Pros and cons of buying a hanger on class D airfield

Strutwipe

Strutwipe

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Strutwipe
Hi All,

There is a T hanger (42'X40') that is for sale at a local small airfield. Other than its own bathroom and entrance, no other features. I have not contacted the owner but I'm assuming there would be some type of land lease agreement with the airfield/city, property tax, insurance, and utilities. I have never looked into anything like this before so I would like to get some advice on the pros and cons of owning a hanger on a small class D airfield.

As a side note, there are no available hangers for rent at this airfield.
 
I own a T at a Class D. It’s been perfect for us. You can make improvements as you see fit. It has appreciated nicely in the last 4 years I’ve owned it. They do great with the snow removal/community stuff. Yes, I do pay a fee once a year that covers taxes and HOA (for lack of a better term). In addition to snow removal they also take care of the taxiways, lights, provide internet, etc.

I have no con’s. Make sure to know how long is left on the agreement with the airport and what they intent after that. i.e. renew for two additional 30 year terms, etc.
 
Strutwipe said:
Hi All,

There is a T hanger (42'X40') that is for sale at a local small airfield. Other than its own bathroom and entrance, no other features. I have not contacted the owner but I'm assuming there would be some type of land lease agreement with the airfield/city, property tax, insurance, and utilities. I have never looked into anything like this before so I would like to get some advice on the pros and cons of owning a hanger on a small class D airfield.

As a side note, there are no available hangers for rent at this airfield.
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Find out. Something owns the airport. City, county, state etc. They have phone numbers and websites and offices. There will be other hangar owners you can talk to. Probably an FBO and/or Flight Schools. It being a Class D is probably immaterial unless it’s one of those where the local airport authority contributes to the funding of the Tower and then that is likely to be built into any fees there are. What airport? Is it RYN?
 
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Radar Contact said:
Make sure to know how long is left on the agreement with the airport and what they intent after that. i.e. renew for two additional 30 year terms, etc.
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This is one of the more important parts in my opinion. Some airport sponsors have rather unfavorable lease terms which could cause headaches or affect the value of the hangar down the road if it hasn't already.
 
mondtster said:
This is one of the more important parts in my opinion. Some airport sponsors have rather unfavorable lease terms which could cause headaches or affect the value of the hangar down the road if it hasn't already.
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Yup. Knowing if they ever took Federal Money and when the obligations that go with that run out could be nice to know. Case in point, Santa Monica KSMO. Better yet, Meigs Field
 
luvflyin said:
Yup. Knowing if they ever took Federal Money and when the obligations that go with that run out could be nice to know. Case in point, Santa Monica KSMO. Better yet, Meigs Field
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I know they both closed down but what happen with the tenants?
 
Strutwipe said:
I know they both closed down but what happen with the tenants?
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Neither signed long term leases knowing that they intended to close. SMO is still open but the tenants know the exact date of future closure.

I don't believe Meigs had any tenants other than the FBO.
 
luvflyin said:
Yup. Knowing if they ever took Federal Money and when the obligations that go with that run out could be nice to know. Case in point, Santa Monica KSMO. Better yet, Meigs Field
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That's a good point too. I was thinking more of the growing trend that seems to be occurring where the airport sponsor will offer a 20 or 30 year land lease with no option to renew and the building becomes the property of the sponsor at the end of the term. No way would I spend money on a building with an agreement like that. One of the local airports tried that with a friend of mine but he ended up prevailing and getting a little more reasonable lease that included a renewal option. At this point he'll likely be dead before the city could get his building so he doesn't care as much.

Strutwipe said:
I know they both closed down but what happen with the tenants?
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Santa Monica is still open, for the time being. Its days seem to be numbered though.
 
Don't know about the class D, but I was forced to move to a class C, KELP, several years ago from a class G. At first I was a bit apprehensive, but within a few months I was appreciative of the fine service provided, and the safety. Oh, enclosed T-hangars are $110.00 monthly.:)
 
Definitely find out what the lease agreements are with the city. I have heard that the west side condo and T hangars at my class D are reverting back to the city in... I have heard four or five... years. Not official, but I heard it from someone who would know. So be careful. We sub-lease one of these hangars, but are also on the wait list for renting one of the city hangars across the field (east side).
 
We now own a hangar. We are at a uncontrolled airport and no services. Would love to be at a delta with services and 2 runways like Kevin.

However our cash price was so low we had to bite. More importantly we have over 70yrs left on the single lease and it was just $1. So I can pass it on to my daughter and still have lease value.

We looked seriously at a Delta but it was the overinflated price due to being executive busy. Also the airport fees and taxes meant close to $400/month before even considering financing.

Where we are now its literally $100/month for taxes, insurance, snow removal and heat. That is cheaper than our rent was.

If you have a bathroom that is a perk. If you can modify the interior like Kevin and Jamie can or we can that is another advantage. If the lease is quite long that is in your favor.

If the building is sound and you don't have to tie up gobs of cash then go for it.

We are finishing ours now...lumber and materials is excruciating right now. So if you need to do any work literally triple your estimate.

South facing is highly desirable if you get snow.

Make sure the door is working in good condition..they are spendy.

Make sure your plane fits. Our door didn't open up all the way and the 182 tail was hitting so we were fortunate to have extra door travel.

Scour the lease for weird stuff.

You should always have a plane or project in there if they are taking grant money.

If you are planning on 2 planes, draw it up first. We can fit a 182 and a archer or smaller low wing. No other combinations work. And those 2 are so tight they'll be rushed in a month or less so we are willing to take an overnight traveler in a pinch but not a tenant.
 
I think it would be great to have a hanger like that (bathroom) at a class D. I miss having services, a tower, and the security that comes with a D airport. I fly mostly into controlled airfields and Class B airspace (Dallas and Houston) but keep my airplane at a small Class G with no security or services.

However, alot of pilots like those types of airports (like where I keep my plane) so it just depends on what you are used to.
 
I have a Tomahawk and building a Zenith 650 so I have the room to grow but I'm not sure what two low wingers would look like. Thanks for the heads up on the length of the leasing terms and renovation. Any issues with a business ownership? I understand each airfield will be different but what type of business/activities would not be acceptable besides a chicken ranch?
 
Strutwipe said:
Any issues with a business ownership? I understand each airfield will be different but what type of business/activities would not be acceptable besides a chicken ranch?
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That may cross a line where the airport would have certain requirements you need to follow. I'd ask the airport manager if there are any commercial minimum standards that would have to be met to operate your proposed business. The expectations can be quite variable, ranging from nothing to excessive. I'd probably expect something in the middle at a typical class D airport.
 
I looked at one for sale at SAT a number of years ago. Could never rationalize the price for the term remaining vs the cost of a rental at SSF, so I rented at SSF
 
Wait... There are cons?

OK, so I'm based at a D and I rent a hangar, but that's because the rent is far cheaper than I could ever buy a hangar there for. It's a busy airport with high demand, so I'm very happy to have the arrangement that I do.
 
Having a hanger available on any terms is amazing. Where I'm at there is either a 5 year wait to pay whatever they want to take from you, or a spot in a community hanger for a cost higher than most mortgages.
 
mondtster said:
That's a good point too. I was thinking more of the growing trend that seems to be occurring where the airport sponsor will offer a 20 or 30 year land lease with no option to renew and the building becomes the property of the sponsor at the end of the term. No way would I spend money on a building with an agreement like that. One of the local airports tried that with a friend of mine but he ended up prevailing and getting a little more reasonable lease that included a renewal option. At this point he'll likely be dead before the city could get his building so he doesn't care as much.



Santa Monica is still open, for the time being. Its days seem to be numbered though.
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In an agreement “like that”, the building still has value for the time remaining under the agreement.
 
Clip4 said:
In an agreement “like that”, the building still has value for the time remaining under the agreement.
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I wasn’t suggesting it didn’t. But if there are only a few years left on a non-renewable lease it will most certainly affect value.
 
Check the lease for a paragraph or two about "reversion." It might mean you have to transfer title to the hangar building to the Lessee at the expiration or termination of the lease. Ok for a business who builds the loss into the business plan and gets to depreciate the cost of the hangar. Not so good for a private individual just trying to protect his aircraft.
 
Whether the field has a tower or not doesn't affect the hangar. I've been based at both towered and non-towered fields over the years. I learned to fly at BJC (back when it was "Jeffco") so towers don't scare me. My wife learned to fly at IAD. I regularly pop in and out of HKY (its 20 miles away an cheap fuel) which has a tower.
 
https://juneau.org/wp-content/uploads/2018/03/2008-01-11HangarLeaseForm.pdf

Here is a lease agreement for hangars at (JNU) Juneau airport. Hangars have been going for $85,000. I heard second hand from a friend the city has lowered the assed value from $85,000 to $45,000. Not sure if that is true.

What airport is the hangar located at?

I rent for now, hangars are great, but.... They do require maintenance at least the one I rent. It floods when snow melts off the roof. Had to change cables for hangar door, heater is giving me problems lately. Owner takes repairs off the rent but I do the repairs and it takes time away from what I would rather be doing.

Good luck
 
AKBill said:
https://juneau.org/wp-content/uploads/2018/03/2008-01-11HangarLeaseForm.pdf

Here is a lease agreement for hangars at (JNU) Juneau airport. Hangars have been going for $85,000. I heard second hand from a friend the city has lowered the assed value from $85,000 to $45,000. Not sure if that is true.

What airport is the hangar located at?

I rent for now, hangars are great, but.... They do require maintenance at least the one I rent. It floods when snow melts off the roof. Had to change cables for hangar door, heater is giving me problems lately. Owner takes repairs off the rent but I do the repairs and it takes time away from what I would rather be doing.

Good luck
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That looks like the Lease is for the ‘land.’ You can then build a hangar on it that you own. Are you renting from an individual or has the City become the owner via Appendix A. 12. and Appendix C. (15) and (16)
 
luvflyin said:
That looks like the Lease is for the ‘land.’ You can then build a hangar on it that you own. Are you renting from an individual or has the City become the owner via Appendix A. 12. and Appendix C. (15) and (16)
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renting from the (owner/individual)
 
I spoke with the airport authority (AA) and between POA and AA, I have learned a lot. So thank you for the information.

This opportunity is starting to die out. With this airport, you get a one time 30 lease on the land. So if you break ground you have 30 years. After 30 years, the structure belongs to the airport. If someone else broke ground, then then that clock has already started. So when that 30 years comes up then the owner has no ownership and must pay to lease their structure from the airport. So unlike other types of real estate, it seems the longer you hold onto the structure the less valuable it becomes. To me, this is a BIG con. Am I misunderstanding? Does not seem like this type of investment would be worthwhile since the real estate payments would be the same as the going rental rate. Also, the AA said that because they accept FAA funding, the regs direct that private parties cannot outright own structure on airport land. Any truth to this or is it one of those, "Don't blame us blame the FAA"?

Rebel makes the case to about the value loss part of a business plan. I will have to talk to my CPA about that possibility. Obviously there is a lot we can learn from him.

I have not called the owner, I wanted to become somewhat educated first. But I have gone from lukewarm to cold on the idea.
 
All of that can be factored into the price you would pay. If it works out to be less than rent and you’re going to be there for the duration of the lease - low probability of moving - it might be worthwhile still.

It would probably be a very low purchase price to make this work is my hunch.
 
Strutwipe said:
So unlike other types of real estate, it seems the longer you hold onto the structure the less valuable it becomes. To me, this is a BIG con. Am I misunderstanding? Does not seem like this type of investment would be worthwhile since the real estate payments would be the same as the going rental rate.
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I don't think you're misunderstanding. This seems to be happening more and more often.

One question I would have is what are the options at the end of the lease. Can the building be removed and the property returned to its original condition or does the building have to remain? You could potentially deconstruct the hangar and put it back together somewhere else at the end of the lease if you owned it at that time and wanted to do so. Obviously that costs money and depending on the condition of the structure may not be worth doing.

Strutwipe said:
Also, the AA said that because they accept FAA funding, the regs direct that private parties cannot outright own structure on airport land. Any truth to this or is it one of those, "Don't blame us blame the FAA"?
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As far as I know, that is not true. People in charge of airports often claim that the FAA says or dictates things that they don't, either because it is convenient to whatever rule they made up and want to force or they interpret things incorrectly. In dealings like this it is important to be knowledgeable of the subject because you can often be taken advantage of without realizing it until it is too late.

Strutwipe said:
I have not called the owner, I wanted to become somewhat educated first. But I have gone from lukewarm to cold on the idea.
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First thing I'd ask is why they want to sell. Have any idea how long the hangar has been there? The time is ticking on the lease and it could be at the point where they want out to preserve some property value.
 
Owner sold his plane due to age and health. 14 years left on lease. According to him, the leasing management company is negotiating a new leasing term with the city. But I have to question 14 years early?

On another note, how does one apprise a hanger that is half way through the lease agreement?
 
Appraisals are what other properties like it are selling for. Which none are. So it’s what the market will bear - what you want to pay and what he wants to sell it for.

What is your monthly cost if you keep renting a hanger? Multiply that plus any rent increases times the time left on this hanger that is for sale. That is the highest you’d ever go. Cut that if half, make that your initial offer. See what he comes back with

Remember - what he has spent on this already is irrelevant. The value is only what you’re willing to pay and he is willing to accept.
 
Don’t really see a significant difference between having a hangar at a class D or an uncontrolled field.
 
A Hangar on a relatively short lease is kinda like a plane with high time motor. By the last hour of TBO its depreciated full motor replacement cost. However the rest of the plane is worth something where as the hangar you will either have to raze...or end up paying the city to be in your same digs that you no longer own.

Thankfully in your case the structure is there so you don't have to build. To me, and like others have said...at 14yrs with no renew its basically worth the equivalent of on field monthly rent x 12 x 14. Maybe its worth a bit more since its yours, etc.

This lease crap is stupid. On the last month of the lease its worth 1 rental month. Might as well scrap it. Have an auction and sell the door, motor sheeting, etc. But if its part of a shared structure you probably can't do that either.

If it were me, I'd make a very lowball offer on a 14yr non renewable lease. Or have a new signed contract by the city/airport that you will given another 20yr or 30yr extension.
 
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