Short term plane ownership
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tspear
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Timothy
I would think the transaction coats would be make such approach prohibitive in terms of coat. Sales tax, dealer commission or hassles to do it yourself, or wholesale discounts. Let alone the risks of significant repair costs...
Also,
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I pay my insurance quarterly so at most, I’d loose 1/4 of that cost but I believe they would prorate.
As far as a 12-18 month ownership, transaction costs always exist and any unexpected major repairs can happen (or not). A rough gauge is compare rental cost for 50-100 hours to the expected/unexpected costs. Depreciation in today’s market looks non existent but that could change.
You pays yer money and you takes yer choice.
Cheers
As far as a 12-18 month ownership, transaction costs always exist and any unexpected major repairs can happen (or not). A rough gauge is compare rental cost for 50-100 hours to the expected/unexpected costs. Depreciation in today’s market looks non existent but that could change.
You pays yer money and you takes yer choice.
Cheers
sourdough44
En-Route
It’s all about the deal. If you pay $40k for a $50k plane, nice deal, will work. If you pay $55k for a $40k plane, bad deal, you’ll be upside down out of the blocks.
I remember when I sold my Warrior a few years back, upper $30’s. A guy told me he could buy a ‘cheaper one’. I told him to do so. Mine was under 3000TT with about 900 hours on the engine. The plane is a workhorse at a flight school in FL now.
I remember when I sold my Warrior a few years back, upper $30’s. A guy told me he could buy a ‘cheaper one’. I told him to do so. Mine was under 3000TT with about 900 hours on the engine. The plane is a workhorse at a flight school in FL now.
I'd check on that. With quarterly payments yours might be different, but many policies are front loaded - the company earns most of the annualized premium immediately or in a short time. You are looking for the term "earned (or unearned) premium."
It's the universal "it depends."
Good price in an increasing market you can pay cash for on privately owned airplane with a clean title in a state with no sales tax, sitting on the ramp at your airport with a trustworthy mechanic to do a decent prebuy and a reasonable earned premium calculation from the insurer, the numbers might work. What are you comparing it to?
Good price in an increasing market you can pay cash for on privately owned airplane with a clean title in a state with no sales tax, sitting on the ramp at your airport with a trustworthy mechanic to do a decent prebuy and a reasonable earned premium calculation from the insurer, the numbers might work. What are you comparing it to?
Checkout_my_Six
Touchdown! Greaser!
would you purchase a house for the same length of time? ....no diff IMHO.
I think you are mostly right but there are market differences. House flippers do it regularly, but they are making improvements which increase the value of the house more than the cost of the improvements. That's rare with airplanes. I also knew of people back in my school days who came out ahead purchasing rather than renting.
Checkout_my_Six
Touchdown! Greaser!
all depends on the market....in most cases it doesn't pay to flip.....or everyone would be doin it.
I doubt it because it does depend on the market. It works for those who have the knowledge and risk tolerance to make it work, like most any entrepreneurial activity. If it were 100% risk free, the reward probably wouldn't be there.
i pay $330 every 4 months. If I sell the plane and cancel the policy, I don’t owe the remaining payments
Cheers
Shepherd
Final Approach
Thanks OP for bringing this up. I may be facing the same sort of thing, but mainly based on my age necessitating a sale in the next couple/three years, plus the factors mentioned below.
Another cost that never gets mentioned is travel to and from the aircraft.
I live 10 minutes from KPOU, 15 minutes from 44N and 30 minutes from KDXR, and 1 hour and 20 minutes from KGBR.
My biggest "time builder" on my Honda Pilot is driving back and forth to GBR. Almost 75% of my mileage is flying related.
I drive almost 3 hours (round trip) to fly the Cubs and the Cherokees, and an hour round trip to the Cessnas.
When I factored in the costs to drive back and forth (fuel, insurance, wear and tear on the car), my cost to rent went from $105.00 wet plus @ $10.00 a flight for renters insurance (total $115.00ish) to over $200.00 an hour.
My "break even" point is flying just over 40 hours a year instead of 100 hours, so I am still looking to own.
Yes it includes $440.00 a month for a hanger at KPOU and it's still cheaper to own than drive and rent.
The really silly part of all this is that if I buy a plane, it lowers my costs to rent the Cubs because travel expenses are dramatically lowered. And no, I don't want to own a Cub. My wife hates it and refuses to get into it. No, don't even go there.
Another cost that never gets mentioned is travel to and from the aircraft.
I live 10 minutes from KPOU, 15 minutes from 44N and 30 minutes from KDXR, and 1 hour and 20 minutes from KGBR.
My biggest "time builder" on my Honda Pilot is driving back and forth to GBR. Almost 75% of my mileage is flying related.
I drive almost 3 hours (round trip) to fly the Cubs and the Cherokees, and an hour round trip to the Cessnas.
When I factored in the costs to drive back and forth (fuel, insurance, wear and tear on the car), my cost to rent went from $105.00 wet plus @ $10.00 a flight for renters insurance (total $115.00ish) to over $200.00 an hour.
My "break even" point is flying just over 40 hours a year instead of 100 hours, so I am still looking to own.
Yes it includes $440.00 a month for a hanger at KPOU and it's still cheaper to own than drive and rent.
The really silly part of all this is that if I buy a plane, it lowers my costs to rent the Cubs because travel expenses are dramatically lowered. And no, I don't want to own a Cub. My wife hates it and refuses to get into it. No, don't even go there.
Great that yours works that way!i pay $330 every 4 months. If I sell the plane and cancel the policy, I don’t owe the remaining payments
Cheers
MauleSkinner
Touchdown! Greaser!
I think the “Is it a bad idea?” part of the question is missing a lot of factors…goals for the purchase, type aircraft, rental availability, what kind of flights/destinations, etc. There are many things that are simply not doable if you don’t own your own airplane.
So how would buying a motorcycle for the commute, that gets 50mpg, change your calculation? Cheaper to buy, maintain, and insure than a plane.
Shepherd
Final Approach
I actually do use a motorcycle during the riding season, if the situation allows (Temperature, mostly). In fact I rode it the last 5 times to the airport.
Also, too many trips are: "Honey, could you stop on the way home and get ........". Typically something too big, even for the Honda.
The other problem with the Cub is space. You have to wear the skinniest shoes you can fit on your feet because there is no space between the seat and the outside of the plane where the rudders reside, so, you carry a pair of shoes. and a flight bag with all your radio gear and wires, and a headset bag, and.. It gets to be a pain in the patootie, carrying all the clothing changes.
Sinistar
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Brad
To me the risk of the 12..18month flip are:
The one annual you will have to fully cover.
You damaging it and its not a insurance event
The market taking a nose dive.
After you are done, the next savvy buyer will first reduce price by the additional engine time and if the AP is digging will list all the stuff coming up. Balance that against this current market and perhaps your flying will have been somewhat discounted even! I think at best you will take a hit though. As others said, depends on the condition it was in when you found it.
The one annual you will have to fully cover.
You damaging it and its not a insurance event
The market taking a nose dive.
After you are done, the next savvy buyer will first reduce price by the additional engine time and if the AP is digging will list all the stuff coming up. Balance that against this current market and perhaps your flying will have been somewhat discounted even! I think at best you will take a hit though. As others said, depends on the condition it was in when you found it.
pfarber
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pfarber
You are missing the point. All the money is made at the buy. If you don't get a good deal then your future transaction payments will eat up whatever you would have saved.
Flipping works because they pay $40k for an otherwise $100k house, put $30k into it and walk away with $30k.
Buy that same house at $70k and you fail.
Now just adjust the numbers for airplanes.... its the exact same. Add in that right now there is a huge bubble that will pop.....