There are a lot of ways to look at an old car. I had an MG (1980 B model) as a third car. It cost $5000, but it was clean. I had the car for 12 years and put another $6000 into the car. The second number is the total of insurance ($123 per year antique), repairs, tires, everything. I sold the car for $1000 last year, so the total cost of ownership for the dependable runner was $833 per year. You cannot get much cheaper than that for any kind of car (drove about 4-5000 miles per year.
I thought about totally restoring the car with me doing a lot of work would have been $15-17,000, and the car in the end would have been worth $6-8000. This is nonsense. So, I put my thinking cap on, and said, this is what I want in a car (I am 67). A convertible, air-conditioning, and an auto transmission. One day I stumbled on a 1983 Mercedes 240D online (I had a 300D, which was my second of many Mercedes. The 240 had a sunroof, auto trans and a broken A/C compressor, and was being sold by this guy in Miami. I overpaid, perhaps, but I drove to Chicago at 55 MPH with its totally shot front end, and trans slipping when taking off. So, I sold a 2000 Grand Marquis to Carmax for $3000 plus a $1000 for the MG, and came out of pocket another $800 or so, and set out for Chicago on a prayer.
I have put another $3000 into the car for a totally new front end, less springs plus me doing a ton of work on the car. New front tires, new brake master cylinder and reservoir, cleaned the fuel tank and lines, new rear callipers, and much more. My thinking at this point is this. My insurance is $125 (again antique) per year, plus I am getting twice the mileage of the Marquis, for a total savings per year (over the Marquis) for fuel and insurance of about $1,400. I have a list of parts I need to finish the job (another $1000), and will use the savings to pay for them over the next two years. I want to drive the car in case of any disasters, so I am taking my time. I have $8,000 in the car including hundreds in tools, and am still not a ton different than the MG at this point. I am getting about 29 MPG driving around town, and not much more on the road. This second number will improve with timing and new injectors. I should also state that my insurance company is insuring the car for an agreed amount of $11,000 for both comprehensive and collision. If it happened, I would profit $3,000, but it would be a very sad day.
There are a lot of these cars out in California, and some in Florida. If you do it, only buy cars with no rust, and you should be happy for a long time. I took a little chance with mine, as I never had the compression checked before the purchase, although it starts instantly and little particulates to be seen in the daytime. I now know that the compression is good, as I tried to turn it over at the power steering bolt when doing the valve adjustment. Wouldn't budge, and I won't try that again. You want to check the compression because the engine is the only big number if there is a problem.
My second Benz was a 300D. I bought it new, had it a few years, and my room mate, a Bmw employee talked me into a 525i. Like you it was a major mistake. A 300D gets about 5-6 MPG less than the 240D around town, but does the same or better out on the road. The 300D is also considerably quieter on the road if you plan on a lot of 45 plus miles per hour travel. Whatever you do, do not buy a gas model. Many were really junk. After my first Diesel Mercedes, a purchase, I only leased Mercedes diesels after that. I would also stay away from the turbo models, as that is one more thing to go wrong.
One other thing. Do not restore a car that needs body work, paint and interior work, even if it is rare, unless you restore every detail and spend a lot of money.
I absolutely love my car, and I plan to have my ashes slipped into the car before my wife sells it.
Here it is.