If you update/upgrade your airplane, how much return on your investment can you expect? Full price? Pennies-on-the-dollar? Somewhere in between? This is an issue we’ve discussed before. We even did a YouTube video on it several years ago (https://www.youtube.com/watch?v=B-P_zRYH--c). It is a subject that needs to be readdressed.
Aircraft owners love to update their airplanes to their taste and needs. That’s great. There’s nothing better than having an airplane that is exactly the way you want it. Sometimes, in their zeal to make the airplane “perfect” those same owners don’t necessarily consider how much of their money they’ll actually be able to get back when they decide to sell the plane. Many folks are under the false notion that everything they spend on an airplane increases its value. Some owners fall prey to avionics sales people who convince them they will get a sizable portion of their investment back. Almost without fail, these folks are disappointed – maybe even frustrated – when they can’t get anyone interested in their plane that is vastly overpriced.
Before you begin to spend money, take these commonly accepted rules-of-thumb into consideration:
- The cost of labor rarely adds any value. If you install a new GPS com for $15,000, and $5000 of the total was for labor, you probably won’t get any of the labor cost back.
- Most components, especially avionics, depreciate rapidly. If you’re installing state-of-the art radios, expect them to be worth 2/3 of their original value within the first year, 50% in the next 2-3 years, and maybe 1/3 after that. Used radios tend to hold their value better since most of the initial depreciation has taken place.
- Popular, widely accepted STC’s, should retain at least ½ of their value for years after installation. If you’re going for a specialized upgrade or modification, don’t expect there to be a lot of buyers who are looking for that type of installation however.
- Routine maintenance adds no value. If you don’t keep your plane maintained, it will detract from the overall value though.
- Engine overhauls, especially those from a well-known shop that offers a robust warranty, will retain their value when pro-rated for hourly usage. Don’t make the mistake of believing that your 100-hour engine that was overhauled 10 years ago will be appealing to buyers. It won’t.
- Quality paint and interior upgrades should retain ½ of their value for the first year or two after application/installation. After that, they will add very little to your overall value. As with required maintenance, poor paint and interior will subtract from the value.
Obviously, these rules are not hard and fast. They have been learned however following years of market study, evaluation, and experience. Airplanes themselves are not sound investments and advertisers who claim otherwise are misleading you. What you are investing in is time-savings, safety, economy, and pleasure -- all noble and wise expenditures.
Before you put money into your airplane, give us a call and we’ll be more than happy to discuss your project and give you a second opinion. Going into any project with your eyes wide open will certainly make you a happier and more satisfied aircraft owner.
Here’s to good flying!