Sport Pilot Posted February 13, 2014 Report Share Posted February 13, 2014 ....... Link to comment Share on other sites More sharing options...
Anticept Posted February 13, 2014 Report Share Posted February 13, 2014 40k to 50k, assuming that laws do not change and no significant flaws are found with said LSA. The depreciation curve is logarithmic; there is a significant drop of value in the first few years, but it smooths out over time. Might be a little more with inflation considered. Also, right now, there is a shortage of some LSAs, so it's inflating the curve a bit (FD aircraft for one). I'd say it would stay in the 60's if it continues on like that. Link to comment Share on other sites More sharing options...
FredG Posted February 13, 2014 Report Share Posted February 13, 2014 I'd guess around $50K, assuming documentation of good maintenance and it being kept in a hangar. Link to comment Share on other sites More sharing options...
Top Cat Posted February 13, 2014 Report Share Posted February 13, 2014 I'm trying to fine tune my thinking about the cost of ownership of an LSA. This question is about depreciation. Assume you pay $75,000 for a used LSA and keep it for 10 years and then sell it. Over the 10 years, you put 600 hours on it. Maybe it had 500 hours on the engine when you bought it and 1100 hours when you sold it. What is your best GUESS of the value when you sell it? I realize it could be zero to $100,000 or more, but realistically, what do you think? Thanks. Trying to fine tune a list of many variables is difficult. For instance, if the Third Class medical rule changes, will anyone want an LSA? Will "light sport' remain as an option? Will the rule change allow manufacturers to apply to up the weights of their LSAs? May in Europe are certified at considerably higher weights, on the same engine. Will the LSA in question be popular or not? Today everyone seems to like the RV12 SLSA but not so many seem to like the Cessna. If at the time of sale you overhauled the engine, or even replaced with new, and the cost was less than the difference between what you paid and what you think you can sell it for now (adjusted for inflation) then is that a worthwhile proposition? If it means a sale? New paint, not being a trainer, climate, and 'for real' "NDH" and "Always hangared" are points which can also make differences. Planes, unlike houses or other large investments, don't follow the 'rules' because of all those variables. Most people don't own airplanes. Most people have no idea what one costs new, used etc, unlike cars. So your guess can literally be as good as the next guys. I would say, the first few years from new, well maintained, hangared and not a trainer would be a straight curve of depreciation…reducing for each year, every hour flown etc. But after time the variables kick in and in all honesty it's a bit of a crap shoot. Here's another option. What if, at the end of the time you own it, you don't sell it but donate it? There are groups like Able Flight, AOPA etc who will gladly take a donated airplane because they intend to use it to train disabled vets (for example) or other worthwhile causes. Meaning, they don't care about the value as such. For you, a tax guy might be able to give you an idea as to what that donation might be 'worth' to you later on and between the two of you, it might prove as financially beneficial as selling it for $$…and may just save you some headaches. Why does the FD C4 look like a Cessna Skycatcher……. on steroids? Link to comment Share on other sites More sharing options...
FastEddieB Posted February 13, 2014 Report Share Posted February 13, 2014 ... I realize it could be zero to $100,000 or more... Well, it could be anywhere from zero to $100,000 - or even more! Does that help? Seriously, don't let this be a case of letting the perfect be the enemy of the good - if you want a plane, buy a plane and things will sort out - life is too short to postpone things waiting for the perfect moment. If you choose a plane that gets orphaned or falls victim to major "AD's" (or equivalent), its value could fall precipitously. OTOH, if you choose a popular model and new plane prices continue their upward spiral, its not inconceivable to sell a plane bought used for more than you paid for it down the road. I sold my 1976 Tiger, bought in 1992, for roughly double the purchase price in 2003. $32k to $64k in 11 years. It had improvements, including an expensive new panel, but had I been making calculations like yours in 1992 they would have been way, way off. It will be especially hard to figure if you choose an "unpopular" plane like my Sky Arrow. With less than 30 or so S-LSA versions sold, it's a very "thin" market. But with new ones selling for $100k, a well maintained earlier model might sell for not much below its new price ($75.5k), assuming an eager buyer really wants one. Or not - its hard to tell. My advice now is pretty much what its been all along - don't do anything rash, but don't overanalyze things until you're paralyzed and end up not ever buying a damn plane. Most here have a finite number of flying days left it our coffers, and each day you delay is one less day enjoying the satisfaction of plane ownership. Just my .02 - YMMV! Link to comment Share on other sites More sharing options...
paul m Posted February 13, 2014 Report Share Posted February 13, 2014 This question is about depreciation. Assume you pay $75,000 for a used LSA and keep it for 10 years and then sell it. Over the 10 years, you put 600 hours on it. Doesn't Rotax have mandatory replacement of engine at [15] years? My guess is $37,500 to your question. There are lots of things that could affect the value-- medical exemptions, part 23 rewrite, health of the economy, government regulation etc. You suggest in your second post you have owned a plane before? Are you hesitating to own again because you didn't enjoy it as much as you thought you would or because financially its tougher to swing going forward? If you love to fly and can afford the annual costs of ownership, I would echo Eddie's comments--don't spend too much time overthinking this. Link to comment Share on other sites More sharing options...
Anticept Posted February 13, 2014 Report Share Posted February 13, 2014 The mandatory requirement is not mandatory per regs. Both continental and lycoming have such requirements too (12 years, roughly), but no one cares about those either. Link to comment Share on other sites More sharing options...
Top Cat Posted February 13, 2014 Report Share Posted February 13, 2014 Thanks H. I'm just rerunning my numbers trying to convince myself to make an offer, but still not sure I want to own another airplane. The tax donation won't do me much good. I spent 34 years preparing for retirement, and have been retired for 10 years. I'm hearing more and more rumors the FAA is going to approve some form of the medical exemption, so I probably will not move on an LSA, but if the one's I am renting get sold, I don't want to be left with nothing to fly. I was thinking the tax donation option if the sale was slow and you needed to offload it in the future. The Sky Arrow comes fitted for disabled pilots/students and that airplane is a good deal for the price (I've seen one for sale $75k with new engine). If you rent nearby you might consider a leaseback if they are a good business. You might get the best of both worlds? Would they consider a lease or a lease purchase? My guess as to the exemption is that it wouldn't be everything that EAA/AOPA wants. It would broaden the horizon to rent 152s and 172s but would you want to buy one of those? As you said before you have access to a Mooney too. Link to comment Share on other sites More sharing options...
paul m Posted February 13, 2014 Report Share Posted February 13, 2014 The mandatory requirement is not mandatory per regs. Both continental and lycoming have such requirements too (12 years, roughly), but no one cares about those either. Figured that would come up. As a potential buyer I would bring it up...repeatedly. And then I would call my potential insurance company and see if they care about the issue. Link to comment Share on other sites More sharing options...
S3flyer Posted February 13, 2014 Report Share Posted February 13, 2014 Figured that would come up. As a potential buyer I would bring it up...repeatedly. And then I would call my potential insurance company and see if they care about the issue. An insurance company certainly can add their own requirements that are above and beyond what is legally required as per regulations but I've NEVER seen it happen for maintenance. I checked my last 6 polices for my LSA and they mention nothing about maintenance. Not even a section for it. The plane does need to be airworthy (or the LSA equivalent -- can't think of the term) but that's it. And, of course, airworthy is defined in the FARs. Link to comment Share on other sites More sharing options...
paul m Posted February 13, 2014 Report Share Posted February 13, 2014 fair enough. those pesky juries though sometimes have a tough time parsing the regs. but the answer to the plaintiff's attorney's question, "so tell me Mr Pilot, the manufacturer of the engine of your aircraft mandated you replace the engine but you thought it was working fine so you ignored them and the engine stopped working one day and your passenger was kiiled in the forced landing (why didnt you deploy the parachute by the way which has never failed to save all on board when deployed within its limits.... but we digress) will take them about 3 minutes to figure out I owe more than my measely 1mm liability policy Link to comment Share on other sites More sharing options...
Anticept Posted February 13, 2014 Report Share Posted February 13, 2014 When I spoke with the tech ops at AFS610, one of the things that they did when it came to aircraft maintenance and regulations, is they called numerous insurance agencies and asked them about maintenance requirements. Every one lf them they called said they will follow what the regulations say. If the regs make the manufacturer's requirements mandatory (such as in 135 operations), then those manufacturer regulations become the guideline for loss payouts. If the manufacturer requirements are NOT mandatory per the FAA regs, such as in part 91, then they are not going to be a factor in loss payouts. It is always good to ask your insurance company though. They can change at any time. As for liability: that is why flight schools, despite not being required to, replace at TBO. Link to comment Share on other sites More sharing options...
S3flyer Posted February 13, 2014 Report Share Posted February 13, 2014 fair enough. those pesky juries though sometimes have a tough time parsing the regs. but the answer to the plaintiff's attorney's question, "so tell me Mr Pilot, the manufacturer of the engine of your aircraft mandated you replace the engine but you thought it was working fine so you ignored them and the engine stopped working one day and your passenger was kiiled in the forced landing (why didnt you deploy the parachute by the way which has never failed to save all on board when deployed within its limits.... but we digress) will take them about 3 minutes to figure out I owe more than my measely 1mm liability policy Never can predict what a jury trial will do but the chances for engine failure increase during the first few hundred hours following an overhaul. So the counter argument could be -- 'Mr Pilot, why did you overhaul an engine that was meticulously maintained as per federal law when you knew that overhauling increased the likelihood of failure?'. From an article from Mike Busch: "Continuing to fly an engine beyond TBO could void your aircraft insurance."Poppycock. I've yet to see any aircraft insurance policy that requires compliance with non-mandatory service bulletins as a condition of coverage. Most policies only require that the aircraft be airworthy and in compliance with FAA inspection requirements."Continuing to fly an engine beyond TBO is dangerous because doing so increases the chance of an in-flight engine failure."To the contrary, an engine is much more likely to fail during the first few hundred hours after major overhaul than during the first few hundred hours after passing published TBO. If you exclude fuel starvation or exhaustion (i.e., pilot error), most engine stoppages involve mechanical failure of some "top end" engine component like a cylinder, exhaust valve, piston, magneto, turbocharger, exhaust stack, etc. Such bolt-on components are routinely replaced during normal maintenance without any need to overhaul the engine. The purpose of a major engine overhaul is to inspect, recondition and or replace the engine's "bottom end" components -- crankshaft, camshaft, crankcase, gears, bearings, etc. -- that cannot be accessed without splitting the case. But these "bottom end" components are seldom implicated in catastrophic engine failures. Furthermore, in those rare cases when these components do fail (e.g., crankshaft fracture), the failure is almost never correlated with time since overhaul. (If a crankshaft is going to fail, it's most likely to fail during the first few hundred hours after manufacture, or after a prop strike.) Different risk profiles for different maintenance approaches. Pick the one you're most comfortable with. Link to comment Share on other sites More sharing options...
WmInce Posted February 13, 2014 Report Share Posted February 13, 2014 . . . "The plane does need to be airworthy (or the LSA equivalent -- can't think of the term) but that's it." . . . Safe flying condition. Link to comment Share on other sites More sharing options...
Top Cat Posted February 13, 2014 Report Share Posted February 13, 2014 Have you thought of running your numbers and your concerns by an accountant/tax person who may be able to explain better or come up with something you may not have thought of? Link to comment Share on other sites More sharing options...
paul m Posted February 14, 2014 Report Share Posted February 14, 2014 Different risk profiles for different maintenance approaches. Pick the one you're most comfortable with. Exactly my point Dave. If I were looking to buy a used 15 year old CTLS and Rotax was still insisting that the engine be retired (side note, i thought retirement was the requirement at 15 years, not overhaul) my offer on MovingOn's hypothetical plane would be reduced by the cost of replacing the engine. You might come to a different conclusion and a higher price. The more people with your view the less the price will be affected and vice versa. But if there was no such requirement from Rotax none of us would have to factor it in and thus I believe the final sale price would be higher. It's not disimilar from our discussions on converting to Experimental. One of the drawbacks is potential affect on resale as it may reduce the buyer base. Link to comment Share on other sites More sharing options...
Greg Posted February 14, 2014 Report Share Posted February 14, 2014 Seriously, don't let this be a case of letting the perfect be the enemy of the good - if you want a plane, buy a plane and things will sort out - life is too short to postpone things waiting for the perfect moment. Well said. The older I get, the more I understand this. Right on Eddie. Greg Link to comment Share on other sites More sharing options...
Top Cat Posted February 14, 2014 Report Share Posted February 14, 2014 If you're motivation is just to dump toys then sell it for whatver you can get and smile. Post it on one of the sell sites, icluding here, and maybe list it with a broker. You may not get what you want, but you will also not get stung. You completely missed his point! Go back to the beginning and actually read why he started the thread! Duuuh! Link to comment Share on other sites More sharing options...
Ian Posted February 14, 2014 Report Share Posted February 14, 2014 You completely missed his point!..... Duuuh! Nothing new there then ...... Link to comment Share on other sites More sharing options...
FastEddieB Posted February 14, 2014 Report Share Posted February 14, 2014 I didn't ask if I should buy a plane or not. I asked what people's guess was as to the depreciated value in 10 years. Sorry, but its reasonable for others to assume you were asking that question regarding a decision process. Such as whether to buy a plane or not. Unless it was purely academic! Link to comment Share on other sites More sharing options...
Anticept Posted February 14, 2014 Report Share Posted February 14, 2014 You know MovingOn, this slightly amuses me. Anyone with an MBA in finance knows that aviation is a financial black hole ! Link to comment Share on other sites More sharing options...
Ian Posted February 14, 2014 Report Share Posted February 14, 2014 You know MovingOn, this slightly amuses me. Anyone with an MBA finance knows that aviation is a financial black hole ! How can you make a small fortune in aviation? Start with a large one!! Link to comment Share on other sites More sharing options...
WmInce Posted February 14, 2014 Report Share Posted February 14, 2014 How do pilots invest their money? Until it is all gone. . . . . . Link to comment Share on other sites More sharing options...
Anticept Posted February 14, 2014 Report Share Posted February 14, 2014 I know that's true. It's just a question of how deep do you want to go?? All the way. N566FD is my baby and I wouldn't trade her for the world. Link to comment Share on other sites More sharing options...
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