Wallace Wyss is an automotive writer. But has on occasion bought and sold both real estate and collector cars. He sent us this personal opinion and recommendations.
by Wallace Wyss –
The plummeting value of residential real estate in Las Vegas illustrates the peril of investors investing in properties in a town that’s well over 75% dependent on one industry.
The irony is that in February, 2020, Las Vegas homes were at an all time high, averaging over $300,000 for a 3-bedrrom two bath resell. But then in late February 2020 came the virus. President Trump cut off tourism from China, and Vegas had a heavy dependence on Asian tourists. Then came the shutting down of the Strip. With that thousands of bartenders, waitresses, porters, casino employees, and entertainers lost their livelihood.
Couple that with the closing of non-essential stores. Once retail went, there was no reason to leave your house, except for gas and food. But those who made their living from buying and renting residential properties had a fighting chance if they didn’t put all their pennies in one pot. For instance I know a man from Orange County, CA who bought half a dozen homes in Las Vegas in the last two decades as rentals but wisely also bought in La Puente, CA, and other States as far as Montana.
So his portfolio is “cushioned” by the fact it’s spread all over the Western US. With one two bedroom 1 1/2 bath house in Riverside, CA he bought, for instance, it increased three fold in appreciation since 1992 and is now $402K where the same size house in Nevada in a comparable neighborhood is fast falling toward 250K due to Las Vegas’ over-dependence on one industry.
But even that house in Riverside could slump in value depending on how long the virus lasts or if it has a re-appearance in the fall. Or even worse, it is discovered that any vaccine developed for the present virus won’t work on the second generation re-appearance because of mutation. And though Riverside’s employment base is far more diversified than Las Vegas, it is a University town and the largest university, University of California at Riverside (UCR), has shut its classes down. UCR, at 5300 employees in January 2020, was the city’s largest employer. So it too is a bit vulnerable, its main employer now shuttered, no longer able to perform its function.
Collector Cars
What does this have to do with cars? Same story with cars. Don’t put all your eggs in one basket. If you are a multi-collector, which I define as owning four or more cars not counting your daily driver, I’d spread out my buys in five areas:
LUXURY That luxury car you always wanted, say a Lincoln four door Continental Ironically though luxury cars are gas hogs, the price of gas is $2 less because of a worldwide glut.
Bentley Continental SC
SPORTS CAR I’d choose one that is thrilling to drive because it will never make a good luxury car. It’s only for that Sunday afternoon romp.
ECONOMY CAR Maybe like the Honda first electric hybrid– the one with the rear skirts–some car that gets 40 mpg but hopefully is remembered as an icon in economy cars.
RACE CAR Yes, ready to race, still bearing the stickers, maybe for practicality, still street legal. Could turn out racing might be an elite hobby that survives once other hobbies go. If it’s still streetable this could be your sports car entry.
Iso Rivolta GT Race Car – Pete Whitehead
4WD SUV If these pandemics roll over us periodically (there’s still a helluva lot of bats in China…) might be good to have an escape vehicle, one that doesn’t need roads. I’d have two spares, outside gas cans, a winch, CB radio, gun racks, the whole survivalist shopping list. As a guy who has driven out of not one but three riots I can’t tell you how much I wanted a 4WD SUV during those occasions.
Lamborghini Urus
Also where you live will affect the salability of your car. I wouldn’t even bother listing a collector car for sale in Vegas now that over half the town is unemployed. If you have a relative in another state maybe they will rent you garage space for that collector car.
Above all make sure every one of your cars is maintained, and readily driveable. If one isn’t licensed for instance, what would you do if all the DMV offices are closed? And if you have to sell one quick, a licensed driveable car is more salable.
Park them in different places, not all in one garage. I remember during the last big fire in Malibu, one collector so proud of having all his collector cars under one roof lost them all.
Where you live could mean an evaporation of any market for your cars. The worst case example is again Las Vegas. Take out gambling, not so much to go there for (maybe some entertainment). I predict a mass exodus of Vegas if the virus hangs on through fall and the nation endures a second wave.
Lesson learned? Don’t depend on one car brand, one genre (sports car, luxury car, etc.) or one location to sell them. Spread the risk.
Let us know what you think in the Comments.
THE AUTHOR: Wallace Wyss has written 18 books on classic cars. He is co-host of Autotalk, a radio show broadcast once a week from KUCR-FM Riverside.
That “Honda’s first electric hybrid – the one with the rear skirts” was called the Honda Insight, and predated the Toyota Prius and the subsequent hybrid cars. I think the only thing that prevented it from blowing up big like the somewhat better-looking Prius was its awkward styling, but Honda WAS there first. Glenn in the Bronx, NY.
I purchased a 65 Corvette from a real estate investor in LV back in 2009. All of his real estate investments were in LV and he was taking a big hit. Prior to the economic crash of 2008 this guy was buying American classics as investments. He had purchased a dozen high end cars and he was then selling them as fast as he could.