My advice: If it looks like you're going to have to do a rebuild - don't do
Instead, call around to local junkyards (especially ones without computer
inventories) and find a wrecked BMW with a low-ish mileage engine,
especially one that you can start and run before buying (though they'll
charge a bit more for such an engine, of course). You can probably get the
whole junked car (minus any resellable window glass) for way less than half
of the cost of a rebuilt engine. If the junker is an E36, you might even be
able to snag some spares or swap some parts - carpet, seats, windows,
stereo, ECU, wheels, tires, battery, exhaust, etc. I did this with an old
Mk I VW Golf GTi. I pulled a complete blue interior from the totalled VW to
replace the mildewed and ugly burgundy one in my "racing" GTi, plus four
alloy wheels and tires. I had pre-negotiated a cash price of $100 for
everything I could pull off the car - they didn't care. They were gonna
Engine swapping requires an engine hoist; but they're not expensive to buy.
You can probably have the guys at the junkyard pull the motor for you and
drop it (carefully) into a waiting pickup bed for hauling to your shop. If
you don't have suitable work space, talk to a local friendly garage owner
about renting after-hours shop time. Sometimes they'll do it. Of course,
better yet would be to talk a local mechanic into doing the work for you
after hours, for cash of course.
Think of it as an automotive adventure...
Just be aware, you could be buying somebody else's marginal motor. If you
do the work yourself, the parts required for a head job are worth a couple
hundred, maybe a couple hundred more for any machining that is required, and
technically it's simpler than an engine swap. When you rebuild your own,
it's the devil you know. When you buy used, you roll the dice.
Not that the rest of your points re: ancillary parts aren't good ones, just
with a motor you can run it and still not really know what you're dealing
with inside, low miles or not.
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