I’ll also throw an alternative to airplane ownership: mid/long-term lease/rental.
I know at least a couple of owners who are not so happy to sell their high-performace SEP’s , have lost interest in flying them for one of several reasons (bought a more capable aircraft, medical or otherwise) and are happy to rent it to ONE trustworthy person to look after it for some time, in exchange for a reasonable fixed+hourly fee.
One forumite herein briefly considered that as his retirement plans evolved towards sailing but ended up selling.
The current sellers market disfavours such approach from the owner point of view, but sometimes emotional aspects weigh more. For the same reason, it may be a favourable approach for the lessee.
If you’ll need to sell in less than five years (your 7-8 years makes sense) don’t buy a house. However bear in mind that if you can rent it at that time, you may not need to sell it. A lot depends on where the property is located.
If I recall correctly I bought my first plane with money borrowed against my first house, in a loan refinance with cash out. A larger amount of cash out was used at the same time as a down payment on a second (rental) house, and despite that the remaining equity in house number one was higher than when I bought it, 12 years before (I didn’t want to be upside down or close) Now after another 18 years I’m in house number three, it’s appreciated to 50% equity, houses one and two are both paid off predominantly by rent, plane number one was sold for about what I paid for it, and plane number two is paid for using the proceeds of that sale plus some extra cash.
Buy things that appreciate with other peoples money, and in doing so let your houses buy your plane.
Antonio wrote:
I’ll also throw an alternative to airplane ownership: mid/long-term lease/rental
Yes, I would not compare renting a house to renting an aircraft from an aeroclub or flying school, it’s like taking a hotel every night that you vacate every day at 10am, the closest one get to renting house/flat is renting an aircraft from a private owner? owning a flat would be like being part of an aircraft syndicate? sole owner of aircraft is like owning a house?
I doubt aircraft & house budgets and financing/running costs are the same, but I think Silvaire has a good advice !
I love planes and to fly. However, I don’t need it.
A place to live is, kind of, required.
If you can afford it, it doesn’t matter wether you rent or own while spending discretionary income on flying.
If you can’t easily afford your primary residence, buying an airplane (fun, expensive toy) would be pretty stupid.
And now, please share with us all the details of what plane it will be. I speak for all of us here, we need you to buy a plane 
(You can always take a sleeping bag and become a flying bum, touring grass fields for little money).
RobertL18C wrote:
You can sleep in a ‘plane but you can’t fly a house :)
We have a winner!!
Snoopy wrote:
If you can’t easily afford your primary residence, buying an airplane (fun, expensive toy) would be pretty stupid.
I would not agree to that because we might be talking about completely different orders of magnitude:
A reasonable 150 sqm 3 bedroom apartment in a better neighborhood of Zurich, Munich, Paris or London easily requires a 7 digit amount of money to buy, while you can get a reasonable used Cirrus for 200-300k. Why would you not spend these 200-300k on having fun if you know that it will either take a long time anyways to get those 2-3Mio. for your dream apartment and or you know that in some years from now you live somewhere else where housing is cheaper?
Yes, in the last 15 years buying that appartment would have been a great deal anyways (even if you paid it fully with borrowed money) but there is no guarantee that over the next 15 years real estate prices will develop the same way. So if we disregard the investment side and just look at a house for living and a plane for flying, I do not see why it is stupid to buy the plane if I can’t afford the house yet…
I think you misunderstood.
Someone pushing hard to manage expenses (like rent or loan payments for a residence) would be financially bold to finance a plane. Goes without saying really.
In the US most stuff is financed and people (reduced to being good consumers) max out their credit potential.
I’m all for enjoying life and dreams and such, but even my limited life experience compared to many here taught me that the main things in life you can’t buy anf I can identify myself more with @silvaire ‘s financial „approach“.
Ibra wrote:
es, I would not compare renting a house to renting an aircraft from an aeroclub or flying school
Sure. But mid-long-term airplane rental is also not comparable to renting an aircraft from an aeroclub or flying school
Operationally it is adamant to ownership
Financially it depends on your terms. You could agree to make it an operating lease with an option to convert to a finance lease where your rental payments conttribute to the eventual, optional acquisition. I am not speaking in theory: I have seen it happen.
It is a way to financially leave your options open in case you do come across that ideal house in the meantime or used plane market changes the wrong way. Also easier to have your partner buying in and giving you time to get the full graps of the entailments of ownership.
Flying – and most particular owning an aircraft – in most cases is not rational. We all try to reason towards it, but it is not. We are all good in twisting perceptions, and in the end can tell, that we save so many hours in travel and reach destinations we would not. Honestly, when you calculate the money involved and/or the time involved for maintenance or earning the money for flying, for flight preparations, annual costs, you would end with more life time without flying.
Buying a house or flat however might get to the point of being a rational decision, because you save on rental fees every month.
So from that rational point of view it makes no sense to buy a plane first, IF there is need to decide in between them both for financial reasons. You would still have the rental fees for living and need to save money on top in order to have enough to buy a house. So if you’d go for the house first, you only have to pay the rates for any credit involved, but nowadays should be less than or equal to rental fees.
But then again you’ll have to wait maybe years to have a “go” for a plane. Kids? Whoa.
What you could do is to buy a plane which does not involve the big can of gold, especially regarding maintenance! Like any microlight or a VFR equipped two seater (have a look at touring motorgliders! with an 80 PS Rotax) or a Robin or the like.
I used to fly a lot in microlights and touring motorgliders earlier in my life (all rented). We had 50 Euros per motor hour for the motorglider, and with engine shutoff, no fees involved. I flew 600 kilometer trips involving 10 to 15 Euros (necessary for takeoff and climb to the first cloud in say 300 to 500 meters AGL). You just cannot fly cheaper than renting a motorglider.
Also calculate that any house buying involves a lot of work in the beginning. Either you’re involved in the planning process if buying new, or you quite definitely will have to renovate when buying used. And then come the kids, leaving no more free time for flying, until they like it on their own. And they typically involve a huge cut-off in income. It is not, that kids would cost a lot of money. But you just loose so much time where you cannot earn money or concentrate on the career, it is the lack of income which makes having kids so expensive. So take into account that the point may come where you’ll have to sell the plane.
So with a small VFR plane I’d say you can go, and I would take a second-hand microlight and just fly. Then have a break when the kids are really young, maybe even selling the plane, and start again with something bigger when there are no more nappies involved.
Antonio wrote:
I know at least a couple of owners who are not so happy to sell their high-performace SEP’s , have lost interest in flying them for one of several reasons (bought a more capable aircraft, medical or otherwise) and are happy to rent it to ONE trustworthy person to look after it for some time, in exchange for a reasonable fixed+hourly fee.
That is how my airplane survived the last 4 years. After the birth of my daugther and changed work conditions, I have no time whatsoever. At the time, it was a massive buyer’s market so selling would have meant an almost total loss. In fact, the 2-3 times I put it briefly on Planecheck, I got offers between 15 and 20k or abusive mails. I always had some people fly it in between and right now have 2 renters which use it quite extensively.
Selling would have been massively unattractive in the last years, while now it could maybe fetch something close to what the plane is worth according to guestimates and looking at some value calculators. Yet, it is also clear to me that if I do sell, chances of getting something similar in terms of equipment and status is very unlikely for the price I could achieve, so I am hesitant as I still hope that my time constraints will eventually come back to something normal again.
Malibuflyer wrote:
Why would you not spend these 200-300k on having fun if you know that it will either take a long time anyways to get those 2-3Mio. for your dream apartment and or you know that in some years from now you live somewhere else where housing is cheaper?
As you mention Zurich, which has a totally overheated property market, there is realistically no property available below 1 to 2 million these days, which is why all of them are financed on the very low interest capital market today. Normal financing according to law and calculations done by banks mean up to 80% of the property value get financed, at interest rates in between 0.5 and 1.5 %. Even if someone has cash to pay for the property, they don’t, as it would kill them tax wise, so in Switzerland, financing is a must. Hence, the 200-300k which you’d spend outright for a plane would buy you a place of between 1 to 1.5 million easily, if your income matches the capital. For this price, you could find older properties whose owners do not wish them demolished or you can find 3-4 room flats not right in the center but in the suburbs, all of which have good connections to downtown. So in this situation, I would always go for proprty, which prices have only known one direction since ever I can think back. Our small terraced house of less than 100 m2 has doubled it’s price in estimates since we bought it, but there is no way we can afford an upgrade, as more attractive houses have trippled or even gone exponentially high. As an example, 2 months ago, a house 500m from where I live with 500 m2 ground and 150 m2 living space in average condition was advertized for 3 million CHF and got snapped up in 3 days. At the time when we bought ours, that house would have fetched a maximum of 900k to 1 million.That is how overheated the market is here. Yet, with patience and a bit further away, 200-300k in hand will still buy you very nice properties under the said conditions.
As for financing planes or other items, one has to be very aware of the volatility of the market. Looking at what the airplane market was the last few years, it is only very recently that prices have come back to something halfways realistic. For many years before, they only had one direction, downwards. 2-3 years ago, when I really considered selling, the maximum I could have gotten for my plane would have been 20-.30k, which would be an unacceptable loss for me, having totally invested near 100k. Today, I’d probably be able to fetch 60-80k, given that it has a low time engine, is in excellent maintenance health and IFR/WAAS equipped and totally ready to fly. But this can change very quickly again with a looming economical meltdown predicted by many experts (who have however mostly been wrong in recent years). Quite a lot of people who finance such goods have found themselfs in very bad situations where they had to sell below the value of the credit and then pay for something they now longer own, something also seen with cars a lot. Therefore, for me it has always been clear that I will NEVER finance anything other than my property for the said reasons.
