Just put a deposit on a sports car. Am I a complete dummy here?

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Just put a deposit on a sports car. Am I a complete dummy here?

Scott V.
Member since 2019 · 28 posts · 48 votes

I'm totally prepared to get my *** grilled based on the title of this thread but that's fine. Please share your honest opinions. Here is the situation:

- I'm a complete car nut. I spend a lot of my free time researching cars, shopping for cars, watching videos, etc. and I've had my eye on a few models for some time now.

- I'm 30 years old, I'm a dentist, I do not have student loan debt, I live in an area of the country with one of the lowest costs of living, I have a monthly mortgage on my home of $2100. I make approximately $140,000/year and save 40% of my income. The remainder is budgeted for my expenses including mortgage, food, entertainment, etc. 

- My current car is paid for by the company I work for and I have no car payment. I'm going to be keeping this car as my daily driver.

- I put down a refundable deposit on a second "fun" car and the car costs $45,000.I think I negotiated well, the average estimated "value" of the car currently is about $50k. I've done a ton of homework and this particular car is projected to depreciate very minimally and even has the potential to appreciate in value as it may become collectible (I won't be counting on this as most all cars depreciate). The car is a few years old and has already done most of its depreciating but it still has 3 years of factory warranty remaining which minimizes risk to me in terms of repair costs.

- I have about 100k in cash savings but I will not be looking to buy the car in cash (I'll put a chunk of cash on a down payment and finance the rest at approx. 3% interest).

- I'm torn between the idea of total fiscal responsibility and buying something I've always wanted to own at a relatively young age. I'm not dead set on buying it and my deposit is refundable but I'd like to make my final decision in the next few days. 

- I'm currently single with no wife or kids (gonna do all that someday)

- Since this is a real estate investing forum and the topic is bound to come up, no, I do not have real estate investments at this time because I'm waiting to invest in my own business next year. I'll be looking to go about real estate investing in my field of expertise which is dentistry. 

Have any of you with more life experience gone through something similar and would you have done the same thing over again? 

10Reply
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Clifford Paul
Rental Property Investor · Member since 2018 · 483 posts · 956 votes
6y
Originally posted by @Scott V.:

I'm totally prepared to get my *** grilled based on the title of this thread but that's fine. Please share your honest opinions. Here is the situation:

- I'm a complete car nut. I spend a lot of my free time researching cars, shopping for cars, watching videos, etc. and I've had my eye on a few models for some time now.

- I'm 30 years old, I'm a dentist, I do not have student loan debt, I live in an area of the country with one of the lowest costs of living, I have a monthly mortgage on my home of $2100. I make approximately $140,000/year and save 40% of my income. The remainder is budgeted for my expenses including mortgage, food, entertainment, etc. 

- My current car is paid for by the company I work for and I have no car payment. I'm going to be keeping this car as my daily driver.

- I put down a refundable deposit on a second "fun" car and the car costs $45,000.I think I negotiated well, the average estimated "value" of the car currently is about $50k. I've done a ton of homework and this particular car is projected to depreciate very minimally and even has the potential to appreciate in value as it may become collectible (I won't be counting on this as most all cars depreciate). The car is a few years old and has already done most of its depreciating but it still has 3 years of factory warranty remaining which minimizes risk to me in terms of repair costs.

- I have about 100k in cash savings but I will not be looking to buy the car in cash (I'll put a chunk of cash on a down payment and finance the rest at approx. 3% interest).

- I'm torn between the idea of total fiscal responsibility and buying something I've always wanted to own at a relatively young age. I'm not dead set on buying it and my deposit is refundable but I'd like to make my final decision in the next few days. 

- I'm currently single with no wife or kids (gonna do all that someday)

- Since this is a real estate investing forum and the topic is bound to come up, no, I do not have real estate investments at this time because I'm waiting to invest in my own business next year. I'll be looking to go about real estate investing in my field of expertise which is dentistry. 

Have any of you with more life experience gone through something similar and would you have done the same thing over again? 

 Scott, 

As a car guy and a rental property investor, although not popular on BP. I will tell you  my opinion... you are only going to live once. 

What good is money if you don't enjoy the things that make you happy.

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  • Mason DeJarnett
    Paducah, KY · Member since 2016 · 75 posts · 45 votes
    6y

    @Scott V. If it was me- I’d find a couple year old version of the car with some miles and pay half. However, your financials are stellar. Buy the car, and own it forever. With rates as low as they are finance it, let your money grow in an investment account and enjoy the fruits of your labor.

    Then go buy some property ;)

    12Reply
  • Scott V.
    OP
    Member since 2019 · 28 posts · 48 votes
    6y
    Originally posted by @Mason DeJarnett:

    @Scott V. If it was me- I’d find a couple year old version of the car with some miles and pay half. However, your financials are stellar. Buy the car, and own it forever. With rates as low as they are finance it, let your money grow in an investment account and enjoy the fruits of your labor.

    Then go buy some property ;)

    Thanks for the reply Mason! As far as the car goes, the MSRP of the car is about $75k and you can't really find them for less than $40k. The one I've got the deposit on is $45k and it's a 2016 model year with 500 miles on the clock (it was owned by a collector who never drove it supposedly). I would normally buy an older car (I was looking at 2006 911s for awhile) but the risk is so high with mechanical issues costing you tens of thousands of dollars. This one still has almost its entire factory warranty remaining since it was titled in 2018 originally.  

    2Reply
  • Mason DeJarnett
    Paducah, KY · Member since 2016 · 75 posts · 45 votes
    6y

    @Scott V. Warranty is key and repair costs on some models can be expensive. I stand by my recommendation- do your thing :)

    0Reply
  • Clifford Paul
    Rental Property Investor · Member since 2018 · 483 posts · 956 votes
    6y
    Originally posted by @Scott V.:

    I'm totally prepared to get my *** grilled based on the title of this thread but that's fine. Please share your honest opinions. Here is the situation:

    - I'm a complete car nut. I spend a lot of my free time researching cars, shopping for cars, watching videos, etc. and I've had my eye on a few models for some time now.

    - I'm 30 years old, I'm a dentist, I do not have student loan debt, I live in an area of the country with one of the lowest costs of living, I have a monthly mortgage on my home of $2100. I make approximately $140,000/year and save 40% of my income. The remainder is budgeted for my expenses including mortgage, food, entertainment, etc. 

    - My current car is paid for by the company I work for and I have no car payment. I'm going to be keeping this car as my daily driver.

    - I put down a refundable deposit on a second "fun" car and the car costs $45,000.I think I negotiated well, the average estimated "value" of the car currently is about $50k. I've done a ton of homework and this particular car is projected to depreciate very minimally and even has the potential to appreciate in value as it may become collectible (I won't be counting on this as most all cars depreciate). The car is a few years old and has already done most of its depreciating but it still has 3 years of factory warranty remaining which minimizes risk to me in terms of repair costs.

    - I have about 100k in cash savings but I will not be looking to buy the car in cash (I'll put a chunk of cash on a down payment and finance the rest at approx. 3% interest).

    - I'm torn between the idea of total fiscal responsibility and buying something I've always wanted to own at a relatively young age. I'm not dead set on buying it and my deposit is refundable but I'd like to make my final decision in the next few days. 

    - I'm currently single with no wife or kids (gonna do all that someday)

    - Since this is a real estate investing forum and the topic is bound to come up, no, I do not have real estate investments at this time because I'm waiting to invest in my own business next year. I'll be looking to go about real estate investing in my field of expertise which is dentistry. 

    Have any of you with more life experience gone through something similar and would you have done the same thing over again? 

     Scott, 

    As a car guy and a rental property investor, although not popular on BP. I will tell you  my opinion... you are only going to live once. 

    What good is money if you don't enjoy the things that make you happy.

    36Reply
  • Allan Smith
    Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    Well its true you only live once. On the other side of that is your goals. I want financial freedom via rental income, so buying a second car only delays that goal. If you have a similar goal, you have to be okay with that finish line being a few miles further away. Up to you.

    the last bullet point was a bit concerning. I do think it might be a little early to jump on an expensive toy when you haven't started the investing game yet. Certainly not a strong start in a forward direction. Could you cut a deal with yourself? After 3 deals you let yourself get a car? Etc

    I've never been a high earner but if I halted my business of 3 dozen rentals, they would build wealth and income over time. Man if I had your kind of income I think I'd be financially free in about 18 months ha! Wife and I live simply. Airbnb our ADU etc

    6Reply
  • Josue Vargas
    Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
    6y

    For a "Dentist" and that salary, looks like you are a student.  Finish your degree and then make big bucks.  Real problems are not about cars.  But if your car worth more than the average property in your neighborhood, and you are wondering if you want to upgrade your car or buy a property... I think you are in the wrong internet site... 

    8Reply
  • Fernando E.
    Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
    6y

    @Scott V.

    Congrats on a very good financials, you’re making a fairly good salary, high - 40% savings rate, Low expenses including mortgage, less responsibility being a single man and fairly young to reach financial independence so in my opinion you can afford it, go buy it! I sound like Suze O. Anyway enjoy the car. Btw, what’s the make and model? I’m excited for you 😁

    1Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y

    YOLO. Sounds like you've done your research. While a car is rarely an asset, unless it's rare, sounds like you have a good deal and you could turn around tomorrow and re sell it for a small loss...or maybe you'd be able to sell it and break even.

    IMHO, now's the time to do it while you are young and have no dependents. I'm lucky in that the worst reaction I get from my wife is an eye roll. Others I know are not so lucky. My buddy buys salvage title cars to drive (and fix...and fix often lol) because he's tight. Then he went and bought a brand new $25K tractor...for which he has zero need. But he loves driving it around his back yard. 

    So my most important question, is what could you possibly be buying if you not getting a viper or corvette? Man, I'm excited for you! 

    It's all about whatever makes you happy, and as another car guy, I approve of this purchase. 

    3Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 540 votes
    6y
    Originally posted by @Scott V.:

    I'm totally prepared to get my *** grilled based on the title of this thread but that's fine. Please share your honest opinions. Here is the situation:

    - I'm a complete car nut. I spend a lot of my free time researching cars, shopping for cars, watching videos, etc. and I've had my eye on a few models for some time now.

    - I'm 30 years old, I'm a dentist, I do not have student loan debt, I live in an area of the country with one of the lowest costs of living, I have a monthly mortgage on my home of $2100. I make approximately $140,000/year and save 40% of my income. The remainder is budgeted for my expenses including mortgage, food, entertainment, etc. 

    - My current car is paid for by the company I work for and I have no car payment. I'm going to be keeping this car as my daily driver.

    - I put down a refundable deposit on a second "fun" car and the car costs $45,000.I think I negotiated well, the average estimated "value" of the car currently is about $50k. I've done a ton of homework and this particular car is projected to depreciate very minimally and even has the potential to appreciate in value as it may become collectible (I won't be counting on this as most all cars depreciate). The car is a few years old and has already done most of its depreciating but it still has 3 years of factory warranty remaining which minimizes risk to me in terms of repair costs.

    - I have about 100k in cash savings but I will not be looking to buy the car in cash (I'll put a chunk of cash on a down payment and finance the rest at approx. 3% interest).

    - I'm torn between the idea of total fiscal responsibility and buying something I've always wanted to own at a relatively young age. I'm not dead set on buying it and my deposit is refundable but I'd like to make my final decision in the next few days. 

    - I'm currently single with no wife or kids (gonna do all that someday)

    - Since this is a real estate investing forum and the topic is bound to come up, no, I do not have real estate investments at this time because I'm waiting to invest in my own business next year. I'll be looking to go about real estate investing in my field of expertise which is dentistry. 

    Have any of you with more life experience gone through something similar and would you have done the same thing over again? 

    Scott, do you have any investments at all?  How will this affect your current savings rate?   I want to say yes, but if you’ve not started investing (not necessarily real estate, just stock market) and you’re 30, you really need to use your income to propel that forward.  If you’ve been investing since your 20s and your 40% savings rate includes money saved AND invested, and that 40% won’t change much as a result of the purchase/financed payment, I say go for it. 

    2Reply
  • Kevin Dureiko
    Lender · Bolton, CT · Member since 2017 · 253 posts · 88 votes
    6y

    Nah, you’re not going off the deep end here. At that price point you’re buying the equivalent of a nicely optioned Toyota Highlander. Which no one would fault you for.

    You don’t need the extra room for kids. So give it a whirl.

    When the buyers remorse hit you (and it will) you’ll either get over it or sell it back.

    Sincerely,

    A 33 year old car nut (and watches too).

    3Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    6y

    This really depends on if it’s a corvette ,. If it Is , your a smart man and doing a good job ...if not then you bought wrong , wasted your income on a foolish liability and will likely experience early male pattern baldness and erectile dysfunction 

    12Reply
  • Account Closed
    Member since 2019 · 1k+ posts · 1k+ votes
    6y

    @Scott V.

    At minimum, go buy a house that legitimately cash flows enough over the next 5 years to make the car payments.

    6Reply
  • Natalie Schanne
    Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Scott V. - I’m a huge advocate of investing and being frugal. That said - BUY THE CAR! (If it’s the kind of car that you think you’ll keep for at least 5 years and love tremendously because you’re a car nut.)

    I had a cash-paid Toyota Corolla and was saving about 50% of my salary and my friend posted she was selling her Hot Red Convertible Coupe with Black Interior which was and still is my dream car. I bought it with cash and I never wanted to drive my corolla again so I sold it.

    Don’t kid yourself that it’s any kind of investment. It’s going to be a money drain with expensive parts and maintenance. I paid almost double for tires and any maintenance. That being said, drive the heck out of the thing so you can enjoy every moment. I loved loved loved my convertible. I drove it with the top down in the rain, in 40 degree weather, you name it. I always was having fun. It made me feel sexy and confident. I sold my convertible 8 years and 45000 miles later for 10k less when I needed to buy a certified used minivan (10-15k off Msrp) for my growing family (2 kids). Which I also financed 0% down and at 3%. Because trying to get a baby in a convertible backseat was hellish and with 2 I couldn’t ever imagine going anywhere with them in my convertible.

    If you’re saving money, put it in the stock market like vanguard index trackers or into real estate rentals (people like me have some great student housing deals in growing markets) to generate more than 1-2% from the bank. The stock market grew almost 30% this year. Whoa! Pretty excellent return for doing nothing but checking your account statement from time to time. Good luck with your career. Consider it an investment in confidence and relationships. Use your sexy car to go meet more people. Consider asking your company to give you more money and not the company car because you’ll enjoy driving this one so much more.

    6Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    6y

    I would say go for it . I have my 4th corvette (1962 built 2 weeks before I was born) in my garage at home and a custom 68 chevy van (from the old vanin days)  at my shop . I have had custom cars since my teens , they are fun . I dont get to use them as much with kids , but they are there .  You only go around once And i still can buy properties . 

    0Reply
  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    6y

    @Scott V., why so cagey about not saying what kind of car it is?  Embarrassed?  C'mon, let's see some pictures!

    The only thing I'd do differently is pay cash.  Nothing steals the joy of owning a toy like payment to the bank each month.  Own your toys free and clear!

    5Reply
  • Nick Gann
    Real Estate Agent · Murfreesboro, TN · Member since 2019 · 194 posts · 181 votes
    6y

    @Scott V.

    Enjoy it dude, thats all you need to worry about.

    Ill expect some free dental work for my in depth investing advice.

    4Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    6y
    Originally posted by @Natalie Schanne:

    If you’re saving money, put it in the stock market like vanguard index trackers or into real estate rentals (people like me have some great student housing deals in growing markets) to generate more than 1-2% from the bank. The stock market grew almost 30% this year. Whoa! Pretty excellent return for doing nothing but checking your account statement from time to time.

    Because it's more interesting than the subject of this thread, yeah. I was glad we at least had SOME of our money in the stock market this year.

    1Reply
  • Ramon HuertaPro Member
    Real Estate Agent · Kalamazoo, MI · Member since 2016 · 223 posts · 26 votes
    6y

    @Scott V. The real question you should ask is what do you value the most and if you spend your money on this car how is this affect it. If you are happy with your life and happy where your at and this car brings you the most joy I guess you should but if your about to start your own business and that is what you value the most i would say save your money and give your self a goal that when you reach a certain level in your business then you reward yourself. But I would suggest that you find a way to have real estate pay for your car 😊.

    1Reply
  • Scott V.
    OP
    Member since 2019 · 28 posts · 48 votes
    6y
    Originally posted by @Josue Vargas:

    For a "Dentist" and that salary, looks like you are a student.  Finish your degree and then make big bucks.  Real problems are not about cars.  But if your car worth more than the average property in your neighborhood, and you are wondering if you want to upgrade your car or buy a property... I think you are in the wrong internet site... 

    I'm not sure if this is a joke or not haha. You do realize that most dental and medical students actually pay upwards of $100k a year to attend those programs and certainly do not actually make any money unless it's $10/hour waitressing in the evenings...

    I do have plans to dramatically increase my income by becoming a dental practice owner in the next 12-24 months but my current salary is about average for a dental associate in the U.S.

    3Reply
  • Scott V.
    OP
    Member since 2019 · 28 posts · 48 votes
    6y
    Originally posted by @Allan Smith:

    Well its true you only live once. On the other side of that is your goals. I want financial freedom via rental income, so buying a second car only delays that goal. If you have a similar goal, you have to be okay with that finish line being a few miles further away. Up to you.

    the last bullet point was a bit concerning. I do think it might be a little early to jump on an expensive toy when you haven't started the investing game yet. Certainly not a strong start in a forward direction. Could you cut a deal with yourself? After 3 deals you let yourself get a car? Etc

    I've never been a high earner but if I halted my business of 3 dozen rentals, they would build wealth and income over time. Man if I had your kind of income I think I'd be financially free in about 18 months ha! Wife and I live simply. Airbnb our ADU etc

    Thanks to everyone for replying, I noticed a few people were asking about my lack of investments currently. I had been putting a good amount of money into my Schwab portfolio and investing in some basic index funds but I took all of it out last year. The reason for that was that I felt the market fundamentals were (and still are) really shaky. The fed is artificially propping up the economy with QE4, developers are overbuilding, and the market seems like its shooting up way faster than it deserves to and I feel a correction is imminent. I know many strategists say to ignore market fluctuations and just keep investing for the long haul but I just felt at the time that it would put me at a huge advantage to wait for the correction then jump back into the market rather than see my investments slashed and have to try and recover. Curious to hear opinions about this. 

    As far as real estate investing goes, competition in the residential real estate space is fierce right now and returns are minimal due to the housing boom and very few good deals to be found. I'm keeping my powder dry so-to-speak so that I can invest in my dental business. The reason for this is that there is far less competition in this arena and many dentists don't know the first thing about real estate and business generally so I stand to gain much more than if I were to go out and buy 3/2 homes in this environment. 

    1Reply
  • Scott V.
    OP
    Member since 2019 · 28 posts · 48 votes
    6y

    Also here's for the fellow car nuts wondering what I'm shopping for :)

    13Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y

    You're a Dentist, I think its okay to treat yourself.  If you need more money you can always make it with no problem. If you want to do really well like a relative of mine just open an office in Manhattan NYC and don't accept insurance (most dental insurance suck anyway).

    0Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y
    Originally posted by @Scott V.:

    Also here's for the fellow car nuts wondering what I'm shopping for :)

    Beautiful Alfa Romeo!  Since you're buying pre-owned at least make sure the brakes and tires are new and they give you a warranty.  These cars are expensive to maintain.  A brake job is triple the cost of an average brake job.  Same way Mercedes wants $500 for an oil change and justifies it by looking over the car with a BS multi point inspection.

    0Reply
  • Brett Rosenbauer
    Rental Property Investor · Fort Collins, CO · Member since 2019 · 36 posts · 20 votes
    6y

    Never finance something that depreciates. Pay cash. If you haven't done it already, I'd set up an LLC for/with your other properties and as others have mentioned it have your REI business pay for the car. Where live, one vehicle needs to be personal, so I have a 2001 Z3 as my errand/beater and all other vehicles are nicer and owned/depreciated through the business.

    0Reply
  • Allan Smith
    Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    I would agree that generally investing in one's own business will have the highest return. If you can scale the dentist business and use the cash to increase revenue and market share, that's probably better than stock or RE.

    0Reply
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