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Geeman

Well Known Member
I am in the process of developing an airpark in the Houston area and in discussions with a bank on financing of the property. The strip will be 3200 foot grass with about 10-12 lots down one side and hangers for rent down the other. The bank told me that mortgage companies would not loan money to the buyers because such a small popluation of people would want to live on an airstrip. I know there are thousands of these type of houses and that did not sound right to me.

Do any of you have mortgages on your house that live on an airpark or did you guys have to pay cash for it?

I am still in the planning stages, but thought of building upscale hanger houses that would cost in the $150,000 to $200,000 range with the land.

Thanks in advance for you comments.
 
USAA

Ten years ago when I built my hangar home USAA used that exact reason for not financing it. Less than 1/4 of 1% of the US population were registered pilots so that makes for a very narrow market should something happen to you and they get the property back.
There are many, many banks that will consider airport property.
 
Where in the Houston area are you planning to develop this property? If it is on the Southeast side, I would be very interested in talking with you about building a house there.:D
 
Have a mortgage...

Geeman said:
I am in the process of developing an airpark in the Houston area and in discussions with a bank on financing of the property. The strip will be 3200 foot grass with about 10-12 lots down one side and hangers for rent down the other. The bank told me that mortgage companies would not loan money to the buyers because such a small popluation of people would want to live on an airstrip. I know there are thousands of these type of houses and that did not sound right to me.

Do any of you have mortgages on your house that live on an airpark or did you guys have to pay cash for it?

I am still in the planning stages, but thought of building upscale hanger houses that would cost in the $150,000 to $200,000 range with the land.

Thanks in advance for you comments.
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No problem, just said we had a 3 acre lot and this is the house, no mention of an airpark in the application and no one asked.

The $150-$200,000 figure for "upscale" hangar houses with land seems way low by standards here and this is low cost part of Missouri. Better figure about $100,000 just to get the lot ready with water, sewer, road access, and utilities. Plan it to be nice or wives will never go for it.

Good luck.
 
i have a mortgage

its on a 2 acre lot. we are second owners but it financed just like any other house. I don't think there was any mention of airpark in the lending process, but i KNOW i talked about it with the lender because I was excited.

Underwriters sometimes will only look at value by nearby comps and normal per sq. foot formulas. They will not take your word that its on a runway and worth more because of that. Even though you know you can sell it like waterfront property if you wanted. If there are no good comps, then its just a regular house on a regular lot to underwriters now (I found this out when i refi'ed last year after housing crash of late).

This is not bad, just don't think your gonna get a larger mtg. just because it's on a runway. These days that's not flying.
 
Never even came up

Conventional mortgage on my property as well. The subject has never even come up during the initial buy, or subsequent re-fi's. As Jeff said, they'll look at comps' in the area, but this last refi, they would not apply any 'premium' for being on a runway. Cedar Park, TX is where we're at.

Note: You might want to get ahold of David Fletcher (of Grumman fame fletchair.com) who was based out of Hobby airport. He left there a few years back and started his own airpark out near Comfort Texas. http://comfortfalls.com/index.html
 
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Have conventional mortgage...Actually easier to get in some cases due to more stable home values. Insurance not an issue either. There's about 60 homes on our airpark and I'd guess that about 40 have mortgages.
 
I build nice custom homes in the area, so these hanger houses will not be amateur looking from the inside or outside. Mine will be the model home, so you will know what you are getting. I have many references in the area.

I am not looking to make a fortune. In fact, if I don't sell any I will enjoy my own private runway. But, I would like to have some neighbors with planes.
I am looking to build some hangers on the property too so I can have some steady income for retirement.

I have application to the FAA now, and waiting on response. But the FAA guy did say they rarely turn down these applications.
 
thought of building upscale hanger houses that would cost in the $150,000 to $200,000 range with the land.
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Holy Cow, I'll take 3 please!

Ok, just kidding really. In the Chicago area you can't touch a 30 year old rehab needing house on an airport for less than $350k.

Heck a t-hangar with a loft is around 75+

Just jelous.

Mark
 
I agree this seems like a really good deal. You can't touch a hangar at Reno Stead under 100K, most of them bring closer to 150K. That is just a hangar. Given it is a popular place in September, I don't understand why they bring so much! Where I came from in Caldwell ID you could purchase a new hangar for the 40 to 50K range.
 
Get another company

100 plus houses in Pecan Plantation airpark. Another 2nd runway finished here and just opened up. 130 plus lots.
 
Mike S said:
What he said------even with the sucky economy, bare dirt here is going for that much.
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You guys are so close to collapse, I wouldn't count on it staying that way. Besides, what you guys pay in property/income taxes would probably cover the houses he's pitching!!! :D

I love California, it's the Californians that ruined it! :p
 
As others have said, it's not the mortgage that you can't get - it's the reasonable comps. I have found that most banks just don't see any advantage to having runway access, and in fact one representative opined that it would actually be a detriment (noise and all). I told her that I felt the same way about beachfront property - that incessant sound of waves pounding the beach would drive me nuts! I think she got it after that...
 
Sig600 said:
You guys are so close to collapse, I wouldn't count on it staying that way. Besides, what you guys pay in property/income taxes would probably cover the houses he's pitching!!! :D

I love California, it's the Californians that ruined it! :p
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Really, it is only a small group of Californians ------ but then, we are not supposed to discuss politics on VAF.:rolleyes:
 
Toobuilder said:
As others have said, it's not the mortgage that you can't get - it's the reasonable comps. I have found that most banks just don't see any advantage to having runway access, and in fact one representative opined that it would actually be a detriment (noise and all). I told her that I felt the same way about beachfront property - that incessant sound of waves pounding the beach would drive me nuts! I think she got it after that...
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Mike hit the nail on the head for me too here in California: I paid cash (55K) for my 1/2 acre lot then could NOT get a loan from any bank to build the house (even with credit scores over 800 for both Tuppergal and I). We eventually found a family friend who loaned us the money to build, and when completed, the bank was more than happy to refinance us and take on the loan. Good luck! :D Rosie

PS: I have to chuckle because my 80'x45' hangar with 85'x45' ramp was 110K (turn-key). If you can turn houses for <200K, build them and they will come...
 
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Comps, and construction loans in general.

I am in the middle of a major remodel and new hangar addition. Only two banks in my area will even consider a construction loan right now.
They put me through the ringer. In addition to having impecible credit, they want 24 months P&I sitting liquid in your bank account. That amounted to almost a third of the cost of the overall project sitting in cash. They care little about other assets. They also will loan only 65-75% of value. That requires you to be sitting on even more cash, in my case, almost 1/2 of the project cost. Considering that "value" is unfluenced by the comps, which they "can't" get on airport properties, you may end up relying on their pre-appraisal to qualify then the post appraisal to verify. In the end, if it appraises low, you will have to make up the difference, requiring even more cash.
I am managing through the process and will get my project financed but I was ready to just cash flow the darn thing. However, financing allows me to move out for six months and move back in when all the mess is done. Cash flowing it would not have been possible in that condensed time frame considering the size of the project and I didnt want to live in a mess while the work was being done (no kitchen, no bedroom, no driveways, etc...)

I am told, by some pretty good sources, that banks might start freeing up the supply of monies they are hoarding but I would not count on it. No wonder our economy can't get back on its feet. The capitilized and qualified individuals and business can't even spend money when they want to. Don't get me started!
Good luck with your project.
 
JonJay said:
I am told, by some pretty good sources, that banks might start freeing up the supply of monies they are hoarding but I would not count on it. No wonder our economy can't get back on its feet. The capitilized and qualified individuals and business can't even spend money when they want to. Don't get me started!
Good luck with your project.
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The treasury has been printing tons of money and routing it through the fed, and on to the banks, who are then sitting on it. Most of the analysts I've read think it's a round-a-bout way of monetizing the debt, and as soon as the rest of the world catches on to what their doing, we're in for a serious shock. The banks turning all that cash loose on the street may very well be the event that triggers everything....
 
What I am hearing from the bank is that people that will buy the property can only get financing through there local bank. The bank cannot sell the note to secondary investors that buy notes. The secondary investors do not want the notes because of the airstrip. This means that the rates will not be as good as with normal mortgages if you can even get one.

I am going to talk to a few other banks because this just does not seem right. There are thousands of these type homes.

So are you paying a higher than average rate? Did your note get sold to a secondary mortgage company/investor?

I appreciate all the comments as I work through all the bank bs.

Sure wish me and everyone else just had lots of money so we did not have to jack with the banks. May have to sell my plane to help finance this....not. :D
 
Kyle,

I wish you good luck! There was a reference earlier to David Fletcher's development in the Hill Country - he was getting that started back when I was building my -8 in 2004. To my knowledge, they are still trying to get it going! That's out in the country, he's got the acreage - should be simple - right? I can't figure out why it seems so difficult to get airparks actually GOING! (at least in Texas...)

Paul
 
Paul,

Seems to be the banks. They act like no one would want the house if the bank got stuck with it. I currently live in Friendswood down the street from you. I know houses don't last long in Polly Ranch and they are keeping values rather nicely. Your lucky to live there. I looked at an older house over there several months back and really did not meet our needs. I need a pretty small house and large (OK giant if you ask the wife) hanger/shop.

After building and living in an apartment in my brother's metal shop for a while, I realized a hanger house is perfect for us and I have talked to many people that feel the same. I believe there is a good market for this, but the banks don't seem to think so. When you walk in my apartment, it looks like a high end penthouse, so all the women love it.

We will see what happens. I am not giving up yet. Worst case I will have my own private runway. If it goes as planned maybe I will start on my 7 sooner than later.

Kyle
 
I am looking to build some hangers on the property too so I can have some steady income for retirement.
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You might want to rethink this.

I personally would not invest in land, home and hangar if right across the runway were several hangars for rent to who knows who. I think I would want everyone with access to the runway to have a real significant vested interest in keeping it nice.
 
Ironflight said:
Kyle,

I wish you good luck! There was a reference earlier to David Fletcher's development in the Hill Country - he was getting that started back when I was building my -8 in 2004. To my knowledge, they are still trying to get it going! That's out in the country, he's got the acreage - should be simple - right? I can't figure out why it seems so difficult to get airparks actually GOING! (at least in Texas...)

Paul
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David told me last July that the project was essentially on hold...

I'm told from other Texans that his price per acre was a bit higher than average...
 
N395V said:
You might want to rethink this.

I personally would not invest in land, home and hangar if right across the runway were several hangars for rent to who knows who. I think I would want everyone with access to the runway to have a real significant vested interest in keeping it nice.
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I am not sure what you are implying here. If you are saying those that would only have a hangar and not a home on the property would be less inclined to keep things neat and tidy or upscale enough for the others, that should be able to be spelled out in detail in contract agreements. Regardless of any contract agreements however, I would expect anyone owning a hangar and property on a private airstrip to have the best interest of the runway in mind whenever they do anything.

I speak from experience on this issue. I have a hangar on a private runway that has many homes/hangar homes on the airport property. I only have a hangar. I do not consider my property any less valuable (relatively speaking not monetary) than the ones with homes on them. I keep my property in the best condition possible and I expect just as much from every other property owner on the airport regardless of whether they have a home on the property or not.

Spell the details out in whatever agreement you come up with, make sure the property owners adhere to the rules and it will all be good.
 
The hangers will be rented. I will build the hangers, maintain them, and take care of the landscaping around them. I have thought about all this. The hangers will look nice, two tones of brown, and the access will be from a road behind the hangers and you cannot see parking from the houses. I am going to live across from the hangers so I have the most vested interest. This has been thoroughly thought about. I guess the potential buyers can decide for themselves. I am not worried.
 
Geeman said:
The hangers will be rented. I will build the hangers, maintain them, and take care of the landscaping around them. I have thought about all this. The hangers will look nice, two tones of brown, and the access will be from a road behind the hangers and you cannot see parking from the houses. I am going to live across from the hangers so I have the most vested interest. This has been thoroughly thought about. I guess the potential buyers can decide for themselves. I am not worried.
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We've been down that road here also. The problem with rentals is they have access to a runway paid for by the owners, in essence not really carrying their fair share of the cost of the place. End result, we do not permit rentals. Short term visiting is OK but not long term rental.

Hope it works out for you but the rentals may be an issue with owners down the road. That item will have to be spelled out in the indentures of the airpark so all know what the deal is or there may be trouble with some people.
 
Kyle,

How far east are we talking? How close to the class Bravo floor are you?

Interested....
 
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David-aviator said:
...We've been down that road here also. The problem with rentals is they have access to a runway paid for by the owners, in essence not really carrying their fair share of the cost of the place. End result, we do not permit rentals. Short term visiting is OK but not long term rental...
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Yep, our airpark is the same way for the same reasons. Renters and owners do not mix.
 
Just a thought but I don't like the homes on one side and hanger on the other side. I would consider putting homes on both sides and allowing the hangar to be located with the home.
It may be that you plan hangars for the homes and the hangers on the other side would be rental units or owned units for non residents. If I were a buyer I would be wary of that type of arrangement. You end up with a lot more noise and traffic and people who may not respect the community. I would go for all home with hangars on the same lots.

George
 
Geeman said:
Paul,

...After building and living in an apartment in my brother's metal shop for a while, I realized a hanger house is perfect for us and I have talked to many people that feel the same. I believe there is a good market for this, but the banks don't seem to think so...
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I have two lots on the same airpark, one has my residence on it; the other is for future development. I tried to do a hangar house on the other property a few years ago (when they were handing out money like crazy) and the banks would not touch it with a 10 foot pole. Despite what you or I think about the viability of the market for a hangar house, it is the banks that are in charge. Even if you find 10 buyers for your hangar house, unless they have cash, you still won't sell it because they can't get a loan. The only thing you can hope for is that there are active comps for similar property - but that is simply a chicken/egg thing when you are starting out.
 
I guess it depends on where building and what bank. We finished building our 3rd hangar home this past year. There was no problem with financing. Where issues usually arise with banks is the inflated dollars that some developers ask for newly developed airparks. (established airparks are a safer investment). With a new airpark you have no viable comps other than off airport and many airparks falter with just a few homes built/sold. Established airparks with reasonable/viable comps will have no problem with conventional mortgages.

Also, most airparks do NOT allow hangar rentals in the mix for many of the reasons given. No matter how well someone thinks they are managing it, there's always room for potential future conflicts. Another thing to consider when purchasing on an airpark is how the residents get along with each other, are lawsuits pending, etc. Let's face it, most pilots are confident, take charge people and sometimes too many chiefs result in conflict. Have a homeowners association meeting, mix in some airline pilots, some ex military officers and a few doctors and see what happens.
 
Flybuddy2 said:
I
Let's face it, most pilots are confident, take charge people and sometimes too many chiefs result in conflict. Have a homeowners association meeting, mix in some airline pilots, some ex military officers and a few doctors and see what happens.
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Absolutely - Airpark living is not for the meek if you have the wrong mix of personalities!
 
David-aviator said:
We've been down that road here also. The problem with rentals is they have access to a runway paid for by the owners, in essence not really carrying their fair share of the cost of the place. End result, we do not permit rentals. Short term visiting is OK but not long term rental.

Hope it works out for you but the rentals may be an issue with owners down the road. That item will have to be spelled out in the indentures of the airpark so all know what the deal is or there may be trouble with some people.
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I will own the runway and maintain it.
 
sailvi767 said:
Just a thought but I don't like the homes on one side and hanger on the other side. I would consider putting homes on both sides and allowing the hangar to be located with the home.
It may be that you plan hangars for the homes and the hangers on the other side would be rental units or owned units for non residents. If I were a buyer I would be wary of that type of arrangement. You end up with a lot more noise and traffic and people who may not respect the community. I would go for all home with hangars on the same lots.

George
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I am planning on starting out with only hanger houses on one side. Just bouncing around the idea that when I retire should would be nice to collect some rent. May not be the best idea. Brainstorming here and thanks for the comments.
 
Geeman said:
I will own the runway and maintain it.
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(not intending to be critical here, just being a devils advocate as a lot buyer may be)

What happens when you are no longer on the scene? Who will own and maintain the runway then and what happens to the rental hangers?

Not saying your plan could not work but I'd have to think about committing to such a deal. You could become very irritated with the entire operation, raise runway fees at will, or if it is maintained another way, simply stop maintaining it. As long as everyone is on good terms, it may work but chances are a fly will fall into the ointment. It is like leasing land at a municipal airport except you are stuck with owning it (with a lot of cash invested) but no control over the runway.

If you're looking for retirement income, why not just build and rent hangars? If you want neighbors (and peace), you will have to share ownership of the runway and that means a home owners association with control over the operation.
 
David-aviator said:
(not intending to be critical here, just being a devils advocate as a lot buyer may be)

What happens when you are no longer on the scene? Who will own and maintain the runway then and what happens to the rental hangers?
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Kyle,

David hit on a very important issue. There are several instances in which the runway wasn't owned collectively by the homeowner's association and that the owner decided they didn't want the runway anymore (like Meigs). That left the other homehomers with a nice hangar home and no runway.

I even heard of a story in which each homeowner owned 1/x of the runway. One of the homehomers in the middle decided that they didn't want a runway and constructed a fence rendering the runway useless.

The only way that seems to work is to be owned by a homeowners association and no single individual.

I fully understand your desire to maintain control, but that actually will send a red flag to potential buyers. I don't think either David or myself are saying that is something you would do, but you never can tell what your heirs may do at a later date. Perhaps you can add some bylaws into the association's rules to give you some control. It's just something you should think about.

bob
 
Met with a friend last night who is a real estate attorney and was enlightened how big a pain in the _ss this could be. Bob, your right, the runway would need to go to a homeowners association. We discussed quite a few options. She has done a lot of small developments and the more I look into this the more it looks like building the runway, ponds, roads,hangers, houses, etc would be the easy part. The legalities and dealing with the homeowners is going to be the biggest problem. I live in a neighborhood now with a homeowners association that is power tripping and I have to deal with it all the time because I build houses in the neighborhood. That is the last thing I want to deal with. I am leaning now to partner up with my brother and Dad and only have about 3 or 4 people doing the project and not dealing with the general public and maybe build some hangers to rent. I will continue to explore my options.

Thanks again for all the input.
 
Kyle,
I'm also developing an airpark, about 120 miles north of you. Mine is going to be a bit different. Almost all lots will have lake frontage(Lake Limestone) and runway access. This website may be helpful and answer some questions http://livingwithyourplane.com/ .
 
Public Airport?

There are pluses and minuses and I can not speak for your State but you might want to research it. I do know some private airparks that chose this option to protect the runway from development and from the land use disputes between neighbors.
Obviously making it public opens up a whole other can of worms but I would at least research it if you have not already done so.

We did not choose that path. Our airpark HOA has the runway, roadways, common areas, taxiways, etc...with easements and set-backs, clearly calling out their use. Still, on occasion, there has been minor disputes. One of the biggest problems should there be a dispute is what is the remedy? Sue your neighbor? the HOA (all your neighbors)?

As Paul says, living and owning property in an airpark is not for the weak of heart. We are lucky. Our airpark has a high percentage of quality individuals who care about it and for the most part get along. Not easy to do with 27 properties.
 
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