The last decade or so has seen television introduce viewers to quite a few new possibilities. From flipping vintage cars to flipping older homes, the entertained masses are now drowning in possibilities of quick, easy money. However, for those who aren’t experts or televisions celebrities, such activities aren’t actually as easy as they look. In fact, there’s a lot of risk involved. Unfortunately for many, what starts off with dreams of big money winds up being a financial disaster for them.
One crucial aspect to preventing such failure is by doing your research. Learn what the risks are before you put your savings at risk. Given that, the following are some tips from White’s Bodyworks you can use about investing in classic cars.
What’s Your Investment Strategy?
To start with, you need to have a good idea of what you’re looking to get from this kind of investment. Do you want to buy one of the older cars you can drive right now and then sell for profit later? Do you want a new car that you hope turns into a classic that fetches a windfall later on? Do you want to start investing in rare exotics cherished by the high-end market of collectors? Or you are looking for cars that are appealing to most American car collectors?
Answering these different questions will help you figure out the kinds of cars that you’d like to buy, where to find them, and how much you are going to have to spend. The answers you have to these questions is also going to determine the possible return you get for your investment.
Know What Actually Makes Cars Collectible
Aesthetics clearly play their role in the collectibility of a car. A properly cared for classic car that has appealing colors and clean lines is likely to generate attention at a private sale or auction. However, that’s far from the only factor driving collectibility.
Collector cars usually also have the following:
-Some degree of historical significance
-A pedigree for racing
-Ties to well-known builders and/or designers
-Previous celebrity ownership, particularly if any past owners also happened to be car enthusiasts
Cars with everyone of these characteristics tend to be more collectible than the rest. Cars are also very collectible if they remind buyers of their youth. In short, collectors are going to be drawn to vehicles that they either owned or just dreamed of having when they were in their younger years.
Know What To Watch Out For And What You Should Avoid
Whether you intend to eventually sell a car through an auction or private sale, you need to watch out for certain things you should avoid. You also need to keep your eyes open for certain things that you want to see.
Experts in the industry tell investors that they should avoid vehicles showing obvious signs of some serious rust. While it’s true that even rusty vehicles can get restored, they might also turn into a money pit. In short, you might not know how extensive the issue is, and you might wind up putting more money into that restoration than you could ever get back in a sale.
Look out for:
-Vehicles that have low mileage
-Rare/unique models, especially ones that only had a handful of them built for a particular model year
-Vehicles you’d love to drive or own
Vehicles that have ‘matching numbers’ seem to bring out big money. What exactly is this, though? Vehicles with matching numbers are ones with major components all sharing similar identifiers found in the VIN, or Vehicle Identification Number. The parts that are best off sharing such identifiers include the transmission, rear axle, and engine.
Most of the time, the last six VIN digits get stamped right onto the engine, making that one easy to verify. You won’t necessarily find such identifiers on the rear axle or transmission, but you might find some date codes there. These date codes are something you can use to spot shared identifiers with the VIN.
Trends And Tastes Always Change
Muscle cars will always have their enthusiasts. There will also always be a market for high-end sports cars from Europe. On the other hand, you should remember not to be a one-trick pony.
For example, there was serious Japanese interest in the mid- and late ’80s in Ferrari’s. A huge price spike went along with this. When the interest waned, there was a definite burst to the bubble with corresponding price drops.
The Dodge Viper is another instance to consider. Originally constructed in the first half of the 1990s, they were boasting 400 horsepower. Paired with a distinct appearance, they looked very appealing to a particular set of investors who were banking on there being substantial appreciation. Sadly, this never actually happened. Lately, you can find original Vipers for under $40,000. That’s actually $10,000 under the sticker prices they had when brand new.
Investing In Classic Automobiles Isn’t Cheap
Investing in or collecting classic cars gets expensive quickly. Since these vehicles are actually classified on a legal basis as a form of tangible personal property, capital gains taxes have to be paid should you make a profit on such a car.
Do you have any cars not in pristine condition? On top of how much it costs to buy them, you might need to pay some serious restoration costs. For instance, the expense involved with bringing an older vehicle up to mint condition using exact replicas or originals in terms of bodywork, paint, and parts can hit $1 million or even more.
You might also have to spend money for the following:
-Sales transaction fees