Private jet expert reacts to Meet Kevin reacting to Iman Gadzhi

Is it worth paying, you know, 50% more in fuel costs, you know, twice the cost for the plane basically? Probably not for those little things. That's when you get into like the luxury, like it's a ripoff.

Okay, you can buy a nice 4-seater Renault or Volkswagen, or you can buy a nice 4-seater Mercedes. Is that considered a ripoff? To each their own. Today we're going to be doing a review of Kevin Kevin's YouTube video, which was doing a critique on my presentation to Iman Gadzhi. So let's go ahead and let's see what he says.

You want to redo the upholstery and the carpet? That'll be $250.

So this video that you're about to watch right here is depicting what it's really like to own a private jet. You see some of the good— no, you don't see a lot of the full picture. But with us here, we have Mr. Kevin Paffrath, Mr. Meet Kevin, who actually owns a private jet and is here to tell us The full story.

Oh, interesting.

Is it all exposed? What is he getting right? What is he getting wrong? And the full picture of what it's actually like to own a private jet.

Interesting. Okay, well, let's play it and we'll sort of just pause it as we go through it. Now, keep in mind, did they actually end up buying the jet? No, they went to a jet store. Oh, okay. Okay. So there's this guy that's been going viral on TikTok who sells jets. I think he's like in London or the United Kingdom or something like that. And he's actually brilliant in that he has this like massive like electronic display and he can just put stuff on this display to show them, oh, the distance of how far your plane could go. And it's fantastic. I wish I had that experience when I was buying a plane because I was literally flying around the country to go visit different planes to see what the different planes were like. Yeah, it's in this video too. You'll see this in this video. All right, let's listen in. So here we go.

Upon entering it, my favorite phrase is time is money. Buy a jet. So I mean, it really is the whole basis of owning an airplane. I'm always saying, you know, it's not about luxury.

It's really bullshit. Bullshit. Like, for again, for 99% of people, it's all about luxury.

Wrong, wrong, wrong. Okay. He is so wrong. I'm sorry about that. But this is not about luxury. 99% of people do not buy an airplane for luxury. It is absolutely a time machine. It's a capital expenditure of a company, and very, very few people are using this as a toy, as a luxury item. Is it more luxurious than flying on a commercial airline? No question about it.

They're walking in there trying to justify their plane. That's what they're doing.

Time machine and being a capital asset to a company.

To a company, that's true.

Club room where sometimes, like right now, you know, we have a client in the main studio there, and so if we really want to, I have another video wall here that I could do another presentation presentation on. However, this one I can't do the full floor plan of all the airplanes, and I'll show you. I'll take you through the app on that wall because it's just much more effective. It's one of these experiential journeys, if you want to call it that. If you're really interested in trying to buy an airplane, this— it's an unbelievable tool. So this is a little bit more of a private, um, kind of atmosphere.

I know it's an ashtray there. You got smoke in here?

You can do whatever you want in here.

Classic sales guy, by the way. Classic sales. I mean, I love it. And you can see I own one of these little, uh, a little After you buy a plane in the industry, it's very common that the salesperson will get your exact paint job for your plane with your tail number, paint it, and they give it to you as a closing gift. It takes like 3 to 6 months to actually get it, but it's pretty cool, and I have one for mine, and it's a fantastic closing gift. It's a very, very good closing gift.

Cross-section of the aircraft. I didn't really find that interesting. Put it in the front window, really, to sell Airbuses or Boeings. The real reason was obviously it's a marketing gimmick to catch the people's eyes.

Yeah, window here on Park Lane, here about the Knightsbridge.

I also see a jet. A good marketing little play is this is—

that's the TV you're talking about. Money shot.

People come driving down this road and there's about— well, pre-COVID there was about 90,000 vehicles every day going up and down here, about, um, 40 people who own a jet every day passing through this window.

They still talk about pre-COVID numbers.

We do this at nighttime. We take this little advertisement or video and we put it over here. So at night everything is black around here. And then, so when they drive down, they see this little video in the window and then they see the airplane, then they see inside the window. And if they have anything to do with corporate aircraft, normally they will find the time to come back here and, and come inside.

This guy's brilliant.

Huh?

Absolutely brilliant. I love this. Like, these are just like the little efficiencies I, I try my best to apply to everything I'm doing as well. What can I do to make something just slightly more efficient? The fact that it's just a click over, brilliant. And you're already paying for like a great location, might as well fully utilize that to like market.

Brilliant. Yeah, I mean 90,000 people passing a day, that's like owning a YouTube channel almost. Like you have 90,000 people watching.

Yeah.

Thank you very much for that great compliment.

What carries in my ears enough carries for me.

So that's his office. Right, so this is basically just a little studio, okay.

Models. What we do now is we have to figure out a sensible way to filter the airplanes out that don't meet your parameters. Honestly, what would be the maximum, maximum budget that you would want to spend?

$30 mil.

Okay. Do you want to have one—

Can we pause for a second? This may be a miss. Like, I feel like most people that want to buy a jet have done their own research and say like, I want this one. They're not going to a broker to be sold on like a wide selection. People spending that amount of money on a jet usually have done their own research. Like, I want this one. I want this one. Help me get it.

Like, is it a—

Sorry, that is not correct. There's a lot of people who are given misinformation by friends of theirs who have a certain kind of jet and they recommend their jet. They tell them this is a great airplane, it'd be great for you, which means nothing. So I'm sorry, but it's— some people who are buying airplanes know nothing about what they're buying and they need the education. Sometimes they get it from the pilot if they have an airplane. But approximately 25% of people who are buying jets are first-time jet buyers, and they really don't know what they're supposed to be getting or what they want to get.

This one, help me get it.

I guess it depends who it is, you know? I mean, I did. But there are definitely also people like— I wonder how much time someone like Taylor Swift would spend, you know, or like somebody who's got like billions of dollars is just like, you know, okay, somebody else go figure it out for me. You know, they don't even have time to make that decision.

Sorry, again, not true. Anybody who's buying a corporate jet and any corporation who's buying a corporate jet, they do take the time to get educated on a different variable of each airplane, what the capabilities are. There's a lot of questions you can ask and see which airplanes meet your needs. So if you just leave it to somebody else, it just doesn't make any sense. It's like telling your assistant, go buy me a car. You really need to have a lot more input and hands-on experience to be able to choose it. You're gonna spend a lot of time in your life in the thing. You wanna make sure it's something that meets your desire.

So you probably have a duality there. But yeah, I mean, somebody also, by the way, going in saying, oh yeah, I'm gonna spend $30 million. This is like such perfect, like delicious juice for YouTube because like you could just say, oh yeah, I'm gonna spend $100 million on a jet and you make your video and you just like never actually buy a plane. It's perfect. It's totally, What makes the senses tingle for you two? Let's keep going.

Section, 2 sections, or 3 sections. There's 4 or 5, 6 people in a section. What do you think is—

It needs to be 8 minimum.

8 minimum. So now we're down to 58. The next one is the maximum range. So the longest trip from A to B, where do you think that would be? 5 or 6 times a year. I'd say farthest realistically, I don't know, maybe Dubai to London. This is the range that you can go nonstop. Okay, so anywhere in Europe.

This would have been very useful for us to know.

Well, I mean, they give you this in brochures and stuff. It's just a different presentation. Like, we, for our mission profile, for the plane that we have, we knew exactly what we wanted, which was West Coast America.

So obviously he knows much more than, you know, most of the clients. He's done his research. He's an educated buyer. He knows what he was looking for. So it's hard to say, but most of the clients who we're dealing with, we have a very interactive map. So really, no matter where, what city they come from, our app designs it around their personal needs, the cities that they start from, where they go to. Most of the manufacturers, they just give you a standard brochure with, you know, New York, Dubai, Hong Kong, and they give you a circle around it to say this is the range.

And he kind of sells it as like, you know, if you want to be able to get from London to Dubai, you need at least this plane. But he doesn't mention like you could also just stop for gas anywhere. Correct.

And so, okay, what he's saying here doesn't make any sense. The reason you buy a corporate jet is you don't want to make a stop. You want to get anywhere you need to go to nonstop. Of course, there's one time a year you go into California from New York and every other trip you're doing is from Miami to Atlanta or Chicago. You don't buy an airplane to go to California. But what he's saying doesn't make any sense. That's the whole reason for buying a corporate jet is to be able to not to stop at other airports you don't necessarily need to.

Correct. And so that is, that is such a great point, Mikey, because here's the thing. His question was, what is the longest distance you want to go maybe 4 to 6 times a year? Okay, that's insane. Let me give you some real math here because we've done this math. We might go from California to Florida, say extreme, 50 times a year. If I wanted to buy a plane for that mission profile of doing 50 trips to Florida nonstop as opposed to stopping for gas once and then continuing going, it would cost me $20,000 per stop per year. So every time you stop for 30 minutes to get gas, imagine writing I have no idea why it would cost you $20,000 per stop.

So maybe you're going to tell me, but I don't know what you mean right now.

You check for $20 grand and lighting it on fire. So the fact that he's trying to sell the plane on what are you going to rarely use— keep in mind, we're in like the— we just passed the end of September. We're in early October here. So 10 months, we've done somewhere around what, probably 250 flights on the plane, 250 legs, and we've stopped for gas maybe 10 times, if that.

Wow. 250 trips on his airplane in 10 months. That's 25 a month. That's one every day. The airplane is flying every single day. I would really doubt that. So let's see. Maybe he's going to correct himself.

If that. I don't even know that we stopped 10 times.

Probably around 10, maybe.

Okay. Yeah, yeah. But I mean, certainly not like I mean, I mean, what is that? That's 5%. It's crazy. Like, why are you going to buy a bigger plane for 5% of the use case? That's insane because you're going to pay 2 or 3 times as much.

Okay, that's not true. Also, just because you're buying a bigger airplane, you don't necessarily have to spend 2 or 3 times as much. You can buy an older airplane. You don't have to buy a newer airplane. And he maybe bought a new airplane. I'm not sure. I'll learn more as we go on. But that's not true what he's saying.

But we started figuring out instead of making those fuel stops like a fuel stop, We started adding efficiency, like looking at real estate around the—

Oh, totally.

Because it takes about 20 to 30 minutes and you can see one or two properties in that time and come back. So we started adding—

We just stay a little longer.

Yeah, we add that efficiency into the fuel stop.

Exactly. Like, for example, we go to Florida, we'll stop in Austin. Oh, which happens to be a market we're looking at for real estate anyway. So it's perfect. So it's really planning. You're right. Can eliminate all of that anyway. But anyway, okay, let's, let's keep going here.

And you can make it to Singapore. However, this is with no wind, right? So now, this was the winds last week at 35,000 feet. So what this means is that you're going to be able to fly faster when you're going east, and you're not going to be able to go as far on range, or it's going to take you longer when you're going west. You can see that here you can make Singapore with all these airplanes. But if you were to start now in Singapore, you watch this, this is so you can see you can see if I go to Singapore, you are just barely. Matter of fact, if the winds get a little bit worse and get to 75 knots average, you're not going to make it back in that G280. One of the things people don't ever ask, which they absolutely should ask, is how much baggage can I put in my airplane? You can see that this number is the 6.4 cubic meters of luggage, and this is half. And I can tell you, this is a nightmare question. Every time somebody has an airplane, they never ask this question, and this is the most important thing of every flight.

Did you ask that question?

I, I actually did, but I don't know that it's the most important question. I like it when salespeople tell you this is what other people don't ask. In fact, when I sit down in a sales presentation, I usually ask, what am I not asking? What am I—

It's a good question to ask. What am I not asking? It's an excellent question to ask.

What am I missing?

Right?

It's a fair point to bring up. But, you know, I think what's surprising to me is we have a Phenom 300 plane, and we'll go through some of the numbers. A Phenom 300E, it's like a 2021 model. The thing cost $12.9 million.

Phenom 300E, it's a, it's an excellent airplane. It's a small cabin airplane, probably has range of under 1,500-1,800 miles. It's probably one of the biggest selling small cabin jets. I think they've maybe sold about 700 of them now. It's a very, very popular airplane.

I pay for it. It's not my, it's not like HouseHack, my real estate startup. It doesn't pay a dime towards this. But I actually just got my statement, which will show you how much this plane has cost all year for the 10 months that we've had it so far. And for the flights that we've done, we could look at fuel and all this sort of stuff. I'll tell you, out of all of this stuff, uh, the baggage has really never been an issue, like an unsolvable issue. And I've done—

okay, I'd be curious to see if he says how many people he's carrying. And if you go in between two residences, let's say from Florida to California, have residences in both, or you're going on a business trip, uh, he's probably right. Because people tend to carry much less luggage when they're just going from residence to residence or office to office and they're going for one day and coming back. But most times when people are chartering, renting aircraft, they bring excess baggage than they normally would take on the commercial airlines. And it is normally a big problem.

I've done trips with— and this is a smaller plane— done trips with the family, ski trips. We have 9 seats on the plane plus 2 pilots.

Whole podcast setup goes in that spot.

When we travel with the podcast setup, that's— those are a lot of boxes, like 18 pelicans or something like that. I don't know, it's something crazy. But anyway, we have not had an issue. Would it be nice to have even more room?

Okay, okay. This is hard to analyze. He says you have 9 seats. Okay, that includes the belted potty in the bathroom. But to go in with skis and, and ski equipment and your family, maybe he only has one kid or two kids, but I can find it hard to believe if you're going on a long trip on a ski holiday with a family and bring your ski equipment in and packing all the bags for everybody, it's going to be a little uncomfortable. You won't fit it all in the baggage compartment for sure. So it has to take up space in the passenger cabin.

Of course. But I mean, like, are you trying to plan for like this extreme or are you trying to plan for your daily use?

Or that—

Good question. You really should plan for your daily use. He's absolutely right. But some people always— you don't plan for the extreme, but usually companies sometimes go much more than what they really need just in case or because they can. But it's smarter to do it if you do it just for your practical day use.

You pay that back in fuel.

Oh my gosh, for sure.

The more room you have, the more luggage you bring, the more it costs to get there.

Well, not only that, the bigger the plane, the more fuel. Like, think about like a G280. Let's see what a G280's fuel burn is. So this is what, what he's— what they're pulling up here. Fuel burn per hour. Everything in these planes is per hour. So you are looking at— let's see how many gallons an hour does it use? 237. So we're at about 165. So 237 divided by 165. This burns about 43% more fuel than our plane does. So let's now compare this. I'll pull this up in just a second here. Christian, give me nothing for a second here. Let me find this. And let's actually see how much fuel and what our expenses have been. So go ahead and pull this up. Here's a full breakdown of all of the expenses. And you could see here are the September expenses. And here on the right side are the annual, so year-to-date expenses. And so, it looks like aircraft maintenance, we're at about $42,000. I'll just focus on yearly figures right now. $10,000 for the month. Oh, I guess we just hit some more maintenance. Anyway, $42,000 for the year. Jet management. This is like a manager to manage the pilots and the service and your rental cars and all that kind of like, all the coordinating. $64,000.

Okay, now this is an important thing. I'm not sure if he actually has a management company that's overseeing the whole airplane and the operation. But management companies are different in America versus outside of America. In, let's say, Europe, about 90% of the companies have a management company overseeing the airplane for them. And in America, about 90% of the airplanes are operated by an in-house flight department in the company that the owner has. And the reason being is because most of the flights that you have in America are all in America and you don't have actually the different cross-border issues. Every place, let's say in Europe, no matter what flight you take, there's a 90% chance you're crossing borders. You have different currencies, different languages, different euro control regulations, and it's really hard for one flight department in-house to actually oversee that adequately. So they engage these management companies and they charge you a management fee. However, because they manage a number of airplanes, The management fee is sometimes and most of the time offset because they can have better buying power. So they get flight training cheaper, they get fuel cheaper, and they get insurance cheaper. So sometimes these costs of the aviation management is offset by some of the savings they can bring to you.

Dollars charges just to use the little machine that actually turns your engines on for the plane. $2,000.

You need those in the summer.

That's because it sounds like he doesn't have an APU, an auxiliary power unit, which will start— it's like a separate little engine in the back of the airplane that can run air conditioning or lights or power without starting the engines on the airplane.

Because it gets hot.

Well, that's to run your AC, but it's also to start your plane. It's both. And some of them suck. But these right here are flight fees for contract pilots with $168,000 worth of contract pilot —fees.

Okay, that's interesting. Right there should be raising a big flag to him, Kevin, because what he probably should do is hire another pilot. That absolutely is too much money to spend for contract pilots. He probably would be saving money if he hires another pilot.

—fees. $3,000 of health insurance. You've got warranty fees here. These are like Embraer ECC fee. These are— this is your sort of per hour you pay a fee.

That's like an extended warranty you'd get on your car. It's a great thing if they offer it. It sounds like it's expensive. However, as you fly the airplane, a lot of chief financial officers of companies love these programs because you don't get any instant spikes on any of your expenses for maintenance that are unexpected for warranty, basically.

Oh, good. We only paid $30 for de-icing. We've never de-iced. So I want to know why we have a $30 de-icing charge here. De-icing is probably about 1500 bucks per time. For a Phenom. And if they're low on the product, it could be as high as $8,000 just to de-ice. So you gotta get in the hangar if you ever go in the snow. Embraer, okay, that's the warranty. You've got engine warranty here. So I like the engine program. So maintenance programs, $100,000.

Again, an insurance program for your engine. So every hour you fly the airplane, at the end of the month you pay the manufacturer or third party company to insure the engines for any problems with hot starts or things like that that could cause damage to the engines or need an overhaul. So again, chief financial officers love these kind of programs because it gives a much steadier budgeting ability.

For 10 months of, of engines, fuel, $282,000 burned in fuel. That's like a condo. Burned in gas. And so now if I had a bigger plane like that 280 for that rare time you need to go a little further and don't want to stop, $282,000 times 43% in, in this, in this example here. So $282,000 times 43% would cost me another $121,000 just to have a slightly larger plane. 280 has about the same number of seats. Wow. Yeah, it's a small plane. Yeah, same number of seats and you're paying $100,000 more just in gas. Why?

Okay, interesting comparison here, but he's sort of mixing a little bit of apples and oranges here. He's right, they have the same number of seats in the, in the air, both airplanes, but the G280 is more than, well, if $100,000 more in cost in fuel, that's about a 30, 40%, I'll do the calculation, 40% more fuel. But in fact, the cabin size of a G280 is probably more like 50, 60, or 70% bigger than his plane. So really, comparison, comparison, you're on a percentage basis, you're getting more volume in the cabin, more size for the amount of fuel you're spending. And also, by the way, the baggage on a G280 is probably double what it is in the Phenom 300 that Kevin owns.

That's why, like, you have to really analyze your mission profile when you look at these planes. Hangar rental, $34,000. Good Lord. Insurance, $35,000. Landing fees, that's actually surprisingly low, $1,100 for landing fees. That's because if you buy a minimum number of fuel, they don't actually charge you a landing fee.

Great point, Kevin. I wonder if those are the tips. Tips for paying the guys' luggage and stuff.

Maybe it could be that. That's— that could be under total pilot reimbursements, which are $62,000. It's also— you forgot that line item. You have a small smaller planes, so you can land on smaller runways, and those airports typically charge much lower landing fees than if you had a—

Yeah, it's true, but you're not going to land there just because it's a smaller landing fee or a shorter runway. You're going to try to land at the airport which is closest to your destination.

Got a big one, have to land in San Francisco, LAX, all these bigger airports. You want to get ripped off, land in San Francisco. I mean, like, that's the story of California though.

Great point, Kev. But it's really any big international airline airport. It's amazing, there's probably 5,000 airports in the United States that a corporate jet could land in and the airlines service less than 500 of those. So really less than, probably about 7 or 8% of the jet airports in America the airlines fly into. So it gives them much more flexibility if you have a corporate jet to get closer to your destination. California though, it's like San Francisco, total ripoff.

It's like $9.50 for a gallon of gas, the service is bad, they don't care about you, you've got to walk in, which sounds sounds first-worldish, but when you're carrying 20 bags, that's a pain in the ass. Uh, you know, as opposed to you go to the smaller airports. I went to Canada, the cars right there, they load up your luggage. Uh, they'll— the, the manager of the, uh, airport where we landed is like, oh, you can't fit all your luggage in your rental cars? My apologies, we'll take my pickup truck and I'll follow you for the 45 minutes to get to your Airbnb and make sure you get all Great point again, Kev, reinforcing why corporate jets are just a better experience.

You can land into these kind of airports that he's talking about. You get much better service, much more courtesy, and speed of service is much better. So you don't get involved in all that airline commercial airport traffic and a little bit of anxiety.

Get all your luggage home safe, eh? It was great. They were so nice. They were so accommodating.

Yeah, I was, because there was one rental car short. I'm like, freaking out trying to get you those rental cars. Texting, right. And then the— our— the manager— the— our airplane manager's like, hey, they got it all taken care of. And I heard that story, like, wow, like, they're so good.

Yeah, that wasn't their fault. That was the rental car company's. But anyway, so you could see some other things. Pilot training, $17,000. Pilot salary, that's— I mean, you add it all together, these pilot salaries for a year, way, way up. Yeah.

So this pilot's salary is less than his contract pilot fee. So that's just going into the point, I think he can be better off if he hires another pilot.

Way higher than this, but that's because we had contract for a while and stuff. You've got, and this is what, 9 months here, ramp parking fees, $4,400 just to park outside. You don't even get a hangar. You don't even get coverage. Just for parking overnight, you're paying 4 grand. Rent? Well, on an annual rate, that sounds cheaper than New York City car parking. Rent expense. I gotta ask them what I'm renting here because I don't know what— oh, maybe that was the life raft. When we went to Puerto Rico to visit Peter Schiff, you need a raft.

How long were you over the water?

Like an hour and a half. Oh yeah, look at this. Voice and data charges. This is your internet. $69,000 for the internet. This is stupid. Airplanes are like so expensive. Look at that. This sucker has cost me $1.3 million just to operate for the year. That doesn't even include your mortgage on it when you have a loan. It's crazy. Anyway, let's go back to the video. So let's tap out of there for a sec.

That's what it's really like owning a jet.

Yeah, that's when you actually own a jet rather than going to—

actually, that $1.3 million was a really good analysis, had good line items on the budget, and it's probably a pretty fair number of what an airplane like that would cost to operate.

The sales office going, yeah, I want a $30 million plane. Oh, okay.

Let's keep playing the video. So this is 100% scale. Okay. So I'm 6 foot, I'm 180. This is the exact size. That's cool.

It's nice to be able to see that. A lot of people, they really want to be able to stand all the way, but you're sitting most of the time. And that's the scam because in 2021, at the end of 2021, I was looking at the Praetor 600, which you could roughly stand in. Beautiful plane, gorgeous. And the Phenom 300E, which I have, you can't stand in, you crouch to get through it, but you're sitting most of the time.

That's not such a fair comparison. You're right, you are sitting most of the time in an airplane. I mean, same thing like in a car, but the fact of the matter is, is that a Praetor 600 is an incredible airplane. It's a beautiful airplane. It's twice the price of your Phenom 300, but again, you're comparing apples and apples because that airplane can go 4,000 miles. Which is more than double of the range of the Phenom 300. And the passenger cabin size is probably more than double as well. So it's not really a complete comparison. That's fair.

Difference in price. Mine, $12.9 million. Praetor 600, $24 million. There you go. Is it worth paying, you know, 50% more in fuel cost? You know, twice the cost for the plane, basically. Probably not for those little things. That's when you get into like the luxury, like it's a ripoff.

Okay, you can buy a nice 4-seater Renault or Volkswagen, or you can buy a nice 4-seater Mercedes. Is that considered a ripoff? To each their own.

You know, hey, let's keep going.

And so if I wanted to take, let's say, the seats on the Gulfstream and compare it to the Challenger, that's the difference in the aisle width. It doesn't look like too big of a deal. You're getting a little bit more aisle width, but really where you're you see the difference is when we look at the floor plan. So this, this is 100% scale of the Gulfstream 550. You got the kitchen door here, the galley door, and most airplanes, the front section has these 4 single seats. This is the really the normal setup. So the G550, this is what it looks like outside, and this is what it looks like inside. You can see it's got those 3 sections. This is the door that closes off, and you got that bedroom back there and the bathroom behind This airplane's got, for the class, it's got the biggest window. See how big that window is? It's a huge window. This is twice the size of, let's say, the windows on the airlines. Up front you have—

Ah, this is the sales guy. You know what he just said? These windows are twice the size of commercial. Oh, the comparison.

If you get a window seat on a commercial. But it's funny.

These sales presentations are designed to hit on pain points. It's not a pain point.

This is a very, very important thing. When people are sitting down in a seat on a corporate jet, you want to be able to turn your head and look out the window. You don't want to lean forward or back or look at a tiny little window. The size of the window is not only just for viewing outside, but when you're inside an airplane, it brings so much more light inside the airplane, it makes it look bigger.

Oh, you want to be able to stand, right? You don't want to run out of baggage space, do you? I mean, come on. It's— they're all like, it's not commercial. You don't want to run out of baggage space.

I mean, who's going to want to leave part of their bags behind?

It's all designed— Singapore, you got to get there in one stop, man. You can't make a fuel stop. Yeah, what's a—

we didn't hear it. I mean, maybe he said it, but we didn't hear it in the video edit. There was no talk about fuel stop. Like you said, Mike.

Give him. A really big kitchen. Flight attendant can prepare anything. You don't need a flight attendant.

Anything.

You don't need a flight attendant.

Well, in a Phenom 300, you can't fit a flight attendant. That's why you don't need one. But when you have a bigger airplane, you absolutely need a flight attendant because, you know, who's going to clean the airplane up after it's done? Who's going to organize all the food and clean the mess up in the galley and sweep the floors and vacuum the floors and everything like that? It's not the pilot's job, and it's surely not the principal's job who's flying inside it. So, I mean, you really do need a flight attendant on a large cabin airplane. Smaller cabin airplanes absolutely don't need one. This is ridiculous.

This is absolutely ridiculous.

Just make one of your employees your flight attendant. Yeah, Senor McKay.

Okay, if there is an emergency in flight, you want to make sure that your flight attendant is fully, fully security and safety trained, and you don't want your housekeeper or your assistant being a flight attendant and trying to figure out how you open up the door when you get out of the airplane or any emergency procedures. It's not a place you want to really cut corners. They bring your food from Whole Foods or you can get it from Harry's Bar or wherever you want it. You can get it from whatever place you want, but it's nice when it's prepared fresh on the airplane. Let's say this airplane you're going to fly it 350 hours a year and you're going to pay $450 $3 a gallon. Okay. That airplane is going to cost about $3.6 million a year to run it. Yep. Okay. Which is about $10,000 an hour. Really, the main thing— there's 3 things you could do to interior. The soft goods, which is—

I wish I could see all of it. He goes in a little more detail in just a minute. Does he? Yeah. All right.

All right. All right.

We'll go through all the fabrics, whether it's the side panels, the ceiling, the seats, the carpet, that kind of stuff. Then the other part is is the color of the wood, and then the other one is moving furniture around. To move furniture around— expensive. Very, very expensive.

No, no, no. Like, listen, we have a joke on the plane. We have a joke. Anything you want to do on the plane is $250,000. Everything is $250,000. You want to put on Starlink? That'll be $250,000. You want to put in a coffee maker? That'll be $250,000. You want to reskin the wood on the inside? That'll be $250,000. You want to redo the upholstery and the carpet? That'll be $250,000. And we're talking $250,000 for every fracking thing you want.

He is pretty right on this one. Changing anything in a corporate aircraft is very expensive because there's just not many of them around. It's all custom made. You got to adhere to a lot of the federal aviation regulations for 16G, for fireproofing, for a lot of different things. It's very, very expensive. It's overpriced for sure. But that's just the industry thing you want to do on these things.

It's a ripoff. We don't even have a coffee maker. We have a coffee pot. It's a delicious coffee pot though. The coffee pot's $15,000, just the pot.

I don't think so. There's no question if you have to have a coffee machine installed in the galley or the kitchen of the airplane, it could cost that much money. That's because they have to run all the wires. The piping, the plumbing, and has to be secure from the standpoint of not freezing when the airplane's sitting on the ground because it could burst and it could cause a lot of other implications in the airplane besides just breaking the coffee machine. So there are a lot of much more safety features built into the system for these reasons.

It is the most expensive coffee pot that exists. It's an aviation coffee pot. $15,000 just for the canister. And they take it inside and they brew the coffee inside in like the little wherever the airport is that you're in. And they fill it up and then you have coffee for your whole flight. Is that— coffee's great, it stays warm, it's nice. $15K is crazy. For a pot, that's just the pot. Wow. That's not even the whole unit, that's not the warming unit. I'm literally talking about the canister that holds—

Kev, have your pilot call me on this one, please.

Holds the liquid. When you remove that to go fill it up or wash it out in your kitchen sink, $15 grand for a little metal box. Jeez.

Nope, keep going. To redo engineering drawings, I mean literally on a G550, Just to give you an idea, if you wanted to change this couch to 2 chairs, it would cost about $400,000. What percentage of jet owners would you say just genuinely have it for personal use or corporate use? 2/3. It's 1/3.

What did I say? Most people, it's just a luxury.

No, no, this was a mistake. Let me see what else is going to say right here, because definitely it's not 2/3.

It's not. No. And honestly, I think it's even less than that. I think, like I said, it's like 99%.

Yeah, I think that's way too high. I think very few people have it for personal use.

Oh wow, that's correct, Mikey. You're right. Very few people would own an airplane for personal use. Wow, you have the opposite opinion.

He said the other 1/3 is like charter planes. Oh, charter. He mentions charter. So somebody asks in the comments, Kevin, why don't you use Flexjet or NetJets? Oh my god, dude, you want to see me get absolutely reamed and ripped off? It's a very good question because a lot of people do ask me that. I'll tell you why. I'll make it quick. So basically, I did the math on this. NetJets is going to cost you about $12,000 an hour for a Phenom 300, but they're going to charge you 12 minutes on takeoff and land. So 12 minutes on takeoff and land is 24 minutes. So 24 minutes, if your average flight is 90 minutes, 24 out of 90 is about 26% of the time they're billing you for is takeoff and land. Okay, so why does that matter? Because that means if you have a flight hour and you're trying to compare flight hour, it's not actually $12,000 for a flight hour. It's actually 26% more for flight hour. So now you have to go $12,000 times 26%. I've done all this math so many times. It's about $15,000 per hour for NetJets. Okay. And I love NetJets. They are a great company. They're a great product. If I was going to like, if I just wanted to be bougie, The way you would do this is you get a 25-hour flight card with like NetJets. You spend, you know, $300K or whatever it is. It might be closer to like $350K now, but whatever it is, you get these NetJets cards, the 25. And remember, the number they're selling you doesn't yet include the takeaway of those 12 minutes on each end. Anyway, so you get one of those cards and then you can be like, oh yeah, the occasional time I want to charter a plane, I could do that. And then it's kind of like you just use the points. It's like going to Dave Buster's, you spend $100 on the reload card, and then it's just kind of like, oh yeah, I want a flight, and then you swipe it. Okay, that works for like the bougie, you know, a few times a year you're gonna go fly, right?

This— Okay, I'm not sure if comparison to Dave Buster's is a good analogy, but let me rewind a little bit. Flexjet, NetJets, the fractional airplane companies have a certain niche that they fill. For Kevin, it doesn't make any sense. If he's flying 250, 300 flights a year, there's no question it would be crazy for him to buy a fractional. However, for people who are flying 25, 50, 100 hours a year, it makes a lot of sense. Is it a little more expensive than owning your airplane? Well, yes and no. It is per hour, but you have to buy the airplane, the whole airplane, even though you're going to use it 25% of what a normal usage would be. So it would be a waste to buy the airplane to do that. So you're paying a little bit more per hour, but you don't have to buy the whole airplane. So in that way, it does make sense. Also, during times like COVID where you couldn't get an airplane at all, they jacked the prices up very, very high for charter. And if you had a fractional ownership, you paid a fixed price. And those people were saved because they didn't get robbed from all the charter companies who were doubling, tripling prices. So it does have its little niche. And we always tell people, if you're not really You're going to fly 150, 200 hours a year, you probably shouldn't buy an airplane anyway. You should do a fractional or charter.

This does not work for us because I expect our flight time this year and next year will probably average 400 to 500 hours.

That's what I'm saying. There's no way. It would be crazy for him to buy a fractional piece.

Which is quite a lot of flying.

Isn't the average like 250?

The average flight time for— no, I think that's like— I think we were calculating like the break-evens or whatever, like 250 or something to compare.

The average usage of the owner is about 325 hours a year, and the average usage of a corporate airplane is about 400 hours a year.

Or whatever. But if we're at about 400 on average, our flight hours cost about $6,000. So if you consider that our flight hours cost about $6,000, that's less than half of the NetJets per hour. And these are like my real actual hours, not their rigged hours. If I fly 500 hours a year, which might— is probably going to be likely next year. Sorry, pilots. They're watching. Enjoy it. Yeah. Enjoy your next 2 weeks, boys. 2 weeks from now, you'll be like, we're giving 2 weeks' notice.

We have a shared calendar with the pilots when we update when we're flying, when we might be flying, when we're definitely flying, and what might fly, might not fly, and then possibly flying. So they see when Kevin changes it. We have a 2-week span, and Kevin has some life events going on that they're not going to be flying for a couple of weeks. Yeah, exactly.

So, but anyway, if I fly, most of the cost in owning a plane, people forget this, is owning it. It's not in flying it. Most of the cost is you pay your pilot salaries, your insurances, your warranty programs, your, you know, the maintenance, the hangar, whatever, right? All the fixed stuff. All the fixed costs. So, the fixed costs for mine are around $1.9 million. If I fly it 400 hours, I'm about $2.3 to $2.4 million. If I fly 600 hours, 50% more, it only costs me 10% more. So it actually brings my cost— if I were to fly 600 hours, my cost per hour would go down to about $4,300. Okay.

One thing he's forgetting, if he flies 600 hours, he's going to have to definitely hire one or two more pilots.

All in. So now when people are like, why don't you use NetJets? I'm like, because I don't want to get ripped off. Yeah. It's simple. It's simple math. Okay, let's go back to the video here and let's wrap this up.

Airplanes were out on a charter for third-party charters because I think that's probably one of the things that most people don't understand. It's okay, cool, very nice.

You bought your jet, this, that. But when he's like, oh yeah, I spent $400,000 or $500,000 on jet charters, bro, that's 30 hours. Unless you got a bigger plane, that might be like 15 hours. Okay, that's not impressive. We flew over 250 hours just in the last 10 months.

This is why I'm saying that he is not the candidate for a fractional aircraft. He's flying too much, too frequently. He really doesn't need a fractional. He does actually— is the best candidate for owning his airplane.

And I'm trying to compare, but I'm just saying you do not belong in this store. In fact, if I were the salesperson and somebody walked in going, well, I just spent $400 grand on jet charters, you know, I want to buy a jet. I'd be like, you shouldn't be in here.

Okay, I don't know what's gonna be on this video going forward, but that's exactly what I told him.

You should never buy your own plane unless you're flying at least 200 hours and prove it. Try it. Go get the jet card and prove that you maxed it out. Anyway, keep going. And then why don't I charter it out in the meantime? Well, that is a great question. That's when you can't afford it. Sorry. Yeah, yeah. When you have to charter out your plane, other people are shitting up your jet. It's because you can't afford it. I want to Airbnb my plane so I can make the payments.

Okay guys, not exactly 100% true. The fact of the matter is, is some people just, you know, want to be in an airplane that they know the complete history of the pilots, they know the complete history of the airplane, the maintenance history, who is taking care of it, who is flying it, and they know everything about it. It's not unreasonable for somebody who's flying around their corporate executives, their family, themselves. If they're only going to fly 100 hours a year and they want to charter it out 300 hours a year, it doesn't make logistical, logical sense, but it does make sense for somebody who wants to know everything about the airplane and pilot. So as long as they know that going into it with their eyes wide open, that it just gets an extra effort to charter the airplane out a lot more, they don't have to. It's just the fixed costs are going to be very expensive per hour. But if you want to get those fixed costs down, you charter it out. When you're operating it, when you have an airplane, the budget is broken up into two things. You got fixed costs and you have variable costs. Fixed cost is what you have to pay whether you fly 1 hour or 400 hours. Okay. It's the pilot salaries. It's— yep, he's right. It's the hangar. All those things, whether you move the airplane or not, you pay. And then every hour you fly it, you have fuel. Landing fees, catering, pilots' hotels, Eurocontrol flight.

That's true. A lot of people don't realize that you actually are paying if you stay overnight. The pilots need to stay somewhere. You're paying for a hotel. You're paying for lunch. You're paying for dinner. That's not included in the pilot salary. The owners has to pay that. Yeah.

Okay. Well, if the guy who owns a $10, $20, $30 million jet's worrying about the crew's hotel bills, he probably shouldn't be owning that airplane.

And the pilots are brilliant because they'll, they'll like always book Marriotts. So they're like Marriott Platinum or whatever, like the highest level is, and they take all the points. I'm like, hey, when, when do I get my points? I'm paying for it.

Let's keep going. The variable cost per hour is $5,700. So if you're flying 400 hours a year, it costs you $4,000 an hour fixed cost plus 50. So it's $9,500 an hour. But if you start flying more hours, then this is less per hour. So it's cheaper to fly per hour the more you fly. Yes. If you're able to charter this airplane for $12,000 an hour— dollars we're talking about— and every hour is costing you half that, that means you're making $6,000 an hour profit, not including fixed costs. If you can charter the airplane.

Quick reminder, it's worth noting that the more hours the plane has, the less the value the plane has. So you do have depreciation, which is not factoring in here, but maybe some would say that's a smaller deal. And then you have to do your maintenance.

Absolutely correct, Kev, you're right on.

Maintenance once engines hit a certain hour, so then you have downtime.

Uh, yes, you know, honestly, that's actually a good point. Downtime is a pain in the butt with the planes.

Expensive downtime.

Well, yeah, because you can't function when it's down.

Alright, let's keep going. I thought it was only just for luxury. Done. 200 hours, that's 200 times 6. You're making a profit of $1.2 million. Maybe that comes off of this. And now your fixed costs are only $400,000.

So if you're flying now, this is how to sell a plane, by the way. If you're going to sell a plane, you tell them how you can Airbnb it. That's why real estate prices went up.

If half the 200 hours in a year and you're renting it out for 200 hours, if you get this to $400,000 and you're flying 200 hours a year, it's $2,000 an hour plus this, and now it's costing you $7,500 an hour. And the more you fly it, the cheaper it gets. You'll say, well, I can go rent it out 300 hours a year. You can, but, you know, every other day you're gonna get a phone call. You have to give owner approval, and you're gonna say, well, who is it? You know, I just did the interior. I don't want them to have red wine. I don't want them to smoke. I don't want them to have a dog. I don't want them to have a coffee. Yeah, because they're gonna spit on the carpet, and on a Gulfstream, to replace the carpet, it's $70,000. $100,000. So, or if you have a, you know, a kid who's chartering the plane, he has a Sharpie and he's, "Oh, Mommy, Mommy," and right across the wall on the suede, and you know, you're not going to get it out, so you have to replace the panel. You know, these kind of things are inconvenient.

Yeah, that was great. It's a good point because like you see these influencers with like their feet on the upholstery, it's like those are not those influencers' jets. Like they are chartering them. Somebody will be paying for those. Feet marks on the upholstery. And so when you rent it out, it's just like you're at anybody's.

Well, it's also worth remembering that there is competition in jet chartering. People like, why am I going to go fly a mom's jet as a charter when I could go to NetJets, where NetJets has a fleet of hundreds of planes and they have a reputation to protect? So if, if you're charging the same as NetJets, if they're charging $12K an hour and you're charging $12K an hour, Why would I go to an unknown plane owner compared to a corporation? Because here's the thing, plane owners are notorious for skimping on maintenance.

Okay, I'm sorry, Kev, this is just not true. You really can't— you cannot skimp on maintenance that's required on your airplane. They're much more technical today. It's all computerized. If something needs to be done, it has to get done. And no pilot is going to fly the airplane if they think that maintenance is not being done on the airplane. They still have to fly it with their life on the airplane as well. And the other thing is, is that when you talk about NetJets, NetJets is flying the airplane about 3 times the number of hours that a normal corporate jet flies per year. So it's getting a lot more wear and tear and use on the airplane than, than what you say is the mom-and-pop one. Sometimes smaller is better because the management companies are much more attuned to giving you better service like you were explaining previously about going into these small airports. Versus going into San Francisco Airport. You just get much better care and NetJets really is, you know, an operator for their fractional owners. They're not really, that business model is not for managing and charter. Their main focus is to take care of their fractional customers and they do that very well for them.

[Speaker:STEVE VARSANO] Whereas corporations are not because the corporations have to I mean, they have to— they're liable to their shareholders. If they're screwing up on maintenance, you can destroy the entire company. Whereas a home, an individual owner, it's like, ah, it's just one plane.

If an airplane goes down and you're an individual owner, they're going to come after you even though it's in a special purpose vehicle. They're going to sue everybody. But thank God you don't see any of these kind of things happening. It's once in years that you see one of these issues happening.

All right. I want to ask you the question everybody's wondering. Why do you have a jet?

Oh, yeah. What is the reason?

And why can't you just take commercial? Right, right.

So, so my media business. So Meet Kevin pays for the plane, and that's the— that's the YouTube channel. House Hack, my real estate startup, has paid zero towards the plane. We're keeping it that way as well. I mean, there's, there's no expectation to ever change that. The, the other businesses are ETF or whatever. Nobody pays for it. Kevin pays for the plane. We want to make that very clear. Why do I pay for the plane? I pay for the plane because I want to be the best CEO ever. And in my opinion, if I'm running multiple companies, so I have to be here in a podcast set, I have to be in my morning studio set, I have to be in Salt Lake in the afternoon, and then I have to be back for podcasts. I can only do that with a plane like this. And you guys have seen it. I mean, what has your experience been, McKay, over this last—

tell us some of your days. You would not be able to operate like. So I go probably on 75% of the trips, the other 25%. We still have a team. We still have multiple, like multiple companies we're running here. I don't go on every flight, but I go on 75% of them. And like in the morning, Kevin's media business is the priority. Then he goes, okay, Houssack Real Estate. Okay, he has some ETF things he has to answer. Okay, he has some other meetings with some other businesses that are in development. You could not have that. I don't want to say luxury. It is a— it is very much a tool. We don't get to go, oh, he gets to go on the private jets like, okay, Everybody has their iPads because they're working on a project. There's always something being done. And if you're factoring, if you take that time that you're saving with a jet and you were to put that going through TSA, going through security, oh, your bag got lost. Now you have to wait at the baggage checking for, for 2 hours. You— the amount of time that we save, and that's not the excuse we use, but it increases our productivity to be able to run these businesses, to allow you to be the best CEO. Mike, you're exactly right.

And that's why at the beginning of this video, when you said 99% of people buy these airplanes because it's a luxury. You're just showing the other side of the argument that it's 99% of the reason is not really just for the luxury. It's because the productivity, the safety, the security, the flexibility, all those kind of things. Luxury, maybe it's that 1% in 100%, but people do not buy airplanes because of the luxury.

To Houzz shareholders. It allows you to be the best CEO for your employees, and it allows you to be the best dad you can be for your kids, to be at home to tuck them in at night after flying to 3 different states.

That's also true. Yeah. I mean, we're about to double our children at home from 2 to 4 and then maybe some more next year. Knock on wood. But anyway, yeah, I mean, it's wild. I would not have decided to create the real estate startup Houzz if I didn't have this, because I would have had to have dumped my other business ideas.

See, that's fantastic. This is a great, great reasoning for owning a corporate jet. It really, it shows you the productivity, the enhancement, the ability to do multiple things at once. It really is. This is a perfect example. And he's a perfect example why somebody should have a corporate jet.

Because then, like, the amount of time it takes to operate HouseHack is, it's a lot. And I'm willing to dedicate that time. But I don't have the time to sit at an airport 4 times a week and then never see my family because then I'm not living, then I'm a slave. Yeah. And I will always give every ounce of commitment that my companies need. They're my babies. But it wouldn't be possible without the plane.

And if you're like, as a house hack investor, if you're a house hack investor listening to this, obviously, if you're interested, go to the website, read the circular. Very important. There's always risks into investing in startups. HouseHack investors are getting the best of both worlds. They're getting you dedicating every hour possible to HouseHack while still getting the benefits of a jet that they're not paying for. Such a huge benefit of being an investor. The company is not paying for the jet like Kevin says it, but as the person that makes sure that Kevin is doing everything he's saying he's doing, he's— HouseHack does not pay any jet costs. It is phenomenal.

Yeah, this is phenomenal. Yeah, phenomenal. Just like the Freedom 300.

Anyway, Kev, thank you very much for this fantastic critique. I learned a few things, uh, maybe I could do better on mine, and, uh, and I hope I, uh, set some points straight that, um, I thought maybe were insufficient or not actually assessed in the correct way because I don't think you actually was showing the complete video of what we did. So anyway, thank you very much, I really appreciate it, and I welcome you anytime to come to my showroom, whether it's just for— if you're in London, I want to show you what we do. It's much more personalized when you come in here. And also, when you're ready to trade up that Phenom 300, you know where to come. If you like that video, make sure you comment, like, and subscribe, and I'll see you on the next one.