My calculations for actual ownership cost of a $130k F430 | Page 3 | FerrariChat

My calculations for actual ownership cost of a $130k F430

Discussion in '360/430' started by MikeR397, Feb 22, 2011.

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  1. MamoVaka

    MamoVaka Formula 3

    Jul 31, 2006
    1,409
    Los Angeles, CA
    Full Name:
    Pano S.
    Mike,

    I agree with you.. trust me a home is no longer a great investment.. that mindframe exploded in 2008.. I am older than you but in same boat.. no kids and no need for a house, want to be in cities and cool areas where single people are.. and condo's are totally screwed right now. no one is buying them and the good condo's have 1k+ condo fees for essentially a crap investment.. not worth it.. I pay 3k+ a month for my apartment but I have covered parking, gym and it's like living in a hotel etc. I like that better..
     
  2. ReinD

    ReinD Formula Junior

    Sep 16, 2010
    472
    When I was your age, which was quite some time ago, I too had a tremendous passion for european sports cars. A Carrera was at the top of my "things to buy after college" list. Blew all kinds of money on cars instead of investing it in my future, but it was worth it. No regrets whatsoever.

    It's nice to be young and financially care free. Have fun with your cars. :)
     
  3. cladd2000

    cladd2000 Formula Junior
    Silver Subscribed

    Jan 18, 2005
    518
    Is this really much more cost than a big S class mercedes or 7 series BMW? Well sure you would drive them more, but the cost of ownership is just that. The cost per mile is just a way to make it look even worse.

    Pulling into my driveway and seeing my 430 after a long day has an amount of pleasure that has dollar value as well. So, I don't really see the difference.

    PS I bet a panamera turbo is at least as expensive to OWN.
     
  4. itwizard

    itwizard Karting

    May 23, 2010
    211
    Clutch wear has a lot less to do with driving ability versus driving situations. I probably put more wear on a clutch heading into the city during rush hour over one mile than I would on a 500 mile road trip with no traffic.
     
  5. mgent

    mgent Karting

    May 17, 2007
    101
    Very thoughtful analysis... I'd hate to see you looking at buying a boat!
     
  6. itwizard

    itwizard Karting

    May 23, 2010
    211
    I think the problem with owning is that there's this huge stigma against renting in the US. Owning a home is the iconic "American Dream" which results in massively overpriced real estate (yes, even now I think it's pretty overpriced, but could be my location that's biased). There's simply an overabundance of demand for home ownership compared to renting. People only rent when they have to, and typically when they don't have the funds to buy. As a result, in my area at least, renting is substantially cheaper to owning (taking into account property tax, mortgage interest, cost of capital for the downpayment, etc.).

    In Palo Alto, $1.5mm gets you a very small, old house. Essentially $36000/year in interest (taking into account tax deduction savings), plus another $15000/year in opportunity cost on the $300k downpayment, and another $7500/year for property tax (tax savings inclusive). Ends up being ~$5000/month out the door. For about $3000/month, you can rent a place just as nice, and only because most owners who rent have owned the homes for a very long time such that the $3k/month is profitable to them. Investing that extra $2k/month readily makes up for much of the inflation gain on the value of the house.

    That being said, if you live in more affordable locations, I suppose it does seem strange to spend as much on a car as one might on a house, but that could just be a Californian sentiment.
     
  7. Monza 456

    Monza 456 Karting

    Sep 15, 2005
    230
    Portland, Oregon
    Full Name:
    Craig Nelson
    Wow, great thred, most entertaining since I've been on fchat. I am passionate about my Ferrari's and drive then almost daily and after reading this am glad I'm factory trained and work on my own cars. I thought about what you added up and realized my 456 has cost me 38K in nine years including depreciation and the 430 about 6K in six months. Oh well, when I added the 430 to my dealers insurance policy it bumped it up 38.00 a month :)
     
  8. Sin

    Sin Karting

    Nov 28, 2003
    151
    WA
    Full Name:
    Mark
    The interesting thing about your estimates is that if you remove depreciation and are left with your ongoing costs ($34,350) and divide by the number of weeks in 5 years (260), that's only a cost of $132/week on average.
     
  9. MikeR397

    MikeR397 Formula 3

    May 9, 2010
    1,469
    SE Michigan
    #59 MikeR397, Feb 24, 2011
    Last edited: Feb 24, 2011
    Hopefully I will never like boats/yachts. I've read like 1/3 a year of thier value is a basic rule of thumb for annual ownership/operating costs.

    Planes are about as bad. In comparision to these cash toiletts, the F430 is a bargain!
     
  10. MikeR397

    MikeR397 Formula 3

    May 9, 2010
    1,469
    SE Michigan
    #60 MikeR397, Feb 24, 2011
    Last edited: Feb 24, 2011
    Absolutely. Other much less exciting cars can and will set you back just as much money or more. The cost per mile details is just one way of looking at it, although in a skewed fashion as I mentioned b/c clearly there is value to ownership besides when the car is moving forward putting miles on the clock, as you mention here.

    To think of it another way, $85k overall cost for 5 years of ownership is only $17k per year. I'll bet if you hold the car for 10 years, that number would probably drop to $12k per year average or so. That is not that much money at all for an entire year with an F430 and 4,000 miles to drive :). This viewpoint ignors lots of things (opportunity cost and repair bills which could be big over the course of 5 or 10 years, or if you get in an accident and destroy your cars resale value that way), but even still, when you hear $85k, your brain focuses all that cost on current $ required out of pocket. I'm sure we'd have a lot more ferrari owners if a 5 year lease only cost $17k a year and included gas/insurance/and all the other figures involved here for 4k miles on a F430.
     
  11. mousecatcher

    mousecatcher Formula 3

    Dec 18, 2007
    2,116
    san mateo, ca
    Awesome awesome post. Thank you.

    Addt'l info:

    CCB brakes will last the life of the car if not tracked.
    Iron brakes should go 20k-25k, so if you start with new/newish brakes you should not have to replace them. Rotor replacement at 20k-30k is unlikely to be required.

    15MPG? No way. I'd say 10-11.
    Tires: 12k miles? No way. I'd say 6k.
     
  12. mousecatcher

    mousecatcher Formula 3

    Dec 18, 2007
    2,116
    san mateo, ca
    A home is still a great investment. The term for such an investment (if considering it an investment) is 20+ years, it's easy to be highly leveraged AND you get a tax deduction. Especially now is a GREAT time to buy a home.
     
  13. mousecatcher

    mousecatcher Formula 3

    Dec 18, 2007
    2,116
    san mateo, ca
    There is no way that you can get a real return of 5% on only $130k invested unless you are super sharp and are going to take on a lot of risk, and you can't count opportunity cost in terms of risky investment. And anyway a) you didn't compound the return and b) the cost of depreciation doesn't include inflation so the return on the $130k shouldn't include inflation. (real return means including inflation)
     
  14. vrsurgeon

    vrsurgeon F1 World Champ
    Silver Subscribed

    Dec 13, 2009
    15,875
    Charleston, SC
    Full Name:
    Curt
    Ahhh open space land use restrictions driving up the cost.. Love it. As I type this in a more affordable area in the Southeast, I now know why incomes are so high in the bay area.. and why I have no desire to move. ;-)
     
  15. MamoVaka

    MamoVaka Formula 3

    Jul 31, 2006
    1,409
    Los Angeles, CA
    Full Name:
    Pano S.
    Depending on what you buy, it's an OK investment.. not GREAT.. and GREAT investment would be Apple stock in 1998.. a home is an AVERAGE investment right now..

    tax breaks? yeah they are ok.. nothing spectacular but better than I suppose nothing at all..

    I am talking about more a CONDO than a house.. living in the city.. condo's don't really make sense and any tax breaks are gobbled up by ridiculous condo fees.. etc.
     
  16. Ice9

    Ice9 Formula Junior

    Jun 22, 2004
    395
    San Francisco, CA
    Full Name:
    Ice9
    +1. It is hard to know whether $84.3k is much money until you compare it to other cars (there's your real opportunity cost). For example, if you are lucky enough to have the money to pay $130k cash for a car, then you might make around $200k+ per annum. Over 5 years, thats $1 million which makes the $84.3 look relatively affordable.

    And let's face it, the big winner is the government which sees our cars as an opportunity to sodomize owners via taxes. The OP rightfully points out that the 10% we pay in Cali is steep. But thats just the starting point, we all pay taxes when we register the car, get speeding/parking tickets, or even fill it up with gas (anyone care to guess what % of gas prices is tax? hint, oil is a global commodity and taxes are a lot higher in Europe, think about the delta....)
     
  17. F430S

    F430S Rookie

    Nov 1, 2010
    24
    Southeast
    Great stuff, thanks MikeR397!!
     
  18. Valenzo

    Valenzo F1 Veteran

    Dec 4, 2010
    5,069
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    Ted
    because i really dont want to know. I guess if i would have run the numbers on what my life would have cost thus far i may have not wanted to live.

    I say the hell with it and enjoy the ride, one day at a time.
     
  19. mchas

    mchas F1 Veteran
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    Oct 5, 2004
    5,903
    Los Angeles
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    Mark
    Interesting analysis. However, if I was making 40% on my money which you say is a temporary situation, I would max that out until I could no longer make that kind of return. Once you have a much bigger pile of cash and fewer opportunities to compound at high rates, then it's time to buy. You are very young and could set yourself up for life if you play the cards right. Buying all of these cars is tempting but if your gravy train is temporary think long and hard before ending the ride to buy a depreciating asset. Just my opinion of course.
     
  20. MikeR397

    MikeR397 Formula 3

    May 9, 2010
    1,469
    SE Michigan
    #70 MikeR397, Feb 24, 2011
    Last edited: Feb 24, 2011
    Well said, and I agree. However, I could get a 2.99% fixed 5 year car loan for the $130k to pay for the Ferrari, so my liquidity for investments isn't materially affected, and my opportunity cost of capital then would only be 3% on $130k, not 40%, and my real marginal returns on this cash would just be lowered to 37%. If my investment opportunities disappear in 4 months, I can always pay the loan off (although I never would since 2.99% is such an easy arbitrage rate). One problem with this is that I've already used this tactic to do a (post cash purchase) cashout refi on my 911 for the same terms, and I need to maintain a clean credit report with high credit scores for a variety of reasons. I'm an expert at the 0% balance transfer opportunities and other means of obtaining cheap capital/float, but using these tactics involve a tradeoff of taking advantage of whats currently available and not overdoing it so that you can't take advantage of the next best thing. Sorry to be vague, but it'd take a long time and go way OT to explain.

    At some point, if you are every going to buy a insane purchase like a Ferrari, you just have to let go of whats rational for a few moments ;). Ferrarited has a good point: "to hell with it and enjoy the ride." I will say that I'm more conservative than that, and I'm putting financial freedom before the toy for now.
     
  21. MamoVaka

    MamoVaka Formula 3

    Jul 31, 2006
    1,409
    Los Angeles, CA
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    Pano S.
    2.99??? is that from a LIC? that is very good!
     
  22. SrfCity

    SrfCity F1 World Champ

    Subconsciously I think those who start to analyze the numbers can't really afford one and are trying to talk themselves out of the notion. Some times it isn't even the money aspect of it it's just that no matter what throwing that much money at a luxury that loses money is not something they want to realistically take on right now for whatever reason.
     
  23. MikeR397

    MikeR397 Formula 3

    May 9, 2010
    1,469
    SE Michigan
    #73 MikeR397, Feb 24, 2011
    Last edited: Feb 24, 2011
    Penfed fcu is where my 911 is financed for arbitrage reasons at, but they only go to $50k, at least for pre approvals like what I took advantage of. Many credit unions offer as good of rates if you can find a way to get in. Another example: https://www.secumd.org/html/secu/lower.htm?page=ratescalc.rates_auto (.25% deduction for autopayments), and see thier beat the rate car refi option (floor of 2.99% though): https://www.secumd.org/html/secu/lower.htm?page=loans.beat_the_rate . Membership is restricted at credit unions, but browse the membership requirements and often you can find a way in by joining an organization, or donating $20 to some charity or something. Once a member of a CU, always a member even if they later change thier membership criteria. This one may have changed criteria since I joined a few years ago for a 9.34% APY 9 month CD (yes you read that right), but I got in with a $20 donation to the alumni association for some university in MD and plopped in $200k of borrowed 12 month 0% balance transfer credit card money in that CD for a beautiful spread :).
     
  24. Valenzo

    Valenzo F1 Veteran

    Dec 4, 2010
    5,069
    IL & NC
    Full Name:
    Ted
    I was at the very same place recently before I purchased mine. I hemmed and hawed and ran the numbers over and over, talked myself out then talked myself in. I have many vehicles; most of them are sitting under car covers in my 5k sq.ft warehouse which is almost full, now I’m thinking of going up with lifts. I bought this car to drive but the more I thought about it the more I tried to talk myself out of it. There was so many other more practical ways to spend the money. But in the end, I just did it and said, "I'm 45 and my dad died at 40, so I’m doing it because I can"

    Instead of clearing out the savings, I to joined a CU to purchase this, I never really thought about a credit union before but when i found out I could get 3.5% on the balance I couldn't resist. The membership was $25 and they didn't even ask for any money down even though I opted for 50%. A CU is a well kept secret for sure.

    Mike, if you can afford it without too much sacrifice, enjoy your life now and how you can.
     
  25. Nashtyboy

    Nashtyboy Formula Junior

    Sep 8, 2010
    429
    Raleigh, NC
    "Throwing away that much money at a luxury"... I don't know, I don't see it that way. Maybe I'm just a car nut, but I would rather call it spending a portion of my hard-earned cash on something that I love.

    BTW has anyone done a HELOC to finance their car? Rates are so low right now, I can't help but wonder if it's "smarter" to do that and invest the cash instead of paying for the car up front. You still get to write off the interest on those AFAIK, and something about writing off interest on a Ferrari makes me giddy inside :).
     

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