The Ten Commandments of Buying A Used Airplane
While the proper acquisition of an airplane is complex process that should be done by someone who clearly understands the procedure, the "rules of engagement" are little more than common sense. Here are ten tips that can help you...
Over the years, I have provided purchase assistance to many first time aircraft buyers. While the proper acquisition of an airplane is complex process that should be done by someone who clearly understands the procedure, the "rules of engagement" are little more than common sense. Here are ten tips that can help you...
I. Negotiate price, not quality - The value in any aircraft acquisition is almost always in the "buy" and rarely in the sell. You are money ahead to spend a bit more to buy an airplane that has been well cared for, flown regularly, lives in an organized hangar, with beautiful logs and documentation, and routine maintenance by a shop that specializes in the aircraft type.
II. Damage History - For all practical purposes, damage history has little, if any, impact on the value of an aircraft that is over 30 years old. In many cases, a repair on an airframe can be as good, or better (as has been the case with some of the newer airplanes coming off the line), than original. Companies like Biggs Aircraft in Wellston, OK or Beegles Aircraft Service in Greeley, CO do exceptional airframe repair work and have factory jigs to help facilitate the repair work. If the aircraft has damage history, you will typically find it in the airframe logs and/or in the FAA Form 337- Major Repair And Alteration forms that should accompany the logs. Inquire who did the repair work and if the shop is known for its repair of Bonanzas. If you are told that there is no known damage history to the airframe, confirm this in your pre-purchase inspection on the aircraft. I have seen many a Bonanza that had been down on its nose with no record of the damage in the logs.
III. Value Versus Price - Do not think in terms of price of an airframe, think in terms of its value to YOU. Radio equipment and modifications already installed on a Bonanza will add only a small percentage to the purchase price of the airplane but will cost the buyer significantly more to install on the airplane after the sale. For this reason, a propective buyer should develop a "must have" equipment list with the cost to purchase and install the equipment on the list in order to properly assess the value of a particular airplane to a particular buyer. For example, let's say the prospective buyer requires tip tanks in order to meet his or her mission profile. The Aircraft BlueBook allows only $2,200 added value for wing tip tanks on a Bonanza but these tanks cost over $12,000 to purchase and install. If tip tanks are required, and are a "must have" for the buyer, thay are worth much more than book value to this particular buyer and the airplane should be appraised as such. I recently purchased a 1979 V35B with the IO-550 engine and other modifications for a client. Although the airplane price was about $20,000 more than one without these modifications, the actual cost to do these mods would have been about $75,000. You are always better to buy an airplane with the equipment you want in it than to add it later.
IV. Always buy an airplane with an exit strategy - Contrary to what you may think now, this will most likely NOT be your last plane. So before you buy, you need to make a projection as to what the numbers on the aircraft may look like when its time to sell it. If you fly 120 hours a year, and think you may have the airplane for 5 years, you'll add 600 hours to the airframe and engine. Buy a Bonanza with 200 hours on an IO-520 and you're looking at an engine time less than mid-time in 5 years, the best point to sell. On the other hand, if you buy an airplane with 1,000 hours on the engine, and choose to sell your plane in 5 years, the buyer will consider the motor run out. If you straight-line the cost of operating an aircraft engine with a 1,700 TBO engine that costs $35K to overhaul, an engine with 1,400 SMOH costs almost 5 times more per hour than a 300 SMOH hour engine.
V. Buy a good "paper airplane" - The best advice I could give an airplane buyer is ALWAYS buy an airplane that presents itself well on paper because, when its time to sell, this is what the new buyer will see. The plane needs to have perceived value in the numbers and equipment alone. A high time airframe with vintage avionics and high engine time is always a poor investment because there is no way the buyer can bring the airplane up to spec without putting far more money into it than what it is worth.
VI. Be aware of the "value proposition" when maintaining your airplane - A factory remanufactured engine may increase the salability of an airplane but it adds no more to its value than a field overhauled engine. A used IFR GPS will cost you less than a new unit but both appraise the same once installed in the aircraft. A used replacement part with an 8130 form will perform like new part at a fraction of the cost of new. And an expensive, brand new, all red custom paint job may look great to you, but may be considered by a new buyer as unacceptable taking $10,000 right off the value of your plane. Whether you're performing routine aircraft maintenance, upgrading avionics or modifying an airframe, always be aware of what, if any, additional value your actions will produce for your airplane.
VII. When it comes to avionics upgrades, do it right - There is nothing less appealing than to see a new Aspen unit installed over a faceplate or a new "stack" with old wiring tied off underneath the panel. When you have avionics work done, make sure the job looks like a factory install. Have the shop cut a new metal "blank" so that your installation looks like the money your actually spent on it. Remove all old wiring and get a wiring diagram for the work done if you can. It will save you money in the long run and add value to your airplane when you sell it at some point in the future.
VIII. The 85% Rule - An airplane should serve ALL of your needs only 85% of the time. You don't need a turbo to cross the mountains once a year, you don't need tip tanks if most of your flying is within 500NM, and you don't need to be paying insurance for six seats if it's you plus one 95% of the time. Buy what you need, and know the difference between your needs and wants. Its always a joy to upgrade an aircraft but buying more airplane than you need (notice I did not say avionics or equipment but rather "airplane") can make your initial aircraft ownership a costly and unpleasant experience.
IX. Commit to training, maintenance, and insurance commensurate to the airplane you will own and operate - It is almost amusing for me to see people spending hundreds of thousands of dollars on an airplane only to insure it with sub-limits, defer needed maintenance, and settle for a "check out" versus proper flight training. If you are planning to upgrade your airplane, commit to upgrading your flight skills, insurance, and your maintenance at the same time.
X. Buy an airplane you can afford to LOVE - I have heard it said that we never really own airplanes but rather are entrusted with their care and stewardship for the time they are in our possession. I have never owned a new airplane in my life but I have never owned an airplane that was not "like new" either. For me personally, there is a certain pride of ownership that I experience every time my airplane leaves the shop and I know I have taken care of it to the very best of my ability.... that it is perfect. And speaking from experience, the pride of owning and flying a cared-for and well-maintained airplane is the same whether the airplane is a Piper TriPacer or a Cessna Citation because a beautiful airplane will always be just that... a beautiful airplane.
Keep the blue side up...
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