How to See Triple-Digit Appreciation on Your “Midlife Crisis”

Karim Rahemtulla By Karim Rahemtulla, Options Strategist, The Oxford Club

Alternative Income

Buying a future collectible is not much different from buying a stock. It’s just a lot more fun!

You’ve got to do your due diligence, set a time horizon, follow the market prices and, yes, set a stop loss.

I received a lot of responses from last week’s article on collectible cars.

It appears that you’re as excited as I am about cars!

I especially appreciated all the comments about Porsches that were once owned but let go. It’s hard to know if the car you owned will be that big winner a decade or two from now.

But there are ways to narrow the odds.

So today, I’m going to hit you with several important lists. The first is a list of the types of collectible cars. The second is a checklist of the things to check off before you buy. And the third is a list of the cars that I think could see excellent returns in the next several years.

Without further ado, let’s look at the types of collectible cars:

  1. Show car – rarely driven, extremely clean, straight and rust-free.
  2. Unmolested – can have some rust, original patina, original paint, interior can be “messy,” aged but not abused.
  3. Driver – good to excellent condition, few flaws, can be restored easily to show car status (the most fun to own!).
  4. Beater – rust bucket, parts missing, may not be drivable.

If you want the most reasonable entry into the world of collectible cars, look for cars in unmolested or driver condition. They are easiest to restore and much, much cheaper than show cars.

The goal here is to buy a car that you can enjoy driving and then hopefully make a ton of money on later.

Before you cut a check though, be sure you’ve checked off at least the following items:

  • Matching numbers. The cars that fetch the highest prices have the original engine and transmission. The numbers on these components should match the vehicle identification number (VIN) of that particular car. The certificate of authenticity (COA) will usually list these numbers. Speaking of…
  • COA. This is a form you can request from the manufacturer. It will list the VIN and the matching engine numbers, as well as the factory options, original paint color, and type and material for the seats. If a COA is not available, then contact the manufacturer for a “build sheet,” which will also list similar information. Most manufacturers have an office that handles these requests.
  • Toolkit. The car is never complete without a full set of original tools. This includes the spare tire and jack. If the kit isn’t complete, it’s time to scour the internet for the parts you need. But watch out for fakes! Joining a forum for your particular car will help you avoid mistakes. You’ll be surprised at how helpful aficionados of your make are, even for the simplest requests.
  • Rust. This is the killer. Avoid it at all costs, unless you really know a good restoration shop.
  • Get it inspected. This is perhaps the most important action you can take. Pay the $200 or $300 to get the car inspected – and not just a cursory check. Get as invasive of a test as possible. It will save you massive amounts of money later. I owned a Porsche GT3 for a few years. It was essentially a race car built for the street. If that engine blew, it would have cost me between $25,000 and $40,000 to rebuild or replace.
  • Parts availability. There’s no point in buying a car if you can’t get parts. Foreign exotics like old Italian cars (I have one on the list) are notorious for poor parts availability… but they’re damned pretty to look at!

Once you’ve checked all of these off, you should be safe to sign on the dotted line.

Five Cars to Put On Your List

Everyone has a list.

It’s usually based on experience, going to a lot of shows and talking to a lot of people. The exact model is quite important.

Your list may be different, but here is a list of cars that I like, with prices ranging from less than $15,000 to around $50,000.

Currently, the market is quite well-priced, but the cars I mentioned above are not yet in the view of most collectors.

The current crop of collectibles may be about to experience short-term turbulence, as some of the gains are results of the risk fostered by a low interest rate environment.

But there are some undeniable factors that will drive the market in the coming years.

Boomers love cars, and they have money. And Asia is just waking up to the idea of collectibles. The cars I mentioned all have triple-digit appreciation potential if bought correctly. More importantly, each one is a blast to drive!

Good investing,