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Airplanes And Depreciation

Posted By:
Joseph Bucemi
13
Posts
7
#1 Posted: 1/23/2010 20:13:31

       Tomorrow, I'm going to be heading out to look at a nice little airplane I found on Barnstormers.com.

       It's an experimental, a Zenith 601 HD. Not to be confused with the XL, which I understand , is having a small problem with the wings staying on.

      Good price, but I find myself wondering about the investment I'm making. I've taken out a loan to do this...I'm not worrying about wether I can pay for it, but instead, I'm wondering if I can get my money back on it.

      Not that I want to sell it. already ,before I've even bought the darned thing. But, what if I had to. Will I still owe more than it's worth?

      The plane seems equipped nicely. It's beem modified to use a taliwheel which really gives it a nice, fighter plane type of look. And it only has 157 hours on the airframe and engine. Only 19,000. Sounds great.

     But, do experimental aircraft hold their value? If I'm worrying about losing money, would I be better  off looking at a nice tailwheel Colt I see for 17,000? It's a classic, so may increase in value over time, it seems. Back in 1995 I bought myself a 1946 Ercoupe for 12 grand. Now I see the same planes going for twice that!

       In the end, I know my emotions will decide for me instead of my head. If I fall in love with this thing tomorrow, all concerns about investment value will go out the window, I know.

       What has been the experience of the community, here. Have you lost money on your homebuilts, or made a couple of bucks. Breaking even will be fine with me. If you have an airplane for a few years and sell it it for what you bought it, well, you're ahead of the game. You had a whole lot of fun for free! Well, almost free...

Dave Prizio
Young Eagles Pilot or VolunteerHomebuilder or Craftsman
118
Posts
29
#2 Posted: 1/25/2010 12:34:08

The answer is, it depends. With the market in the dumps as it is now, you are going to have a harder time hanging on to the value of your investment that in better times. 

In good times we saw RVs selling for enough money over the cost of building to allow some people to make a nice profit. GlaStars, at the height of their popularity were also selling for  high prices.  Ditto for the big Lancairs.  However, these planes are no  longer bringing such good prices. 

Many things impact the resale value:  better models come out (GlaStars and RVs), problems appear (certain Zeniths), insurance becomes prohibitively expensive (many Lancairs), plus the general state of the economy.  To some extent the same things happen to certificated airplane values.

Be conservative and expect to take a pretty good hit on the value of any airplane you buy.  If you are still comfortable after allowing for that, then go ahead.  If you aren't, maybe you're not yet ready to buy an airplane.



Wayne Bressler
Homebuilder or Craftsman
89
Posts
30
#3 Posted: 1/25/2010 15:47:36

Joe,

The biggest issue affecting resale on the plane you're looking at is probably going to be the Subaru engine.  There are a handful of people who are happy with the Subaru engines, but the vast majority would rather fly behind Lycoming, Continental, or at least a Rotax 912.  Of course, at that price, you're significantly lower than any of the other CH601's on the market, so perhaps you'll still be able to recoup your intial investment.

It would be my opinion to pick up something a bit more conventional, with a more conventional engine/prop combo at a good, depressed market price.  You menioned the Colt, which is definitely conventional.  If you're willing to spend a few more bucks, and don't have to be LSA, you could get a nice Pacer or Cessna 120/140.

Also, don't forget about the Sonex.  Yeah, I know they only use the VW (AeroVee) or Jabiru motors, but the airframe is proving to be quite popular.



Tricycles are for babies. Taildraggers, Inc. www.taildraggersinc.com
Joe LaMantia
Young Eagles Pilot or Volunteer
175
Posts
69
#4 Posted: 1/27/2010 11:05:11

Joe,

I would echo Wayne's comments especially regarding the uncertainty in the market.  I'm a retired cost accountant and I will tell you one very big fact regarding expenditures on transportation equipment.  Whether we're talking about airplanes, boats, cars, or motorcycles to name a few of the popular modes, they aren't generally viewed as "investments".  These things depreciate with time and use.  The guys and gals who sell these things know the buyer has an emotional attachment when they set down to make the purchase, and that works in the seller's favor.  If your more interested in the return-on-investment (ROI) then the FLY in the airplane, then talk to a financial advisor rather then an airplane salesmen.  

My personal point of view is that all the money I spent to put those PIC hours in my log book pay me a huge dividend in my mental well being.  I can take out my log book and re-fly those flights as much as I like for free.  You will never get a dividend check from any aircraft or auto manufacture because you own their product.  You may find some future appreciation in value if your lucky enough to pick a product that holds its' value.

The RV line has had a great track record because Van takes a conservative approach to his designs, conventional materials and construction methods. His engine approach is "the best engine value is a low time Lycoming".

In the end, it's all about having fun and making a dream come true and you can't really put a price on that.  We're all going to be dead a long time, enjoy life and follow your dreams!


Best of Luck on whatever you decide to fly!


Joe