A classic car investment, because it will be a significant financial commitment, requires a good amount of research before signing on the dotted line. We understand how it is when you’re passionate about a classic and can’t wait to take the leap at restoration. That said, before you do, the following classic car investment tips and risks will make it possible for you to make an educated decision that will help you fulfill your passion, make a profitable investment, and avoid costly mistakes.
Classic Car Values Rise
Hardcore classic car collectors are always going after the next “big thing,” but it’s hard to predict a “sure” thing when it comes to investments. Fortunately, classic cars are gaining attention, with popularity increasing by as much as 500 percent over the last ten years. They’re also outpacing other popular investment opportunities like wine, stamps, and art by over 100 percent according to the Knight Frank Luxury Investment Index.
Ways You Can Invest in Classic Cars
Before you consider a classic car investment, it’s important to do your research, finding out how much it will cost, how long it will take, etc.) and you’ll need to have decided on a classic that you’re passionate about. You’ll also need to come up with an estimate of the type of value you’re looking at if or when you’re ready to sell it. Another consideration is that you don’t want to pay too much for the car if you want to make a profit. Once you have the research behind you, it’s time to invest, and the following information will help.
This form of investing has been growing in popularity because more and more investors are looking for ways to distribute their wealth to something that they’re passionate about or that tugs at their heart. The classic car arena has grown into a highly valued collectible sector, increasing successful results when it comes to passion funds.
Purchasing a Restored Classic Car at an Auction
Some of the best deals can be found at auctions, although they can also end up raking in the highest prices too. That’s why it’s so important to know your car, and it’s worth. There are a lot of auctions held around the country, and you’ll probably find one close to home.
Restoring a Classic Car
One of the most important things to remember with a classic car investment is that it’s easy to spend more restoring the car, for example, you can put a private plate on, than it could end up being worth once you’re finished. That said, in contrast to shares or other alternative assets like wine (and the others mentioned above), you’ll have an asset you’ll be able to enjoy, driving it around town, turning heads.
Classic Car Investment Risks
You should familiarize yourself with the classic car market before buying so you’ll know you’re getting a good deal. You’ll also want to consider the classic car investment risks listed below.
If you don’t have enough time to devote to the project, you won’t get the job done. Ask yourself these questions before investing. “What is my timeframe and how much time do I have to dedicate to the project each week?” “Is this project going to conflict with other commitments (work, family, etc.)?” Keep in mind that a thorough restoration project can take a year or more.
Do you have the budget to complete the project? Remember, you’ll only make money on your classic car investment when you sell it. Classic car restoration is an expensive project, and it’s easy for costs to pile up on you. You’ll need to include car parts, garage/storage space, tools and unknowns that typically occur along the way. Important to note is that the cheapest cars can end up costing the most to restore.
If you don’t like the car or are in it only for the money the project probably won’t be as rewarding. Any project worth taking on should make you feel like a kid anticipating Christmas morning. There’s nothing quite like the excitement and joy you’ll experience when you invest in a sought after classic vehicle.
Another potential risk is that you don’t have a place to work on the car or to store it. If you don’t, you’ll need to rent space, which is an additional cost. If you’re lucky, you could find a friend or family member who wouldn’t mind you using their garage.
You end up over your head in terms of the work involved in your restoration project. Do you have the skills and expertise to complete the restoration to a high standard? Metalwork, welding, and upholstery are just a few of skills you’ll need to restore a classic.
If you’re considering restoring a classic car and would like a quote, please contact us today.