Originally posted by @Tom Doan:
Alright so, other than my introduction, this is my first post here. I have been thinking about this idea for a while, but I need some perspective to un-noobize it.
Owning a Lambo is definitely one of my dreams in life and I hope to achieve it. I'm a senior at the business school at UT and I'm graduating this December. I plan on working for a while to build up some cash and then purchase a home around $100-150k as my first home. Now I'm assuming my salary would be able to afford a $1500 monthly payment for my mortgage and $400 for my car payment.
My idea is why not swap the two payments. I want a used Lambo to avoid the depreciation costs. A used 04 Gallardo runs for around 90k. I would use the $1500 per month to the car on a 60 month lease and $400-600 for the mortgage payment.
Then once the car payments are done, that frees up $1500 per month and I could purchase another house and begin to lease out that house or the original one.
What do you guys think? Any help is appreciated.
I've done pretty much exactly what you are asking about. I always said I'd get a Ferrari by age 30 but I was making more money than I ever thought I would at 27 and realized it wasn't enough for a Ferrari, and while my salary was high it wasn't going to grow much more in that company/career, so I decided to meet my dream halfway with a Dodge Viper.
I rented an apartment for $500/mo and bought the Viper at $1,100/mo. Then of course I needed something for the winters in Michigan so I bought a Cadillac Escalade a year later at $800/mo. I also read Rich Dad / Poor Dad round this time which motivated me to buy a rehabed turnkey rental property in a class "d" neighborhood about 2 hours away from my apartment for more than it was worth which was a financial stalemate but a cheap education.
You can imagine the looks of conflicted amusement on my neighbor's faces when I had $120k of cars out front of my 800 sq ft townhouse that was probably worth $100k (looking back, if I lived in a warm area, that would paid for a Ferrari afterall - curse Michigan snow!).
About 6 months later my Viper visited the repair shop enough times to be eligible for the lemon law and I pounced on it as a money making opportunity.
It took two years to get the lemon law case settled (smallish settlement) then I sold the car at a discount to a private buyer - I liked driving the Escalade better about 80% of the time anyway. When I sold the Viper I took the cash flow I was no longer losing to the car and bought a duplex (still had the turnkey) and rented the other side. Probably a turning point for me.
I traded the Escalade for a 300c (with a Hemi!) which did ok in the snow by itself, then a couple years later I bought a Caddy STS-V. Finally, I sold that upon moving to New York where I no longer needed a car and I haven't had a car since because the company provides one as an expat (and I miss not being able to choose a sportscar!).
Long story short, having the Viper early was mixed - I scratched the itch at $70k vs $150k or $250k and it allowed me to focus on investing shortly after. Without the lemon law "out" and going somewhere I couldn't drive though I probably would have stayed poor for a while longer; same game plan but a lot less cash flow to fund it.
When I finally get home though I'm going nuts. Ferrari and Bentley are minimum. I'll probably throw in a Range Rover for the wife now too since I'm married now. All cash this time around.
Gotta enjoy life a bit or what's the point, ya know?