I guess what they say is true, it takes money to make money. No, I’m not talking about stocks, bonds or even investing in real estate; I’m talking about flipping jets. Many heavy jets are in demand by high net-worth individuals and global companies creating a substantial opportunity to turn profits through the sale of these assets.
The scarcity of these jets is a result of limited inventory and a long wait period after the order has been placed allowing market prices to skyrocket and presenting investors an opportunity for a solid return in the 10% area with minimal risk. Sounds great in theory right? Its only going to set you back a minimum of $50 million.
One particular example that has been in the news recently is the Gulfstream G650, which has lead to profits as high as $5-7 million per transaction. Customers prefer these jets because of their large cabins and ability to move people longer distances.
THE G650′S LARGE CABIN ALLOWS FOR A SPACIOUS INTERIOR CONFIGURATION.
PHOTO CREDIT LIVEITFOREVER.NET.
With a base price of $64.5 million, the G650 is considered by many to be the king of private jets. This large cabin jet has a range of 7,000 miles, a maximum speed of Mach 0.925 and can transport up to 18 passengers depending on the interior configuration. Since its inception, there have only been 30-35 produced worldwide. Billionaires including Ralph Lauren and Oprah Winfrey have signed up for deliveries of the G650. The demand is so strong that if you were to sign a contract today, you wouldn’t receive your jet until the third quarter of 2017.
Unable to wait this long, some wealthy individuals have begun buying these jets at a premium in the low $70 million range. Formula One mogul Bernie Ecclestone has been in the spotlight byNBC for purchasing his G650 years ago for $64.5 million and recently selling it recently to an Asian businessman for $72 million, earning almost a 12% return for simply selling the jet.
When Gulfstream was asked about this controversial situation, they stated that they are “privy to the details” and “if customers are, in fact, getting a premium for the aircraft, it’s a testament to the amazing capabilities of the G650.”
However Gulfstream has made it clear that they are in opposed to individuals buying the rights to jets with the intentions of reassigning the title to another owner to turn a profit before the jet has been delivered.
In attempt to get around this, customers have even gone so far as to open up a business as a charter company to mask their intentions. Instead of operating as a charter company, these customers will then flip the jet after the paperwork is signed. Gulfstream quickly caught on and required the signor of the deal to be the one to receive the jet when it is delivered.
What this high demand does forecast is the continued dependence of private jets to facilitate business. What is all the hype about? Find out for yourself here.
This article was written by Johnny Sengelmann, Co-founder and COO of Fresh Jets. Fresh jets aggregates private jet schedule and pricing information in real-time matching inventory to the travel needs or business and individuals instantly.