Is it wise to invest in cars or property?

In 1979 Greg Whitten, a Microsoft employee, bought a 1962 Ferrari 250 GTO for about USD $4.8 million.

Cut to 2018, 39 years later, the Ferrari in question was sold at an RM Sotheby’s auction in Pebble Beach, California, for over ten times the original purchase price: a world record USD $48.4 million or R677.6 million.

Averaging an appreciation just over USD $1.2 million a year, or R16.8 million, it’s clear that the rapid change in the car industry over the last 50 years has left the old, picturesque world of classic cars wanting for someone to take the risk.

There’s no uncertainty that money is to be made, not merely with vintage motors, but with current cars that could, one day, be future classics.

Ballito resident Bennie Hayes, who dabbles in historic racing with his pre-1980s Ford Escorts, said that while classic cars can be expensive to maintain and repair, there is still money to be made if one can stumble onto a rare find.

“If you buy a clean historic model, such as a barn find classic, and give it a clean – you can sometimes make a lot of money,” said Hayes, who said that even pre-1990s cars and pre-2000s could one day be considered and registered as classics.

Property is also widely known to be a good outlay, providing one thinks very carefully about their expectation and return on their investment.

Tim Johnson, principal and director of Seeff North Coast, said potential investors need to weigh up the pros and cons of short term and long term returns, compared against putting the money into a savings account.

“If you buy land in the hope of selling for profit at a later stage, one must remember that there are no monthly returns nor guarantees of coming out with a profit,” said Johnson, who said that costs such as rates, levies and holding costs need to be taken into account.

Buying property to rent out for short or long term, especially on the North Coast, had proved to be the most effective means of receiving quick returns, as opposed to a long term return on investment.

“There are different reasons for investing in property, which will steer the type of capital growth one will see.”

Investing in an asset is a risky and financially dangerous business method that offers zero buyer security, but a keen eye on the developing market and strategic purchase can also turn incredible profits if done correctly.

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