The Best-Performing (and Fastest) Asset in My Portfolio
I stumbled onto the best-performing asset in my portfolio by pure chance...
Its value has increased by 800% in the past dozen years or so. And it’s also the most fun asset I own. That’s a hard combination to beat!
From a young age, I’ve had a need for speed.
I rode my bicycle fast. I loved sitting next to my brother as he whizzed around town in a Datsun 240Z. And I lost my license for two years in college after racking up 24 points for speeding in my turbocharged BMW.
Over the years, my tastes in cars matured.
In the early 2000s, I was looking for a Porsche 911. Not a new one - mind you - but a used one. I’ve always enjoyed sports cars, and it was time to jump up to a whole new level of performance.
What I ended up with was a car that barely had 75 horsepower and would break the 100 mph barrier only if I was going down a very steep hill.
Zero to 60? Hardly... A Toyota Prius would leave me in the dust.
But it was a Porsche, and I fell in love with it. I had no idea that this Porsche 356 would be a sought-after collectors’ item a little more than a decade later.
I was not looking to collect. All I was looking for was a unique driving experience.
What I ended up with was the investment of a lifetime...
When the car arrived from California, it was almost totally rust-free.
That was a big deal.
Prior to the mid-‘70s, most cars - Porsches included - did not use galvanized steel. That meant cars in certain climates were prone to rust.
The engine had just been rebuilt by a shop in San Rafael, and I had all the documentation of the rebuild on a CD - not that I really cared. I also got a huge binder full of receipts for the past 30 or so years. It went into that special filing cabinet where you toss stuff you’ll probably never look at again.
I drove the car everywhere.
Each time I sat in the car to start it up, the aroma of gasoline and leather was intoxicating. I would take it through a regular route, down some back streets, on the highway and get it nice and hot. It was no garage queen, and I really didn’t pay much attention to cleaning it up. (Under six coats of faded black paint, it didn’t shine anyway!)
Bottom line, I enjoyed the heck out of it. For a 50-year-old car, it was nothing short of an amazing ride.
Apparently, I wasn’t the only person who felt that way...
I paid $12,500 for that car. Recently, I turned down a six-figure offer for it.
That’s a gain of more than 800%.
The toolkit alone sells for more than $3,000.
It’s much nicer today. I did a complete bare-metal repaint 10 years ago and replaced the headliner, some of the glass and rubber seals.
That’s about it.
Marc Lichtenfeld and me in the 356.
I’ve spent between $500 and $1,000 a year on maintenance. The car has only about six electrical components, so besides adjusting the valves, putting in new points, adjusting the timing and changing the oil, there’s really not much else to do.
I wasn’t counting on it to add to my portfolio as a real asset, but that’s where it is.
Insurance is more than affordable, as it’s classified as a collector car. I pay about 1% of its value to insure it for an agreed-upon value policy.
Today, the collector car market is off the charts. In fact, as a group, collector cars have been the best-performing asset for the past 10 years.
You don’t have to be a “wrench” or expert mechanic to own one. You just have to know where to get it fixed.
I prefer to drive mine, but many collectors are now storing these vehicles away because they are too valuable. I say, drive ‘em! That’s what insurance is for.
In fact, driving them actually keeps them in good tune. And in some cases, the cars that are driven pick up value.
I’ve seen cars that looked like they were parked in a barn with a rat’s nest in the engine compartment sell for hundreds of thousands of dollars. It’s all about the model and the rarity when it comes to super-high-end cars. But that’s not the case for the middle of the pack - the affordable classics.
While the market is going crazy right now for the real classics, the soon-to-be classics are still quite affordable. The key is to follow the action in the models that you really love.
Here are some ground rules:
- Buy rust-free. If there’s rust, the car’s days are numbered, and you will spend a ton more on restoration. California and Arizona are two of the best places to buy.
- Insist on documentation. If the car has books and records, it will sell for more.
- Do not buy a customized car. In only rare situations does customization add value. Buy something original or something you can restore without spending an arm and a leg.
- Numbers matter. If the car’s components are original, such as the engine and transmission, then you’re going to get more for it. A rebuilt engine is rarely an issue as long as it’s the original engine.
- Repainting and restoring have to be done properly. If you’re not in an area where you can get good work done, you’re better off leaving it in the condition it’s in. The last thing a collector wants to do is buy a “restored car” that needs to be restored again.
- Drive it! If you don’t get a thrill from driving it, don’t buy it. You will be hard-pressed to sell it to someone if you’re not enthusiastic about it.
- Never buy a car unless you plan to enjoy it.
There are several great sources and price guides that you should be following today for the great deals of tomorrow. I recommend Hagerty.com, Autotrader.com and Hemmings.com.
However, the best way to get a good idea of pricing, supply and demand is to join a car club for the make and model you love. These clubs are usually open to anyone who shares the affinity for the marque. Do an online search for the national or local club, and get in touch.
It could end up as the most enjoyable move you made for your retirement!
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