How do you figure out the right price to pay for a hangar?

[AndreiC]

For the past 8 months I've rented hangar space from a guy at my field. This is a small field with a 3000' paved runway, about 40 minutes away from my house, in rural WI. The hangar is a nice one, 50'x50', insulated, with heat and a good bifold door. There are two planes in there (mine and a Husky, also renting space). Due to demand the airport is opening up space to construct 14 more hangars, but I have heard that new ones will be well over $100k to build.

The owner mentioned to me the other day that he is thinking of selling his hangar, because he is too old, has not had a plane for 10+ years, and does not think he'll get back into flying. My question is -- how do I figure out what the right price is for such a hangar?

I asked around and talked to two guys who bought hangars at the same field in the past two years. One paid $60k for a 50'x50', but it needed a new bifold door, new insulation and paint. The other guy paid $35k for a 30x40, but ended up putting close to another $35k in repairs fixing it up. Is $80k reasonable for my hangar? If I buy it and 5 years down the road I need to sell, will I be selling at a loss?

[EricJ]

It's very regionally and situationally dependent, so it's kind of like asking what a house is worth.   It depends a lot on what part of the country, what part of the state, and what part of town, where it is, how it's situated, etc.    I've been looking around at hangars for several years, in different parts of the state and country, and it varies widely.    Your best bet is to try to make comparisons at other airports local to you, which still may not be 1:1, and history on your airport.   It also depends on whether they're owned or on land-lease or whatever.

I recently barely passed on a brand-new hangar at a fairly remote airport in AZ that had a $100k asking price.  I'm already wondering whether that was a mistake or not, but hangars in the metropolitan area here see $500k pretty easily.   There are an awful lot of dependencies, so it boils down to what it's worth to you.

[Ragsf15e]

1 hour ago, AndreiC said:

For the past 8 months I've rented hangar space from a guy at my field. This is a small field with a 3000' paved runway, about 40 minutes away from my house, in rural WI. The hangar is a nice one, 50'x50', insulated, with heat and a good bifold door. There are two planes in there (mine and a Husky, also renting space). Due to demand the airport is opening up space to construct 14 more hangars, but I have heard that new ones will be well over $100k to build.

The owner mentioned to me the other day that he is thinking of selling his hangar, because he is too old, has not had a plane for 10+ years, and does not think he'll get back into flying. My question is -- how do I figure out what the right price is for such a hangar?

I asked around and talked to two guys who bought hangars at the same field in the past two years. One paid $60k for a 50'x50', but it needed a new bifold door, new insulation and paint. The other guy paid $35k for a 30x40, but ended up putting close to another $35k in repairs fixing it up. Is $80k reasonable for my hangar? If I buy it and 5 years down the road I need to sell, will I be selling at a loss?

Eric mentioned it, but the land lease terms are key.  Definitely want to know who owns the land, and if it’s not you, how long do you have a lease and how is the renewal process going to work?  Most public airports, you can build/own the hangar but the airport owns the land.  You might get a 30 or 50 year lease… if you’re buying a 25 year old hangar, you need to know what happens at the end of the lease.

[skykrawler]

From a commercial real-estate investment perspective, the value is based on the what income can be generated from the property.  Generally isn't it something like the revenue should be a %10 return on the capital investment?  The capital may not be just the price of the structure.

[Z W]

They usually seem to trade on a function of 1) how many years are left on the land lease, vs. the cost of renting another hangar on the same airport, and 2) the cost of constructing a new, similarly sized hangar on the airport.

If you buy while there's 10 years left on the land lease, and sell when there's 5 years left, you may well sell at a "loss".  Most of the time, hangars on public use airports depreciate every year.  Not always true on some with really long lease terms, like 50 years, which may appreciate at first, then depreciate as the end of the lease approaches.  If it's a private airport with deeded ownership of the ground under the building, this likely does not apply.

You can easily have $100k in dirt work and concrete on a new 50x50 hangar build, before you start on the structure.  Especially if you're heating it.  Remember you have to pour an apron and maybe pave a taxiway too.

[LANCECASPER]

On 6/7/2024 at 10:48 PM, AndreiC said:

For the past 8 months I've rented hangar space from a guy at my field. This is a small field with a 3000' paved runway, about 40 minutes away from my house, in rural WI. The hangar is a nice one, 50'x50', insulated, with heat and a good bifold door. There are two planes in there (mine and a Husky, also renting space). Due to demand the airport is opening up space to construct 14 more hangars, but I have heard that new ones will be well over $100k to build.

The owner mentioned to me the other day that he is thinking of selling his hangar, because he is too old, has not had a plane for 10+ years, and does not think he'll get back into flying. My question is -- how do I figure out what the right price is for such a hangar?

I asked around and talked to two guys who bought hangars at the same field in the past two years. One paid $60k for a 50'x50', but it needed a new bifold door, new insulation and paint. The other guy paid $35k for a 30x40, but ended up putting close to another $35k in repairs fixing it up. Is $80k reasonable for my hangar? If I buy it and 5 years down the road I need to sell, will I be selling at a loss?

Without a longer runway I wouldn't ever expect the price on this one to skyrocket, but almost always owning beats renting.

As has been mentioned, if the city owns the land the key is going to be how many years left on the land lease. No way possibly right now could you build it for even close to $85K with what concrete and steel and electrical, etc is going to cost. If you were starting from scratch, not including land, a 2500 s.f. hangar in rural WI would cost over  double that to build by the time you do a slab, apron, metal building, insulate it, wire it, lights. hangar door, put heat it, etc, etc. I own a 2500 SF hangar on an airpark in rural TX and my neighbors have built since I have bought and I'm glad I bought when I did (2016). 

Worst case scenario: If for whatever time you own it, it doesn't go up in value (highly unlikely), you still had a great place to store your airplane. You could house another airplane or two (effectively making it close to free for you) and you didn't pay rent. 

Hangaring rather than keeping it outside - Good

Owning the hangar rather than renting - Better

Having one or two other compatible owners help pay for the hangaring of your airplane - No Brainer.

 

[AndreiC]

Turns out this airport is not publicly owned, but it is owned by a corporation. They do very short term land leases (5 years) because they want to force out people who use their hangars to keep non-aviation related stuff (boats, RVs, cars). As far as I understand it you pay land lease around $1000/year, and if you keep airplanes there your lease goes on indefinitely. This is how the airport owners make their money, so it is in their interest to keep it this way. This is what was explained to me by one of the hangar owners on the field and also by the airport manager.

Does this sound fishy in any way?

[Ragsf15e]

39 minutes ago, AndreiC said:

Turns out this airport is not publicly owned, but it is owned by a corporation. They do very short term land leases (5 years) because they want to force out people who use their hangars to keep non-aviation related stuff (boats, RVs, cars). As far as I understand it you pay land lease around $1000/year, and if you keep airplanes there your lease goes on indefinitely. This is how the airport owners make their money, so it is in their interest to keep it this way. This is what was explained to me by one of the hangar owners on the field and also by the airport manager.

Does this sound fishy in any way?

No, it seems reasonable, except the lease is so short that they could raise it significantly each 5 years.  Just to play devils advocate, say it raises to $3k lease in 5 years and $10k after 10.  Maybe that still works, but I like more certainty with my expensive building on someone else’s land…

[Schllc]

2 hours ago, AndreiC said:

Turns out this airport is not publicly owned, but it is owned by a corporation. They do very short term land leases (5 years) because they want to force out people who use their hangars to keep non-aviation related stuff (boats, RVs, cars). As far as I understand it you pay land lease around $1000/year, and if you keep airplanes there your lease goes on indefinitely. This is how the airport owners make their money, so it is in their interest to keep it this way. This is what was explained to me by one of the hangar owners on the field and also by the airport manager.

Does this sound fishy in any way?

The airport here is owed and operated by the city and they provide 25 and 30 year land leases.  The leases provide no provisions once expired, and the city can assume possession of your building. While they make that clear in the leases, it has yet to actually happen. 
If the airport accepts federal funds and that places some rules on them as well. 

[N201MKTurbo]

Private hangars at my airport that size are currently going for north of $350K

[Schllc]

60x60 box hangars I lease are selling for $2,000,000 here. 
 

[EricJ]

10 hours ago, AndreiC said:

Turns out this airport is not publicly owned, but it is owned by a corporation. They do very short term land leases (5 years) because they want to force out people who use their hangars to keep non-aviation related stuff (boats, RVs, cars). As far as I understand it you pay land lease around $1000/year, and if you keep airplanes there your lease goes on indefinitely. This is how the airport owners make their money, so it is in their interest to keep it this way. This is what was explained to me by one of the hangar owners on the field and also by the airport manager.

Does this sound fishy in any way?

+1 that that's not unreasonable, as it is not unusual on private airports for hangars to get filled with junk and just become storage units.   What you're describing is a practical way to prevent that.

[Schllc]

I think the reality is that you don’t generally get to decide what you pay. You only get to decide weather or not you are willing to pay what it costs. There is no alternative, or competition. You have to store you plane at an airport, and if you don’t live in a fly in community, or aren’t willing to drive to a cheaper spot, you pay what they are asking. 

[Fly Boomer]

On 6/7/2024 at 10:48 PM, AndreiC said:

how do I figure out what the right price is for such a hangar?

Lots of good discussion above, but I keep thinking that if I lived in WI, a 50x50 heated box hangar would be Nirvana.  My only thought on price is that, like airplanes, hangars are probably not exactly an investment.  We may sell an airplane for more than we paid, but if the total cost of ownership were used instead of the selling price, I'm willing to bet it wouldn't look quite so good on paper.

[Yooper Rocketman]

My local airport (U.P. of Michigan) has the same limited lease contracts, but they've never exercised the option to NOT RENEW and take the land.  In all reality, I could legally take my hangar off the airport if they did so, but it wouldn't be practical.  There are hangars that have signed the same lease and are still here, with a reasonable yearly land lease, 50 years later.  Also, I have NEVER seen a hangar sell for less that the selling owner paid for it.

My area is pretty similar to yours and I think the price is lower that what my airport would get for a heated hangar your size.  Considering all factors, I believe the price you stated would make it hard to get hurt.

Tom Sullivan