Profitability in buying and selling warbirds
Sat Jan 12, 2008 5:23 am
what does the WIX community think about the prospect of buying and then selling warbirds, is there a profit to be made in the brokering of warbirds? There's only a few brokers that I'm aware of and I have no idea how much business these brokers are doing. Is the market viable and robust, or just a trickle market, anyone care to give imput?
Re: Profitability in buying and selling warbirds
Sat Jan 12, 2008 11:41 am
do you know how to make 6 million dollars in aviation?..............
.
...... easy really just start out with 12 million.
.
...... easy really just start out with 12 million.
Sat Jan 12, 2008 4:36 pm
There is a difference between buying and selling warbirds and brokering warbird sales.
When you buy and sell, you are trading a commodity that doesn't necessarily move very quickly. Look at the Courtesy site. There are aircraft listed there which stay "for sale" for a long, long time. During that time, the aircraft still have to be maintained and insured which is expensive. Also, you have hundreds of thousands (occasionally millions) of $ tied up in inventory. Because of these factors, I don't believe there is any money in buying and selling.
Brokering? That's another issue. You're essentially playing with someone else's money and just get a cut of the proceeds when/if the airplane sells. There is money to be made there, but there is a reason there are few warbird brokers. The market isn't very big, and can't support more than a handfull of brokers.
When you buy and sell, you are trading a commodity that doesn't necessarily move very quickly. Look at the Courtesy site. There are aircraft listed there which stay "for sale" for a long, long time. During that time, the aircraft still have to be maintained and insured which is expensive. Also, you have hundreds of thousands (occasionally millions) of $ tied up in inventory. Because of these factors, I don't believe there is any money in buying and selling.
Brokering? That's another issue. You're essentially playing with someone else's money and just get a cut of the proceeds when/if the airplane sells. There is money to be made there, but there is a reason there are few warbird brokers. The market isn't very big, and can't support more than a handfull of brokers.
Sat Jan 12, 2008 5:17 pm
do you know how to make 6 million dollars in aviation?..............
.
...... easy really just start out with 12 million.
Very true ... you give me 12 million, I'll make you an extra 6 mil with it. You just explained the investment world fella. .... "it takes money, to make money" .... even though I think you mean't it somehow differently ....
Brokering? That's another issue. You're essentially playing with someone else's money and just get a cut of the proceeds when/if the airplane sells. There is money to be made there, but there is a reason there are few warbird brokers. The market isn't very big, and can't support more than a handfull of brokers.
I should have been more clear, you're absolutely right about selling and brokering, I understand that selling would be very slow and expensive, I was more concerned with brokering, seems less stressful.
Sat Jan 12, 2008 5:52 pm
Well there is more to it than you may well think on the surface.
Brokers need to have a lot of contacts, where they can pick up the phone and sell something without even advertising it. They need to know basically everyone in the business so they can find something for their customers (it works both ways). They also need to put up with a lot of poo poo since there are more tire kickers than you can imagine int the market. You can't have one rich guy pulling the P-38 out for a viewing for some YO YOU who thinks he can buy it because he bought a Lottery Ticket and will have the money Saturday night.
People will lowball you in general. OR they will look at the new paint, new interior and NEW KING radios you put in and say I wanted GARMIN, let me lower my offer by the cost of the new Garmin stack, a new interior and new paint. OH yeah let me know off a Stormscope and an overhaul too.
Some people are collecting pictures of airplanes, some just like to talk to you all day.
You also have to deal with PERSONALITIES. Never let the buyer and seller get together. WHY? They may hate each other. One may say "I can hardly wait to repaint the P-51, the paint job sux". Well the airplane had been painted in the owner's father's colors from back in the war, he tells the buyer to pound salt. Or they say something to belittle the airplane that offends the seller. Or the seller tells the buyer to hit the bricks.
I was selling a helicopter one time and a buyer flew up to WV from FL commercial. I took the chopper to that airport, the buyer spent 45 minutes on the cell phone and wouldn't acknowledge me. I told the guy he was with that if he didn't hang up in 30 seconds I was gone. He didn't hang up and I took it home and he flew back to FL without ever seeing it.
Also as a broker you need to answer questions like YOU SAID IT WOULD SELL IN 2 WEEKS. Or (like in the case of Sea Fury recently; I'm sure this happened) YOU PRICED IT TOO CHEAP, IT sold in a week and hit the market again for $400k more and sold a few weeks later.........
Also once you start turning your hobby into a business, you also quit having fun with the hobby.
Now the BUY&SELL model could be fun if you have some money to play with.
You buy it, price it 30% over what you paid and then "advertise it" by flying it airshows until it sells. Maybe a year or so....... All the expenses of operating it are deductable against the sale, and when you do sell it, the final price doesn't change much (if any) since you put 100 hours on it. A pretty good model to use, but you have to be able ot put up millions of $$$$$ to do it..........
Overall, I prefer to stay liquid and make the money in the stock market.
Mark H
Brokers need to have a lot of contacts, where they can pick up the phone and sell something without even advertising it. They need to know basically everyone in the business so they can find something for their customers (it works both ways). They also need to put up with a lot of poo poo since there are more tire kickers than you can imagine int the market. You can't have one rich guy pulling the P-38 out for a viewing for some YO YOU who thinks he can buy it because he bought a Lottery Ticket and will have the money Saturday night.
People will lowball you in general. OR they will look at the new paint, new interior and NEW KING radios you put in and say I wanted GARMIN, let me lower my offer by the cost of the new Garmin stack, a new interior and new paint. OH yeah let me know off a Stormscope and an overhaul too.
Some people are collecting pictures of airplanes, some just like to talk to you all day.
You also have to deal with PERSONALITIES. Never let the buyer and seller get together. WHY? They may hate each other. One may say "I can hardly wait to repaint the P-51, the paint job sux". Well the airplane had been painted in the owner's father's colors from back in the war, he tells the buyer to pound salt. Or they say something to belittle the airplane that offends the seller. Or the seller tells the buyer to hit the bricks.
I was selling a helicopter one time and a buyer flew up to WV from FL commercial. I took the chopper to that airport, the buyer spent 45 minutes on the cell phone and wouldn't acknowledge me. I told the guy he was with that if he didn't hang up in 30 seconds I was gone. He didn't hang up and I took it home and he flew back to FL without ever seeing it.
Also as a broker you need to answer questions like YOU SAID IT WOULD SELL IN 2 WEEKS. Or (like in the case of Sea Fury recently; I'm sure this happened) YOU PRICED IT TOO CHEAP, IT sold in a week and hit the market again for $400k more and sold a few weeks later.........
Also once you start turning your hobby into a business, you also quit having fun with the hobby.
Now the BUY&SELL model could be fun if you have some money to play with.
You buy it, price it 30% over what you paid and then "advertise it" by flying it airshows until it sells. Maybe a year or so....... All the expenses of operating it are deductable against the sale, and when you do sell it, the final price doesn't change much (if any) since you put 100 hours on it. A pretty good model to use, but you have to be able ot put up millions of $$$$$ to do it..........
Overall, I prefer to stay liquid and make the money in the stock market.
Mark H
Sat Jan 12, 2008 6:07 pm
Overall, I prefer to stay liquid and make the money in the stock market.
Amen brother ..... even though the liquidity sometimes drys up ....
Sat Jan 12, 2008 6:40 pm
Kyleb wrote:There is a difference between buying and selling warbirds and brokering warbird sales.
When you buy and sell, you are trading a commodity that doesn't necessarily move very quickly. Look at the Courtesy site. There are aircraft listed there which stay "for sale" for a long, long time. During that time, the aircraft still have to be maintained and insured which is expensive. Also, you have hundreds of thousands (occasionally millions) of $ tied up in inventory. Because of these factors, I don't believe there is any money in buying and selling.
Brokering? That's another issue. You're essentially playing with someone else's money and just get a cut of the proceeds when/if the airplane sells. There is money to be made there, but there is a reason there are few warbird brokers. The market isn't very big, and can't support more than a handfull of brokers.
But surely Courtesy are a broker? They don't acquire title to the aeroplanes, but sell them on behalf of the owners. They may hangar them at Rockford, but that doesn't mean that they are a 'dealer', who holds inventory.
Provenance, on the other hand, do buy and sell aeroplanes, and take on the associated risks of holding inventory, so are more of a dealer than a broker.
Sat Jan 12, 2008 10:45 pm
Mike wrote:Kyleb wrote:There is a difference between buying and selling warbirds and brokering warbird sales.
When you buy and sell, you are trading a commodity that doesn't necessarily move very quickly. Look at the Courtesy site. There are aircraft listed there which stay "for sale" for a long, long time. During that time, the aircraft still have to be maintained and insured which is expensive. Also, you have hundreds of thousands (occasionally millions) of $ tied up in inventory. Because of these factors, I don't believe there is any money in buying and selling.
Brokering? That's another issue. You're essentially playing with someone else's money and just get a cut of the proceeds when/if the airplane sells. There is money to be made there, but there is a reason there are few warbird brokers. The market isn't very big, and can't support more than a handfull of brokers.
But surely Courtesy are a broker? They don't acquire title to the aeroplanes, but sell them on behalf of the owners. They may hangar them at Rockford, but that doesn't mean that they are a 'dealer', who holds inventory.
Provenance, on the other hand, do buy and sell aeroplanes, and take on the associated risks of holding inventory, so are more of a dealer than a broker.
Yes, Courtesy is a broker. I was not clear in what I was trying to communicate, which was that it can take a long time to sell an expensive product in a very narrow market. That makes the buy/sell model somewhat less attractive unless you have the ability to weather having lots of money tied up in inventory which may not move anytime soon.