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Always been curious about this, but in general, is buying a Hangar and renting it out, a good investment? What are the factors/gotchas to consider. I guess Location is a big one, and demand/waitlists for hangar space. Or is it like most things in Aviation - money Pit

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You can go to Bankstown, Moorabbin, Archerfield, Parrafield and Jandacott and find a suitable hangar to sub-let from the Leaseholder. The Leaseholder will charge you rent which is equivalent to commercial industrial space rates, but you will not be conducting any income-producing activity. The Leaseholder will charge you for water and electricity usage at a higher rate than the suppliers of these things, plus the Leaseholder will charge you a service fee for delivering the invoice and handling the payment. The Leaseholder will make you have regular independent audits of how you minimise the environmental impact of your activities, as well as creating a myriad of inspections and reports that have to be submitted.  The Leaseholder will charge you for standing aircraft outside the hangar on airside.  The Leaseholder will regularly up the rent "in line with commercial rates". On the bright side, the Leaseholder will be responsible for the 6-monthly fire-fighting equipment certification that the hangar requires. The will also have to provide you with the results of any inspections for the presence of Asbestos Containing Materials in the hangar.

 

So, now you have got the keys to the hangar. Have you purchased "Hangar Keeper's Liability" insurance? Don't forget the Public Liability insurance. If you've got any property in the hangar, don't forget the Contents insurance.

 

Have you determined how you are going to determine the price you are going to charge for hangar space? Have you determined how many aircraft you can reasonably fit into the hangar? Have you had a Lease Agreement document drawn up and checked for loopholes? What frequency are rents to be paid? What are your ways to recover outstanding rents? 

 

Finally, where are you going to get customers? Look around these airports. Where are the aircraft that were parked all over them 25 years ago?

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Let's say you buy a Hangar for $35,000. You rent it out for $50 a week. That's about thirteen and a half years to get that money back and that's not including any other costs you may incur. 

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2 hours ago, old man emu said:

You can go to Bankstown, Moorabbin, Archerfield, Parrafield and Jandacott and find a suitable hangar to sub-let from the Leaseholder. The Leaseholder will charge you rent which is equivalent to commercial industrial space rates, but you will not be conducting any income-producing activity. The Leaseholder will charge you for water and electricity usage at a higher rate than the suppliers of these things, plus the Leaseholder will charge you a service fee for delivering the invoice and handling the payment. The Leaseholder will make you have regular independent audits of how you minimise the environmental impact of your activities, as well as creating a myriad of inspections and reports that have to be submitted.  The Leaseholder will charge you for standing aircraft outside the hangar on airside.  The Leaseholder will regularly up the rent "in line with commercial rates". On the bright side, the Leaseholder will be responsible for the 6-monthly fire-fighting equipment certification that the hangar requires. The will also have to provide you with the results of any inspections for the presence of Asbestos Containing Materials in the hangar.

 

So, now you have got the keys to the hangar. Have you purchased "Hangar Keeper's Liability" insurance? Don't forget the Public Liability insurance. If you've got any property in the hangar, don't forget the Contents insurance.

 

Have you determined how you are going to determine the price you are going to charge for hangar space? Have you determined how many aircraft you can reasonably fit into the hangar? Have you had a Lease Agreement document drawn up and checked for loopholes? What frequency are rents to be paid? What are your ways to recover outstanding rents? 

 

Finally, where are you going to get customers? Look around these airports. Where are the aircraft that were parked all over them 25 years ago?

they definitely don't put that on the brochure... sounds like it's more trouble than it's worth 

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Ive often thought hangars overpriced. Like everything aviation related, suppliers see flying as the reserve of the super wealthy and everything aviation related gets marked-up. 

 

You can throw up  a perfectly adequate hangar for an aircraft for under $10,000 (materials). I watched a couple of blokes at local a flying club do exactly that, and aim to do the same myself.

 

We recently hoisted  a farm  shed at my place  that would  accommodate a couple of light  aircraft ( if it wasn't now  filled with vehicles and equipment!)  and my wife and I spent about $20,000 on it (with our own labour).

 

Of course,  I can't speak to the purchase or lease of the hangar site, utilities,  or any  other associated costs.  But the basic structure wouldn't be expensive. 

 

 

Alan

 

 

 

 

 

Edited by NT5224
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The joy of putting up a hangar on one's farm without the B$, priceless. There are advantages to living in the bush. 

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I built mine 20 years ago for $10000. Very basic and no doubt would cost a lot more now. That was not including labour. If I had built in Gladstone it would have been about six times that amount, then there would have been rent to the airport. I don't know what it costs to rent a hangar, but to recover costs it would be much more than I could recover considering that there are a lot less aircraft around nowadays.

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24 minutes ago, Yenn said:

I built mine 20 years ago for $10000. Very basic and no doubt would cost a lot more now. That was not including labour. If I had built in Gladstone it would have been about six times that amount, then there would have been rent to the airport. I don't know what it costs to rent a hangar, but to recover costs it would be much more than I could recover considering that there are a lot less aircraft around nowadays.

 

 

 So is it true to say there is oversupply in hangar space at present?  If so, has this been reflected in reduced hangar rents?

 

Or do the perversities of the aviation economy strike yet again?

 

Alan

 

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A hangar on private property is very different to one at an airport. 

A hangar at an airport can generally be on-sold so has value in it's own right and can be more readily sublet to aircraft owners.... but there maybe a lease and other ongoing costs involved.

Each have their own merits and disadvantages..... 

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A hangar on council ground involves lease and rates payments. And regulations about engineering standards that may make it more expensive. A two-aircraft hangar will cost around $60k at present including labour with a concrete floor.

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We had several people in a hanger, leasing off a partnership who leased from council. Thanks to council bs we now have an empty locked up hanger, with airplanes sitting outside, or stored a long way from home in some cases. This building was on airport when handed to council ownership, it was a recycled airforce building from the original airport. It would have been generating $800 per month minimum from the private planes in it plus more from the commercial operation in there.

go figure

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Where do you buy a hangar for 35k?????  even at Caboolture the last new hangers were $182,500 EACH !!!!!!!!!  even the old ones are 130k  plus I think its about 4k a year lease from the council for the land.....definately rent unless you have lots and lots of spare cash you want to hide or offset your tax losses

 

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I have a half share in 16m x16m steel hangar at Atherton Airport. We rented it out for a few years because we had purchased prior to needing it - knowing we were going to be forced out of Cairns at sometime in future. 
 

In the end it was not worth it as an investment for rental. We housed several aircraft for extended periods. Could really only fit two aircraft or three at a squeeze. When we did move our own two aircraft in there was room to fit another and we could have but it was just not worth it. 
 

The extra insurance needed just made it not viable. The costs are usually as much or more than you can rely on getting for rent. By the time you factor all the costs in you don’t get much if anything back in rental. You have to hope you make a capital gain in selling. But that ( see below) can be risky. 
 

On the other hand a mate across the road has a huge hangar and can fit a dozen or so aircraft ( a lot of trikes which can be very close packed) and I think with bigger numbers it’s got more income for proportionately less cost. So I think maybe it could be viable  if you’ve got economy of scale. 
 

something else you need to be really careful of. A lot of airports have leases where at some point the hangar Itself reverts to ownership by the airport. You pay $100k for the steel shed and 10 or 20 years later they can kick you out and take the hangar off you. Happened in Cairns 2 years ago. One owner was convinced his lease said differently so when he got kicked out he moved in with a spanner and started taking the hangar apart. Federal police called and they threatened to arrest him and he had to return the metal he’d taken away. 
 

If you do go ahead - right from the start insist on automatic bank transfers for rent payment. We had a guy who always had an excuse to put off paying. He wanted to pay in cash - we thought that would be good to get cash - for not having to account for income etc- forget it. That never turned out to be a problem he just never paid or did so very intermittently ( just enough percent of what was owed to take the pressure off) and when we booted him out he left owing thousands which we never got. 

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Thats why when my instructor asked me what my flying interests and ambitions were i said ,beaches and paddocks eh Mark, the costs are discusting and fraudulent ripoffs eh.

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You are likely leasing it, as the council owns the land and leases it for set time periods. Typically 20 years. But that means you have a set period to recoup your money. It’s not something you truly own.

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2 hours ago, Hargraves said:

Thats why when my instructor asked me what my flying interests and ambitions were i said ,beaches and paddocks eh Mark, the costs are discusting and fraudulent ripoffs eh.

Fifty years ago I said pulling birds and getting out of here.

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On 10/01/2020 at 12:34 PM, mAgNeToDrOp said:

Always been curious about this, but in general, is buying a Hangar and renting it out, a good investment? What are the factors/gotchas to consider. I guess Location is a big one, and demand/waitlists for hangar space. Or is it like most things in Aviation - money Pit

There is a “hanger for sale” at YHBA.  Looks like it can fit 3 planes if you can mix low and high-wings. Was told it is $200k for a 20yr lease.  Sounds like a bad investment.

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With GA in a very uncertain era buying a hangar for the purpose of making money would be risky! Rent in these uncertain times is far smarter.

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Best to do the sums and include what the hangar would sell for down the track, value may go up, down or remain level.  One or two other aircraft can help off set the cost and if so best to take out a hangar keeper insurance.  If you look at the purchase mid to long term say 10 years or so the resale price might tip the derision to buy into the 'go ahead with purchase' area.   Most hangarage is in the $2k to $4k per year area unless your lucky, and some are.

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I can agree with some here, as I was, at one point, going to purchase a block at Temora and put up a Hangar.  When I got the quote back from the shed guys, I nearly fainted.  They wanted more than $120,000 for the Hangar alone.  SO... I called another shed mob and asked for a quote on the EXACT same size "shed" for my "property"  It was half the price - for the same thing.

I think it's like weddings.  As you as you mention the word Wedding, the flowers double in price!  LOL!

 

I now rent hangar space in a very nice hangar in southern NSW.  Great AD, and the hangar I am in is large and very comfortable.  Shower, toilet, and even an office space if I want to use it.  For what I pay for it, I think it's pretty good value to keep my bird out of the elements, and somewhere to work on her when I need to.  I share it with another aircraft, but it's large enough to house both of us, without having to move aircraft to get out - the other is a Bonanza! 

Would I buy one as an investment - Maybe - If I was to put my own bird in it, and maybe lease some space out to someone else.  You can always sell in the future, and you have to put a value on it being yours to do with as you wish.
 

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In terms of Hangar design.. I used to hang out at an airport ( in South Africa) where the majority of the GA hangars were Tee-Hangars. Something like this:

Tee_hangar_layout.svg

 

You'd need taxiways both sides, but this appears to be a more efficient way to get more aircraft into a single space, if your goal is to maximise rental revenue. It maybe more attractive to some as your aircraft is locked up and nobody else has to move it to get theirs out.

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7 hours ago, BirdDog said:

I can agree with some here, as I was, at one point, going to purchase a block at Temora and put up a Hangar.  When I got the quote back from the shed guys, I nearly fainted.  They wanted more than $120,000 for the Hangar alone.  SO... I called another shed mob and asked for a quote on the EXACT same size "shed" for my "property"  It was half the price - for the same thing.

I think it's like weddings.  As you as you mention the word Wedding, the flowers double in price!  LOL!

 

...snip.....
 

Yep. Same with  the insurance. 
We got a quote for hangar insurance ( our hangar is, I’d estimate about a 250 m from the actual strip of a pretty quiet country grass strip - two rows of hangars back with a road included and basically furthest from any flying aircraft  and it seemed very high. 
My share partner contacted them and asked about insurance for same shed if it were not located at an airfield - I forget exactly but was significantly less.  Asked why and was told it was because a plane might crash into the hangar. No effort made to check that likelihood ( which I reckon is actually about zero chance given its actual distance and being well in behind other hangars etc ) certainly no more chance than the many located on the farm properties on land around the airport. 

The fact it is on airport precinct is claimed to increase its chance.  Doubt there’s any supporting evidence for it. But..... They can get away with so they do. 

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Jaba-who, do you have the option of NOT insuring ? Some risks are so unlikely that I reckon you should carry the risk yourself.

For example, why insure against being abducted by aliens?

There are 2 categories where is makes little sense to insure: Firstly, where you can afford to carry the risk yourself, and secondly, where the event is so unlikely that it has never happened except in the imaginings of insecure people.

 

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43 minutes ago, Bruce Tuncks said:

Jaba-who, do you have the option of NOT insuring ? Some risks are so unlikely that I reckon you should carry the risk yourself.

For example, why insure against being abducted by aliens?

There are 2 categories where is makes little sense to insure: Firstly, where you can afford to carry the risk yourself, and secondly, where the event is so unlikely that it has never happened except in the imaginings of insecure people.

 

We could elect to. We could also have elected to just have public liability insurance. 

 

As far as I am aware from our lease we have no requirement to. 
Some airports require insurance and that it include public liability etc - more to cover their bums if the hangar damaged someone else though. 
 

But on balance we decided to go with getting it. The building is worth about $120k I would guess. While the metalwork is fairly invincible normally we do get cyclones here ( though none since the world started saying climate change is going to give us more and have them more destructive)

 

It houses some flammable stuff. We have timber  living quarters etc with electricity etc at the back and the aircraft have fuel in the tanks etc. the other thing is that if I was in it on my own I might consider not. Because then if I do something stupid and caused damage I’d be the only one affected but since I’m in with a partner I wouldn’t want to leave his half lost from something I did. 

so on balance we thought better to get it. 
 

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