Residential Real Estate Broker · Greensboro, NC · Member since 2015 · 14 posts · 68 votes
Just a fun post here. I have been a SFR investor for 15 years and now have $2M in rental RE while working a full time career. The cash flow was tight for years it seemed but the snowball of debt paydown is rolling big time now and I'll be able to "retire" in 2 years with enough cash flow to replace my salary.
That said, I can't imagine having a car payment and only buy used vehicles. I drove a 1999 Jeep Grand Cherokee (to haul all my rental supplies) for 7 years and the engine blew a year ago with 275k miles. I made a significant upgrade and replaced it with a 2000 Jeep Grand Cherokee with 110k miles and paid $3,600 cash.
I don't need the status symbol of a new vehicle nor the monthly payment and living well below my means is my motto. As Dave Ramsey says, "live like no one else today, so you can live like no one else tomorrow".
Investor · Boise, ID · Member since 2011 · 1k+ posts · 736 votes
11y
A 2005 Volvo XC90 with 120k miles. I haul a lot of kids around a lot of the time - gets the job done and is still acceptable for driving clients around. Best of all: paid for!
Can someone tell me how it makes more sense to pay cash ($20k+) for a car when you can get loans at 2.5% for 60 months? If you have $30k for a car and are able to put down $3k and finance the remaing $27k at 2.5%, that leaves you with $27,000 cash to go out and make a return well above 2.5%. You make even 3.5% ANNUALLY on that money and you have essentially borrowed free money and made an additional 1% on it. I will never understand why people are against borrowing free money.
Buying a new car is just burning cash...if one has it to burn great. Cars are depreciable assets. Don't get me wrong...its FUN to just BURN cash.
But I'm too frugal to do that. I'd give more to HELP those less fortunate than me to HELP themselves - learn how to earn $$$...not just feed them.
Mark, I agree with some of your points; however, the question wasn't answered one bit. Also, just to clarify, I wasn't necessarily talking about a new car. Applies to used as well.
Zach,
It doesn't make sense...financially anyway. Its all about image.
Mark, you've completely lost me now. It makes perfect sense, especially financially. Maybe my main point didn't come across fully in my original post. Let me ask another way. If you have a balance on a credit card with a 15% interest rate and instead of using the cash you have on hand to pay it off you decide to invest in the stock market and you do alright and make a 10% return. Effectively, you still lost 5% on that money right? Well if you did really well and made 20% in the market then effectively, you made 5% on that same money.
It's the same thing here. Spending 2.5% and keeping a large amount of cash on hand that you can go out and invest to make well over 2.5% is the financially responsible choice there. Not buying the car outright. If the same money will sit in a bank account and make zero return then paying for the car is the way to go but if you put that money into any investment that makes over 2.5% interest then you come out ahead. In all seriousness, please tell me if I'm wrong here because then my thinking is completely flawed.
Rental Property Investor · Soldotna, AK · Member since 2014 · 73 posts · 28 votes
11y
Personally I do not see any problem with having a loan on a vehicle, especially if you're smart about it. I have a loan on my 2008 Ext Silverado and have even refinanced it. Is it stupid to finance $10K at 2.3%? I have the cash, but could I use it more wisely? $10K at 2.3% for 5 years is only about $600 in interest. I strongly believe I can make more than $600 over 5 years using that same $10k. What do you think?
Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
11y
Every job has an appropriate tool... Fast cars belong on the track
This my 1998 Porsche C4S on the track where it belongs... It is street legal, with A/C and a stereo but has a 6 point harness, a cage and a full fire suppression system.
My street, ride before getting into REI was a 2004 Porsche Cayenne S with air suspension. I would pull a 20 foot enclosed car trailer with it, no problems with power or brakes. Those who tow large objects know the benefit of self leveling air suspension over steel springs.
My ride now that I am doing demo and doing renovations myself is the same Cayenne. My little dump hauler is not a big tow, but the suspension does make the ride much better!
Houston, TX · Member since 2015 · 57 posts · 8 votes
11y
'92 Kia, Paid for, still runs pretty good but I have dreams! I love cars, and when I get into a position in my real estate career where I can afford one of my dream cars, it'll definitely happen.
I don't get the whole "buying new cars is like burning cash" and the "cars depreciate" mentality. Some posters have openly said they are embarrassed to show up in the vehicles. People, you don't have to live like this!!! Everything you buy…furniture, clothes, televisions, jewelry, stereos, cellphones, computers….everything depreciates so where does it end? Even Real Estate can depreciate. Just in my little area, there are Toll Brother built homes here bought in 05 for 900k, selling for 250k…..not to mention every house value literally cut in half since the housing crash. You think everyone is feeling good about penny pinching and being embarrassed by their cheap cars so they could "invest" in those "appreciating assets"???? Wheres it end? Do you also live in a mobile home so you can put the rest of your income into appreciating assets? Its fine to live like that, but don't put down people for enjoying the finer things in life. Life sentence because I have a car payment???? Thats silly.
Not all older cars are a maintenance headache. I drive a 96 Camry with 313k, I inherited it from my wife after I got rid of my 96 Explorer with 315k (that had been rolled/totaled and still put another 90k on it). We also have an 03 Acura (wife's car) and a now an 02 Tahoe. We drive a lot, have a great mechanic, and we take good care of our cars. Over the last 10 yrs since doing this, we have never been stranded and having a 3rd vehicle makes it easy if something needs to get fixed. For the most part we just do oil, brakes, and tires. If they were a headache we'd just buy newer stuff. Someday when my RE income grows, I'll be like Steve and drive a nice big new truck
Originally posted by @Steve Olafson:
I drive a 2014 tundra. Paid cash. I absolutely love the truck. I can fit 6 passengers comfortably and still have a truck bed.
Yeah, I think the argument about needing a new car to avoid being stranded is pretty much just an excuse for people to go out and buy a new car to make themselves feel better under the guise of safety. Unless the car being replaced is truly falling apart, you just don't see 7-8 year old cars stalled on the side of the road. They make cars so much better than in the 70's and 80's, so I can understand why older generations think this though. Cars from this era were often horrible, especially the American ones.
Asset Manager · Peoria, IL · Member since 2014 · 28 posts · 5 votes
11y
I buy used cars and pay cash. I drive a 2006 Chevy cargo van for jobs and a weekend nice weather car is a 2001 740i Sport sharpest BMW in town. If you need to buy new the best stategy is to use the IBC strategy.
Investor · Edwardsville, IL · Member since 2014 · 142 posts · 54 votes
11y
'99 Accord. 95,000 miles. Paid for but... I can't haul drywall, or plywood with it. (Does surprisingly well with 2x4s though.) But I am looking for a truck and I'll be surprised if I can get away with paying cash. It'll have to be cheap though. Maybe a Silverado, Tundra or a Sierra.
Parnell, IA · Member since 2015 · 26 posts · 7 votes
11y
2008 Subaru Outback. 2nd one. For this country girl, AWD is a must and I love the cargo space in the back. New ones have a shorter back. It'll be a sad day when this one dies.
Rental Property Investor · Charlotte NC Fort Mill SC Lake Wylie SC, SC · Member since 2009 · 174 posts · 103 votes
11y
I drive a 2006 Toyota Tundra 4x4. Love it! She'll haul anything and everything I need for my rehabs, plus she rides like a big fat Camry--comfy.
I do not trade in my vehicles every couple of years. However, now that we can afford it, I will be trading in my 2006 for a new (2015 or 2016) Tundra. Mostly because she's gotten up there in mileage, but also, just given her age, it will soon be time for some big repairs. I do not have time for car trouble. After all, time is money. Also, I want the 'toys' that I can get on new vehicles these days. My truck is my mobile office, and it's one of the most important "tools" I own. I love not having a car payment, but I'll gladly have a payment and write off the interest (along with all of the expenses of the vehicle) because it's registered to my business and used 100% for business.
On the other hand, my husband refuses to let go of his 190K+ mileage, 1994, Toyota 4x4 pick-up. Even though he ends up working on something every month. And even though people keep wanting to buy it. Thankfully, he's handy with cars.
We gave our old 2000 Camry (with 180K+ miles) to my niece when she went away to university. If we didn't do that, we would have kept on driving it ourselves. It's a good car, and it will carry her safely for many years and many miles to come. If she'll remember to get the oil changed!
Investor · New York City, NY · Member since 2014 · 289 posts · 374 votes
11y
I have an 01 Ford focus with 222k miles. She's been a great car but I fear she's past her prime and I'll have my eye out for a decent used vehicle in the next few months. Definitely something that will work better for hauling stuff around for my rental.
Flipper/Rehabber · Williamsburg, VA · Member since 2008 · 144 posts · 105 votes
11y
I drive a 2009 Dodge Ram & Chevy Suburban. I'm from NJ and pretty cars are a vice.
After reading this thread, I am now ashamed. :(
Flashback: When I was a young Private back in 1997, my father gave me a 1994 Mustang GT 5.0 convertable fully loaded THIRSTY beast. I remember I couldn't even buy a sandwich and I slept on a floor, but I always found a way to gas that thing up with my ity-bity paycheck.
Investor · Arcata, CA · Member since 2015 · 76 posts · 34 votes
11y
First my pride and joy 2008 Dodge Ram 3500 6.7 Cummins Diesel. Had this truck for over 5 years now and love it. Hauls everything I need for all my projects.
Also my 02 VW Jetta TDI that gets 50mpg. For saving money on a day to day basis.
Real Estate Agent · Fort Worth, TX · Member since 2014 · 187 posts · 113 votes
11y
Since this thread won't die I decided I should share the car we got for my wife a couple of yeara ago... Crazy story... I'll keep it as brief as possible haha. Quick stats first... Bought it in 2012, 2006 escape v6 fully loaded had about 90k miles, paid cash 6500.
So I called a listing from craigslist. Small local dealer. He's asking 7900. I meet him at sears where he's keeping the car... I thought it was wierd.. But whatever. So I get there and its missing a trim piece by the bumper has a cracked tail light and a crack in the windshield. So I point it out , he offers to fix all of it no problem... I tell him I want to take the car home today and I want the price to reflect condition etc... So I follow him to his "dealership". Its a small office in an office warehouse area... No cars for sale anywhere... I choose to ignore that red flag. Make a deal at 6500, hand over the cash. And leave proud of my deal.
30 days pass and no plates. I text the guy, he says there on the way, complains about the DMV to deflect blah blah blah...
60 days or so. Receive a letter from James wood Chevrolet saying that the dealership I bought the car from stole it along with 10-15 other cars. They ask me to file a complaint so he loses his license.. I don't and instead try to use it as leverage to get the dealer I bought from to fix it. He doesn't. I called him every few weeks and had words for him. My temporary plates are long expired.
I waited this thing out. James wood pressed charges took it to a judge and got his license revoked. The dealer skipped town with the cash... He was more worried about the sec for a penny stock scheme that he was running "evcarco". James wood bailed us out and gifted us the title. Thank you James wood Lol. This process took over a year.
Lesson - don't ignore red flags and make sure the seller has the right to sell.
One more thing... The state of Texas waived our TTL!!! We paid it to the dealer who skipped town and apparently this happens often enough that there is a waiver that can be obtained.
Real Estate Agent · Marietta, GA · Member since 2014 · 6 posts · 4 votes
11y
I'm happy to add for the first time in my life I just paid all cash for a car for my wife (2011 Toyota Corolla)! I'm a Dave Ramsey listener too and he (and my beliefs) had me very motivated. Feels great!
Mooringsport, LA · Member since 2014 · 25 posts · 31 votes
11y
My wife drives a 2008 F-150, and I have three trucks all used for work. A 2009 F-350, A 2010 Dodge 2500 and a 2014 Dodge 3500. Only the 3500 has a note but since its for work i guess its good debt :P
NoW if the question was "What car do you hate" I would say Subaru, the commercials they run make me want to barf!