My Car Quest

August 23, 2019

Can You Make Money Investing In Old Cars?

by Mike – 

The question in the title is on your mind, I know it is because it is on the mind of all classic car lovers.

A friend once told me a saying in the hot rod world, “why buy a hot rod for $50,000 when you can build one for $150,000?” There is a corollary to this in the classic car world, “why buy a restored car when you can buy an unrestored car for a bargain?”

Maserati Bora

Maserati Bora

Keith Martin, publisher of Sports Car Market, says “Buy the best car you can afford”. What I think happens often is a buyer buys, for example, a $25,000 car that needs $20,000 of work resulting is a car that is worth $35,000 after the work is done.

The buyer sees the savings on the front end ($25,000 versus $35,000) but does not think clearly about the cost on the back end ($20,000) and the final value after the work is done ($35,000).

Unfortunately there are many cars that are not worth the cost of restoration, the cost of the car prior to the restoration is zero because even if the car were free the restoration costs will not be recovered. Sometimes this can be difficult for the selling owner of the unrestored car to accept.

Pontiac GTO

Pontiac GTO

Some collectors do not care about the economics very much because they restore a certain car for love or they do a lot of the work themselves and do not count their time as part of the cost. This is fine as long as the economics are understood.

There are many cars that will be sold for less than the seller has spent – this is the type of car you want to buy, assuming that the work was done properly. As an owner you want to try to stay out of the negative zone, where you have more into the car than it is worth. This is not always as easy as it sounds. We sometimes under estimate the cost of a restoration or we under estimate the value appreciation of our car.

This is one of the reasons why old cars should be bought for the passion, so that if the economics do not work out then at least you love the car.

Chevrolet Pickup

Chevrolet Pickup

You may want to read what I think about classic car investment funds.

Become a My Car Quest Member – click the image below.

My Car Quest Membership

Comments

  1. emailrobertcena says

    Investing money in old cars is the best way of expanding business. If they used new technology in old cars which they have that will be very helpful for them. Surely this prove them to become successful among those who loves old cars. Classic Muscle Cars

Speak Your Mind

*