It is no secret that the exotic car market (actually, the entire car market), right now is going INSANE.
And I bet you are wondering the same things thousands of other people are wondering:
“How do I buy an exotic car in this market? Is this the right time to buy a car? Should I wait? Will the market crash?”
Let’s talk about three things you need to know that will help you buy an exotic in todays market.
First, not all cars are created equal.
For example, a lot of people are scooping up the latest and greatest cars to hit the market.
Due to supply shortage these cars are indeed significantly higher than their MSRP and commanding premium value in this market, this means even basic spec cars are going for way over what they are really worth.
Now we have seen flippers get away with this for some period of time, however, eventually these brand new base spec cars are going to get hit with something called “basic depreciation”.
It is not a new concept in the car market, but it seems to be one we have forgotten given the hot state of the market in the last two years.
A way to hedge against this is by buying exclusive, special edition, high optioned, well spec’d versions of these brand new cars.
This way there is still a premium dollar tacked onto the car that enables it to be sold for more given the uniqueness.
Second, find cars OFFLINE.
Yes, eBay, Autotrader, and Cargurus are great tools for finding cars for sale.
However, other sites like Facebook and Instagram can open the door to a world of car enthusiasts where you can forge connections, and help lead you to cars that while aren’t necessarily listed for sale, could be sold to you at the right dollar.
(Yes, I know that’s still online, but it’s off the listing sites)
While you could make the argument that these particular people don’t have their cars listed because they aren’t looking to sell, they still may be open to selling.
The real point is that a lot of these people don’t have their cars listed because they don’t want to deal with the hassle of selling.
Putting a car online to sell creates endless streams of phone calls, emails, low ball offers, tire kickers, etc.
All you have to do is know how to approach/talk to them, and ultimately this is a great way to be able to build a relationship while also getting a better car for the same value as the deals you are seeing on the generic posting sites.
Finally, buy the highest spec, not the lowest price.
A lot of people struggle to pay more for the same thing.
While this method of thinking makes sense for an iPhone or a pair of shoes, it doesn’t apply to exotic cars.
Here is an example.
There are two Ferrari 488 Pista’s for sale.
Car A is $520k and the Car B is $540k.
The average person would jump for the Car A because they want to save the $20,000, but that’s not the right way to look at these two deals.
Let me explain why.
The Car A’s sticker (MSRP) is $480k, meaning you are willing to pay $40k over sticker for a car that is a base spec, with low options and is found to be not as “hot” on the resale market.
Where as the Car B’s sticker (MSRP) is $530k, meaning you are willing to pay $10k over sticker for a car that has $50k more options than the Car A, meaning it is a hotter spec, with more desirable options, and considered to be a strong resale car.
Now wholesalers make their bread and butter off going for the Car A types, but we are not car wholesalers, we are car hackers.
We drive our cars, own our cars, enjoy our cars for a certain amount of time, and then position ourselves for a place of exit.
Even in today’s market, car hacking is more relevant than ever before.
Let’s say, you fail to follow the above three methods, and you buy a brand new, base model spec car from a dealer who has it listed online for $60k over sticker (MSRP).
Then when the markets shift, you now own a car that isn’t special, it is not desirable for resale, and it is about to hit basic depreciation curves, all resulting in loss from an ownership standpoint and a struggle to exit on a resale standpoint.
That is when you have to ask yourself, can you afford to lose that $60k just to have a basic spec, low optioned car just to say you have one?
Because even if you are paying on the higher side of a cars true value, you want to ensure you are betting on the right cars that will still retain some value even if the market shifts back or corrects to some extent.
There is a ton of opportunity to hack in these high markets, but remember that it is all about the car that you choose to bet on wether you will ride the wave or get knocked off your board.