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Paying for your kit

skelrad

Well Known Member
Friend
In terms of paying for your RV, what have some of you done?

- Paid as you go, piece by piece with cash?
- Paid for some of the plane with cash, financed some?
- Financed the whole thing?
- Primarily used your credit card?

I did not think financing would be available for something like an experimental plane, but some have told me it is possible. Looking for options and advice from people who have used different financial avenues to get in the air.
 
Paying for my RV

We ended up with $30k extra on our mortgage after a failed bid to move house. Long story. Anyway, we had planned to start an RV in several years but somehow I managed to convince Jackie to do it now and move in a few years instead :D. So $12k converted the garage into a workshop and bougth tools, and the rest went on the emp & wing kits. The rest we'll save & buy as we go, except the big block up front; that'll go on the mortgage when we move house in about 3 years to somewhere with a shop big enough for assembly. Hopefully. We have god equity in our current property, we expect it to increase further, and we both earn well and have no kids. We one of the lucky ones, and don't really have any complaints. With luck, 5/6 years from now we'll be in a nice house near a local airfield with our RV in one of the hangars...
 
NO CREDIT CARDS!!! There's always a better way. I started this thing a long time ago when I had barely enough for the tail kit. Later, I amassed a 6-figure sum in the stock market back when any idiot could pick winners. Subsequently lost most of it without getting to use any of it on the plane. Since then, I have paid for everything cash a little at a time. I'll probably buy an engine/prop this summer and that'll pretty much be it. I might finance some of the engine, but haven't decided yet. Bottom line is that financing is available, but cash is probably better. Buy a little at a time and grab a bargain on parts and instruments when you can. Slow and steady was my method.

Oh, and I drive a 98 Tacoma which helps save a few hundred a month.
 
My project is a cash only operation. No questions asked. If something crappy happens, it goes into moth balls. No liability, no regrets.
 
Cash as I go. I put my last fairly hefty bonus in a money market. I transfer into checking as I go and it can earn a little return between purchases. The engine will be the only hiccup in the plan, so I might finance that and sacrifice a new truck (it'll be about the same payment). Or the kit will just sit for a while while I get cash together. BTW, I don't get gifts for holidays anymore - I get Van's gift cards or cash. :D
 
I plan on paying by cash. I'll probably buy a half time lyco and get all the bugs out. I want this thing pretty much all paid off when I am flying it!
 
I paid with a credit card as I went but had the cash to back it up. Used the card, then paid it off in full at the end of the month and got lots of flight miles in the process...
 
simple rule -- no loans on toys :) so, pay as I go.. and it'll get done when it gets done.. but it'll be paid off then.

PS.. Oh yeah, just like Glenn, I collected a lot of FF miles on my credit card by charging everything there then paying off at end of month.
 
financed half

I bought the kit and financed most of the engine and panel. Fairly painless process. I was surprised that I could get a box of parts financed but it's done all the time. I ended up with a car payment, although a little longer term. Jack
 
Radomir said:
PS.. Oh yeah, just like Glenn, I collected a lot of FF miles on my credit card by charging everything there then paying off at end of month.
This is a very important point to anyone looking to use cards for kickbacks. Even on the best cards, the APRs are MUCH higher than any kickback you'll ever get.
 
Free credit or cash

I'm with Radomir on the "no loans for toys" - my wife got me into this way of thinking and I'm glad she did. However, I do like taking advantage of true 0% finance offers. I put my QB on a 0% for 12 months card, which I will pay off before interest starts to accrue. If you've got the discipline, it's a no-brainer. I get a couple of these 0% offers every week.
 
Rick_A said:
However, I do like taking advantage of true 0% finance offers.

I'm sure most know this, but for those that don't: Most low rate offers contain a lot of fine print, not the least of which is a clause that allows them to raise thr rate through the roof if you're late on a payment. This includes late payments to OTHER creditors. I'm sure most folks on here pay their bills on time, but if something gets lost in the mail you can find yourself paying 25% instead of the free loan you planned on.
 
As I go

OK with maybe a plug from the budget every now and again. My current dilemma is that I came across a deal on an engine I couldn't pass up. :D A little early in the process saying all I have is the empennage and tools. Now I'm out of wing money. :(
 
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Cash only

I agree no loans for toys.

I put aside money from extra teaching and grant/consulting for years. I started the 8A before I had all the money. However, my projections for future extra income and future project expenditures showed that I would be able to complete the plane without interruption. As it turns out, I could have started sooner. :eek: I build slowly, but enjoy it.

The airplane fund money is going to be used to buy a lot for a future home soon. So, I will have to get a house built, move in, and sell this house to get my airplane money back. I plan to finish the fuse (already delivered) and then do the house before the big expenses (panel and engine) hit. That's the plan, anyway...
 
I am in the same boat as a lot of you, don't buy toys with money you don't have. Before I started with the empennage, I sold this:

mini-DSC00047.JPG


2002 BMW 330 ci European Delivery, and this is a picture of it at the BMW factory/museum in Munich. It hurt to let that toy go.
 
A little of both

When I decided to build my RV9, I went to the bank and got line of credit for the plane for $50,000.00. My reason. I will not stop because I don't have the cash on hand at the time. If I see a deal I will buy it at the time. So far I have bought my tools and empenage with cash. The line of credit has been used to buy two income properties so far and is still at $0.00. My problem is not the money as much as the time. Four years ago we installed a swimming pool by refinancing our house and have never regretted it.
Russel :)
 
I'm on the pay-as-you-go plan. It's taken 6 years, but I've been able to buy all four kits. I'll have to get a loan for the engine and panel--or maybe find a partner.

Mark
 
10 years ago I was not able to start the project because of lack of funds. Then my IT career really took off and now we have a different problem ?TIME?. We both work and have two kids (15, 6) and enough money for our dreams, but hardly any time to do the things we want to do. I sometimes wonder how I ever be able to finish my RV 7. I am still working on the empennage kit a year after delivery. Often I think about how others are doing it. There are plenty of people here with careers and children? Aren?t you just tired at 9 PM to go to the workshop? I get up at 6 AM so I need to go to bed shortly after 10...
 
Time and Money

I started my RV-7A project with some money (not nearly enough) in the bank earned while doing some part-time product development consulting. But I had to build my shop first. When I finished my shop plans I was going to take them down to the county the next morning for review. That morning was 9/11/2001! Needless to say I had to rethink the whole project. Should I commit to the shop and the RV with everything as uncertain as it was or put everything on hold? A few weeks later the plans were in plan check. $30K and a year later the shop was completed. A good chunk of the money was gone but I had a some leftover for the empennage and wing kit. I knew I could sell some stocks I have owned for years but that would eat into my retirement. I also didn't want to pull funds from my regular income, after all I have 4 kids (14, 12, 10, 8 yrs at that time) and they need to eat. So I hoped I might find some additional income to help the project along. I did find a few design jobs along the way but they didn't really contribute too much to the RV fund.

However where there is a will there is a way. I recognized the need for a better dimpling tool to replace the impact c-frame dimpler and built the prototype. It worked great. When other builders found out about the dimpler I started thinking that maybe this is the way to fund the RV project. The RV building slowed while I entered into the world of small business offering the DRDT-2 dimpling tool to the RV community. Now two plus years later, I have far exceeded my goals of generating income to finish my RV and created a source of income to help cover my future operating expenses.

However there has been a price for this success. Stress, frustration, trying to run a business and not letting the customers down and the fact that it has taken a lot of time away from building the RV. This intern has created more frustration and disappointment because of the very slow progress on the RV. However every time I help another builder with their project (through the use of the tool), and every time I look a my kids and see that I am not depriving them of the basics (they are now 20, 18, 16, 14 years old), I feel a sense of pride and accomplishment which helps wipe away the other rough feeling. :)

In short, you need money and time to build an RV. You also need time to make money. Your time will be pulled in different directions.

-If you are independently wealthy the last paragraph doesn't apply.

Paul
 
I'm very confused. I won't borrow money for toys either, but my RV-9 is no more a toy than food and water!

I will probably borrow a bit so I can buy a new engine when that time comes, but the rest will be cash.
 
The only part of the project that really concerns me is the engine and avionics - and unfortunately one comes right on the heals of the other. I can stay ahead of the kit costs, but there's no way I'm going to have $30,000+ laying around burning a hole in my pocket based on our current income. So, I've got two possible plans in mind. One, is to take out a line of credit on my house. It's appreciated so much in the last few years that I'd hate leave that resource untapped.

My other plan is to use my wife's future income to pay off a short term loan. Now that the kids are getting older, she'll be going back to work within the next few years. I keep that particular plan to myself though! Her income is supposed to pay for the kids' college - not my airplane. The trick is not to talk about her income and paying for my airplane in the same breath. Now, I just hope she never reads this!

So, I do intend to go into some temporary debt toward the end of the project. The alternative would be to wait. And although I'm healthy now, you never know when something may happen that causes you to lose your medical. So, I say don't be afraid of a little debt as long as it's manageable. After all, we're not talking about a plasma TV, an extravagent vacation, or a new car - this is a lifelong dream! It's not just a hobby! In my view, there are four things worth going into debt for: an education, a house, a dependable used car, and a dream. Is going into debt the smartest thing from a practical standpoint? Certainly not. But then neither is building a plane in your basement :D

Chris
RV-7
Empennage done - Wings on order!
 
im doing pay as you go this way i dont need any loan ,which i can get because no credit history at all ,so i pick up rv-3 is cheap for me and if someone needs ride i can always rent plane anywhere
 
szicree said:
I'm sure most know this, but for those that don't: Most low rate offers contain a lot of fine print, not the least of which is a clause that allows them to raise thr rate through the roof if you're late on a payment. This includes late payments to OTHER creditors. I'm sure most folks on here pay their bills on time, but if something gets lost in the mail you can find yourself paying 25% instead of the free loan you planned on.


Also, many have a clause that the initial use is zero interest but additional purchases have an interest rate applied and guess what: payments go first to the 0 interest portion.

I'm a financial planner and I've seen how devistating credit can be to misuse [mostly unintential].

I use several credit cards many times each month... always, ALWAYS pay them off in full. If you aren't going to pay them off in full each month - do yourself a favor and cut them up and live using checks.

Ultimately, in our society you end up in one of two camps. You either borrow money or loan it to others. I've never seen anyone make money by borrowing it.

John
 
Looking at the last RVator I see a few RV's that have been 14 + years to build. Now that is a SLOW build , but they have done it !!!
I hope to have mine built in 6 - 8 years, I dont have all the funds now, but I have no debt so far. Shop/tools/Emp all paid for. I plan to get 50% cash and the other 50% credit, and take about 1.5 - 2 years on each sub kit.
 
So far everything for us (my dad and I) has been cash. When we decided to build an RV we started to save and had a pretty good funds supply when we ordered the tail kit. Since then He has sold his cessna 150 and I have sold my sports car to pay for the RV. The cost so far is around 80K. This includes all the tooling etc. We expect the total bill to be around 150K. Yes that right, flying is expensive downunder. If things keep going the way they are I expect we should be able to do the entire project with cash. If we get to the end and are a few $$ short we will take out a small loan to finish the job. I dont really want to have to borrow to pay for the RV but I would rather do that than have it sitting idle while we save some more money.
 
Ultimately, in our society you end up in one of two camps. You either borrow money or loan it to others. I've never seen anyone make money by borrowing it.

John[/QUOTE] DEUSKID (above)

Sorry John, but I just can't let this go. I could write pages about this but don't want to give that much time and if you were anything but a "Financial Planner" I'd just pass it by. If you want to make any real money you will belong to BOTH "camps". Plenty of money is made borrowing it via tax savings and increased net worth. I can't believe as ANY kind of "Planner" that you even use the word "NEVER". Sure isn't one that I use much.

Just for the record, I paid cash for my 7 :) . Wonder where that money came from?? Maybe from some I borrowed to make more :D :rolleyes: Glad I'm not your client! :)
 
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Paying for the kit

I agree with that. A little OT here and there when I want to add funds for building. I sold a house in July and that is where some is coming from. Right now I am building the empennage and my workshop at the same time. :eek: But I will NOT use a credit card no matter how tempting. NAFCO in Florida makes loand on kits and engines.
 
One word here...

"NAFCO"

They have been great. Want. Need. Gotta have. Thats the story of my life and I must say I've pretty much had it all. You only live once.

-Jeff
 
It's easy math...

It's pretty straight forward for us. We just did the math backwards from our cost estimate, ($104K) broke that down to a budget and worked forward from there. We're NOT in a hurry, we're sticking with our plan and we should own it when we fly it...

Yes there were adjustments to make the plan work in a realistic time...our cars might be a few years older than we like when we're done, the cabin will do without a few upgrades but we decided together what would be done when and we live this plan every day!

- Peter
 
I took a 20 year hiatus from flying. :mad: When I got back in the saddle a couple of years ago, my wife got hooked on flying so much that she is paying the bills for the construction... :cool: So, its pay as you go for the 30 month construction schedule were on right now.(the goal is to have Phase 1 flown off by 25th aniv)

I REALLY gotta keep her happy.. :D
 
I agree with Jeff "you only live once"

I have never figured out how sometimes with I am working on something such as this, the money comes from places I least expect.. somehow it just arrives at the perfect time.. get the emp and get the tools, buy used tools or get them from someone that gave up and get them cheaper.. after that things will fall in place somehow.. so far I have not borrowed anything and don't plan on it.. hope to fly in July
granted I can be pretty creative at times finding money.. I have not broken the law or done anything I am asamed of.. when I am done I will thank my
ex for leaving or I would have never started or finnished this project.. :) then send her a copy of the kitplanes mag..

although I started mine "I was driving home with the kit on June 13th 2004 from florida on my exwifes birthday" I celibated (mispelled on purpose) big time :) waiting on prop &spacer and dynon D-180
then paint.. and it will be ready! yeehaww..

It all works out somehow.. just have to believe..
 
JACKR said:
Ultimately, in our society you end up in one of two camps. You either borrow money or loan it to others. I've never seen anyone make money by borrowing it.

John
DEUSKID (above)

Sorry John, but I just can't let this go. I could write pages about this but don't want to give that much time and if you were anything but a "Financial Planner" I'd just pass it by. If you want to make any real money you will belong to BOTH "camps". Plenty of money is made borrowing it via tax savings and increased net worth. I can't believe as ANY kind of "Planner" that you even use the word "NEVER". Sure isn't one that I use much.

Just for the record, I paid cash for my 7 :) . Wonder where that money came from?? Maybe from some I borrowed to make more :D :rolleyes: Glad I'm not your client! :)[/QUOTE]

Jack -

You are correct debt in and of itself isn't wrong and I wasn't exact enough in the way I said what I intended. Never borrow money for a depreciating asset. Never borrow money for a non-cash generating asset unless you have high certainty that it will appreciate and you have certain surplus cash flows from other sources to fund it. Never borrow money to live on [eg, run up your credit cards to improve your life style]. never borrow more than your net worth [eg debt > asset values].

If you follow these precepts then in essence you 'have more than you owe' and that makes you a net lender rather than a net borrower. That is a more exact explanation.

There are quite a few folks who feel like you do and chose others to manage their money. There are quite a few folks who, after several interviews, I chose to not serve for the same reason. I'd never make that decision as hastily as you seem to have but if you feel the way you do I'd probably agree that we wouldn't be a good 'fit' to work together.

Cheers,

John
 
...blessed with the ability to pay cash for the plane - also blessed with a wife that won't let me.

I'll be paying for the plane as I build. Her reasoning is sound: I won't have $40k sitting unfinished in the garage until Kingdom-Come. If I don't get past the $7k wings and tail, then relatively little is lost.
 
I had been thinking about building for a long time with one major stumbling block,but the divorce cleared that up nicely... I got a realy good deal on an engine that I bought on the spot then thought I should buy a kit to hang it on. I ordered the complete kit thinking I would need it all eventually any way. It meant a lot of points on the credit card but was hassel free and I only had to pay for shipping once. As far as spending the money , I heard you can't take it with you when you go and you are going to end up with a rather nice asset. :)
 
Plan it out, finance if needed

Funny that you should ask about financing...I just picked up my $40k check on Friday. I've spent about $30k in cash for the Van's kits (slowbuild) and various other things for the plane. I got a 10 year, $40k home equity loan from my credit union at a reasonable interest rate. That plus another $20k in the bank will result in a nice flying machine.

Ideally toys would be cash only, but if it makes the difference between living your dreams and not living your dreams, finance! Home equity loans are probably the best bet, then look into aircraft finance companies. Plan it out like I did (and still doing), make an Excel spreadsheet of all the things that you want to buy and the cost and add it all up.
 
Paul Tuttle said:
I had been thinking about building for a long time with one major stumbling block,but the divorce cleared that up nicely... I got a realy good deal on an engine that I bought on the spot then thought I should buy a kit to hang it on. I ordered the complete kit thinking I would need it all eventually any way. It meant a lot of points on the credit card but was hassel free and I only had to pay for shipping once. As far as spending the money , I heard you can't take it with you when you go and you are going to end up with a rather nice asset. :)



You shouldn't have to worry about money with all that motorcycle/Discovery Channel money. :D
 
Brian130 said:
Cash as I go. I put my last fairly hefty bonus in a money market. I transfer into checking as I go and it can earn a little return between purchases. The engine will be the only hiccup in the plan, so I might finance that and sacrifice a new truck (it'll be about the same payment). Or the kit will just sit for a while while I get cash together. BTW, I don't get gifts for holidays anymore - I get Van's gift cards or cash. :D



Just ask your brothers Nick and Aaron to throw you a bone.
 
BTW, I don't get gifts for holidays anymore - I get Van's gift cards or cash.

Yup. My wife is /really/ good about that. She'll buy me anything I ask for if the price is reasonable. She doesn't care if she knows what it is - if she knows I want it, it's mine. For my last birthday she bought me a sweet Incra miter fence for my table saw (accurate to 1/10 degree, 100% repeatable). She can't even spell 'miter fence', much less use one. But it was on my list :D

So my new list will consist of various instruments and other toys. Given my birthday, Christmas, Valentine's Day and our Anniversary X 2-3 years, I should have a pretty full panel less radios and xpdr by the time the plane is ready to go.
 
Cash - Credit- Sell

I'm currently paying for my 8 as I go. It was going fine until I decided to move. Quite an expense.

I have thought about financing the remainder but I am undecided. I actually have considered financing the first project and then selling it once completed. There should be enough money left after the sale to at least purchase the kit outright for my personal aircraft.

Obviously the downside is the significant ammount of work required to build two and the reluctance of selling my first born.

Regards,

Donald
RV-8 Empennage Underway
N-284DP Reserved
 
When I am ready for my engine and avionics I will sell one of my kidneys on eBay. :D
 
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praterdj said:
I have thought about financing the remainder but I am undecided. I actually have considered financing the first project and then selling it once completed. There should be enough money left after the sale to at least purchase the kit outright for my personal aircraft.
Just be sure your assumptions/calculations account for the interest you will pay along the way until you are ready to sell. That $50K you borrow now may cost you $60K by the time you are finished.
 
Doing the pay as you go thing. However it's interesting that my wife does not think of the airplane as an investment or something you can get money for in the future. Don't know what's up with that - she's very well educated but doesn't think of the airplane as an asset. Just a toy in her mind.
 
gbrasch said:
I paid with a credit card as I went but had the cash to back it up. Used the card, then paid it off in full at the end of the month and got lots of flight miles in the process...

This is my plan too. I plan on getting the cash to pay for it thru bonuses and stock participation at my job, and driving my older car. Too bad I cannot use the credit card miles to buy plane parts. ;) We will see if my plan still holds when I get to the expensive parts, Engine and Instruments.

I try to find bargains as I go. I sometimes have to pass up bargains because I do not have enough cash to pay for them. But eventually I will. Eventually I will be flying too.

I do not understand how people can justify financing an airplane. Loans are for things that you absolutely need, like a house, a car, an education. Financing something that is just for fun seems weird to me. Especially financing a plane that needs to be built. :eek: That is just too risky for me.
 
See Doug's Article under 'Articles' on the Vansairforce.net homepage

see...

Doug's Article under 'Articles' on the Vansairforce.net homepage

How Can I Afford An RV? by Doug Reeves

This is one of the early articles Doug wrote.
 
Chofrock said:
I do not understand how people can justify financing an airplane. Loans are for things that you absolutely need, like a house, a car, an education. Financing something that is just for fun seems weird to me. Especially financing a plane that needs to be built. :eek: That is just too risky for me.

Amen. I don't really have a problem, however, with financing the engine AFTER the plane is built and otherwise ready to fly. At that point it's just like financing a modestly priced car, but one that doesn't really depreciate. Cash in the bank is worth something from a security standpoint, so if buying the plane or engine would completely wipe out a needed cash reserve then financing seems to me to be okay. Now we could debate whether someone with only an engine's worth of cash saved can really afford a plane...

Financing is a tool that used properly is perfectly okay. If you use financing to buy things you can't really afford, then it can be the devil. But if used in a larger scheme of managing/investing/saving cash and the interest rate is an acceptable price for flexibility, financing can be your friend.
 
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Vern said:
see...

Doug's Article under 'Articles' on the Vansairforce.net homepage

How Can I Afford An RV? by Doug Reeves

This is one of the early articles Doug wrote.


Good advice, I read that a while back. I have been doing all that stuff for years which is why I'm able to build on my crappy Michigan factory job income. :( :( :eek: :mad:

It hasn't gone up since 1998.
 
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