biophase
Platinum Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
LEGACY MEMBER
MEMBER
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
I just bought an R8 last month and I actually got a loan to pay for the car. Yes, blasphemy! Getting a loan for a car? I guess that means you could not afford it!
Well, I did the math and here is why I got a loan.
In 2011 I paid cash for a Ferrari 360. Looking back, I wish I had gotten a loan instead. You see, back in 2011 I was debating between purchasing an investment property or getting my dream car. Ultimately, the dream car won. But in hindsight, this is what I wished I had done.
I wished I would have bought the property cash and taken out a loan on the car
In 2011, we were in a real estate downturn and properties were selling at very low prices. The condo that I had my eye on was an $80,000 short sale that required all cash to buy. In fact, there were 3 of these condos available. The Ferrari was also $80,000.
If I purchased the condo for cash, it would have cashflowed $500/mo. If I would have gotten a $80,000 car loan, my car payments would have been $1500/mo. So the whole thing together would have been -$1000/mo. Obviously, if I couldn't swing that, I have no business buying a Ferrari.
In 2013 I sold my Ferrari for $65,000. So it cost me $15,000 in 2 years. My car's net for this period was -$15,000. (I have left out maintenance, insurance, etc... because they are irrelevant. It would have been the same if I went with a loan or paid cash)
If I would have bought the condo and the Ferrari, this is how 2013 would have ended up.
The Ferrari would have cost:
$15,000 (sales price difference)
$36,000 in payments
-$30,000 in loan pay down
----------------
$21,000 in total costs
The condo would have produced:
$12,000 total cash flow
$35,000 in appreciation
----------------
$47,000 in income
In this scenario, I would have made $26,000 and had a Ferrari for 2 years! But instead, I was -$15,000 after 2 years. Ok, but what if the condo does not appreciate? Then I would be at -$9,000 after 2 years. I still would have been ahead.
Earlier this year I had the same nagging decision, R8 or condo
This time I went ahead and did both. Let's look at R8 numbers.
I actually bought one of the same condos that I was looking at in 2011, but I paid $122,000 for it. It has been rented out at $900/mo, cashflowing $600/mo. I put down $20,000 and got a $60,000 loan on my R8 at 3.3%. I have paid $142,000 out of pocket.
My return on the condo is 5.9% and my interest rate is 3.34%.
So if I keep my R8 for 2 years this is what the numbers would end up as:
$X (sales price difference)
$26,000 in payments
-$22,800 in loan pay down
----------------
$3,200 + X in total costs
The condo would have gained:
$14,400 total cash flow
$0 in appreciation
----------------
$14,400 in income
$3,200 + X = $14,400
X = $11,200
This means that if I can sell the R8 in two years for $68,800 I would have broken even assuming no appreciation in the condo. Hooray for car loans!
Well, I did the math and here is why I got a loan.
In 2011 I paid cash for a Ferrari 360. Looking back, I wish I had gotten a loan instead. You see, back in 2011 I was debating between purchasing an investment property or getting my dream car. Ultimately, the dream car won. But in hindsight, this is what I wished I had done.
I wished I would have bought the property cash and taken out a loan on the car
In 2011, we were in a real estate downturn and properties were selling at very low prices. The condo that I had my eye on was an $80,000 short sale that required all cash to buy. In fact, there were 3 of these condos available. The Ferrari was also $80,000.
If I purchased the condo for cash, it would have cashflowed $500/mo. If I would have gotten a $80,000 car loan, my car payments would have been $1500/mo. So the whole thing together would have been -$1000/mo. Obviously, if I couldn't swing that, I have no business buying a Ferrari.
In 2013 I sold my Ferrari for $65,000. So it cost me $15,000 in 2 years. My car's net for this period was -$15,000. (I have left out maintenance, insurance, etc... because they are irrelevant. It would have been the same if I went with a loan or paid cash)
If I would have bought the condo and the Ferrari, this is how 2013 would have ended up.
The Ferrari would have cost:
$15,000 (sales price difference)
$36,000 in payments
-$30,000 in loan pay down
----------------
$21,000 in total costs
The condo would have produced:
$12,000 total cash flow
$35,000 in appreciation
----------------
$47,000 in income
In this scenario, I would have made $26,000 and had a Ferrari for 2 years! But instead, I was -$15,000 after 2 years. Ok, but what if the condo does not appreciate? Then I would be at -$9,000 after 2 years. I still would have been ahead.
Earlier this year I had the same nagging decision, R8 or condo
This time I went ahead and did both. Let's look at R8 numbers.
I actually bought one of the same condos that I was looking at in 2011, but I paid $122,000 for it. It has been rented out at $900/mo, cashflowing $600/mo. I put down $20,000 and got a $60,000 loan on my R8 at 3.3%. I have paid $142,000 out of pocket.
My return on the condo is 5.9% and my interest rate is 3.34%.
So if I keep my R8 for 2 years this is what the numbers would end up as:
$X (sales price difference)
$26,000 in payments
-$22,800 in loan pay down
----------------
$3,200 + X in total costs
The condo would have gained:
$14,400 total cash flow
$0 in appreciation
----------------
$14,400 in income
$3,200 + X = $14,400
X = $11,200
This means that if I can sell the R8 in two years for $68,800 I would have broken even assuming no appreciation in the condo. Hooray for car loans!
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Last edited:
Access Restricted: Unlock 1,000,000+ Posts
Stop Peeking Through the Keyhole.
Open the Door.
You hit a wall because the best advice isn't free—it's earned. Since 2007, MJ DeMarco has been active here daily (99.9% active rate), building a war room for entrepreneurs who refuse to settle for mediocrity.
- Active Daily: Life-changing content posted dozens of times every day. No dead threads.
- MJ's Inner Circle: Direct access to the author of The Millionaire Fastlane.
- Vetted Network: Connect with founders scaling to 7 and 8 figures.
- Proven Roadmaps: Strategy over motivation. Execution over "hustle porn."
"SCALED TO 6-FIGURE MONTHS"
"Tips and advice here saved me from huge mistakes, others allowed me to scale my business to 6-figure months."— User MitchC
"INSANE QUALITY OF PEOPLE"
"The number of high quality people I've met from this forum has been insane. All of it predicated on building real value."— User Richard Peck
"You are the average of the five people you surround yourself with."
Are you surrounding yourself with success?
