Over the past decade, the internet has facilitated a major boom in the sale of rare, antique and classic cars.
Along with art and wine, it’s one of the hottest forms of alternative investing, due to both great returns and because it’s a fantastic hobby. If you love old cars, investing in classic automobiles might be right for you.
Here are a few pointers to get you started.
Understand the value of scarcity
Learning to distinguish between old and rare is a vital skill that can prevent you from overpaying for a vehicle.
When considering the purchase of a particular make and model, research online to find out how many cars were completed in the production run. Two otherwise comparable cars can differ tenfold in value if 100,000 units were produced of one and only a few thousand of the other. It’s supply and demand at work.
Novice investors are encouraged to start with European manufacturers as older Porsche or Ferrari vehicles tend to be rare by default, removing some of the guesswork when determining whether the asking price is reasonable.
Buy cars that you like
An antique automobile collection is a relatively safe and stable place to put your money over the long haul – but classic car investing is not a sound strategy for turning a quick profit.
If a quick ROI is your concern, you might be better off with a more traditional investment medium.
The happiest collectors are those who truly have a passion for it. Purchase cars that you like. That way you’ll still be content to own them should their values drop.
Don’t throw good money after bad
Scoring a great deal on a car that needs a lot of work can be a real boon. Or it can lead to a money pit parked in your garage.
Fixing up old cars to turn a profit can be very lucrative but you have to learn when to throw in the towel. Once you determine that you’re unlikely to come out ahead, it’s best to cut your losses and sell.
Even those who love working on old cars should consider the value of their time when calculating the cost of refurbishing a classic vehicle in need of some TLC.
Divide your collection
Classic cars with exceptionally low mileage are worth a lot of money. This means that should you purchase the vehicle and drive it every weekend, you’ll be shooting value out the exhaust pipe.
When shopping for new cars for your collection, bear in mind that some additions just aren’t meant to be driven. Divide your collection into museum pieces and cars available for enjoyment on the road.
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