The financial reality of Ferrari ownership...

yeah it is bonus / profit share / incentives quarterly.. my salary is under $100k beleive it or not... the res is as you said. And yeah, what I have found is the conventional shelters don't apply to me, I make too much (this is all new learning for me) and most of the other stuff as you say is a bit shady (I am not that way at all...), or it risks taking away the corporate veil on my business interests if I start trying to use the corporation for tax shelter... I was warned by an attorney about this, that yes, I could do it, but if there was ever a big liability for the company (that I am partner in) it could be argued probably succesfully that the I abused the corporation for personal interested and thus the corporate veil is not applicable and I would become personally liable for the coorporation liabilities (my share)... I don't know if its true, but it stuck with me... scares me.


Anyway, its been VERY interesting seeing the different opinions and really made me think A LOT. ANd I apologize for derailing, but hopefully has even been a little applicable to the OP in regards to figuring what he wants to do...

 

Please don't tell my wife this!!! the whole "I could die tmw" argument was why she agreed that I should buy a Porsche so I bought the Cayman!

ALso, its creepy, all you guys talking about my death. Yikes

 

LOL. When it comes to convincing the other half, anything that works is OK.

Dave

 

I think you have the corporate veil issue if you don't maintain the corporate independence, etc. (which only comes into play if you have a creditor or plaintiff coming after the company for some reason), and the issue of smaller companies and high net worth owners are on the audit hit list right now. You want to take advantage of what the IRS allows and there are some positions you can take within the zone of reasonable minds can differ, but KPMG and some of the other accounting firms have been hammered as well as some of their clients for some of the complex schemes that didn't past muster in recent years.

 

24,500 ? Please elaborate what was the bill for ? My god, I could get a decent 930 Turbo for that amount...

 

sorry, read the details on the repairs.... what a shame.

 

3 years of ownership, annual service costs of around £900-£1200, Tyres around £800 a set. Insurance age dependent. My 911 was heavier on Tyres, about half the cost on service but 430 still great value when you take into account the driving thrill!

 

A 2-year bump. Nice.

When I bought my Lotus, I was in the last category, pretty much...the poor guys. I was enlisted in the Navy and relatively low ranking. But I wanted it bad, so I saved up for 3 years, used my reenlistment bonus, threw in some deployment money, and bought it straight up, no loan. Lots of hard work. And you can do that with a Lotus, or a Corvette, or even a Viper b/c maintenance costs are low...on the Lotus even insurance rates are low. Point is, if you want it bad enough (most don't), you can get it. That's what I'd tell people.

Now, nearly four years later, I'm a civilian again and looking at a Gallardo or F430 to be my next garage obsession, and I guess I've moved up to the middle category. I'm gonna have to cash in some mutual funds and empty my margin account, but I'll be able to comfortably afford one by April. Patience, resolve, and self-discipline...that's what it takes if you really want something in life.

However, there is no last "low-income" category with Ferraris made in the last 10 years. At least, there shouldn't be. You can't be low-income and save up for one. The ownership costs are just too high. You have to have a certain amount of discretionary spending available. And, while I won't list my income of course, I think anyone making less than me would probably be making a mistake getting one, though I really can't judge other people.

Point is, you can't let your car be a burden on your life. And a high-end exotic will truly bleed you to death if you try to reach too far for it.

 

You actually did quite well buying a new 430 in mid-2005 for 'only' $190,000 out the door. Most buyers were paying $220,000 at that time.

But the real moral of this story is to buy a car that has fully depreciated while someone else owned it. 355s fall into this category. 360s and 550s are getting close.

Buying a new 458 right now? You had better fall into that super high income bracket where taking a $100,000 depreciation hit 5 years from now when you just have to have the new model won't hurt too much.

OR -- Buy a nice 365 GTC/4 for about $100,000 and in 5 years it will likely GO UP 50%.

 

A C4 was a great deal maybe ten years ago, but they have drifting lower the last 3 years and you still have running costs, mainentance, etc. Anyone who owns or has owned a classic will tell you they are a work in progress. Financial people will tell you that collectibles of all types are classified as non performing assets since they suck money and produce no income. I've been in a collectible business myself for 35 years and can tell you that the majority of people don't do very well. If timing is impeccable, big profits are made, but you can probably do that even easier in financial markets.

Anyway, my point is that there is a lot to consider buying an expensive toy and not all the costs are obvious. I knew going in and I'm OK with that.

Update: I still have the 430, now with 19K miles on it and I figure it is probably worth around 110K. Works out to a little more than $4 a mile depreciation. Maintenance averaged 700. a year over the first five plus consumables. By contrast, last year I bought a used Cayman S for 39.5K with 5500 miles on it. The original owner paid 70K and maybe got 35K for it. Worked out to almost $7 a mile. Not much point to selling the 430 now. I can't get any safe return on the money and depreciation going forward will pretty minimal.

Dave

 

You followed the American dream and saw the fruits of your hard labor, how many other Americans are as motivated as you? Kudos on your hard work and ability to attain goals.

The only exception I take with your comments is what was responded with below. Those Fcars made about 10 years ago liek teh 360 and 550 have nearly fully depreciated and I'm astonsihed how close to $50k they are becoming priced. That's too close to other brand's daily-driver car model price range to ignore.

 

Unless you find a competent ferrari mechanic as opposed to a dealership, the risks are too great. If you can limit the amount of driving and get reasonable rates on service and small repairs, you can pull it off. You might want to then spend a bit more to ensure a well maintained car, so it can pull you through the years of ownership. Also limit ownership to say 2-3 years, and bail out before major repairs are needed but the car is still sellable.

Go for it bud ,I dont think you will regret it, but finding a good cheap mechanic is key!

Yes I would just forget all the other things, because if you are crazy about cars, and they are your life, why should you invest in your home or holidays? If you can be happy every day chirping in a fezza.

VS

 

The neat thing about capatialism is you get to do what you want with your hard earned money. If you are on the cusp of affording an F-car you can certainly do without lots of little luxuries to get one big luxury. But I think the danger of making that choice is that it is very hard to plan the expense of owning an F-car.

The FMV of a 360 Spider climbed nearly 100K after introdiction and took five? years to resell below sticker price, yet people who bought right before the financial crunch saw 50-60 K depreciation in a few short years. Similarly maintenance could cost a few hundred a year (with extra on three year belt changes) or it could cost lots more. If it is going to ruin your month if the instrument pod goes dark one night or the clutch needs replacement, you probably do not want to be on that ride.

 

There is a good recent compliment thread to this one over at 6speed: http://www.6speedonline.com/forums/ferrari/230096-being-able-own-ferrari.html

 

I am going to get my first F-Car this spring and I will finance part of the cost. I will be looking at the 355 Spider or 575mF1 Fiorano. I have made millions over the years and have spent them with no regret. I have been happy during both the highs and the lows, since wealth for me is not in the bank but in your human relationships.

Toys are just that. After reading a lot over the last year I am going to do my best to buy a move in ready car that has a full maintenance history that includes a very recent major. I will have enough cash to do a full major and more set aside just in case the poop hits the fan.

I fall into the less rich category, in that I live very comfortably, but could not go out and buy a new Ferrari. I have a new BMW X5 M as my DD. So ironically, if I get the F355, it may not be faster than my DD, but just to get to have that wonderful motor right behind me and the high rpm F1 shriek of the remarkable and unique motor is priceless.

Cars are a passion and I ain’t getting younger........I know deeply inside that I want a Ferrari and understand the great heritage the brand represents…..there is no substitute.

I know what I am getting into and that anything can happen. Yearly maintenance cost and consumables are understood. I can get lucky and the car runs well with 3-5k a year on it until the next major maintenance or I need to fix it one week after I buy it. It will not affect my current life style, and in the end if it is worth $0 in resale, I am OK with that.

So in the end, all the F-Cars are special to the lucky few that get to own and drive one. I look forward to the adventure both the good and the bad.......Steve

 

This is a great thread.

I too have been contemplating the purchase of a 360 since they've come down in price. This car is something I have dreamed of owning since it first came out. Back then I quenched my desire with a purchase of new BMW 330cic in 2001, I still own the car today. It's the garage queen with a supercharger, something I truly cherish.

In ways I wish I wasn't as responsible as I am and didn't think twice about making a purchase. I think I've lived responsibly and well within my means. As I will be turning 45 this year, I think is now the time, or shall I keep dreaming? As others who have started these type of threads, I simply am trying to find out if I am making a sound decision based on my income level, my savings, lifestyles etc. in comparison to other 360 owners, or $90K F-car owners.

As someone else pointed out, sharing one's financial numbers to a bunch of strangers doesn't bother me either. So here's where I am at:

Age 44
Kids: 0
Wife: soon to be (divorced with 3 grown kids)
Income: Sustainable $125-$150K
House:Mortgage of $70K (75% Equity)
Non-retirement Savings: $190K
Retirement Savings: $185K (Maxed out Simple IRA yearly)
Credit Card Debt: 0
Cars All Paid for: 2001 BMW 330, 2001 BMW 530

As I love my cars, I typically throw 2-3K away each year modifying the 330. Pics of it are here for the car fanatics:
http://forum.e46fanatics.com/showthread.php?t=814864
I certainly would sell it if I were to purchase a 360. I believe I could get 20K for the car. So the question I have, is there anyone close to my numbers with a 360? A few yes's would convince me to pursue it, a bunch of nays would keep me lurking here for a few more years....

Any input would be great. I'm not overly concerned with the repairs, I am extremely mechanically inclined and have read what the known demons are with this car. As my local BMW charges $130/hr, I am used to the dreaded unavoidable trips to the dealer. I realize this is a different game and a bigger bill will pop up.

 

Anyone who doesn't think twice will probably never have the means anyway, so that is good.

I would say you are at a point where buying is OK. Pay cash.

Dave

 

I think you are good to go, and thanks for sharing the info.Its nice to get a perspective on where other buyers are at.

Remember, the 360 is nearing the bottom of the depreciation curve, so you won't lose too much there. Taxes will hurt, but you can't avoid that. You can get a very nice coupe in the low 70's now with all needed maintance done (clutch, belts, breaks, tires are the big ones) A clutch will cost you $6.5k every 8-20k miles depending on how you drive (F1 or manual), belts will cost you about $3.2k every 2-3 years depending on how much you drive. Learn to do you own oil changes and you'll save money there. Otherwise, you should be ok. Pay cash for it, and with your steady income, your savings will be back up soon.

Don't wait, buy it and enjoy!

 

Thanks for chiming in guys....

I plan to do as much DIY as possible. Going back and forth on 6 speed or F1, been doing alot of reading.

I think come spring, I will rent a 360 for the day to see if its for me. On the surface, I can't see why I wouldn't want one; driving it for a day will be the prudent/fun thing to do.

Where are some good places to search for one?

 

While I certainly wish you the best of luck on the sale of your 330, don't count on the $20K number. I just sold my 2004 M3 SMG with 80K miles (CPO car and covered by factor extended maintenance plan) and some very nice mods. It went for $17,500. You can search my username on E46Fanatics or M3Forum to see pics. The problem is that the buyer pool for used BMWs with higher mileage consists of young adults lacking money. When I posted my car for sale, I was bombarded with Twitter style PM like, "What's the lowest U will go?" Or my favorite, "Bottom line price if I pay cash?"

Don't be afraid to lower the price to move it, then buy your 360 and never look back!

 

Lots of good 360 Coupes out there in the $70-80 range. Get a PPI, be patient and get the best one you can for the money. There is bound to be something that goes wrong, just make sure you have all the all the recommended maintenance done and don't skimp. Also you will pay a premium for a "red" car. Just a point I did not see in reading this thread....best of luck to those looking.

 

I am your exact age. I have owned a 360 for 4 years. Worth every penny. I own or have owned a bunch of cars. This is a keeper and love every minute of ownership. You wont be disappointed.

 

Being a mortgage lender and looking at people's finances all day, I'd say you're in a good position to buy. (That low mortgage balance won't help us mortgage guys make a living, though!) You seem conservative and have your head on straight. I am contemplating a 360 purchase too. I'm 48 and not getting any younger. I plan to track the car -and there is always the risk of totalling it there. If i did, i'd still have maybe $25k of parts to sell. So worst case is I would lose ~$50k. If there were a hardship and I needed to sell the (unwrecked!) car, I'd obviously recoup a lot more than that. Go for it!

Curious- does anyone know if the poster Dirty Evo (from 2008) ever bought a Ferrari?

 

rule of thumb i use is simple.

if you cant pay cash for it (65-90) grand cash .... and 10K in cash extra for slush fund (maintence) then you are not ready ...

now, if you house is paid for , and job / career secure, and you have to get a 60% loan oon it, and you have no other debts, like CC/Lines of credit and have a little nest egg.... then again, with a loan on it ... still fine ....

if your wife/partner are ok with this, and you dont need to pay her a tax for something for her, or if you do , and you have a few bucks for her shopping spree, or her kitchen reno, then you are ready.

if you dont have this going on for you - i would say DONT DO IT

 

The financial reality of ferrari ownership I'm coming to grips with is that now that I consider them fair game, at an entry level, I'm looking to better deal my car practically out of the starting gate. I love my 360. I wander into FOW and see a 430 that I fall in love with, and find myself monitoring cars.com and screwing around with payment calculators for weeks. I expect I'll be trading cars every couple years at the most, and that's going to cost each time, significantly. I hope I get over it, frankly. I said I'd be happy with my 360 until a used 458 spider was down in the $150k range, and then I'd buy. That lasted about six months. Ferrari's have made me obsessed in a way I've never been with my other cars. I've always wanted to trade in every 3-5 years, but I now own the nicest sports car of my life and I want to trade it at 9 months. Crazy.