Buying an Airplane

Fear not. There is help for the unwary. Good, honest bankers, brokers, and backers who have been through many airplane acquisitions before will know the ropes and can guide you through the rough spots.

That’s not to say there aren’t some shysters ready to unload a dog of a plane they happen to have for sale. But a reputation for dishonest dealing spreads quickly in the relatively small world of general aviation. Ask around before handing money to a seller you don’t know.

Many times, people have fallen in love with a certain airplane type early on and will rush out to buy it, any one of it, as soon as they’re able. Such a rushed relationship is a recipe for an early breakup. It’s also important to match the plane with the mission. Buy something that will do your average job and not a whole lot more.

And, unless you’re independently wealthy, consider the airplane’s ability to hold its value for when you’re ready to sell it. That means you’re better off staying in the mainstream with a popular airplane type that will find a ready market when you’re done with it rather than taking ownership of one of the odd and unusual orphaned types.

Keeping some funds in reserve for unexpected expenses after the acquisition is important. Don’t spend your last nickel buying the airplane. Believe me, stuff happens. I’ve always compared aircraft to home ownership in that they both need upkeep, insurance, regular care and cleaning, and an occasional restoration. Neglect them, and you’ll soon have a junk heap of dubious market value.

I know of a person who spent $40,000 on a 1960s Piper Cherokee, which naturally had some problems with the vintage radios, so he put in $30,000 worth of avionics upgrades. Sure enough, the next annual revealed the need for an engine overhaul, so now he’s invested nearly $100,000 in an airplane that might fetch $50,000 at a forced sale.

If possible, always buy somebody else’s upgrade. Otherwise, expect your market value to increase by only half of what you spend on a new interior, paint job, radios, or other geegaws. If you want those things, plan on keeping the airplane long enough to enjoy flying off some of the value of your investment.

A friend of mine sold an extra house to buy his first airplane. His rationale was, “I can always sleep in the airplane if I have to, but I’ll never be able to fly the house.” Now, there’s a man who has his priorities right. He takes care of his airplane like he would have doted on the house.

Before you take the leap, make sure you understand what you’re getting into.

Arrange for financing with a payment you can comfortably afford. Not all lenders are at ease with a piece of collateral that can be flown out of state. Expect to put down 20 to 25 percent of the purchase price as your demonstration of financial stability. The lien holder will expect you to carry enough insurance to satisfy its interest in the event of loss or damage.

Your ability to attain sufficient insurance may be a deal-breaker, or at least a hurdle to be cleared. Mere possession of a private pilot’s certificate and logged currency doesn’t satisfy some underwriters, particularly if you’re upgrading to a more capable machine than you’ve been flying.

Your advancing age can restrict what kind of plane you can be insured to fly, and if you’re limited in experience with your choice of a more powerful, higher performing airplane, you can be required to obtain added training in type, or not be able to carry passengers until logging a certain number of hours. For retractable-gear airplanes, you may be
told to begin earning an instrument rating as a condition of coverage.

In a more practical sense, make sure you’re able to safely fly your dream aircraft.

You may lust after a vintage Beech Staggerwing, but a radial-engine tail-wheel airplane with unique quirks will need to be approached with a careful transition. Once you’re moving out of the basic trainer category, you need to find a training source specific to the type of plane you’re buying. Talk to owners and type club members, who can suggest instructors who know your equipment.

Be sure you have a place to keep your airplane before you bring it home.

In this day and age, finding a hangar, or even a tie-down spot, is a major undertaking, given the collapsing number of airports. Good storage is important to maintain your airplane’s value, so shop the airports in your locality to see which ones have space available.

Similarly, start making arrangements for service work early in the buying process.

Perhaps you can take the airplane back to the shop the previous owner used, or you may already have one you like. But not all mechanics work on all airplane types, particularly if you’re bent on owning something out of the ordinary, so seek servicing council as part of becoming an owner.

Don’t forget the oft-overlooked taxation issues involved with taking on a new piece of property.

A state with personal property taxes will assess your airplane based on its blue book valuation unless it’s mitigated by antique/historical categorization. With the start of a new year, you’ll have to add the plane to your list of toys. 

A more pressing matter is the payment of sales tax on the purchase of an airplane.

This is something you need to be ready to take care of right away because states assess penalties and interest on unpaid sales tax month by month. Once your deal is concluded, you may as well contact your state’s revenue department and find out how to file. Otherwise, your 5 percent tax may grow incrementally into a much larger sum. If you want your CPA to find a loophole, do it before buying.

Be financially ready to take on another mouth to feed.

All in all, my advice is to determine an aircraft ownership budget by talking with other owners, including both fixed costs (insurance, storage, taxes, annual inspection, and note payment) and hourly expense (fuel and oil, parts and maintenance), and then double it. If you have a lucky year, well and good, but in my experience, surprises always happen.

As with any business deal, negotiation is normal. Just don’t make an insulting low-ball offer unless you want to risk losing an opportunity.

A prepurchase inspection (aka “pre-buy”) is your best protection against surprises and a way to finalize the price, but don’t use the owner’s mechanic. Find a trustworthy, independent set of eyes. And don’t accept a “fresh annual” as a substitute. Likewise, pay a title search company to look in the FAA files for unsatisfied liens or other flaws.

The actual acquisition of an airplane can be very simple, although you may want to use an escrow agent.

The preferred payment method is a cashier’s check, for which you will receive an acceptable bill of sale. It’s best to visit www.faa.gov and print out the old reliable 8050-2 form. The seller’s signature must exactly match the format on the current registration certificate. You do not get their certificate; the seller has to send it to the FAA for deregistering.

Fill out an 8050-1 Aircraft Registration Application and send it, the bill of sale, and a $5 check to the FAA registry in Oklahoma City via first-class mail. If all goes well, you’ll be an aircraft owner.

Meanwhile, carry a copy of your application in the airplane as a temporary registration.

Tastes change, and our airplane market today is far different than what we dealt with 20 or 40 years ago. Market trends follow desirability, so if fewer buyers want a certain type of plane, its value drops.

I remember the fuel crisis of the 1970s, when 200 hp Mooneys sold like hotcakes, and then with the prosperity of the ’90s, everyone wanted the big-engine models again. Cirrus began with the 200 hp SR20, which sold well, but when the 310 hp SR22 came along, sales of the SR20 soon languished.

Retractable-gear airplanes once were steady step-up sellers in the ’80s, and twin-engine planes were logical advancements 50 years ago. Today, both categories have limited appeal, mostly due to the cost of insurance and upkeep.

GA aircraft being long-lived commodities, certain pre-owned airplane types stay evergreen in the marketplace. Based on their short on-the-market life when put up for sale, these planes seem to be as popular now as they ever were and thus would make good investments.

Buy, fly, and take care of them. They’ll always find a ready buyer. Here are our recommendations:

There’s a reason the Cessna 172 made up 10 percent of the world’s light plane fleet. It has always done its job with minimal complication and expense. It does nothing exceptionally well, but it does everything adequately, asking little of its pilot but some common-sense flying ability. It has enough creature comforts and basic performance to satisfy most owners. It works fine as long as you don’t ask it to do more than it was designed for. The trick is finding one that hasn’t been beaten up as a trainer in flight school service.

From its introduction over 60 years ago, the 180 hp PA-28 became the standard low-wing family airplane everyone else tried to imitate. Simple and powerful enough to haul four in style, a Piper Archer, or even its lower-powered relative, the Warrior, sells quickly when offered in the marketplace, as does the retractable-gear Arrow cousin. These Cherokee types make few demands new pilots can’t meet. They are great for midrange traveling and are easily maintainable. Don’t wait if you find one for sale.

Every Skyhawk owner wants to upgrade to a 182. Cessna’s big-engine heavy hauler just offers more of everything, and that’s the reason it became the third-biggest seller in GA history. It’s still just a fixed-gear, strut-braced high-winger, although it needs to be approached as a high-performance category airplane, demanding a little more respect from its pilot. Because it can truly carry four adults at 140 knots, with extra high-elevation airport capability, selling prices have soared. Finding a clean one for under $200,000 is becoming difficult—they don’t last long when offered.

A Beechcraft Bonanza was the airplane that set the standard for light aircraft performance for three-quarters of a century. It still does the job of a twin-engine aircraft with a single big-bore Continental up front, turning heads while parked on the ramp and putting miles behind when in the air. Always known for quality, Beech Aircraft made airplanes for the discriminating buyer who wanted the best. Bonanzas, even the V35s last built in 1982, sell at dependably high prices, but you’ll get what you’re paying for—an efficient 170-knot cruiser. Beech’s best four-seater value is the straight-tail F33A, produced through 1994.

One quick-moving pre-owned category has always been an airplane with an extra couple of seats, sought after by owners with a family to haul. Piper catered to that market with its Cherokee Six, later Saratoga, offering a great wide-body cabin with loads of room. Cessna countered with its Stationair, a less-endowed six-placer popular with high-wing aficionados. Both move quickly on the used market because owners of four-place planes are forever looking for more seats. The retractable-gear Piper Lance/Saratoga SP or Cessna 210 Centurion will also do the job, but they don’t sell as fast as fixed-gear models. Beech’s Bonanza A36 also fills the need at a higher price point. While its six-place cabin is smaller, nothing else offers its speed and range. 

If you’re thinking of buying an airplane, these five classes will always be popular and will hold value if maintained. The cost of owning an aircraft has never been cheap, and it’s not likely to decline. But the capability to fly yourself where you want, when you want, is priceless.  

Images: LeRoy Cook, iStock.