Avg net income of M5 owner?

[Spinny02]

Everyone's situations is different. Some good advise is if you have to change your life style then it's not a good buy.

I also agree that buying a car cash is the way to go. It's that much better to know you saved up and get the reward with no payment. ( my opinion ) and I know that this can't come true for all but it's a great feeling when you do save for it.

[chong0]

Originally Posted by ///SAL

Of course, my monthly bills are 10-12k a month,

3 mortgages (rental property)
1 mortgage ( my home)
4 car payments( m5, civic, rogue, x5)

House bills, credit cards, etc.

Should i say more???? Lol

car payment on a civic? what the heck? ;-)

[PhilT3]

Originally Posted by ///SAL

Thats my income,

No work no bimmer

Well, I'm not following your math. I have to assume you have other sources of income as 10-12k of bills per month cannot be supported by $65-70k per year.

I'm guessing you're either a male prostitute, a dealer of fine 'mood altering' products, or you give piano lessons on the side.

But wait a second...aren't you currently trying to unload your M5 lease?

So maybe we've just put the puzzle together!

Either way, you've sucked me in.... I....MUST....GET..OUT...OF....THE..VOR..T..EX!

[nv6425]

Originally Posted by MichaelJohn

... I'm old school, I won't buy a car unless I can easily pay cash for it which has meant a lot of hard work and many years of saving and investing. It has been simple for me, buying a car has not been a matter of how much I earned, but how much I saved. Of course the more you earn, the more you save (if you have some self-discipline)....I guess my dad's mantra of "don't buy it unless you can afford it" really stuck. This has meant some delayed gratification for me but it has been all the sweeter.

Very well said sir!

[BavariaExclusive]

Buying a M5 cash ties up allot of your assets towards a depreciating value. Don't understand why a person would do such a thing. Leasing you pay as you go and have options to get out of it for example: Early termination Fee to end terms early etc.

[BavariaExclusive]

But rental properties are being paid off by the tenants. Not coming out of your pocket so that wouldn't count.

[savela]

Insert popcorn gif here.

Good rule of thumb. If you have eaten ramen noodles at any point in the last 5 years, an M5 may not be the best utilization of your hard earned $$$$....unless it's coming out of the ground.

[MichaelJohn]

Originally Posted by BavariaExclusive

Buying a M5 cash ties up allot of your assets towards a depreciating value. Don't understand why a person would do such a thing. Leasing you pay as you go and have options to get out of it for example: Early termination Fee to end terms early etc.

Nobody makes money buying OR leasing a car (with rare exceptions) so depreciation is a given. The option to get out from under a car you own is easy, sell the car - and there is no "early termination fee". As far as tying up a lot of one's assets in a car I agree. I would not do that. I have not had to stretch at all to buy an M5 but I am older than you and I was wiliing to wait, save and feel comfortable writing the check. If owning the car outright means putting a good portion of your assets into it then leasing is probably the better way.

[Fantasm]

Originally Posted by MichaelJohn

Nobody makes money buying OR leasing a car (with rare exceptions) so depreciation is a given. The option to get out from under a car you own is easy, sell the car - and there is no "early termination fee". As far as tying up a lot of one's assets in a car I agree. I would not do that. I have not had to stretch at all to buy an M5 but I am older than you and I was wiliing to wait, save and feel comfortable writing the check. If owning the car outright means putting a good portion of your assets into it then leasing is probably the better way.

There actually is an "Early Termination Fee" option available in the BMW FS lease. I believe its the residual value of the car on the lease contract minus the value of the car at auction, the difference is the ETF.
They give you an estimate of the auction value -- if you don't agree to it, then you just take your luck as to what it actually ends up getting at auction and the ETF is formulated and due from there.

---

The point is if you lock up 120K cash in the car -- the car is depreciating, and your $120K is not earning you any money.
It's far better to borrow the money at 1.9% and keep your $120K for an actual investment that will return you far more than the 1.9% loan costs you.

Put $120K into a good bond (or any number of bonds or a fund) and you get 5-9% per year. The investment will pay for all your interest on the loan, plus still give you a profit (or even possibly cover the majority of the payment, meaning you actually suffer far less "personal" depreciation in terms of total amount paid out of pocket by term & re-sale).

No point locking in cash when using leverage puts you on top.

[Road racin]

My rule of thumb, get a great rate. Then put down enough cash to cover 2yrs of depreciation. That way if "it" hits the fan you can get out of the commitment. You haven't tied up the whole 120 and you can earn more then the 2%ish their charging you to own it. Heck, My mortgage is more so I just put an extra 100 there too save the diff in interest. Works for me.

[stealth.pilot]

Originally Posted by BavariaExclusive

Buying a M5 cash ties up allot of your assets towards a depreciating value. Don't understand why a person would do such a thing. Leasing you pay as you go and have options to get out of it for example: Early termination Fee to end terms early etc.

It only ties up "a lot of your assets" if you don't have much assets. If you are high net worth then its a small share of your assets. And also you don't want to have all your assets invested in high yield high risk investments.

[///SAL]

Originally Posted by PhilT3

Well, I'm not following your math. I have to assume you have other sources of income as 10-12k of bills per month cannot be supported by $65-70k per year.

I'm guessing you're either a male prostitute, a dealer of fine 'mood altering' products, or you give piano lessons on the side.

But wait a second...aren't you currently trying to unload your M5 lease?

So maybe we've just put the puzzle together!

Either way, you've sucked me in.... I....MUST....GET..OUT...OF....THE..VOR..T..EX!

[PatrickC23]

Just me, being conservative, but I think it's crazy to spend 100% of your income on your car. Granted I did this when I was 24 and had an M3, but I could afford to lose my job and car at the time.

I think it's also ridiculous to live at home with the parents and drive an M5, not sure we have any of those here, but there inevitably one out there.

[PatrickC23]

Originally Posted by BavariaExclusive

Buying a M5 cash ties up allot of your assets towards a depreciating value. Don't understand why a person would do such a thing. Leasing you pay as you go and have options to get out of it for example: Early termination Fee to end terms early etc.

It really depends what % of those assets are. If you're well invested in the market already, that money isnt going to necessarily make you more elsewhere.

Leasing has drawbacks, for me, despite flipping cars every three years, I just dont like being told how many miles I can drive, things change, especially commutes. If I find something else Id rather have, like a 911, I dont want another headache in trying to get out of it, Id rather spend my time building and working on the "get in a 911" aspect.

[greentrbo95gst]

Originally Posted by PatrickC23

Just me, being conservative, but I think it's crazy to spend 100% of your income on your car. Granted I did this when I was 24 and had an M3, but I could afford to lose my job and car at the time.

I think it's also ridiculous to live at home with the parents and drive an M5, not sure we have any of those here, but there inevitably one out there.

We have a little bit of everything here. Parents buying kids an m5, trust fund babies, married rich dudes, settlement and inheritance collectors and majority works hard and is able to afford one. Nothing wrong with any of these. You choose how you live and how you manage your finances. In my case, my family was not wealthy, but growing up we had everything we needed. Parents paid for my college education and everything else was up to me . I made many stupid mistakes, including spending college loans on building a race car and having to eat ramen noodles and hot dogs every dday, but I learned on my mistakes , worked extremely hard and at the age of 29 bought my first m5. At 33 bought my f10 m5 and couldn't be happier with where my life is. Well, actually I could, I need a McLaren in my stable.

[MichaelJohn]

Originally Posted by Fantasm

The point is if you lock up 120K cash in the car -- the car is depreciating, and your $120K is not earning you any money.
It's far better to borrow the money at 1.9% and keep your $120K for an actual investment that will return you far more than the 1.9% loan costs you.

Put $120K into a good bond (or any number of bonds or a fund) and you get 5-9% per year. The investment will pay for all your interest on the loan, plus still give you a profit (or even possibly cover the majority of the payment, meaning you actually suffer far less "personal" depreciation in terms of total amount paid out of pocket by term & re-sale).

No point locking in cash when using leverage puts you on top.

Can you get 1.9% car loans today? I have several bond funds and none of them are paying 5-9% per year. Maybe junk bonds. I don't see that much profitability in borrowing and leveraging. Certainly if you are willing to take some risks i.e. the stock market, you can potentially make a much greater return but it's not guaranteed. For that matter the return on a bond fund is not guaranteed either as the value and rate can fluctuate quite a bit. You would have to buy a bond directly and keep it to term to be certain of your return. Frankly, I don't want to worry about that so I just pay cash. I am fortunate to have enough other assets so that the small amount of the potential lost return doesn't matter to me.

[Fantasm]

Sure, you can easily get 1.9% or even lower APR's. I have 0.9% I think on my woman's X1.

[greentrbo95gst]

You can get 0% as well

https://www.penfed.org/Auto-Loans-Overview/#tabs-2

[MichaelJohn]

Originally Posted by Fantasm

Sure, you can easily get 1.9% or even lower APR's. I have 0.9% I think on my woman's X1.

OK, I stand corrected. That is very cheap money. I know that BMW wasn't offering anything like that when I bought my M5.

[wrsbmw]

Originally Posted by Fantasm

Put $120K into a good bond (or any number of bonds or a fund) and you get 5-9% per year. The investment will pay for all your interest on the loan, plus still give you a profit (or even possibly cover the majority of the payment, meaning you actually suffer far less "personal" depreciation in terms of total amount paid out of pocket by term & re-sale).

No point locking in cash when using leverage puts you on top.

No "good bonds" pay those yields.

[TazOjla]

Why not just go for a CPO M5?? I've always done that, having had a quick look you could pick up a 2012 M5 for £40,000 that is here in the UK of course but you have to consider it like I do, in 2 years the owner of that car has lost £35,000 on his car, I could go out and buy one brand new right now but IMO I'd rather save a 'buck' and get a CPO M5 and save £35,000. It really is kinda sad how badly these car's do depreciate

[Fantasm]

Originally Posted by wrsbmw

No "good bonds" pay those yields.

If you do research, you can find some, for example I have a preferred stock (not a true bond tho) with a very strong residential/commercial utility company paying me 8.75% dividend. I also have capital appreciation because the shares have increased in value from the initial par value at inception.

I've owned it for like ~5+ years and it has been absolutely stable and will continue to be. It, amongst a few others, are where I put any cash I don't need to touch or use for higher returns in my other investments (IT Services/Real Estate).
It matures in 2069 and unless they buy me out, I don't expect this utility company to be going anywhere.