Author Topic: Friend bought a Ferrari  (Read 2356 times)

Hula Hoop

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Friend bought a Ferrari
« on: May 15, 2018, 11:20:19 AM »
We went out to dinner at our favorite greasy spoon local restaurant near where we live in Italy.  My husband is friends with the family who own the restaurant but we hadn't been there in a while (because of mustachianism) so it had been some time since we last saw them.  The owner's son (50-ish) took my husband aside and told him that he put a second mortgage on his apartment and bought a red Ferrari.  Business is good, he said, so he thought "why not?"  He told my DH not to tell his mother (who owns the restaurant and is the main cook) as she would kill him.  Because you can't just park a Ferrari on the street, he also has to pay some crazy amount of money for it to be stored (secretly obviously) in a fancy garage.

He's single and a bit of a play boy and he thinks the Ferrari will be a chick magnet.  We left the restaurant rolling our eyes.
« Last Edit: May 15, 2018, 12:00:35 PM by Hula Hoop »

Chris22

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Re: Friend bought a Ferrari
« Reply #1 on: May 15, 2018, 02:16:21 PM »
A silly purchase maybe, but on the other hand, unless he beats the car up or puts a ton of mileage on it, it will likely lose very little value or even appreciate some.  It will never be a "good investment" but it's unlikely he will lose any significant money on it. 
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

patchyfacialhair

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Re: Friend bought a Ferrari
« Reply #2 on: May 15, 2018, 02:41:39 PM »
I think the Anti Mustachian part of this (other than financing a luxury by putting the apt up as collateral) is thinking that the car will be a chick magnet. In all likelihood it'll be a dude magnet.


2Birds1Stone

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Re: Friend bought a Ferrari
« Reply #3 on: May 15, 2018, 03:10:42 PM »
A silly purchase maybe, but on the other hand, unless he beats the car up or puts a ton of mileage on it, it will likely lose very little value or even appreciate some.  It will never be a "good investment" but it's unlikely he will lose any significant money on it.

I would argue that it really depends on the vintage....he could have already lost money by overpaying, the opportunity cost, and now the ongoing storage/maintenance costs (even with very little/no use)

MgoSam

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Re: Friend bought a Ferrari
« Reply #4 on: May 15, 2018, 03:22:45 PM »
A silly purchase maybe, but on the other hand, unless he beats the car up or puts a ton of mileage on it, it will likely lose very little value or even appreciate some.  It will never be a "good investment" but it's unlikely he will lose any significant money on it.

I would argue that it really depends on the vintage....he could have already lost money by overpaying, the opportunity cost, and now the ongoing storage/maintenance costs (even with very little/no use)

Not to mention insurance and taxes (unsure if this is sig in Italy).

At the same time, I just can't imagine hiding something like that from my family/boss.

Chris22

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Re: Friend bought a Ferrari
« Reply #5 on: May 15, 2018, 03:51:26 PM »
A silly purchase maybe, but on the other hand, unless he beats the car up or puts a ton of mileage on it, it will likely lose very little value or even appreciate some.  It will never be a "good investment" but it's unlikely he will lose any significant money on it.

I would argue that it really depends on the vintage....he could have already lost money by overpaying, the opportunity cost, and now the ongoing storage/maintenance costs (even with very little/no use)

Of course.  This is (almost certainly) not a money making venture.  However, a Ferrari is unique in that it is one of the only sports car of that caliber that will generally not lose value.  Most new Ferraris are worth more immediately after purchase (they make a finite amount and the demand is very high for most new models).  Then they gradually depreciate down some, to maybe 75% of sticker, and then nostalgia will set in and the older models will go back up in value, usually to over sticker after about 20 years.  Right now there is a renaissance for the manual transmission models, because they no longer make them, so some MT 1990s Ferraris are going for more than they ever cost new.  I'm guessing the next fad will be that Ferrari will will start to incorporate KERS-like hybrid drives (the LaFerrari already has it) in their more 'pedestrian' models and there will be a run on pre-hybrid drive Ferraris. 

This is unique, most other high end sports cars (Lamborghinis, non-GT3 Porsches, AMG Mercedes, etc) experience EPIC depreciation.  But if you were lucky enough to pay sticker for a McLaren F1 back in the early 1990s (around $1.5M), that same car would be worth ~$15M today. 
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

sokoloff

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Re: Friend bought a Ferrari
« Reply #6 on: May 15, 2018, 04:21:26 PM »
This is unique, most other high end sports cars (Lamborghinis, non-GT3 Porsches, AMG Mercedes, etc) experience EPIC depreciation.  But if you were lucky enough to pay sticker for a McLaren F1 back in the early 1990s (around $1.5M), that same car would be worth ~$15M today.
The air-cooled 911s have experienced a significant run-up in the last 6-8 years or so as well. An older 930, 964, or 993, bought right a decade ago can easily worth 3-4x what you paid.

Chris22

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Re: Friend bought a Ferrari
« Reply #7 on: May 15, 2018, 04:28:30 PM »
This is unique, most other high end sports cars (Lamborghinis, non-GT3 Porsches, AMG Mercedes, etc) experience EPIC depreciation.  But if you were lucky enough to pay sticker for a McLaren F1 back in the early 1990s (around $1.5M), that same car would be worth ~$15M today.
The air-cooled 911s have experienced a significant run-up in the last 6-8 years or so as well. An older 930, 964, or 993, bought right a decade ago can easily worth 3-4x what you paid.

Correct, I was mostly referring to current sports cars as there are a lot of older sports cars which, bought used, are currently appreciating, such as my S2000, NSXs, etc.  Ferraris (ex California/Portofino) are one of the few cars (along with the GT3) which appreciate straight off the lot. 
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

PrairieBeardstache

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Re: Friend bought a Ferrari
« Reply #8 on: May 15, 2018, 07:14:25 PM »
This is unique, most other high end sports cars (Lamborghinis, non-GT3 Porsches, AMG Mercedes, etc) experience EPIC depreciation.  But if you were lucky enough to pay sticker for a McLaren F1 back in the early 1990s (around $1.5M), that same car would be worth ~$15M today.
The air-cooled 911s have experienced a significant run-up in the last 6-8 years or so as well. An older 930, 964, or 993, bought right a decade ago can easily worth 3-4x what you paid.

Correct, I was mostly referring to current sports cars as there are a lot of older sports cars which, bought used, are currently appreciating, such as my S2000, NSXs, etc.  Ferraris (ex California/Portofino) are one of the few cars (along with the GT3) which appreciate straight off the lot.

S2000s seem to be selling for the same price today as what I paid for mine 13 years ago.

Strangely, my AMG is now holding its value (W204 with an M156), I suspect largely due to the same reasoning you have above: it's one of the last great naturally aspirated engines.

I find it a little amusing that I own two recent cars holding and appreciating in value.

Better Late

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Re: Friend bought a Ferrari
« Reply #9 on: May 15, 2018, 07:28:32 PM »
How do you get information on what older cars are sought after currently?

Hula Hoop

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Re: Friend bought a Ferrari
« Reply #10 on: May 15, 2018, 11:04:13 PM »
So you're all saying that, in fact, our friend may be a canny investor?

Chris22

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Re: Friend bought a Ferrari
« Reply #11 on: May 16, 2018, 05:53:48 AM »
So you're all saying that, in fact, our friend may be a canny investor?

No, Iím saying if he wants to drive a fancy car, he probably picked the cheapest way to do it. Heíll still lose money on maintenance, storage, insurance, etc, but probably not much on the car itself.
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

Just Joe

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Re: Friend bought a Ferrari
« Reply #12 on: May 16, 2018, 08:10:01 AM »
https://www.wsj.com/articles/the-art-of-faking-a-ferrari-1525963426

Then these guys come along and build something a person can drive hard and not worry about ruining its resale value... ;)

RWD

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Re: Friend bought a Ferrari
« Reply #13 on: May 16, 2018, 08:28:02 AM »
How do you get information on what older cars are sought after currently?

I like to browse Bring a Trailer. Very interesting to see how the auctions turn out.
You can use Hagerty to look up specific vehicles.

Chris22

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Re: Friend bought a Ferrari
« Reply #14 on: May 16, 2018, 08:58:15 AM »
How do you get information on what older cars are sought after currently?

I like to browse Bring a Trailer. Very interesting to see how the auctions turn out.
You can use Hagerty to look up specific vehicles.

Bring a trailer tends to get a lot of exposure, and is generally thought of to be the height of the market.  It also shows what's hot currently, and isn't necessarily a future predictor.

It's fantastic for daydreaming though :)

Really, to predict the future, you want to look at what was hot about 20-30 years ago.  The idea is that you take the generation that's in the meat of their earning years, and look at what was popular or desirable when they were in high school, because that's what they'll buy to try and recapture their youth or acquire what they couldn't have then.  That's why about 10 years ago muscle cars were all the rage, and now 80s sports cars are blowing up (air cooled 911s, Ferrari 308/328).  The thinking is that the next big thing will be 90s Japanese cars, and that's what we're already seeing, such as the NSX, FD RX-7, Supra (they never really went down), Integra Type-R, etc.  You also want to consider what cars/features aren't available on the new market; manual transmissions are on the wane, electric steering is taking over for hydraulic (generally considered a backwards step), etc.  And you have to consider if the old car is superior to the new one; for instance, no one is going to pay huge money for an old Miata when a new one is available off the showroom floor for reasonable coin.  But if you find something that was desirable and discontinued without a good replacement (like my S2000), that will have a little more runway to appreciate. 
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

Laura33

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Re: Friend bought a Ferrari
« Reply #15 on: May 16, 2018, 09:56:37 AM »
Along the lines of the same thing:  my biggest non-Mustachian splurge is my 911 convertible.  Because of this, I am now on a mailing list for Porsche, and I just got a survey they had done of their demographics.  The part that got me was that by far the highest percentage of Porsche owners (30%) were people in the lowest income category on their list!  (Which wasn't exactly "low" -- under $200K -- but I still can't imagine spending like a year's pay for any car!  Much less a ridiculously overpriced toy.).
Laugh while you can, monkey-boy

craiglepaige

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Re: Friend bought a Ferrari
« Reply #16 on: May 16, 2018, 10:07:47 AM »
How do you get information on what older cars are sought after currently?

I like to browse Bring a Trailer. Very interesting to see how the auctions turn out.
You can use Hagerty to look up specific vehicles.

Bring a trailer tends to get a lot of exposure, and is generally thought of to be the height of the market.  It also shows what's hot currently, and isn't necessarily a future predictor.

It's fantastic for daydreaming though :)

Really, to predict the future, you want to look at what was hot about 20-30 years ago.  The idea is that you take the generation that's in the meat of their earning years, and look at what was popular or desirable when they were in high school, because that's what they'll buy to try and recapture their youth or acquire what they couldn't have then.  That's why about 10 years ago muscle cars were all the rage, and now 80s sports cars are blowing up (air cooled 911s, Ferrari 308/328).  The thinking is that the next big thing will be 90s Japanese cars, and that's what we're already seeing, such as the NSX, FD RX-7, Supra (they never really went down), Integra Type-R, etc.  You also want to consider what cars/features aren't available on the new market; manual transmissions are on the wane, electric steering is taking over for hydraulic (generally considered a backwards step), etc.  And you have to consider if the old car is superior to the new one; for instance, no one is going to pay huge money for an old Miata when a new one is available off the showroom floor for reasonable coin.  But if you find something that was desirable and discontinued without a good replacement (like my S2000), that will have a little more runway to appreciate.


^^^ this.
It's extremely expensive to relieve your youth.
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https://youtu.be/GO1Fsp4cUTQ

RWD

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Re: Friend bought a Ferrari
« Reply #17 on: May 16, 2018, 11:17:35 AM »
Along the lines of the same thing:  my biggest non-Mustachian splurge is my 911 convertible.  Because of this, I am now on a mailing list for Porsche, and I just got a survey they had done of their demographics.  The part that got me was that by far the highest percentage of Porsche owners (30%) were people in the lowest income category on their list!  (Which wasn't exactly "low" -- under $200K -- but I still can't imagine spending like a year's pay for any car!  Much less a ridiculously overpriced toy.).

Ooh, nice! Which vintage 911? (I'd love to have you stop by my journal and share more)

Our household income is under $200k but we purchased our Porsche used so it was less than a third of our annual income.

MgoSam

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Re: Friend bought a Ferrari
« Reply #18 on: May 16, 2018, 01:53:04 PM »
So you're all saying that, in fact, our friend may be a canny investor?

No, Iím saying if he wants to drive a fancy car, he probably picked the cheapest way to do it. Heíll still lose money on maintenance, storage, insurance, etc, but probably not much on the car itself.

Any idea if this reporter's experiences are representative with selling a pre-owned Ferrari?

https://jalopnik.com/the-hardest-part-of-owning-a-ferrari-is-selling-it-1666290108

Better Late

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Re: Friend bought a Ferrari
« Reply #19 on: May 16, 2018, 09:51:58 PM »
How do you get information on what older cars are sought after currently?

I like to browse Bring a Trailer. Very interesting to see how the auctions turn out.
You can use Hagerty to look up specific vehicles.

Thank you! Selling a vehicle for a family member and trying to learn what I can.

Coloradostache

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Re: Friend bought a Ferrari
« Reply #20 on: May 17, 2018, 03:22:14 PM »
How do you get information on what older cars are sought after currently?

I like to browse Bring a Trailer. Very interesting to see how the auctions turn out.
You can use Hagerty to look up specific vehicles.

I follow that sight way too much.  There is money to be made though.  I made over $20K last year on 4 car flips - 2 E39 M5s, 2 E46 M3s.  There is a market for fun analog cars.  Like any investment, research the market and there's opportunity. 

80's cars are hot for sure.  I have an 88 M3 that I bought in 2003 that has easily tripled in value. 

sokoloff

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Re: Friend bought a Ferrari
« Reply #21 on: May 17, 2018, 03:44:47 PM »
80's cars are hot for sure.  I have an 88 M3 that I bought in 2003 that has easily tripled in value.
That's a good outcome for a car, but a fairly average outcome for an investment. (IOW, make sure you enjoy the car part of it. :) )

S&P return (dividends reinvested) from May 03 - May 18 is +282% (or almost quadrupling).

PrairieBeardstache

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Re: Friend bought a Ferrari
« Reply #22 on: May 18, 2018, 08:03:00 AM »
How do you get information on what older cars are sought after currently?

I like to browse Bring a Trailer. Very interesting to see how the auctions turn out.
You can use Hagerty to look up specific vehicles.
80's cars are hot for sure.  I have an 88 M3 that I bought in 2003 that has easily tripled in value.

I had an e30 once, one of my favorite cars of all time. An e30 M is an icon. If I had one, I don't know that I could part with it. Also, in 2003 there was the $14k rule - seems laughable now.

Coloradostache

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Re: Friend bought a Ferrari
« Reply #23 on: May 24, 2018, 09:09:34 AM »
I've for sure had more fun with it than I would have had with any other investment.  I haven't driven it a ton, about 25,000 miles, but we've had lots of good times.

I remember the $15k rule.  I paid $16K CAD in 2003, and its likely a $50K car right now.  That said, it really doesn't matter as I don't really intend to sell anytime soon.  I've never considered my cars investments, but they've been a good way to feed my car hobby while not losing any money. Better than most can say about car purchases.