Buying first plane, and have some questions.
Posted by ExpensiveCategory854@reddit | flying | View on Reddit | 36 comments
Wife is on board with buying a plane. We’re paying cash and have gone through a massive amount of spreadsheets. We’ve been renting for the last year or so and with limited flying club options around us we want to take the expensive plunge into ownership.
We’ve been searching for a Cherokee 6. It fits our mission which is 3 adults, a dog, some stuff and room for other family if needed, and one with limited mobility so having the lower cargo loading/pax door will help. Today we fly as a family and are limited by rental time and payload and the 6 seems to fit the bill. We’ve found a few and are actively talking with sellers and seller agents.
I get this stuff is expensive and I’m trying to plan for the unexpected.
We’ve planned for about 53k/yr in fixed and variable costs (including fuel, annual, oil changes, engine/prop and misc reserves) we’re also going to have a 25k cash buffer just in case. This is also assuming 125 hrs a year and expect this can go up or down in the real world due to all kinds of factors.
We’ve haven’t performed a pre-buy yet but plan on doing so to ensure there will be less surprises. This is one area I’m struggling with. Most of the planes are nowhere near us and we don’t have a network of people out to recommend reputable shops. I’ve read about Savvy and other similar companies and not opposed to soliciting their services to save some $$ in the long run.
Also, we’re planning on having this owned through an LLC. The states we’ve seen planes for sale have sales and use taxes, my state does not so we’d prefer to save that $$ if possible. Can a closing be done remotely? If yes how are taxes handled in that case?
Lastly, we know financially this is dumb. We do very well, and have the means to cover this we’re just looking to see if we’re missing anything….
Thanks in advance.
Wemest@reddit
I was the Sales Manager at a new aircraft dealership for a few years. You appear to have it pretty well covered. A good pre-purchase inspection is key. Do not use a shop recommended by the seller. Find one that is reputable and experienced in type. A prebuy is not an annual, you are looking for the deal killers. Also, buy with the avionics you want. Airframe and engine values are well defined but avionics are not and upgrading is expensive. Best of luck and enjoy.
saml01@reddit
Skip the prepurchase and just make it an annual split with the seller.
Flimsy-Ad-858@reddit
Most sellers aren't going to agree to that. You're buying it, it's your problem if you want it inspected. If that inspection finds something you can use to negotiate, great.
saml01@reddit
What if the annual you end up getting finds corrosion that wasn't found during a superficial prebuy?
Yeah. You're fucked. Then you'll be right back here with "but I got a savvy prebuy boo hoo".
Flimsy-Ad-858@reddit
You're welcome to get an annual as a pre buy inspection, that's basically what I did. Just don't expect me to pay for part of it if I'm the one selling you the airplane.
saml01@reddit
You're not paying if its sold. You're paying half if you can't come to a concession on the issues that are found.
Flimsy-Ad-858@reddit
Nah. What if I just had an annual done last month? I'm not paying for that again.
You want stuff looked at by independent eyes, that's fine, but it's your problem.
saml01@reddit
You still don't get it.
Flimsy-Ad-858@reddit
Apparently 🤷
Wemest@reddit
This is an option but it requires some negotiating. Who will do the annual? How do you handle the squawks? You don’t want their mechanic doing it. If you insist on an annual per the PA34 checklist you are looking at about 30 hours before anything is addressed. Are you ready to invest $5000 grand with the chance the deal may not go through? What I have seen done is after the prebuy and deal is done the shop offers to do the annual.
saml01@reddit
Third party.
Squaks are negotiated in the selling price.
Planes need annuals regardless and the seller has an option to either get it for half price or a sale.
Cessnateur@reddit
Not sure who's downvoting you, but this is excellent advice. An annual tends to be more thorough, and if a prepurchase inspection gets you 75% of the way there, it's entirely logical to just up it to an actual annual.
saml01@reddit
Idiots that like to be had
TxAggieMike@reddit
Like real estate, there are buyer’s representatives that can assist throughout the process to make sure you get the proper airplane for your money, and the sale happens without you being taken advantage of.
Make sure you use a buy/sell contract that includes wording that covers your needs/concerns. It should include info that covers who is paying for airworthiness discrepancies and significant cosmetic items.
Use an escrow account. This allows you put the purchase money in escrow to demonstrate you have the money, but it doesn’t get sent to seller until you say so. One service that is highly recommended is https://www.aerospacereports.com/services/escrow
This service can also assist in registering your purchase with the FAA.
For every popular aircraft make/model, there is a type club of folks with lots of valuable intel on the model. Seek this out and find the deep dive info. Maybe use it to find the Cherokee 6 experts near to your seller.
Flimsy-Ad-858@reddit
In the vast majority of cases you'd have to be kind of an idiot to require a broker for an unpressurized piston single. You're going to spend several thousand extra dollars on someone whose specific purpose is to lie to everybody.
TxAggieMike@reddit
That hasn’t been my experience with the buyers rep I know.
He works on commission and doesn’t earn anything until a deal is closed.
So he is incentivized to cut through the seller’s BS and only bring forward aircraft that fit the buyers criteria plus needs and don’t have a large amount of airworthiness issues.
Flimsy-Ad-858@reddit
That's a weird way to say "gets paid when a deal closes" which is exactly the incentive required to just push something through. Issues discovered later? Who cares, already got paid.
Environmental-Block1@reddit
This.
Check piper forum for prebuy recommendations. You can also find one you trust and pay for his travel. Your choice.
Use a title company. Period. They will check the provenance of the paperwork, check for liens, and provide escrow.
Sounds like you’re about to embark on a great adventure!!! Congrats and welcome to the “I Hate Seeing Money In My Bank Account” club!!
phliar@reddit
You mean "hate seeing money stay in my bank account." A lot of money will be going through the bank account! /s
Environmental-Block1@reddit
^thisguyairplanes
FlyNSubaruWRX@reddit
Buying an airplane and turns to Reddit for advice….
Big_Smoke_4817@reddit
The tax is in the state you register it with the FAA, usually, if it’s hangered in a other state that’s fine so long as that state doesn’t have a sales and use tax. So for example an LLC registered in NV has no sales tax, the plane is titled there and the state it’s hangared in has no sales and use tax - no tax is due. If one is/does have taxes then you will need to model that out. Setting up an LLC in a no corporate tax / high privacy state will protect your privacy - Wyoming is the standard here.
Prebuy like others are saying helps to a point, but expect month 1 to be squawk month, if you have a shop in your field you trust let them do all the work needed to baseline in month one then you can manage from there which is much much safer later as you know the start point.
Many sellers lie, for a variety of reasons, many owners don’t maintain their aircraft or cut corners. If you find a plane ask to talk with the shop that maintained it. I’m selling an SR22 right now and I focus on what’s wrong with it, and let my shop talk to anyone they want. Transparency is the real test - decent planes don’t need lies and smoke to sell. There is a market price and the seller has the range from comps. There’s nothing gained by making stuff up.
There will be an escrow and titling company, that will cost around $800 usually split between you and the seller and they will close the entire transaction after your offer is accepted. AI can write decent offer letters - tell it what you want and what contingencies you need and it will draft it.
Also put all logs though ai and prompt it to pull out anomalies or areas of risk, it can do that really quickly and it gives you a great start point. Might miss or make mistakes but it helps and draws you to the pages of logs that might have issues. If it’s an older plane the airframe engine and avionics logs will be a lot.
Insurance -3% of hull without IFR, or hours on those, 1 1/2% with.
Hangers - scarce depends where you are.
W&B - I onto say this as I was super for stupid people like me. But cirrus to M350 there is much more work now to make it all fit. If you know the plane type already then ignore this, otherwise get the w&b profile in Foreflight and play around with your missions to see what the issues are.
Santos_Dumont@reddit
I live in NV. NV most definitely has sales and use tax. I think you are confusing that with NV had no personal income tax.
dopexile@reddit
The taxes will depend on how your LLC is structured. Avoiding sales tax can be illegal depending on your state laws. WhistlinDiesel, a YouTube guy, just got arrested twice for that.
You need to get the plane to a reputable off-site mechanic to look at it for a pre-buy. Sometimes the mechanics at the same airport all know each other and may not look out for your own interest.
Savvy Aviation has a few good videos that walk you through the whole process. https://www.youtube.com/watch?v=GzoaJrBlDNw
aftcg@reddit
Get Savvy. The rest of your plan seems pretty good. I've been in the GA consulting biz for 25+ years and have owned personally 11 planes. I'm on my 6th Baron now
The 6 is a great plane for your mission. I'd like ton get a spec sheet to give more advice (or hire me lol). DM the spec sheet?
Make sure your prebuy is done by someone who's never seen the plane, or knows the seller and agents. Get savvy for a few years until you get the mx part figured out.
One bit I'll add that I didn't notice in the comments is a short term budget. Your annual whole expenses are good, but the first 2 years of ownership will probably be surprising.
I have suggested over the years that have about 20% of the value of the plane ready to spend on repairing all the deferred shit the previous owner refused to take care of. The seller has been wanting to sell for years I bet, and they have cut mx corners for a while. Experience has taught me this.
I'll assume from experience, that the prebuy will show a lot of stuff that needed to be fixed years ago. And, the first 2 years of mx will be spent fixing that.
But what do I know, I'm just some rando on reddit.
RyzOnReddit@reddit
Yeah first 18 months/2 annuals on my PA34 (which was well sorted in most ways) hit almost exactly 20% after a surprise crack in the NLG mount. Other than that, your annual budget is nice and beefy - similar to what I expect to spend steady state on the Seneca for similar hours.
BravoCharlieZulu@reddit
I’m sure there’s an equivalent for Pipers, it when I bought my 182 16 years ago I got a lot of help from the Cessna Pilots association. Type clubs are good sources because that’s where you can get good intel on who might be selling and also where good A&Ps may be found. Their forums are generally helpful as well if you have questions. Of course PA32s are not exactly rare so pretty much any decent mechanic should know what he’s looking at.
Good luck on the purchase. My advice after purchase: make zero improvements to the plane for at least one year. Work through any squawks thst show up on the first annual and then plan accordingly, with preference for safety related improvements.
WelderNo4099@reddit
Couple of quick things-
Blue skies.
theanswriz42@reddit
I think you're pretty well covered. For the tax question, you shouldn't need to pay taxes for an out of state purchase (if your state doesn't require taxes on the airplane) unless there's some exception I'm unaware of. I set up a Montana corporation for mine though Northwest Registered Agent, and did all the title work and escrow through AIC. If you need my contact at AIC, feel free to let me know.
Iancshafer@reddit
Looks like you’ve done your homework! I have a Lance and absolutely love it. You’ll definitely save some $ on insurance with the fixed.
Alternatively, if you have retract time, could add to this list, very comparable, but will increase your costs for sure.
Check the Piper PA-32 forum on facebook, great group and people sometimes post 32s for sale before listing.
The big ticket item is the Wing Spar Corrosion/Fatigue AD (2020-24-05 & 2024-20-14). So, I’d definitely have the prebuy inspection check this.
Lastly, if you are moving up from something like a Cherokee, definitely plan on 10-20 hrs of transition training with an instructor who is familiar with type. You’ll be surprised at how different of a plane it is, I was.
Jazzlike-Wash@reddit
Re: sale and use taxes, Google “fly away exemption” for both the state in which the aircraft is currently located and where it will be based. If available, it’s a simple form you file with the tax authority (usually at the county level). The purchase agreement should specify the place of delivery as the no-tax state to confirm the outbound flight is only a ferry flight that deprives that state of taxable authority.
AcceptableCrazy9486@reddit
Looks like you have a good idea of what you’re doing. One thing I’d say is, make sure you are happy with the paint. Everyone knows avionics are expensive, but the base cost for a GA paint job is $30k. Also, if you’re looking at any planes in North Florida, I own a maintenance shop and we do pre buys often.
catchman86@reddit
If you have AOPA’s pilot protection service, you get 1-2 hours of time with an attorney who can help with your LLC and tax questions.
Flyboy2020@reddit
Great suggestion. AOPA also offers escrow service at a reasonable price (iirc was around $400)
AnActualSquirrel@reddit
Make sure you travel to look at every candidate airplane before placing an offer. There is so much misrepresented junk on the market. Sellers embellish and omit and try to pawn off problems on others.
Ask for a digital copy of the logbooks before traveling to look at a candidate aircraft. If the seller can't (or won't) figure that out, don't go out of your way to look at it. Don't accept "the last few annual entries." Anyone with a smartphone can make a PDF of a set of logs in several hours. Good owners do this anyway to back up the paper copies.
If the logbook entries are short and sparse in recent years, be wary. A good example will have a nominal amount of progressive maintenance entries - taking care of recommended servicing intervals for components, replacing high wear items preemptively and making small improvements. The scariest thing to see is a very brief annual entry every year from the same shop and not much else.
When you draw up a purchase contract, allow sufficient time for a prebuy to be completed. Most shops are backed up. If you find a good candidate airplane, start calling shops within an hour flight time of where the plane is based. Use their feedback on availability to set an appropriate prebuy time period in the contract. Don't use a shop that has performed any recent major maintenance or annuals.
Hold out for a good example and don't be in a hurry. It could take several months or more to find the right one. You will probably spend several thousand traveling to see candidates that won't work out. You may walk away after a prebuy if the seller won't accept the concessions necessary to make it make financial sense after the findings. That's just part of the process. Don't fall for the sunken cost fallacy if you've spent on travel or a prebuy.
Don't be smitten solely by nice paint or panel. You want the airplane that has been doted on and well kept and regularly flown even if the paint and panel are a bit dated. You can do both of these to your own liking later if you keep the plane long term. Recent paint can hide damage.
rFlyingTower@reddit
This is a copy of the original post body for posterity:
Wife is on board with buying a plane. We’re paying cash and have gone through a massive amount of spreadsheets. We’ve been renting for the last year or so and with limited flying club options around us we want to take the expensive plunge into ownership.
We’ve been searching for a Cherokee 6. It fits our mission which is 3 adults, a dog, some stuff and room for other family if needed, and one with limited mobility so having the lower cargo loading/pax door will help. Today we fly as a family and are limited by rental time and payload and the 6 seems to fit the bill. We’ve found a few and are actively talking with sellers and seller agents.
I get this stuff is expensive and I’m trying to plan for the unexpected.
We’ve planned for about 53k/yr in fixed and variable costs (including fuel, annual, oil changes, engine/prop and misc reserves) we’re also going to have a 25k cash buffer just in case. This is also assuming 125 hrs a year and expect this can go up or down in the real world due to all kinds of factors.
We’ve haven’t performed a pre-buy yet but plan on doing so to ensure there will be less surprises. This is one area I’m struggling with. Most of the planes are nowhere near us and we don’t have a network of people out to recommend reputable shops. I’ve read about Savvy and other similar companies and not opposed to soliciting their services to save some $$ in the long run.
Also, we’re planning on having this owned through an LLC. The states we’ve seen planes for sale have sales and use taxes, my state does not so we’d prefer to save that $$ if possible. Can a closing be done remotely? If yes how are taxes handled in that case?
Lastly, we know financially this is dumb. We do very well, and have the means to cover this we’re just looking to see if we’re missing anything….
Thanks in advance.
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