Overhaul on calendar time - io-550

[rpcc]

I’m looking at 1999 ovation with 600 hours. Most of that time is in its first tee years of life.   Should this be considered runout based on heads in service as it’s nearly able to drink leagally now?  

[gsengle]

Generally as an owner I’d only overhaul on condition. But we all know that a sitting engine is potentially worse than a higher time one run regularly. 600 hours in 20 years is pretty bad. I’d treat it as runout as a buyer unless proven otherwise...


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[MIm20c]

I would value that as a mid time engine.  If a buyer came at me trying to justify another 30k off I’d respond, “don’t let the door hit you on the way out”.  600 or 1200 you are going to be replacing the cylinders one time anyway before it gets to TBO. 

[Cruiser]

I would look very carefully at the entire airplane. If it only flew 600 hours in 20 years there are probably many other things that haven't been done either.

[gsengle]

I would value that as a mid time engine.  If a buyer came at me trying to justify another 30k off I’d respond, “don’t let the door hit you on the way out”.  600 or 1200 you are going to be replacing the cylinders one time anyway before it gets to TBO. 

My M20R has 5 original cylinders at 2000 hours. So that’s not a foregone conclusion. You could also point out to the seller, that according to continental, at 12 years it’s due.

If it’s 600 out of 2000, that’s a theoretical 70% remaining on what, a 50k overhaul, so yes you’re def asking for a lot to take 30k off. So let some other buyer buy it. Or split the difference if you really like the plane otherwise and cross your fingers. It’s at least a negotiation point and I sure wouldn’t pay as though it were a 5 year old engine with 600 on it.

Finally I’d get a pretty thorough inspection, and of course a test flight, maybe oil analysis...

Greg


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[gsxrpilot]

I'd price it as run out or let some other sucker buy it. Don't be the one who pays for a "mid-time" engine and then immediately has to start replacing cylinders... because of the way the previous owner flew it and managed, or rather mis-managed the engine.

My TSIO360 is supposed to eat cylinders as well... so far not on my watch. 1300 and going strong.

[carusoam]

It can be considered a lot of things, but...

Run-out is not going to be one of them.

PPI and a well thought out purchase agreement should cover many of the risks of buying a plane.

I don’t think any IO550 has been considered run out in so few hours...

Good luck with your negotiations. You may want to continue to tune the approach some...

Of course... did they list the sales price as if the engine were new? If they did, then there is some discount available because it isn't new... 

Cam location, design and materials are completely different than Lycoming... a common area to check with a strong eye.

If you have two identical Ovations side by side... select the more active one...

If the seller has two identical buyers side by side... he has choices too.... 

The fun part of buying machinery... Some situations are more in the buyers arena, some situations lend themselves to the seller more...

PP thoughts only, I only bought one M20R...

Best regards,

-a-

[rpcc]

Thanks for your comments.  Sorry, I butchered the original post.  I was on plane using my phone - should have had my glasses on.  

If I can't work out some type of risk sharing agreement with the seller I'll move on.   Something like escrow hold back for 12 months or 100 hrs for example payable to the owner if the engine remains airworthy - unsure how to word this type of thing and would appreciate some input.

There is another option that I'm aware of that is similar year, but an eagle with 1500 hours and original, 2 blade 244hp.  I'm more comfortable with this as its at least been somewhat regularly flown.  

[MIm20c]

1 hour ago, rpcc said:

Thanks for your comments.  Sorry, I butchered the original post.  I was on plane using my phone - should have had my glasses on.  

If I can't work out some type of risk sharing agreement with the seller I'll move on.   Something like escrow hold back for 12 months or 100 hrs for example payable to the owner if the engine remains airworthy - unsure how to word this type of thing and would appreciate some input.

There is another option that I'm aware of that is similar year, but an eagle with 1500 hours and original, 2 blade 244hp.  I'm more comfortable with this as its at least been somewhat regularly flown.  

You have to go with what you’re comfortable with. I’d bore scope the ovation and feel a lot better if everything looked good. Of course it would need to be a 100 percent hangared airplane from a dry part of the country. 

The eagle is a 15-20k expense immediately to put the proper prop and stc on it.  You will also never be able to sell a 2500 hr engine but 1600 hr engines still command a premium from what I’ve seen. 

[MIm20c]

3 hours ago, gsxrpilot said:

I'd price it as run out or let some other sucker buy it. Don't be the one who pays for a "mid-time" engine and then immediately has to start replacing cylinders... because of the way the previous owner flew it and managed, or rather mis-managed the engine.

My TSIO360 is supposed to eat cylinders as well... so far not on my watch. 1300 and going strong.

Paul, just curious what year your fire breather was overhauled?

[LANCECASPER]

2 hours ago, rpcc said:

If I can't work out some type of risk sharing agreement with the seller I'll move on.   Something like escrow hold back for 12 months or 100 hrs for example payable to the owner if the engine remains airworthy - unsure how to word this type of thing and would appreciate some input.

Just negotiate a fair price for both of you and buy it - no seller is going to wait a year for the rest of his money. Everything used is as-is. This engine could make it to TBO and the next one might not. Have a thorough pre-buy and know that realistically on most Continentals you'll be buying new cylinders at around 1000 hours. If you don't have to, good for you. An equally valid argument by the Seller could be made that only 600TT on the airframe, if cared for, is worth a premium also.

[M016576]

The one piece of info that has been left out is what the seller is asking... lots of assumptions so far that the airplane is priced “to the max.”

but if the seller is asking 125, I’d say that’s fair for a ‘99 ovation with 600smoh, and if a buyer tried to Negotiate lower due to the motor, I’d tell him/her to pack sand.  Now if he’s asking 200.... that’s a different story.

of course, avionics are a big part too... but if it’s only flown 600hrs in 20 years, I’d imagine it’s pretty stock on the inside and in need of a WAAS gps, and an ADS-B solution.

remember- a fair transaction has occurred when both the seller and the buyer walk away disappointed.

[rpcc]

Ha Ha.  180 is the ask.  Avionics are original. 

As you all know every negotiation is personal so there is no correct answer for both parties.  Just trying to figure the buyer side.

[StevenL757]

6 hours ago, rpcc said:

I’m looking at 1999 ovation with 600 hours. Most of that time is in its first tee years of life.   Should this be considered runout based on heads in service as it’s nearly able to drink leagally now?  

I faced this similar situation when buying my Ovation with 643 hours on it, although it averaged 53 hours per year...a fair amount more than the one you’re looking at, but still worse than the “100 hours per year” goal.  I ended up taking that engine to just over 1050 hours, when it was determined 4 of the 6 jugs needed to be changed. In all honesty, I couldn’t see putting a $13.5k top OH into what was a then-15 year old engine core, so opted to bite the proverbial bullet, hit “reset”, and go for a factory re-man IO550N with the 310HP STC.  Sure, it was more than I planned to spend, but I did negotiate down a substantial and fair amount when I bought the airplane, expecting to have to spend a fair amount a couple of years down the road.

If this specific airplane is something you’re seriously considering, I suggest a good inspection, and then (echoing others) negotiate accordingly...emphasizing that it’s a strong likelihood that you’ll have to do something similar to what I did.  If they refuse to meet you in the middle, walk away.  Best of luck...happy to help if needed.

Steve

[gsxrpilot]

2 hours ago, MIm20c said:

Paul, just curious what year your fire breather was overhauled?

New in Dec 2003
Prop strike June 2006 - no overhaul
Prop strike Oct 2008 - no overhaul 
I purchased the plane in Aug 2016 - 1000 since new and I've added about 300. 

I purchased from the owner who installed the new engine in 2003. It's seen regular flight time since new with the only gaps being when the engine was off for inspection after the prop strikes and when I was down for a tank reseal. I'm still on the original cylinders. 

I really believe the key is regular use and don't push the engine too hard. Fingers crossed I can get it to TBO.

[MIm20c]

1 hour ago, rpcc said:

Ha Ha.  180 is the ask.  Avionics are original. 

As you all know every negotiation is personal so there is no correct answer for both parties.  Just trying to figure the buyer side.

If by original avionics you mean 155’s and a 94 and it’s lacking TKS I think you have a lot of wiggle room. However, you might want to spread out the justification to older avionics etc to make a better case. 

Also keep in mind @StevenL757 has an almost perfect example of what you’re looking at.  He decided to go first class. However, others might just invest 6-7k to overhaul the bad cylinders and fly it for another 1500 hrs before a replacement is put in.  7 vs 70 makes it hard to put a value on this engine. 

[jetdriven]

8 hours ago, gsxrpilot said:

I'd price it as run out or let some other sucker buy it. Don't be the one who pays for a "mid-time" engine and then immediately has to start replacing cylinders... because of the way the previous owner flew it and managed, or rather mis-managed the engine.

My TSIO360 is supposed to eat cylinders as well... so far not on my watch. 1300 and going strong.

Or be the guy who pays 12,000$ in engine value for that mid time engine only to have it spall the lifters 250 hours later rewuiringna full overhaul. That money was wasted. 

[carusoam]

I like machine shopping...

pushing the reset button on the power plant can be expensive.

A factory reman 310hp (N) is about 35amu. A TopProp 15 amu. and R&R 10amu.

Flying LOP, With CHTs Around 320°F, they could go the distance....

O1s started with KLN89s, then KLN90Bs, the 94 didn’t arrive until later.  G530s quickly pushed out the BK devices.

Best regards,

-a-

[thinwing]

23 hours ago, rpcc said:

Thanks for your comments.  Sorry, I butchered the original post.  I was on plane using my phone - should have had my glasses on.  

If I can't work out some type of risk sharing agreement with the seller I'll move on.   Something like escrow hold back for 12 months or 100 hrs for example payable to the owner if the engine remains airworthy - unsure how to word this type of thing and would appreciate some input.

There is another option that I'm aware of that is similar year, but an eagle with 1500 hours and original, 2 blade 244hp.  I'm more comfortable with this as its at least been somewhat regularly flown.  

That would be very unique agreement in my opinion...basically asking the owner to "insure"your purchase....I honestly cannot imagine any seller agreeing to that " holdback"as you describe it.I think you need to consider buying new from the factory with a maintaince contract.

[rpcc]

thinwing - I'm just trying to buy the plane at a fair value.  I think in this case the owner and I are too far apart to make a deal realistic.  Just trying to be creative.   This type of strategy is common when you buying or selling a business and there is debt from the seller on the business.  The bank often times will not let the seller off the note for some time to prove the business is still operating smoothly.  The bank loaned the money originally based on historical performance.  The new owner may not have that history. 

My offer is similar in that the owner believes he's selling a 5 year old engine with 600 hours and is hoping to find a buyer that believes this as well.  It may very well run 1500hrs or may need an overhaul in 2 years.  If the plane was priced fairly, I'd be fine with that, but it is not.  

I agree this is  complicated approach, but buying new presents some capital and tax implications as well.  

I did make the mistake of looking very nice younger ovation.  This one is exceptional, but its not in the market I've been looking at.  I think finding one in between original and in this league is where I"m going to focus.  https://www.controller.com/listings/aircraft/for-sale/23721763/2008-mooney-m20r-ovation2-gx

Thank you all for your input.  very much appreciated.

 

 

 

 

 

 

 

 

[Jerry 5TJ]

On 2/4/2018 at 4:56 PM, rpcc said:

.....

If I can't work out some type of risk sharing agreement with the seller I'll move on.   Something like escrow hold back for 12 months or 100 hrs for example payable to the owner if the engine remains airworthy .....

I had an odd offer on my Ovation something like that.  I didn’t even bother to respond.  

Then a more normal buyer quickly showed up and paid near asking subject only to a pre-buy. 

That is generally how it works with aircraft deals: If you mess around with elaborate offers on a good plane you get left behind.   

Good hunting. 

[StevenL757]

3 hours ago, rpcc said:

thinwing - I'm just trying to buy the plane at a fair value.  I think in this case the owner and I are too far apart to make a deal realistic.  Just trying to be creative.   This type of strategy is common when you buying or selling a business and there is debt from the seller on the business.  The bank often times will not let the seller off the note for some time to prove the business is still operating smoothly.  The bank loaned the money originally based on historical performance.  The new owner may not have that history. 

My offer is similar in that the owner believes he's selling a 5 year old engine with 600 hours and is hoping to find a buyer that believes this as well.  It may very well run 1500hrs or may need an overhaul in 2 years.  If the plane was priced fairly, I'd be fine with that, but it is not.  

I agree this is  complicated approach, but buying new presents some capital and tax implications as well.  

I did make the mistake of looking very nice younger ovation.  This one is exceptional, but its not in the market I've been looking at.  I think finding one in between original and in this league is where I"m going to focus.  https://www.controller.com/listings/aircraft/for-sale/23721763/2008-mooney-m20r-ovation2-gx

Thank you all for your input.  very much appreciated.

RP,

Does your target Ovation have TKS, air conditioning, and/or built in oxygen?

Steve

[larryb]

If you like the plane, can afford it, and have a reasonable financial cushion after the purchase then buy it. You can do all the inspections in the world and find there are no guarantees. It will break and the repairs will be expensive. Look at the 10 year ownership cost and you will find that the purchase price is the cheapest part of the equation.

[carusoam]

RPCC,

This may have gone a little sideways on you...

I think you might be putting the cart ahead of the horse...

See if any of this makes sense for you?

 

There are many Os around the 200amu mark....

This One has what looks like a 150amu instrument panel...

A new one costs 700amu.

Making it a 50% discount to fly essentialy at the same speed.

The only things I didn't see were the words Fiki and 310hp.  They may be there...

 

It helps when using facts at the negotiating table... when facts aren't available you are left with making an offer...

You have Money that they want.

They have a plane that you want.

Make an offer, see where it goes.

You don't need the added complexity outlined above.

Start with the words... ‘how flexible are you on the price, can I make you an offer?

Your opinion on the value of your money, can outweigh the opinion of the value they have placed on their plane...

They say yes or no...

Compare to other planes in the market.

If it is the only plane in the market for you, and the seller says he can’t negotiate the price....

See how that can go afoul.

 

The issue of needing an overhaul because it sat can be alleviated with a proper PPI.

If you need to point at something to get a discount while hoping to get paid later... it may be better to pay an agent to do this work for you.  Some People actually hire a buyers agent.

Most Mooney transactions don’t go that route.  Owner flown, and paying somebody else to buy a plane don’t usually go together....

How much is the value of the engine...

35amu new. 1/3 (?) has been used already and priced in...

There isn’t a lot of history with problems of IO550s sitting... So if it is the 18amu Of cylinders at risk, 1/3 used, You are now negotiating a whole 3% of the price?

Just remember some asking prices are firm and negotiation will be met with a Kind thank you...

Better put your big negotiation pants on...

East Coast Aero in Bedford is the company listing the plane.  The contact person is Adam Harris...

Looking that name up in Bedford provides some interesting detail...

If you have questions about negotiating maintenance issues... consider hiring Mr. Adam Harris... director of Maintenance (DOM)

https://www.faasafety.gov/SPANS/event_details.aspx?eid=16503

 

Probably could negotiate getting a free annual and transition training to go with that.  

RPCC, you seem to be early on in the search... you are discussing a bare bones Eagle in original condition and an O in extremely fine condition for 2X the price...

Remind us again, if you would...What’s your experience and what are you looking for?

 

Just a PP doing some homework, for you...

Best regards,

-a-

 

 

[M016576]

Not to get too far off track- but has anyone (other than the OP) noticed just how tight the Mooney market is right now?  Not a whole lot out there available- even fewer that I’d want in my hangar!