Yeah, imagine if only 1 person was flying it instead of 3 and if money was put away for the overhaul… you’d have made some $$ on the sale and you’d have a small pile of overhaul $$ sitting there with no more overhaul on the horizon.
Let me clarify this a bit… If the cost of the overhaul doesn’t seem like such a big problem, then it’s not a big deal either way.
Many people can swing the overhaul cost within their yearly budget and for people in that situation, putting away money on a per hour basis doesn’t matter as much.
For me, Im always thinking of putting the money on an hourly basis into an S&P 500 index fund earmarked for overhaul. That way I can profit and be excited when I need an overhaul! 
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Not quite sure what you mean by cash flow. I could swing 15% down for 150K$ plane. What I would expect to pay monthly including saving for maintenance for a plane of that price. I saw a breakdown of a 150 bought for 60k that cost the guy 1k a month on average.
That probably gives you a much better ROI than a savings account. I like that idea.
Basically, can you afford the monthly payment if the flight school you may lease back to isn’t generating much money for you
I suppose I need to do that math. That would be the airplane cost, sales, property and use tax, registration, insurance, hangar, fuel, and saving for maintenance like approximate overhaul price, inspections, and in case of emergency funds, correct? Let me know if I am missing anything.
I like to divide the costs into two categories.
What does it cost me if I don’t fly at all:
- Hangar
- Insurance
- Annual Inspection
- Registration
- etc.
What does it cost me on top of that per hour to then go fly it:
- Fuel
- Oil
- General Maintenance Reserve
- Overhaul Reserve
- etc.
@LeeGriffing likes to then divide my “Don’t fly” budget by the amount of hours flown that year and add the result to the “per/hour” amount… I don’t really care about that, but if you are leasing back to a school (or running a 135) then that would make sense to do. (which is Lee’s background, so I try to extend him some grace on this idiosyncrasy that drives me insane)
I have it broken down several ways. I call them fixed costs and variable costs. Which are Rob’s Don’t fly and Fly costs respectively. I have fixed costs by per month and per hour and I have variable costs with and without fuel and I have fixed and variable costs(total costs) with and without fuel. @RobertBerger is right, my background is such that it only makes sense to divide the fixed costs per hour or else when someone asked what it will cost per hour I will give them only variable costs which would be a lie.
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@LeeGriffing already wrote a great overview. Just going to add a few extra footnotes based on my experience (little over one year ownership):
- Dont assume insurance costs will drop after the first year, even with 100+ hours on the same make/model. Insurance providers are basically a fucking cartel and they set the price (and its a lock up price, not like you can readily get second quotes). Insurance really drops after IFR and commercial ratings.
- Depending where you live, hangars have long wait lists and can be quite expensive. Get on the wait lists as soon as you can (took me 9 months to get one).
- Be prepared to not be able to fly for a month+ at a time due to maintenance (happened to me). It takes a dent on min flight hours per year for cost ownership to make sense.
- Flight schools are sketchy when it comes to using your own airplane. At least here, they jack up the CFI cost per hour because they wont make money off you renting the plane. You have options, and some CFIs in school might work with you off the school’s books during their days off; alternatively there are solo CFIs that will work with you, but they aren’t as easy to find.
Overall I am happy with my decision so far. Yes it has been a financial burden where we could have invested that money etc, but we expected that from the start.
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This is a big concern for me, It seems to be getting worse and worse as the years go on.
I find myself looking up hangars for sale as often as I look up airplanes for sale. I will probably buy a hangar before I buy an airplane, just for the pease of mind that I always have a place to take it.
I would even consider owning a hangar up here in Ohio and renting in Florida. That way I could use it up here in the summer and I would always have a place to bring the plane if I got squeezed out of Florida hangars. Hangars up here are dirt cheap compared to Florida.
You could always buy a hangar and rent it out until you get your plane. Just specify in the contract that its a “rent as you go” that might be terminated with a months notice or so. That way you can generate some revenue while you find the right airplane.
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