Classic Cars

How Classic Cars Can Be an Investment

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Classic cars catch the attention of people like few other things. Whether you’re cruising around in one or just have it parked by your home, you’ll get compliments and respect. Buying this status symbol can cost you upfront or over time if you fix it up, but classic cars can actually be an investment that pays dividends for you in the long run.

How are Classic Cars an Investment?

Just defining classic cars can be tricky. The Classic Car Club of America says that classic cars are models made between 1915 and 1948. Then again, certain states say that any car more than 25 or 30 years old is a classic, which now covers the early 1990s and all of the 1980s.

The reason classic cars are investments is that they are rare items. Investopedia notes that in the last 10 years, classic cars have seen prices rise faster than other collectibles, including stamps and coins. In fact, the market for classic cars has actually outpaced the general stock market that index funds track in retirement portfolios.

Entry-level classic car enthusiasts can find vehicles meeting the various definitions for around $20,000 in some sales. High-end classic car lovers pay attention to the famous auctions, where some classic cars fetch millions of dollars.

How to Make Money with Classic Cars

In terms of making money with classic cars, there are three general strategies that you can use:

  1. Buy and Hold:¬†Find a classic car that’s in good to great condition, and then just enjoy it as long as you can. So long as you keep the condition of the car how you got it, you should be able to just wait for the market value to go up. Once you’re ready, you can put it back on the market and sell it for a profit.
  2. Fix and Flip:¬†Many classic cars are not in great shape. That’s simply due to their age. Even classic cars that were well-maintained for a while sometimes start wearing down and even rotting if their owners keep them for a long time without working on them. Finding the right parts gets harder the older any car gets, especially for rarer rides, but your sweat equity can translate into restored market value.
  3. Diversify: The values of certain classic cars go up or down based on market demand. As generations change, so do the market tastes. Some makes and models that are worth a lot today might not be worth nearly as much a decade from now. Diversifying into multiple cars is exponentially more expensive than just dealing with a single vehicle, but it does offer you a hedge against losing value on some models since more of them will hopefully appreciate in value.

Factor in Shipping Costs

The Internet has made the market for classic cars a national marketplace. You can now buy and sell to every state in the country.

In the continental United States, car shipping is often done by truck via the Interstate system. These trucks can also give you access to Canada, Mexico, and parts of Alaska. You can choose from open trucks where vehicles are exposed to the elements or enclosed trucks that give cars safety inside an interior storage space while in transit.

For clients in Hawaii or overseas, container shipping on ocean freighters still lets you move classic cars from one owner to the next. Having said that, such transactions are far rarer. Classic cars would still need to be moved via truck once onshore.

Knowing how much it costs to ship a car is likely to matter more when you are the buyer. Most transactions put the cost of shipping as a buyer burden. This is a cost you would have to add to the purchase price of the vehicle, along with any applicable taxes, tag fees, and registration matters.

Just owning a classic car can be one of the sweeter moments in life. However, if you do it right, you can not only enjoy ownership but also make an investment out of it. When the time comes to pass a classic ride on to its next owner, you can recoup what you put into it and make even more.

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