Rent vs Buy: the missing metric?

LifeAsBen

LifeAsBen

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LifeAsBen
I'm entering the hot debate of rent vs buy with what seems to me an overlooked factor in every thing I've read: If you rent you're giving money away. If you own you have an asset to sell.

An example, say you're going to spend $20k (airplane rental only; instruction fees excluded from this example) on getting your Instrument and Commercial ratings and it will take you 5 years. If you rent you've just given away $20k. If you own you have an asset at the end of your training that you can sell. Even if ownership costs such as gas, insurance, maintenance, tie downs, etc. are $15k over 5 years you are still $5k ahead assuming the plane holds it value. Even if it loses $3-4k in value you're still ahead. If you get a mogas STC'd 150 certified ifr trainer, follow Mike Busch's maintenance advice, do all the things you can yourself, tie down at a cheap airport, you might spend a lot less than $15k over that time and come away with even more.

I'm ready, tear my assumptions apart!
 
Don't forget Use Tax and Property Tax (if that applies where you live), as well as overhaul costs if you think the engine is going to approach time during your use. Take whatever maintenance you've factored in and multiply by 3. Instruments go south, electrics act up, props get nicks, etc.

On the other hand, what is your time worth? Renting means that you may not have the aircraft available when you want it, and that can delay your training. Plus there may be minimums involved if you're going to take it on a long cross county over a couple of days (or more). Don't forget to factor in the cost of renter's insurance.
 
The missing metric in your analysis is the opportunity cost of the capital you have to "invest" to purchase the plane. Money is not zero cost, although that's how a lot of people that think "renting is throwing away money" view it to make their case (and that applies to renting vs buying anything from vacation condos to cars to boats & RVs as well).
 
the OP is not factoring in risk. the airplane is likely to be a depreciating asset; he will also need to factor in hanger/tie-down costs, expected maintenance and unexpected repairs, taxes, fees, interest on the loan, yadda, yadda, yadda. if your net worth is sufficient so you can pay cash and can cash-flow the other expenses, etc. then by all means but i would not go into debt for this.
 
I gave up renting ,when the availability of aircraft didn't fit my schedule.
 
I've experienced both sides. Many years a renter. Now a couple years an owner. For the number of hours I fly each year (75 or so), there is no question: owning is more expensive, however you cut it. My calculations account in the spreadsheets I use account for both the value of the aircraft and opportunity cost of tied up dollars. As an example, in my first year of ownership, each hour of flying ended up costing me around $185. The rental fee was around $155.
 
I've owned my plane for over 20 years. It has cost me more to own my plane than what I would have spent renting. My fixed costs of insurance, tie down/hanger rental, annual inspection, upgrades/maintenance alone equals what I would have spent renting.

That being said, there have not been a lot of rental planes available were I live and scheduling is always an issue. Owning gives you the freedom to fly when you want to fly, and take overnight trips at a drop of a hat. No minimum flight hours for cross country trips and you are no pressed to return the aircraft by a certain time.

Another plus for owning is you can set the plane up the way you want it. You know what has been done mechanically to it and what needs to be done to keep it flying safe.
 
maintenance is the surprise factor in ownership.....not so for the renters.
 
arnoha said:
I've experienced both sides. Many years a renter. Now a couple years an owner. For the number of hours I fly each year (75 or so), there is no question: owning is more expensive, however you cut it. My calculations account in the spreadsheets I use account for both the value of the aircraft and opportunity cost of tied up dollars. As an example, in my first year of ownership, each hour of flying ended up costing me around $185. The rental fee was around $155.
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Have you calculated how many hours it would take to hit the break even? I always figured it'd be around 100 hours but it's always only been speculation. It sounds like you'd be pretty close to that.
 
LifeAsBen said:
I'm entering the hot debate of rent vs buy with what seems to me an overlooked factor in every thing I've read: If you rent you're giving money away. If you own you have an asset to sell.

An example, say you're going to spend $20k (airplane rental only; instruction fees excluded from this example) on getting your Instrument and Commercial ratings and it will take you 5 years. If you rent you've just given away $20k. If you own you have an asset at the end of your training that you can sell. Even if ownership costs such as gas, insurance, maintenance, tie downs, etc. are $15k over 5 years you are still $5k ahead assuming the plane holds it value. Even if it loses $3-4k in value you're still ahead. If you get a mogas STC'd 150 certified ifr trainer, follow Mike Busch's maintenance advice, do all the things you can yourself, tie down at a cheap airport, you might spend a lot less than $15k over that time and come away with even more.

I'm ready, tear my assumptions apart!
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$20,000 / 60 months. So you think you can buy an IFR airplane, put fuel in it, pay interest on it, have an annual inspection, pay to tie it down or hangar, buy insurance, replace plugs, oil, tires batteries, etc, and pay for unexpected maint for $334 a month?

Good luck.
 
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frfly172 said:
I gave up renting ,when the availability of aircraft didn't fit my schedule.
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^^ This is the biggest single factor, IMO. If you live in an area where rental or flying club aircraft are plentiful and easily accessible, it is hard to argue that it is more economical to own. But many/most of us don't have close and easy access to rentals. In fact, the reason I learned to fly in the first place was related to this. My twin brother was working on his PPL at a small town in Alaska, and when it came time to do his long x-country, the fellow he was renting the Champ from wouldn't let it leave the area. My brother then convinced me to go partners with him on a Citabria and learn to fly(we were 17 at the time). I took my first lesson in that airplane.

As someone else mentioned, how much is your time worth? I know that if I had to drive 45 minutes to an FBO and then do 20 minutes of paperwork to get the keys to an airplane(assuming an airplane is available), I would do a whole lot less flying than I do now. Owning an airplane is not cheap, but if you plan to fly regularly(say, 50+ hrs/year), it can make a lot of sense, especially if you have limited free time.
 
amster105 said:
Have you calculated how many hours it would take to hit the break even? I always figured it'd be around 100 hours but it's always only been speculation. It sounds like you'd be pretty close to that.
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Yeah, it's a bit in excess of 100 hours for the math I was doing. However, you also have to factor in risk. As a renter, budgeting is easy and nearly risk-free. One thing that's not in my calculation, now that I think about it, and probably should be, is the plane's slush fund. I keep about an overhaul's worth of money in the plane's separate banking account to allow the thing to keep flying in case of unexpected problems. I should add that to the opportunity cost that I'm accounting for. That might be a good way to turn risk into a dollar figure.
 
I don't know how to quantify it, but there is a YOUGE difference in value and utility between an airplane in which the pilot has an equity interest compared to renting somebody else's airplane.

If you rent from an FBO you really have no expectation that anything more than the most basic safety of flight maintenance will be performed. You have no assurance that any particular avionics equipment will be maintained. You have no assurance that databases will be updated. You have no assurance that the airplane will be available to you when you want it even if you've scheduled it.

A more important pilot (the owner, student needs it for a checkride, 'opps') can fly off with it five minutes before your scheduled time.

If you fly only an hour or three a month, and don't have to count on your airplane being available then renting is going to be a lot cheaper and will cause much less stress in your life.

If you want a reliable airplane (at least as reliable as our flivers can be) and you want to know how well it is maintained, then equity ownership is the way to go, no matter how much or little you fly. The more equity you have, the better off you'll be.
 
edo2000 said:
Owning an airplane is not cheap, but if you plan to fly regularly(say, 50+ hrs/year), it can make a lot of sense, especially if you have limited free time.
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True, and you can actually get more flight time owning vs renting. Not to mention the knowledge of maintaining the aircraft is priceless if you don't mind getting your hands dirty..
 
The upside is that you have control of the airplane and it's maintenance. The downside is that you have the all the responsibility for it. Remember that when your airplane has one of those unexpected problems, you not only have to pay for it, but the airplane may be unflyable for an extended length of time. I think it helps if you enjoy spending time working on and around the airplane in addition to flying it. The cost factor depends on the airplane and how much you fly it. The various factors have already been mentioned.
 
JimNtexas said:
I don't know how to quantify it, but there is a YOUGE difference in value and utility between an airplane in which the pilot has an equity interest compared to renting somebody else's airplane.

If you rent from an FBO you really have no expectation that anything more than the most basic safety of flight maintenance will be performed. You have no assurance that any particular avionics equipment will be maintained. You have no assurance that databases will be updated. You have no assurance that the airplane will be available to you when you want it even if you've scheduled it.

A more important pilot (the owner, student needs it for a checkride, 'opps') can fly off with it five minutes before your scheduled time.

If you fly only an hour or three a month, and don't have to count on your airplane being available then renting is going to be a lot cheaper and will cause much less stress in your life.

If you want a reliable airplane (at least as reliable as our flivers can be) and you want to know how well it is maintained, then equity ownership is the way to go, no matter how much or little you fly. The more equity you have, the better off you'll be.
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A lot of this depends on the club and the mission. If you need something simple (172), often you'll get a better dispatch rate from a club then owning. My club has 20 172SP. There is almost always one available. This is going to be better than your own plane, as every aircraft has significant downtime for MX. I've certainly rented other owner's planes when mine is down. On the other hand, the club has a one singular Dakota. If that's the plane you want and need, better hope it's available!
 
Here is the metric for aircraft ownership:

I want it: Y / N
I can pay for it while still putting food on the table:. Y / N

Two yes and you can buy a plane. These days, a plane is an investment as much as an above ground pool or a jetski is an investment.
 
LifeAsBen said:
assuming the plane holds it value
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This is a LOT of assumption. Normally it doesn't hold value or actually depreciates very fast. I could easily justify a purchase of an old airplane, I could easily come up with $$, I got savings, my finances is not a problem, my problem is I lost interest in flying old 172/182 or PA28s, I got this urge to enjoy finer things in life, I want to fly recent Cirruses or Cessnas Ttx and all of a sudden it is much harder to justify outright purchase, depreciation is huge and all other expenses pile up quickly, I could consider a partnership and this I might do one day if right opportunity presents itself but for now I am a happy renter. So we can at least agree that there is not a single solution that is going to work for everybody, so much depends on individual expectations and what you want out of your airplane, out of flying. Your house is an asset that will most likely appreciate in value in long run, this can't be said about airplane.
 
For many of us it's own or don't fly... even though renting would be cheaper, it's easy to talk yourself out of spending the money this week for an hour or two rental. The problem is you talk yourself out of it again next week, and next month, which can stretch into years. But when you own the plane you're just buying gas at the time you decide to fly, which is only part of the total cost of flying, whether ownership or rental. It doesn't seem that expensive right then, so you go ahead and fly. Sure you get the hangar bill once a month, and whatever maintenance becomes necessary, but unlike deciding not to rent this week you can't decide to just not pay the hangar rent this month. Wow, I just justified airplane ownership for poor people.

It should be noted that experimentals can drastically shift the break even point, as maintenance costs can be much lower, particularly if you are willing and able to do the work yourself.

Of course, nobody rents the kinds of planes I like to fly, anyway.
 
olasek said:
This is a LOT of assumption. Normally it doesn't hold value or actually depreciates very fast. I could easily justify a purchase of an old airplane, I could easily come up with $$, I got savings, my finances is not a problem, my problem is I lost interest in flying old 172/182 or PA28s, I got this urge to enjoy finer things in life, I want to fly recent Cirruses or Cessnas Ttx and all of a sudden it is much harder to justify outright purchase, depreciation is huge and all other expenses pile up quickly, I could consider a partnership and this I might do one day if right opportunity presents itself but for now I am a happy renter. So we can at least agree that there is not a single solution that is going to work for everybody, so much depends on individual expectations and what you want out of your airplane, out of flying. Your house is an asset that will most likely appreciate in value in long run, this can't be said about airplane.
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well....I guess we disagree. Every plane I've owned I was able to sell for close to or more than what I paid for it.....not including the annuals and maintenance (which I view as operating costs). But, each plane I owned was more than 15 years old....and well depreciated from new.
 
I find it interesting how much time pilots spend trying to justify the cost of their hobby. Does anyone try to justify the cost of a boat? A vacation home? Etc.?

"The cheapest thing in the airplane is the pilot." - Anonymous
 
Owned for about 20 years... couldn't imagine renting for that period of time and have nothing but pictures and memory to show for it. You have to answer, how long will I be flying and will investment cost to rent out weigh cost of purchase. Bottom line.
 
kgruber said:
Do you want "pride of ownership?"

Or not?
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And I am always open to such argument, I think it is much more compelling argument than any economics-based arguments. BTW, you are from eastern Washington?, my pursuit of this solar eclipse finally placed me in Easter Washington, first time ever in WA, - the closest hotel room I could get was in Pasco, WA, my Best Western room was overlooking the Tri-city airport and it's rotating beacon. Later I drove to Seattle to tour the Boeing plant.
 
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midwestpa24 said:
I find it interesting how much time pilots spend trying to justify the cost of their hobby. Does anyone try to justify the cost of a boat? A vacation home? Etc.?
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They do, you probably just never paid attention to it. I've heard the same style of discussions around cars, leasing vs buying, financing vs paying cash. Thing is no one really views cars as an appreciable asset though. Nor should they unless it's rare car collectibles... but then you're not driving them anyhow.
 
midwestpa24 said:
I find it interesting how much time pilots spend trying to justify the cost of their hobby. Does anyone try to justify the cost of a boat? A vacation home? Etc.?
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The only thing more absurd is the pilot obsession of calculating ownership cost on a per hour basis. Ask someone with a 30ft center console what his boat costs per pound of fish or an RV on a 'per night' basis.
 
I gave up renting for one reason.

When I sat in a rented plane, I have no idea on the condition of the plane. How did it fly for the person who flew it last? How was the landing? Sure, I would preflight, but are there unreported squawks? Did it make an odd sound or did the controls feel different?

With owning I have none of these concerns. I fly and no one else does. I know the feel of the controls, I know the trends, the last flight, and the condition of the plane. I know the squawks.

Renting is cheaper when you add in all the costs, but I want a high degree of confidence if I am going to put my wife and kids (or friends) in there.
 
LifeAsBen said:
I'm ready, tear my assumptions apart!
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Not looking to tear your assumptions apart, but I think you need to take more time to determine what your individual "needs", "wants" and "means" are. Once you know that then you can start on deciding how important your "wants" are and how much that factors into your decision. Unfortunately that's something you will never be able to quantify and/or model in a spreadsheet...

FWIW, I rented for 25 years and two months ago pulled the trigger and became an aircraft owner. I think I'm going to come out ahead owning vs. renting in the long run from a financial perspective but I know I'm a long way from knowing how it's really going to work out. That said, I haven't looked back and have definitely not regretted my decision.
 
Owning in a club or partnership is probably the best
LifeAsBen said:
I'm entering the hot debate of rent vs buy with what seems to me an overlooked factor in every thing I've read: If you rent you're giving money away. If you own you have an asset to sell.

An example, say you're going to spend $20k (airplane rental only; instruction fees excluded from this example) on getting your Instrument and Commercial ratings and it will take you 5 years. If you rent you've just given away $20k. If you own you have an asset at the end of your training that you can sell. Even if ownership costs such as gas, insurance, maintenance, tie downs, etc. are $15k over 5 years you are still $5k ahead assuming the plane holds it value. Even if it loses $3-4k in value you're still ahead. If you get a mogas STC'd 150 certified ifr trainer, follow Mike Busch's maintenance advice, do all the things you can yourself, tie down at a cheap airport, you might spend a lot less than $15k over that time and come away with even more.

I'm ready, tear my assumptions apart!
Click to expand...

It's better to own unless you are going to fly just a couple hours a month. I suggest you buy a plane with a cruising speed of 125 kts or better, with an altitude hold autopilot and good com/nav radios. You won't want anything better for a good little while.
 
Also factor in you now have the option to buy something you don't couldn't rent.
 
I generally agree with the OP's perspective on money value( in that renting is essentially throwing money away.) I've never rented an apartment, bought a condo instead, because I agree that having assets is genuinely better in the long run than not. However I rent and have for 5 years now.

I believe that principle the OP is using only holds water if you believe said asset will appreciate in value over time. Airplanes are a depreciating asset over time( even if you maintain it amazing, add in the best avionics etc.) Therefore, if you actually break down the possibility of any return( financially) on the purchase of the plans you really need to stretch the numbers and do some funky math to see how it works. The lease car market uses this exact understanding to work! Now, I'd imagine people who own a plane are happy with the money they spend for their own reasons and more power to them, but the idea that renting an airplane is throwing money away leaving you asset less is flawed on a number of levels.

I would love to own a plane one day. It's a life long goal/dream. I want one for all the reasons everyone else above has mentioned. However, for now, I'll continue to fly the nearly always available rental and enjoy my time in aviation relatively worry free!
 
AKBill said:
True, and you can actually get more flight time owning vs renting. Not to mention the knowledge of maintaining the aircraft is priceless if you don't mind getting your hands dirty..
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This is one of the big things about owning vs renting. I try to get no less than 1hr/week. No way that will happen if I had to rent.
 
I've owned, rented, and been in a club.
I've gone through countless calculations, and indeed, if you're not flying at least 100 hours/year, then renting is cheaper than owning.
However, the club option is interesting.
I'm currently in a club, and it's kind of like having the freedom of owning with renting costs.
I have never had a scheduling conflict, and I can take the plane for as long as I like.
But I pay $115/hr for a nicely equipment 180hp 172, or $145/hr for a C182P.

For now, I'm flying about 80hrs/yr, and this seems like the best compromise.
In about 3.5 years, I'll be an empty nester, and my flying hours will increase.
At that point, I'll look at owning again (maybe sooner).
 
weilke said:
Here is the metric for aircraft ownership:

I want it: Y / N
I can pay for it while still putting food on the table:. Y / N

Two yes and you can buy a plane. These days, a plane is an investment as much as an above ground pool or a jetski is an investment.
Click to expand...
The only "missing metric" for the OP is that he thinks that plane ownership can be expressed in a "metric".
 
You know the expression: "Everybody needs a hobby?"

For some, owning and maintaining a personal aircraft is exactly such a hobby.

For others, it might just be another chore.

I'm in the former group, but understand the logic of renting. Which, with BasicMed, I may find myself doing if and when I have missions not suited to a 2-seat Light Sport.
 
GLMS_NC said:
I gave up renting for one reason.

When I sat in a rented plane, I have no idea on the condition of the plane. How did it fly for the person who flew it last? How was the landing? Sure, I would preflight, but are there unreported squawks? Did it make an odd sound or did the controls feel different?

With owning I have none of these concerns. I fly and no one else does. I know the feel of the controls, I know the trends, the last flight, and the condition of the plane. I know the squawks.

Renting is cheaper when you add in all the costs, but I want a high degree of confidence if I am going to put my wife and kids (or friends) in there.
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This pretty much sums it up nicely. The renters won't take care of an airplane and the owners are putting in as little as possible, it's like renting a car.
 
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