Aircraft Makeover

Thinking about buying a cheap


I‘ve had several people call oremail me lately with a “fresh” approach to buying a used aircraft. Because thegood ones are getting harder to find why not take an old dog and refurbish it into ayoung-looking, pristine aircraft? To those who have this “idea” it is just that.They have yet to look into the actual costs of overhauling the engine, upgrading theavionics, painting it, and refurbishing the interior.

The cons greatly outweigh the pros in this scenario. That’s because every time youspend money upgrading or refurbishing a system only 50 to 60 percent of what is spent isadded to the value of the aircraft. Does that mean that you should not invest in a newpaint job or interior if your present aircraft needs it? Of course not. But when you plana complete aircraft makeover it is likely you will spend so much on the refurbishment thatthere is no way you will recover it should you be faced with selling the aircraft in lessthan ten years or so.

Don’t Go Overboard

Time and time again I have seen aircraft come up for sale where the owner has sunk somuch money into it that the asking price was ridiculous. After several months, the pricestarts down and eventually the airplane sells for something close to realistic, but theowner has lost a good deal of the “investment” he or she made. This happensoften to those who don’t do their homework before equipping an aircraft the way they wantit. Then, shortly after the refurbishment is complete, they decide they want to move upinto a more complex airplane, so they buy the new aircraft then put the old one on themarket. Because used aircraft appreciate in value, they figure their old bird is worthevery penny they invested in it. It takes a while before their confidence in the value ofthe old airplane is shaken. When the phone calls don’t come or a few people tell them”you’ve got to be kidding!” or words to that effect, they begin to get themessage. But now it is too late because they already bought the second aircraft.

Don’t believe it? I know of several airplanes that remained on the market for a long,long time because of this same scenario. One, a Piper Arrow, was overloaded with all-newdigital equipment including an HSI, an autopilot, an approach-certified GPS, a custominstrument panel, gorgeous paint and interior, and a recently-installed factoryremanufactured engine. Another, a Cessna 182, was replaced with a Cessna 210 afterundergoing more or less the same treatment.

Another fellow bought a Cessna 210, immediately spent $14,000 on avionics, then put theairplane back up for sale at a price that was close to $20,000 over the market value. Whenit didn’t sell, he changed the autopilot, refurbished the interior, and raised the priceagain.

Buying On The Cheap (?)

Some folks are in a position where they can do most of the work themselves. That’s abig help, especially when you consider that shop rates are often between $60 and $70 anhour for installation work. Still, the investment in the equipment itself has to be dealtwith. That can be tempered by buying direct at discount through vendors who advertise in Trade-A-Plane or online.

But most people don’t want to get that involved with their aircraft. They don’t havethe time to invest, or the technical expertise. They just want to fly their aircraft, andthey want them equipped with the latest and greatest of the available gadgets. But theygag when they look at the price of new aircraft, so they take what they figure is thesecond best route.

While major avionics installations and cosmetics will never give you adollar-for-dollar increase in the value of your aircraft, engine overhauls can come prettyclose because the engine time is reflected directly in the market value. But it depends onthe type of overhaul that is done and who does it. If you do a cheap “dip andship” overhaul, fly the aircraft a couple of hundred hours, then have to”top” the engine because the cylinder work wasn’t done right the first time,potential buyers are going to be skeptical of the rest of the engine work (and rightlyso). If one buyer is turned off by that, others will be also. That means that you may haveto reduce the price of the aircraft to make the engine attractive to other buyers.

If you have a good overhaul done by a well-known, competent engine shop, the value ofthe aircraft will increase dollar-for-dollar with the cost of the basic engine. If youspend several thousand dollars more on new hoses and other under-the-cowling accessories,you won’t get much for that in increased market value. But you will always recover ahigher percentage of an engine overhaul in increased aircraft value than you will withupgraded avionics and cosmetics.

How Long Will You Keep It?

If you are going to spend serious money upgrading your aircraft, you must plan onkeeping it 10 years or more to make it work financially. And that is assuming that thevalue of aircraft will continue to appreciate in the future as it has in the past. Thereis no guarantee that will happen, though there is nothing on the horizon that gives theappearance that the market is about to change either.

Long-term ownership is the key to success as an aircraft owner. There are fewinvestments out there that you can buy, use on a daily basis, then sell several yearslater for more than you paid for it. Is the investment as good as leaving it in a moneymarket fund? Perhaps not. But most of us get a great deal out of our aircraft in a realpersonal or business sense, and that is worth something.

Some Buying Advice

So, how do you buy an aircraft that you do not have to spend a great deal of money onfor upgrades? Most people are in too much of a rush to make their purchase. Instead ofwaiting for the right aircraft to come along, they buy whatever is convenient. Then, theywind up taking the aircraft they bought in for refurbishment to make it meet theiroriginal needs. Financially, that can be a disaster.

When you buy, take your time. Find an aircraft that comes as close to meeting yourneeds as possible. I like to see 90 percent of the equipment required in the aircraft atthe time of purchase. It’s one thing to add a GPS to an instrument panel, but to strip outthe entire avionics stack and start over with all-new gear is not a good way to go. That’sespecially true now, since we will all be changing over to WAAS-capable GPS/comms in therelatively near future. Any new nav/comms that are installed now are likely to becomeobsolete and unsaleable when the government finally gets its act together and gets the GPSsystem working as it was intended.

Avoid buying an aircraft that needs too much refurbishment. The price might beattractive, but by the time you get done with the upgrades, you won’t be too happy withthe bottom line. It is one thing to put new paint and interior in an aircraft that youbuy. But to overhaul the engine, redo the cosmetics, and upgrade the avionics should beout of the question (unless you can do the work yourself and can buy everything atwholesale).

Be certain you have a thorough prepurchase inspection completed before paying for anaircraft. That is your one line of defense against major problems that will cost a greatdeal of money to repair. I have seen engine compressions recorded as normal on an annualinspection that was done for a sale, only to find that they are below the required minimumat the next oil change. And don’t buy an aircraft whose owners did a top overhaul insteadof a complete major when the engine reached TBO. I see that happen all the time, and thenew owners can’t understand why they lose so much after paying the price for the aircraftthat includes the cost of the top, which adds nothing to the value of the aircraft.

Anticipate The Future

When you are trying to determine what aircraft you want to buy be sure to considerfuture needs. You want to buy an aircraft that you will be happy with for a minimum offive to ten years. While that is the ideal, it doesn’t always work. Many pilots don’t havethe experience they need to get into the high-performance aircraft they want to buy. Theyhave to start out with a low-performance aircraft and move up as they gather ratings andflying hours. It is imperative that they buy that first aircraft right if they are to sellit and move on to the next one within a few years. Any mistakes in the purchase processcan prove very costly when they decide the time is right to move up.

Don’t Forget Insurance

Recently, I went looking for insurance quotes for a low-time client who wanted to buy ahigh-performance aircraft. The major insurance carriers declined to quote on his proposal.Only one company would touch him, and the premium was very high. Remember, the insurancecompanies have a lot to say about who will fly what aircraft. That should be one of yourfirst inquiries after deciding what type of airplane you want to buy, no matter what yourexperience level. If you are moving from a low-performance airplane into ahigh-performance one, or single to multi, insurance may be a problem until you get aminimum amount of time in that type of aircraft. Recently, I heard the story of a14,000-hour Alaskan bush pilot who had trouble insuring his newly-acquired Beech Bonanzabecause the insurance company said he lacked sufficient retractable time.

Find out if you can get insured at a reasonable rate before going too far in thepurchase process. To buy an airplane and then find that no one will insure you in it wouldbe a costly error, but one that has often been made in the past.