Investing in Classic Cars: A Crash Course (Part I)
So, to declare, no pun intended on that headline.
Now, you want to buy a classic car, so you come to me and you ask me, Caleb, what classic car should I buy? Then I ask you, do you like letting your children go hungry?
Many people approach classic car buying with such fear, that they may end up buying a blackhole which will suck up all of their money. This happens nine times out of ten. The world of classic cars is a scary place, different eras, continents of origin and the biggest of all, the condition.
The choices really are endless, 60s? 70s? 80s? Italian, British, American, German, Japanese? Auto, manual? Colours? Engines? In South Africa, there has been an uptake in classic car buying as petrolheads who are madly passionate, seek to defy the coming future of electric vehicles.
But classic car buying is also a business, with the amount of dealers and brokers increasing dramatically in the last five years. Being entrenched within the luxury vehicle space I am seeing more clients who appreciate pieces of history and seek to own parts of the past.
So before we get intto the meat and veggies, let me blow your mind with a fact that may just make you look at the classic market, twice, or three times.
Seen in the image below, is a 1963 Ferrari 250 GTE, a car I very much cherish and appreciate, it was being offloaded here in the 60s, and sold at the time for £2000, at a time when it was £2 to one Rand.
Crazy right, now here is a picture of me next to the car at a beautiful wine estate in Stellenbosch. It looked marvellous in Grigio Argento, over Pelle Rosso, all original, and see how the seats are aged, that is called patina, which is a term used to describe when classic cars age, but are perfectly aged, not kept in a glass box, but shown that is has been through the eras and loved in different ways - but it does not mean it is an old rust bucket.
And one more photo, of the screenshot of the exact car now being sold, for ZAR 6 700 000, at my buddies spot in Cape Town. You do the math and work out the % increase in nearly 60 years. Stonks!
But you are going to come to me and say, well Caleb, I do not have 6 bars to drop on a 50+ year old classic machine, that is exactly what this article is for, let us show you how to access the market, more easily.
Now, why do you want a classic car? Here are a few reasons from the crazy people like myself who have done it;
- Fulfill a childhood dream, maybe you have always wanted a car, and you grew up loving it and now have the opportunity to own it.
- Restoration project, a strange phenomenon, you spend lots of money, by purchasing a rust bucket and bringing it back to life, you may do it yourself and learn some valuable car mending skills, or sit back with a coffee on a Saturday morning watching a trusty classic car specialist work on it.
- Diversify your garage, in my garage is some new stuff, which is cool, but the old stuff wins for character, they are so fun to own, and drive - and if you get into the right car clubs, it opens up a whole new world of connections with like minded people you meet along the way.
How much are you willing to spend?
You have to have this in mind, not only for the car, but all the work that could potentially need to be done, if you are buying a car in mint condition, not much, odds and ends, if you want a project, you could be in for three to five times the value of the car purchased. So, don’t be brave, keep it simple.
Budget a total value, all in with your poker chips and take it from there.
What are you going to use the car for?
Do you want to keep it, fulfill your quarter or mid-life crisis and enjoy driving it on a Sunday afternoon with an open button shirt and shades, or is that just me?
How about also taking it on classic car tours, enjoying a cheeky track day or two?
Do you want to sell it, make a little profit on the car? That requires a bit more research and will require you buying a car in higher demand, which will attract a higher volume of buyers. A 1998 Alfa Spider is a great little Italian sports car that you can pick up sub-100k but good luck finding a buyer, but then also, a 1987 BMW 320i (E30) is also a great pick, with you finding a neat one at under 100k, could do a few touch ups, a service and maybe make a small margin.
You need to be actively reading all about your classic car buying choices, you need to know them as good as the manufacturer, go to a local garage and find out the costs to maintain the vehicle, what is temperamental, or parts that are hard to find, all this and more can be found online, or within our profile of Banker X-perts who are willing to help you in this exciting journey, trust me, it is incredible to do.
I recommend so many people to do it - but since I have never seen a real world example, it was decided that you can come along for a journey of buying, fixing and possibly selling a classic.
So I would like to tell you about Emery, my new, old, 1976 Mercedes-Benz 280S (W116) - which I have purchased for you to see just how much the journey costs.
Here is a quick breakdown;
Cost: R 15,000.00
New Battery: R 1,320
Tow Costs (from previous owner to me): Free, a strong bargain can get you anything.
I will tell the full story, in part two, she is going to need some restoration, but join me on the journey and see her come to life!