Purchase price evaluation
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Join Date: Sep 2010
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Purchase price evaluation
I’ve bought and sold a good handful of GA aircraft over the past few years and always found it relatively easy to appraise the value of them and work out what’s a good deal, etc
Helicopters on the other hand are extremely frustrating. Nearly every one is POA, and the ones with a price against them feel as though they might be a bit pricey based on reading the odd comment here on pprune.
I’m looking at a future purchase of a jet ranger or MD500 but finding it impossibly difficult to work out how much I need to spend to get a decent example.
Does anyone have any tips on how to go about determining a purchase based on the lack of public pricing?
Oh, and I’m in the UK.
Thanks
Helicopters on the other hand are extremely frustrating. Nearly every one is POA, and the ones with a price against them feel as though they might be a bit pricey based on reading the odd comment here on pprune.
I’m looking at a future purchase of a jet ranger or MD500 but finding it impossibly difficult to work out how much I need to spend to get a decent example.
Does anyone have any tips on how to go about determining a purchase based on the lack of public pricing?
Oh, and I’m in the UK.
Thanks
Last edited by carlmeek; 4th May 2018 at 22:18.
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I assume by Request for Quotation you simply mean to contact a bunch of sellers.
The problem with contacting sellers is that it exposes me as a buyer, means I have to answer all their questions, and they forever hassle me. I’m at an early stage so I don’t really want to waste their time either. Usually they won’t quote without having your full details, email, phone, etc. They like to interview you to work out how much of a mug you are...
For the same reason I like to purchase cars using desk research and then make a swift and decisive purchase once the right one comes up.
I guess I was hoping there was something magic I’ve missed!!
If this is the only way, Maybe I need a burner phone!!
The problem with contacting sellers is that it exposes me as a buyer, means I have to answer all their questions, and they forever hassle me. I’m at an early stage so I don’t really want to waste their time either. Usually they won’t quote without having your full details, email, phone, etc. They like to interview you to work out how much of a mug you are...
For the same reason I like to purchase cars using desk research and then make a swift and decisive purchase once the right one comes up.
I guess I was hoping there was something magic I’ve missed!!
If this is the only way, Maybe I need a burner phone!!
Yes, that's what I meant. Send out a bunch of enquiries to get a feel for the market.
Only other way I can think of would be some serious networking and try to make friends with some trustworthy insiders.
Maybe stick with fixed wing if you know that much more about that side of the fence.
Only other way I can think of would be some serious networking and try to make friends with some trustworthy insiders.
Maybe stick with fixed wing if you know that much more about that side of the fence.
The 'problem' with valuing most helicopters (let's exclude Robinsons as as different set of rules apply to them due to the 12 year thing) is that the value of the machine is aligned to a few different factors...a bit of age, a bit of upcoming maintenance, a bit of condition and a massive amount of component times remaining: but even this is further affected by the age of the components.
So you could have a pair of 1985 JetRangers side by side. One is tatty, has a lousy avionics fit, its annual is due tomorrow. Next to it is parked a machine that has just come out of Edmundsons, 2 off 8.33 radios, clean leather upholstery, sparkling windows. But the former will be worth more* as it has a freshly overhauled turbine, mid life blades and so on.
*to an experienced buyer. And therein lies the rub.
To answer your question 'how much do I need to spend', my answer would be 'as much as you can afford'. And it will start with a 3.
So you could have a pair of 1985 JetRangers side by side. One is tatty, has a lousy avionics fit, its annual is due tomorrow. Next to it is parked a machine that has just come out of Edmundsons, 2 off 8.33 radios, clean leather upholstery, sparkling windows. But the former will be worth more* as it has a freshly overhauled turbine, mid life blades and so on.
*to an experienced buyer. And therein lies the rub.
To answer your question 'how much do I need to spend', my answer would be 'as much as you can afford'. And it will start with a 3.
Start with a 3 ? I wish any D or E model 500 now starts with a 5 !! Really due to the price increase of a new one from $1.4m to $ 2.3 m over the past 8 years
Carl, the best advice is to ask someone in the know as 206 jock says it is a combination of things but also include laws of supply and demand eg 500's, I would always go for teh machine with the best component times and descent maintenance pedigree. Also go for a machine with reasonable hours, too low and all teh components will be at a low mod state which means will be a fortune to overhaul. A very high hour machine will obviously be a bit tired but would have had lots and lots of maintenance done on it which is better than a private machine flying 50 hours a year and being seen once or twice a year by an engineer
Carl, the best advice is to ask someone in the know as 206 jock says it is a combination of things but also include laws of supply and demand eg 500's, I would always go for teh machine with the best component times and descent maintenance pedigree. Also go for a machine with reasonable hours, too low and all teh components will be at a low mod state which means will be a fortune to overhaul. A very high hour machine will obviously be a bit tired but would have had lots and lots of maintenance done on it which is better than a private machine flying 50 hours a year and being seen once or twice a year by an engineer
Totally agree with Hughes500 . V low hour machines can have loads of problems. Helicopers need flying to keep everything covered in oil and grease etc Also they have had far more maintenance and will be more up to date !!
Valuation Algorithm
The 'problem' with valuing most helicopters (let's exclude Robinsons as as different set of rules apply to them due to the 12 year thing) is that the value of the machine is aligned to a few different factors...a bit of age, a bit of upcoming maintenance, a bit of condition and a massive amount of component times remaining: but even this is further affected by the age of the components.
Even for the Robinsons, the formula that only attempts determines that replacement value for the first 12 years or 2,200 HRS period would be at least as complex as this (and my still be inaccurate at that):
=(Q$85/(1+Q$95)^L81-(J81/2200-INT(J81/2201))*Q$93-IF((L81/12-INT(L81/12.01))*2200>(J81-INT(J81/2201)*2200);1;0)*((1-(J81/2200-INT(J81/2201)))-(1-(L81/12-INT(L81/12.01))))*Q$92-(J81/4400-INT(J81/4401))*Q$94)*W$86
With the variables being current new price, past annual average price increase, age, TTSN, non-utilisation-related depreciation, cost of 12-year inspection, and cost of 2,220 HRS overhaul, cost of replacing 4,400 HRS time-limited components.
So, yes, good luck!
