Question.... Has anyone really ever made money on a car like an investment

[daytrayd]

Non-dealers can make a bona fide "profit" on some cars but by and large the entire "investment" rationale is something we have invented to convince ourselves and our wives that we aren't making silly purchases. I paid $160k for my GT 4 years ago. I can make 10% all day long on relatively safe investments. Even assuming the GT is still worth $160k (it isn't), I have "lost" about $64,000 in interest (non-compounded interest, no less) and about $7,500 in insurance, registration fees, etc. Although I have not done the calculation, I bet the GT would need to be valued at about $500k 10 years after purchase (it won't) to equal what I could have made in a typical investment, assuming annually compounded interest.

I looked long and hard at an original 289 street Cobra when the prices dipped into the low-mid $300k range several years ago, but I could not justify the purchase. I believed the opportunity cost was simply too high. Even with the increase in the Cobra's value since then, I probably would have only matched my safer investment that yielded 10%/year. Of course I never would have sold the Cobra, and that makes it the WORST investment possible.

Never view cars as investments. Buy and keep them because you love them.

I'm not saying 10% a year cant be done easily, but safely like clock work??? I trade for a living, I own junk bonds that pay that, but they arent safe. Over time they should average a little above treasuries even though the current yield is 10%. I do get your point though. I was doing the math on some of these 70's muscle cars that sold for 10x their original msrp from 40 years ago, the avg rate of return in only 5.5%, and this doesnt include maintenance, restoration, or insurance. The return has to be horrid. Regardless, 5% can be easily outmatched, and safely. So yes I agree, its better to "invest" in something else.

 

[Sinovac]

I'm not saying 10% a year cant be done easily, but safely like clock work??? I trade for a living, I own junk bonds that pay that, but they arent safe. Over time they should average a little above treasuries even though the current yield is 10%. I do get your point though. I was doing the math on some of these 70's muscle cars that sold for 10x their original msrp from 40 years ago, the avg rate of return in only 5.5%, and this doesnt include maintenance, restoration, or insurance. The return has to be horrid. Regardless, 5% can be easily outmatched, and safely. So yes I agree, its better to "invest" in something else.

Not exactly like clockwork, but I have done very well with private mortgages loaning money the way banks did decades ago (remember when banks paid attention to LTV?). I loan primarily to self employed borrowers that have problems with income verification.

 

[daytrayd]

I see, very smart. I know I see these banks that wont loan to friends and family who put 30% down on a house they are getting a steal on and have decent jobs. More for you my friend

 

[Neilda]

Yes. I've had a couple of vintage cars that made money - not much, but I came out of them in profit.....

 

[silver1331]

I'm not saying 10% a year cant be done easily, but safely like clock work??? I trade for a living, I own junk bonds that pay that, but they arent safe. Over time they should average a little above treasuries even though the current yield is 10%. I do get your point though. I was doing the math on some of these 70's muscle cars that sold for 10x their original msrp from 40 years ago, the avg rate of return in only 5.5%, and this doesnt include maintenance, restoration, or insurance. The return has to be horrid. Regardless, 5% can be easily outmatched, and safely. So yes I agree, its better to "invest" in something else.

It's a bit unfair to include all the costs associated with maintainence and not factor in paying something for the enjoyment. There should be a cost associated with that. Also, 10% is a pre-tax number i assume? if you;re assuming low risk i assume you mean fixed income so thats more like 6.5% after tax...which even that is hard these days to find.

 

[jaxgt]

Personally would love to find an investment that even safely returned 7%.

 

[daytrayd]

It's a bit unfair to include all the costs associated with maintainence and not factor in paying something for the enjoyment. There should be a cost associated with that. Also, 10% is a pre-tax number i assume? if you;re assuming low risk i assume you mean fixed income so thats more like 6.5% after tax...which even that is hard these days to find.

Of course there is no price on the enjoyment of our lives driving our dream car, I'm just saying if its really an investment, we could do better in the market. Without a doubt, there is not funner investment. I get a lot more out of firing up the GT than checking my account and seeing the dividend distributions.

And yes, pretax 10%. You are correct, even 6.5% pretax is hard for AA corp bonds, but I think that should be pretty easy to do in 1-3 years.

 

[Neilda]

Over here (in the UK) it is vintage cars that make the largest returns - as always, the buyer needs to know what he or she is doing! Aston DB4's and 5's are doing extremely well as well as certain Ferraris. Newer cars are extremely high risk if bought as an investment. The Ford GT was sold at a high premium when it was launched, I paid over $240k for mine (for example), but I bought it new in 2005 when it featured on the front pages of every car magazine! It's probably worth just over $200k today. Maybe. My guess is that it will be a very valuable car in the future, but right now most buyers could safely say 'you'd get your money back'.... which is, in itself, almost unique.

I was chatting to someone last week who, a couple of years ago, bought several cases of wine at $1,120 a case, each case today is worth $27,230. Wine is being bought by the Chinese in vast quantities and at astronomical prices (I'm told they mix it with Coca Cola).

So if you want some big returns, wine is doing pretty well!!

PS 2000 Chateau Lafite now selling for £26,693.16 or $42,756.94. At $3,563 a bottle, it's probably too nice to have with a Wendys.

 

[jaxgt]

I have heard quiet similar about the Chinese buying well known French wine by the container full. Now mixing it with Coca Cola - sounds just plain awful.
I have occasionally bought some wines to hold - unfortunately, they tend to call my name after a few months in the cooler, then they mysteriously all dissappear.

 

[69RS/SS]

As Jerry Seinfeld has once said, (paraphrasing) "You can't drive money".

These cars really are artwork to enjoy. That is priceless. If you do enjoy it and do proper due diligence while maintaining a long term holding position, speaking from experience, money can be made but should not be the primary motivation. Anyone that gets into the business to make money on classic type of cars will generally not be rewarded with profits. Lack of liquidity is a big problem because if for some reason you are forced to sell a piece of this artwork in the wrong investment climate, you can take a beating especially on a short term basis.

With these cars, some of that "fuzzy" math is needed when calcuating ROI on personal matters. Otherwise, one had better also include the price of fuel in the total cost of the investment and, who does that? Nobody. Furthermore, there should be an unrealized gain calculation for all the joy they bring to the participants, especially the joy that others gain from viewing these pieces of art. From a business point of view, all costs need to be considered, even fuel. Thing is, there, those costs can be written off annually and ultimately, after depreciation and cumulated write offs, the investment could easily still end up as a profitable investment with taxable consequences when the vehicle is ultimately sold.

With that, hope everybody is well here and THINK SPRING!!

 

[RALPHIE]

However, you can easily lose money on a Ford GT - just sell the one you have, and, after a month or two, get seller's remorse!

Then, go out and buy another one!

:frown :ack :frown

 

[timcantwell]

Since I have sold cars to other forum members I'll reserve my comments for our next lunch together!

 

[GT38]

I am thinking that Carol Shelby made a little money on his personnal cobra , investment cost $0.00 , sale at BJ a few years back $5,500,000.00 , we could only be so lucky someday

The Super Snake was sold at B-J 2007 by Harley Cluxton, not Carroll Shelby. I don't know what Cluxton paid for the Super Snake, but it was not $0.00.

One of the largest net gains on car that I'm aware of was when Penny Graham sold Jaguar E2A in 2008 for $4,957,000. She and her father acquired this car from the Jaguar factory for less then 1,000 GBP in the late '60s.

http://www.bonhams.com/cgi-bin/publ...ItemNo=3965994&iSaleNo=16133&iSaleSectionNo=2