M20J Valuation

[Ben E.]

There's been a lot of talk in the "selling aircraft" section lately about people looking for Mooneys that can't find one that fits their needs and/or budget.  I just started looking again and have felt a similar frustration.  Some people have commented that the market doesn't really pick up until closer to summer, which I hope is the case.  I think for me it's that I'm a bit picky on what I want and that plane just hasn't hit the market while I've been looking.  When the right plane comes around, I want to make sure I'm coming up with an accurate valuation.  I'm willing to spend the money as long as it's a fair price.  We have VREF, but I'm not sure how accurate that is and in any case, it doesn't take into account everything that affects valuation.  With that in mind, I was hoping you guys could tell me how you would appraise the following hypothetical plane, which has the things I'm looking for:

* 1990 M20J (or any of the early round window models with a gross weight of 2900lbs or eligible for the upgrade to 2900lbs)  

* total time less than 3000 hours and flown regularly

* engine overhauled in the last 10 years with new cylinders by a reputable shop with less than 1000 hours SMOH and good compressions.  Also, an engine that previously reached TBO (or pretty close to it) without needing a top overhaul or other major engine work.  

* two blade prop, overhauled in the last 10 years

* functioning autopilot with altitude hold and approach coupling (I've test flown two planes that didn't have a properly functioning autopilot despite the owner's claims before I showed up)

* resealed tanks or bladders

* Garmin 430W or better 

* GPSS

* everything in the plane works as intended

* no outstanding airworthiness issues

* no corrosion

* no major nonairworthiness related maintenance needed

* paint within the last 10 years or so and in good condition

* leather interior in good condition

* no major damage in the last 10 years, and if there has been any major damage, then properly repaired at a reputable shop and nothing more serious than a gear up landing and/or prop strike

I'm curious what you guys think.

[cnoe]

$110,000


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[aggiepilot04]

I know of the perfect airplane!  Meets all of your criteria (except 2-bladed prop).  Previous owner had a gear up around 2005, and it went back to Mooney for repairs.  Regarding valuation, I don't think I am in a position to offer an unbiased opinion, but I do think it's priced fairly.  I have asked David/Jimmy to bring it down to 133k though because owning 2 airplanes is no fun.  Doesn't look like that has been reflected on controller yet.

 

https://www.controller.com/listings/aircraft/for-sale/17359805/1994-mooney-m20j-mse

[ArtVandelay]

$130,000...and your requirements will limit candidates.
A 1990 with reseal tanks?
Engine recently overhauled?
A 1990 with a recent paint job?

I have no idea why you have these requirements, I rather a plane that didn't need all that work

[carusoam]

Nice planes are easier to price than the not so nice...

everything is up to date, and working.

Market price or fair price is a function of knowing the actual sale price of a similar plane.

1) it is hard to get actual sale prices of planes.

2) there are so few actually sold.

3) planes can also be moved to other locations to sell, or when sold...

4) One thing in your favor, AAA posts their price, and they focus on the higher end of Mooney's, like the one you are looking for...

5) You can assume that Jimmy and David know Mooney pricing better than anyone else.  They wrote 'the book' on it years ago, and maintain said book currently....

a fair price can be ascertained by taking what AAA offers and adjust it, for market dynamics... don't expect much favorable market dynamics as the spring selling season comes upon you...

Best pricing comes from planes that have been for sale a while... in the middle of winter... after an economic free fall...you have the cash in hand... (but they don't know how much you have)

1) Is the plane you want readily available?

2) Has it been sitting for months?

3) Is the economy making people feel poor, or are their houses being foreclosed on?

4) The competition for buying a nice plane increases with warm weather, the ability to travel to see it, the economy improving, and 'overtime' being available...

5) Its a friendly competition around here, until the number of planes available becomes exhausted... that hasn't happened yet. But we are a long way from 2009.

6) Sometimes the best price is very close to the asking price.  Don't lose a plane that matches your mission trying to get another one percent...  pay the price, lock it in, move forwards...

7) Don't skip a good PPI...

8) it is no fun spending months looking for a plane and have it get away while you figure out your next steps.  When this happens you are now ready to buy, there will always be a next plane.  The next plane may even be better...

9) cash, insurance, financing, training, experience, and ability to go see.  There is so much involved in landing the big fish.

10) if you actually over pay for a plane.... only you will know. Keep in mind some people around here have different levels of excess cash available... house is paid already, kids are grown up already, college is all paid for.... 5% of the sale price is huge in terms of negotiation.  In reality, it can be less than a month's work. 

11) just don't make the mistake of paying for one thing but getting another.  Back to the PPI...

12) disclosure, I used AAA to buy my O.  They seemed careful to under promise and over deliver...  an excellent sales strategy for high end used machinery.

13) expect to use a rule of thumb to make sure you have some dough left in reserve. If you spend the whole wad on the plane, how will you handle what happens next...?

14) If you know what you want, and have the dough, negotiations don't take very long unless you want to take that risk.  

Good luck, now go make it happen.... 

Best regards,

-a-

Edited March 20, 2017 by carusoam

[Ben E.]

19 minutes ago, teejayevans said:

$130,000...and your requirements will limit candidates.
A 1990 with reseal tanks?
Engine recently overhauled?
A 1990 with a recent paint job?

I have no idea why you have these requirements, I rather a plane that didn't need all that work

I figure all M20Js leak sooner or later, so I'd rather the previous owner have taken care of that already.  Recent paint because I think 27 year old paint is on the older side and will need to be repainted soon.  Recent engine overhaul because if the plane has been flown let's say 2500 hours and was flown regularly, then the engine overhaul would have had to been recent if the engine made it to TBO previously.  These are all things that affect valuation the longer you neglect them.  If I need to sell the plane in 10 years, the buyer will likely insist that I pay the $15k to repaint the 37 year old paint job, the $10k to reseal the 37 year old tanks, and the $30k to overhaul the engine that's 10-15 years past TBO (which I know is not a requirement but it does affect valuation).  So I'd rather pay $15k more now than $55k later.  Also, I just want a nicer plane and am willing to pay for it.

Edit:  I know my math is simplistic on that last point, but it's just to make the point that considering depreciation and the time value of money, I personally think it makes more sense to get more now rather than invest more later. 

[carusoam]

Ben, Time value of money...?

1) We might being seeing inflation begin this year.  

2) We might see the federal reserve raise the overnight interest rate a few times this year.  Other banks and loans will follow behind...

3) We will need the fed reserve, to see unemployment continue to go down and inflation to start moving again.

4) with the yield of the US 10yr note hanging around 2.5%, the time value of mooney is about the same today as it will be tomorrow and the next day...

5) in the '70s prices of things changed weekly, price of fuel was skyrocketing, lines to buy gas were prevalent,  you had to buy gas on odd and/or even days...  interest on loans were in the teens...not three or four percent. Fun memories...

6) the economy is improving, it isn't going gang busters yet...

Hows that for CNBC finance topics? I'm only a PP, my finance administrator sits right seat.

 

Ben, I like your thought.  Get more today that the PO already paid To have installed...  he won't come back to install the next round of nav equipment, unless you keep him as a partner...  

 

Best regards,

-a-

 

Edited March 20, 2017 by carusoam

[KSMooniac]

You're looking for a unicorn. You want a relatively young M20J, of which there weren't many produced...a few hundred? Then you want the previous owners to have repainted, resealed, maybe re-interiored, etc. If you can find such an example, it would likely be an estate sale as most owners will not put a ton of money into cosmetics, panel and such and then sell relatively soon.

If you'd like to buy a nice J in the next 12-24 months, I'd suggest you broaden your pool and focus on what is most important...like paint, or useful load, or panel. I'd ignore total time on the airframe as it doesn't functionally matter with Mooneys. A 3000 hr 1989 model can be in worse shape than my 4100 hour '77 as an example...maintenance and storage matter far more than hours.

You'll likely have to compromise on something...paint, leather, tanks, etc to actually buy one relatively soon and then fix/upgrade to your desires along the way. I'd rather spend the next year or three flying a Mooney with poor paint vs continuously shopping and not flying!

If you're determined to hold out for a unicorn, I'd spread the word to the major MSC's, Mooney brokers, maybe take out an ad or website, etc and be prepared to pay a premium. You might convince someone to sell that way sooner rather than later. Good luck, just remember nearly any Mooney is better than no Mooney!

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[Ben E.]

Just now, KSMooniac said:

 

You're looking for a unicorn.

 

You may be right.  That's probably why I'm in my mid thirties and still not married

[KSMooniac]

And for the record, my '77 had more useful load than a typical 2900 lb J, and mine would meet your criteria except for 3-blade MT prop and STEC-30 that doesn't follow a glideslope. I wouldn't sell it for $150k after doing my improvements.

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[KSMooniac]

You may be right.  That's probably why I'm in my mid thirties and still not married

Get the plane first!!! That's what I did...bought plane at 33, got married at 40. Got two unicorns!

 

Edit...I started with a solid plane that had some nice upgrades from the previous owner...I've continued pouring money and labor into her...so she is now a unicorn and not for sale. I've also enjoyed flying her for the last 10 years, except while down for overhaul and some mods.

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[Rmag]

Since the thread is creeped quickly into finding women and talk of unicorns, if you have never watched this video, it is definitely worth the watch..

 

[Ben E.]

Just now, KSMooniac said:

Get the plane first!!! That's what I did...bought plane at 33, got married at 40. Got two unicorns!

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Yeah that's what I'm thinking.  I figure if I get the plane now then somehow my future wife won't be able to complain about it as much because she knew what she was getting into.  That's probably wishful thinking.

[Ben E.]

Just now, Rmag said:

Since the thread is creeped quickly into finding women and talk of unicorns, if you have never watched this video, it is definitely worth the watch..

 

Definitely seen it, and love it!

[ArtVandelay]

I figure all M20Js leak sooner or later, so I'd rather the previous owner have taken care of that already.  Recent paint because I think 27 year old paint is on the older side and will need to be repainted soon.  Recent engine overhaul because if the plane has been flown let's say 2500 hours and was flown regularly, then the engine overhaul would have had to been recent if the engine made it to TBO previously.  These are all things that affect valuation the longer you neglect them.  If I need to sell the plane in 10 years, the buyer will likely insist that I pay the $15k to repaint the 37 year old paint job, the $10k to reseal the 37 year old tanks, and the $30k to overhaul the engine that's 10-15 years past TBO (which I know is not a requirement but it does affect valuation).  So I'd rather pay $15k more now than $55k later.  Also, I just want a nicer plane and am willing to pay for it.

There are many Js, especially 80s-90s models, that never have been resealed. There is no guarantee a 10 year old reseal will last longer than an original. 27 year old paint should look good if the plane was hangared, if it wasn't, would you rather a 5 year old paint job of a plane that spent it's life outside? Your 3000 TT limit eliminates planes that were flown regularly, probably long cross country trips. The airframe doesn't have limit. Also a 10 year old engine could have spent the last 5 years sitting idle. I am just saying some of your requirements may not accomplish what you want.

[Rmag]

I agree you are going to have a tough time finding a plane that hits 100% of your criteria.

You need to itemize what is most important to you, what you can live with, what you can't live with, etc. Get a PPI at a reputable MSE.  My Agreement of Sale listed that Seller shall pay for repairs limited solely to Airworthiness Discrepancies (if any) found at Pre-Purchase inspection.

For me, I needed to know that I had a good air frame, free from corrosion and or damage, and a good engine.  The rest of it is secondary imho.

 

[Hank]

20 minutes ago, Ben E. said:

Yeah that's what I'm thinking.  I figure if I get the plane now then somehow my future wife won't be able to complain about it as much because she knew what she was getting into.  That's probably wishful thinking.

Hey, it worked for me and my convertible . . . And we took it on our honeymoon. She later encouraged me to buy the plane, seeing the benefit of being taken far places in much less time than driving.

[Rmag]

Or if you have the plane first, you can take it on your honeymoon.  Not sure if 201er did that, but I just happend to be watching his video over the weekend.

 

[carusoam]

201er's engine didn't qualify for unicorn status...

But everything else has.

Plane first, then wife... sounds ideal...

Make a plan and execute it...

Life is short, fly fast.

Best regards,

-a-

[glafaille]

Ben:

Do you own a plane now?  Mooney's are transportation machines and therefore can usually be found in locales from which their owners require transportation.  In other words, they can often be found in small, off the beaten path, airports many miles from any  airline service.  That's why people buy airplanes and especially Mooneys.

Therefore, if you own an airplane now, your search will be much easier because you can travel to where your prey can be found.  If you are forced to rely on airlines and rental cars, your search will be very time consuming, expensive and challenging.  Does your job allow sufficient time off for the search?  Your ideal plane may very well be out there, but if you can't get to it in time, it might as well be on the other side of the planet.

[Ben E.]

Ben:
Do you own a plane now?  Mooney's are transportation machines and therefore can usually be found in locales from which their owners require transportation.  In other words, they can often be found in small, off the beaten path, airports many miles from any  airline service.  That's why people buy airplanes and especially Mooneys.
Therefore, if you own an airplane now, your search will be much easier because you can travel to where your prey can be found.  If you are forced to rely on airlines and rental cars, your search will be very time consuming, expensive and challenging.  Does your job allow sufficient time off for the search?  Your ideal plane may very well be out there, but if you can't get to it in time, it might as well be on the other side of the planet.

No plane of my own but a flexible job and a lot of frequent flyer miles and access to rental planes. I went to see one in Florida on a day's notice two weeks ago but it had too many undisclosed issues that needed to be fixed to justify the owner's lowest price (upwards of $20k in maintenance needs). I'm sure I'll find something I like in the next few months.


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[blacknchrome]

I'll agree with the unicorn comment.  I think your expectations are somewhat unrealistic.  Buy the airframe you want with your basic necessities covered and then don't be scared to do some of those things yourself.  It might not be perfect when you close on the purchase, but after it's built the way you want it, you'll have better peace of mind I think if you choose the shop and the components to do the upgrades yourself.  It also sounds like you have the finances to handle an upgrade or repair if something comes up.

For example, I'd rather pick the engine overhaul shop myself and choose the components to be replaced/rebuilt and know exactly what I've got instead of not knowing the previous owner's budget when we went through it and maybe cut a few corners. 

If you want GPSS, you might have to add an Aspen.  Now you'll have a brand new model rather than whatever the owner put in 5 years ago.

I don't think tanks are a deal-breaker and they're not a preventative maintenance item.  Having them done within 10 years?  Sure, it might make you feel better but might also be a complete waste of money if the originals or the 15 year ago reseal is still great.  If they leak, price accordingly.  If they don't...go fly it for years and years without any need of reseal!

[Rmag]

When I bought my J I had leaking fuel cells checked for in my PPI. 

They are original seals but were not leaking.  So I know this may or may not be something I have to deal with in the future, but I'm not going to worry about it. It passed inspection and I move on and focus on the things that did not pass. 

[Ben E.]

1 hour ago, bluehighwayflyer said:

As much as I love this site, I think it and others like it are responsible for shopping lists like Ben E's that result in the buyer's paralysis that we have witnessed several times here lately.

Find a nice clean hangared airframe with as much of the stuff you want already installed and buy it.  Use hours on the engine as a pricing tool, but don't try to devalue a candidate airplane today based on maintenance that may or may not be necessary in the future.  

Jim

I get what you're saying, but if I just wanted any old plane so that I could upgrade it myself then I would pay $30k less and get one.  I don't mind waiting for the "right" one and paying a premium for it, because in the long run it's cheaper that way because I'm not paying full price for avionics and an engine overhaul.  But what I, and many other buyers I've heard from, have a problem with is the expectation that we should essentially take deferred maintenance problems and long overdue avionic upgrades off the hands of the seller who wants to sell his plane at the same price as a plane without these issues.

Many sellers have unrealistic expectations of what their plane is worth.  They want $130k for an early 1990s J that has original avionics, a malfunctioning autopilot, a few hundred hours before TBO on an engine that hasn't been overhauled in 20 years, and original paint and interior.  Let's say they would take $125k, then after adding a GPS ($12k), engine overhaul ($30k), paint ($12k), interior ($5k), autopilot overhaul ($2k), and another $5k for the mag overhaul, gear adjustments, and all the other maintenance they've been ignoring, you're really looking at a $190k plane.  For that price you can get an early model Bravo or Ovation.  People don't buy those planes at those prices, so both seller and buyer can't accomplish what they're looking to do.  

On the other hand, you have sellers that have properly maintained their plane and updated the avionics from time to time.  Some want exorbitant amounts for those planes even though the upgrades are 15+ years old (like the $160k M20J on Controller with a TN and TKS), and they sit on the market for 2 years.  Others price them reasonably and they sell quickly.  I'm looking for the latter and believe I will find it.  I'm not saying I won't budge on some of my criteria, but it has to make sense.  Otherwise, I'd be better off paying $100k and getting a decent plane that doesn't have all the stuff I'm looking for, but I will have some money for upgrades.  

Last year when I was looking toward the end of summer there averaged about 165 Mooneys on controller at any time.  Now there are 118.  So a lot of this is that people aren't selling this time of year.  I assume it will pick back up.  

[Ben E.]

And while I'm ranting here ...

Buyers also don't like when a seller tells us no damage history, tanks don't leak, autopilot works great, paint and interior like new and you fly 1000 miles to see the plane and the rudder is mangled from a taxiing incident they forgot about, there are fuel stains under the wings, NAV and HDG modes don't work on the autopilot, the paint is a 6 at best and the interior is falling apart, and they're not willing to budge on the price.