First Time Buyer. Help!

In other words, if I were to look at my airplane maintenance expenses for
a
given year they might differ by as much as a factor of 3, yet a running
5-year average would be fairly predictable.


Okay, I can see this, but it sounds like you are saying that years 1 and 2
are bound to be higher than 3, 4, and 5.

I can assure you that if I were to trade up ( which I may do), I would
still
be ahead due to tax savings.

What tax savings do you get by owning instead of renting? If you mean
depreciation, then you have to balance that against the cost of capital of
buying an airplane. Rental prices spread the cost of capital over many
users, so an accurate comparison of rental vs. owning usually favors
renting
from a purely economic perspective.


I could care less about the capital costs to others. Its the cost to me
that counts. So far, I have spent about what renting would have cost me.
Yes, I lose cost of money on the down payment, but given that all my
investments have been headed south except my home and plane...

What kills renting is fleet insurance at 8% of hull. Its not the capital
costs. The insurance company is making all the money on my plane. I am
just covering costs other than purchase (not counting depreciation write
offs).


My plane is on a leaseback, and its not really
costing much at all.

Well the only leaseback model I have seen that works well is where the
owner
is an A&P or otherwise can tightly control maintenance costs.


My experience has been fine. The plane has not had many problems that were
not covered under warranty, or that the factory did not pick up outside of
warranty. I did switch FBO's, but I didn't have any real gripes about the
cost of repairs at the old school. Perhaps your AP's are more aggressive in
your area. Down here, they are cheaper than car mechanics.

A new airplane has much lower maintenance costs, but the value of a new
airplane depreciates and thus creates a high risk of a loss.


I would only sell my plane in a trade. The free loan from Uncle Sam that
comes in the form of depreciation and expense write off is much greater than
the actual depreciation so I would be ahead so long as I can aviod recapture
which is pretty easy to do.


So a 60k plane, put 200 hours on it in 2 years, what is the worst you
will
lose
out? Maybe it will end up costing you an extra $4,000 or $5,000, IF you
really did buy the wrong plane. In the meantime, you had a lot of value
you

You could lose much more than that. A new engine could cost twice your
estimated maximum loss. New exhaust, corrosion repair, new prop are
others
which could cause very significant blips in maintenance costs.

You are assuming the most incredible losses. Also, if you put a new engine
in the plane you can get back much of that because it increases the value,
so your only loss is the hours short of TBO. Corrosion repair should not
occur within a few years of an adequate prebuy. If someone is going to buy
badly, it won't matter what kind of pilot they are. A fool will still be a
fool after he has his ATP.

every plane flying by, and wishing I were able to fly. Are you full
time
in
the aviation business? You seem to have lost the passion, man!
Certainly,
without knowing the income of the person you are working with, its hard
to
tell what they consider a reasonable loss, but to anyone in the flying
hobby
an extra couple thousand a year can't be a huge mistake.

I haven't lost the passion at all; I am as addicted to airplanes as anyone
else. I have, however, been around enough to have a sense of the economic
reality of owning an airplane.

I only wish the risk of airplane maintenance were only an extra couple
thousand dollars per year. I have known any number of instances where
surprise maintenance cost a pilot 20% of the value of an airplane -- no
matter if the airplane is a Piper Cub or a Gulfstream, that is a lot of
money.

I am not sure that you are subtracting increases in the plane's value from
the costs. If you can recoup the repairs in the resale, you never really
lost the money. 20k can almost rebuild planes in the under 100k range
unless you have to replace a low time engine without any relief from the
manufacturer.



Aha! This could be a gem of info. I am completely inexperienced here.
Tell me more. What kind of bill are we looking at on a 50 to 100k basic
plane like 182, arrow, mooney etc. I know the common wisdom on avionics
is
that adding them to an old frame gets a poor return, but what about
other
repairs and fixes. Are there any rules of thumb like 20% or 50% or what
not?

A typical rule of thumb is to expect 5% to 10% of an airplane's cost in
"catch up" maintenance with a possible upper limits of 20% if you get
really
unlucky.


I would be interested to hear what others think of this rule of thumb,
anyone? What do you consider the odds of being really unlucky are 5%?



Perhaps I mistated. I think you may not know what you WANT. What you
NEED
will be much easier to identify though. Where you are going to travel

Most students do not have a good sense of what avionics they will need.
They also tend not to have enough perspective on weather patterns to make
judgments on items like weather avoidance equipment vs. a nice paint job,
turbocharger vs. extended fuel tanks, etc.


You are talking about planes that should be flown buy 300 plus hour pilots.
300 hours is a lot of rental, and a lot of time for someone who wants to own
rather than rent. Really, I would plan on having many more hours than that
before trying use a stormscope or strikefinder to avoid weather. I advise
using the phone to avoid the weather before you decide to fly to pilots that
green.



--
Richard Kaplan, CFII

www.flyimc.com

These sorts
of things cannot usually be predicted while a pilot is in training.


This is at the heart of our disagreement, and I disagree.


I think that you and Jay have found the mark above. It can be a
seperate
skill set. Many students don't know anything about larger planes, while
nuts like me read everything we could get our hands as soon as we
started
on
our private.

That is absolutely true, but no matter how much you read it is hard to
have
a sense of weather patterns on your likely routes until you start flying.
If you discover that icing typically blocks Thanksgiving trips to visit
Grandma in the Northeast, that could have a radically different effect on
your airplane choice than if you lived in Texas.


I really do not understand this, did grandma move? Did the spouse decide
after the purchase that he/she did not like to fly in the plane? I think
you are describing a buyer that buys totally on a whim, with little
forethought. I hope we weed many of these personality types from the ranks
of the pilot community before Darwin gets them.

Honestly, lets say you are approached in the hangar by a student that says
he is going to start flying to a city a few hundred miles away after he gets
his private. You know the weather patterns that are likely on the route.
Are you not going to tell him? "You will be seeing T storms everyday during
April down there, make sure you have your IFR certificate, weather systems,
and oxygen or your going to get stuck a lot." Or, "Thats a nice flight.
Hardly any day you will need to wait for more than a few hours. Just watch
out for the balloon on the island."

Did you think he would buy a plane without asking anyone about the
appropriateness of the plane for his mission? Even a wet behind the ears
CFI can steer him away from a really bad decision.




--
Richard Kaplan, CFII

www.flyimc.com

I recently read an article where the author recommended paying for an
annual versus a pre-buy inspection. That way, new parts and serviced
items are on the old seller and not the new owner. Which, as you found,
often seem to pop up when it's time for the annual on your new plane.

This certainly seemed like sound advice? Anyone care to make a counter
point?



On Sat, 03 Apr 2004 22:56:22 -0800, MRQB wrote:

On your pre buy make sure you take a mechanic can check the avionics and
instruments in the pre buy its the only thing we did not check and during
the after purchurace inspection was deturmed that most all my instruments
needed replaced nice little $2,400 dent in the pocket book but what the hell
its only money we can always make more right.

In article ,
Greg Copeland wrote:
I recently read an article where the author recommended paying for an
annual versus a pre-buy inspection.

My airspeed indicator wasn't checked during the annual. It wasn't even
checked during the prebuy inspection. I did take a test flight and saw
it go up and down, but if it had been intermittant I wouldn't have known.

I think the lesson here is that if you're going to be an airplane owner
you can't let a $2500 maintenance bill get you down. Buying one of the
least expensive production planes (and I think an older C-152 qualifies!)
doesn't change that. Somewhere between C-152 and pressurized, cabin class
twin that goes up an order of magnitude.

--
Ben Jackson

http://www.ben.com/

Greg Copeland wrote:

I recently read an article where the author recommended paying for an
annual versus a pre-buy inspection. That way, new parts and serviced
items are on the old seller and not the new owner. Which, as you found,
often seem to pop up when it's time for the annual on your new plane.

This certainly seemed like sound advice? Anyone care to make a counter
point?

You will find it very hard to get the old owner to agree to those terms. It is quite
possible to get an owner to agree to having the inspection be done by your mechanic
as an annual. The usual terms are that glitches found are discussed after the annual
and the existing owner is free to walk away if you try to leverage the price down too
much. In that case, your IA may not get to see the logs until after you purchase the
plane, and the new parts and serviced items are still probably on you.

As toecutter pointed out the last time this sort of thing was discussed, the IA will
have to make a written record of the glitches, but few owners would hand the actual
logs over under those terms. Another poster stated that his tactic is to allow the
mechanic to inspect the logs before inspecting the plane, while the owner keeps the
logs during the aircraft inspection. When I sold my Cessna, I held the logs and the
IA did not touch them until after the deal was done.

In my case, the owner wanted the inspection to be an annual just because he wanted a
full year before doing it again. It only cost him about $100 more than getting a
pre-purchase done.

George Patterson
This marriage is off to a shaky start. The groom just asked the band to
play "Your cheatin' heart", and the bride just requested "Don't come home
a'drinkin' with lovin' on your mind".

On Tue, 06 Apr 2004 02:52:01 +0000, Dude wrote:

You are assuming the most incredible losses. Also, if you put a new engine
in the plane you can get back much of that because it increases the value,
so your only loss is the hours short of TBO. Corrosion repair should not
occur within a few years of an adequate prebuy. If someone is going to buy
badly, it won't matter what kind of pilot they are. A fool will still be a
fool after he has his ATP.

My father has been a pilot long before I was born. He's owned several
planes. I've recently started to talk about getting my license. At any
rate, the finance side of owning is something that my father has always
shared with me. Recently, I had an even more detailed conversation,
working up a spreadsheet that breaks down costs of ownership. He assures
me the wise man plans for 20%. Even better, bank 25% so that you ride out
really, really bad surprises. Needless to say, he plans on 25% and his
reserve is pretty much empty right now. Why? Surprises are there, just
lurking. He has a rather new plane. It's a 172R. I don't remember the
year on this one, but it's not older than the late 90's.

My point? The 20% that he's telling you seems like very sage advice. If
you don't need, you've got some cash for moving up, when you're ready.
Should you need the reserve, you'll be dang glad you planned for it.

On Tue, 06 Apr 2004 19:22:25 +0000, G.R. Patterson III wrote:



Greg Copeland wrote:

I recently read an article where the author recommended paying for an
annual versus a pre-buy inspection. That way, new parts and serviced
items are on the old seller and not the new owner. Which, as you found,
often seem to pop up when it's time for the annual on your new plane.

This certainly seemed like sound advice? Anyone care to make a counter
point?

You will find it very hard to get the old owner to agree to those terms. It is quite
possible to get an owner to agree to having the inspection be done by your mechanic
as an annual. The usual terms are that glitches found are discussed after the annual
and the existing owner is free to walk away if you try to leverage the price down too
much. In that case, your IA may not get to see the logs until after you purchase the
plane, and the new parts and serviced items are still probably on you.

As toecutter pointed out the last time this sort of thing was discussed, the IA will
have to make a written record of the glitches, but few owners would hand the actual
logs over under those terms. Another poster stated that his tactic is to allow the
mechanic to inspect the logs before inspecting the plane, while the owner keeps the
logs during the aircraft inspection. When I sold my Cessna, I held the logs and the
IA did not touch them until after the deal was done.

In my case, the owner wanted the inspection to be an annual just because he wanted a
full year before doing it again. It only cost him about $100 more than getting a
pre-purchase done.

George Patterson

Okay. Fair points. So, assuming that the seller will allow it, does it
appear to be the preferred route? Granted, while the seller could walk,
it seems like it still bought you protection. Especially so, if the
seller isn't willing to price accordingly. Even if the annual is put on
the logs until post-sale, sure seems like the preferred path?

Ya, I know I'm being pedantic here, but I'm am looking for any downside to
this strategy. Thus far, it all seems like nothing but goodness.

Greg Copeland

Greg Copeland wrote:

Okay. Fair points. So, assuming that the seller will allow it, does it
appear to be the preferred route?

Absolutely; just don't expect the seller to pay for a bunch of stuff your mechanic
finds, when *his* mechanic either didn't notice or doesn't think it's important. The
technique has several advantages, from the buyer's viewpoint. For one thing, it
prevents "surprises" at the first annual, since this *is* the first annual. If your
IA finds stuff you don't want to pay for, and the owner won't pay for it, you're not
stuck. If you buy the plane, you're not looking at an annual within the next few
months, as might be the case with a pre-buy inspection.

The most important thing in my opinion is that prospective buyers may take the
results of a pre-buy inspection too lightly; few mechanics will come right out and
say, "If I were you, I'd run from this one." Their usual approach is to tell you what
they've found and assume that you know how serious it is. Change that to an annual,
however, and they hand you a list of squawks and an estimate of the cost. That
estimate tends to get your attention, and much of it has to be done right now.

It is important to arrange an understanding with all concerned that, if you buy the
plane, the inspection will be logged as an annual. If you don't buy the plane, it was
a pre-purchase inspection.

George Patterson
This marriage is off to a shaky start. The groom just asked the band to
play "Your cheatin' heart", and the bride just requested "Don't come home
a'drinkin' with lovin' on your mind".

"Dude" wrote in message
...


Okay, I can see this, but it sounds like you are saying that years 1 and 2
are bound to be higher than 3, 4, and 5.

Years 1 and 2 and not "bound to be" higher than years 3, 4, and 5, but more
often than not this is the case. A lot of airplanes get deferred
maintenance when an owner is nearing time to sell his airplane.

What kills renting is fleet insurance at 8% of hull.

If the hull insurance is split between multiple renters, then the cost of
insurance for a rental is much lower per pilot tha nowning an airplane.

My experience has been fine. The plane has not had many problems that
were
not covered under warranty, or that the factory did not pick up outside of
warranty. I did switch FBO's, but I didn't have any real gripes about the

Wow.... no there is why you have a different experience. You are talking
about a new airplane if you have a warranty! Sure maintenance costs will be
low.. but there is a major depreciation expense in the first couple years of
buying a new airplane, whereas used airplanes rarely depreciate and maybe
even appreciate slowly.

If your airplane is rented and thus quickly accumulates hours, then it will
REALLY depreciate in cost.


cost of repairs at the old school. Perhaps your AP's are more aggressive
in
your area. Down here, they are cheaper than car mechanics.

Aviation mechanics are cheaper than car mechanics everywhere. It generally
takes much more time to access aviation parts, however. Much more
importantly, airplane parts cost VERY SUBSTANTIALLY more than auto parts,
often 2-3 times what the identical auto part would cost.

I would only sell my plane in a trade. The free loan from Uncle Sam that
comes in the form of depreciation and expense write off is much greater
than
the actual depreciation so I would be ahead so long as I can aviod
recapture
which is pretty easy to do.

You get a depreciation/expense writeoff on a used airplane as well, albeit
somewhat slower -- but in the end you get the same tax advantage from a new
vs. an old plane. However, the actual depreciation in value of a new plane
is quite real and in fact would reduce the amount of money available when
you step up to your next airplane.


out? Maybe it will end up costing you an extra $4,000 or $5,000, If
you
really did buy the wrong plane. In the meantime, you had a lot of
value

It could cost you $10,000 or $15,000 easily if you buy the wrong plane.

You are assuming the most incredible losses. Also, if you put a new
engine
in the plane you can get back much of that because it increases the value,

You cannot get back the full value of a new engine.

Much more importantly, if your engine is halfway to TBO when it needs an
overhaul, the very most you might recover in cost is half of the value of
the engine -- you cannot recover the value of the "unused" TBO time if the
engien did not make it.

so your only loss is the hours short of TBO. Corrosion repair should not
occur within a few years of an adequate prebuy. If someone is going to
buy

Corrosion can be hidden, i.e. painted over and not visible on a prebuy. Or
in the case of an older Mooney, it is time-consuming to inspect the steel
tubing for corrosion and thus this item is often missed on a prebuy.

I am not sure that you are subtracting increases in the plane's value from
the costs. If you can recoup the repairs in the resale, you never really
lost the money. 20k can almost rebuild planes in the under 100k range
unless you have to replace a low time engine without any relief from the
manufacturer.

A new exhaust system, an overhaul on a low-time engine, corrosion repairs,
and many other "gotcha" repairs do not come close to increasing the cost of
an airplane in proportion to the cost of the repairs.

rather than rent. Really, I would plan on having many more hours than
that
before trying use a stormscope or strikefinder to avoid weather. I advise
using the phone to avoid the weather before you decide to fly to pilots
that
green.

I would encourage spherics use by any pilot planning a cross-country trip in
the summer. Spherics are much easier to interpret than radar. If a pilot
is going go buy an airplane but have a mission profile that would not
benefit from a Stormscope/Strikefinder, then why not just rent a local
airplane?


--------------------
Richard Kaplan, CFII

www.flyimc.com

"Dude" wrote in message
...

I really do not understand this, did grandma move? Did the spouse decide
after the purchase that he/she did not like to fly in the plane? I think
you are describing a buyer that buys totally on a whim, with little
forethought. I hope we weed many of these personality types from the
ranks
of the pilot community before Darwin gets them.

I have met more pilots than I can possibly remember who have been surprised
either positively or negatively regarding how their expectation of airplane
practicality differed from reality.

The fact is that no matter what someone may be advised weather patterns,
it takes the experience of actually renting a car to drive the family home
from Thanksgiving dinner for it to hit home what the limitations of an
airplane are. Going on a family vacation by general aviation takes a
certain sense of adventure and spontaneity from a family which is more
realistically experienced than imagined; some kids love the adventure and
others do very poorly with sudden changes in plan. Some kids love flying in
an airplane and others don't. Some spouses are enthusiastic about flying
but develop motion sickness; others are so thrilled at visiting family
easier that they become instant aviation enthusiasts.

I am not just guessing here... I have seen this happen many times.


--------------------
Richard Kaplan, CFII

www.flyimc.com