Are You Making the Most Out of Your Classics Car Investment?

How Does YOUR Investment Measure Up in Today's Market?

According to the latest reports, Classic cars remain at the top of the list when it comes to ROI, outstripping other collectibles by a wide margin. According to the Wealth Report from Knight Frank and Douglas Elliman, the value of classic cars rose 17 percent in 2015. Coins came in second place with a 13 percent gain, followed by wine at 5 percent. Fine art came in a distant fifth, suggesting that despite highly visible purchases of hyper-priced masterpieces, the broader art market is growing at a more modest pace.
Unfortunately, Most Classic Owners Have Not Leveraged The Growth In Value
The Classics receiving the highest ROI's tend to be extremely rare, highly documented and either perfectly preserved or impeccably restored, but the group has another measure...they are all high priced - hundreds of thousands to millions of dollar values. 
As the average Classic car remains valued at between $25,000 and $50,000, it probably means your investment is either sinking or going sideways. It unfortunately also means these investments are not being well managed.

We Can Help Change That
What it really comes down to is the process of managing your Classic car assets, more accurately, the difficulty to organize important details, protect them from accidental loss and manage valuation. Here is a very intellectually profound quote from a 58 page thesis covering the Collector car market. If you want to get an extreme education on the subject, please use the link.

"Concentrated data on collector car auction results are difficult to find. Auction houses often give out statements of their own results at their latest auctions and sometimes provide access to their past auction results, but this data often lacks in detail, usually only providing the make, model, model year and of course, the price. For the hedonic regression in this study however, more information on other characteristics is desired."

What the heck does that mean? Hedonic regression or hedonic demand theory is a revealed preference method of estimating demand or value. It decomposes the item being researched into its constituent characteristics, and obtains estimates of the contributory value of each characteristic.
David Burroughs in his restored Stearman
In layman's terms, it means the value of an average Classic car WILL change according to the amount of detailed information made available.  Therefore if an owner makes the effort to collect and organize as much information as possible regarding their Classic, when the time comes to value the car these details will be used to set the quality, condition, rarity, desirability and price of the vehicle. The concept has been defined by David Burroughs, a Collector car expert and Garagistry advisor, who has created vehicle grading systems and compiles forensic level examinations of vehicles believed to be both significant and of high value.
 
THE BURROUGHS THEOREM©
If Documentation Drives Credibility and
Credibility Drives Value, then
Value Drives Demand and
Demand Drives Revenue
Therefore, Documentation Drives Credibility, Value, Demand and Revenue

As no two Classics are the same, these records create a finite separation when comparing one Classic against another. Therefore using these details to evaluate similar Classics, even when priced the same, the closer you look the more you'll uncover value setting differences. Here's a great example-two 1969 Mustang Mach 1 Fastbacks.

Why is This Classic $39,000
And This One is $64,000
The answer is because they are vastly different when quality, condition and rarity can be measured by both visual inspection and documentation. But without documentation to verify these differences, they would both be considered nice, but relatively average, $39,000 Classics.

Defining YOUR Classic
While it does take some time and the effort may actually reveal your Classic is worth less than expected, it offers at least two advantages. First, as a documented (that does not mean every record since the car was produced. It means every known detail and all available records, photos and vehicle history) Classic, you possess a powerful dossier which can stand up to any scrutiny. Second, it provides you with the opportunity to address deficiencies which lower the value.

Lessons From Home Ownership
You'll find voluminous online examples of what types improvements, developed from real-world examples, offer the highest and lowest ROI, BEFORE you dive into a new project.
The same can be said for updating your Classic. Upgrading suspension, steering and brakes offer some of the highest ROI's and can be accomplished far cheaper and easier than new paint. 

Of course, you need to do two things-the updates should be in line with the vehicle class (preserved, modified, custom) and you need to document all of the updates.

The same can be said regarding seat belts, radial tires and the replacement of any unsightly items, such as seat covers. Have you done an overhaul of your car's electrical circuits, as explained here? It is very inexpensive and the results can be impressive. 

In brief, an automotive electrical expert show you how to address the shortcomings of the factory wiring to improve the operation of all electrical components, such as lights, wipers and charging systems. Nothing worse than turning on the headlights only to find out it's still dark or wipers to learn they stay parked.

Where to Manage Your Classic's History, Records and Documentation
Make the process as easy as possible by subscribing to Garagistry. Get more details here.

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