depreciation

Guest Discussion
1

A group of members in my flying club is organizing to purchase a new plane to lease to the club for use by club members. The SR-20 is an obvious candidate for purchase. In computing the hourly rental to charge at various levels of usage in order to break even, the major unanswered question is “How much will the plane depreciate during the first few years of ownership?”

I would be most appreciative of any information you can provide concerning SR-20s sold used. How much did you pay for your plane? How long did you own it? How many hours did you fly it? For what price did you sell it?

Thanks very much for your assistance.

–Stephen S. Ashley

2

In reply to:

I would be most appreciative of any information you can provide concerning SR-20s sold used. How much did you pay for your plane? How long did you own it? How many hours did you fly it? For what price did you sell it?

These are all good questions, and I don’t have any answers for you!

Just wanted to note something peculiar about used SR20s that you might want to keep in mind when you do start getting answers.

For a while (and even now), there was a pretty long backlog for new orders for SR20s. For that reason, you could often buy an SR20, fly it for a couple hundred hours, and then sell it for the same price (or even a little more) than you paid for it.

I suspect that as Cirrus continues to ramp up production, and as the wait time for newly ordered SR20s decreases, this abnormal phenomenon will stop…

Steve

3

I’m beginning to think about resale value. I have contract #501 for a new ship with all the goodies, so I’ll be selling SR22 #44 some time next spring. I’m guessing the resale calculus will go something like:

PRICE YOU PAID

  • CAPITAL IMPROVEMENTS (engine monitoring, etc)

  • PRICE INCREASES BY CIRRUS

  • DEPRECIATION (new plane depreciation seems to be about 5% per year for the first 5 years)
  • SCARCITY PREMIUM (function of the Cirrus’s lead time and how many other birds on the market - state of the economy affects this one)

A year ago the SP was around $15K for the 22; at least that’s what I paid to get to the front of the line. I don’t have any feel for what it is now, or is for the -20.

-Curt

4

In reply to:

I’m guessing the resale calculus will go something like…

Curt -

Thanks… I’m in a similar position, except I’ll be selling my SR20 for an SR22 with all the added weight I can buy. Your “calculus” didn’t include a usage factor. Care to take a stab at that one? My SR20 will be about two years old when I sell it, but it already has about 630 hours on the Hobbs. That’s not flying time – I can back into that, obviously smaller, number.

Mike.

5

Curt,
I too will be selling my 22 when the new plane is ready, my hull number is 46.
Once again we find ourselves in a similar situation, hmmm.
Myron

6

Well, I guess we have to factor in the engine overhaul allowance, which is useage based. I don’t know how to consider the airframe factor.

I think depreciation will be a little accererated as the airplane comes out of warranty. I’m planning to sell mine with one annual under warranty remaining, as a bonus.

-Curt

ps how do you do the quoted reply? Is there an option for including the quoted text, or do you hand edit it in?

7

In reply to:

how do you do the quoted reply? Is there an option for including the quoted text, or do you hand edit it in?

Curt,

First, thanks for your response on depreciation.

To do a quoted reply, copy the text you want to quote and paste it between

.

For a complete list of available “tricks” (other nifty things to put between brackets), click on the “markup in your posts” link that is at the top of the Reply to Post page.

Mike.