Thinking of building a challenge car, some questions from the new guy

So, I find myself with almost no time at all on my hands, but some desire to build a challenge car for 2015... or maybe 2016, and while I have read the rules, I have a few questions about the budgetary constraints.

As I understand it, I can recoup up to $1008 for selling off spares or OEM or aftermarket crap that comes with the initial purchase. That part I think I grasp solidly.

The first question comes from the concept of parts lot purchases: For example, last year, I bought a group of parts from a guy in Mississippi. I paid $150 for the lot of parts including 2 sets of wheels, a pair of seats, a spoiler, and various other bits and pieces. Immediately upon my return, I sold one of the sets of wheels for $100. Would I be able to count any other parts I purchased from that lot as having a net expense of $50? Or does that all roll into the $1008 I'm allowed to recoup from the car?

The second question is related to the first. I know that generally trades are considered 'inside deals' and I certainly understand, but what if the trades are for parts that where included with the original purchase? For example, let's say that the car comes with 2 spare motors, and in my wisdom, I decide I only need 1 spare motor, and someone will trade me a front shock and a set of fuzzy dice for the redundant motor. As I read the rules, I'd have to count the front shock and fuzzy dice at fair market value of $12 and $900 respectively. If that's the case, I can live with it, but I'm hoping that the 'spirit of the competition' allows a little more wiggle room if the parts I'm trading are from the original purchase.

A new guy (who's been loosely following the challenge since '99) thanks you for your input!

I'm not knowledgeable at all about such things, but wouldn't seats and wheels fall under the "safety equipment" blanket and therefore be excluded from the budget?

If so then leave the spoiler off your car and you essentially added nothing to your budget (so no need to count the $100 set of wheels you sold back IN your pool because you didn't count the entire $150).

^this, safety items can not be sold for recoup value as they are free on the car. I don't know if seats and wheels are specifically listed as safety items so check the rules but if they are then no bueno.

My understanding is total recoup from all sources is limited to $1008. Again I'd wait for official clarification.

I would think if you are trading original parts that came with the car for other parts you still need to assign a value as it would count toward your recoup total, its just not a cash expenditure.

Lots of errors here.

Seats and wheels are not safety items. They need to be included.

Trading is unlimited, until you reach the full recoup amount.

Your first question:

2 options:

1- count the full purchase price AND the recouped amount. $150 expense, $100 recoup.

2- Pull the parts from your shelf and assign a fair market value. So, if the parts you want to use are worth $50, you would include a $50 expense and document it, then take no hit to your recoup budget.

So, if the parts you want to use are worth $50, choose the second option. If the parts you want to use are worth $300, choose the first option. ;-)

Your second question:

Trading is unlimited.

You bought the spare engine with the purchase of the car, and included it in your budget. You may trade it for whatever you like, and put it on the car at no additional penalty to the budget. , as long as you have not recouped a total of $2007.50

OR:

You may sell it, and use it for recoup funds.

So, if you paid $200 for the car and parts, and the car was worth $100, but the engine was sold for $300, you may recoup $200 (max because of the purchase price). You can't recoup more than you spent.

Thanks guys, I think I've got a more solid understanding now.

Just to be clear if I buy the car for $1500, and recoup $900 worth by selling parts that came with it, I can trade someone item for item without having to assign a value to the item(s) received in trade?

I'm getting the car tomorrow, and I've already started to document all the crap that comes with it. I assume photos and a bill of sale with itemized parts will be sufficient documentation.

TMo wrote: Thanks guys, I think I've got a more solid understanding now. Just to be clear if I buy the car for $1500, and recoup $900 worth by selling parts that came with it, I can trade someone item for item without having to assign a value to the item(s) received in trade?

Yep.

TMo wrote: I'm getting the car tomorrow, and I've already started to document all the crap that comes with it. I assume photos and a bill of sale with itemized parts will be sufficient documentation.

Yep.

Look forward to seeing you there!

SVreX is correct on all counts–thanks for helping him out.

Well said Paul

If trading parts is unlimited, is there a list/tally that should be kept of what went out and what came in via the trade?

Photographs taken as proof?

Anything to reinforce your budget explanation is good

What about parts from other cars bought specifically for the challenge car?

Ex: I buy a rotted out 3400 V6 powered minivan at the Goodwill auction (open to the public) for $750 with a bad transmission. I remove the engine and part out the minivan for $500 then scrap the hulk for $200. Does the engine cost $50 or FMV of $225 (pull-a-part pricing for V6 with accessories)?

Junkyard_Dog wrote: What about parts from other cars bought specifically for the challenge car? Ex: I buy a rotted out 3400 V6 powered minivan at the Goodwill auction (open to the public) for $750 with a bad transmission. I remove the engine and part out the minivan for $500 then scrap the hulk for $200. Does the engine cost $50 or FMV of $225 (pull-a-part pricing for V6 with accessories)?

Fiddy bucks.

Up to the $1008 recoup limit of course. I did a 5 speed swap and a few other things for a grand total of $25 by buying a parts car, taking what I needed, parting some out, and scrapping the leftovers.

TeamEvil wrote: If trading parts is unlimited, is there a list/tally that should be kept of what went out and what came in via the trade? Photographs taken as proof?

As Aussie said, anything to help reinforce your budget is good, however there is a more important thing...

The Challenge is trying to generate editorial content for the magazine. Good trading should create good stories.

If you manage to trade the floor mats for a supercharger, I guarantee there is a good story in there somewhere. Spin it well- it is worth points on the Concourse.

What if you got the car for free, and that was about what it was worth. Should fair market value really be assigned? The market value would have been very close to nothing, not even for scrap given the weight and lack of usable parts.

Here's a link to what I'm beginning with, The pictures actually make it look better than it really is:

http://mgaguru.com/mgtech/restore/rt309.htm

And I've done nothing BUT beg, plead, steal, whine, cajole, and trade for parts and pieces needed to raise this from the dead. Luckily I have something of a photo record and a WHOLE bunch of lurid tales concerning what I went through so far.

I'm just wondering how the fair market value thing would be handled when there really isn't any value to what's being used until you completely refurbish it to usability. I had two rotted/rusted/junk fenders worth zero to anyone. Spent about twenty bucks on fiberglass and another ten on primer, plus two weekends worth of work to bring them back to life. Would I now have to add in the restored fair market value of $200/$300 each or would I get to retain the original value of $0 . . . ? If I'm subject to the restored value, would I then get to deduct a fair hourly labor charge which would then put the market value in the negative?

Wondering . . . SO many questions about something that was set up to be SO simple.

In reply to TeamEvil:

Your fenders are budgeted at $30- $20 on fiberglass, $10 on primer. Your labor is free.

You can spend 10 years restoring something if you want. Your labor is still free.

As far as the free car, I have a simple solution. I don't take free cars. I pay at least $1, and get a receipt.

The new rules might catch you on the "Inside deals" rule, and require FMV. As I read the rules, you don't really get the option of claiming "It's not worth anything", but you do have the option of asking for input from this board to determine FMV. I guess that means, if the general consensus is $0, then the FMV is $0.

In reply to TeamEvil:

...and you are right. There seem to be a lot of questions. But I think a huge percentage of them are generated by people who are not reading the rules.

They seem pretty clear to me. So, I guess I will ask, did you read them and decide they didn't make sense or were unclear? Perhaps I am not recognizing something.

How did you come up with "restored fair market value" from reading the rules?

No offense- I am really just curious.

TeamE, your car was free

http://grassrootsmotorsports.com/forum/grm/free-cars-are-still-out-there/33112/page1/

"How did you come up with "restored fair market value" from reading the rules?"

Just an extrapolation on the 'fair market value" theme.

Meaning if I didn't rework the fenders myself, but found them already restored or paid a body man to restore them, would the value be what was spent on them or the current "restored fair market value?"

I read the rules, easy to follow except for the area of the value of used and free and home made parts opposed to the value of purchased parts. If I were to make a muffler hanger out of a piece of fender that I trimmed away to clearance the wheels, would the home made piece of an already purchased fender be valued at what Pep Boys would charge for the same piece or would it be free since it came from the bottom of an already paid for fender and would have been thrown out anyway?

Seems like a small item to wonder about, but most of the car is being built using this business model. Waste not want not and don't pay for anything that you can make yourself out of scrap and junk.

I just love the idea of resurrecting a classic like an MGA using house hold trash and egg shells . . .

In reply to TeamEvil:

Gotcha.

OK, well honestly, you are over-thinking it.

1- If you pay for something with dollars (pesos, lira, euros, etc), it goes in your budget, INCLUDING if you pay for labor.

2- If you buy something in a package WITH the car (or parts) that you don't end up using, you can recoup some of the cost (up to the limits).

3- If you pick something up off the floor of your shop that has NOT already been included in the budget and add it to the car, you need to put a price on it (FMV).

4- Your labor is free. Even if you spend 4000 hours of it.

So, your trimmed fender example fits into #1 and #4. It does NOT fit into #3, because the piece was paid for when you bought the car.

The value of a piece (or of the entire car) when you are finished with it, having spent 4 years, 6000 hours, and 3 divorces is not relevant to the budget.

It MAY be relevant to your ex-wife, who may want her 1/2 of the completed value of your hooptie.

Thanks for the help with the explanations !

Now I'll just have to figure out what I should have paid for the car since I got it as junk for nothing with the usual, "Just get it OUT of here so I don't have to junk it myself!"

Since it's an MGA, and they seem to fetch some coin no matter what, it may well not even be worth it to try to enter the challenge, you know? I might be over the line in costs before I even begin, if the MGA is considered to be worth $1,500 or even $1,000 as it sits, I'm out of the game already considering what the Ford 5.0 driveline, wheels, rear end, front beam, and such already cost me.

Anyway, thanks for the help regardless !

TC

So did you get the car for free because of an inside deal? Or was it free to the first person to drag it out of the field?

The first one means fmv which in that case may be scrap value. If its the second then its free.

It was a freebie. I was looking for a LONG term MGA project and was talking with the shop owner about picking up one that he was working on. In the end he wanted more than I could afford, especially for what I wanted to do with it. After chatting a bit, I asked him what he would get for "the one way out back" and he said that it was going to the crusher next time he was forced to clear the yard by the owner of the property.

I asked if I could have it and he said sure, "Just get it out of here and take all of that junk with it." Meaning the old top frame, rusted seat backs, and such.

I chopped it in half and stacked the pieces in my brother-in-law's trailer and brought everything back here. Been fooling with the parts and pieces ever since. So far I have the rear body clip and both rear fenders "looking" pretty nice. They've been patched with anything that I can get my hands on, but they really DO look sound and solid.

Here are a few pics of one of the fenders to show what I mean:

First showing the missing/rotted off lower "dog leg."

Showing some of my patch work using aluminum foil, tape, and fiberglass.

A bit of grinding and a coat of "Tiger Hair."

More grinding, Bondo, and even MORE sanding.

Primer and done ! !

And this is how the whole thing is being done.

The "car" really was a free pile of rotted rusted crap.