Mindsets — The perceived value of used airplanes is changing

As a Cessna C177 Cardinal RG owner, I belong to a “type-club” called Cardinal Flyers Online. As the name implies, the organization depends heavily on the benefits of the Internet, although the organization’s reach is far greater. One of the major attractions of membership is the near daily e-mail digest that acts as a forum for the membership to discuss a multitude of issues regarding Cardinals.

In a recent digest, a relatively new owner of a ’71 Cardinal RG used the forum to vent his frustration over the significant expenses he has incured, much of it surprise, in making and keeping his plane airworthy. His posting amounted to an “I give up” notice and he hinted that he was ready to sell. His problem, though, was that he had put more money into the plane than the plane was now worth. The replies were interesting and got me to thinking as to how the mindset of ownership has changed over the past two decades.

One reply simply asked him, “Why would you think of selling now when you have worked on everything that can be worked on? So now go out and enjoy it!” Another reply emphasized that when these planes are not well kept, it usually means considerable expense to get them back in order, but then it should be years of good flying after that. Other replies were also supportive of him keeping the plane, but also of the fact that value isn’t always measured by the blue book.

While the mindsets regarding aircraft ownership have changed over the years, one that still holds true to this day is this: If you make the honest effort to correct what is wrong with the plane, stay after your maintenance and fly the plane regularly, the odds are heavily in your favor that you’ll receive years of good, reliable and enjoyable service out of your plane.

Now, let’s move on to some mindsets that have changed. First there is the value for refurbishment. Years ago, when relatively new, low time planes in excellent condition were readily available on the used market, getting a new paint job, interior or engine major never gave you back in market value even close to what you spent. So the only way you could protect yourself on market value was to buy the “rough” plane so cheap as to keep your final investment from going over book value. This is not the case anymore.

Few owners are blind to the fact that decent used planes are commanding top dollar. And many sellers are asking top dollar. And if the plane is not in top condition, the price will reflect top dollar less what it will take to get it in top condition. Plus current appreciation rates on most of the used plane market means that it won’t take long to realize the benefit of refurbishing. Lenders recognize what refurbishment does to value and are far more willing to lend money for this work than in years past.

Certainly, one can’t put $20,000 worth of improvements into a $20,000 Cessna 150 and expect this investment to be returned on resale. But the margins now are better than ever for those who want to do reasonable improvements and protect most, if not all, of their investment.

Another mindset that is losing ground quickly is the notion that to put more into the plane than you could ever sell it for is stupid. That may be so if you plan to resell the plane soon. But what if your plan is to keep it? What if you want the performance and capability of a new Piper Arrow with the new age avionics, but can’t afford new? What if you CAN afford a mid-’70s Arrow, fully refurbished including the latest avionics and do it for a third of the price of new? Should you pass on the opportunity because you might wind up $20,000 over book? A large number of owners are now saying, “The heck with book value; I know what I want and this is the only way I can afford to get it.” A Cardinal RG owner posted to the Internet forum that he had $150,000 tied up in his plane (but its value is listed only in the $80,000 range) and it was worth every dollar to him. A new culture, a new mindset.

I have owned nearly 20 different aircraft since 1974. I have never put myself in the position with any of these aircraft where I was not, in the worse case, at least even with total investment against what I could immediately retail it for on the open market. But I am also ready to change that culture because my current, fully refurbished airplane represents a “keeper” for me and I would like to update my avionics with new GPS and MFD products. It won’t happen tomorrow. But it is now in the plan and when it does happen, I’ll be at least $20,000 “upside down” on investment versus the probable retail price I could get for it.

But then again, who knows? If the number of owners who are willing to pay to have what they want done to their planes are on the rise, so should there be those buyers who recognize the value of having the same thing without having to wait to get it done.

Hmmm, another mindset change?

Guy R. Maher is a business owner and aircraft appraiser with more than 12,000 hours in general aviation airplanes and helicopters. He is an independent buyers agent and flight instructor for type specific initial and recurrent training. He can be contacted through the above email address or by calling 704-287-3475.

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