Ever since I was a little kid, I have dreamed of someday owning a Ferrari. For many years my dream Ferrari was a yellow-on-black F355 Spider just like the one Nick Cage destroys in the classic 1996 film, The Rock. As I've gotten older, my tastes have changed slightly. I still want a Ferrari, but my preferences have shifted to the more classic models from the 60s and 70s. Unfortunately those also happen to be the Ferraris you hear about selling for $10 million at auction nowadays. Or more! So is owning a classic Ferrari, Lamborghini, Porsche, Jaguar or BMW just a pipe dream? How can someone get into the classic car market with a much smaller budget? Are dream cars always going to be way too expensive for the average person to afford? Not necessarily…
Out of the 10 most expensive cars ever sold at auction, three of the auctions were handled by a firm called Gooding & Company. Gooding & Company is the exclusive auction house of the annual Pebble Beach Concours d'Elegance. Just two months ago at this year's Concours, Gooding helped sell a 1961 Ferrari 250 GT SWB California Spider for $15.18 million. That's the fifth most expensive car ever sold at auction. Three years ago, Gooding helped sell a 1957 Ferrari 250 Testa Rosa for $16.39 million. That's the fourth most expensive car ever sold at auction.
FYI, the most expensive car ever sold at auction is 250 GTO Berlinetta that sold earlier this year for $38.1 million. That sale was handled by an auction house called Bonhams.
OK so why am I talking so much about Gooding? Well, on the most recent episode of the Celebrity Net Worth podcast (which can be found on iTunes here and on SoundCloud here – please rate and review!), I interviewed a friend of mine named Morgan Carter. Morgan happens to be a Vice President at Gooding & Company.
In our conversation, Morgan talks to us about everything from how to buy a $30 million dream car to how the average enthusiast can get into the market on a much much smaller budget. He also walks us through what would be in his garage if money was no object, what to look out for in terms of quality and how Porsche 911s from the late 70s and early 80s might be where we should all be looking to buy. It was a fascinating conversation, and I highly recommend listening to the entire episode which is embedded below:
Morgan's Advice For Buying Classic Cars
#1) If you're gonna buy a classic car, you've got to be in it for the passion of the industry/hobby. You gotta be in it because you love cars. You can't be in it because you think it's going to be a good investment opportunity that you'll flip.
#2) There are so many unexpected costs involved in owning a classic car. You've need to have enough disposable income to take the lumps, roll with them and throw them out the window.
#3) A lot of people are looking for a sub-$100,000 car that's gonna have 30-35% growth, year over year. This is not as easy to pull off as many people assume. If you're looking at post-war European cars, you're generally in a good area. Some examples to look out for include a Jaguar XK120, Jaguar E-Type, Austin Healeys and Porsche 911s. If you look hard enough, you should be able to find a good quality late-70s, early 80s Porsche 911 for around $30-$40,000. That car should at the very least retain its value and maybe help grow your passion/equity for a bigger purchase down the road (pun intended).
#4) When evaluating the "quality" of a classic car, you need to look for the same things you would look for when buying a 2009 Honda Civic. For example, if the car has had a paint job. There's probably a reason. Maybe it was in a car accident, or maybe someone left it unattended and rusting for a number of years. The number one signal for quality is originality. Ideally you want to find a car that is as close to the original owner as possible. If you're looking at a car from the late 70s/early 80s, this shouldn't be too hard to pull off. A car from that era really shouldn't have already had 7-8 owners. Obviously low mileage is a clear sign of high quality. A car from the late 70s/early 80s would ideally have fewer than 70-80,000 miles.
Generally speaking, Morgan recommends looking for cars that have a good story. A car that has had as few owners as possible (preferably just one – definitely not more than 5). You want a car that doesn't look like it has been abused and has been owned by someone who really cared for it.
Morgan's Dream Garage – Assuming Money Was No Object
#1) Ferrari 250 GTO, late 1962 – 1964. One recently sold for $38 million, rumor has it that one sold for $50 million. If money was no object, Morgan thinks he could get one for $40 million.
#2) A mid 1990s McLaren F1. According to Morgan, the McLaren F1 might be the most fun street-legal car in the world to drive. Gonna set you back $10-11 million.
#3) Bugatti Type 35 Grand Prix race car from the 1920s. $2 million.
#4) Jaguar Race Car D-Type from the 1950s. $4 million.
#5) Any racing Ferrari from the late 50s to the early 60s. Estimated cost: Anywhere from $3 million to $30 million and up. For example the 1964 Ferrari 275 GTB 4Cam. $3-4 million if it came with an alloy body.
Estimated rough cost of Morgan's dream garage: $67 million.
What would be in your dream garage if money was no object? For me, there would definitely be a classic Ferrari and a contemporary Ferrari, a Range Rover for every day errands, a BMW 5 series, some 1950s American muscle cars and a Gullwing Mercedes (modern or classic).
Hope you enjoyed our conversation, please subscribe, rate and review us so we can keep climbing in the iTunes charts! Our goal is to be in the top 100 at some point. Wish us luck and happy car hunting!