Is an airplane a good investment?

I don't really like the word "investment". I would argue it a very bad investment. It is an item you will purchase that has a very high cost of ownership (hangar / tiedown / insurance / annual / maintenance). Now, on the other hand, if you want to help justify the purchase by taking into account the equity you'll have and build, then that is another story.

About every six months I open up an excel spreadsheet and start calculating the total cost to fly for different scenarios. I evaluate renting, joining a flying club, buying an airplane myself, and buying an airplane with a group. For me, and the type of flying I do, renting comes out cheaper (i.e. fewer dollars per hobbs hour). every... single... time... I just can't afford to fly enough to make any of the other options cheaper.

Now, I also have five kids that are between the ages of 3 and 12 and my wife is a stay at home mom. So I have lots of competing priorities. I have budgeted a set amount that I can spend on flying every month, and that's all I get.

But I think you're asking the right questions to run those financial numbers. Perhaps when you run the financial analysis, instead of calculating the loan payment as a fixed monthly cost, instead try considering the opportunity cost for that money. Even if you pay $45,000 cash for a C172, you are still losing out on what that money could do for you if you invested it (and I mean really invested it) in something else. Figure 8% per year (or whatever you think is the right number for your analysis) as the opportunity cost of that money. That's $3,600 a year that its costing you to own the plane, even if it doesn't depreciate at all. If you own the plane for 5 years and sell it for $45,000 when you are done, you still lost out in $18,000 in opportunity cost.
 
dell30rb said:
Buy an older plane thats common, has a good market, is already depreciated out, and has been well maintained. There is a very good chance you can fly it for a few years without spending more than regular annuals and fixing some minor stuff, then sell it for around what you paid for it.
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If your goal is to get the most money back when it comes time to sell, this is the best advice.

Otherwise, buy the airplane that you really want, take good care of it and accept that the money you lose when it comes time to sell is worth the time and experience that you get from flying it.

The former is how I approached the Baron ownership. The latter is how I chose to look at the Beech 18 experience.
 
Fearless Tower said:
They don't have to be, if you go with the right shop and don't try to get a 'bargain'.
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When I wrote the check for my overhaul, the amount was exactly the amount I was quoted on day one, to the penny.

Guess I did it wrong:dunno:

:)
 
This is really what driving me towards ownership. The place I rent from is closing its doors on the 8th. This sucks because I have to do a CFI checkout with another a busy school to rent from. Their rentals are primary Cherokees. I been flying C172's. So not only I have to learn a new airplane and I have to do a check out. My next flight review is in July. So I might as well reset the clock on my flight review during the check out. I know I know cry me a river.

Trying not convince myself an airplane is not a money pit. I own a boat and a RV. LOL.
When I go to sell and upgrade to something else I don't loose a ton of Money.

I would love to be out there waxing and washing my own airplane. :)
 
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AZ I understand the budget thing. I have 3 kids and mom is a stay at home mom. We wouldn't want her to work and place the kids in Child Care. Its golden she can be home with the kids when the leave for school and come back home.
 
owning is always "more" expensive......don't own an airplane to be cheap....own for convenience.
 
David,

I was in your shoes about a year ago after finishing up my PPL. I kept forking out $140 an hour for rentals (included fuel) and thought to myself hell as much as I fly I'm paying 5-times too much to go up per month. So I bought a plane.

It's the one I'm also selling right now.

I approached it from the perspective of getting my instrument rating. I crunched all the numbers and upgrades aside, it was cheaper to own my plane and get my instrument rating then it would have been to go fly someone else's plane. I also have the freedom to go up every night if I want and every weekend without having to deal with whatever horror-show rental I happen to get at a flight school. And believe me..I've seen those horror show rentals..

So is owning worth it? Yep.

It will cost you some capital to get the plane (ANY PLANE) where you want it, be it human capital or the green stuff. However, I can honestly say that the plane I own fits me perfectly. There is not a single other PA-28-180C out there better equipped or better designed for how I fly.

And yeah, like others I put at LEAST as much as I paid for it back into the plane in the form of upgrades, maintenance, etc. I'll never get it back but, I'm ok with that.

You can either approach the purchase from a logical standpoint (I'm buying the plane for this mission and when I'm done it's gone), or for pleasure.

Crunch the numbers, but realize, the acquisition cost is the least amount of money you'll ever spend on the plane if you keep it long enough, or plan on updating it.
 
evapilotaz said:
AZ I understand the budget thing. I have 3 kids and mom is a stay at home mom. We wouldn't want her to work and place the kids in Child Care. Its golden she can be home with the kids when the leave for school and come back home.
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With that size family I assume you are flying for personal amusement(the best reason.) Why not shop two seaters? If you don't want something plebian like a C-150 get an old classic taildragger. Cheap, and any taildragger outramps Bo's, Cirri and such in pilot smug factor. I know it isn't fair, but hey them's the way it is.:lol: Good on ya for having the wife home for the kids.:thumbsup:
 
Sure it's more expensive.

But it's mine, it's clean, and ready when I want to fly it, and no one is abusing it.

Also when something DOES go wrong, I have the choice to fix the issue if I want, no matter how small. Compared to an issue with a rental, where the FBO doesn't give a damn about the airplane, and squawks don't get addressed unless they're airworthiness items.
 
You could just always treat it like any other vehicle purchase. Say you bought a used pickup it cost say 25K you drive it and put enough maintenance into it to keep it running and safe but 20 years down the line the body is shot and the motor needs to be replaced and you just sell it to some kid too dumb to know better for a few thousand dollars.

Probably not the best idea but an idea none the less.
 
evapilotaz said:
AZ I understand the budget thing. I have 3 kids and mom is a stay at home mom. We wouldn't want her to work and place the kids in Child Care. Its golden she can be home with the kids when the leave for school and come back home.
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Want to talk expensive and low ROI.


After school sports for the kiddies and a job for the wife FTW.
 
Short answer to the original question... No.
 
Caramon cant help but ask why you are selling your airplane.

Phoenix all my flying is for pleasure and the best flying for me anyways is Solo. No one except for my 13yr son appreciates flying like I do. Sure wife likes to fly but doesn't have the love. So a two seater does fit the bill. I did all my PPL training in a C150 than immediately moved on to a C172. I just like the extra space and wind handling of a bigger airplane even though 80% of my mission is flying solo or with my son.

I'm at a point in my life I need to really not buy so many toys and make better decisions about Money. Toys are all paid for but I just don't want to throw away money at more expensive toys.

Thanks all
 
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evapilotaz said:
Caramon cant help but ask why you are selling your airplane.

Thanks all
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Well, I'm just not flying it as much as I used to when I was going for my rating. I do still go up a couple times a week, but that's mostly to run the engine and just go for a lunch someplace.

I fly for EAA's Young Eagles as well as much as I can.

It wouldn't kill me to keep the plane but I'd rather it go to someone who is gonna fly the hell out of it. I put 130 hours on it last year (and that was done in 6 months) out of the 205 hours I flew.

Also, it's mostly just me in the plane, and let me tell you, as fun as that can be I really don't need a 4 seater for myself. A two seater would be fine, maybe a taildragger or a faster plane.

I bought the plane knowing I was gonna use it for my instrument and (if the family took to it) keep it around for family trips. Well..we did two of those last year, one to Savannah and the other to North Carolina. Neither one my wife was thrilled about so..I'm hoping to sell this and possibly downgrade to either an experimental or two-seater. And..hopefully pay off a few bills in the process :)
 
Completely Understand Caramon. I hope I don't fall into I should have bought a two seater category. I might go that route anyway to save some coin.
 
On the flip side, if you have 4 seats but only fill 2, you're well below gross with some extra for baggage. And IF you need to haul a couple back seaters, the ability is there.

I rarely fly with anyone in the back seat, but it's nice to be able to if needed.
 
BigBadLou said:
I literally LOLed here. :D That is a good one! :)

Frankly, your airplane sale price is first subject to market fluctuation and supply/demand.
A good engine with low hours adds value (or you can argue that it does not subtract value). 300 vs 600 hours won't be a big difference in sale price. Once you get past 1/2 TBO, people usually start looking elsewhere. Everybody wants a fresh engine nowadays.
Just my $0.02;
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Many buyers consider a half-TBO engine to be a runout.

For "book" depreciation, divide overhaul cost by TBO hours.

ex $35,000/2000 = $17.50/hr/
 
dell30rb said:
My dad bought a 172RG for 50k, sold it 5 years later for 75k. Basically flew for free.
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Really? When was that?

Of course he probably spent another $25K in the 5 years he owned it.
 
txflyer said:
Buy one that looks like crap and spend about a hundred hours polishing and detailing it then fly it to Oshkosh and win an award.

That'll do it. :)




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Damn, that is beautiful!
 
evapilotaz said:
Maybe the word investment is not a good one. So the price of flying fun in an expensive one no matter how you look at it.
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That's it. You're paying for the convenience and peace of mind of knowing who flew it last and its mechanical condition is 100% under your control. It's a luxury, just accept it and enjoy. :wink2:
 
The delta between rental and ownership costs diminishes with increasing hours, until at some point it becomes cheaper to own. That, plus the greater convenience of ownership make a compelling case IF you are going to cross that threshold.

My Cessna 150 has cost me approx $60/HR wet, all in, including hangar and maintenance - 700 hours in 4 years. But now it's getting more expensive, because I fly it less often ..... I can only fly one plane at a time, and now I'm usually in the Bonanza.

Despite the general consensus that we should all fly a plane suited to 90% of our stated "mission" requirements, my personal opinion is that if you can only have one airplane, it should have a back seat - even if it's cramped and seldom used. It'll come in handy, and it doesn't neccesarily carry a terrific efficiency penalty.

Ignoring my own predudice stated above, in your case, solo or + one kid, a 150 or something similar makes good sense - you can rent something for special occasions. I'm not sure, but I suspect a classic tail wheel AC holds value better, so maybe a 140 ?
 
What CCluck said, look at the delta between rental and owning. When you fly enough for owning to cost less per hour than renting, buy.

Other things you have to look at is the value of your time, driving to an airport that rents eats 2 to 3 hours out of my time versus going to the field by my house, 7 minute walk.

Availability, the place I rent from is a school and students get priority as they should, but when I want to take a trip the plane might not be available or available for the entire time that I need it.

Usually you have to pay a minimum amount for each day you have the aircraft checked out, this can limit you on flying somewhere and staying with a rental unless you don't mind paying for time that you didn't fly.
 
paflyer said:
Really? When was that?

Of course he probably spent another $25K in the 5 years he owned it.
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Mid 90's. He didn't spend much on it.

I forgot to mention after the deal was finalized, the owner had a bad prop strike on the delivery flight. Crank was toast. They got a fresh overhaul and new prop out of it.
 
One thing that sucks about renting or even a flying club is that maintenance issues are harder to forsee. I feel more confident planning a trip in advance with a privately owned airplane. Because I am the last one to fly it and know that everything was 100%. I've showed up to the flying club a few times and found flat tires, a flat strut, dead battery, inoperative oil pressure gauge, bad magneto, electric cowl flaps broken. Its difficult to plan a trip with friends and buy hotel rooms in advance etc...
 
dell30rb said:
One thing that sucks about renting or even a flying club is that maintenance issues are harder to forsee. I feel more confident planning a trip in advance with a privately owned airplane. Because I am the last one to fly it and know that everything was 100%. I've showed up to the flying club a few times and found flat tires, a flat strut, dead battery, inoperative oil pressure gauge, bad magneto, electric cowl flaps broken. Its difficult to plan a trip with friends and buy hotel rooms in advance etc...
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Definitely. I have had minor issues come up on the road, but I have honestly never been stranded or even had to reschedule a trip with my Baron.
 
Last fall a friend hopped in a club plane and it was deader than dead. The last person using it(or maybe it was maintenance) left the master switch on.
 
fiveoboy01 said:
Last fall a friend hopped in a club plane and it was deader than dead. The last person using it(or maybe it was maintenance) left the master switch on.
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A trick that I used to do on rented planes was to leave the nav lights or beacon or something ON when I turned the master off.

That way I would know right away walking away from the plane if I forgot the master.

The school I flew planes out of had a $50 fee for the master being left on. Which, if you think about it, was no where near enough. Batteries can be $200. I do NOT miss rental planes..
 
Problem is as a new owner about to do an engine overhaul, is that one thinks the quoted price, plus labor to get engine in and out, is what it will cost. It won't. Unless you're planning on re-using your:

old hoses
old ignition harness
old spark plugs
old oil filter
old oil
old turbos
old wastegates
old oil cooler
old engine rubber mounts
old accessories
etc

Add to this all the NDT you have to do to engine mounts, plus labor, and you're looking at twice the amount of your original quote, roughly. Maybe a little less for a very simple NA aircraft. Hoses alone on a turbocharged engine can cost $5-8K. Just for friggin' hoses!

That's money that just gets lost between the cracks - it's not something you can recoup on a sale. They will value the engine at the overhaul price (and not even that), never at the total price of what it took to actually get it in there and working again. That's why, in my opinion, you can never recoup the true cost of an engine overhaul on a sale.

And that's fine as long as you don't sell it. Then that just becomes part of your operating costs. So never sell - just keep buying more! :yes:
 
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Its just like my vehicles. I will never recoup what I pay in maintenance in the vehicle when I go sale or trade in the vehicle. Also the depreciation of a car or truck is not a good comparison with an airplane.
 
BigBadLou said:
I literally LOLed here. :D That is a good one! :)

Frankly, your airplane sale price is first subject to market fluctuation and supply/demand.
A good engine with low hours adds value (or you can argue that it does not subtract value). 300 vs 600 hours won't be a big difference in sale price. Once you get past 1/2 TBO, people usually start looking elsewhere. Everybody wants a fresh engine nowadays.
Just my $0.02;
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I think a lot of people want fresh engines because sellers can't fully discount a ragged out one. For a lot of 50k airplanes at least (my price range), the engine is 2/3 the value of the airplane.

For the OP, the vref answer to your question about how much the engine depreciates the cost of the airplane is $18/hour. It's simple math, cost of overhaul / TBO hours.
 
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