I mostly agree with your premise.

One thing you aren’t accounting for though is taxes. You would have to pay capital gains on your ETF return. And you would not be getting the benefit of bonus depreciation that has lately been de rigeur on new aircraft.

Those two effects somewhat blunt the advantage the lower capital cost airplane has.

Only when you sell it. You can control when that occurs.


Only applies if you can maintain 50% or higher business use. If the plane is personal, then bonus depreciation doesn't factor into it.

Bonus depreciation is ramping down, 40% now, 20% next year, then gone, unless it gets renewed.


Not by much. At 20% capital gain tax rate, you still have $4.3M of post tax money.

Mike C.

Over here in the real world… most people buy a Mustang, they pay $2.2M for it, they fly it three years, pay the engine program, and then sell it for $2.2M and buy an M2.

We aren’t talking $3M Mustangs that will only be worth $1.8M in a few years.

I don’t have a crystal ball, but so far all of my clients who have bought Mustangs have sold them for a profit. A couple for a $500k profit.

Will they continue to go up? I have no idea. Will they drop like a rock if things slow down? Only the ones that are not on an engine program, have crappy history / logbooks, or damage history.

We do a lot of Mustangs and one thing I can tell you is that it is an owner flown airplane and the vast majority of buyers are meticulous owners, who are not interested in an airplane with stories. If you buy one of the crappy ones and the market stays good, you’ll probably be OK, but if you buy crappy one and the market slows down, you may be stuck with it.

i'm too lazy to re-read the thread. What do the programs cost, per engine, per hour? minimums? i presume most of these are <150hr/yr birds.

i'm too lazy to re-read the thread. What do the programs cost, per engine, per hour? minimums? i presume most of these are <150hr/yr birds.

Why are they not buying an M2 to start with if they are so soon not going to be happy with the Mustang? Why invest 3 years into a unique type rating and unique ecosystem when they are gong to end up in a 525 series anyway and have to start over? Lots of start up costs get duplicated like sales taxes, initial type rating, etc. The M2 runs circles around a Mustang, far faster and more capable.

The more churn your customers have, the more you make, of course. Hmm.

The implication that the rest of us not doing things your way aren't real is bogus. I understand you want your potential future customers to believe there is only your path, but that just isn't so, and my world is just as real.

If we find a Mustang owner who bought about the same time I did, late 2020, and we carefully accounted for every dollar we both spend, and I get to stick every extra dollar they spend into an ETF at that moment (and vice versa), then we both sell at about the same time in the future, I am convinced I will be well ahead financially once the totals are made. And during this time I was flying a V that is faster, bigger, longer range, more capable. I will have burned more fuel, but the lower capital costs and other factors means I will end up in a far better place. The difference could well be over $1M in my favor.

Do you have any Mustang customers who bought in late 2020 and are willing to be as open about their expenses as I am?

I suspect not, but it would be an enlightening exercise.

Mike C.

"Over here in the real world"? Really? Do you think that I got myself to the point where I can acquire a Mustang by not living in the real world? That's the type of comment you make consistently which makes me sure I do not want to work with you. Other buyer reps probably.

The real world for owners is that they have limited funds. Even Musk, Gates, and Buffet. Their numbers are bigger, but they don't waste their money (except maybe Musk). But the real world is that we have to utilize our limited funds to address 3 aspects of ownership: Acquisition, Fixed/variable, and Operational. As a pilot, I care about opex the most. That's the money that gets me from here to there. As an owner, fixed is the necessary evil that lets me keep the thing. Some are truly fixed like hangar costs. Others are influenced by acquisition price, like insurance rates. Some are indirectly tied to acquisition (buy a cheap plane, expect to pay more to maintain it). Finally, as a buyer, spending more on acquisition commits capital that could have been used for fixed or opex. Your best advice to your clients may be to spend as much on acquisition as possible, in order to try to minimize expenses for repairs and maintenance. The analogy is buying a brand new car off the lot with a warranty. Yes, you pay more for it, and you can sleep at night. And the salesman makes a good commission. I prefer to buy a used car in "real world" markets, not the post pandemic la-la land that we've experienced in the past 5 years.

My real world scenario is that I don’t need an M2. I need a small, affordable fast (faster than a Bo, not M2 fast) plane for me and an occasional passenger. An M2 cost more to acquire, more to operate, more to insure and will be a steeper curve to flying without a mentor. The only downside is finding contract pilots with 510 types is a bit tougher than 525 typed guys and gals.

Also, if a plane isn’t on an engine program, its acquisition cost is lower, so I’m taking an educated risk that I won’t get burned. Yes it will sell for less but my acquisition, insurance, and taxes will all be lower, helping me save for a surprise.

Also, until 5 years ago, the real world was that aircraft depreciate (quickly). Chip you’ve experienced the land of Oz. Someday, we gotta go back to Kansas. I’m timing this because I bought my G36 in 2020 for what was then market price, with numerous upgrades freshly installed. I’ve flown it 600 hours and will probably sell it for 20% more than I paid.

But I’m not banking on being able to do that twice.

If the "real world" returns, where aircraft values go down with time, then I'll be much happier with a lower acquisition cost, because I'll lose less money. I have no significant business expenses to write down.

So, explain to me again why I'm not living in the real world?

Why are they not buying an M2 to start with if they are so soon not going to be happy with the Mustang? Why invest 3 years into a unique type rating and unique ecosystem when they are gong to end up in a 525 series anyway and have to start over? Lots of start up costs get duplicated like sales taxes, initial type rating, etc. The M2 runs circles around a Mustang, far faster and more capable.

The more churn your customers have, the more you make, of course. Hmm.

The implication that the rest of us not doing things your way aren't real is bogus. I understand you want your potential future customers to believe there is only your path, but that just isn't so, and my world is just as real.

If we find a Mustang owner who bought about the same time I did, late 2020, and we carefully accounted for every dollar we both spend, and I get to stick every extra dollar they spend into an ETF at that moment (and vice versa), then we both sell at about the same time in the future, I am convinced I will be well ahead financially once the totals are made. And during this time I was flying a V that is faster, bigger, longer range, more capable. I will have burned more fuel, but the lower capital costs and other factors means I will end up in a far better place. The difference could well be over $1M in my favor.

Do you have any Mustang customers who bought in late 2020 and are willing to be as open about their expenses as I am?

I suspect not, but it would be an enlightening exercise.

Mike C.

The type rating is a real difference. Not for the pilot, but for the owner.

The reality is that for every 510 typed guy or gal, there are probably 10 525 typed people.

Why does this matter? Because in the real world, people moving from an SR22 or Bonanza into a Mustang will have to have a mentor pilot for a while. Most of us don't have one of those sitting on the shelf, and we'll have to find / hire them. It's tougher to find them. Also, if I'm in Vegas, and my plane is in Denver, and I want it brought to me, I have to have a 510 typed person bring it to me. Easy peasy to find 525 people. Not as easy for 510 typed. And one of my destinations is out of the way, a good 2 hours from decent commercial air service. Really harder there.

"Over here in the real world"? Really? Do you think that I got myself to the point where I can acquire a Mustang by not living in the real world? That's the type of comment you make consistently which makes me sure I do not want to work with you. Other buyer reps probably.

TLDR, it's not in the real world, solely because you paid cash for your plane.

The problem with comparing ownership cost is 1)it's unique to each person, 2) unless you've exited the asset, it's still hypothetical. But dealing strictly from an asset stand point, the math doesn't have you ahead.

I bought our Phenom in early 2021 so close enough to you from a market stand point and bought it with 0.9% financing for $2,000,000 (close to what Mustangs were going for). Subtracting the $270,000 in payments made so far, the $2,000,000 is now worth ~$2,800,000 in my indices growth.

You paid cash for your V for $900,000 and lost out on market gains of $486,000, plus you put another $250,000 into it on a panel upgrade which also cost another $135,000 in gains you lost out in the market the last 4 years.

So my asset that I paid 220% more for cost me net $1,200,000 to date and your asset has cost you $1,521,000 ($900,000 + $486,000 + $135,000).

How you're able to buy something often matters more than what you buy it for. And what's available to you in terms of financing is individual and therefore near impossible to compare apples to apples. The more money you have, the cheaper it is to borrow.

Of course all the above is just an exercise as all that matters is the total cost of ownership, and from an asset stand point the total cost is only known at sale. If Mike was to sell his V right now, it looks like it would go for about $2,300,000 or ~$800,000 above what it's cost him to date. The Phenom looks like it would sell for about $2,900,000 or about $1,700,000 more than it's cost me (as an asset). The asset I paid 2.2x for netted me 2.2x more return. Crazy times.

Obviously this is a very simplistic view, because there's a whole host of other variables an asset carries with it, such as can you get any tax deductions with business use? I can't, but Mike probably can as he uses it to grow his business. Then there's the intangibles of that flexibility which are hard to calculate, but significant in terms of employee efficiency. Also if either of use were to sell, what's next? There's no single pilot upgrade Mike can make from his V and keep what he likes about the V and for me the upgrade would be a 300 and that is easily 3x the asset cost for 1.5 the performance...

We're airplane owners, we can make the numbers work however we need them to

Chip-

I mean, there has to be a tipping point coming, but I've been saying that the last 2 years. Maybe there's been a little slide, but we are still living in airplane la la land.

Chip-

I mean, there has to be a tipping point coming, but I've been saying that the last 2 years. Maybe there's been a little slide, but we are still living in airplane la la land.

Chip-

Dear Chip,

I will hire someone when I'm ready to pull the trigger. Full transparency it's obvious that you and I have different value systems, so it wouldn't make sense for us to work together. I'm not upset about that. I do object to you implying I'm not living in the real world. If you believe that we are going to see aircraft continue to appreciate or even hold their value over the next 5 years, well good luck with that. I believe a change is coming. Those who could afford to move up to jets have done so over the past 5 years. The status quo is now changed, and we will return to normal. Unless DJT's magic formula proves me wrong...

My goal is to fly myself as fast as possible for as little out of pocket money as possible. Not as little monthly cash flow as possible, but as little total out of pocket over the next 5-10 years. A 2009 Mustang flies just like a 2017 Mustang. Just as fast. It may need some P&I work, and maybe even some catchup maintenance. But the asking price difference right now between two such planes is on the order of $1-2mm.

In the meantime I'm educating myself and watching the market. Here's a snapshot of current availability (not everything, but everything I'd consider):



Any of those are going to work for me. Some of them give me a couple million $ to invest, use for training, mentor pilot, paint and interior, catchup on maintenance, hangar, insurance, and fuel.

And whether you or I are correct about appreciation or depreciation, it doesn't matter. The market will change by +/- XX % in the next 5 years, and all of those airframes will go up or down the same amount. I'm willing to suffer less opportunity for appreciation on the expensive airframes, because I know I can make more money in the S&P500.

Ok, I see where you are coming from, if you think there will be a big shift and drop in aircraft values, then your logic is correct. The less invested, the less there is to loose.

I can't advise folks on speculation, so all I can do is look at is the information we have right now and based on what we are currently seeing, a 40% drop in Mustang values is highly unlikely. I'll say this way, to see that kind of drop in an aircraft that is so economical to operate, you would have to see a 50%- 60% drop in everything else. To see that type of drop in the jet market, would take something unprecedented, a world war, complete financial collapse, something of that magnitude. If that were to happen, I suspect what airplanes are worth will be the least of any of our concerns.

So, that is where my real world comment came from. I'm sorry, I didn't intend for it to be taken literally, I intended no insult, you and Mike are talking about hypotheticals that we just don't see aircraft purchasers talk about, so it is unreal to me.

I live in an area where housing prices have doubled in the last five years. I would love for them to go back to pre-Covid prices, but that isn't going to happen... too many people not enough homes.

The same is true of airplanes, all of the manufacturers combined are not building enough jets to replace the ones that are aging out, much less meet the increase in demand. We're only building about 1100 new turbine aircraft a year, and none of those are $2M jets.

The manufacturers all have multi-year backlogs, until you see their lead times start decreasing, we haven't even reached a leveling of prices, much less a decline.

Are old airplanes (built before 1990) going to drop in value? Yes... at some point they'll drop off the cliff. The newer ones?? They're not dropping more than normal depreciation without a severe outside influence.

If you want a Mustang and to have the lowest overall cost over a 10 year period, buy a nice airplane on programs that will retain it's resale value.

If you want the lowest acquisition cost to free up capital for investing, buy a 501SP and throw it away in 10 years.