Muscle cars as investments
July 2nd, 2015, 04:52 PM
#41
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Join Date: Sep 2009
Location: Braintree, Mass
Posts: 728
Muscle cars just lose less when sold than a conventional car. I know I can sell my Olds for more than I bought it but I spent money on it not including insurance and gas. Throw in an expensive restore and they may be worse than a conventional car.
July 2nd, 2015, 05:01 PM
#42
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Join Date: Mar 2013
Location: Climax, NC
Posts: 124
These examples sort of prove the point. At first glance, you doubled your money on the '70 442...but, (assuming you spent NOTHING on it), your returns are actually about 5% per year, and under 4% for the Nova. The other poster borrowing at 4.5% is unlikely to come out ahead.
I know that these returns are better than bank interest, but don't compare to returns from stocks or real estate.
Steve
I know that these returns are better than bank interest, but don't compare to returns from stocks or real estate.
Steve
Shew... A deeper view than I ever thought to look at... I just enjoy cars...lol...
Thanks for pointing that out Steve...!
July 2nd, 2015, 05:27 PM
#44
"me somebody" site member
Join Date: Jul 2007
Posts: 1,612
Bought my tri-carb 4 speed '66 442 convertlible for $11.5k back in 1999, sold it for $33k in 2006. Probably put 4 to 5k in the car while I owned it. But that is the only car I ever turned a profit on in my life. Probably never will again either. Never bought a car just to flip however, sure there's money to be made doing that if you're savvy.
July 2nd, 2015, 07:27 PM
#45
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Join Date: Sep 2012
Location: Water Wonderland MI.
Posts: 1,414
Not sure cars are a (great) investment unless there are in your blood, several post stated its not for the faint at heart. Invest in real estate in warm climates where the baby boomers will retire.
July 2nd, 2015, 09:08 PM
#46
IMO: With maintenance, insurance, and storage I have found these old cars to be more like pets or even kids than investments. They always need something.
And old cars most be driven regularly or they'll deteriorate.
It's not that they aren't decent investments, but that they are risky investments. It's only the select few that go up in value exponentially and even Ferraris suffer from market fluctuations.
I have read where less effluent collectors have had to sell there prize cars due to the raising cost of insurance. Apparently the cost of insurance goes up as the value of the car raises. And storage cost go up as well when you add climate control and alarms to the equation. A most for a real collector car.
And old cars most be driven regularly or they'll deteriorate.
It's not that they aren't decent investments, but that they are risky investments. It's only the select few that go up in value exponentially and even Ferraris suffer from market fluctuations.
I have read where less effluent collectors have had to sell there prize cars due to the raising cost of insurance. Apparently the cost of insurance goes up as the value of the car raises. And storage cost go up as well when you add climate control and alarms to the equation. A most for a real collector car.
July 2nd, 2015, 09:54 PM
#47
Connoisseur d'Junque
Join Date: Sep 2010
Location: The Hudson Valley
Posts: 21,183
To illustrate the wisdom of "investing" in antique automobiles, let us consider an extreme example:
Suppose, for a moment, that you were amazingly farsighted in 1970, and knew, with certainty, that "muscle cars" would become extremely valuable in the distant future (of course, if you were that smart, you would have bought Apple at a dollar a share a few years later, but I digress...), and so you bought a brand new 442 convertible as an investment for the MSRP of $3,567.
Not having a time machine (hey, you're not THAT smart), you will need to store your new car and protect it from the ravages of time if it is to retain its value.
Therefore, you will need a garage, and will need to heat and/or cool it, and maintain it in good condition.
Maybe you've already got a spare garage space, but even if you do, you are still paying for that space - how much would your house have cost if it had had only a one-car garage when you bought it? How much less would the mortgage be in that case? How about the real estate taxes?
Maybe you don't have a spare space, and will need to build one or rent one.
Either way, that will cost you money. If we figure an extremely conservative additional cost of an extra garage bay on your house at $25 a month today, and we multiply that by 12 months a year and 45 years, that's $13,500 (let's not even consider $100 a month or more to rent a climate controlled garage).
Why use the modern cost all the way back to 1970, when $25 of today's dollars was worth about $4? Because we're considering the value of the money, as translated into current dollars - Spending $4 in 1970 was a six-times-greater hardship than spending that much today would be, so the amount can be converted to its current equivalent.
Now you've got your heating, cooling, and maintenance on the garage.
Heating to about 55° in a cold climate, or cooling to about 80° in a hot climate will certainly cost well more than $25 in the hottest / coolest months, and much less in others, but I think we could probably come to a similar number for that, especially if we include some maintenance in that, so... maybe add another $13,500.
While I think of it, how many garages do you know of that keep air and bugs out reasonably well, that still have their original doors from 1970?
So better add a garage door at a conservative $1,000.
Maybe we'll say that you're a gambler, and trust in your own security, so you don't need insurance. Obviously, if you did, that would add a significant sum to the cost.
Ditto on keeping it registered - if you're saving a zero-mile car, you won't need to drive it.
So what have we got now, about $28,000 in expenses for keeping the car?
And then there's the car itself.
You paid $3,567 for it in 1970. That's the same as $21,860 today.
So, add up the $21,860 for the car and the (very conservative) $28,000 for the uninsured storage, and you have $50,000 in expenses.
Collector Car Market Review says that that car in #2 condition (which is what you would have, if you were extremely lucky) is worth $38,350 (in #1 condition, which is a fresh, perfect restoration, it would be worth $53,400).
So, your absolute best possible outcome, if your car miraculously goes from factory original to perfectly restored while it is in storage, and if the storage expenses are at a bare minimum, is that you break even.
On the other hand, if you had invested that $3,567 in the stock market, and it performed in line with the Standard & Poor's Index, you would have $261,143 in 2013, with no maintenance or worries about theft, fire, floods, etc.
A car is not an investment.
- Eric
Suppose, for a moment, that you were amazingly farsighted in 1970, and knew, with certainty, that "muscle cars" would become extremely valuable in the distant future (of course, if you were that smart, you would have bought Apple at a dollar a share a few years later, but I digress...), and so you bought a brand new 442 convertible as an investment for the MSRP of $3,567.
Not having a time machine (hey, you're not THAT smart), you will need to store your new car and protect it from the ravages of time if it is to retain its value.
Therefore, you will need a garage, and will need to heat and/or cool it, and maintain it in good condition.
Maybe you've already got a spare garage space, but even if you do, you are still paying for that space - how much would your house have cost if it had had only a one-car garage when you bought it? How much less would the mortgage be in that case? How about the real estate taxes?
Maybe you don't have a spare space, and will need to build one or rent one.
Either way, that will cost you money. If we figure an extremely conservative additional cost of an extra garage bay on your house at $25 a month today, and we multiply that by 12 months a year and 45 years, that's $13,500 (let's not even consider $100 a month or more to rent a climate controlled garage).
Why use the modern cost all the way back to 1970, when $25 of today's dollars was worth about $4? Because we're considering the value of the money, as translated into current dollars - Spending $4 in 1970 was a six-times-greater hardship than spending that much today would be, so the amount can be converted to its current equivalent.
Now you've got your heating, cooling, and maintenance on the garage.
Heating to about 55° in a cold climate, or cooling to about 80° in a hot climate will certainly cost well more than $25 in the hottest / coolest months, and much less in others, but I think we could probably come to a similar number for that, especially if we include some maintenance in that, so... maybe add another $13,500.
While I think of it, how many garages do you know of that keep air and bugs out reasonably well, that still have their original doors from 1970?
So better add a garage door at a conservative $1,000.
Maybe we'll say that you're a gambler, and trust in your own security, so you don't need insurance. Obviously, if you did, that would add a significant sum to the cost.
Ditto on keeping it registered - if you're saving a zero-mile car, you won't need to drive it.
So what have we got now, about $28,000 in expenses for keeping the car?
And then there's the car itself.
You paid $3,567 for it in 1970. That's the same as $21,860 today.
So, add up the $21,860 for the car and the (very conservative) $28,000 for the uninsured storage, and you have $50,000 in expenses.
Collector Car Market Review says that that car in #2 condition (which is what you would have, if you were extremely lucky) is worth $38,350 (in #1 condition, which is a fresh, perfect restoration, it would be worth $53,400).
So, your absolute best possible outcome, if your car miraculously goes from factory original to perfectly restored while it is in storage, and if the storage expenses are at a bare minimum, is that you break even.
On the other hand, if you had invested that $3,567 in the stock market, and it performed in line with the Standard & Poor's Index, you would have $261,143 in 2013, with no maintenance or worries about theft, fire, floods, etc.
A car is not an investment.
- Eric
July 3rd, 2015, 12:46 AM
#48
Rocket Renegade!
Join Date: Dec 2014
Location: Vancouver Island
Posts: 4,441
Agree with your point -- up to a point. The historical/originality/novelty value of such a car with zero miles would put its price well beyond that of #1 restoration. But then it becomes a museum piece rather than a musclecar.
Also, how did you do the incremental inflation adjustment for the maintenance costs between 1970 and now?
Also, how did you do the incremental inflation adjustment for the maintenance costs between 1970 and now?
July 3rd, 2015, 03:09 AM
#49
Connoisseur d'Junque
Join Date: Sep 2010
Location: The Hudson Valley
Posts: 21,183
Obvioulsy, once you add a bit of reality (there is no such car, a plausible car would have some miles and some wear and tear on it, etc.), the numbers look even worse.
If you start maintaining it, the costs go up further.
And for inflation, I'm just translating all costs up to their modern equivalent, for comparison purposes.
- Eric
July 3rd, 2015, 06:25 AM
#50
Registered User
Join Date: Sep 2009
Location: Braintree, Mass
Posts: 728
I passed up some nice homes at reasonable prices because I wanted a garage. A garage is nice to have but If I didn't have my Olds I would have dropped the garage requirement if everything else about a particular home was great. Permitting can be a hassle and new construction is expensive so I preferred an existing garage, less hassle to renovate what I already have.
July 3rd, 2015, 09:28 AM
#52
Registered User
Join Date: Mar 2015
Location: Berwick, Pa
Posts: 230
Interesting read, but you are down to nickels and pennies about it and unless I read it wrong you added the price of the car at today's cost 21,xxx instead of the 35xx when you came up with 50,xxx investment.
Doesn't really matter, the bottom line is that it all depends on what car, what condition, how much you put into it, how long you have it, your location, what it's worth to a buyer etc etc.
are you investing for $ purposes or enjoyment? You can't put a price tag on happiness and pride. Ultimately it's up to you and your significant other (gotta be politically correct now) if it's worth it. As you can see, some people are more cautious and conservative than others which can be for reasons such as their history in such a situation, how much they can afford to take invest, if they have the knowledge and means to do work on a vehicle themselves, etc.
bottom line is do what makes you happy. Find a good deal, make an offer. If you have it for a year and decide that it's not for you then sell or trade. This is what life is about. The only certainties that you have are death and the fact that things will continue to change. There's no right or wrong answers. Life and everything in it or about it is about making choices.
I say go for it.
Doesn't really matter, the bottom line is that it all depends on what car, what condition, how much you put into it, how long you have it, your location, what it's worth to a buyer etc etc.
are you investing for $ purposes or enjoyment? You can't put a price tag on happiness and pride. Ultimately it's up to you and your significant other (gotta be politically correct now) if it's worth it. As you can see, some people are more cautious and conservative than others which can be for reasons such as their history in such a situation, how much they can afford to take invest, if they have the knowledge and means to do work on a vehicle themselves, etc.
bottom line is do what makes you happy. Find a good deal, make an offer. If you have it for a year and decide that it's not for you then sell or trade. This is what life is about. The only certainties that you have are death and the fact that things will continue to change. There's no right or wrong answers. Life and everything in it or about it is about making choices.
I say go for it.
July 3rd, 2015, 09:49 AM
#53
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Join Date: Aug 2014
Location: S Dayton Ohio
Posts: 171
Like any other potential investment, know the market. I've owned well over a hundred cars over the years. I have made some, and lost some, but the law of averages and market knowledge has put me in the gain column. I have passed on many potentially good deals, simply because I wasn't knowledgeable of the market for that particular car.
Do your homework, know the car, know if it's "correct", know recent sale prices, both locally and nationwide, and be willing to lose money if you were wrong.
Do your homework, know the car, know if it's "correct", know recent sale prices, both locally and nationwide, and be willing to lose money if you were wrong.
July 3rd, 2015, 01:59 PM
#55
Rocket Renegade!
Join Date: Dec 2014
Location: Vancouver Island
Posts: 4,441
It was just an academic point by way of extreme example.
Obvioulsy, once you add a bit of reality (there is no such car, a plausible car would have some miles and some wear and tear on it, etc.), the numbers look even worse.
I didn't. It was stuck in a garage with no maintenance.
If you start maintaining it, the costs go up further.
And for inflation, I'm just translating all costs up to their modern equivalent, for comparison purposes.
- Eric
Obvioulsy, once you add a bit of reality (there is no such car, a plausible car would have some miles and some wear and tear on it, etc.), the numbers look even worse.
I didn't. It was stuck in a garage with no maintenance.
If you start maintaining it, the costs go up further.
And for inflation, I'm just translating all costs up to their modern equivalent, for comparison purposes.
- Eric
I know. Just a smartass fail on my part.
)
July 4th, 2015, 04:40 AM
#57
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Join Date: Nov 2011
Location: milwaukee
Posts: 548
Im depressed reading all these. I just had our financial advisor tell my wife to "have jason buy another car" he realizes the investment part of it and it is part of our portfolio. Sure cars go up and down but if he market crashes and we have nothing, That iron will never be worth zero. I've been been fortunate though to build up a collection by using my hands. I do my own restos so there is where I have a ton of equity. But for someone similar to the original post I would say invest in a legit, survivor. These will surpass high end restos and some have already. 1/2% interest in the bank is doing no good. If a major event pops up you can liquidate. If you borrow against a retirement plan you have to pay ot back or pay a hefty tax. Im all for it just buy smart and the best for your budget. Also if looking at restored, buy one done if you can't do the work yourself. (My 2 cents)
July 5th, 2015, 12:45 AM
#58
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Join Date: Aug 2011
Location: Northlake, IL
Posts: 633
If you mean that you do the body, paint, engine and trans as well as everything else, then yes, you will have good equity with that. But if you have to farm things out, then generally, no, you won't have a ton of equity (another word for the dollar value of your labor), you just won't have as big a loss. I recently restored a very desirable old muscle car. Did everything but the four large items mentioned above myself. Spent about $44k on it (those nickels and dimes add up) and hundreds and hundreds of hours of my own time. It's worth about $45k. I'm sure I put far far more than 200 hours into it, but if it was just 200 hours, and the car is worth $1,000 more than my "investment" into it, then I made about $5/hour for all the work I did. In the end, I'd much rather have invested that time into cars that I can enjoy, and not a car that's worth $45k, but only if I don't drive it and keep it perfect. At least it has retained the value of my dollars spent on it, but only because it happens to be a very desirable car.
July 5th, 2015, 05:46 PM
#59
344879M363895
Join Date: Jun 2015
Location: Raleigh, NC
Posts: 2,234
If you want a good return on investment, go out and buy 100 of the video game systems that are moving on to the next model. Keep them sealed up. In five years time, you will probably double your money.
Regarding the muscle cars as investments...it does seem as if the market is shrinking. Baby boomers who always wanted these cars when they were young can now afford them. But after that...I mean...come on...do I really want to go out and buy a sub-par 1991 T/A or even a 1991 Vette? BORING! I think those from my generation are somewhat interested in older muscle cars, but much because we have nothing to like from our own teenage years. But then there are those from my generation who have no interest in these cars at all. They don't know how to fix them, never wanted one as a kid, and certainly might even find them "environmentally irresponsible."
My advice: Sell, sell, sell!!! To the boomers! Yesterday!
Regarding the muscle cars as investments...it does seem as if the market is shrinking. Baby boomers who always wanted these cars when they were young can now afford them. But after that...I mean...come on...do I really want to go out and buy a sub-par 1991 T/A or even a 1991 Vette? BORING! I think those from my generation are somewhat interested in older muscle cars, but much because we have nothing to like from our own teenage years. But then there are those from my generation who have no interest in these cars at all. They don't know how to fix them, never wanted one as a kid, and certainly might even find them "environmentally irresponsible."
My advice: Sell, sell, sell!!! To the boomers! Yesterday!
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