Is it possible to make money on modified cars?

This got cut by about two-thirds to make it into print. Also the editor hated it.

If you’re thinking about buying and selling modified cars, it’s handy if you’re either a complete genius, or don’t mind losing money. We suppose you could just be super lucky, but if you have that kind of kismet you’ll be too busy getting banned from casinos in Vegas and fending off lingerie models to have time worry about hotrods.

First, ask yourself  if you’re looking for bang for your buck in a car you’d like to drive; or is money on the other end your ultimate goal? They can be the same thing, but it’s much easier to have a single goal in mind.

Either way, if you take the complete genius route, then you have a two-pronged plan of attack. Figure out what the next big thing is and buy it; and at the same time use your massive mental powers to make yourself love that car, whatever it is. Even if you have picked the right next hot car, and on top of that successfully predicted that people are going to want it in five years, you haven’t accounted for the failure of the Iowa corn crop in 2018, which through its effect on derivatives markets has driven the collector car market into the ground. But if you love it, you’ll have something you want to have, no matter what. And as Jay Leno once said, “if it happens to increase in value, great.”

Another tactic you could take is the updating flip. The world may have passed by a particular 320hp LS1-powered Camaro, and if the owner parked it at some point, it got frozen in time. It’s not going to be your car, so you don’t want to spend $10,000 and update it with some version of the new LS3 crate engine. But in the eight years since it was built, the Pro Touring scene has  kept evolving. Look at the 17-inch Centerlines with Pirelli tires. There are wheel companies whose line starts at 18x7, so updating to 18s or 19s will really modernize the look with minimal work (if not minimal expense, because those wheels cost a fortune). It was probably built with 11-inch discs, with Baer two-piston calipers in front and singles in the rear and that’s big money to upgrade, but so were the wheels and boy do those brakes look puny behind them. So a shiny new 12-inch Wilwood kit does the job, and you can save some money by refurbishing a set of four-piston calipers for them. We’re leaving the engine alone mechanically, but again, the look of the thing is important. Go beyond a prepackaged $175 engine dress-up kit and think of ways to make it stand out and just as importantly, for it to look “all of a piece.” For instance, blue hoses are out of place in an otherwise stock-looking carbureted engine, so either go back to black rubber or go braided. We’ll say this is a Chevy small block—because odds are it is—and that makes it easy. You need to think about return on investment here. If you’re not making the car substantially more powerful, then you’re not adding value. It’s like maintenance: It just makes sure no money is left behind at the sale. And don’t think about what you are or are not paying yourself per hour.

1969 Roadrunner
Here’s a car on the update and flip end of our spectrum. Sold in late 2011 for $17,050, it had some dress up and mild performance work, most obviously the Vision Legend wheels and stainless exhaust with Flowmasters. The drivetrain was a 383 with four-speed, so there was value and appeal underneath it all. While the base car was more expensive, the mods were not.

A little carb cleaner and a few trips to a swap meet are your friend for this project. If you need an intake or headers, both are essentially appearance items that you can refurbish in an afternoon. Best would be if you can get the engine out to rattlecan it with Duplicolor, because with that and your new-looking headers, intake, carburetor and matching wires and hoses, suddenly it looks like a freshly built engine. Don’t get us wrong, we’re not saying you should call it that if it isn’t, but someone looking at two cars will like the one that looks cared for. The great thing is that the majority of modified cars are somebody’s baby. If they’ve been driven hard, they’ve probably been maintained well, too. No one puts that much time and money into something they abuse horribly.

Because of that, you are in an excellent position to cherrypick at auction. We’ve made this about coming out ahead, but we don’t think there are many people out there making a killing buying and selling modified cars. A living, sure. For the average person we’d suggest looking more at the possibility of getting the car “for free,” which means buying it, using it for a year or two, then selling it at a break-even point. Our updating and refurbishment program is well suited to this.

The next level is building a whole new car. You might think it works like this: You buy a nice, complete 1964 Tempest convertible project car for $4,000, intending to build a Royal GTO tribute. Since we’re looking at this as a money-making proposition, we’ll presume that you, genius, are doing everything aside from machine work in a garage that your holding company is leasing from yourself, or whatever people with money do. Call it $12,000 for all the work outside of the drivetrain, including the chrome, new tires, eight-lug wheels (incorrect, but they scream “Pontiac”) and exhaust.

1969 Chevrolet Camaro COPO Clone

This was a car done as right as a car can be. We don’t think it had been driven to any meaningful degree since the build, and it was expensively done, with a 425hp 427, four-speed, aluminum heads and Winters intake, and Holley carburetion. It was beautiful, deadly and correct down to the F70-14 Polyglas. At a Leake auction in the spring of 2012 it was bid to $42,500, which is absolutely right on the button for a COPO replica of this quality. The consignor refused the bid and with that build you can guess how much money they had invested. But if you look at other auctions, that’s exactly what a high quality 427 four-speed COPO replica sells for. If they were expecting more, then they didn’t do their homework.

Sourcing a non-date coded 421, four-speed and tripower intake isn’t hard. If you wanted to maximize profit potential, then we spotted a complete YH-code 1965 421 (from a Grand Prix) for $2,200 in the classifieds recently, with a TH400 attached. A rebuild of the 421 would be somewhere north of $1,000, in the best-case scenario. We called the seller and he was moderately encouraging, saying the engine turned but should be gone through. Then we located a date coded 1964 tripower intake with thermostat water neck and three aftermarket but reasonably correct-looking two-barrels, for $450. At that price we’re not questioning provenance.

We could use the TH400 and we’ve seen a Royal GTO replica built like that, but “four-speed” will sound so much better on the auction block; plus you can put a Hurst badge on the tail. We located a beautifully restored, date-coded early 1965 Muncie M21 close ratio four-speed for $750 on a Pontiac forum. We think we can clean up the TH400 and recoup $500 there. But a clutch kit, flywheel and linkages are probably going to eat up another $1,000, once we’ve located all the seals.

1965 Pontiac Custom Station Wagon
            Who doesn’t like a draggin’ wagon? Especially one this good-looking and well made. Badged as a GTO, it had a 455-cu.in. V-8 with AC from a 1971 Pontiac and dress-up kit. Equipment included a wood-rimmed steering wheel, bucket seats, a factory tachometer and a modern stereo. We saw it three auctions in 2012, and it ultimately sold for $29,500 in August. If you’ve read our hypothetical Royal GTO build, these numbers will seem familiar, but consider the added cost of all the unique engineering and sheetmetal to create this wagon. ‘Think there was much profit in it?

Now we’re into the project for about $22,000, and remember: We’ve done all the work ourselves; stripping the donor car down, all the paint and bodywork, rebuilding the suspension, recovering the interior, sourcing everything, all the assembly. All the little bits and pieces of trim, wires we couldn’t reuse, exhaust…undoubtedly another $2,500, so we’ll call it a $25,000 build. Continue to practice Shaolin discipline and keep the idea of an hourly rate out of your mind, because at this point it’s closing on zero. You’re a genius and were incredibly efficient and got through this in 1,000 hours. You realize you’re charging by the job, not $50 an hour, so you’re looking for a single payoff. Surely, this is now a $50,000 car, right? After all, what does an authenticated 1964 or ’65 Royal GTO bring? $75,000? So a third off is entirely reasonable. That’s a $25,000 profit after consigning and transporting the car to the auction, and $25 an hour for your labor. Not huge money for a genius, but as a lump sum, it’s a fair a return on six months work.

In fact, just last September at Mecum, we saw a 1966 Royal Bobcat GTO replica bid to $50,000. Even better, nine months before that it actually sold for $55,000 in Kissimmee. It was probably a sale like that which encouraged you to crunch numbers like the ones we did, and come to the same conclusion. And you probably weren’t the only one.

One of the difficulties with buying and selling a modified car is coming up with a price. Again, you really need to be a genius to be able to do this sort of math, but this is a situation where the auctions are your friend. You have public records of bids and sales and while a few of them might be crazy high or low for some reason, most of them are accurate. Start tracking not just sales of comparable cars but details, and go to a few in person so you learn to interpret auction photos and descriptions.

1967 Shelby G.T. 500
Starpower can add to a modified car’s appeal; this was Sammy Hagar’s well known modified 1967 G.T. 500. Signed twice by Carroll Shelby, once “to Sammy,” Sammy and his boys had installed a solid-lifter tunnel port 427, Detroit locker and Tremec five speed, and painted it Guards Red (a Porsche color), including the wheel wells and inner fenders. When he sold it at Barrett-Jackson in 2006, he included a souvenir Guitar and a case of his Cabo Wabo tequila. He certainly made good money on it, bringing $270,000. By 2012 it still had the guitar but the case had dwindled to a single bottle, and the top bid in August had dropped 50%, to $135,000. It’s no longer Sammy Hagar’s car; it’s now a modified car that used to belong to 65-year-old restaurateur Sammy Hagar. Bidding was still higher than a stock or non-Hagar car, but the downward curve from 2006-2012 

So remember the TH400-powered Royal GTO replica we mentioned seeing recently? That was a #3-quality car and yours is #2; but it sold for $29,500 in the spring of 2012, consigned by a dealer who’d been advertising it at $42,900. The quality factor and your 421/M21 combination will make a difference, but not a $20,000 difference. And the Royal name won’t add anything at all. On the other hand, that one only had a 389. There are still more factors to consider: unlike yours, the $55,000 replica had a complete C/stock paint scheme and Milt Schornack was called into the build to help get it right. No, what you’ve built there is a $32,500 car, or a $7,500 profit for six months work, less transportation and consignment fees. Congratulations, genius: You’ve just learned a very hard lesson: it takes money to make money.

We know people who are doing well building very high-end Pro Touring cars but in a way, we worry about them. We sure don’t know if Pro Touring is here to stay; or if suddenly everyone will be done with it. That happens. Maybe one day someone will invent the Street Slider, which is always sideways on its 13-inch tires and then your tubbed F-body will look as relevant your Grandma in her Cutlass Ciera. Maybe in 10 years the invention and legalization of durable, lightweight synthetic high-speed caterpillar tracks for the street will have everyone scouring junkyards for Cummins diesels and buying Summit bogey wheel setups for the Trackin’ scene. There will be magazines and Red Bull will sponsor Trackin’ Nats. Heck, down in places like Oakland and Houston they’re already actually building Swangas, which evolved out of the lowrider/Dub culture. These are ideally fullsize front-wheel drive Eighties or Nineties GMs with 30-spoke wire wheels, the Swangas from which the name came. And who could have predicted that there’d be people seeking out the ’84 Eldorados,’95 Roadmasters and’77 Cutlass Supremes for their modified cars? They want grandma’s car in the worst way but have no interest whatsoever in your Mustang.

The only way you’re guaranteed to come out ahead is to buy or build the car you like, and drive it. If when you’re done you can clean it up and maybe update it and come out ahead, that’s wonderful. Just…don’t bet the mortgage on it, OK?

1968 Plymouth GTX
On the scale of modifications, this was right at Level 1: A set of 17-inch Cobra-style (Ultra? Backdraft? We couldn’t spot a name on them) knock-off-style wheels, two-and-a-half inch stainless exhaust with Flowmasters; and nothing else we could see. You could see the four-wheel drum brakes behind them, though, which was not a great look. We would not have done one without the other, but in this car, minor modifications were not the important part. The VIN said it was a real 375hp 440 car, which was what mattered part and when we saw it sell in the spring of 2012, it went for $27,500. That’s exactly what we computed the average auction price of comparable GTXs is right now. The wheels were undoubtedly expensive, probably around $2,000 with tires, but they didn’t hurt the value.