Renting versus Owning

[NutDriverRighty]

Captain Who and I have been discussing the pros and cons of renting versus owning recently and I was hoping for the input of others more knowledgable than we. At present, we have an IT7 car that has cost about $7K in blown motors since this time last year. Other than consumables like front rotors, a new set of belts, etc., this has been the major cost. Captain Who and I can do basic stuff like the brakes, rotors, and oil changes, but engine work, tranny work, rearend work, etc. are stuff we have to pay someone else for.

In regard to the Baby Grand, I caught the silly thing on fire in March. Still fixing the damage now. Seems that it's got valve trouble and may need a new head. This may be $2K to fix all that's wrong. Since we haven't been into the engine since we got the car, I guess this is to be expected. Like the Rx7, we can do basics, but engine work is something we have to farm-out.

Knowing our lack of mechanical ability and the fact that we can only afford to race 4-6 races per year, any opinions on owning versus renting??

Thanks for the help,
Scott Franklin
www.NutDriver.org

[JLawton]

The one thing you have to look at with a rental is the cost of balling it up and having to pay for it. That's a lot of cash to have to come up with.....

If I ball up my car, I just sit out until I can afford to re-build it or get another one.....

[Greg Amy]

If I ball up my car, I just sit out until I can afford to re-build it or get another one...[/b]

Renting or owning, you still gotta pay for it. In owning you pay for it up front; in renting you pay for it in the back end. Smart money says you're better off financially paying for it in the back end, with inflated dollars...

Renting is, bar none, the most cost-effective way to go racing. If anyone wants to get into a financial discussion over it with me, be prepared with extra calculator batteries and a lot of pencils and paper; you're gonna need it.

Let's say, for example, that I had actually taken my existing NX program and "subbed" it out. Assuming I could find someone to invest in such a business effort (Key Point #1), and assuming they will be willing and able to prep it like I desire (Key Point #2) I can't imagine why I'd want to do it myself. If I were to take all the financial outlays that I've spent over the last five years, and divide that into the number of races I've done, well, it ain't pretty. If someone were willing to rent that NX to me for $XXX per race, I'd come out WAAAAY ahead, financially.

Anyone who thinks that they can build, prep, and campaign a race car on their own for less money than it would cost to rent one each time you wanted to go racing has either 1) never done it, or 2) never been honest with themselves on what they've spent doing it. Then, even if you *do* decide to do it yourself, you'll need to race many more times to amortize the costs involved. The lesser number of races you actually run, the more advantageous renting is.

Don't believe me? Change your batteries and let's go...

GA


Key Points:

#1: You're highly unlikely to be able to find someone willing to invest the time, effort, and money to building a car just like you want, all on the premise that you're going to rent it from them for X races per Y years. If you want to drive something other than the status quo, renting ain't gonna happen.

#2: You're highly unlikely to find someone that will do the work the same way you would (good or bad).

#3: If you DO find someone willing to invest in the effort, and they WILL work the way you want, it will cost more than you want to pay.

[tom_sprecher]

Captain Who and I can do basic stuff like the brakes, rotors, and oil changes, but engine work, tranny work, rearend work, etc. are stuff we have to pay someone else for.[/b]

To save money you may want to learn how to do these things. I ain't rockect science but nor is it intuitive either. There are plenty of books and videos out there. You may not end up with a national level motor but are you a national level driver?

Personally, I much prefer rebuilded engines and transmissions than pulling dents, patching, sanding and painting unibody crap any day of the week.

[jjjanos]

According to pure neoclassical economic theory, the cost is exactly the same.

Injecting a little reality into the model (thus, already straying from neoclassical economics...)

It all depends on how long you intend to race.

Renting - you are paying for the operating costs and the depreciation (i.e. wear) of parts upfront. You also are going to be out of pocket for anything you break.

Owning - you still are paying for the operating costs, but the depreciation costs are paid at the time the part wears out.

Going to race for a single year? Better off renting. Going to race for 20 years? Better off owning.

[ddewhurst]

***At present, we have an IT7 car that has cost about $7K in blown motors since this time last year.***

This cost ^ is REAL simple to eliminate & I don't care who your engine builder is. He/she is no friking good. Get rid of him/her. Other rotor motor users should tell you the same thing. (Unless the "Nuts" behind the wheel are the cause for the blown motors in which case your motor costs will continue owning or renting.)

[Knestis]

What Greg said. There are a LOT of lies that we use to rationalize our decision to own rather than rent.

If racers were indeed honest about what it costs them, they'd start to get it. It's way more painful to spend $2000 to rent a seat from us for the Golf than it is to spend that same money in TEN little $200 chunks - and THINK about the number of "little things" on a race car that cost that much. Factor in the truck that would be a car, the trailer you don't use for anything else, insurance, etc. and it starts to look more sensible.

We (rightly or wrongly) tend to put a value of 0 on our time. If you really enjoy working on race cars, then it's OK that you spend money to do that. If you don't - or can't - then the value math is a little different. Problem is, you have to value the time of the guy/gal building your rental car so in that respect it IS more costly - unless you rethink what you might be doing with the time you spend working on the heap. (See also, overtime, 2nd job.)

We tend to think that when we own a race car, we have capital - stuff, a thing, something that has value and can be converted back into liquid assets. That is a pretty dangerous assumption, given the reality that it can depreciate to $zero in just a second and the harshness of the used race car market.

Frankly, it's easier to finance owning a race car than renting - and a LOT of racers make the most fundamental mistake of spending more than they can afford on their game. Last time I saw figures, the consumer credit market was comfortable with the fact that it has extended an average of something like $10K of totally unsecured debt to every adult in the country. You can get a new Visa, charge a bunch of parts, and put them in that big steel box with wheels in the garage but it's a hell of a lot tougher to leverage that same credit opportunity to rent a ride.

We DO like to do things our own particular way and racers tend to have control issues. That's a real factor, I think.

There's a lot at play here but the moral of the story is that you should consider renting. The more of you who DO that, the more viable those operations become (increased efficiency and all), and the more reasonable the prices are for you all...

K

[BlueStreak]

Own or rent - both make more sense in SRF. I know it sounds crazy, but if you look at the stability of the vehicle value in SRF and the miles they run on their spec stuff (motors/trans/everything!), you can't really race cheaper. Cost of admission is high, but you can get it back anytime you want to sell it, and, other than body panels, you have a pretty good idea of what costs are up front. As racecars go, not much else is easier to sell. If you want to run up front, you'll spend more in consumables, but that is the case in every class. If I had it to do all over again, I'd go SRF, and probably rent to save tow vehicle/trailer ownership costs and shop space!

[gran racing]

There are several variables that come into play with this one, and it isn't as simple as saying one is going to be the cheaper method all of the time. Part one of the equasion. Compare Greg's NX2000 with $$$$$ into it vs. a much more moderately (still reliable and safe) prepared car. If one were to race Greg's car or equilivant, I would tend to agree renting is less expensive. For someone getting a mid-pack car, I honestly believe buying is less expensive.

Another component that comes into play when looking at the "buying" side are the needs vs. wants. People rationalize many, many things with their cars because they need them. It does quickly add up like Kirk stated. If I look back to when I was in the lower budget category, renting would not have made sense for me. $500 tow dolly, used the vehicle I had to tow although far from optimum, used Toyos until they were shot, stayed farily local, ect.

Each decision we make has opportunity costs. Spend money to have someone else work on a rented car and you work a part time job/overtime (if possible) vs. doing the majority of the work yourself. Just because a person owns a car doesn't mean they can't sub out some of the work and allocate their time elsewhere.

[charrbq]

Renting a race car or building a race car is just like doing the same thing with a house. If you don't want to be saddled with all the work or incidentals...rent. If you want the feeling of building and doing something with what is your achievement, build. It comes out close, but takes two different directions to get there. Like Greg said, it all depends on where they insert the thermometer.

One thing I feel remains constant...IMHO...if you chose to build, buy something you like already built and in good condition. You'll have to change a lot of things to suit yourself, most likely, but it will be a lot cheaper than building from scratch.

Also, if you rent, check into the car and the team you're renting from. I've seen some SM's and other's rented for a premium price that weren't not anywhere near a premium value. You may end up paying for repairs that someone else didn't have the money to do prior to receiving your donation.

[lateapex911]

As others have said, "It depends..."

A good MS is about $1500 for a two day weekend from a reputable shop. That said, a reputable shop will expect proof of ability to pay for said car when the wrecker brings it, and you in, in peices. If you rent, you better find out the "buy out" price that you will be obligated to pay when the worst happens. And if you don't have that cash, then walk.

Also, reputable shops aren't in the business of renting cars out to lose money. So, it follows that it could be cheaper to own.

However, the shops may have ways of maintaining the cars cheaper than you can.

Your situation sounds odd. IT racing rotaries should last seasons. Like 2 or 3 of moderate racing, and often more. If they are blowing at this rate, there are other problems, and those need to be adressed. If it's the operator, then who's to say the same operator won't blow the rental motor? (Which makes the cash problem much worse, as the renter won't want to wait for a payback, he's losing revenue when that car is off the track, and you might be liable for that too...)

I'd look first closer to home, and find out, and fix, the problems with the blown motors.

[seckerich]

An IT7 car should be one of the cheapest mile/dollar investments you can make. I can guess your engine builder so I will leave that one alone. I have had 2 motors since 1998 and the second one was by choice so you have a very real problem. If you have to have someone else do most of the expensive work you are better off renting. Get someone reputable to take the car and sort out the motor reliability and keep the car. Sounds like a mixture or timing issue to blow motors that often.

[Despr8dave]

Good stuff. Most everyone's response, I feel, had some good things. I rented my first stock car, first it was convenient, second, I wanted to make sure this roundy stuff was for me. I soon purchased a car as my racing increased and as alot said before, I wanted it my way. Divorce causes alot of changes and well, the stock car was sold......then, here we are again and a rented road race car got me my license....I rented it a few more times and as my driving improved, the car did not and well, I wanted it my way. But, I got my foot in the door, met alot of helpful people and felt a great more comfortable when I went to the track. The original thread talked about the amount of racing. When I could only run three or four races the first year, It was very nice to just have to show up and go, plus the car came with a pretty talented owner and he helped my learning curve tremedously. But, I will only rent again if it was the only way I could race at all. If you don't have an emotional attachment to your nothing but hunk of iron, plastic, rubber and wires, why are you racing for a trophy??? And as stated before, I was honest with myself about my racing once, but never again!!!

[lateapex911]

I should add that I blew a 7 session old ISC motor this spring, and in about 2 laps! My Yaw carb never returned from a trip back to Yaw 2 years ago, so I've been borrowing carbs ever since. Some have oil metering, some don't. Stupidly, I ran the car on the track on the fuel in the carb and lines that had no premix, (without pumping to the premix in the tank) and on a carb that had no metering to scrub in some tires, and poof! No starty! No compression.

I superheated the edges of the apex seals, and when they cooled, they were bananas. So i did my first rebuild. As the apex seals were the issue, that's all that I replaced, except for the usual stuff that gets destroyed on disassembly, and as a result, the cost was well under $500, I'd guess. (I measured everything else once open and it all measured fine).

So, moral of the story is: operator error, caused by allowing outside varibles to change my game.
2nd moral: A blown motor isn't always a multi thousand dollar problem.

[JLawton]

Renting or owning, you still gotta pay for it. In owning you pay for it up front; in renting you pay for it in the back end. Smart money says you're better off financially paying for it in the back end, with inflated dollars...

[/b]

I'm not saying that in theory renting isn't cheaper that owning......... But, renting and totalling it may hurt pretty good financially.

Most owned cars are payed for.
Most owned cars are bought for pennies on the dollar
Most rental cars value is not listed at what the market says it's worth.

How many guys actually have the cash to pay for a balled up rental. It probably would intale taking out a loan, dipping into the home equity line of credit, selling off some assets, etc

Economic theory is great...........but don&#39;t forget reality. Maybe I&#39;m the only one out there that doesn&#39;t have xx thousands of dollars laying around <shrug>

Am I off base?

[Greg Amy]

Am I off base?[/b]

No, not at all. You&#39;re just looking at it with a different perspective.

Comparing apples to apples, there&#39;s little difference: SOMEONE has to spend the money to build, prep, and campaign the car, and the driver is going to pay for it one way or the other. If Matt, for example, had been the one to build and prep your Saturn, he&#39;d have spent the same as you have already.

However, one thing you are missing is illustrated by this statement:

How many guys actually have the cash to pay for a balled up rental. It probably would intale taking out a loan, dipping into the home equity line of credit, selling off some assets, etc...Maybe I&#39;m the only one out there that doesn&#39;t have xx thousands of dollars laying around <shrug>[/b]

The reason you don&#39;t have money laying around is because you&#39;ve already dipped into cash reserves and credit to buy and prep the car in the first place. If, instead, you had chosen to rent that car from Matt, then you&#39;d have in your pocket all the money you&#39;ve already "invested" to buy, build, prep, etc the car.

Instead of putting out large wads of cash for purchase, tires, parts, etc you&#39;d simply dribble it out in rental fees. Instead of buying a car and worrying about repairing it between races, you&#39;d be amortizing those non-recoverable expenses with each check you wrote to Matt.

And, you&#39;d take all that money you had originally "invested" in the car, put it someplace gathering interest, with the caveat that it may have to be used to pay for a balled up car. Then, when it&#39;s all said and done and you do roll that car into a little ball, you withdraw that saved-up money, pay for the car, and walk away pretty much about where you would be if you owned.

It&#39;s the ole "pay me now or pay me later" deal.

However, there would be one distinct advantage to renting from Matt: you&#39;d have a lot more discretionary time between races - and probably a better-prepped car at each race - in return for slightly more cash outlay. As in everything, there&#39;s no such thing as a free lunch (R.I.P. Milton Friedman)...

[NutDriverRighty]

Thanks for all of the input. Can&#39;t say that I&#39;m convinced one direction or the other yet. Did the math myself yesterday. Selling the truck is a break-even. My open trailer is worth $1500 (maybe), and with the price of IT7 cars, I think I&#39;d be WAY under the cost to replace a balled-up car. Seems like it would pay for the better part of my short season, though.
In regard to the engine issues, they were largely attributable to the "nut behind the wheel". When the first rebuild blew, the guy(s) who build it were very accomodating and I can&#39;t say anything bad about the way that they handled the situation. I also can&#39;t (won&#39;t) say who they are. Now that we have an AFR and know how to read it (didn&#39;t have it or an EGR set up prior), I hope that the engine will live up to the longevity numbers that I&#39;ve seen from others.
The idea of having someone else do the work and the transport would be awesome. Since the car is in the metro Atlanta area, we&#39;ve got some options. Any suggestions of one over another?
I&#39;ll probably keep my SPU "clown car" as it is so much fun, it&#39;s in Western NC (so I have easy access to the Legends car folks for engine work) and, as long as I don&#39;t set it on fire, it&#39;s cheap to run.
Thanks for all of the input. It is greatly appreciated. Keep it coming!

Scott Franklin
www.NutDriver.org
ITA/IT7 and SPU "clown car"

[tom_sprecher]

Comparing apples to apples, there&#39;s little difference: SOMEONE has to spend the money to build, prep, and campaign the car, and the driver is going to pay for it one way or the other. If Matt, for example, had been the one to build and prep your Saturn, he&#39;d have spent the same as you have already.[/b]

In general I agree with everyone&#39;s comments and concepts regarding renting vs. owning but I don&#39;t think the guy you rent a car from, assuming that is what he does for a living, is doing it for the love of racing. For example, unless Matt works for free he must be paid for his time and labor vs. when you own and do your own work your labor is more like "sweat equity".

This is where I believe renting would have to end up costing more than owning. Otherwise, those who rent out their cars must really love this sport.

[Greg Amy]

...he must be paid for his time and labor vs. when you own and do your own work your labor is more like "sweat equity".[/b]

No disagreement whatsoever, Tom. However, that&#39;s not a fair apples-to-apples comparison.

I suggest that if the question was, "can you go racing cheaper by doing it yourself?" there would be an unqualified "yes!" from everyone; there&#39;s no doubt the owner/driver can skimp on fixes and upgrades to keep the costs down. However, I see the question at hand as "can I get the same level of dependability and speed by doing it myself, and do it cheaper?" I offer that answer is a qualified "maybe": only if you possess the skills, resources - and discretionary time - of the person from whom you would be renting.

You see, when renting, we hold the rentee to a higher level of expectations than we do when we do it ourselves. Think about your own car, truck, and trailer combo: would you actually pay someone only to give you that level of service? In most cases, that answer would be "NFW!" Therefore, when considering the rent-vs-buy argument, you *must* make a direct comparison of level-of-quality decisions.

Further, if you do possess the "skills, resources, and discretionary time of the person from whom you would be renting", I suggest the opportunity cost of the time involved in building your own race is far greater than what you save: you&#39;re better off letting someone else pay you to build their car.

Use my situation as an example. As of today, I am effectively "renting" the car from Matt. Yes, I own it; and yes, I paid for the build, and yes, I can do most of that work myself, but after every race I choose to drop off the car to Matt and he does all the repairs and prep. I also have capital tied up in the truck and trailer, but I pretty much sub out any work over and above basic tune-ups and oil changes to repair shops. So, can that fee I pay to Matt plus the expenses in truck/trailer maintenance be considered a rental fee? If I didn&#39;t own anything would I be paying the same I am now, but in rental fees instead? After all, Matt&#39;s making a profit on the work on my car, and the repairs shops are making a profit working on my truck.

Let&#39;s say, for example, that I sold the whole kit-and-kaboodle to Matt at a reasonable price and put that money in the bank, and Matt "increased the per-race rental price" to reflect his capital depreciation and wear, plus a small amount of risk. Would that additional outlay of money exceed what I spend now in terms of opportunity cost, risk, and depreciation? In other words, am I actually spending any more money by paying for the depreciation and risk myself, versus reimbursing someone else for accepting that expense? I believe that when looking at a true apples-to-apples comparison my out-of-pockets expenses would come out about even, especially when considering opportunity costs of capital.

I just wish Matt had the money to do exactly that, I&#39;d do it in a heartbeat... - GA

[ITS5GB]

The worst thing that can happen when renting a car is buying it midway through a weekend because through no fault of your own(other than the fact that I chose to be on a race track in a race and, "hey! that&#39;s racing"), someone decided to total the car I was in. That was painful to write that check with all those zero&#39;s in front of the decimal point. At least I got an engine and 3 wheels out of it! So, I did the next dumbest thing, I went out and bought my own! Then I moved to an even dumber level, I decided to build my own! Fortunately I just sold 2 of them and saved my marriage! I love this hobby!