hello ladies and gentlemen welcome to Sporty's webinar on buying your first airplane my name is Eric Radke and I'm serving as your facilitator for the evening your presenter who we'll get to in just a moment is charlie masters a lot of great content to cover tonight before we get into that presentation we have for you tonight just a couple of housekeeping items to begin first of all we are recording tonight's presentation so if you have to step away if there's a point that Charlie talks about that you missed and want to come back to you keep in mind you'll be able to do that as often as you'd like we will have the full recording available in the Sporty's webinar archive which will be available at Sporty's dot-com slash webinars the same page you likely use to register for this one so come back any time and again as often as you like that will be up and published in just a couple of days also feel free throughout the presentation to submit any questions you may have via the software we will kind of pull those questions together and we have some time set aside at the very end in order to get some of those answered so we're delighted that you're here with us thank you very much for joining us and with that I want to welcome charlie masters Charlie serves is Vice President of Sales it's Ortiz and eastern Cincinnati Aviation which is 40s FBO located in Cincinnati at the Clermont County Airport pilot aircraft owner knows a lot about the topic of that we're going to talk about tonight and myself being a long time pilot I can't say I have aircraft owner as one of my qualifications which certainly I've probably like all pilots I've certainly been intrigued with the prospect so Charlie a quick question for you I guess before we get going what kind of market are we looking at now is this kind of a buyer's market in the airplane is it is it better to be selling an airplane right now where would you kind of word of the scales tip toward right now in the market well it's been a buyers market really since 2008 and if the scales maybe moving back a little bit as some of that excess inventory gets moved out of out of the marketing channels and into somebody's hangar but certainly been a good time to be buying an airplane appreciate that insight and certainly everyone probably on understands there's so many moving parts and so many considerations so Charlie thanks for your willingness to navigate through this somewhat complex topic so with that you have the floor take it away all right well thanks Eric and welcome everybody to to our presentation here at night like I've already been introduced what a just a little bit about myself it was I live on the farm that I was raised on and I bring that up because in the de Baca fields and the hay fields of northeastern Kentucky there every time an airplane would go over I'd look up and say someday I want to be a pilot of one of those things at watch Sky King every Saturday morning and I've been very fortunate after I got out of school I've got right on my pilot's license and I have I'm a commercial pilot in both land and sea plains and for the past 15 years I've been working here at Sporty's eastern Cincinnati aviation the FBO here at Sporty's as heading up the aircraft sales and as such I've facilitated dozens and dozens of airplane sales as both buyer seller and a broker for buyers and sellers and of own airplane myself so I'm going to share with you all what I've learned through the years and on that first slide I said maybe you're second third or fourth airplane because it seemed like every time that I participate in the sale I learn something new so tonight just give you a little presentation overview what we're going to be we're going to kind of look at the why should buy versus why you should rent how to go about assessing the use of the airplane to serve your needs determining a model that will what will best serve your needs kind of look at the advantages of new versus used airplanes how you go about finding an airplane once you've kind of settled on what you want going to talk about financing an insurance which is something that needs to be considered early on and choosing the mechanic which is another important thing and then we'll just kind of walk yourself walk through the purchasing process so I want to find out something about you all tonight and got a poll up here and basically we've got three possible responses one is I'm going to buy an airplane soon within the next year but this time next year I'll have my own trusty airplane if you're in that category se12 is soonish like to buy an airplane but family or business needs are taking a priority right now and sunís would be more than one year and then you're going to learn tonight that there are things you should be doing even if that airplane purchase is more than a year away there are some things that you can do be getting ready right now charlie monitored get go ahead Larry I'm sorry I was going to say wonderful news as the polling results come in that we don't have any attendees on right now that never plant on an airplane the majority is skewing towards soonish it's about a 60/40 breakdown soonish versus soon okay then number three never you know if you're in that category hopefully your you'll tune in a ballgame or something tonight you know but there are people that feels like if it floats or flies that you're better off for it and there's a saltier version of that Eric but we won't go into that tonight and the Portillo's now charlie so it's all yours all righty so how did it turn out Eric about about 60/40 skewed to nish versus soon all right great so let's begin this section talking about why someone should vibe versus renting an airplane and certainly renting has some advantages for one thing if the airplane you're going around is $150 an hour and you go out and you have a trip and it's going to be three hours you know it's going to cost you $450 when you get back the costs are known and constant another nice thing about renting at an FBO like here at Sporty's Academy we have a variety of airplanes so you'll have access to maybe a four-seater and maybe a six-seater maybe a two-seater so you'd have it if you want to go up on a Sunday afternoon just kind of look at the trees or something like that maybe a two-seat airplane be all you need whereas if you're going you know cross-country through 400 miles something more capable and that may be available by renting another thing is that you know the aircraft is professionally maintained by the owner of the FBO that you're renting from you know that the annuals up-to-date that the static check is up-to-date the ELT batteries all that thing you typically had a well-run FBO you don't have to worry about stuff like that and then another advantage for renting is convenience for business accounting it's pretty easy to decide well this trip is for business and you can deduct the whole thing you know if it costs you $450 you say well that's $450 charge my business I don't have to worry about percentages of hangar rent and percentages of insurance and things like that the rain does have some disadvantages one is that you lose some spot and Heddy the airplane that you want to rent may have to be scheduled days or even weeks ahead to get the one that you want sometimes the airplane may not be clean there's in the world unfortunately there's a rental mentality and you might show up and see the airplane looks something like old dusty crophopper over here and that may not project the image that you want for for yourself or your passengers rental airplanes are often equipped with with legacy avionics the simple kind of nav comms that everybody understands big knob big numbers little knob little numbers and and all those some Fe O's have some some newer glass panels often rental planes are kind of the old school and then one thing you may run into with rental is the minimum daily use requirements it's you know the FBO or the flight school is in a business too and they really can't afford to have you get the airplane flight for a half hour keep it for a week then fly it for a half hour back home so they'll put on those minimum daily use requirements that you have to pay for whether you actually use the airplane or not now uh not to be too rosy here buying has some disadvantages and the first one I think is the expenses are unknown you can kind of plan for them and budget form but if you're out at XYZ Airport and your starter goes kaput Leonia you're going to have to be out for a new starter because you're the owner also I don't know whether it's an advantage or disadvantage or not but as the owner you're responsible for for maintenance it's it's your responsibility to make sure the airplane is in annual and make sure that it its transponders check is up to date and the in this in the static system so and it's also it's possible that you can buy an airplane and the day after you get it the government comes out with a very expensive ad everything this directive that you have to comply with to keep that airplane air worthy so it's just something that it doesn't happen often but it's something you have to have in the back of your mind in addition to just the airplane you have to plan for additional expenses for storage and insurance taxes and then upgrades then finally as you're buying you can spend considerable time and dollars cruising the countryside looking for the airplane of your dreams that said there's many many advantages to owning your own airplane I think the primary one is that the airplane is there when you need it when it's your airplane so if a trip comes up fairly spontaneously you can go out to the airport and hop in your airplane pre-flight it and take off on you get an airplane that specifically fills your needs you get the airplane to for your missions I think there's a safety aspect in owning your own airplane you know when you fly an airplane the same airplane for 50 or 100 hours you get to where you know wherever dial button and knob is without having to look you know what the airplane sounds like you know what it looks like if there's if there's something crops up you know if that's a new problem or if it's when it's been existing for a while so I think there's a big safety aspect and buying your own airplane another thing is the maintenance status is is known you know when it was worked on last and what it was you know what was done to it and whether the spark plugs are new or old or all that but it you know it and then I think an important thing is yeah this pride of ownership it's your airplane becomes a symbol of you and your business so you can be like Nicky here and just have that pride of ownership which which I think is maybe bigger in our mind and then a lot of us will let on now there is some middle ground between renting and outright ownership and one is through a co-ownership or becoming part of a flying club and this works for many people as a matter of fact this is a way that I bought airplanes in the past is is fine people who's willing to share those expenses with you kind of technically if you have more than four owners the insurance is going to call that a flying club but again it's an opportunity for you to share your expenses especially the fixed fixed costs by all the owners and you might say well I don't know if I you know what if I want the airplane another guy wants the airplane well you know if you take out if you kind of figure there's about sixteen flying hours in a day there's potentially over 5,800 flying hours per year so the chances of conflicts are are pretty minimal in in twelve years of co-ownership on on our airplane had one conflict one time and one of the co-owners arose and my wife and I we were planning on going to Myrtle Beach place in golf over the weekend and guy called on Thursday night saying that he had an uncle in Florida that was probably not going to make it through the weekend and of course I said hey Myrtle Beach will be there next weekend or next month or whatever you know you go see your uncle but but you probably upfront you need to you have to agree how conflicts will be handled to make sure note there's no hurt feelings another kind of middle ground is through the lease back and a lease back is were you buy an airplane and then you lease it to an FBO or flight school for them to use on their flight line and there are some advantages here and that it does allow you to recover some of your capital costs the other people are paying you to fly the airplane that may that may make you a business and make the whole airplane tax deductible for you kind of downside is that you lose access to your airplane if you're going to have to get on a schedule like everybody else to that airplane and although as owner in most situations you can pull the airplane but you're in a business of renting airplanes now and you don't want to be looked at from your clientele as being well I don't want to rent that guy's airplane because every time I rent it you know he pulls it out from underneath of me and then of course you know if the airplane gets flown more and flown by more different people it's going to be susceptible to some additional wear and tear so you just have to factor that into the equation as well so let's say that you've decided to to buy an airplane and we're not going to talk about what airplane to buy yet we're going to talk about what do you need an airplane for and on your screen here you see two different airplanes other than the fact that they both have twin engines and they both fly that's about where the similarities of these two end this Gulfstream here it flies at about 90% of the speed of sound and this air cam over here it flies about 90% of the speed of smell this one has a very important if you have 10 or 12 people that need to go across the continent or across the ocean for business or pleasure certainly this is the kind of airplane that you want but if you want to go over a lake or a river or woods at 200 feet above the treetops really slow take pictures and kind of enjoy the scenery then the AirCam is the airplane for you so both those airplanes although they are they are vastly different they both have a place and a person that wants about so as you're assessing the needs why do I want an airplane and we think back to maverick air you know it says our friend maverick he says goose out you know I feel the need and his need was for speed well your needs may be different you may need more payload or or a longer cruising range and I put a graph up over here on the side and this it really doesn't matter what this is going to be dollars of the y-axis and then across the x-axis down here is going to be utility and you know you can buy a lot of utility and the price doesn't go up much but whenever you get to buying more and more the price goes up exponentially and so we have to keep this in mind as we're looking for that you know the speed the payload and the range of our airplane we can we can buy one that does about anything it just may have to require a thicker thicker wallet so you need as a potential airplane owner or buyer to think about you know how far do I need to go how fast we need to go do I have the skills to fly this airplane while I need additional skills well I need to hire a pilot do I have the time for the additional training I've had more than one customer that bought a pretty nice airplane thinking that they were going to fly it and it wasn't very long before they had hired a pilot because the customer is busy doing whatever the customer did to be successful enough to to be able to afford the nice airplane and found out that he didn't have time to go every year for annual recurrent training and things like that and that's fine to have a pilot this frees you up a lot so another factor to consider is you know how much useful load do you need and then I guess the big one though down here is is what what can we afford so I've been talking to a couple of guys here in the last just the last few days that are considering buying an airplane and I got this this one fellow here and he's located in Cincinnati and he as part of his business needs to make monthly trips to Joliet Illinois up here in the Chicago area Montgomery Alabama down here State College Pennsylvania Sikeston Missouri I don't know what he goes to Sexson for other than Lambert's cafe down there but maybe that's reason enough and then he goes about once a month over to DC and he likes to go to NASCAR races down in Concord down the Charlotte area he takes a yearly visit to has a timeshare condominium thing out in Las Vegas he goes out there every year most of these trips are less than 400 nautical miles this Outer Ring here his average trip is 320 and we just threw out this this Las Vegas deal he's going to either a charter an airplane or go commercial to take care of that Las Vegas trip after he'll probably fly his airplane out there one time to say that he has but most of the time that's a that's a pretty you know we're probably looking at you know a full day in most airplanes to get to Las Vegas from from Cincinnati so he's got to consider his useful load the number of people the cargo both weight and dimensions how heavy is the stuff I'm going to take and then also will it fit in the airplane you he wants to buy an airplane that would he doesn't have to stop for fuel for one of these normal trips and he usually takes another person so he figures at about two people 400 pounds 50 gallons of gas is another 300 pounds and then he has some somewheres that he takes on his consulting business he thinks there's about fifty pounds of that so he's about 750 pounds and something that we always have to remember I think most of us know that's been involved with airplanes very long is that the number of seats do not equal people very seldom can you put two or four people in a four person airplane or six people in a six and six place airplane that it's the seats are there and if you have some kids and stuff you can fill them up but certainly when you're talking about adults you need to kind of really assess you know how many pounds of people in my take and not how many people I'm taking so kind of looking at his case here it's going to travel about 300 thousand nautical miles a month that's that's quite a bit of traveling and in the in the month you can see that it would range from 25 hours if he buys an airplane going 120 knots to 15 hours with an airplane that does 200 knots now his longest trip is to Montgomery Alabama and that's about 800 nautical miles roundtrip and note that it would take him seven hours to do the round-trip at 120 knots and that goes down to 400 hours or 4 hours at 200 knots and you might say wow that's a it's going to take him all day just to fly down there and back well you know if he has an airplane in this in this neighborhood here 5 hours hunting 60 knots if he spends 2 hours in his meeting down there and another hour going maybe to and from the airport that's it's basically an eight-hour day and he can he can get his work done down there to give him two hours in Montgomery by Airlines from Cincinnati he would have to leave Cincinnati at 8 o'clock in the morning and he doesn't get back to 11 almost midnight so even though you might say wow this is this takes quite a while to fly down there it's still a lot better than going down by the airlines well got another guy he's retired at a rural airport not too far from Cincinnati here and and he's kind of a weekend fixture at that Airport everybody knows him everybody sees him he spends his weekend there he only takes local sightseeing flights he only hauls maybe one passenger or here he goes by himself so whereas I'm going to move back here and knotch this guy might think about this Piper Malibu here for his for his business the retired guy this legend cub here may serve his purpose is just absolutely fine and and probably even better because he doesn't want to go very fast he doesn't want to go very high I think you we always have to say well what skills do I need to get for the airplane that I want what ratings do I have and what I need to develop so you know certainly the fellow that is thinking about using his airplane in the business he needs to have his instrument rating will the airplane that you buy will require a high performance or complex endorsement or in the letter gentlemen there will require a tailwheel endorsement do I want a multi-engine airplane well do I have am i rated for multi engine for the guy more interested in the fun part of it I do want a seaplane do I have a seaplane rating do I need a type rating you may be familiar that what FAA calls large airplanes if they weigh over 12,500 pounds or they're they're powered by a jet engine you have to have a type rating and that has to be done typically on an annual basis recurring training and do you need some model specific training let's get let's get down but certainly the it's not a type rating but if if you're transitioning from from a you know Piper Archer or a Cessna Skyhawk and you're going to assess that TTX or Cirrus sr22 something like that you want some training in that specific model they all have their there there are certain little quirks not bad not good just they're all a little bit different and the most of the factories offer model specific training and especially their higher performance airplanes and then you need to really assess you know am I willing to take the time to gain and maintain the proficiency I need to fly this airplane because we don't want to be like Stryker over here and breaking out in a cold sweat every time we think about flying the airplane because if that's the case you're going to wind up not flying it if the airplane scares you you're just not going to use it I guess the big one is always how much can I afford and that can only be determined you know you know what that number is you can only really come up with money like this guy in the picture one time and you'll probably get caught and then you won't be able to fly your airplane after that and remember that that the price the the purchase price of the airplane is only the cost of admission you've got the direct operating cost which you can think of as as you know gas oil and tires maintenance costs reserves for engines and avionics debt service if you borrow money you're going to have to pay interest and then there's taxes and fees that you're going to that you're going to run into as part of your ownership to things do not buy more than you can afford if you do you're not be able Ford to put gas in it and it's going to sitting in a hangar and not do anybody and good but on the other hand do not buy less than you need but the fellow that's going to Montgomery Alabama if and he's wanting to rely on that once a month to get down there and go to State College Pennsylvania and Joliet you know that the legend cub is not the airplane for him he may be able to afford it but he will never be it will never serve his purposes and so make sure you buy an airplane and if if you can't afford it yet just wait to get your finances in order to where you can buy the airplane that you need so we've what we talk here for almost a half hour and I haven't mentioned once about what airplane you should buy and there's certainly all kinds of airplanes made by and I've got several here you know we've got the you know from Muniz - you know legend and cub crafters - boeing business jets and all those following the on in the ga world and they all have a place and so we need to figure out what it is that's going to serve our purposes as you begin to look at what to buy you're you're going to fill out a form on a website somewhere and somebody like me is going to pick up on that and and they're going to contact you to try to sell you an airplane it's it's their job and it's the sellers responsibility to make whatever airplane that they have fit your needs or make you think it fits your needs and they're going to do this the five P's here they're going to do it with pictures really glossy nice picture is going to show all the good features of the airplane while well conveniently not showing any any of its warts are going to use print media we're going to have they're going to have talk about how fast it goes and how little fuel it burns and there's going to be pictures in the brochure of a very attractive people sitting in the airplane with big smiles on their faces so you just know that if you buy that airplane that you're going to automatically become that attractive and have it big smile on your face and then the seller is going to have a pitch like this guy here this is a guy that thinks every airplane ought to have a parachute on it and he's going to he's going to pound that down that you know it's the this is what you need this is what this will serve your purposes then the seller you know he has to make the price attractive and then the next thing that's that the seller is doing is promotions and a promotion is something to make you go ahead and make the decision to buy their airplane in a short amount of time so they'll say hey you know I'll give you this price but it's only good through AirVenture at Oshkosh and after that that promotion goes away so what is what he's really wanting you to do is to make a decision force a decision before you have a chance to think about what else it is that you might need now your responsibility as a purchaser is to make sure that the airplane fills your needs that it has the payload that they will carry what you need to carry goes the speed that you need to go and remember you can buy any speed you want it's this this isn't like driving a car where there's a speed limit it's just you can if your billfold is big enough you can about go as fast as you can imagine one that fits your ability to fly has a purchase price that you can afford and operating costs and I brought this up here this is a if you're not familiar with it this is a twin bonanza a very capable airplane goes reasonably fast you can tell it's a twin retractable gear it's got a cavernous cockpit you can just put anything in there only front end and reasonably price you we can buy these things all day long for you know somewhere between 50 and 80 thousand dollars the rub comes with these these geared supercharged lycoming engines that require a fair amount of maintenance to keep them going a fair amount of fuel to get the to get the power out of them so I've seen this happen to a lot of a lot of potential purchasers they they find the the twin bows kind of a rare but they you know they find the Seneca or the Baron or something like that and they say oh man I can look here I get a twin for $125,000 certainly you can but again that's just the price of admission and it may be that that may be exactly the airplane you need but keep in mind it's to fill your need not the sellers need so you need to determine the maximum that you can pay after all the improvement including searching for the airplane the travel the pre by inspection something that fits your operating budget and then you can determine what model suits you best now I had the twin bonanza on one side and on the other end we've got this airplane here and certainly it probably doesn't cost very much to buy it doesn't cost next to nothing to fly this thing it just sips on the fuel but again you don't let price be everything make sure you buy the airplane that fills your needs so there's always the question of new versus used and again this is something that you're going to have to sort out for yourself and certainly new airplanes have some advantage of remarkable advantages there's a known history it doesn't have a history it's brand-new it's just just out out of the factory they'll come with a warranty so you'll know that there's not going to be an expensive ad that crops up in the next two or three weeks that you'll have to take care of it's in a known condition you you know the service bulletins have been taking care of it any airworthiness directives have been been cared for I can tell you from experience of new aircraft salesmen are very happy for you to take a test drive a demonstration flight in their airplane so you get to actually fly the airplane new aircraft is going to have the latest and greatest in all the accessories most new airplanes certainly established aircraft manufacturers will have some sort of factory training program where they'll get you acclimated to that airplane so you can get the utility out of it and that new aircrafts come with a pretty established price a dealer new aircraft dealer may be able to deal just a little bit but but the margins aren't great on new aircraft for the dealer so don't expect them to come off very much the disadvantages is is the higher price new airplanes are going to cost more used airplanes and a greater depreciate and that and I'm not talking about the the tax depreciation but the actual physical depreciation of the airplane it's going to be worth about eighty percent this year or next year what it was this year and then the year following that you know probably ninety percent of that number and you're following that about ninety percent again another disadvantage depends on how you look at it is most new aircraft now have a prepackaged avionics in them for example you can get a Cessna turbo 206 with any avionics you want as long as it's G 1000 and that's you know most new airplanes have have gone with with some sort of glass panel avionics and if that's what you want that's fine but if it's not then you're kind of stuck with it now the unit airplanes have some distinct advantages as well and the first one I think most of us think about is the price use is going to be less than a new one they may already be depreciated again I'm not talking about the tax depreciation what I'm talking about here is just the physical depreciation you know if you buy well-maintained skylane for $75,000 this year it's probably gonna be worth $75,000 next year and the year after that year after that year after that because it's already been depreciated out as far as again the physical depreciation not the tax depreciation speaking of skylines maybe there the model may no longer be available as a new airplane Cessna has there allegedly they're going to start selling them again here in August or maybe at the AirVenture but for the past three years there hasn't been sky lanes available new and then I've listed this on both sides when you buy and used airplanes from from someone there's there's more of a possibility of horse trading there's there there may be the the seller may be willing to concede more in order to get the the airplane sold also I've been in on deals where there were RVs involved boats involved were you know people were or wanting to get rid of a boat wanting to buy an airplane or vice versa and so there's a possibility of horse trading which can be an advantage a big disadvantage and used airplanes I've got history there and I've got a question mark after and the reason I say that is all of them have a history and you know we can we can go on what the owner says but you know an airplane that's maybe had five owners we don't really know what happened 30 40 years ago even if it has complete logbooks we don't really know that everything was logged of used airplanes typically have the legacy avionics the you know the typical nav comms and maybe a panel mount at four ninety six or something like that they may have that an air gizmo or whatnot but typically you know you're not going to see the the latest avionics you may have to find you may have you may wind up travel and I speak from experience here I have traveled hundreds of miles to look at airplanes that were allegedly in great shape and and when they opened up the hangar door look at the airplane I said oh hey mister that's an interesting airplane now where's the one you were telling me about on the phone so just you know have it in your mindset to be surprised if the airplane turns out to be as great as you thought it was going to be before you go look at it and and and rather than being horribly disappointed if it's not again you know I put the horse-trading is this man some people don't like horse straight and some people say I just want to know how much it is I'll write a check so it depends on whether you're which side of the barter system you're on and then another disadvantage is most used airplanes do not come with any sort of warranty and even if the guy says I guarantee that airplane is going to be good you know what's he backing that up with just fooling folks we're going to keep on going next we're going to talk about how to go about finding the airplane that you're looking for that you need and fortunately there's some trade publications that exist just for this very purpose you're probably all familiar with controller and the and the yellow traded plane or maybe the Aviators hotline you'll see those publications laying around almost every airport and you can subscribe to them most of them have online versions that are free and completely up to date there are some publications that are online only like Barnstormers and global air and there are there are many others if you just google airplanes for sale you're going to find several several sites but don't overlook local go out to your Airport and look at the bulletin board and see if there's an airplane for sale on it that might just be the airplane that you need also don't be afraid to ask around the the line guys or the airport manager if somebody's got an airplane for sale they on the airport they likely know about it and they know something about the condition of it nothing you do is just stroll around the ramp you may come across like a citta Priya here it's got a for sale banner on its prop you can kind of figure this for sale and there's contact information right here in the window kind of same shameless self-promotion here you may want to contact a broker or dealer they can do some of quite quite a bit of this work for you and the ones that have been around for a while it won't be their first rodeo their first squirrel hunt and they'll know a good deal when they see it not know a bad deal when they see it next thing you can do is just start traveling in a place that you can travel coming up here is if an airshow and flying like up at Oshkosh it but AirVenture and up there you will see airplanes of all all models all makes all conditions and when you find one that you might be interested in talk to the owner but don't ask him to say you know how do you like your airplane because we all love our airplanes what you really want to find out is is things like remember I said that the seller he'll have the you know the brochures the print media and stuff telling you about how fast there playing goes and how high flies and how much fuel it burns if if you see somebody and let's say you're interested in a piper era you know you find a arrow owner and you you know you ask and say hey you know what's your airplane crews work on crews you get out your airplane and how much fuel does it burn and and those are because that's what you really want to know is is what are these airplanes actually like for the owner before you invest the big check and find out on your own pipe clubs if you if you get it narrowed down and you've got a few airplanes that you're looking to fulfill your needs chances are there's a type Club that knows a lot about those airplanes whether it's you know like the seaplane Pilots Association the Bonanza Society Cessna pilots leska moaners Cherokee pilots also you know AOPA and EAA uh talk to those people they have technical service people that know the airplanes and we'll give you a honest an honest assessment I mean they're you know the Cessna Pilot guys is pretty big on Cessna airplanes he'll tell you that you know the Beechcraft is is made by the devil himself because when God made birds he put the wings on top and so the beaches have the wings on the bottom so it must be made by the devil so but they they know they know their airplanes and they'll give you an honest assessment I know I know folks from both I'm picking on because I know people from from both those organizations and and they will will give you a good honest opinion about it also if you when you join a type club they'll give you access to their message boards where you'll still have you'll see members of typing on them on the message board talking about their experience with the airplane and you'll see for sale postings there might be the airplane that you're looking well we get before we get too deep into it we need to talk about the a little bit about financing and insurance the airplane aircraft financing is is like nothing your banker has probably seen before you know we've got perfectly good airplanes out there we can buy for $8,000 or you can spend 80 million dollars on a boeing business jet so there's a broad range and most local bankers lack knowledge of airplanes and aircraft value like houses airplanes need maintenance to maintain their value and and your most bankers don't have any idea about how to assess the value of an airplane and then they may have been at a some seminar some time and remember hearing something about the liens or aren't recorded at the County Courthouse they're recorded out at the aircraft registration branch at Oklahoma City and they don't know how to do that and so they may not be interested in financing the airplane for you but they might be in the what I'm seeing right now is terms in aircraft financing ranging from 5 to 20 years current rates are around 5 points something you know between you know five point two and five point nine nine on good wrist you need to probably think about putting up 20% of whatever it is the the value of the airplane it's going to be 20% yours and if you're working with here one way to work with your local banker and this is what we've done with with with my co-owners on our airplane is we put up other collateral the bank really did want to fiddle with with filing a lien and stuff like that so we just we put up a other collateral to get the loan at the local bank with our local banker people we knew but dealt with several fine aviation financing companies these guys know what they're doing and what they're talking about like the ones that I have up here flee capital NASSCO LP aid or there are others they they aren't banks themselves but they they broker money from from banks and they know which bank is is apt to be a good fit for you and the airplane they understand airplanes and they know about their kind of a good resources say you know I say that seems like reasonable amount of money to be spending for that airplane now what are you going to need what you should be getting together right now is an application and almost most of these these guys in the aircraft financing world they'll take anybody's application because they all asked for the same pretty much the same information you're going to need to develop your own personal financial statement with with the statements debate back that up from you know your bank accounts and your brokerage statements and whatnot you'll need two years federal tax returns the complete returns all the schedules w-2s ke ones because you know we pay accountants and we pay bookkeepers and we pay tax preparers to make our income as meager as possible as the government will accept and now we're trying to show how much money that we're making so will be considered a good risk so that's why they're going to require all those schedules they'll ask for a current pay stub or maybe a couple of couple of months of pay stubs and then when you're ready they'll ask for the aircraft specification sheet that's going to let them know what airplane that they are actually financing insurance I'm going to bring that up you know what insurance is it's to share the risk insurance aviation airplane insurance is not required by law like we have to have a insurance policy on our car to drive our car well it's not required by law but typically if you borrow money you're going to have to have the airplane insured now you may have an insurance agent that you've dealt with but if they're not familiar with the aviation market you need to find a quality aviation broker like Perry O'Neal here and they will assist your regular insurance provider because in the airplane insurance world there's about 20 air underwriters and notice none of them over here are things like progressive Gockel or State Farm it's a specialty market and an aviation insurance broker will know which one of those companies might might be interested in your airplane at a good good price there's two parts to your insurance ones the whole insurance that's going to insure the airplane it's kind of like collision with your car insurance you want to make sure that you ensure no more than an aircraft's value because you you know if something happens the airplane if the hanger falls down on it or it catches on fire or whatever they're not going to pay you any more than the airplane is worth so you don't want to be paying any extra premium and then there's going to be a liability insurance a component which you know kind of it's pretty common to start out with a million hundred thousand dollar of liability insurance words a million dollars total and a hundred thousand dollars per person and then what what you want to move to though is what we call smooth limits where it's just a million dollars if there's just one person involved they would get the you know the possibility of settlement of the whole million dollars if you think you need additional insurance maybe your companies I may have an umbrella insurance or something like that that we can put additional insurance on top but typically most insurance with with normal kind of airplanes there you're looking starting out with that million hundred thousand before you get to dependent you need to think about them finding the mechanic the mechanic is going to be one that's going to take care of your airplane you want to make sure that they're properly license that they're an A&P hopefully they have a inspector authorization that way they can sign off the annual they need to be available to you fairly local that doesn't mean they have to be at your airport but you need to be able they need to be able to come to you if your airplane doesn't start they need to be able to get to you will make sure that they're good but you want make sure they have time for another customer when you need them you need them and an hour so many of the good aircraft mechanics are booked up they need the affordable knowledgeable familiar with the model that you're that you're thinking about buying for example I'm going to throw a weird one out here like a block of Viking very capable high-performance airplane it's got wooden wings so you know you'd want a mechanic that has some knowledge of dealing with wood and again the type club may be a good spot to find a local mechanic those guys know who the mechanics are around the countryside so we're going to move into the purchasing process and if you decide to go it alone if you're not going to contact a broker or dealer you know you found that an airplane and the trade publications hopefully more than one will fulfill your needs so you'd call a guy up or email any knowledge your seventy eight bucks master is still available and he's either gonna say yes or no if he says yes what you want to do is send you a specification sheet with all the equipment that means every radio what goes with the airplane what doesn't for example just you know these got these sheepskin seat seat covers it needs to be known whether those goes with the airplane or not well like this uh this portable Garmin here is that go with the airplane or not you're going to ask the person to take several pictures with email this works out really great you want pictures of the wings control services cause hail damage is going to show up on control surfaces first horizontal vertical stabilizers underneath the airplane see if it's like said antennas scraped off of it from a gear up landing or something like that look at the cow and the wheel pants these are typically composite parts and see how badly if they're cracked or what kind of shape they're in we want a picture of the panel's close enough that you can identify all the radios and you want a picture of all the seats to see how worn they are and then a picture of the floor for the same reason next is you need to in your own mind establish a reasonable price range and there's some you do that in the trade publications you can you know see what people are asking for particular airplane there's some books that the that are available this vrf is an on is has both of book form it's also available online for the AOPA but you need to know how to make adjustments they're going to give you an average and you know the old saying average if you have one foot and freezer and one foot and the stove on average I should be comfortable well especially when you're talking about airplanes that are you know 30 40 50 years old you're going to have a wide range of possible values so you need to know how to make adjustments for the damage history the paint and interior the equipment that's on the airplane the airframe irons and the engine tires also you want to need to keep up with what kind of overhauled or we did it have here was a factory overhaul or a shade tree overhaul like said know a knowledgeable broker a dealer can help you with that as long as as as well as the type clubs and then your mechanic will have an idea of what things are worth as well you want to get a PDF email to you of all the logs and see if there's any gaps in the in the airplanes history if there's any damage history how severe it was or how far how long ago it was typically if it was you know kind of minor hanger rash and stuff doesn't count to much but if if certainly if the airplane is in something where it it lost a wing or something like that you want to know about that and who repaired it and how long ago also through the logs we can find out if the if the airworthiness directives are any any of those are outstanding and any service bulletins that you want attended to and you got to be a very careful of high time airplanes but also low time airplanes it's hard on equipment to have it just set in the hanger season after season so you found the airplane you're going to go visit the airplane well give yourself plenty of time to evaluate the airplane don't fall in love with first sight you know one of the things go back to the high wing low wing thing you know it's the we call that ramp appeal houses house the airplane look to us and and you can't discount rent that's why most of us chose their spouses you know the first time we saw and said I like that person so but don't fall over the airplane yet look at the airplane and say this is the the the pictures this person send me represent this airplane or was he taking pictures of some other airplane look at the paint the seats and the floors be wary of fresh paint they may be covering up something like corrosion that soon after your own airplane that fresh paint will fall off and the corrosion will be there composites if it's if scenario if it's a composite airplane composites are very they have problems with ultraviolet light they need a coat of paint on them so if you see like along the wing the leading edge of the wing where they flown through a lot of rain and stuff if if the paint's missing on a composite airplane be very wary of that make sure mechanics checks it out that there hasn't been some bad decomposition of that composite you want to check the engine the baffles and the seals just make sure if everything looks good that there's nothing leaking out of the airplane and then do this and I'm speaking from experience here make sure all the logbooks the registration in the airplane there wasn't certificate and the data plate both for the airframe and the engine match the the documents that you have during your test flight if you have a chance to fly the airplane turn everything on check it all out even turn on the heater even if it's in the summertime check all the power plugs the cigarette lighter adapters the intercom outlets make sure the controls are correct and tight if you're buying the airplane from a private individual he may not really want you to take off and land the airplane but he certainly should let you handle the airplane and cruise flight going to listen for any unusual noises or vibrations take as many notes as you can and the nice thing about cell phones these days they all got a camera on them take pictures of higher settings and cruise speeds and all those things so you'll have your mail remember it later we get to we decide that we want the airplane we need to make sure we have a purchase contract in this contract we're going to spell out the price a complete list of all the equipment and accessories remember I said from the get-go that you needed a list of the equipment that came with the airplane we're going to talk about deposit and we're going to have an escrow account who's going to do a pre-purchase inspection if a person will not consent to a pre-purchase inspection I would advise you to run don't walk away from the deal if they won't during the pre-purchase inspection we're going to determine that the airplane is either air worthy or it's being sold as is if it's if it's as is if it's not an airplane if it's not an era where the airplane well it's worth whatever you know twelve hundred pounds of pop cans would be worth and then how we're going to handle contingencies during the pre-purchase inspection if something's found wrong how's that going to be fixed and then we also wanted to cover you know where the delivery is going to be made and when talked a little bit about the pre-purchase inspection it's it's there to establish that the airplane is air worthy the mechanic should conduct the completed inspection of the airplane and the logbooks usually we're not going to be concerned with cosmetics you should be able to see that yourself if there's if there's some paint missing and things like that you don't need a mechanic to tell you that and you should have known upfront that the seller is going to address any air worthiness squawks and while he's in it you may as well get an annual inspection after they complete the pre-purchase inspection they've already got the airplane open and you'll know when your annual still be a year after you bought the airplane we mentioned that the liens and title is recorded at the aircraft registration branch out in Oklahoma City you want to make sure you want to do a title search and find out make sure the guy that owns the airplane actually owns the airplane Sporty's has made this easy for you you can go and on and one of these links and either get a title search to make sure that the that the owner of the aircraft is who he says he is and you can also by title insurance so times these airplanes that's had five or six owners maybe it's it's rare and it happens very seldom but maybe back three owners ago somebody gave a bill sale for that airplane they weren't really entitled to do it I like to use escrow accounts AIC can also handle the escrow account and basically this is really handy if you and the in the seller are separated by some distance the escrow keeps the purchased contractor and and make sure that the buyers use the buyer is doing everything you're supposed to do in other words you're getting the money into the escrow account and make sure that the seller has title to the airplane and he has turned in his bill of sale and they will also file all those documents with the FAA after after you close the sale speaking the documents that's required you need a bill sale from the seller one thing it's sometimes people don't want to talk about how much they actually paid for the airplane up here in the in the word says for consideration you can put one dollar and ovc that stands for other valuable consideration and if you paid you know forty million dollars for the airplane make sure that when they fill out the bill of sale that your name and address is correct the way you want it make sure that the seller signs it exactly as his name or her name appears on the registration then you'll need to fill out an eighty fifty one this is the aircraft registration application and this has to be done on the official FAA form you can get it from your fist o most FBOs have some copies there around the white copy gets sent in but again make sure you fill it out exactly the way that you want it your name and address to appear on the title and then the pink copy is kept by you in the airplane as a temporary registration on that the on that 8051 you're going to have to declare what kind of ownership you have most people are either individuals or : most people aren't partnership you say I partnered with an airplane be careful that sometimes indicates the joint liability with the other person most most of us are co-owners flying clubs generally incorporated some sort of LLC another document you may need if you live in one of these states is you may have a state registration that you need to fill out and the Virginia our Alaska and Utah if you're lucky enough live in one of those states and make you pay a registration fee and also personal property taxes so we've got all the papers filled out and they're where they belong you want to make sure all the required repairs have been made that if there's any warranty that it's spelled out that you have the air Worth and certificate weight and balance pH owner's manual inventory all the accessories get the logbooks get all the keys authorize the escrow to release the funds and then go out and fly because now you're an airplane owner congratulations and that's that concludes what about what I know we have any questions Charlie appreciate that yeah we have a few kind of broad topics that have come up and none of these maybe you're all that specific but they're topics that perhaps you would be able to comment on the first one being about liquidity of an airplane so there's definitely some that have clearly have reservations about jumping into airplane ownership for fear that it's an asset that they just won't be able to turn or turn quickly if the circumstances call for so can you speak to the the topic of airplane liquidity and if that is a should be a serious concern for all of us well certainly any an airplane is a commodity and a commodity we'll always trade at a price and if you're careful about buying the airplane and then you shouldn't be in a position you know if you buy if you buy a hundred thousand dollar airplane it's worth a hundred thousand dollars then you'll probably get pretty close to a hundred thousand dollars we need when it's time to go sell certainly there are better times of the year to sell an airplane and others spring when people are starting to flies it's better than you know December January when the days are only you know seven hours long but typically it's there's an airplane trade out there and and and certainly if you if you have the airplane price right and again I'm a little you know shameless self-promotion here if you don't have the time or the inclination to deal with a lot of people a lot of tire kickers you know enlist a broker to to help you sell your airplane it will probably move charlie thanks for that another question is and we all know aircraft like this we're likely to come upon maybe some airplanes that have been sitting in a hangar haven't maybe flown or flown very little in a number of years and typically you know airplanes are healthier and happier if they're flown on at least some regular basis so what extra concerns might there be with an airplane that said that they'd say his log maybe five hours in the last five years yeah that's if it's if it's set outside if it's been outside on a tie then there's some definite places to be concerned about as far as corrosion if it's been inside if it's been hangared I think you would be wise to kind of figure that this airplane is going to need an engine overhaul especially lycoming engines the the way the cam sets it's it doesn't get all on it during periods of inactivity and so if if it cost you know $25,000 to to overhaul a four-cylinder like homing engine I'll just factor that into the purchase price and say I'm you know maybe I'll make it a year or two but I'm thinking I'm going to have to you know fork up $20,000 or more on the engine overhaul and I'm going to put that in a bid and and and people the person that you're buying it from they likely know that that's it their planes been sitting for a while and they're going to you know they're going to say hey look here it's got low time but you say yeah it's got low down so I got a lot of rust in the engine - okay thanks for that charlie related to avionics so can you I guess give a clear indication is it is it better from an avionics perspective which can vary a great deal for in the used airplane market is it better to look for the kind of avionics we you know a premium avionics weeders are better to look for something that that may be in need of upgrade and go ahead would be more economical to do the avionics upgrade yourself versus looking for something a little more modern well uh that's it's kind of up to you but the thing about it is av Onyx is going to appreciate like like anything else though a new radio a brand new radio is probably going to be worth about eighty percent next year what it was this year even though it's it works in its end it's fine avionics going to appreciate just like a brand new airplane would so you may be able to take advantage of maybe not the cutting edge but I'm just going to throw out something here you know like maybe an airplane that's got a an aspen PFD and a - Garmin 430 w's and and get that at a more economically than you could afford to put in you know a glass panel and then you know - 650 s or something like that yourself sure charlie one last question and we appreciate everyone sticking with us this evening just just a bit over the time but is there an industry benchmark for brokerage services which if somebody wanted to avail themselves of you know the expertise of a broker what should they expect to pay for that well it's going to vary with the airplane uh certainly you know the brokers time is worth something his his phone and or her phone and and her work and so for example if you're out looking for a you know a fifty thousand dollar archer or there are Skyhawk or something like that you know the broker may he may think he needs you know 10 to 12 percent of that whereas you know if you're if you're at you know 200,000 or $500,000 airplane the percentage the percentage may go down but you know the broker has to be paid for his time or her time and and or the other option you can do is is come up with a with a flat rate for for participated in the sale and then agreed to pay for the travel expenses and whatnot of the broker charlie what an education kind of from start to finish in terms of the entire process I know I feel like I just understand the entire process a lot more I think that goes for probably our entire audience with that I just want them a reminder for everyone still on with us that we did record the entire presentation so again check back with us it's poised calm slash webinars you'll be able to view the entire presentation as often as you can also as Charlie mentioned during the presentation we're just a week and a half away from the greatest aviation show on earth that being AirVenture Oshkosh at Wittman Regional Airport in Oshkosh Wisconsin Sporty's we'll be there in a big way we'll be in the hangar or excuse me tent location two sixty just outside of hangar B sub by all means stop by and see us Charlie will be on hand I will personally be on hand as well if you're in the area we'd sure love to talk to you and in terms of upcoming webinars let me make mention that we're just three weeks away from our next webinar presentation that does relate to our topic tonight's on aviation headset so if you're shopping for a new airplane or in the market certainly probably a very close behind that you may be looking for some new headsets you probably surprised all the new accessories and all the new features that are include with aviation headsets these days so that will be on Thursday the evening of Thursday July 30th Aviation headsets you can sign up at Sporty's
