H

hughfi

Well Known Member
Hi there,

I nearly purchased a hanger this week that was half way through its 25 year lease. When I looked into it, I found out that at the end of the lease, the hanger would effectively belong to the airport again and my investment would effectively be gone. Is usually how this is done. I weighed up the NPV of the investment and it did not add up to pay a large amount of capital now for a property that would ultimatley depreciate to zero. I would have had to rent it out for almost all that time at top dollar to even break even on this. While I can probably write the depreciation off against taxes, it still seems steep when you considering that your cash could earn interest and appreciation in other investments and would not end up being zero at the end. I am pretty sure I do not have the full story, so wanted to see if someone understands this business model better than I do. What am I missing and what would make a hanger worth purchasing?

Thx for any help you can provide.

Hugh.
 
Talk to the airport manager, see if you can get a new 25 year lease to start on the date you buy the hangar.

This reversion clause is not uncommon at airports, my old airport tried to sneak it into the renewal a while back, but the tenants caught them, got it removed.

Good luck.
 
When you want a hangar now and none are available, building one is your only option. A few years of paperwork and you get to build and your ownership cycle (25 years) will be more expensive and weighted up front.

On the other hand, you get what you want and "now".

That's how it works around here, the only ones building in the past few years have been land developers that want a corporate hangar and airport office.
 
Was it clear that the lease was not renewable?

I purchased a hanger last year with very similar circumstance but the lease is renewable and they other owners were certain that unless the airport was going to be closed/moved, then the lease would be renewed. It had been done in the past for those who their lease came up for renewal.
 
Hangar lease

Here's what you get -- a hangar for the remaining term of the lease. Here's what they get -- a hangar built for them that they can rent out on a monthly basis once the lease term has run out. This sort of thing is fairly common, especially when a municipality is involved so that the City would not have to make the initial capital investment to build the hangars.

It's a simple matter of economics -- is it worth it to you? Sounds like, in your case, it's not. The guy with the hangar lease that he's trying to sell to you may be in a tough spot. He may no longer have a need for the hangar, and he's trying to get as much of his capital investment back as he can. If so, he may be interested in a monthly rental if he can't sell it. Or, he may be willing to negotiate the sales price downward to what you might be willing to pay.

Check for other restrictions before you go ahead with such a deal. Typically, there are some, and they may include having to get approvals before you can sell it or rent it to anyone else.
 
You must log in or register to reply here.