Given today's real estate market

[phikappapsi]

Interesting hypothetical scenario... Given interest rates being at basically never before seen lows, a lot of people are saying this might be the best opportunity ever to buy a house.


That said, would you sell off all, or most of your collection, to come up with the money to take advantage of the soft housing market?


I know it's not apples to apples, ones an investment and cards are and should be a hobby, that said... I found it an interesting subject that came up last night, with a friend in the modern card hobby.

[Big Ben]

Well... All I can say is that in 2008-early 2009, I sold most of my collection and invested most of that money in stocks and put some money in vintage cards. I did rather well and realized a goal to simplify my collection.

[Jlighter]

I would not even consider a house an investment. Homes need repairs, homes need renovations. Buyers are fickle, what may be considered a desirable area one day could be considered undesirable the next. Unless your house can recieve income, I.E. two houses on one property, I would not recommended it. Better to put it in a basket of Emerging Market debt.

[bbcard1]

I have thought about it. We are about ten years our from semi-retirement. The thought of going ahead and picking up a nice patio home near the ocean and then renting it for a few years had certainly occurred. One way to do that would be to liquidate a sizable portion of my collection. I would consider that, however, as someone who has recently done that for a friend, it's a whole lot of work. I have a job that keeps me busy a good 60 hours a week. Just doesn't seem....in the cards. I don't have five items I could sell to accomplish the goal.

While housing does represent a good buy right now, it's going to be a long time before we see previous prices.

[t206blogcom]

I won't step into the 'whether a house is an investment' argument, but I don't think it's a bad idea to sell some or all to help fund a home purchase. I'm considering doing the same thing within the next year.

While I love collecting as much as the next guy, in the end, it's just cardboard. A home is an investment in your family and your life. I'd take a home over a stack of cardboard any day, unless the stack came from the Black Swamp...

[barrysloate]

There are too many variables to answer that question. One would need to take a full inventory to make that decision: do you need a house, where do you live, what other assets do you have, how old are you, etc. A house is a big commitment so I would take as many factors into account as possible.

It might be a great idea for some, not so for others.

[Leon]

Two different things. Cards are liquid and houses not so much. I think it really comes down to what your family goals/needs are. You can't live in your cards.. If it means a better life for you and your family by having the house then I say do it. I would sort of make the decision based on the house need and just think of the cards as cash you have now.

[phikappapsi]

Well, in the discussion with my buddy, we basically came up with the summation of most of the points made in the thread, though still maybe logically flawed. He currently rents, and collects modern (which I see lesser "investment" potential in) so we concluded, for him, liquidating would be the right choice, because he'd merely be swapping asset classes. For me, I already own a house, so if I bought another, the current one would turn into a rental. I also collect mainly in pre-60s, so I see better longterm value in the collection. So in his case we ended at a clear sale, for myself, a little more convoluted.

[Vegas-guy]

Well as someone that has done this I'm not sure??? I sold my entire collection about 10 years ago and used it as a down payment on two homes, one as an "investment" rental property and one as our main house. Now we all know what happened in 2008 and I lost my A$$ on both and ended up short selling both to get out from them (I'm not talking like 50k loss, on our main home we lost over 250k..) Now having said that there was no way of knowing it was going to happen or if it will happen again but after what happened to me I wish I had my cards back..

As someone above posted the cards are liquid and much easier to sell then a home. Now if you can sell all your cards and pay cash for the house that's a different story.

[Leon]

Well, since we are here.

My wife and I have spoken about our goals too, with respect to my collection, many times. I could probably pay off our sizable mortgage (see farm house on acreage ) if I sold my cards. My wife just knows the cards can bring cash and fast . She has said she doesn't want me to sell them to pay off the house because then we won't have liquidity. So, I happily keep collecting (uh, er...spending) .....Good luck whichever way you go.

[phikappapsi]

That's awful man, truly. But seeing as now we're on the clear backside of that bubble, can much more really happen to housing? Not to go in a political direction (obviously this isn't a politics forum) but does anyone see any way for inflation not to kick in over the next 3-5 years? Interest rates have to go up at some point, seems to me that a mortgage now, at 3.5% is almost going to look like free money in 5-10 years.

[barrysloate]

Joe- if you buy a second house for rental, and the rent income pays for the mortgage, taxes, and upkeep, it's hard to imagine it won't work out. But always built into that formula was the idea that the property would increase in value. I don't think you can count on that any more. So factor everything in and see if it still makes sense for you.

[martingale]

Don't do it, for two reasons:

1) Real estate is not an investment, it is a place to live. (Unless of course you are very wealthy, don't have to borrow to incur in debt, and can afford to have an illiquid asset as a small percentage of your total net worth).

2) When interest rates go back up, the cost of money is going to be higher and it is very possible real estate prices will go down because buyers will not be able to afford as much real estate as today.

[bbcard1]

There seems to be a built in assumption that baseball cards are more liquid than real estate...that is a flawed perspective because of the sickness we share here on this board. Both are only liquid at a price. Maybe real estate is down, but most baseball cards are as well to a great degree except for the thin level at the top.

[phikappapsi]

Logical flaw... As interest rates go up, inflation does too... So even if rates would pressure home values down, inflation pushes home values up. So if you can leverage debt in today's dollars at 3.5% and rates go back to the 7-9% range which is a historic average, youre basically earning. 5+% untaxable dividend, even before the home itself rises in value.

I know it sounds like I'm talking myself into liquidating my collection...not the case, just playing devils advocate to the previous post.

[Leon]

Originally Posted by bbcard1

There seems to be a built in assumption that baseball cards are more liquid than real estate...that is a flawed perspective because of the sickness we share here on this board. Both are only liquid at a price. Maybe real estate is down, but most baseball cards are as well to a great degree except for the thin level at the top.

Politely disagree. I can sell cards in the next hour to get 200k and have it tomorrow......can't do that with a house. Hell, I have an 815 credit score and can't even refinance!!

[phikappapsi]

Leon. I think his point was, you could probably do that with a house too, if you were willing to sell a 400,000 house for 200k. Maybe the cards you're talking about have a value of 400k, but given the current market, if you wanted to sell them fast, you'd have to underprice.

[tiger8mush]

I've heard good and bad stories about rentals. Some of my friends have rental properties. Sometimes the tenants are perfect, the houses never needing maintence, tenants always paying on time, etc. But then there are the not-so-good parts, where friends need a place to stay and it they don't pay rent and they out-welcome their stay, tenants wreck the house, are a nuisance to neighbors, house is in constant need of repairs or appliances always breaking, roof leaks, basement carbon monoxide detector goes off at 2am so u get the phone call, house goes unoccupied for a few months in between tenants, etc.

Sure, you'll probably make some money, but is it worth it? Is the renter's market good right now, considering people can buy the house themselves for a cheaper price? Can you afford to hang on to the house a few years until the market picks up so you CAN make money on the rental?

Good luck!

[Leon]

Originally Posted by phikappapsi

Leon. I think his point was, you could probably do that with a house too, if you were willing to sell a 400,000 house for 200k. Maybe the cards you're talking about have a value of 400k, but given the current market, if you wanted to sell them fast, you'd have to underprice.

I have bought and refinanced several houses. No one can get money the next day through that method. And I think with the cards I have in mind I could get 150% of what I paid and at least 80% of market value quickly.

[SMPEP]

Guess I'm the contrarian, but I don't see this as a good opportunity to buy a home at all. In fact, I would argue it's the worst time. Rates are low. Probably too low. At some point they will rise. Now we've seen in Japan this ebvironment can continue for 20 years ... but banking on that doesn't seem wise. Even predicting 5 years out is near impossible for the professionals.

So with rates this low, you know that when it comes to sell the home ... rates will be higher ... and therefore your house will be worth less money. Most likely a lot less.

If you never plan to sell, okay buy. If you plan to rent it out, Ok. Someone else is paying your mortgage (assuming you are doing this right). So who cares what the house is worth when you sell it. You essentially got an asset for free.

But the premise of the original question was an investing decision, whcih suggests you will sell at some point and aren't renting it ... and as rates rise, you will lose.

[phikappapsi]

Again, I made this point earlier...on the face of it, your analysis makes sense... But history and further data suggests that when rates rise, it's usually with inflationary pressure...thusly devaluing the dollar, ie prices, including home prices rise... Also, as rates spike, the cost of the money you borrowed becomes lesser. Borrowing at 3.5% and holding while rates rise to 9% means you're paying yourself a de facto dividend of 5.5%.

[barrysloate]

Originally Posted by Leon

I have bought and refinanced several houses. No one can get money the next day through that method. And I think with the cards I have in mind I could get 150% of what I paid and at least 80% of market value quickly.

Leon- agreed that rare baseball cards are a very liquid asset, and that you could get 80% of their value rather quickly. But you would be leaving 20% of their value on the table. I think any asset discounted that deeply would be pretty easy to sell. If your home is worth 500K and you put it on the market for 400K I don't think it would take too long to sell either.

[Leon]

Originally Posted by barrysloate

Leon- agreed that rare baseball cards are a very liquid asset, and that you could get 80% of their value rather quickly. But you would be leaving 20% of their value on the table. I think any asset discounted that deeply would be pretty easy to sell. If your home is worth 500K and you put it on the market for 400K I don't think it would take too long to sell either.

But I couldn't have money tomorrow with the house deal?

Regardless, my whole thoughts were based on what is best for his families living conditions. Since it sounds like the house would be an investment the choice becomes which is a better investment, cards or a house? Most folks would say a house, I have cards . That being said, of course there will be more of our members (except for the folks that shudder to think of our cards as investments) relative to the general population who would take the cards. And lastly when I think of deep discount it's not 20% it's about double that. But that is relative and everyone has their own idea.

[barrysloate]

Fair points but I think any asset that would have to be deeply discounted to sell quickly isn't so great. If you had a stock portfolio (boring) and you had to sell stocks the same day you would probably get 98% of market value. The real asset of baseball cards is the enjoyment factor.

[glynparson]

I don't think one is more liquid than another. At %'s of value I think the liquidity changes the equation. Plus I guarantee a House in my area is more liquid than an equal value of 1988 donruss so I think it depends on some things like what is in your collection and what % of full value do you want same with house whats the location condition etc. There really is no correct answer the more I think about it, but I have more faith in houses having close to current value forever than I do in baseball cards always having their current values.

[bbcard1]

Originally Posted by Leon

Politely disagree. I can sell cards in the next hour to get 200k and have it tomorrow......can't do that with a house. Hell, I have an 815 credit score and can't even refinance!!

You have to admit you are unusually qualified to sell cards for nearer retail...which is cool. You are probably well aware that the refi issue is most likely your employment status, not your credit score. I have a friend who runs a rather successful recruiting business with 15 employees. The employees can qualify for loans based on their salary and gainful employment, but he cant' because he is dependent on a company he runs. Even though he is the guy who pays all the other people.

We have had similar problems. Had I not sold baseball cards to a banker for years, I would have probably not been able to get the very small loan I needed to start my company...

But yes, anything will sell at a price. There are plenty of cash buyers for real estate if the price is good enough.

For what it's worth, I am pretty much investing in saving money and keeping it reasonably liquid. I have a son heading off to college next year and a daughter three years after that. I buy cards for enjoyment, though I hope in the long run to at least break even. I buy a little metal, but you have to be in a very specialized place for that to work an it's a pretty small part of my financial equation. I can certainly see an inflation scenario and would think that the factors would point toward that...but I could also see a deflationary cycle with the pressures.

[brob28]

Joe - to me the first question I would ask you is: not considering baseball cards, do you want to own a home? If so, is the only way to buy one now or in the near future to sell some of your collection?

Bottom line, do you value your cards more than homeownership? If not, I'd say to sell some to buy a house. Rates today are in the 3.50% range for a 30 year fixed rate loan. The after tax cost of borrowing that money after tax considerations (given todays tax laws) is about 2.52%. I'd be willing to bet a lot of cabbage that sometime in the next 30 years the rate of inflation will be greater than 2.52%. So at some point your effective cost of borrowing on a home will be less than the inflation rate. What I'm getting at is the cost of funds to buy and the cost of the home are both at or near as low a level as one could hope for, so from that perspective the time is right to buy.

As I type this I realize there are counter-points to each point made in each post, but I come back to: Do you value your cards more than homeownership? If not, I'd say to sell some to buy a house

[mrvster]

If u can, have both

If not, a house would have to come first before your cards, like Leon said " you can't live in your cards"....

But if ur half way comfy, and basically don't need an "extra" house, or your doing fine making your mortage payments, then why not collect/invest in vintage???????????....if u don't wan't to deal with investment renting, then my theory is collect/invest....


like antiques=rarity and condition...

i go with rarity, that supercedes condition unless u can afford both inmho...


collect rare, qaulity, desirable cardboard....


i have only seen my t206 rarities appreciate since 1998 at exceedingly crazy rates....

i don't know, but i think the trend is keeping up with wag pushing the investment/collection...



but if your not into t206, there are other issues ....some are too are too volitile...

i love ojs, as a second vehicle, but unless collect the rareer ojs, the commons remained stable...anything 19th century seems like a safe investment also, mayos, ect


i got my quarterly 401 K statement and almost cried the other day, and hasn't gotten that much better over the years, changed the investment mix / diversification doesnt seem to matter either the "investors know what they are doing"



(please excuse me ,old business major here)



I don't care what anyone says, the rare unique desirable cards(in any set, that would be debated in another thread) seem to , dare i say it, recession proof

cardboard is only worth what someone else is willing to pay for it, like anything else in this world.....and if it is rare and desireable enuf, the investment takes fruition....like a small entity,

as long as there are individuals with moola, the desireables will be in demand..


simple economics=


supply and demand....

you would have to take care of maslow's heirachy of needs first and foremost, if you are comfy at the level you are at , then why not collect/invest.... cardsare very liquid( also as leon stated)

collectors are going to cringe when they read what i wrote about collecting as an investment, but these are different times, and these maybe alternative investments for many, instead of the traditional ones...

i always wanted to buy gold years ago, but never did.....that to me is a good investment....education is a good investment.....1988 topps might not be

i like real estate, but i am obsessed with t206


Summation:


COLLECT TO INVEST IF YOU ARE WORRIED ABOUT It, it's not far fetched .......

sell if in trouble...


sell your freak t206 to me is so desired??

peace

johnny

[glchen]

I think you should consider cards as an investment vehicle. (also as the caveat, don't count on your cards for your financial safety.) You can't sleep in your cards. They don't shelter you from storms, the cold, etc. If you need a house, I'd buy a house. However, if you already have a house, and are looking for one for rental, then you'd just have to decide which is the better investment.

[SetBuilder]

I'm trying to purchase a short sale condo here in Florida. There are a ton of them around with a decent cap rate -- 8 to 12%, which is a nice return. During normal times I would prefer to purchase bonds (preferably tax free) since they provide efficient income without the hassle of property maintenance, HOA, taxes, unruly tenants, etc. Right now however, it's a great time to buy a house/condo at a discount because you can generate a higher return than with an inventment grade bond (4%).

Stocks are great sometimes but it has been proven that very diversified portfolios (10 or more stocks) don't generate healthy returns, so you're better off picking 3-4 stocks that you're an expert on and go all in with a percentage of your net worth. The key here is spending a lot of time researching the companies you invest in, which requires several hours a week/month and some complex number crunching, which most people don't do (it's quite boring).

I was actually trying to compare the prices of metals (gold, silver, platinum) to comparable baseball cards to see what the ROI would have been over a decade or two. I never quite finished this project but I'm willing to bet that a portion of the baseball card market greatly outperformed the metals. I think cards, like metals, are hedges against inflation.

I think collectibles should be a part of every young adult's investment portfolio. Buy rare art, books, cards, wine...enjoy it, hold it in your hands. It's great (better than a number on a computer screen).

[mrvster]

+1

[tbob]

Now is not the time to sell baseball cards. Buy pre-world I cards. Buy them in the best condition you can afford. Pay attention to grades but more attention to eye appeal. Do your home work. Look at scarcity but also at popularity.
I have a house so I'm looking at cards. I like to think I have a better handle on 1909-1919 cards than I do on the real estate or stock markets. Besides, the idiots in Greece and Spain may play hell with my stock portfolio but don't affect my caramel and tobacco cards

[egbeachley]

Originally Posted by phikappapsi

Logical flaw... As interest rates go up, inflation does too... So even if rates would pressure home values down, inflation pushes home values up. So if you can leverage debt in today's dollars at 3.5% and rates go back to the 7-9% range which is a historic average, youre basically earning. 5+% untaxable dividend, even before the home itself rises in value.

But with inflation you also get appreciation on pretty much everything, houses and cards.

In general, interest rates and housing prices go in different directions. It sounds counterintuitive but the best time to buy a house may be when interest rates are very high, and housing prices low. Then when the rates go back down and the house prices are back up you refinance. N

[phikappapsi]

To clarify for some in the thread...the house I already own is a multifamily rental. The house I'd be buying would be a single family, and I'd be renting out the unit of the current house that I already live in.

[phikappapsi]

Originally Posted by egbeachley

But with inflation you also get appreciation on pretty much everything, houses and cards.

In general, interest rates and housing prices go in different directions. It sounds counterintuitive but the best time to buy a house may be when interest rates are very high, and housing prices low. Then when the rates go back down and the house prices are back up you refinance. N

I understand what you're saying, and logically it makes sense, but it doesn't actually hold water. Look at the time periods in this country of relatively high interest rates, and expansive inflation...housing values typically outperform the inflation adjusted metrics of those time periods.

Again, I have multiple avenues of buying the second home. I was only toying with the idea that cardboard might be the correct source of liquidity to cover the initial costs. Not sure there's one specific "correct" answer

[z28jd]

Someday Johnny, you will work all 11 emoticons into the same post, forcing Leon to create new ones. Keep on working towards your goal my friend!

To answer the question in this thread, I have no clue. I live in an apartment above a garage and almost 90% of my assets are cards, 8% is in 2 antique cars, 1% is silver and 1% is cash. I do have enough cards from the 80-90's to build a house out of them so pish-posh to whoever said you can't live in your cards

Originally Posted by mrvster

If u can, have both

If not, a house would have to come first before your cards, like Leon said " you can't live in your cards"....

But if ur half way comfy, and basically don't need an "extra" house, or your doing fine making your mortage payments, then why not collect/invest in vintage???????????....if u don't wan't to deal with investment renting, then my theory is collect/invest....


like antiques=rarity and condition...

i go with rarity, that supercedes condition unless u can afford both inmho...


collect rare, qaulity, desirable cardboard....


i have only seen my t206 rarities appreciate since 1998 at exceedingly crazy rates....

i don't know, but i think the trend is keeping up with wag pushing the investment/collection...



but if your not into t206, there are other issues ....some are too are too volitile...

i love ojs, as a second vehicle, but unless collect the rareer ojs, the commons remained stable...anything 19th century seems like a safe investment also, mayos, ect


i got my quarterly 401 K statement and almost cried the other day, and hasn't gotten that much better over the years, changed the investment mix / diversification doesnt seem to matter either the "investors know what they are doing"



(please excuse me ,old business major here)



I don't care what anyone says, the rare unique desirable cards(in any set, that would be debated in another thread) seem to , dare i say it, recession proof

cardboard is only worth what someone else is willing to pay for it, like anything else in this world.....and if it is rare and desireable enuf, the investment takes fruition....like a small entity,

as long as there are individuals with moola, the desireables will be in demand..


simple economics=


supply and demand....

you would have to take care of maslow's heirachy of needs first and foremost, if you are comfy at the level you are at , then why not collect/invest.... cardsare very liquid( also as leon stated)

collectors are going to cringe when they read what i wrote about collecting as an investment, but these are different times, and these maybe alternative investments for many, instead of the traditional ones...

i always wanted to buy gold years ago, but never did.....that to me is a good investment....education is a good investment.....1988 topps might not be

i like real estate, but i am obsessed with t206


Summation:


COLLECT TO INVEST IF YOU ARE WORRIED ABOUT It, it's not far fetched .......

sell if in trouble...


sell your freak t206 to me is so desired??

peace

johnny

[mrvster]

Your collection is insane!!!

I seriously think we have a seriuos problem LOL

[z28jd]

Originally Posted by mrvster

Your collection is insane!!!

I seriously think we have a seriuos problem LOL

I think you're right. I definitely don't have my priorities straight in the eyes of 99% of the people I know...the other 1% collects baseball cards too

[egbeachley]

Originally Posted by phikappapsi

I understand what you're saying, and logically it makes sense, but it doesn't actually hold water. Look at the time periods in this country of relatively high interest rates, and expansive inflation...housing values typically outperform the inflation adjusted metrics of those time periods.

Again, I have multiple avenues of buying the second home. I was only toying with the idea that cardboard might be the correct source of liquidity to cover the initial costs. Not sure there's one specific "correct" answer

Over time, housing prices always match inflation. If they were off by even a few tenths of a percent, eventually everyone would own a home or nobody would.

[JasonD08]

Coming from a builder/investment property owner/card collector.....Guys it all comes down to math. I have lost over $200K in the last 3 years sitting on empty real estate. With taking that into consideration, every deal has to be looked at uniquely. If the math works out then a person can build wealth faster now with real estate than ever before. I have lost most $$ on spec homes built to sell and made more recently on investment property. With that being said, the time is right now to purchase rental property because the supply is high and interest rates are lower than we will ever see them. Now, I would not recommend being a landlord to anyone but it can pay off. I have had many in the same business tell me dont do it, that it is a headache, but hard work can pay off. You have to rent to the right people and line up your ducks, and be willing to sit empty for a month or two rather than just stick anyone in there. Also make a plan to own atleast 10......1 or 2 will just be a headache and not worth it. Atleast with 10 you should have a nice income every month and if 1-2 go empty the others will help carry them. Do what you enjoy in life. I would not recommend investment property to just anybody. I still stand firm in real estate as the way to build wealth. All of the other stuff (cards, stocks, etc.) are just smoke and mirrors. They dont make more land folks.

Jason

[JasonD08]

and yes I have liquidated many nice cards to purchase real estate. When the time is right to buy, you liquidate to make it happen. Matter of fact I am looking at another piece of property so stay tuned to the B/S/T folks! Real estate investing is long term (20 years). I figure in 20 years I can rebuild most of the collection I sold off a little at a time.


Jason

[GasHouseGang]

My best collector friend did exactly this back in the 80's when cards were hot. He sold off his entire collection (to Mr. Mint believe or not). He used the money to buy the lot next to his house to be able to expand. After that he quit collecting. While I didn't mind that he used his collection for that purpose, I hated to lose my best trading buddy.

[ls7plus]

In terms of pure investment, classic, rare, significant cards in the best condition you can find or afford will be far better investments than a house anytime in the near future!

Boy, got that off my chest!!!

Regards,

Larry

[T206Collector]

Let's just say that with a great sale of a very sigmificant and rare card this year, I was able to refinance my house, reduce my monthly mortgage payment by about $1,000, and put a half-bath next to my kids' playroom.

The improvement in my quality of life is palpable - I do not miss the piece of cardboard in my safe deposit box.

And, I still have my favorite cards; which I guess may very well be the most important thing!