Confident investors with an interest for rare, valuable objects have made classic vehicles a valuable part of their portfolios. Though collectors can earn big returns on such cars, many of them are car aficionados who derive their greatest rewards from the experience of owning and maintaining the vehicle.
If you’re thinking collecting as an investment, it’s imperative to understand what makes a classic vehicle.
Classic vehicles date back at least 15 to 25 years, but more importantly, have some quality that makes them interesting to collect. This may be inclusive of the unusual designs and limited production runs. The rarer the car, the more valuable it is likely to get. Cars more than a century old fall into the separate category of antiques.
As you would for any other investment, research what you are interested in buying carefully. Weigh each deal independently and make a sound and great decision. That means finding a vehicle that meets your budget, is in good shape and is likely to have strong resale value.
More investors than ever are looking at classic vehicles as an alternative to traditional stock or bond investments. That’s largely due to the fact that it can lead to major profits. Between 2004 and 2014, the Knight Franklin Luxury Investment index noted a 500% rise in the value of classic vehicles, according to U.S. News and World Report.
For example, the 1954 Mercedes-Benz racecar sold at public auction for a record $30 million in July 2013. Juan Manuel Fangio, a legendary Argentinian-born driver in the 1950s, raced the car. Part of its appeal was that it was greatly un-restored and still had scuffs from racing – something that buyers today covet.
While few investors will have the fortune to make a record profit like that, it’s not too late to own and enjoy a classic. The classic vehicle market evolves over time and vehicles that carry high prices at one point may dip, while others that cost less may see a jump. It’s vital to track the market for the best investment opportunities.
Buying into classic vehicle investing
Thanks to the Internet it can get relatively easy to track the vehicles that interest you. There are also classic vehicle auction sites that can help you spot trends.
The process is more than just a numbers game. Find a vehicle you like. A fondness for a model and the pleasure in owning it can soften the blow if the market suddenly devalues your car. A classic vehicle, in which you take pride and build an attachment, is far different than owning stocks and bonds.
Also, it’s vital to consider just how rare a car is. Before investing in a classic car, find out just how many cars of that make were built. That will tell you something about the vehicles’s worth. If there were only 1,000 ever built, this bodes well for the ultimate price you may be able to get if you resell it.
Starting out is easier than you might think
Classic vehicle investing is not limited to the super high net worth investor. For example, you can, purchase a car in the $20,000 to $30,000 range. That 1965 Mustang you were hankering for in high school can be had these days in the $20,000 range. But, don’t just snap up any random ‘65 Mustang.
As a smart shopper, you will want to ensure that a car wasn’t in an accident. You’ll also want to know that, if it was restored, it was done so properly. An original vehicle with its original parts is a particularly good find.
Mistakes to avoid
With any classic vehicle purchase, it can be helpful to hire a certified appraiser or consultant to provide feedback on a potential purchase. While this may add to your buying costs, these professionals can diagnose issues and save you money in the long run. Hiring an expert will ensure that you’re vetting an investment wisely.
It’s vital to avoid buying anything on impulse or because you know somebody who’s offering a classic for sale. You could end up with a vehicle you can’t sell that’s taking up space in your garage, or you may have to pay far more in restoration costs than you could hope to recoup.
The cost of owning a classic vehicles goes beyond a simple paper investment. Before handing over your check, you must also think about maintenance, restoration and storage costs, as well as the need for classic vehicle insurance which is quite different from an ordinary car insurance
Ultimately, if you check your car wisely, you may find yourself with an investment that not only looks good on paper but also carries you back to the good old days on Route 66 and beyond.