Financial Analysis for an Under 30 Yr. Old - ~(07-10 California)

#2
You can find 2010's with less than 10k for miles under 100k
that have been well maintained
I'd look for a 2013 private party 10-15k for miles
you'll be around 115k
also in many states save taxes buying private party. With the release of the portofino these cars will continue to drop..... IMO
also there are many for sale currently that don't seem to selling....
buyers market 4 sure
good luck

 

I looked briefly at '10-12 but my service guys warned me about the transmission and tops. There's an early one with its guts out right now at the dealer. Try for at least a '13, they say. But overall, it's not like you're buying a 355 with a number of Known Issues.

As you can see early ones have settled in the $90ks, expect them to follow the GT cars' (612, 456) descent down toward $65-70k. I think they'll hit another floor there for a few years.

Don't worry about what other people think. Buying a car that's a few mos gross income is not crazy. What is crazy is if you are putting off other things in life that you otherwise could not afford. I didn't own a house yet when I bought mine a few years ago, but it's not that I couldn't if I really wanted a house (I do now, because my wife found the house she wanted and that, as they say, was that). What I think the key is, whether if you needed to sell it you could get out without too much damage.

 

Dude, you are way ahead of me! I finished college in '63, went to work on a bank management training program for $400 a month gross! The 2nd. year I bought a dealer demo 1965 Porsche 356C and had a car payment of $99.80. Count your blessings and get a 13/15 Cali 30. Good luck my boy. Bud

 

I think the general conservative approach regarding depreciating assets, is to avoid putting more than 1/2 of your annual take home salary into the sum total of all of your depreciating assets.

So, rounding up at 300K per annum, and assuming you are in NYC, SFO, or CHI, let's assume a total annual tax burden of 35%.

EBT = $195K. Less 15% for retirement, which you better be doing! , and say $2.5K/yr for health insurance, nets you out at around $163K.

$163K x 50% = $81,625. So, you are a little high on this car purchase, but not extremely so.

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Personally, if it is something you really want, and can afford the depreciation and R&M hits, and most importantly - you would have the ability to pay cash for the car, even if planning to finance, then I would say go for it.

 

I think you'd best take depreciation/appreciation out of the overall picture ... the car will depreciate, there may be a "floor" but there will always be examples of cars that have been driven 200 miles per year out there and, if you are anything like me, you are going to drive the car a lot more than that. Best thing you can do is set the odometer display to show the fuel range and never look at it again try not to think about what it costs to maintain or what it might costs if it breaks, and just enjoy the car. These cars are a lot more expensive from the start than other cars, and the depreciation and maintenance is exponentially higher. The best advice is right above ... if you have the ability to just pay cash for the car if you needed to, then you probably don't have much to worry about in regards to financing it. But I don't think anyone (ever) will actually make money on owning a California. And I would not really expect a 2010 911 Turbo to appreciate, either, if was aircooled, sure.

 

I would add that it’s possible that the 15-16 California t might be within your price range in a year or so too. I only mention this because it appears many issues are eliminated with the T though for me I’m watching 13 and up and biding my time. Originally I had a target of between now and December for a purchase but I’m now going to wait since I took money I had set aside and put it into a business expansion since I really think these cars may come down in price and it was a smart move to increase business volume.

Granted I’m not driving a Ferrari right now unless I rent it on vacation but I am also fine waiting for a better deal and a larger pool of available vehicles with more color combos and options to choose from. But there is nothing wrong with taking the plunge now either if you find something that will work.

If you still choose to purchase an earlier model I’d seriously urge you to purchase a new power warranty or negotiate one into a deal with a Ferrari dealer and familiarize yourself with what it does cover. A DCT failure without one could be a bad day and there have been a few that have failed fairly quickly after purchase.

Good luck in what ever you choose. I was on the bubble about the California at first but after renting and using one I was in love and I was more then happy with the room available in the model. It is now my Ferrari of choice though I still have others I really enjoy.

 

Sorry but after 459 cars (I am lucky I can afford to loose lots of money on them), I have to say buying any car that cost over 100K is not about practicality, or weighing the costs, nor should it be. If you are going to pay that much the car better do something special for you. I just bought a 2015 Calf T (a loaded one) with less than 2K miles, I have driven both and the differences are greater than I would have thought. When people ask me advise about cars, I always ask the same questions. What to you want the car to be? How will you use it? What things about a car are most important to you. People forget that these cars with options probably averaged around 225K, and people who can afford that can afford to keep them on the road. Ferrari warranties are not cheap. I'm not trying to burst anyone's bubble but it is a big jump from an Audi to a Ferrari (I owned 39 Porsches before I bought my first of 7 Ferrari's). I admire your financial understanding OP, and I wish you all the best.

 

Dang, Bud, you were rolling in major dough! I worked in Woolworths for $100 week (full time!). Actually, cleared 88 beans, after taxes. Working for "The Man" stinks. It's no way to own a Ferrari.

Troy...
1. Budget: I say to budget $1K/month for care, feeding, insurance, gas, warranty, etc. for owning a Cali. If a big ticket item like the the hard-top or tranny goes, then you are talking 10 - 20 grand depending on severity of the issue.

2. Depreciation. Others have commented above. As I said before, I just imagined a big stack of cash = to the price I paid for my Cali going up in flames. If my Cali goes up in flames tomorrow, it won't bankrupt me. I'll be sad, but I have a ton of great memories, met great new folks, and my wife & I checked off a major item from our bucket list. If you're worrying about the $$, you won't enjoy your F-car to the max. And, believe me, when you're styling in a drop-top Ferrari, you don't want to worry lines and wrinkles!

3. Your net worth is ~ $250K more than my net worth @ 26. I'd only ask this question, if you work hard & work smart & have good luck for the next 5 or so years and that number is doubled, tripled, quadrupled, etc., and you could go and buy a new Portofino, used V12, or whatever floats your boat, would that we worth it? For me, I was willing to defer my dream while I worked on other things I wanted sorted - great wife, career I love, nice home, travel, etc. - and so now I just enjoy my Cali, my Porsche, heck even the wife's pickup truck to the max!

Good luck. You're asking the right questions...T

 

Bottom line: did you buy the house yet? If I were you, I will make sure I have my own house before I consider buying an exotic car, if I were 26 yo. If you already have a house under your name, your choice of exotics are quite more than you think given a 1500 a month. Buying used is a good idea, but all cars depreciates except a few.

Actually look into a FF. You are going to have so much Ferrari for so little money.

 

The FF is indeed a great V12 Fcar, sounds great, has better back seats and also offers 4WD but there are reasons for its low price.

The FF is not a convertible, and the FF's "hatchback looks" is more problematic than the Cali's "retro looks". It's also arguably more of an introverted petrolhead car than an extroverted mainstream car. One should also take note a V12 engine is more expensive to maintain than a V8, uses significantly more gas and does not go any faster. As for sound, my modded Cali30 arguably sounds a lot more epic than an FF.

Truth be told though, if I had room for 4 or 5 cars, I would love to add a FF to my garage.

 

I always kinda shied away from the FF, but the owner of the rental car agency I rent exotics from showed me his personal Lusso on our recent visit, and let my daughter sit in the back to show me the roominess the back seats have. I have to say I really backed off of the negative feelings I had after that. It still reminds me of a station wagon, but like a fellow fchatter reminded me the baddest station wagon on the planet.

Like 4th says the maintainance is more but im not sure how much more, and if i recall it is all wheel drive or 4x4 or something like that which could cause an added expense to maintain.

 

IMO

Truth is, the "hardcore" Fcar (and most sporty cars) is always one which is super-focused on the driver, not the passenger(s). The Cali's 2+2 is also more about beautiful proportions than passengers or even handy storage. Confirmation comes from the fact that the Cali only offers one cup holder.

OTOH, the FF and Lusso give the plot away immediately at first glance, compromising beauty for better passenger seats, many cupholders. That explains why they get a lot of resistance from mainstream Fcar owners unless it's a 3rd, 4th or 5th Fcar; and why a keener for one is usually a petrolhead... or a chauffeur.

 

I agree, but after checking out the FF replacement I went from no way ever to it wouldn’t be a bad car. But the California is still at the top of my personal list. I enjoyed the 488 but the California suits my personal taste and driving style more.

 

Yeah, I agree that FF likely should not be the first F car. I didn't like the FF first but it totally grows on me. I love the look with the capability to carry two kids at the same time in a car with legit Ferrari v12 engine. We can always enjoy the 458 if it's a date night. I also missed the California T HS too. I specced it so beautifully. And open top ferrari is really something!

To each of his own.

And where is the OP?

 

Do you have any other large debt obligations? If not and it's what you want I say go for it. If you want to check out a California I'm happy to arrange to check out mine. Hell if you wait a few months I'll probably have mine on the market over winter/spring.

 

At 26, you should be proud of yourself for even being in a position to consider purchasing a Ferrari. However, if you invest well now, you can become a multi-millionaire sooner so you can buy more Ferrari's or whatever else your heart desires (with cash) over your lifetime. Therefore, I'll be the first to slap you in the head because I would hope someone would have done the same for me when I was your age. My advice: buy a less expensive car and invest, invest, invest. Have you purchased a home and paid it off? Start there. You have a great income for 26. With some discipline, and the fact you have time on your side, it won't take you long to create a secure future for you and your family. Principal you could be leveraging NOW (building a business or invested in the market) will only be diminished (pissed away is another way of saying it) on any new car.

More info can be learned from Dave Ramsey's website who recommends purchasing any car with cash provided your net worth is high enough:

https://www.daveramsey.com/askdave/automobiles?page=9 The first audio clip is about purchasing/leasing a Ferrari and further down the page is a audio clip about purchasing a Lamborghini.

On the flip side , life is short and you're young, maybe you need a Ferrari now. Whatever you decide, good luck.

 

That guy says not to buy that car unless it's less than 3% of your net worth ($300k car needs $10 million+ net worth). That makes no sense. It's all about opportunity cost when financing. If you can make more money with that $300k than the rate you finance, you should finance. It's just a form of leverage and there's nothing wrong with leverage if you don't overextend it.

 

3% There'd be a lot more Chevy Sparks on the road if everyone followed that advice! I do like his suggestion to eat rice & beans. Not so much for the $$ but I love rice and beans!
T

 

I always buy cars with cash. They are fully budgeted for along with projected operating costs when I buy them. I separate personal possessions from financial investments to avoid excessive exposure to market risks. So my cars do not end up becoming financial distractions.

However, if you are talking about leasing, it works if you like swapping cars every couple of years and can write off the costs as an operating business expense. Otherwise, leasing is a terrible way to experience Fcar ownership as you cannot make any modifications to the car and your mileage is restricted. When the lease runs out, you have return the car and you have no residual equity. I only buy cars I truly like and I tend to own them for 15+ years so financing does not work for me.

For your opportunity costs to exceed your cost of financing you also have to be doing better than the lease operator or bank for the entire term of the leases or loans. Very few people can reliably do that and those financing payments can pose a problem if you experience a temporary cash crunch.

 

I don't lease and I prefer to buy used cars that have depreciated. I do see the benefit with businesses or those that want to change up cars regularly and not deal with out of warranty expenses (like a BMW) or the sales tax on entire price at day 1.

I was referring to that blog guy saying not to "buy" a car more than 3% of your net worth even though the initial question posed to him was about leasing. He kept talking about ownership/buying aspect and I don't agree with that ratio he used. I understand some people are pretty risk averse and don't want to tie their money into a car. Those are probably people that don't mind having multiples of millions in their bank account when they die, but I think 3% too conservation. Just imo.

I'm pretty conservative financially and I wouldn't want to have more than 20% of my liquid net worth in cars as a personal choice. Cars are my hobby and passion and what I get most enjoyment from, which is why my % is higher than others likely. Other people like spending money on nice dining or international trips (which don't have any value when used unlike cars) while I don't so it's just all discretionary budget for me. At any rate, I think OP should do what makes him happy and not to stick to rules of thumb that may not fit his lifestyle like that 3% thing.

 

3-u can afford easily a ferrari at 295k and 26 year old.


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Thank you for expanding on your views and I agree completely with what you say. Here's how I would explain it.

I've also looked at Dave Ramsey's blogs and information about his own finances and I think there's more than a bit of inconsistency in his writings. IMO, he's not very detail-oriented, more of a seat-of-the-pants type. For instance, according to his 3% idea...

3% of $2,000,000 net worth is actually $60,000, BMW M-car territory.
3% of $6,000,000 net worth is $180,000, Mercedes/Porsche territory.
3% of $6,120,000 net worth is $183,600, Mercedes/Porsche territory.
3% of $10,000,000 net worth is $300,000, Ferrari/McLaren/Lamborghini territory.​

The difference between a $300k car and a $180k car is $120k. So what if you had $6,120,000 net worth? Would you settle for the Merc/Pcar or spend the extra $120k on an Fcar?

Ramsey's formula is not very robust... because as you already noted, it does not account for what the buyer prefers to do with the rest of his net worth. The formula may seem rational at lower levels of net worth which fits a large portion of the population and their goals regarding luxury car ownership but it falls apart once you go above that. The buyer may also be retired and live in the countryside and his $1,000,000 home is actually equivalent to a $3,000,000 home in the city. What do you actually do with the other 97%? And then, there's also the issue of timing.

The buyer may only have 10 more good years or even 2-3 years left to enjoy his cars; and all his children, if he has any, may already be well-established. He may have a worsening medical condition, a bad back, he may or may not even be married. The list goes on. Ramsey's formula is overly simplistic. The gentleman is rich, opinionated and many of his followers, readers look for simple answers.

 

Nice work! Here I was patting myself for purchasing my first Ferrari ('10 Cali) at the age of 40! It's on the trailer being shipped now.

Anyway, I wanted to comment on your Section 179. It requires that the vehicle weigh over 6,000 lbs so the California doesn't qualify. It's more Range Rover friendly. Last I checked, a passenger vehicle needs to be new to depreciate all in year 1, but I am not sure about that part.