Roadside assistance for distressed portfolios

Collectible motorbikes, symbols of rebellion and liberty, can also preserve capital. Owning a classic motorcycle is both a lifestyle choice and investment, says Daniel Wade of U.K.-based Paul Fraser Collectibles. “Typically, collectors are united by passion for motorcycle design, engineering and history,” he says. “While it is possible to make money, my advice is not to buy with that expectation.”

These vehicles have one distinct advantage over vintage cars—they take up less garage space. Edward Doering, director of the Motorcyclepedia Museum in Newburgh, N.Y., says the closer the bike’s condition is to the day it rolled off the factory floor, the better.

“Original paint is important, as are decals and accessories,” he says. “Collectors want every nut and bolt [to be] original. Bikes restored years ago may have value, but auctioneers say [such bikes fetch] about half the value.”

Provenance matters, too.

“Some of the most coveted bikes among serious collectors are factory works bikes with documented race-winning or record-attempt histories,” says Wade. “They were generally hand-produced in limited numbers.”

Serious investors should expect to pay at least $15,000 for motorcycles with original parts and finishes, says Wade. If you’re buying with an eye to potential profitability, stick to flagship brands such as Indian, Triumph, Brough, Vincent, Harley-Davidson and Ducati.

An April 2013 Bonhams auction in Staffordshire, U.K., netted more than £1.4 million. The top-selling lot was a 1952 Vincent Black Shadow, which sold for £113,500. The bike was part of a squad that broke several speed records in 1952 in Montlhéry, France.

And the highest auction price for a vintage motorcycle is US$520,000, paid for a 1915 Cyclone Board Track Racer in July 2008 at MidAmerica Auctions.

The next wave

Doering notes younger collectors are buying bikes from the 1960s and ’70s, the era in which they grew up. These are nostalgia purchases. “Many now sell for only a couple of thousand dollars and could double in value pretty easily.”

As for how much of a portfolio to allocate to bikes, a Barclays study finds wealthy people hold an average of 9.6% of their net worth in collectibles. Doering suggests motorbikes could be a more daring “25% of your investment portfolio.” That’s not entirely crazy when you consider appreciation rates seen at the top end of the market. A 2012 Bonham’s auction saw a 1937 Crocker V-Twin clear US$302,000, topping a 2006 record of $276,500 for the same style of bike.

Hassle factor: Insurance

Dalton Timmis Insurance, a vintage motorcycle insurer, offers these tips for collectors:

• Appraisals can’t be older than 18 months at the time of application, and must be done every five years.
• Third-party appraisals cost between $65 and $250.
• Average cost to insure a bike worth between $10,000 and $12,000 is $350 to $400 a year.
• A $50,000 Vincent owned by someone in Toronto would cost approximately $700 per year to insure if the driver has been licensed and otherwise insured for nine years, with no tickets.
• Vintage motorcycles are at least 30 years old.

Vikram Barhat is a Toronto-based financial writer.