Classic cars as investments ?

[Deschodt]

Just an unreasonable idea floating in the back of my head, that I wanted to run by the collective...

Imagine a hypothetical scenario (really, I'm not there yet) where you have some cash to invest in today's economy... The banks will give you 0.003% interest (sarcasm), investing strategies might return 3-4% if no other meltdown happens, there seems to be very few "decent" return opportunities out there. Properties are cheap, but there are a ton of them and values are not guaranteed to increase over the coming years.

I did the math on rental (I like the idea of having money in "stone" instead of in a bank) and locally it is at best a 2% ROI proposition, once you factor in property tax, insurance, taxes, repairs, let alone crappy renters who may not pay....

So.... how about classic cars ? Over the past 10 years, I've seen 356s and early 911s go up by 100%, give or take. Same with old Mercs, some alfas, and let's not even mention the likes of Ferraris or gullwings... I've also noticed some smart rich people starting a classic car fund, but the entry price is too high for my blood...

Yes, there *could* be a bubble, but does anyone think it likely that, say, pre-A 356s are gonna go back down to $15000 ? Me neither ! It's not like Porsche or Mercedes make "new" 1950s or 1960s car anymore... Classic insurance is dirt cheap, assuming you have garage space, and if you buy them well enough (no fixer uppers, nice cars with no needs) and don't spend too much maintaining them, I think 10% of appreciation a year is fairly easily achievable... Sure beats my 401K or CDs ;-) As a bonus, you get to drive them, and should they get stolen or accidentally burn to the ground, you get the correct market "agreed value" right away.

What am I missing???? I know some models might not have that upside potential (I'm thinking early 911S, speedsters), but your run of the mill pre-A, A, B, C 356s, old mercs, some Maseratis (riskier engine wise) definitely have room to grow more than what a bank would give me...

[onlycafe]

how about engraved colt single actions?
they require less space and don't leak oil.

[cbush]

My concern would be that as baby boomers age and start unloading their toys, there will be a glut on the market of high priced toys that mid twenty year olds like my kids have neither the money nor interest in. I suppose the market will stay strong for the very best ones, but I doubt given their current high prices that they would do better than a good mutual fund--and the risk is about the same.

[BeyGon]

Why not invest in wine, it dosen't cost you to store it, buy/sell no DMV, you can show it off to your friends just like a car you don't drive. No big insurance.

[pwd72s]

I bought my '72S in 1974, $9,300...could have easily sold it for 6 figures in 2007, but gave a friend a "buddy deal". No BS here, it was one of the best original examples left on the planet. By original, I mean not repainted, never wrecked, awards winning...293 points out of 300, a PCA concours.

So, what if I had placed that $9,300 in a good no load index fund back in '74, and just let it ride? Easily double the 6 figures I could have sold the 911S for.

You mention the upkeep hazards of real estate...cars as well...big time!

Cars, even collectable cars, are NOT investments. But then, you can't drive & enjoy a portfolio..

[sketchers356]

I dont think buying a 911S in 74 for 9300 was that good of a deal Paul in terms of long term investment. I do think it is possible to have cars be an investment. As mentioned above you could buy 356s or early 911Ss for 25000ish 5 years ago.

[pwd72s]

Originally Posted by sketchers356

I dont think buying a 911S in 74 for 9300 was that good of a deal Paul in terms of long term investment. I do think it is possible to have cars be an investment. As mentioned above you could buy 356s or early 911Ss for 25000ish 5 years ago.

Go for it! And good luck to ya!

[sketchers356]

Originally Posted by cbush

My concern would be that as baby boomers age and start unloading their toys, there will be a glut on the market of high priced toys that mid twenty year olds like my kids have neither the money nor interest in. I suppose the market will stay strong for the very best ones, but I doubt given their current high prices that they would do better than a good mutual fund--and the risk is about the same.

Indeed, I think a lot of the muscle cars are going to crash after the baby boomers age. However, truly cool stuff like Porsches/Mercs/Mazzers etc are always going to have value especially once they become classic. I think the value to the muscle cars now is that the baby boomers finally have the money to buy the car they wanted as a kid. However, a really cool old car will be desirable whether or not it was the hot thing when the buyer was a kid. Im thinking of how cool a classic Bugatti is for example.

[Zeke]

Been talked about here many times. it's always pointed out the insurance and storage are big factors. If you are going to thing about automobiles as investments, think big. Rare and expensive cars will always be capital.

I've always thought of Bill Harrah as one of the slickest investors ever. Here he had what he wanted and depreciated the lot because his massive collection was a business. The only thing that tripped him up was death.

[stomachmonkey]

Cars are a personal passion subject to the fluctuations of peoples emotional attachments to them.

They don't make particularly good investments.

I have a 190SL that is insured for 6 figures.

You can buy one that looks identical for a fraction of that.

Mine is a two owner car. Documented as the 7th one off the line in the first production year, the first one sold to the public, the first one sold as a coupe, original factory luggage set that the car left the dealer with.

Much like Hughs old car it was originally purchased as a cheap second hand car and was used as a daily driver for a long time.

Sometimes you just get lucky.

[targa911S]

Originally Posted by onlycafe

how about engraved colt single actions?
they require less space and don't leak oil.

Any Colt. I stopped collecting cars 5 years ago when I sold my early S. Spoons take up a whole lot less room.

[targa911S]

Originally Posted by sketchers356

I dont think buying a 911S in 74 for 9300 was that good of a deal Paul in terms of long term investment. I do think it is possible to have cars be an investment. As mentioned above you could buy 356s or early 911Ss for 25000ish 5 years ago.

Bought my 70 S in 97 for $10K. Drove the snot out of it until 2005 and sold it for $36K. It was the only car I ever owned worth more when I resold it.

[strupgolf]

I have to agree with the muscle car bubble. If you inherit one from you dad, it's great. But they are falling in price over the last few years. New buyers with interest can't buy them because of the price, and the older f-ers like me would like them, but "been there, done that"comes into play. Those old cars are "old", and would make it around the block, but so what? Now for the old Porshces/Mercedes/bmw's, those are more attuned to the better, more knowledged buyer today. They might rise in price. But IMO, stocks are better.

[on2wheels52]

Originally Posted by targa911S

Any Colt. I stopped collecting cars 5 years ago when I sold my early S. Spoons take up a whole lot less room.

Even Pocket Juniors? (jk)
I couldn't swing the logistics of storing as many cars as I would like but I have room for as many bikes as I can keep running.
Storing firearms? I don't even give it a thought, other than being able to locate a particular one when I want to. The ones in hock are well organized though.
Jim

[tabs]

A little clarity and definition is needed here.

1. My Dad's generation loved the Classic Packard's etall of their youth. Paul's gen loves the 50's chrome behemoths of the road. The Boomers love the Muscle Cars of the 60's. After each gen passes on the cars of their passions just don't escalate the way they did when the guys started collecting them.

2. The Euro speciality cars have an international following.

3. Classic cars are big ticket items and as such are subject to the whims of INTEREST RATES..how many guys are out there that can pop 250K or more in cash?

4. Cars require space to store, upkeep and insurance

5. Ahhh Spoons don't leak oil and you can put allot of them in a small space called a safe.

6. If U chose right mid priced Spoons can do very well over time. These have a broad base of collectibility.

7, Spoons are now being listed as hedges against inflation for portfolios by the financial gurus. Along with Gold and Silver.

8. Art is in the same league as Spoons. However the mid priced stuff has been languishing since 2003. The big ticket stuff is now moving at record prices. Also a Spoon has utilitarian value Art is more subjective as a collectable and one needs to know someting and have a feel for it.

9. Spoons are easy to value..there are several Blue Books of value and spoons are usually marked as to maker, model, caliber and SN.

10. Spoons are semi-liquid, they move fast at the right price. The idea is to find the deals where upon one has margin so one has the jump on ROI. Then one can give a good price.


THUS: Classic cars Nay, Spoons Yay

[sammyg2]

What's that old saying? if it flies, floats, or fornicates, rent it. It'll be cheaper in the long run.
no wait.

Howz about "if it has wings, wheels or teats it's gonna be expensive".
there's not much money to be made in rolling stocks.

[motion]

Cars are large, complex and expensive. They take up valuable space. I'm collecting motorcycles. There are good deals going around these days if you're willing to travel, and most classic bikes are on the way up in value. You'd be amazed at what an early 70s Honda 750 is worth today. Back in the day it was just a junky bike mass produced in Japan. People are parting bikes like crazy on eBay, dwindling the available supply of whole bikes. I expect this trend to continue. Most of my bikes are seeing at least 10-20% appreciation per year. And, I get to clean, ride and admire them If you had, say, a $250K portfolio in motorbikes, well, that's a pretty good return.

[id10t]

Invest in the *parts* and literature. Seen what 356 speedster/cab top bows sell for? How about some of the original sales ads from dealerships, etc. Key blanks are selling for $20ish, shifter knobs, steering wheels, emblems, etc. All small, easy to get for current or at least more recent vehicles that will become classics, easy to store, etc.

Which cars? Well, it seems based on what I've casually observed in the past 30 years (and we know the plural of anecdote is data) whatever is *hot* for kids in highschool is what they will end up wanting to own when they hit 45 or so and can afford it.

[onewhippedpuppy]

Originally Posted by id10t

Which cars? Well, it seems based on what I've casually observed in the past 30 years (and we know the plural of anecdote is data) whatever is *hot* for kids in highschool is what they will end up wanting to own when they hit 45 or so and can afford it.

Very valid point, the muscle car boom is a perfect example of this. When men grow older and have the money to get their dream car, those dreams often seem centered in their teenage years. As the boomers age the over-inflated muscle car market will crash, products of the '80s didn't lust over Chevelles and Camaros like they did. So the question - what did a guy that graduated high school in 1985 dream about? What did he have on his wall as a kid? THAT is what you should speculate on for a car, as it's probably cheap today.

[Garp]

Originally Posted by onewhippedpuppy

Very valid point, the muscle car boom is a perfect example of this. When men grow older and have the money to get their dream car, those dreams often seem centered in their teenage years. As the boomers age the over-inflated muscle car market will crash, products of the '80s didn't lust over Chevelles and Camaros like they did. So the question - what did a guy that graduated high school in 1985 dream about? What did he have on his wall as a kid? THAT is what you should speculate on for a car, as it's probably cheap today.

I came out of HS in 86 and drive an 86 Carrera. Pretty simple.