not fit the current narrative. I am waiting on truck prices. They have come down some but not where they should be.
 
Sounds like you and I are alike in a lot of ways. If the terms are good and you can get the plane when you need it then continue to investigate. You’re using $20k as your benchmark/ reference - but as that was an uninformed swag I would not use that.

lots of details to dig into. Do they have an engine overhaul account funded to the new costs of an overhaul and fully prorated for the amount of hours already used? What is your hourly rate you’d pay? Monthly? Exclusions on taking the plane for long periods of time?

valuation ? I have no idea if the cost to buy in is good or bad.

do they have a history of availability and usage they could show you?


BTW / this is why you saved - no need for guilty feeling. Tigers are great planes - wish the place where I used to rent from still had theirs.
 
WDD said:
It’s already started ……..
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Correct. I'm seeing layoffs at our client companies already. Didn't Tesla just announce layoffs?

@Terry M - 3CK (Chicago) that sounds like a good partnership and all other things being equal I'd say go for it. But at a $200k valuation? No way. Well, no way unless you don't mind your $50k share being potentially/probably worth $25k in five years. Depending on your finances, that might not really be that big of a deal and in that case I would say you absolutely only live once and you should do it anyway, but you just need to acknowledge and process what you are signing up for.

Actually, on that topic, it depend a little bit on what you're buying. For instance, if it's a $50k share but there's a $50k engine reserve fund that you're buying into - which there should be of some sort - that does change the calculation. If it's really just a $200k plane, not a $150k plane plus a $50k reserve, well... those are two very different things.
 
Would your $50k be to pay for the current owners cost to put in the panel and - or funding a currently empty engine and annual fund?

When it comes down to it, it is whatever the market - in this case the current owners - will accept and what you’re willing to pay, in context to whatever your alternatives are.
 
@Terry M - 3CK (Chicago)
Reading your "stream of consciousness" post, I totally feel it.
It sounds like you've been patiently waiting for the right deal and you diligently set a budget. Unique opportunities you can't consider ahead of time have a way of smashing budgets ;)

My thoughts:
- I'd find out exactly what I'm buying. As others suggest, buying into a partnership with a well stocked reserve fund (i.e., there's money in there before you buy in) is a lot different than you cashing out an existing member and the small remaining balance of your buy-in making a minor dent in replenishing an empty reserve fund (those avionics upgrades probably were not cheap...). Same goes for availability. Is the a/c usually available so you can take those enjoyable impromptu sunset flights when the weather is nice? Or will it be like the rental situation where it's usually tied up? I'd want to know about the partnership I'm buying into...
- I wouldn't try to time your purchase with the market's peaks/troughs (stock, job or aircraft market). Those things are outside of your control. I tried doing that with a house, a boat AND a car... the net result was just sitting on the sidelines for years (a decade in the case of my house). Turns out there is rarely an ideal time for big ticket purchases (except when you have the benefit of hindsight). If you're fairly secure at your job, have a marketable skill set in case of job loss, and have a rainy day fund to cover expenses should anything happen, that's all you can ask for. You just don't want to be in a situation where you're going to be looking for liquidity right away after buying it. But I think the worst case scenario is psyching yourself out for a long period of time -- because life is short.
- 50k$ is the buy in, but not the only expense. At this particular point in time fuel is also very expensive. If the buy-in smashes the budget, are you going to feel comfortable spending the additional $300 to refuel it? Would hate to stretch the budget and then have guilt at the gas-pump that keeps you from flying...
- If the a/c checks all the boxes for you (close to home, modern avionics, lots of availability, dream airframe, etc) and the only complaint is price, perhaps you can negotiate with them? They probably pulled that round 50k$ number out of thin air b/c it sounded nice. Perhaps you can let them know what you had budgeted and see if they can help close the gap? I know if I was in a partnership -- getting the right partner who is a competent pilot, easy to work with and respectful would be worth sacrificing several k!
 
Tom has a great point. If a partner and I had a plane that cost us $100k, but we could get someone to buy a share for $200k, well - yes, I would take the money. Negotiate.

BTW - $25 / hour dry? How does that cover the engine fund, the annual fund, the normal maintenance (oil, tires, brake pads, spark plugs, burned out light bulbs, etc.) that should be on a prorated basis?

What is the monthly charge for sharing the fixed costs, like hanger, insurance, property taxes, database updates, etc.?

Do a Pre Buy as if you were buying the plane with your mechanic. Any delayed maintenance? Missing log books? Odd looking entries?

Get a good look at the finances. Are they unfunded?
 
@AA5Bman there is a reserve and the valuation is a swag.

Much more digging to do on my end. These are all good thoughts and I think time could be on my side. I'm not rushing.

Layoffs - there was an article in the WSJ yesterday about companies rescinding offer letters. Seemed to be limited to new college grads and more techy focused. We are starting to hear a few borrowers announcing cuts / strategizing cuts (or planning for what if).


ETA: @WDD and @Tom Wells thank you. Those last few posts are very helpful.
 
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hope it's gentle (movement/corrections...)

(I don't have a dog in the fight...)
 
I try to stay out of other people’s golf bags and check books.
Terry M - 3CK (Chicago) said:
…The guilt is the hangup. I figured at $20k it wouldn't even be a discussion. No change on the home front etc. $50k seems different. You'll notice that missing from an acct.

To clarify: wife was aware and on board at $20, just saying $20 didn't require as much thought….
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I’ve been where you are. The conversation you need to be having is with your wife and not us. But the $50K CAPEX isn’t your real money suck. How well is the partnership financed if the new motor catastrophically comes from together on a strange ramp with no A&P? What’s the airplane insured at, especially with all the new equipment?

When we bought into our partnership, we looked at the insured value and added the cash reserves to it, divided by the shares and said here’s our offer.
 
Predictions are hard. Especially about the future.
- Yogi Berra​
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My own obsession is real estate. Got a bag of cash burning a hole in my pocket to get a ski condo. But can't get past the sense that something is about to break, so I have been reading every article I can that tries to analyze the market.

A month ago, all the experts were saying it will slow down but not to expect a price drop. They were all very confident that this is not the same as 2007, mismatch between supply and demand, fundamentals, blah blah blah.

Fast forward 30 days and the same experts are clearing their throats and nervously saying there maybe, might, possibly be a correction.

Point being, there are limited historical references for this kind of situation, and everyone is just spitballing. At least those of us on POA admit it.

You and I have similar financial outlooks. I say if you can negotiate a more realistic valuation that you are comfortable with, go for it. Other than the price it sounds like a great fit for you.
 
We are in a recession already, no one wants to admit it, but will finally be announced come December or next January 2023,after the dust settles. SIGH
 
AA5Bman said:
Correct. I'm seeing layoffs at our client companies already. Didn't Tesla just announce layoffs?

@Terry M - 3CK (Chicago) that sounds like a good partnership and all other things being equal I'd say go for it. But at a $200k valuation? No way. Well, no way unless you don't mind your $50k share being potentially/probably worth $25k in five years. Depending on your finances, that might not really be that big of a deal and in that case I would say you absolutely only live once and you should do it anyway, but you just need to acknowledge and process what you are signing up for.

Actually, on that topic, it depend a little bit on what you're buying. For instance, if it's a $50k share but there's a $50k engine reserve fund that you're buying into - which there should be of some sort - that does change the calculation. If it's really just a $200k plane, not a $150k plane plus a $50k reserve, well... those are two very different things.
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The partnership owns a hangar too, it seems


Sent from my iPhone using Tapatalk
 
They do own the hangar. Ground lease, I understand, is still $200 or $250/month.

There is an engine reserve. I don't know how much. I haven't seen books or docs.

They have it insured for $125 as that was the max their carrier would offer.

Lots for me to learn and consider. Some digging to do for sure. Thank you for clarifying and directing my thoughts.
 
Terry M - 3CK (Chicago) said:
They do own the hangar. Ground lease, I understand, is still $200 or $250/month.

There is an engine reserve. I don't know how much. I haven't seen books or docs.

They have it insured for $125 as that was the max their carrier would offer.

Lots for me to learn and consider. Some digging to do for sure. Thank you for clarifying and directing my thoughts.
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3CK? With ground lease that much, hangars go for 30?40? (Just trying to help value the deal)

Definitely go crack open the books, maybe there’s more.
 
Stock market down 20%+ in 6 mos, fed only starting to tighten the screws. planes and boats will follow. Seen this before many times. There is no such thing as a soft landing. Right now owners don’t have to sell, but sooner or later they will. I would of sold my 172 for 35t 5 yrs ago, now I feel it’s worth 80,000, but I doubt I would come close to 80,000 in 6 mos.
 
Speaking of which, during the last peak in 05-06 several of my neighbors got HELOCs to finance their toys. When the housing market cratered, they were upside down and wound up losing their homes. I just kept paying the mortgage. Soon to be fully paid off.
 
Ed Haywood said:
Speaking of which, during the last peak in 05-06 several of my neighbors got HELOCs to finance their toys. When the housing market cratered, they were upside down and wound up losing their homes. I just kept paying the mortgage. Soon to be fully paid off.
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I know and heard of a few people getting HELOC;s and when their house was underwater, they walked away. Either took the foreclosure or declared bankruptcy and somehow had decent enough credit to buy a new house in the next 5 years. Rented in between at a lower price than their original mortgage payments, and didnt have to wait for their house to appreciate enough to buy something else. Somehow, the credit bureaus understood a BK or foreclosure on their record and looked past it.
 
Looks like it might be leveling off, I wouldn’t say the bubble had broken. There will always be some distressed sales around if your patient and follow the market.
 
The peak has passed. Opened the classifieds today and found:

1. A Piper Tri-Pacer, 3,300 TTSN and under 300 SMOH for $22,000.

2. A Beech Musketeer, 2,300 TTSN and under 400 SMOH for $37,000.

3. A Beech Bonanza, 5,000 TTSN and 1,800 SMOH for $39,000.

And that’s Canadian Dollars! Haven’t seen those kind of prices in a while. On the flip side, I filled up the tanks of my Cherokee today for a whopping $11/gallon.
 
or we are in a local minima and things will rise...
 
TCABM said:
When we bought into our partnership, we looked at the insured value and added the cash reserves to it, divided by the shares and said here’s our offer.
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I've never heard of this valuation model, but dang, it makes sense to me.
 
Our area is starting to se an increase of “just take over the payment” in private party listings. I’m not talking about high end stuff, either. Latest listing this morning was from somebody that financed a Peloton bike and some other higher end fitness equipment.

Houses are listing at lower prices and staying listed much longer. Just over six months ago my neighbors sold their house over asking to the first showing and had 45 more showings and five backups at the elevated price.

Car dealer lots, while not full, aren’t mostly empty.

So I think our little corner of the woods is cooling down some.
 
Jim K said:
Holy moly... where at, Midway? Or is it just more expensive in America's hat?
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I interpret that $11 to be in Canadian dollars, but yes, that sounds in line with what I’ve heard from a couple of fish camp owners I know up there.
 
Another data point:

I saw "priced reduced" on Van's Air Force classifieds for a RV-9A. If I recall correctly, it was $10k reduction on +/- $150k .
 
Ed Haywood said:
Speaking of which, during the last peak in 05-06 several of my neighbors got HELOCs to finance their toys. When the housing market cratered, they were upside down and wound up losing their homes. I just kept paying the mortgage. Soon to be fully paid off.
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When I hear this, I always wonder, "what changed?" If they could afford the 1st mortgage, and the HELOC payments, what happened to cause them to "(lose) their homes"?

The reason I ask is that during the 08-09 panic, I had a couple of co-workers that did that. One just turned the keys in and defaulted, the other worked out a bank-sale. But, in both cases, they still had their jobs and their monthly payments were the same. They just freaked out about suddenly being upside down on their mortgage. " I tried talking them out of it. But, they said something about not throwing good money after bad. And that was that. I just never understood. Those same houses today are worth nearly 3 times what they were less than 20 years ago.
 
Demand and supply - probably less buyers in the market. And with the price of gas and everything else those that are in the marke, demand is lower even with them. Not sure about job as once was, what will prices be, etc. Batten down the hatches
 
wilkersk said:
...what happened to cause them to "(lose) their homes"?...
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Could just be working the system. Maybe having lousy credit for 5-7 years (or however long it lasts) is worth getting out from a property where you're substantially underwater.
 
Jim K said:
Holy moly... where at, Midway? Or is it just more expensive in America's hat?
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CYLL in Alberta. Stopped there for fuel on the way to Edmonton thinking it might save a few bucks over the large FBOs in Saskatoon and I’m sure it did. But still, $11 a gallon is tough. I’m leaning extra hard these days lol.
 
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