V1 Capital Advisors
Applying Leverage to Fractional Aircraft Acquisitions
From the initial consultation to the final financing arrangements, our dedicated support team is here to assist you every step of the way. We handle the complexities so you can focus on what's most important – your aviation goals
When acquiring a fractional share in a private jet, financing can play a crucial role in determining the return on investment (ROI) and the amount of capital required upfront. Below, we compare a traditional financing approach with an approach that incorporates leverage to illustrate the benefits of reducing initial capital investment.
Traditional Financing Example
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Jet Cost: $4 million
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Loan-to-Value (LTV): 75%
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Number of Owners: 4
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Upfront Cost: Each owner purchases a 25% share, amounting to $1 million upfront.
In this scenario, because each owner invests a larger amount of personal capital, their ROI is reduced due to the higher initial investment. The upfront cost can be a significant barrier to entry and limit capital flexibility.
With Leverage Applied
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Jet Cost: $4 million
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Loan-to-Value (LTV): 75%
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Number of Owners: 4
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Upfront Cost: Each owner finances 75% of their share, reducing the initial investment to $250K per owner.
By leveraging financing, each owner significantly lowers their upfront capital requirement. This results in:
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Higher ROI – Since the owners are investing less of their own capital, their returns on investment improve.
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Increased Affordability – More potential buyers can participate in fractional ownership.
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– Owners can allocate the remaining capital toward other investments or business ventures.
Conclusion
Applying leverage in fractional jet ownership allows investors to reduce their initial capital commitment, making private aviation more accessible while maximizing financial efficiency. In contrast, traditional financing requires a higher upfront cost, reducing overall return on investment.