Cars as an Investment

NY Jewish Guy's picture
Rank: Chimp | 9

I just had a networking call with an incoming first year in IB who said he bought an older Porsche race car as an investment. His father was a professional race car driver so he said he bought the car for what the parts are worth (<$10K) and plans on building it, racing it, and selling it for ~$35-40K. I'm skeptical on the legitimacy of those numbers (seems like an overstated return) so I wanted to ask, has anyone done something similar to this? Sounds like it would be a fun investment if I had the time or the space to do it.

Comments (18)

Jan 7, 2020

My dad owned a 1960's Porsche 912 for $5k way back. Today it'd be worth $60-90k. I believe your networking call.

I remember tracking Ferrari Testarossa's for a bit. I saw them shoot up from $75k (ish) to about $120-130k in a year.

As a pure "investment", seems very risky and it's definitely not scalable. But if you're super into cars you can make a buck if you get it right. Older Porsches became super hot in recent times.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Jan 7, 2020

By the way he was talking about it sounded as if it was less of an antique, vintage collectible and more as a car that someone is going to buy and race. The appreciation in value is purely in labor as it seems to me.

Jan 7, 2020

Sounds like just building a car and selling it, although it happens to be a very cool car to build and sell. There are small companies who make "kit cars" and are profitable. I know of a guy who does this out in Beverly Hills PO, his house is near Mulholland Drive. Numbers seem very reasonable for what you described.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Jan 9, 2020

Have a family friend that does this as a side hustle. It is a little more scalable than you think. He will buy up to 6 Porsches made between 1960-1970 at a time. The hardest part is finding buyers that don't know what they have on their hands, that want to get rid of the car quick. Margins for these types of cars can be as high as 40k per car, but are typically much lower, maybe avg of like 15k.

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Jan 7, 2020

Not a stretch at all. Pretty normal, especially if we're talking Porsche.

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Jan 7, 2020

Down the street from me there's a Pagani dealership. They have a 1961 Ferrari 400 Superamerica SWB Aerodinamico Coupe.

I wonder what it was worth back in the day. Today it's worth around $4.4MM

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

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Most Helpful
Jan 7, 2020

Check out a video Doug Demuro did on youtube talking about identifying future classics. A lot of the cars regarded as "classics" these days have already blown up in value, leaving little room to make any money (ex. any 911, gen 1 bronco, pagoda roof Merc SL)

There are some cars the the Gen Z/Millenial Generation will have nostalgia for that still sell for cheap (ex. R129 Merc SL, E36 BMW M3, Porsche 928, Mitsubishi 3000 GT).

If you want a look at some crazy future classics, check out the "Youngtimers Collection" that Sotheby's auctioned off last year. Huge garage of 80's and 90's AMGs Alpinas, Porsches, etc.

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Jan 8, 2020

THISSSSS
I really enjoy Doug's videos, if you haven't seen it yet check out the Vinwiki yt channel, their content is awesome as well

Gun rights activist
Jan 9, 2020

My best friend worked for an exotic car dealership during college and got Doug to film one of their cars.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

  • Associate 3 in ER
Jan 9, 2020

When I was a teenager there was an old Porsche for sale at a local gas station, the owner of the gas station had passed away and their kids were liquidating his collection of project cars. I begged and pleaded with my parents to help me buy a rusty 356 I had my eye on since elementary school before the family listed it online.

Most of the other cars were pre-war classics, I figured since my parents weren't car people the Porsche would be an easier sell and as a naive teenager $30,000 looked like a deal. No way I could convince them I needed a Nash Metropolitan (unlisted) or a Hudson Hornet (unlisted) much less a BMW 3.0 CS ($20,000) or DeTomaso Pantera ($10,000) which were sitting alongside the 356.

I last saw that exact car fully restored at auction for close to $250,000 dollars. Granted, I wouldn't have been able to restore that car on my own, but today even poor condition models sell for double what the sale price was. 356 prices have outpaced the S&P 500 handily over the same time period.

By the time I was in college and working I was determined to buy a Porsche with whatever I could save. The impact bumper-style 911SCs I was looking at were around $15-20,000 at the time. 993 911 Carreras were only $25-30,000. Today most of them in the condition I would want are around 2-3x those figures. Even the 996 which wasn't popular at the time is increasing in value.

Jan 9, 2020

From what i see on Bring a Trailer, i think you can still get some less desirable 911SC models for a reasonable price...youll see some targa models with the earlier, less reliable engines go for sub-30k...still a big chunk of change for a car with less than 200 horsepower tbh, but i dont see them getting any cheaper

Jan 9, 2020

He may or may not pull it off but the least to say is that he's an interesting guy!

Jan 9, 2020

Lamborghini Countach which is worth $300,000+ (U.S.D), fun fact is that Countach is the Italian word basically for "Wow". Production from (1976-1990). The most beautiful Lamborghini I think is the Diablo roadster 1997 VT and Mclaren F1. I highly doubt you would be even to find one that someone would sell it.

"It's okay, I'll see you on the other side"

Jan 9, 2020

I mean its actually Piedmontese, which is just not italian but a lost language/slang in northern italy

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Jan 9, 2020

You are correct. :)

"It's okay, I'll see you on the other side"

Jan 9, 2020

Counting down the days until my old 2003 Suburban is considered a collectible.

"Work ethic, work ethic" - Vince Vaughn
  • Associate 1 in IB - Ind
Jan 15, 2020

You'll be saying the same thing at 80 years old

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Jan 16, 2020
Comment
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