How To Buy An Airplane With Jamie Beckett - MzeroA Flight Training

hey good to see you again it's jamie beckett here once again just escaped from the aopa foundation offices for a little bit so i could come down and talk to you great folks at m0a we're getting ready to do another little segment of how to buy an airplane part two [Music] okay folks we're back to the how to buy an airplane topic an important one we discussed some of the basics in in part one how to get started in the process but let's talk about some more serious stuff let's talk about money because money is going to matter there's no doubt about it now you got to start thinking and you might want to get a piece of paper and a pencil or a pen or work on a computer whatever but you're going to want to write some things down here you don't want to wing it if you will pardon the pun how much can you afford to spend on this aircraft this is a much more important question than you might think the purchase price is the biggest part at least up front and you do have to know if you can actually make that payment if you can come up with that kind of money but it's not the only cost involved in buying an aircraft remember you have to budget for the hangar or the tie down you're going to need insurance of some port whether you have just liability or liability and hull there's going to be maintenance considerations because you're certainly going to have to do oil changes there's going to be annual inspections you may want to do upgrades all those things have to come into it and let's not forget the all-important taxes you will be paying sales tax on this more than likely and that can be a significant amount of money depending on what kind of an airplane you're buying so let's look at all of those things carefully before we start the shopping experience fortunately we can actually get a pretty good idea of what all those costs are going to be a hanger or a tie down you can call around to local airports and find out do they have hangers available how much do they cost do they have tie downs available are there different types of hangers is it just shade hangers or t hangers or is there a community hanger you can get a pretty good idea of what's available to you right in your area and what it really will cost it's not unheard of for somebody to go ahead and get the hanger with the intention of buying the airplane because the hangers available go ahead and grab it now same thing is true of insurance you can call up an insurance broker or an insurance carrier directly if you prefer and you can tell them the type of airplane you're going to buy and you can ask for a generic version of a price they won't give you an exact price that you're going to pay but they can get into the ballpark and and they'll want to know how are you going to use the aircraft are you doing flight instruction are you renting it out is it just for personal recreational use go ahead and answer their questions and you'll come back with a really good idea of what it's actually going to cost now on the maintenance side that's a guess and in all honesty you can fill out all kinds of sheets spreadsheets and scratch pads and talk the mechanics the reality is nobody knows what maintenance your aircraft is going to require in the future nobody not even the current owner so you want a budget for that very often what people will do is they'll take a dollar figure twenty five dollars forty dollars whatever per hour and they'll pay that to themselves every time they fly to put money away four maintenance needs that you know are going to arise or something like an engine overhaul which will sneak up on you putting money away a little at a time can be helpful but having to pay that whole nut all at once that thirty thousand dollar bill for a new engine that could be painful it's not unheard of but it is absolutely avoidable sometimes people buy an aircraft that they find out later they can't afford to own it and fly it it may not even be able to afford to own it we can avoid that problem by sitting down really seriously with a piece of paper and a pencil or a pen and really looking at what's it going to cost me to own this airplane and what can i afford get those quotes get a ballpark so you know what are you actually going to be paying to own this airplane now let's get into the next part since we're going to be going shopping are we going to be using cash or are we going to finance this airplane both of those are perfectly viable and believe it or not as i told you my my cessna 150 story in part one if you're working with cash you may be able to make a heck of a deal as i told you in that i got that airplane for almost half price but i'll add another story in several years ago a piper cub came up for sale on my airport and i did not have a tail driver signed off i wanted one i'd wanted one for years but i never really got around to it so with this piper cub available i went and looked at it it was actually pretty good it had a lot of features i like disc brakes which was a nice upgrade basically it was very standard though the fella is selling it was asking i believe 28 000 and i didn't have 28 000 and i didn't want to go get a loan at that point because of some personal things going on so i told him the truth i said i like this airplane i'll give you 18 000 for it man that did not work out well he was truly angry he was personally offended he called me names he swore at me it was a very unpleasant experience and finally i just had to back up and say look man i'm not trying to insult you i'm telling you i'll give you eighteen thousand dollars for that airplane if you could sell it to somebody else for twenty eight thousand thirty two thousand that's none of my business but i have eighteen thousand dollars and if you get to where you need to sell that thing and you haven't been able to i can come up with eighteen thousand dollars still very unpleasant he was very unkind it was not the experience you want to have until three days later when he called me back and said would you still give me eighteen thousand dollars for that airplane well it turned out he had bought it and had it moved to florida from north dakota but he never actually registered it and he didn't have a pilot's license and he had kind of put off the flight instructors in the area and nobody wanted to fly with him and he had a broken foot so his leg was in the cast and his company was transferring him to another state everything aligned against him and he was in a rush to sell an airplane by the way the airplane still had a recorded lien on it it was easy to clear up but it was it was no big deal but all those things can work in your favor as a buyer even though i offered a ridiculously low price not meaning to be rude it was just i can actually afford that so that's what i offered three days later he accepted it we made the deal literally moved that airplane out of his hangar and into my hangar so working with cash can give you tremendous flexibility and keep in mind this is important don't fall in love with that particular airplane there's always another one if you don't get this deal that's okay there's another one someplace else now how about financing financing is a big deal the airplane i'm buying now i mentioned in part one a 1966 cessna 172 g golf model i'm financing that one because it's significantly more expensive than the previous airplanes i've owned that's because it's got a brand new engine upgrade to 180 horsepower it's got a glass panel it's got leather interior that's a more expensive airplane so this time i'm not buying with cash i'm financing now financing an airplane is a lot closer to buying a house than it is to buying a car or at least it can be you can find a bank maybe your local bank will go ahead and do aircraft financing there is a bank near me that will do aircraft financing but they'll only amortize it up to 10 years that's not really what i want i want to get that payment down smaller because the aircraft has devalued all it's going to it i want to amortize that payment over a longer period of time so while you might be able to work with your local bank and you might even get a very good interest rate there i choose to go with aopa finance not because i work for aopa foundation but because they're willing to amortize that loan for 20 years that lowers my payment down even though i'm paying the same amount and yes that means i'm paying more interest over time but that means i can get into the airplane and based on the deal it really does work out for me now minimum you're going to want to put down a pretty substantial down payment much like a house um probably 20 or better unlike a house most most aircraft finances aren't going to do the 3 down thing or the 5 down they want to see that you have some real equity in this airplane so 20 or better is desirable it will lower the amount you're actually borrowing and lower your cost but it also tells them you intend to keep this airplane for a while you're not just buying it and flipping it and they want to see that it's going to be with you for a while the cost of the airplane isn't critically important there's a pretty wide range of what these companies will finance there is generally a minimum though and it's typically down around the 25 000 mark so say you were buying a 50 000 plane you're putting down 25 000 and borrowing 25 000 that's about the bottom that the aircraft companies would do because there are costs involved in getting these loans put together and they don't really get the return on a small amount you might just want to go to your local bank instead of going to an aircraft financing company then again aircraft financing companies they'll finance aircraft up into the millions of dollars so whatever you want to get whatever price range it's in there's a deal out there for you you can finance it just be aware because as i said it's much like financing a house so you'll want your tax returns for the last two years you'll want a current w-2 and w-2 from the previous year you'll want obviously some id bank statements brokerage account statements any other outstanding bills any other loans you have for cars or homes or things like that they'll gather all that information and they'll make a determination based on your debt to income ratio whether you can do that but that's not the only way you can buy an airplane there are some really good creative cost cutting tips that i'd like you to pay attention to say you found an airplane that's perfect it's exactly what you want but it's about fifty thousand dollars maybe a hundred thousand dollars more than you can afford there's just no way you're going to make that work out with your lifestyle and your bills and your income that doesn't mean you're out of the game there are still opportunities you might consider a co-ownership people often call this a partnership partnership's actually the wrong term that implies a for-profit making enterprise and that's not what we're doing we're doing a co-ownership we want two or three or five people to own the same airplane and have the same rights to it because now we can cut the cost down so if you found that perfect airplane that's just a little too expensive if you put in a little legwork and find one more person or two or three more people who are interested in a similar thing you may be able to buy that airplane for a quarter of what you thought you were going to spend now it does require an agreement or you should have a partnership agreement but i'll tell you i've got friends who have been in partnerships co-ownerships with aircraft for many many years and because they've owned it with three or four people the cost has become so inexpensive some of them can afford to be in co-ownerships on two aircraft one for local fund flights one for fast high cross-country flights another option you might want to consider is joining or starting a flying club i know that sounds a little weird but the same concept of spreading the cost across multiple people with a co-ownership is true for a flying club in addition there's a there's a social component to the flying club where you get together and talk to each other hang out and have fun that part has real value the other thing is flying clubs can grow in size significantly i know of some that have more than 100 members and multiple aircraft but because of that economy of scale the prices have dropped down to just a few hundred dollars a year to get access to multiple aircraft so don't rule that out the co-ownership or the flying club is a great way to get the aircraft you want at a much lower price and let's face it we generally don't fly that airplane every day or even if we're time builders we may find one other person who's in the same boat needs to build time we'll buy that cessna 150 together we'll buy that cherokee 140 together and we will fly it together one under the hood one safety pilot will build up a bunch of time we can really cut our costs so keep those opportunities in mind and i'll share one more cost savings tips for the actual ownership of the aircraft that will keep it cheaper consider involving yourself in owner assisted maintenance there are things you're allowed to do as a pilot like oil changes and spark plug changes that are acceptable you can do that as preventative maintenance but you can also get involved with your annual inspection it's called an owner-assisted annual and if you find an ia who will do that with you and there are many you can do a lot of the grunt work taking off the inspection panels removing the interior getting the airplane ready for its inspection where you're saving 95 or 100 or 110 an hour shop fee for somebody else to do that not only do you save a lot of money but you really get to know your airplane inside and out because you've actually been there we're going to be back next time with some more tips on how to actually go about buying the airplane but that gets you a good start for talking about the money the financing whether we want to go alone or whether we want to do this in a group the key is you can do this let's just find the way that works for you because as we all know m0a nation a good pilot and a good aircraft owner is always learning see you next time [Music] you

Channel: MzeroA Flight Training

Views: 9,094

Rating: 4.9665737 out of 5

Keywords: MzeroA, MzeroA Nation, MzeroA Flight Training, Aviation Education, AOPA, AOPA Foundation, AOPA Finance, aircraft, aircraft purchase, how to purchase an airplane, flight training, flight lessons, pilot, pilots life, pilot training, Jamie Beckett

Id: u-4GnGZVMCk

Length: 15min 42sec (942 seconds)

Published: Tue Sep 14 2021