Interesting comment from an aircraft Broker.

N2124v

N2124v

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N2124V
I've been talking with a Broker about a plane he has listed (a nice looking 1964 Mooney M20E). I made the comment that my goal is to own it for 4-5 years (500+/- hours) and then sell it and that it is also going to have to be a good deal not just on the purchase, but looking at the resale down the road (hours on airframe, engine, avionics, etc).

This was his reply.

"Ok . As far as resale .... Forget about that idea on a plane this old. Buy it because you want it and want to fly. Aircraft this old can't be expected to be able to hold value . Anything over 40 years old is extremely difficult to sell at any price .

From a business stand point we are getting more away from 60's-70's AC as so many we find can't get past a pre buy. It's had become to much effort in the last 2-3 years to push a sale through on the older AC .

If you buy an old mooney for 40k now expect to sell it in 5-6 years for 28-33k"

I know the days of making money on a plane are way long gone, but this seemed a little pessimistic.

What do you think about his reply?
 
N2124v said:
I've been talking with a Broker about a plane he has listed (a nice looking 1964 Mooney M20E). I made the comment that my goal is to own it for 4-5 years (500+/- hours) and then sell it and that it is also going to have to be a good deal not just on the purchase, but looking at the resale down the road (hours on airframe, engine, avionics, etc).

This was his reply.

"Ok . As far as resale .... Forget about that idea on a plane this old. Buy it because you want it and want to fly. Aircraft this old can't be expected to be able to hold value . Anything over 40 years old is extremely difficult to sell at any price .

From a business stand point we are getting more away from 60's-70's AC as so many we find can't get past a pre buy. It's had become to much effort in the last 2-3 years to push a sale through on the older AC .

If you buy an old mooney for 40k now expect to sell it in 5-6 years for 28-33k"

I know the days of making money on a plane are way long gone, but this seemed a little pessimistic.

What do you think about his reply?
Click to expand...


Within the next 6 years you're going to have to drop a couple thou on the ADS-B mandate if you want to fly anywhere a mode C transponder is now required. Meaning all those old planes listed for sale now will be even further behind on equipment, driving prices lower. I hate to tell you, he's spot on.
 
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N2124v said:
I've been talking with a Broker about a plane he has listed (a nice looking 1964 Mooney M20E). I made the comment that my goal is to own it for 4-5 years (500+/- hours) and then sell it and that it is also going to have to be a good deal not just on the purchase, but looking at the resale down the road (hours on airframe, engine, avionics, etc).

This was his reply.

"Ok . As far as resale .... Forget about that idea on a plane this old. Buy it because you want it and want to fly. Aircraft this old can't be expected to be able to hold value . Anything over 40 years old is extremely difficult to sell at any price .

From a business stand point we are getting more away from 60's-70's AC as so many we find can't get past a pre buy. It's had become to much effort in the last 2-3 years to push a sale through on the older AC .

If you buy an old mooney for 40k now expect to sell it in 5-6 years for 28-33k"

I know the days of making money on a plane are way long gone, but this seemed a little pessimistic.

What do you think about his reply?
Click to expand...
I think it sounds like you found an honest broker. Tell him that based on his advice you need to make him a lower offer.
 
I think he's probably right. The plane market is weak anyway, older planes are not as supportable, and updates such as avionics & ADSB can quickly get to be a substantial portion of the value of the plane. My last annual had enough stuff that it was approaching the point where it could have become uneconomic.

If maintenance costs > plane value (maintained) - salvage value, it really doesn't make economic sense. Add it use tax and transaction costs and it's quite likely to be problematic value-wise.

Most buyers want something more modern with bells & whistles. A '60's vintage plane doesn't cut it.

Sorta like "would you rather own a '72' Caddy or a '98 Lexus"?
 
It is just an indication to me that he wants too much for the airplane and you can do better elsewhere. But at least he is being honest with you.
 
I'd color him honest as well, but say that opinion is probably reflective of the average 60's vintage Mooney (or any other common plane for that matter) that hasn't been thoroughly maintained and updated by previous owners. Few buyers today are looking for a shotgun-paneled Mooney with no autopilot and KX170B radios. Fewer still will want that in 2020. Those planes are just barely selling above scrap value currently.

Conversely, if you can find an E with some modern avionics and especially a modern autopilot that has been flown and maintained, then paying a bit more for it today is probably a safe move as it will still be in demand in a few years. The engine bears scrutiny as well... if it still has a vintage case that has been overhauled 2-3 times, then it might not have enough "meat" left for another overhaul and at that point it doesn't even have core value as Lycoming typically won't take 35+ year old engines in exchange. That is a time bomb that an unsuspecting buyer might find...even if they don't overhaul the engine the next buyer might figure that out and kill a sale. Don't get caught holding that bag.

If your budget only supports a truly vintage plane, then the advice is spot-on. You can still enjoy it and fly the heck out of it with old radios (assuming they work) and get lots of great experience. Just be realistic when it comes time to sell as you might not get a buyer and perhaps the only move to recover any money from it is to part it out, as sad as that is...but even that takes a lot of effort.

I keep hoping that sooner or later it will make sense to update vintage airframes that don't have damage or corrosion, but it seems we're losing pilots faster than we're losing airframes so perhaps that won't ever happen. We're not making enough new ones now, so I hate to see the old ones scrapped.
 
N2124v said:
If you buy an old mooney for 40k now expect to sell it in 5-6 years for 28-33k"
Click to expand...

If you go into the deal with that approach, I think you will be pleased, or at least not incredibly disappointed in the outcome. You might do a little better in 5-6 years, but I sure wouldn't bank on it.
 
I know the days of making money on a plane are way long gone, but this seemed a little pessimistic.

Try a light twin now that will give you a real pessimistic view.
 
If you buy an old mooney for 40k now expect to sell it in 5-6 years for 28-33k"

I believe he's more than generous with the 28-33K.
 
I give the guy an A for honesty!! For years people bought airplanes, flew them 3-5 years and sold them for what they paid or in many cases more, that just isn't the way a normal market works on any type of vehicle, airplane, boat, car, motorcycle. I think he's right about people wanting newer airplanes with better equipment. I am helping a buddy look for a 182 and it makes more sense for him to look at later model airplanes vs ones built in the 70's.
I have had a couple brokers tell me that "legacy" Citations, 500/501/550/551's, are all pretty much worth what the engines are worth and the buyer is likely the last owner of these airplanes. :eek:
As airplanes age, newer ones also age and become more affordable, that makes the older ones less desirable, especially ones that need work, paint, interior, avionics all cost the same whether it's a 1964 or 1994 model. ;)
N2124v said:
I've been talking with a Broker about a plane he has listed (a nice looking 1964 Mooney M20E). I made the comment that my goal is to own it for 4-5 years (500+/- hours) and then sell it and that it is also going to have to be a good deal not just on the purchase, but looking at the resale down the road (hours on airframe, engine, avionics, etc).

This was his reply.

"Ok . As far as resale .... Forget about that idea on a plane this old. Buy it because you want it and want to fly. Aircraft this old can't be expected to be able to hold value . Anything over 40 years old is extremely difficult to sell at any price .

From a business stand point we are getting more away from 60's-70's AC as so many we find can't get past a pre buy. It's had become to much effort in the last 2-3 years to push a sale through on the older AC .

If you buy an old mooney for 40k now expect to sell it in 5-6 years for 28-33k"

I know the days of making money on a plane are way long gone, but this seemed a little pessimistic.

What do you think about his reply?
Click to expand...
 
N747JB said:
As airplanes age, newer ones also age and become more affordable, that makes the older ones less desirable, especially ones that need work, paint, interior, avionics all cost the same whether it's a 1964 or 1994 model. ;)
Click to expand...

This is true, but we all know GA production peaked by ~1980-1981 or so, and fell off a cliff in 1986 when Cessna stopped. Other planes trickled out during that time, and there has never been anywhere near the production quantity of the late 70's in the last 20+ years.

I follow the Mooney market very closely, and for example someone looking for a J model (aka 201), there are a LOT more '77-81 models "out there," so following your logic and only looking for a 1991-94 model, there are a far, far fewer of those so a buyer might not find any at any given time while passing on older but otherwise good models. Sooner or later, there will not be enough airframes with less than 20 years available to support all who wish to fly. What happens then? It is my hope that older airframes will bottom-out value-wise before they are scrapped and become economically viable to upgrade and keep flying simply to just keep the entire fleet from disappearing!

What I see now is declining utilization and reluctance to upgrade, which is depressing values and utility as well as hastening the path to the scrap yard and it makes me sad. I have high hopes that the regulation relaxation will unleash some better values in the avionics and autopilot markets and breathe some new life into our portion of the market... we also need movement on avgas and lower priced engines/components but I can't see that happening.
 
The ADS-B thing is in play, as are pilot demographics, fuel costs, etc. This is a sunset industry/hobby/pastime.

Whatever you do, go in knowing this and you won't get burned. Maybe disappointed, but not burned by unrealistic expectations.
 
wsuffa said:
I think he's probably right. The plane market is weak anyway, older planes are not as supportable, and updates such as avionics & ADSB can quickly get to be a substantial portion of the value of the plane. My last annual had enough stuff that it was approaching the point where it could have become uneconomic.

If maintenance costs > plane value (maintained) - salvage value, it really doesn't make economic sense. Add it use tax and transaction costs and it's quite likely to be problematic value-wise.

Most buyers want something more modern with bells & whistles. A '60's vintage plane doesn't cut it.

Sorta like "would you rather own a '72' Caddy or a '98 Lexus"?
Click to expand...

Personally? I'll take the '72 Caddy any day.
 
The broker said to expect up to $2,400 per year in depreciation on a $40,000 purchase. I wonder how that compares to the decrease in residual value on a 60 month lease of a new $40,000 car. Tote up the sum of hangar rent plus insurance for those 5 to 6 years for another comparison. Airplane ownership costs money.

Scott
 
The truth sometimes hurts.

How many 60s era motorhomes do you see on the road ?
 
weilke said:
The truth sometimes hurts.

How many 60s era motorhomes do you see on the road ?
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Or power boats? A few old sailboats, but not many power boats other than a few classic yatchs. :D

I've got the first "Bluebird" if you're into that kinda thing! :D
 
When these Mooneys were built, the jobs situations was far different as were wages. The price of the airplane new was much more in line with what people earned, plus company's provided excellent employee insurance at minimum cost. Fuel was dirt cheap. The whole thing is now upside down . The mooney is now old,wages are lousy, jobs are scarce, many many jobs that bought these airplanes new are now overseas. fuel is out of site, engine overhaul out of site. Whole different story now. Hangars usually high, insurance very high. GA has little going for it.
 
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Jimmy cooper said:
When these Mooneys were built, the jobs situations was far different as were wages. The price of the airplane new was much more in line with what people earned, plus company's provided excellent employee insurance at minimum cost. Fuel was dirt cheap. The whole thing is now upside down . The mooney is now old,wages are lousy, jobs are scarce, many many jobs that bought these airplanes new are now overseas. fuel is out of site, engine overhaul out of site. Whole different story now. Hangars usually high, insurance very high. GA has little going for it.
Click to expand...
The blame the economy argument is full of holes. There are far too many people with garages full of motorcycles, jet skis, bmw's, you name it. There are plenty of people with plenty of money to waste on hobbies. There are simply more attractive options for expensive hobbies than GA
 
JHW said:
There are simply more attractive options for expensive hobbies than GA
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I agree wholeheartedly. I have a 21ft bowrider on the lake, the family would much rather spend the afternoon on the lake than fly for an hour. (An hour's worth of flying pays for a full day of running around the lake)

Add in that folks don't need expensive training, medicals, and can do their own service/mx, most aren't going to bother with aviation. Wakeboarding, anoyone?
 
wsuffa said:
Sorta like "would you rather own a '72' Caddy or a '98 Lexus"?
Click to expand...

Caddy any day of the week and twice on Sunday.

I think the broker is right. Old planes are getting older, ownership costs aren't going down, and many of the people who can afford to own and operate an old plane can afford to buy a newer one as well. It is getting harder and harder to push old planes through the market for this reason.

There would have to be some significant market changes to reverse the trends.
 
C'mon all these old GA planes are going to go up in value once the RC FPV community starts converting them to drone toys.:lol:
 
If you really want to fly a nice aircraft, it seems to be a reasonable option to buy an older aircraft, replace the engine, the interior, give it a new paint job, and a brand new avionics stack. Say you bought a 1970s 182 for 60k, put in a new engine for $50k, new avionics for 60k, a new interior for 20k, and a new paint job for 14k, for a total of $204k. How does that compare to a the price of a new 182? Less than half, maybe even as little as a third? If you want to avoid all that, you might be able to find nice ones that have had much or all of that done recently. I guess I just look at it from a utilitarian standpoint, but I just don't see new aircraft bringing anywhere near the added value to justify their astronomical purchase prices. If aircraft appreciated in value, or at least held their value, I guess you might justify it from that standpoint, but that doesn't seem to be true anymore.

What am I missing?
 
PPC1052 said:
What am I missing?
Click to expand...

The only thing I would say you are missing is that (depending on the particular model of airplane) for all the cost of getting a project airplane where you want it with recently overhauled engine(s) and the panel you want, you would do better financially to be patient and find one that someone else has already gone through that pain and expense.

A project makes sense if it is a unique/rare airplane and you actually enjoy tinkering with it. But unless we are talking about some kind of rare warbird or vintage airplane, it is rarely a good financial venture.
 
Fearless Tower said:
The only thing I would say you are missing is that (depending on the particular model of airplane) for all the cost of getting a project airplane where you want it with recently overhauled engine(s) and the panel you want, you would do better financially to be patient and find one that someone else has already gone through that pain and expense.
Click to expand...

Understood, and I did make mention that you could save some money and hassle doing that (albeit briefly). But if you really want to fly a nice aircraft, and you want it to be built out the way you want, it seems much more viable than buying brand new.
 
l8evator said:
The broker said to expect up to $2,400 per year in depreciation on a $40,000 purchase. I wonder how that compares to the decrease in residual value on a 60 month lease of a new $40,000 car. Tote up the sum of hangar rent plus insurance for those 5 to 6 years for another comparison. Airplane ownership costs money.

Scott
Click to expand...
Exactly! Capital assets depreciate. $200 per month depreciation is one of the cheapest items on the books, and certainly less than an equivalently priced car. [hint: newer planes depreciate too...]. A lot of doom & gloom on this thread. Airplanes are not an investment, they're an expense. A pretty fun one I think....
 
PPC1052 said:
Understood, and I did make mention that you could save some money and hassle doing that (albeit briefly). But if you really want to fly a nice aircraft, and you want it to be built out the way you want, it seems much more viable than buying brand new.
Click to expand...

Agree...I've never quite understood the logic behind a brand new 172 or 182 that costs more than a nice used cabin twin.
 
Bill Jennings said:
I agree wholeheartedly. I have a 21ft bowrider on the lake, the family would much rather spend the afternoon on the lake than fly for an hour. (An hour's worth of flying pays for a full day of running around the lake)

Add in that folks don't need expensive training, medicals, and can do their own service/mx, most aren't going to bother with aviation. Wakeboarding, anoyone?
Click to expand...
yep. Here is a photo essay of how my kids view flying vs boating
 

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JHW said:
yep. Here is a photo essay of how my kids view flying vs boating
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FWIW, as much as I love airplanes, when I was a kid riding around in the back of the Lance, I wasn't much different.
 
Fearless Tower said:
FWIW, as much as I love airplanes, when I was a kid riding around in the back of the Lance, I wasn't much different.
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Yep, but the bug took hold in me! I slept a lot of hours in the back of a Mooney M20C as a kid. I studied aero engineering, learned to fly, bought a plane, etc. Hopefully a lot of the sleeping kids today end up like me. :D Unfortunately the plane had to go about 18 months before I started training...
 
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