Investment Cars - A Different Kind of Investing
By Eric Hammer
One of the more unusual ways to make money these days is through
investment cars. While these things may seem to be the exclusive
province of the super rich, the fact is that even upper middle
class Americans are able to purchase investment cars (i.e. classic
cars which have a chance of going up in value) and make some
decent money while doing so.
The key, according to the experts is to have an eye for such
vehicles and to know which cars are likely to increase in value
as time goes on. It also pays to have enough room to house such
vehicles and to be able to maintain them as you need to keep
your investment cars in as pristine a condition as possible in
order to sell them later on for a profit.
Finally, remember that this is unlikely to become a full time
profession unless you happen to run a used car lot, in which
case you are not just working with investment cars. However,
it is potentially a good way to make some money and have fun
while doing so.
How Much Can You Make?
It's impossible to quantify how much you are likely to make
from investment cars since so much depends on the fickleness
of the buyers who may purchase the vehicle from you in the future.
However, it is not uncommon to double or even triple your money
inside of 10-15 years if you do your job correctly and buy the
right kinds of collectible cars.
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According to the experts, there are a number of factors to
consider when buying investment cars. First, you need to consider
whether the car has bottomed out as far as losing value. Typically,
new cars lose around 20% of their value for every year they are
on the road. However, after a certain point, if they are still
in good condition, with relatively low mileage, they start to
go up in value, especially if they are collectible.
Good choices for investment cars include cars that were once
expensive to begin with, such as a Rolls Royce or a Ferrari.
They should also be desirable types of cars and considered "cool
looking."
As an example, amongst modern vehicles, a car which has the
potential to become a collectible 10-15 years from now is the
Tesla Roadster, which was released in limited quantity and which
is being phased out by that company in favor of their new sedan.
The reason that the Roadster has potential (and this is just
an educated guess - no one can guarantee that the Roadster won't
be considered a worthless turd 15 years from now) is because
it is considered to be a sleek vehicle, which was originally
quite expensive and which was released in limited quantities.
All of these things are likely to make such vehicles more attractive
to classic car collectors 15-20 years from now.
On the down side, the odds are good that in the next 15-20
years, electric vehicles which actually get 300 miles to a charge
and which can be charged much more quickly than the Roadster
will likely be on the road, meaning that the market for the vehicle
could go down.
Bottom line, investment cars can be fun and they can be a great
investment, however, there are no guarantees that your investment
vehicle will go up in value, nor are there guarantees that it
won't lose value.
However, you can increase your odds by paying close attention
to the market, to see which vehicles are popular with collectors
and have stood the test of time (the 1999 Hyundai Accent that's
being offered $1,000 for example is probably a bad choice, since
investment cars are usually ones that are considered "cool").
You should also be sure to store your investment cars in a
covered garage and keep them in pristine, original condition.
If the vehicle is ever involved in an accident of some kind,
your car will be worth less for insurance purposes than it might
have been worth if you'd held onto it for an investor. Not to
mention that most people who buy classic cars want cars with
relatively low mileage. A classic Ferrari with 250,000 miles
on the Odometer is not going to be worth nearly as much as a
classic BMW with 5,000 miles on the Odometer, even though the
Ferrari is ostensibly a more desirable vehicle.
Qualifications / Requirements
The only requirement here is that you have an eye for classic
cars which would make good investment cars and that you have
the money and space to care for your vehicles while you wait
for them to appreciate in value. It's also a good idea to have
at least some automotive knowledge so that you can understand
what's going on when you take the vehicle to an expert for an
evaluation.
First Steps
Start by researching possible investment cars and coming up
with a budget for your investments so that you know exactly how
much money you have available. Then, be sure to shop around,
bargain with owners and take the time to have cars inspected
by a professional who knows what to look for in a vehicle.
Resources
Check out these helpful resources to learn more about investment
cars:
Car Info Weekly: Investing in Classic Cars -
This blog in general is a good resource for more information
about investment cars and this article in particular gives you
a good overview of the market for such vehicles.
The Discriminating Explorer: Classic Car Investing
Tips - Another good resource on investment cars, this article
provides an excellent overview of what to look for in order to
find a car which will likely go up in value.
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