Author Topic: Used Cars are an Investment  (Read 5481 times)

GoStumpy

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Used Cars are an Investment
« on: July 06, 2013, 12:01:44 PM »
That title got you going, didn't it??? 

Had a thought this morning when discussing on another forum "How much is a 1999 TDI Jetta worth?".

I answered that question before ever reading what was in the body of his post... I answered the subject question. 


The calculation of 'worth' of an asset is debatable.... right?  It's not always $XX,XXX, sometimes it's $XX,XYX.  That is different.

Therefore, if you're willing to fix every problem in the car, then it is worth far more, correct?

A rusty, barely driveable 1999 TDI Jetta with 418k KM is worth... say... $3000?

Same 1999 TD Jetta with no rust, fresh paintjob, brand new motor, new interior, new glass, nice wheels, completely new brakes, wires, suspension, exhaust, fuel system, etc...

Is that 1999 TDI Jetta worth $3000?

What if it also had 418k KM?

No?


Then it went up in value.



Just like investments in the real estate market & investments into the stock market, bonds, Vanguard, etc.... Money you put in is not always directly proportional to the return.

ROI.


When you invest in your vehicles, your ROI is not good.  It will be bad.

But how is it compared to paying a car loan?

End of my thought, let me know what you think!

Thanks!
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ketchup

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Re: Used Cars are an Investment
« Reply #1 on: July 06, 2013, 12:57:42 PM »
There are plenty of $500 beaters on Craigslist that with some time and know-how one can make into $1500 beaters easily.  There are also plenty that are time bombs that will turn into $250 scrap very fast.

If you know what you're doing, and are very picky about what you get, with a little luck used cars can be an investment of sorts.

Another thing that is very important for valuation of a car is location.  A beautiful rust-free 20 year old car with 200k in Phoenix might be worth $1500, but drive it to Chicago and it might be worth $2500.

GoStumpy

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Re: Used Cars are an Investment
« Reply #2 on: July 06, 2013, 10:52:23 PM »
Yep... I am in pretty much the only province of Canada that has rust-free cars... so I don't want ANY cars from out-of-province, as they will deteriorate far faster.

I am of the opinion that a car that is waxed frequently, twice a year, and cleaned *properly* with a pressure washer, and has a good undercoating, can last 50+ years easily.  Mechanical is easy, but the body is usually pretty irreplaceable.
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ender

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Re: Used Cars are an Investment
« Reply #3 on: July 07, 2013, 06:27:27 AM »
Time of year and season can greatly affect this too.

People aren't as interested in buying $500 4x4 trucks in spring or early summer, but once winter hits, in some parts of the world, those are much more desired.

GoStumpy

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Re: Used Cars are an Investment
« Reply #4 on: July 07, 2013, 09:52:10 AM »
Yep.

We made the error (only a mistake if you don't learn from it) of buying a 2005 Nissan Altima in the early spring...

Not sure why, but nobody wanted it.

It's a damn luxury car!

We paid $3150... I thought it was worth $6k minimum, more like $8k...

Eventually sold it for $4k to some lady, and she wanted to return it!!!  CRAZY PEOPLE!

Anyhoo, if you take meticulous care of your vehicles, and always fix them before or after they're broken, and bought them used for a good price, they will always go up in value... Eventually.  You gotta ride out the market :)
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capital

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Re: Used Cars are an Investment
« Reply #5 on: July 07, 2013, 10:08:41 AM »
My year of car ownership (a Pontiac Vibe) was essentially free or even slightly profitable: I didn't use it to commute, did reasonable wash/wax/oil change maintenance, had no breakdowns, sold it for what I bought it for, and used it to move cross-country in a move reimbursed at 50 cents a mile.

GoStumpy

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Re: Used Cars are an Investment
« Reply #6 on: July 07, 2013, 11:42:40 PM »
Me too!

Every car I've owned in the last 10 years, I have sold for more than I paid.

The trick is, buy low, sell high.

Simple, right?

Buy Low, Sell High, put few miles on it, take care of the paint & interior, do mechanical maintenance, and don't wreck it without insurance.

You'll always make money driving a car, except gas & insurance are always an expense.  Unless the insurance pays out.



That's why I cannot fathom people buying a brand new vehicle... If you buy a slightly used one for a good deal, and keep it meticulously maintained, it won't depreciate unless you put a ton of miles on it, which I think us, as mustachians, put as few miles on our vehicles as possible!

Thoughts?
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StarswirlTheMustached

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Re: Used Cars are an Investment
« Reply #7 on: July 08, 2013, 03:38:03 PM »
I think you need good luck to flip a car, on top of very good mechanical knowledge. You need to be able to pick out the good ones and do your own work; that's the knowledge. But I've seen people whose mechanical aptitude awed me suckered in by lemons that looked excellent, which is where luck comes in.

I suspect you'd get better returns if you travel to visit family or what-have you long distance, and take advantage to do some market arbitrage.

SnackDog

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Re: Used Cars are an Investment
« Reply #8 on: July 08, 2013, 03:48:51 PM »
Thousands of people and many companies invest in used cars for profit. Carmax comes to mind. I had a neighbor who supplemented his day job (a preacher) by selling used cars he picked up at auction. He stored them, six at a time, at his house and moved them over to a busy street every morning with big paper prices on them. He seemed to move a car or two per week. He had a casual laborer who spent all day spiffing them up.
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StarswirlTheMustached

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Re: Used Cars are an Investment
« Reply #9 on: July 08, 2013, 06:43:39 PM »
Thousands of people and many companies invest in used cars for profit. Carmax comes to mind. I had a neighbor who supplemented his day job (a preacher) by selling used cars he picked up at auction. He stored them, six at a time, at his house and moved them over to a busy street every morning with big paper prices on them. He seemed to move a car or two per week. He had a casual laborer who spent all day spiffing them up.
Not to mention dealerships. These folk tend to spiff them up superficially and flip them quickly, and so wouldn't be vulnerable to the "seems fine"/dies in 6mo failure mode I've seen. If you're going to use the car for a while and then sell it, you open yourself up to that.
They're also a lot less scrupulous about passing on vehicles without full disclosure of their issues than I would be.

charles_roberts

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Re: Used Cars are an Investment
« Reply #10 on: July 09, 2013, 06:07:05 AM »
Good car knowledge will go a long way. If you don't feel you have that, take someone with you. Everyone knows a car fanatic. Anything with low mileage is a plus. But the most important factor is how you drive it + how often. The less, the better.

SnackDog

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Re: Used Cars are an Investment
« Reply #11 on: July 09, 2013, 10:00:39 AM »
Low mileage is just one part of the equation.   A low mileage Land Rover could eat you alive in repairs (and initial cost) while a high mileage Toyota could be trouble-free for another 100k miles (and low initial cost).  People used to think cars give up after 80k miles or so.  Get familiar with major service needs of the target vehicle and factor them into the price.  A used Toyota, Honda or Hyundai with 80K miles could be a bargain and last you the rest of your life, at your frugal usage rates.

I bought my first car for $5,000 in 1987. It was a 1983 model with 36,000 miles. I drove it until 1999 and racked up a total of something like 160k miles. Repairs were minimal.  Sold it for $900 to the insurance company after someone smashed it in the street in front of our house.
The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind. –Thomas T. Munger

GoStumpy

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Re: Used Cars are an Investment
« Reply #12 on: July 09, 2013, 08:10:22 PM »
Here are the only comparable Jetta's locally:

2000 Jetta, 170k, 5spd, $5200
2001 Jetta, 180k, 5spd, $5000
2001 Jetta, 289k, auto, $6000 TDI
2000 Jetta, 255k, auto, $3250
1999 Jetta, 145k, 5spd, $4900
2002 Jetta, 160k, auto, $3900 VR6
1997 Jetta, unknown km, 5spd, $4250 TDI
1997 Jetta, 293k, 5spd, $4200 TDI
1995 Jetta, 222k, 5spd, $4100 VR6
1998 Jetta, 220k, auto, $2950 (400km away)


So, after looking at all available cars, I think mine:

1998 Jetta, 145k, auto


So mine has the least KM out of all of them by a large margin except one, and that one is $5000.

Mine has all options, ZERO rust, no dents, scratches, comes with summers & winters on rims, roof rack, etc...

What do you think mine would be worth?
"Do the best you can until you know better, and once you know better, do better" - Maya Angelou
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Matte

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Re: Used Cars are an Investment
« Reply #13 on: July 13, 2013, 01:27:36 PM »
Lots of good advice on here, I have sold lots of cars, at a dealership for a while but mostly for myself, if you have the best car on the market, I wouldn't expect any more then a couple hundred over the next few lock runners up, or the asking price of the next runner up.  I'd price yours at about 5k and take over 4. 

The real money to be made on cars is the high and low end, a 500 dollar car with some parts and labor can easily be a 1500-2500 dollar car.  In general stuff like the body is big dollars but mechanical is cheap, cars that fail emissions are really good candidates if you now what your doing. 

GoStumpy

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Re: Used Cars are an Investment
« Reply #14 on: July 13, 2013, 09:10:58 PM »
Absolutely :)

I ended up getting $3750, and if I had any receipts whatsoever, I could have gotten more.  I think my spare set of wheels/tires with full tread are worth ~$250 though..
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Matte

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Re: Used Cars are an Investment
« Reply #15 on: July 13, 2013, 09:29:22 PM »
Excellent Move, seperating the spare wheels from the car, good quick sale price.  I always snag good radios, speakers, Snow tires, mags, all that stuff goes well.

GoStumpy

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Re: Used Cars are an Investment
« Reply #16 on: July 13, 2013, 11:24:14 PM »
Yup, thankfully it had the worn out winters on it, and the full tread summers were safely in my yard :)

We also didn't have a receipt for the $300 head unit, so we snagged that as well... They would have given us MAYBE $100 for it.  Sub & Amp obviously came out, but I couldn't find the keys to the roof rack so sadly that's a $200 Thule Roof Rack I'll never get back :(
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StarswirlTheMustached

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Re: Used Cars are an Investment
« Reply #17 on: July 17, 2013, 06:21:10 PM »
What do you recommend doing for routine maintenance to keep it lasting so long? My 2003 Honda odyssey was $10k five years ago, and it now has 182k miles on it. It's valued around $4500 now. I want to keep it a good while longer, but I'm wondering if you think just the standard upkeep will keep it in good shape for many more miles? I plan to get to 250k miles and assess at that time if I want to replace it (likely keep it for my kids to use as teenage drivers or something).

If you haven't been, change the transmission fluid. Now. Newer cars often leave it out of the manual, claiming that they put in "lifetime" fluids in the factory. Trouble is, the lifetime of the transmission is then determined by the lifetime of the fluid, which isn't as long as they'd like you to think. Other than keeping the fluids, belts and hoses fresh, there's not much to do unless something breaks.

My question is if it still works at 250k, why would you get rid of it then? Everyone seems to have their own arbitrary number, each different, past which they want to get rid of a car, which I think is silly. Until it's costs you less to replace than to maintain, keep driving, and don't worry about mileage.