My First Purchase Experience: Lessons Learned

Discussions about buying and owning your own plane.
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C5Guy
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My First Purchase Experience: Lessons Learned

Postby C5Guy » Wed Dec 12, 2012 9:10 pm

I recently purchased my first airplane, a 1970 Cessna Cardinal, and Jeff Ward asked me to share my purchase process experience with the UCAP group. Some background on me: I just returned to GA after a 20 year hiatus. I had a Private License and about 100 hours of total time in C-152s before I became an Air Force pilot. I currently fly the C-5A Galaxy in the WV Air Guard out of KMRB. I have also flown the C-141, T-37, and T-38, so I am very comfortable in mid-1960’s jet technology. Most of my Air Force time has been under IFR in multi-place airplanes with FMS, autopilot, and lots of engines. Although I have a lot of total time (I’ll live an additional 11 months according to Dave), I don’t have much single engine time and no ownership experience, so some of my observations may seem idiotic or like common sense to many of you.

My search took two years. I responded to 17 online ads and found two airplanes that were for sale by word of mouth. I live in NJ and physically looked at 7 different airplanes all over the country, including trips to California, Florida, New York, and West Virginia until I found the right Cardinal for me.

Here are some observations and lessons learned:

1). Join a user's group for the type of airplane you are considering. The information I gained from the Cardinal Flyers Online (CFO) made me a much more well-informed buyer. At the time of purchase, I had less than 10 hours in Cardinals. Even as a novice, I was able to educate some owners and their mechanics about their Cardinals from information I gained thru CFO.

2). Every single airplane I physically went to see was misrepresented in some way. This ranged from the relatively minor (DG and heading bug inop - still a $2000 repair) to the gross misrepresentation of having a different engine than advertised! Even the airplane I purchased was listed as having complete logs, yet was missing several years. Be careful! The owner of one Cardinal I looked at bought his plane sight unseen on eBay! It worked out OK for him, but there is no way I would take that gamble, unless maybe you are looking for a project airplane. I wanted something that I could fly right away and that didn’t need any work in the near future.

3.) A thorough review of the logs followed by a pre-buy is a must. I brought a friend along who has owned airplanes his whole life. Although it is possible to review the logs by yourself the first few times, I wouldn’t recommend it. There is much more to a log book review than finding missing pages and looking for cylinder compression trends. I would also suggest a test flight or acceptance flight with a safety pilot (so you can check all of the avionics and systems while the other pilot flies). You would be surprised how many squawks you can find on an airplane with a fresh annual by flying it.

4). Be especially careful when looking at airplanes flown just a few hours/year. In my experience (which is admittedly limited) these tended to have more problems than aircraft flown regularly. Most of the airplanes I looked at were not flown very often for one reason or other, which is probably why they were for sale in the first place. It’s something to bring into your decision-making, especially when considering making a long trip to go see a plane.

5). If you are a serious buyer, be ready to pull the trigger quickly when the right plane comes along. This means having things like financing and insurance in place. I missed out on a couple of planes because I wasn't 100% ready to close the deal and the planes were sold a couple of days later. There are lots of well-informed buyers checking online sites daily who can spot value quickly. If you find an airplane for sale by word of mouth or with a “For Sale” sign at the local airport, you might have more time, but if it is a great deal, it probably won't last long. I found my plane listed online on Friday evening and called the broker immediately. I travelled to see it Monday and put a deposit on it that day. I have no doubt that if I had waited a day or two, my Cardinal would be in someone else's hanger today.

6.) Becoming good at determining value took some time for me. The AOPA and Trade-A-Plane valuation tools are a good place to start, but in the end, a plane is only worth what someone is actually willing to pay. I checked the online sites daily and after a while, got a pretty good feel for what was in the ballpark price-wise. Some airplanes I saw online two years ago are still for sale – that tells you something. But you would only know that if you spent time online looking…

7.) I anticipated a bountiful buyer’s market due to the poor economy. That wasn’t 100% true. I had a couple of fair offers flat out rejected. Here is why I think that happened: Over the past few decades, owners became accustomed to rising values of older aircraft. When values suddenly declined due to the economy, owners were unwilling to sell at the lower prices. So they held on to their airplanes which they could no longer afford to fly. The airplanes sat, annuals lapsed, and preventive maintenance was not accomplished. This further lowered the value, and so on and so on.

8.) Be ready to travel to buy the plane of your dreams, especially if you are considering a rare model. You can probably find lots of 172s or 182s within an afternoon's car ride. However, if you are looking for something like a Cardinal or a Comanche, you may have to travel to find the right one. You might be waiting a long time for one to come along in your neck of the woods. I live in NJ and found my plane in WV, about a 4 1/2 hour drive away.

9.) When going to see a plane, get to the airport early and talk to people: The mechanic on the field, the guy in the flight school, the girl behind the FBO counter. GA people love to talk about airplanes; to anyone. Even strangers. And they will happily tell you everything they know about the airplane you are considering purchasing, and sometimes they’ll spill the beans on the owner! Some of the things I heard:
“Great guy, but he doesn’t fly much anymore. I think he leased it to the flight school a couple of years ago.”
“Yeah, we’re not too nit picky about his annuals. He just doesn’t put the hours on it we like to give people a break when we can.”
And my favorite: When I asked if she knew the owner: Silence, accompanied by an eye roll. It gave me some indication of what I was in for (turned out to be the plane with the misrepresented engine).

So, it was a long process, but worth it. And I’ll be that much smarter when it’s time for the next one…

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champguy
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Re: My First Purchase Experience: Lessons Learned

Postby champguy » Thu Dec 13, 2012 12:43 pm

Great account, thanks.
I tend to buy on impulse, then, surprise, buy a new engine. Fortunately I've stuck to planes I could afford, just barely.
Soon it will be the season too put on a bunch of hours, see a bunch of new places, and more of the country than you ever saw flying IFR for the Government. Enjoy.
Oshkosh this summer?
Camping down in the South-Forty/Vintage is very civilized but still just a shuttle ride from all the action.
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Remember, not all who wander, are lost.
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PropFan
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Re: My First Purchase Experience: Lessons Learned

Postby PropFan » Thu Dec 13, 2012 11:04 pm

Lots of good advice here. Thanks.

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C5Guy
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Re: My First Purchase Experience: Lessons Learned

Postby C5Guy » Sun Dec 16, 2012 10:41 am

Champguy,

OSH is on my list of things to do next summer. I've never been. I retire from the Air Force on 1 June and plan to take the summer off before returning to my airline. I'm looking at Sun n Fun as well if I can get the time off....

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DaveA
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Re: My First Purchase Experience: Lessons Learned

Postby DaveA » Sun Dec 16, 2012 10:29 pm

C5Guy, I appreciated you sharing your experiences with us. A very well organized, thought-out process on your part. I do quite a bit of business with auto dealers, and one guy told me that out of 30 buyers, 1 will take what is usually an emotional decision and turn it into a rational act. Congrats on the result of your rational act....

Oh, and I loved the part about the 'eye-roll'...priceless....!
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C5Guy
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Re: My First Purchase Experience: Lessons Learned

Postby C5Guy » Mon Dec 17, 2012 12:08 pm

Thanks, Dave. A rational act to buy an irrational toy!

Larry James
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Re: My First Purchase Experience: Lessons Learned

Postby Larry James » Wed Dec 26, 2012 8:29 pm

A really helpful account of your buying experience and one I'm sure the CFO folks would love to include on their website.

As I mentioned in another thread here on this forum, I've been a Cardinal fan since even before I needed the wide doors with their easy access. :-)

Getting your ducks in a row early is great advice. May I ask if you used any escrow service such as that provided by AOPA?

Now all I need is to get my wife to que up with the ducks!

Larry

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C5Guy
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Re: My First Purchase Experience: Lessons Learned

Postby C5Guy » Mon Jan 07, 2013 11:36 am

Larry,

I did not use an escrow service. I did consider using a "buyers agent" to arrange the purchase process, but in the end, decided to educate myself and do it own my own.

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JimP
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Re: My First Purchase Experience: Lessons Learned

Postby JimP » Sat Mar 23, 2013 6:06 pm

C5Guy raised some excellent points. I think joining the type club for your airplane type is essential to the purchase process. There is a wealth of information specific to that particular airplane, and the type club folks know it all. And having been a member of the CFO (Cardinal Flyers Organization), that particular organization has to be one of the best run, most informative of the clubs. I was having trouble deciding between the Cardinal and a Grumman AA5 - both 4-seaters, but different in almost every other aspect. The type clubs (CFO and AYA - American Yankee Association) were extremely helpful in my decision-making process. Like C5Guy, I looked at all the online ads for a couple of years to get a feel for the market, etc. I also noticed that the same airplanes kept showing up over and over. One in particular kept coming back with a completely different description, but the N-number was the same... Talking to people in the type club helped me to understand exactly why it wasn't being purchased - it had a LOT of problems that would not have been found without a very thorough pre-purchase inspection.

Unlike C5Guy, I elected to use an escrow service. They helped me coordinate all the lender and insurance company required documentation, and took some of the worry out of the process. I got to "lock" the deal on the airplane (subject to any inspection findings, of course) protecting both the seller and myself.

The seller was using a broker, which I wasn't really thrilled about at first, but it turned out to be a really good thing for me. The airplane was in the DC "restricted" space, and the broker flew it to an airport just outside, where I could check it out more thoroughly without going thorugh a lot of hassles. He also ferried the airplane to a nearby airport where I had an IA recommended by the type-club give it a 4-hour pre-purchase inspection. That way I didn't have to use the mechanic at the seller's field (the same guy who has been doing the annuals and maintenance on it for the seller) to do the pre-purchase inspection. By the way, whereas it is good to talk to the airplane's current A&P/IA, it's almost never a good idea to have them do the pre-buy for you. If they missed something on the annual, they will likely miss it on the pre-buy as well.

The pre-buy turned up absolutely nothing that needed attention at the time, and when I flew the airplane with the broker, everything was good, so we sealed the deal. A phone call to the escrow agent and a faxed signature, and the airplane was mine. The broker also helped me line up a type-club recommended instructor to provide the "Pilot Familiarization Program" training, which would same me about 20% on my first year's insurance. After speaking with the instructor, I actually decided to have him fly with me back to my home town, because of some expected IFR weather enroute. Saved me a couple of nights on the road, and gave me a lot of "remedial training" in IFR flight, since he is a CFII. Another good decision!

Some specific comments:

1) User's group - completely agree. It's the best money you'll spend.

2) Misrepresentation in the ads: One ad contained significantly misrepresentation pertaining to "light hail damage"... The thing looked like a golf ball, only with golf-ball sized dents in it everywhere. I told the owner that I would not classify what I was seeing as "light", but as "moderate to severe" and he actually changed the ad. Conversely, I found almost all of the publicly listed Cardinals to be misrepresented in some way - some major and some minor. That's where the type club (CFO in this case) was helpful, because they have their own "internal" listing of airplanes that are known to many of the club members, so misrepresentation was much less likely. The airplanes listed on the CFO site were typically a bit more expensive, but also tended to be better maintained, etc.

3) Logs and pre-purchase: Definitely agree with this one! One "damage free" airplane whose logs I checked had several interesting log entries over a 4-month period. First the nose gear strut was replaced. A month later (zero flying hours), the prop was replaced. Two months later, the right main gear attachment point saddle was replaced. Clearly, the airplane had a hard landing, porpoised, and had a prop-strike. But the engine never had a "sudden stopage" inspection / teardown. And the firewall (which the type club told me would certainly have been damaged in an incident bad enough to cause damage to the nose gear and main gear saddle) was never even inspected. Another pre-buy inspection found non-approved (and blatantly illegal) modifications to the airplane with no paperwork whatsoever.

4) The vast majority of airplanes that are for sale haven't been flown a lot recently. The exceptions are where the owner is upgrading to a bigger/faster/newer airplane. These airplanes often have a lot of recent time on them, and are more likely to sell quickly. (See next point)

5) When you find the plane you want, you really need to be ready to pull the trigger quickly. Have your financing pre-arranged. Ditto for the escrow service.

6) Have an insurance broker lined up ahead of time. Here again, the type clubs can save you a bunch of money. My AYA-recommended broker saved me almost $400 a year over the AOPA insurance service, becuase they know the type so well, and know which underwriters to use for the best deals.

7) On pricing / valuation of used airplanes, the best thing I can recommend is to talk to others in the type club who regularly either purchaser / sell airplanes, or who do a lot of pre-buy inspections. They have a good feel for values, and can give you a lot of tips.

8) I found there were two kinds of sellers: Those who seemed like they didn't really want to talk to me, and those who could not stop talking about their airplane. The first type generally were getting lots of calls from people wanting to low-ball an offer, or had dealt with lots of "not-so-serious" tire-kickers. I found it helpful to assure them that I had the financing lined up, escrow service ready to go, and was already talking to the insurance broker... As for the second type, those were the fun conversations, but I always kept my salt-shaker handy. (Take everything the seller says with a grain of salt.)

9) For my airplane type (Grumman American AA5 Traveler), there are about 4 major service centers across the country. Given that these airplanes were built in the 70's, it is highly likely that one of these four shops have done work on "your" airplane. They can be a wealth of information about the airplane and the owner's maintenance habits. If they are reluctant to talk, you can be assured there is a reason for it. On the other hand, if the owner kept the airplane in good shape with regular maintenance, you'll likely hear about it.

10) While looking for my airplane, I really wanted one that had been modified with the high-compression STC for the O-320 engine. It adds about 10 HP, reduces the fuel burn, and dramatically increases the climb. After talking to a couple of the Grumman-specialist A&P shops, I realized that this upgrade was an easy one to do later on, and I was able to consider a broader range of airplanes.

11) The type clubs can help you learn about the pros and cons of all the available STCs for "your" aircraft type. Some (like the HC mod for my AA5's O-320 engine) are dramatic improvements. Others have more "subjective" benefits. Some STCs can have a huge negative impact for your specific needs. The type clubs can help you sort all of that out before you make a mistake.

12) When it's all said and done, buying your first airplane is an incredible experience. There is nothing quite as fulfilling for a pilot. I absolutely LOVE being able to go to the airport, knowing that MY AIRPLANE will be waiting in the hanger, in exactly the same shape I left it in when I tucked her in after the last flight. I always know how much fuel is in the tanks (I record it in my flight log). I don't even have to adjust the seat or seat belt when I get in, and my headset is always plugged in and adjusted to the volume level I prefer. Is it practical? Heck no! There is no way to financially justify owning an airplane strictly for pleasure. My cost per hour (I fly about 100 hours per year) is probably about the same as renting a plane - if I could even find a Grumman to rent. But is it worth it? Every time I open the hangar door, my answer is "Yes- you bet it is."
Jim Parker
N5842N - 78 Commander 114 Hot Shot (Turbo Normalized)

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C5Guy
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Re: My First Purchase Experience: Lessons Learned

Postby C5Guy » Wed Mar 27, 2013 5:11 pm

Jim,

Congrats on your purchase! I looked at Grumman Tigers during my search. Neat airplane.

I completely agree with #12 of your post. The purchase process is a very thoughtful, methodical procedure. But when I open that hanger door, the response is purely emotional. Worth every penny!!!

C5guy


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