Car You Drive ? vs. Investments You Have ?

Car You Drive ? vs. Investments You Have ?

Lender · Los Angeles, CA · Member since 2012 · 147 posts · 76 votes

Ok, long weekend and a little lighthearted fare:

Real estate investors - what kind of car(s) do you drive? Do you prefer luxury cars? Modest cars? How many drive cars with many, many miles on them? And - if you drive a nice car - do you have a "property car" to drive when you go to meet contractors, workers or tenants at properties?

Question 2: How has the vehicle you drive compared to your net worth during the years?

I drove the nicest, most expensive vehicle when I had a much lower net worth.

Now, I drive a very modest vehicle with over 200k miles on it. I can more afford a luxury vehicle than I ever could, my net worth is higher than it ever was, but I keep thinking about that license plate frame that says, "My other car is......." and I want to get one that says, "My other car is an apartment building."

I do feel I've fallen prey to a different, more subtle type of status-seeking. That is the statement that some feel they're making by driving cheap, old cars, basically saying that they know you know they don't have to prove anything financially.

Before you write this off as silly, do note that you make faster progress acquiring wealth if you monthly vehicle expense is $600 (including gas, insurance, maintenance and vehicle acquisition costs) instead of closer to 1500 per month.

Ok, would love to hear your feedback on this. The cars? Oh yeah, they're great:

1999 Honda Civic with 200,600 miles on it.
1998 Ford Explorer Sport with 201,000 miles on it. (great for hauling stuff to the properties)

Joffrey Long

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Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
13y

I have always bought slightly used Saabs and kept them to somewhere between 160-200K miles. I loved my Saabs and was distraught (exaggeration) when they shut down. Recently I had parts needed to pass inspection and they were on two month backorder. And after I got that solved, I still needed $4300 worth of work. And the Blue book value was $2800. (Saab values plummeted when they stopped making them) Considering the cost of putting more money into the car than it was worth, the inconvenience of driving to the Saab guy a half hour away, and the cost of a rental while it was in the shop, not to mention that I would still have a 10 year old car with more issues on the way, I decided to shop for a non-Saab. It was painful, and I was cranky, because nothing drove like a Saab.

I bought a new BMW X-1. Spent what I consider a ridiculously large amount of money for the car. (there are no used ones because it's the first year it's offered in the US) But I'm at the point in my life where I want more play and less work and want to enjoy what I worked so hard for.

It turned out to have come in with a defective cam shaft. I've now been driving their loaner for longer than I drove my new car. The part is on backorder from Germany, and they are trying to find me a new car already in the states that matches my feature set, without ordering me a whole new car from Germany.

So the only good news is that all the miles I put on it are on their loaner and not my car. Wish I didn't sell the old Saab.

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  • Lender · Los Angeles, CA · Member since 2012 · 147 posts · 76 votes
    13y

    Oh, I forgot to mention - I had to stop driving my previous car at 379,000 miles when it could no longer pass the Calif. required smog test - forced me to spend the big bucks - $3,000 on the Explorer.

  • Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    13y

    This is pretty much the entire premise of The Millionaire Next Door, by Stanley and Danko. It

  • Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    13y

    Jon Holdman,
    I don't think I will ever sell the Mustang. It is worth much more to me than I could ever sell it for. I have a lot of people asking me to sell it. They are getting rarer and rarer, at least the nice ones. Mine is dark green with white top and white leather, 5 speed. Its got upgraded suspension, fuel system, exhaust, transmission and the supercharger but looks almost stock on the exterior.

  • Investor · Groves, TX · Member since 2009 · 44 posts · 25 votes
    13y

    2003 GMC pickup with 135,000 miles. I will drive it until it dies or until I come across another really good deal. I will always have a truck.

    Sidebar, I think the money spent on cars more than anything else in this country keeps so many living pay check to pay check. It amazes me how many people struggle financially but have new cars.

    Ohh, and when the weather is nice I have a 1966 Gto convertible.

  • Lender · Los Angeles, CA · Member since 2012 · 147 posts · 76 votes
    13y

    Jad,

    You hit it right - car payments are one of the most effective methods of keeping the "poor" poor. (or at least working for someone forever.)

    ......the high cost of bright and shiny objects.

  • Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes
    13y

    Reminds me of a story I love to tell. Met with a roofer a couple months ago to price out roof repair. Met the property manager there. The roofer was driving a 2010 F150, property manager was driving a Lexus. I pulled up in my beat to heck 2002 ford Taurus. (passenger side mirror duct taped, big dent in the passenger side) and the roofer looked at me and said, 'Why does your pm drive a nicer car than you?' and I said, he's my employee because he drives that car and I drive mine.

  • Bismarck, ND · Member since 2011 · 142 posts · 16 votes
    13y

    I drive a '97 Explorer with 80k miles. Bought it from a little old lady that didn't want to renew the insurance. Very reliable, great in the snow, and can pull anything. It fits my personality - reliable, functional, and a good use of money. Ill drive this vehicle until it leaves me on the side of the high way somewhere. When Im not at work I wear one of my dozens of free shirt and shorts I have left over from college basketball. Outside of my work wardrobe, my closet looks like a thrift shop!

    My wife drives a '04 Taurus with 38k miles. I bought it from a state auction. Ive never had any issues with it. Again, its very practical and very functional.

    Like just about everybody else has said, Its not that I don't like cars, its that I like working towards my financial goals more. Maybe one day when this well oiled real estate investment machine is on auto pilot Ill splurge but its not really something I ever think about. Ive never known any different.

    Meanwhile, my brother in law with student loans from hear to eternity and a big car loan is living in my basement...paying me rent. Its not a coincidence why most people's balance sheet looks the way it does.

    My way may not be right for everybody, but its exactly what I want to be doing and its very productive.

  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    '95 Mustang GT 5.0 stick convertible 24,000 miles.
    2001 Town Car handed down from aging parents 90,000 miles. I drove their '92 until it had 250,000 on it.
    Work vehicles '03 & '05 Toyota Sequoia's both 100% 179 cash write offs on income but they were not new. They pull a large trailer I use.
    I bought an auto repair shop @ auction to work on the autos but sold it contract for deed to a friend who offered me too much to say no.
    Thinking about a Lexus LS460 to replace the Town Car.
    We have been through the BMW & MB maint nightmares back in the '90's & the BIL just told me he has spent $24,000 on his 911 Porsche In the last 3 years, but he can afford it.

  • SFR Investor · Watkinsville, GA · Member since 2011 · 83 posts · 33 votes
    13y

    Troy Fisher Now that made me laugh.

    Joffrey Long It was funny to read back though all of these responses and see how many of us really do drive older high mileage vehicles. We can all afford much newer higher priced vehicles but look at them as depreciating assets and say no thanks.

  • Lender · Los Angeles, CA · Member since 2012 · 147 posts · 76 votes
    13y

    William Brace

    I agree with what you said, William.

    It was amazing to see how many shared the same view - but logical. Once you start "collecting real estate," like the guy who collects rare stamps or anything else - you just want more.

    Almost all my tenants drive nicer cars than I - although granted, my vehicles are not a difficult standard to beat.

    Thanks, William, and all others, for commenting on this - appreciate hearing from others with similar wealth-building tactics.

    Joff

  • Phoenix, AZ · Member since 2013 · 37 posts · 2 votes
    13y

    I drive a beautiful dark blue 2003 Ford Mustang with classic looking chrome rims and 98,558 miles to the exact! Although I am just a college student who is trying to earn some extra money as a real estate agent.

    I don't think i'll ever get rid of that mustang, I just put a new engine in it last year because of a rod knock. That car has never failed me though and I take good care of it!

  • Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    13y

    I noticed a lot of Mustangs on here. Possibly due to the performance to value ratio?

  • Phoenix, AZ · Member since 2013 · 37 posts · 2 votes
    13y

    It probably is the performance to value for Mustangs.

    I just think it's really fun to drive and I got a really sweet deal on it when I bought it in early 2009. They seem to hold their value better than most other cars, right now I could probably sell it for more than I bought it for and it would probably sell within a week.

    Best buy I could have made looking back, car is 10 years old and still turns heads, plus it's a really quick and nimble car, and also really easy to work on. The advantages go on and on! One disadvantage though is lack of storage space, but it's not too inconvenient.

  • La Jolla, CA · Member since 2013 · 8 posts · 1 vote
    13y

    I have an '09 Accord with about 45,000 miles on it, bought 3 years ago. I love cars, big fan of the UK's Top Gear show, but they are a terrible investment and I'd rather build wealth. I hold on to cars until they stop working and always buy for reliability. My millionaire grandpa has been the model for this- drives a 1995 Accord & our materialistic neighbors actually had the gal to leave a note on his car saying it was driving down the property value!

    That said, I'm hoping to pick up a classic Bronco someday for a hobby car :) In my dreams I'd have a Mercedes SLS/SLR/SL (just the mention kind of turns me on...), but could never fathom spending that much on something that will depreciate so quickly!

  • Wholesaler · Fort Worth, TX · Member since 2011 · 163 posts · 45 votes
    13y

    I drive a 2002 Ford Expedition Eddie Bauer w/185k miles. Paid $3500 cash.

    Wife drives a 2003 Honda Accord 4dr w/220k miles. Paid for.

    Never have any major repair issues and best part is that I don't make any car payments. :)

  • Wholesaler · Bristow, VA · Member since 2011 · 41 posts · 3 votes
    13y

    I am like a few of you that loves my cars but i also love getting my cars at a steal of a price. I treat finding a car the same way as real estate ie. scouring auction data and searching craigslist across the country to find the best deals and prices. I have a 2002 lexus SC430 hard top convertible that cost me $14,000 160k miles (paid for in full) I hate car payments!!!!! I also have a 97 ford F150 $3000 175k miles(paid in full) I hate car payments!!!! And a 1994 Lexus LS400 $2000 165k miles (paid in full) Did i mention i hate car payments? I have found i can have luxury cars at reasonable prices without having car payments.

  • Mike HurneyPro Member
    Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 545 votes
    13y

    2002 Chevy Silverado Pickup.
    I like to buy brand new Cars/Trucks on the lot when the new models are out and they're dumping them for a discount.

  • Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    13y
    Originally posted by Troy Fisher:
    'Why does your pm drive a nicer car than you?' and I said, he's my employee because he drives that car and I drive mine.

    Haha classic, I have to remember that for my own answer to the question.

  • Richard W.Pro Member
    Lender · Los Angeles · Member since 2013 · 63 posts · 33 votes
    13y

    just sold my '95 Acura with 176k after buying it new in '95. Loved that car, and it was the last new car purchase I made.

  • Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    13y

    Drive a 2001 Rover Discovery, with 160,000, picked it up from a friend, a couple years ago, for 4,000. Paid cash.

    My other car is an f150 pickup with 230,000, paid 1,500.

    Before my crash, I always had car payments, new cars, thunderbird, mustang, bmw325.

    Interesting, my two private lenders who finance 80% of my deals, one drives 2003 f150, 100k+, the other lender is a rehabber drives a 2005minivan With the seats removed, both are millionaires and could obviously afford to upgrade.

    Funny thing is they also tend to eat from the dollar menu when they are buying, one always has coupons for meal discounts or a free burger with a meal. Until I met these guys I didnt know there was such a thing as a dollar menu.

  • Real Estate Investor · AL · Member since 2013 · 40 posts · 1 vote
    13y

    2005 f 350 130k miles
    2005 dodge viper srt
    Wife has a 2012 Nissan pathfinder

    No car payments on anything.

  • Real Estate Broker · Houston, TX · Member since 2013 · 187 posts · 111 votes
    13y

    I'm allergic to car notes. I drive a 2002 Toyota Sequoia that had only 16 miles on it when I bought it. That was my last car note and don't plan to upgrade anytime soon. I maintain a cash car fund so when it goes I'll go find something similiar.

  • Louisville, KY · Member since 2013 · 23 posts · 3 votes
    13y

    I drive a 2001 Honda Accord EX-L with 182,000 miles. Paid $16,000 for it in 2003. It runs great but has a few little visual flaws here and there. Thinking about upgrading later in the year or early next year.

    I've had it for 10 years and really just want something a little newer and nicer. My last car was a 1989 Accord LXi hatchback. Bought that new and drove it for 14 years until I got the current car.

    Don't plan on spending a ton, probably get a 2008 or 2009 Accord or other sedan again.

    Also, plan to buy it through my S Corp for better tax advantages. Started a thread about those issues here:
    http://www.biggerpockets.com/forums/51-tax-legal-issues-contracts-self-directed-ira/topics/93038-one-man-s-corp-buying-a-car-questions-and-concerns

  • Member since 2011 · 798 posts · 216 votes
    13y

    I think most people start off buying expensive, overpriced cars when they're young or just come into money. Eventually they seem to value each dollar a little more. Aside from car enthusiasts...

    I've had my car forever. I got a great deal. It's still worth more than I paid for it. It looks classy enough (but reasonable), it's in good shape, comfortable leather seats, etc.

    I don't understand buying $50K cars just to have them be worth maybe $20K or $30K in a year or two. I paid cash for my car since it was a great deal and an affordable car anyway.

    I don't understand why people are willing to pay $800/month+ for a car. A married couple could easily cough up $1500 a month for a car. YIKES! I mean, really? Is there THAT much enjoyment out of driving a somewhat nicer car? I like nice stuff, but that's more than I'm willing to spend. And, I don't drive enough to make it worth it.

    I've seen a lot of people, even who make good to very good money, paying $1000+ a month for car payments. Their savings accounts? Yeah, they often don't have any. When times get more meager in terms of their income, it's painful. I see them buy the most/more expensive cars when they're younger, more into status symbols, and just started making good money.

    Not that I'm saving enough money. But at least I don't have $1500 in car payments a month. I could get a mortgage on a house for that size payment!

    Now, if i was rolling in money and had tons of money to save, maybe I would get me an Mercedes (or a few). I doubt my income will ever be so high that a luxury car will be a "negligible" expense. And, I'm not sure I could still justify to myself paying thousands a month for my cars. I would rather travel or save it.

    If I was meeting contractors and had multiple cars, I would drive the crappiest one there. If you show up to see tenants or contractors with nice cars, jewelry, and other nice stuff, it just seems like a bad idea. I don't want them to think I'm "monied" and have a reason to sue me.

  • Investor · Los Angeles, CA · Member since 2013 · 71 posts · 16 votes
    12y

    I drive a 2005 Acura TL, I bought it brand new in 2005, it now has 143,000 miles on it.

    I wanted a nice luxury car because I thought I deserved it so I bought one but it wasn't cool when I got laid off of my job in 2006 and I was stuck making car payments with only freelance income coming in. Then it became a lot less cool. It was also doubly uncool when I got laid off again from another job in 2009 and still had car payments remaining. Ugh. Never again.

    I paid it off in 2010 and I intend to drive it until the wheels fall off literally. So far I've had no issues with it. It is a great car and I enjoy driving it but I honestly couldn't afford it when I bought it.

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