Time to buy an E39 M5?

I've always wanted an M5.  It seems like the E39 is really starting to appreciate quickly, but they're not in "ye gods!" price range yet like the E28 and E34 have become.   I've owned and loved an E39 528i, and always said there was nothing wrong with the car that another 200 hp couldn't fix.  Questions:

1)  Are there any expensive gotchas that a regular E39 540i doesn't have?  I'm aware that I'll need to buy with service records or expect to spend $2k on cooling system and timing chain guides/VANOS/etc/etc.   But are there any M5 specific maintenance bits that are super expensive?

2)  Along the same lines, are there any NLA mechanical parts?  I had been thinking about an E60 M5 as well...until I found out what an engine rebuild would cost.

3)  Is it just my perception, or does color really affect the value of these?  I can find silver and black for relatively cheap all day long, but anything that stands out (really like Avus and Biarritz blue) seems to add 4-6k with no other changes.  

My thought is that if I buy carefully and find something with ~125k miles, I can put 10-12k miles on for a couple of years while I'm paying it off, then either sell it for what I've got in it or just store it away as a sunny day car. 

Good choice. There's a significant difference in feel between the M5 and the normal E39.

Brake parts are M5 specific, I know that. I've found there are a few other bits and pieces around the car that way. The engine is the big one, of course. I haven't come across anything that's NLA yet but I haven't had to do anything really intense other than the VANOS service. If you want factory wheels, they're fairly expensive especially if the finish is accurate.

They look best in black, so save yourself some money

Yep, I'd say go get one!

I remember being at autoxes about 10 years ago where me and all the other guys in our stripped "race car" e30s and e36s would get whooped by a 100% stock (almost 4000lb) e39 m5.

He was a great driver too, but still.

E39 M5s are awesome cars, you should definitely buy one. 

That said, I recommend against buying one with the expectation that the price will go up.  Yes, it might, but when (and it's a matter of when, not if) the economy turns south the collector values on cars will plummet like a stone.  

I had one a few years ago. Awesome car. Sold it for what I paid for it which was nice.  Kick myself every day for doing that.

The later model years had the full screen nav which looks way better than the half nav/half radio setup.

I think the best is Blue with Tan/Brown interior but black on black always look good.

My neighbor is selling one. Has had it for 14 years. 230K miles. Tempting. 

IIRC, VANOS work is more expensive on the S62 than an M62.  But timing chain guides are less of a problem.  Other than that, they shouldn't really be any worse to maintain than any other E39.  

Just talked to my neighbor: He had cooling system done 2011. Fuel pump done in 2018. All belts, radiator, pump, thermostats in 2012. . Guides done in 2011.

Says "no issues" with vanos. 

Wonder at 230K miles, what its worth?

There is a M6 with 120K miles on it for sale in Iowa right now..  Has already had the rod bearing job.. $12k

v10.. 507 hp.....

I could swing the loan.. It would be stupid.. but glorious...

Lol. "Stupid, but glorious"... we should do a group buy on license plate frames. 

Fueled by Caffeine said:

There is a M6 with 120K miles on it for sale in Iowa right now..  Has already had the rod bearing job.. $12k

 

v10.. 507 hp.....

 

I could swing the loan.. It would be stupid.. but glorious...

That sounds like a much better deal. Talked to my neighbor, for his 235K mile M5, he wants $7800.

codrus said:

E39 M5s are awesome cars, you should definitely buy one. 

That said, I recommend against buying one with the expectation that the price will go up.  Yes, it might, but when (and it's a matter of when, not if) the economy turns south the collector values on cars will plummet like a stone.  

It's also a question of "when, not if" the economy recovers, too. Cycles go down, but they also go up, right?

codrus said:

E39 M5s are awesome cars, you should definitely buy one. 

That said, I recommend against buying one with the expectation that the price will go up.  Yes, it might, but when (and it's a matter of when, not if) the economy turns south the collector values on cars will plummet like a stone.  

I agree the economy is about due for a correction.  I disagree that enthusiast car values will drop.  If anything, there will be more inventory, but I don't think values will go down.  (Sure wish I had bought a couple of aircooled 911s in 2009.)  

Tyler H said:

I disagree that enthusiast car values will drop.  If anything, there will be more inventory, but I don't think values will go down.

Huh?

I've wanted one for a long time.  Get one so I can live vicariously through your posts.

I think "inventory" refers to cars available for sale.

The V10 cars are going down in value, the E39s are going up. They're starting to be viewed as classics and a high point, and values are reflecting this.

Keith Tanner said:

I think "inventory" refers to cars available for sale.

The V10 cars are going down in value, the E39s are going up. They're starting to be viewed as classics and a high point, and values are reflecting this.

Correct....you may see more cars change hands.  I don't think folks that can afford E39 M5s are as likely to be as affected in an economic turndown, and if they are, even more affluent people are waiting to snatch up cars that weren't previously for sale.  

Inventory was the wrong word....there is more demand than supply, which is why the prices are going up.  I think there are more willing buyers than good cars.  Even if the economy tanks, the price isn't going down.

I'm curious about how people who "can afford" E39 M5s might not be affected in an economic turndown. The cars are less expensive to buy than a new Honda Civic.

Keith Tanner said:

I'm curious about how people who "can afford" E39 M5s might not be affected in an economic turndown. The cars are less expensive to buy than a new Honda Civic.

Agreed, but unlike the Civic it requires 100% down financing terms plus a steady diet of cash to keep them right.  It's an enthusiast car, so that's all discretionary cash for a fun-yet-needy second or third car.  The buy-in is great for what you get, but that still puts it in the one-percenter realm.  

I don't think an economic downturn is going to affect their values. Maybe people who paid $40-60k stupid money for one will be stuck or take a hit, but a good clean mid-pack $20-30k example is going to hold or appreciate even through bad times.

(Keith, please don't get mad because I implied you're a one-percenter.) 

Wow, people are asking 30k for decent (and that's probably a loose usage of the term) example.  

Seems like an E60 manual would be a hellava car at around 20k

Tyler H said:

Keith Tanner said:

I'm curious about how people who "can afford" E39 M5s might not be affected in an economic turndown. The cars are less expensive to buy than a new Honda Civic.

Agreed, but unlike the Civic it requires 100% down financing terms plus a steady diet of cash to keep them right.  It's an enthusiast car, so that's all discretionary cash for a fun-yet-needy second or third car.  The buy-in is great for what you get, but that still puts it in the one-percenter realm.  

 

Seriously? One percenter? These aren't Ford GTs here. 

I just looked it up - my wife and I would have to triple our salaries to get to that point. It was actually lower than I expected. But still. Triple.

Keith Tanner said:

Tyler H said:

Keith Tanner said:

I'm curious about how people who "can afford" E39 M5s might not be affected in an economic turndown. The cars are less expensive to buy than a new Honda Civic.

Agreed, but unlike the Civic it requires 100% down financing terms plus a steady diet of cash to keep them right.  It's an enthusiast car, so that's all discretionary cash for a fun-yet-needy second or third car.  The buy-in is great for what you get, but that still puts it in the one-percenter realm.  

 

Seriously? One percenter? These aren't Ford GTs here. 

I just looked it up - my wife and I would have to triple our salaries to get to that point. It was actually lower than I expected. But still. Triple.

Okay...5 percenter, then.  

Edit:  Damn, just looked it up....need about $500k a year to get there.  No wonder I never win any of these damn auctions.

Tyler H said:

Correct....you may see more cars change hands.  I don't think folks that can afford E39 M5s are as likely to be as affected in an economic turndown, and if they are, even more affluent people are waiting to snatch up cars that weren't previously for sale.  

Inventory was the wrong word....there is more demand than supply, which is why the prices are going up.  I think there are more willing buyers than good cars.  Even if the economy tanks, the price isn't going down.

Collector cars are luxury items and in an economic downturn those sorts of values get hit, hard.  Hagerty has a few index measurements here:

https://www.hagerty.com/apps/valuationtools/market-trends/collector-indexes

They only go back to 2004-ish, but the 2007 downturn is very visible in the values.  Rest assured the values dropped significantly in the 2001 dotcom crash and the early 90s recession as well.

Will they go back up after an economic downturn ends?  Sure -- maybe to the same level, maybe not.  A lot of the price increases is speculation and is related to trends, and the "hot" cars in 8-10 years (which is the kind of timeframe to think about recovery) may well not be the same cars as today.

IMHO, cars are a lousy investment.  They're volatile, non-liquid, most of them barely beat inflation, and they have substantial ongoing costs requires to keep them in top value condition (garage storage, registration, insurance, maintenance, etc).  If you drive the car then you risk collisions causing damage and hurting the value, plus the inevitable per-mile additional depreciation.

I'm not saying don't buy an E39 M5, quite the opposite.  They're awesome cars and anyone who wants one should totally buy one and drive it.  Just don't buy it as an "investment" -- put that money into stocks or bonds or mutual funds or whatever.  They take up a lot less space and you don't have to change the oil or replace a window regulator for a pile of S&P 500 index fund shares. :)

The best thing about buying a car as an investment is that you can still drive it if the stock market craters.

My decision to run the Targa Newfoundland in 2008 started looking like a really good financial move right before the race. I mean, I could have invested the money. But instead I had a lot more fun spending it on the race instead of losing it in investments :)

I seriously suggested to my wife a few years back that we should refi the house and buy a Ford GT with the money. She didn't believe me. Now that house is once again worth what it was when we bought it in 2006, and Ford GTs are a half million bucks. Then again, I'm a guy who sold a house in the hottest part of the Ottawa market to buy a house in the US in 2006, so you shouldn't listen to me on investments...

In reply to codrus :

No disagreement here; cars are not good investments.