John McMullen really loves cars. The 76-year-old Michigan car dealer started buying collector automobiles in 1986, when an ad in Hemmings Motor News caught his eye: for a two-tone, blue-and-cream, 1932 Packard. He flew to Chicago to inspect the car and plunked down $220,000 for it.
Since then, McMullen has amassed one of the largest and most impressive private collections in the U.S. He owns 130 cars worth $9 million in all. His 275-acre farm north of Detroit houses everything from an 1886 Benz (that's before it was Mercedes-Benz (DCX ) to '60s muscle cars. He also owns Bette Davis' 1949 Cadillac and a 1931 Duesenberg built for comedian Joe E. Brown and later owned by reclusive billionaire Howard Hughes. Says McMullen: "It's easy to get turned on to it."
True enough. Tooling around town in a well-restored vintage car makes a statement all its own. Sure, driving a new Mercedes tells people you have made it. And buzzing down the street in a Porsche (PSEPF ) 911 says you are into the sporting lifestyle. But owning a classic is different. It suggests money, but it also puts its owners into a special coterie -- those who either know how to fix up cars or at least have a discerning eye and can pick a good one. Drive a classic, and it is assumed you are among the automotive cognoscenti.
Posers beware. If you don't really know old cars, you can get burned. You need a methodical approach. First, novice collectors should be careful at auctions, where fees can jack up the price and savvier buyers have an advantage. Second, do your research and examine many cars of the same model before buying. And it's important to seek the advice of experts. "You don't just go out and buy an old car," says Richard Lentinello, editor of Hemmings Motor News, which publishes articles about the hobby and lists plenty of collector cars for sale. "You'll be sorry."
The first thing you should do is decide exactly what car you want. Whether you like 1930s hot rods, old Jaguars, or Packards, find the make or style and era you want. What you collect will, of course, depend on what you want to spend. Rare classics can sell for over $1 million, but muscle cars from the '60s and '70s can be found in good shape for about $20,000.
Go to car shows and find the vehicle that catches your eye. Then hit the books. Car magazines and reference works will tell you if certain years or models were rarer -- and hence more valuable -- than others. If it's a Packard you want, join a local Packard club. Memberships cost $20 to $30 a year. Most car clubs have technical experts who know which cars to avoid and where to get parts and restoration work done.
Club members can help you avoid easy mistakes. Here's an example. Car & Driver Editor-in-Chief Csaba Csere recently bought a '65 Jaguar E-type convertible. While doing research, he discovered that the Series 1 E-types, which had the car's classic covered headlamps and chrome-encircled grille, are worth 40% more than Series 2 E-types, and that convertible E-types are the most valuable of all. All told, Csere's E-type Series 1 convertible is worth twice what a Series 2 coupe would bring, assuming they're in the same condition. But someone selling a Series 2 may not volunteer that information.
Once you know what you want to buy, start shopping. Hemmings is a good source for cars, and so is the Web site, Autotrader.com. Auctions can be good, too. But novice collectors may want to take along someone who knows old cars, says Lentinello. Auctions charge both buyers and sellers a fee, usually about 8% of the sales price. Plus, the well-heeled, big-time collectors will sometimes make high bids to get a car they want, forcing others to pay more than they might if they found a similar model elsewhere.
Be prepared to look at a lot of cars before buying. Csere says he saw 10 Jags before buying his '65 E-type. He traveled all over the country to find one. "If you're not interested in investing the time to look, perhaps you shouldn't be buying a collector car," he says.
Seek models that are in good condition or have been reconditioned. Even though it may be far cheaper to buy a fixer-upper, in the long run it could cost much more, says Rob Myers, owner of RM Auctions Inc. Sometimes the restoration costs can exceed the car's value. Myers says a '65 Pontiac GTO convertible that has spent its entire life in wintry climes, probably has rusted-out floor panels and other parts, and can cost $100,000 to restore it to showroom condition. The car is worth only about $60,000 in great shape.
Even good-looking cars should get a thorough inspection. McMullen says he once bought a '56 Pontiac hardtop that looked great. When he got the car home, he found out that the frame was bent. He eventually sold the car at a loss.
Restored cars can be troublesome, too. Car club members can tell you which models are prone to frequent problems. They also know what to look for to make sure you're buying a classic that is worth the price. Some models had limited edition packages with rare engines that can be far more pricey. Rare collector cars are called classics, while other nice old cars are just called collectors.
When you're ready to buy, take a second look at the specific car before reaching for your checkbook. You might spot some problem you didn't see before. Also, it pays to hire a mechanic or an appraiser for a second opinion. Car appraisers, who often act as judges at car shows, grade collector cars on a standard 100-point scale.
Take the car out on a test drive. Make sure that the brakes stop the car evenly and the engine runs smoothly. RM Auctions, for one, allows test drives if you show up early, but many auctions don't. That's one problem with auctions. The other is that you see the cars only on that day. But usually there are plenty of appraisers on-site that you can hire to look a car over.
If it's done right, investing in a collector car can eventually bring a return. Right now, Chrysler cars with vintage Hemi engines are hot, because the company has revived the name and motor for its new models. Myers of RM Auctions says he sold a rare '71 Dodge Hemi Cuda convertible for $250,000 five years ago. It's worth $700,000 today. Chrysler made only seven of them.
Still, most cars aren't great investments. So newcomers to the hobby should buy just ones they like for the pure enjoyment of it.
By David Welch