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indygirl2560
Jun. 28, 2009, 10:00 PM
What exactly is an investment horse? I know a few people who have them but I don't really understand how or why. Anyone care to elaborate?! :yes:

Trixie
Jun. 28, 2009, 10:03 PM
There's really no such thing.

The idea is that when the horse sells, the owner will make money. Either it's a horse purchased young or inexpensively, has miles put onto it, and is sold for a profit.

However, after boarding, training, and showing to get to that point, most folks don't make much in the way of profit. And if the horse somehow gets hurt or sick, you're pretty much SOL.

joiedevie99
Jun. 28, 2009, 10:07 PM
The theory is that you buy an unbroke or green youngster, put in the training, and sell for a profit in a relatively short period of time (3 months-3 years?). Some people buy thoroughbreds off the track, do the first few months of retraining and then resell for a few thousand more than they paid. Others buy a 20-30k well bred, perfectly conformed youngster in the hopes that it will live up to its pedigree, and sell once its going in the pre-greens or ready to go as a 3'6" horse for a child or amateur for double+ what they paid. Obviously there are lots of reasons why your investment horse might not pan out, or might not even be sellable at all - so its pretty risky.

Heineken
Jun. 28, 2009, 10:07 PM
If you assume that board, vet, farrier and some training are "fixed costs" in your monthly budget, then buying a horse cheap and selling it for more than you paid makes you a "profit". This is considered an "investment horse". Example: I bought a horse as a youngster (2) for 3k, sold him at 5 for 13k. TECHNICALLY I "made" 10k. Realistically, if you count my "investment" in his OCD surgery...I'm sure I lost close to 10k overall, maybe closer to 20. Oy. That's a depressing reality!

Jleegriffith
Jun. 28, 2009, 10:08 PM
Horses are a gamble but what has worked for me in terms of actually creating a profit is to buy a cheap horse that fits my basic horse shopping criteria- 16+ h, gelding, sound, no vices, some bling if possible and a good personality. Put a lot of mileage on it as quickly as possible and resell. Don't try to make a killing and don't hold onto the horse for to long. The longer you keep it the more the bills add up.

indygirl2560
Jun. 28, 2009, 10:09 PM
Oh, ok. That's a pretty risky investment IMO!

grandprixjump
Jun. 28, 2009, 10:13 PM
Go to an area that isn't exactly horse heaven (midwest and a little farther west, but not to CA) buy a horse that's cleaning up locally, but the owners don't know much or don't have the finances to take the horse to bigger shows, major markets, etc. Show the horse a little, and sell for a decent profit, the horse was already trained, just not in a good market area.

LexInVA
Jun. 28, 2009, 10:28 PM
Well, an investment horse, in terms of what it means in the H/J world, is a horse that an outside party invests money in by purchasing and/or paying all expenses for a horse. Usually an investment horse is hand-picked by a rider that the investor deals with or in some cases, the investor simply brings the rider a horse they own/bred to evaluate for the purposes of mutual profit when the horse is later sold. The horse is established through competition and then sold off at some point to recoup expenses for the investor and costs for rider/trainer/whatever or in rare cases the horse is financed through investments to compete internationally and usually doesn't recoup anything for the investor other than whatever prize money is agreed upon in the contract and social points in whatever little social circles in the equestrian socialite community that they are a part of. It's quite like what goes on in the horse racing industry and what some people have described here isn't quite the same thing when you get down to the specifics of who is paying for what and how much money is usually involved when the term "investment horse" is thrown around. What they are talking about here is more along the lines of regular horse business for profit and not "investment horses" which are a key component of the businesses of high-level riders like McLain Ward and his contemporaries.

PONY751
Jun. 28, 2009, 10:35 PM
I think it is a myth. Like trying to flip a house nowadays...:D

FrenchFrytheEqHorse
Jun. 28, 2009, 10:48 PM
I guess I have a different perspective on an "investment horse". To me, I feel like board, vet, and farrier bills are pretty much fixed costs. Meaning I will be paying them on a horse anyway, in order to ride the way I would like to, so why not buy something green and NICE, put the miles on it, sell it, then buy something NICER. To me, the end goal in the "investment" is to have immediate funds available to buy something even nicer than you had in the first place- the goal would be to always have a nice horse, and hopefully, progress up the ladder in quality.

Of course, all of this plan would hinge on having a *lot* of professional guidance along the way. Additionally, I think this kind of arrangement needs to be stringently planned- ie, down to the exact show schedule for the entire duration of ownership. Too many people attempting this end up without a serious plan, and they're lucky to break even in the end.

woodhillsmanhattan
Jun. 28, 2009, 10:52 PM
Let us all cross our fingers and hope my new horse proves to be a worthy "investment" horse. Most likely won't make any more money then we spend in training, board, showing, etc. But the big tangible check with all the $$$ in one place at the end makes it seem like you get something in return

Linny
Jun. 28, 2009, 10:58 PM
PONY is right. The investment horse is an illusion, like the Yeti, Bigfoot or the Loch Ness monster. Everyone has heard of them but no one has actually seen one.

We've all heard of some super EQ horse selling for a fortune but what no one realizes (or thinks of) is that the seller spent more than the sales price in board and lessons at XXXXX (insert BNT barn name here) plus entries and show related expenses for 3+ years while child climbed the Big EQ ranks on said Giraf-a-WB-a-saurus. They may have paid $30k for the beast and sold him for $300k but trust me they probably LOST money.

snaffle635
Jun. 28, 2009, 11:04 PM
Oh, ok. That's a pretty risky investment IMO!

Yes, it is! But have you seen the performance of the stock market lately?

I bought an 'investment horse' in January. Basically, it's like taking your money and being able to pet it every day and feed it treats.

Heineken
Jun. 28, 2009, 11:06 PM
Basically, it's like taking your money and being able to pet it every day and feed it treats.[/QUOTE]

LOVE this Snaffle!

HyperCat
Jun. 28, 2009, 11:10 PM
We have a few investment horses. My trainer buys fancy horses from Europe an flips them when they are here in the US. Generally she is able to sell them quickly (we're talking months not years) but this is not always the case. We had one investment horse that didn't sell for a year. When you factor in board/training/vet/shoes you are not making a ton, though it happened once at my barn...

We had a gelding clear quarantine while we my stable was at a show. My trainer had the horse delivered to the show directly from quarantine. Once at the show, there were a bunch of people interested in him. The people who had bought him paid about $35K for him and the importing. They sold him for 80K two days later. All they ended up pay for was a horse show stall for a week. But remember, this is the exception, not the rule.

indygirl2560
Jun. 28, 2009, 11:11 PM
Yes, it is! But have you seen the performance of the stock market lately?

I bought an 'investment horse' in January. Basically, it's like taking your money and being able to pet it every day and feed it treats.
hahaha

juststartingout
Jun. 28, 2009, 11:19 PM
Investment horse sounds like an oxymoron to me... it reminds me of an old real estate joke.... at the beginning of a deal the investors sit down with an experienced real estate developer. The group agrees that the investors will provide the money and the real estate developer will provide the expertise. The deal is made. At the end of the deal, the real estate developer has the money and the investors have the experience.

any investment is a risk - look at the market these days - an investment horse is just a higher risk

French Twist
Jun. 29, 2009, 12:12 AM
i agree with the above:
investment horse = oxy moron... most of the time

most cases i think it's tough to turn a profit as a non-pro owner or investor. i think trainers are most able to reap the benefits, because they have the resources to buy cheap and put the training and mileage into them, and then resell them. obviously they also have to recoup basic care costs, but they are doing the training themselves, and the sale will essentially "pay" them for their efforts. for an amateur purchaser/investor, they also have to pay board/training, which cuts into the final resale price, and those expenses add up fast.

that said, people wouldn't do it, unless it worked sometimes. i think the best investments are ponies for lease, as they tend to last forever, have long careers. if you get a good one that will reliably pack a kid and is fancy, it's worth its weight in gold, and then some, since it will bring in a nice lease every year for maybe 10 years.

French Twist
Jun. 29, 2009, 12:29 AM
We have a few investment horses. My trainer buys fancy horses from Europe an flips them when they are here in the US. Generally she is able to sell them quickly (we're talking months not years) but this is not always the case. We had one investment horse that didn't sell for a year. When you factor in board/training/vet/shoes you are not making a ton, though it happened once at my barn...

We had a gelding clear quarantine while we my stable was at a show. My trainer had the horse delivered to the show directly from quarantine. Once at the show, there were a bunch of people interested in him. The people who had bought him paid about $35K for him and the importing. They sold him for 80K two days later. All they ended up pay for was a horse show stall for a week. But remember, this is the exception, not the rule.

I've also seen this. Some "fresh off the plane" European horses who were flops at jumpers (i.e. worth little in the European market) were imported. Within a matter of weeks/months they were retrained/tuned up (usually just smoothing out lead changes) for hunters/equitation, and immediately marked much higher and rapidly sold. This, however, was a few years ago when the Euro to the dollar exchange rate was very good and the American buying market was extremely hot. I also have heard that European breeders and dealers are becoming savvy to what makes a good hunter/eq horse and are beginning to price those prospects higher. If I were getting into horse investments, it would likely be this route- flipping low end European jumpers which already have show experience in Europe into mid-to-high range hunter/eq horses for the US market, but I don't know how conducive the current conditions are for doing this.

equest
Jun. 29, 2009, 07:54 AM
The problem is the cost of overhead (training rides, boarding, showing and vet care) is prohibitive. Unless you're a trainer or have your own property, a low-priced "flip" (i.e. buying a OTTB for $2,000 and then selling for $15,000) just does not really make economic sense as an investment. With luck, you would break even and at least be subsidizing your hobby.

Mileage may vary depending on local factors such as cost of board, showing costs, the local market. By way of an example, where I live in S. Florida, everyone says the market for low to mid-priced horses is weak, so mid priced TBs intended for the local show circuit are not big sellers. Buying an OTTB and trying to make it into a local hunter would make a lot more sense in GA, for example, where costs of board and "overhead" are less and there are more mid-range buyers who compete locally and would want to purchase such a horse.

Come Shine
Jun. 29, 2009, 12:13 PM
An investment horse is one where you are guaranteed to make a small fortune.


...


Out of a large one. Ba-dum-dum. :)

Czar
Jun. 29, 2009, 12:30 PM
With luck, you would break even and at least be subsidizing your hobby.



This is the way I look at it.

I've done quite a few horses this way but I absolutely refuse to do it for anyone else. A few people have asked and I always tell them that I do it b/c I love the riding & the showing...something happening to my "investment" horse or not getting enough money is a risk I am willing to take b/c I enjoy the process.

mortebella
Jun. 29, 2009, 12:58 PM
...and you didn't hear it from me ;)

Livestock are assets you are allowed to keep in a bankruptcy. If you know you're going down the drain, go buy something you can pet and feed treats to before you file the papers. I'd say that'll take some of the sting out of it.

Punkie
Jun. 29, 2009, 01:01 PM
We've had a fair number of them and made some pretty darn good money each time out. We go in with a set monthly expenditure plan (board/training/showing/vet bills/ancillaries/INSURANCE/etc.) and a second account with the "just in case" money. Then, based upon the purchase price of the horse, the market, and the amount of training the horse came to us with, we set a projected sale period (i.e. if we think the horse will be "finished" or ready to sell in March and it's September, that's what we work towards). We don't bank on that date, nor does that date signify the point where the horse is no longer an investment, but it's a goal to work towards. I think the biggest part of it for us is that either way, we're going to have show horses and we're going to have show horses that are going to do exactly what the investment horse is doing. If we walk away from a horse having broke exactly even, then we've enjoyed a wonderful horse, had a show partner for a season or two, and it didn't cost us a thing. If we make some money, then we make some money. What we've learned is you can't go into it expecting anything. We never spend a cent more than we have to comfortably lose, and we never buy anything that we can't personally enjoy (with two major exceptions, but they were VERY quick flips). Look at it this way, if you were considering a purchase anyways, but would like to give making a few bucks a go, then why not. If your entire life savings are at risk, run!

equest
Jun. 29, 2009, 01:12 PM
...and you didn't hear it from me ;)

Livestock are assets you are allowed to keep in a bankruptcy. If you know you're going down the drain, go buy something you can pet and feed treats to before you file the papers. I'd say that'll take some of the sting out of it.

Let me get this straight - would a horse that is boarded out and kept as a so-called "investment" by an amateur rider who intends to sell said horse at a profit at some point in the future, who does not buy and sell horses under a business but rather as a personal hobby, be considered as such? The BK judge would not require that the horse be sold to satisfy creditors, and would allow the debtor to continue outlaying board and upkeep $ for horse?

meupatdoes
Jun. 29, 2009, 01:25 PM
It is possible to make money even when board and expenses are taken into consideration.

It is helpful, of course, to ride well enough that you do not need to pay somebody else to do it for you or help you through it while you do it, and to have your own place so that you do not have to pay someone else to house the horse.

I bought one ottb out of a backyard for $3,700 and flipped her for $30k five months later.

Of course that used up all my karma and I haven't been able to flip a pancake since.

Alterrain
Jun. 29, 2009, 03:26 PM
I have had two "investment" horses that worked out well, financially, for me. Ironically, neither was supposed to be an investment.

I bought an OTTB for myself (BAD idea- green horse, VERY green rider) years ago for the cost of shipping. Had the horse for one month (so one month board, four shoes, some lessons, USEF papers, etc) Just when I decided she was wacko and needed to go, a BNR in my area saw her jump, thought she was going to go GP, and offered me $35,000!!! BNR thought she was getting a steal, I laughed all the way to the bank.

Said horse is not GP, but fairly succesful in state Level 6-7. still wacko.

My trainer convinced to buy a young (4) hunter from Europe last year, to be my AA hunter in a couple years. He was cheap ($15,000), but a stallion, so quarantine cost $11,000. He got out of quarantine on tues and met my barn at a show (A). on wed my trainer was hacking him in the schooling area and someone asked if he was for sale. (He was GORGEOUS- liver chestnut, 4 stockings and a blaze, liver chestnut mane, flaxen tail) After discussion, we said sure, $100,000. I owned him for 42 days, 40 of those in quarantine. He has won like every single hack class this year (baby greens) and every time I watch him go I wish he was mine. But then I remember how we are not homeless even though my DH lost his job nine months ago, and I can afford to have TWO horses on full board, mainly because of that $75,000 profit.

I'll admit, it is risky. But it can be done. :)

mortebella
Jun. 29, 2009, 03:47 PM
Let me get this straight - would a horse that is boarded out and kept as a so-called "investment" by an amateur rider who intends to sell said horse at a profit at some point in the future, who does not buy and sell horses under a business but rather as a personal hobby, be considered as such? The BK judge would not require that the horse be sold to satisfy creditors, and would allow the debtor to continue outlaying board and upkeep $ for horse?


As far as I know, they don't ask you any particulars about any livestock you own - where you keep it, what you pay for it, what you intend to do with it. Livestock is exempt, period. However, I will say, these are the OLD rules - pre-Bush's virtual shut-down in, whatever it was, 2005? But no, livestock was not required to be sold to satisfy creditors. Like things like household items that could be really valuable like crystal and such.

Liver Yang Rising
Jun. 29, 2009, 04:05 PM
I do it the easy way, the "green grass" way, as I call it.

Got a knack for eyeballing youngsters who will grow into stupendously awesome adults. Pick up a weanling or yearling every year, usually from someone who bred the thing and had no idea what to do with it.

Sadly, they all get sold out from underneath me by the time I start them undersaddle, sometimes at the age of 2. Usually for 10X the amount I bought them for. No kidding.

Amazing what a year of green grass and growing will do.

Course, it helps I have my own farm, bale my own hay, and have great turn-out with hills for them the run and develop on.

I usually sell to both coasts, guess they think they are getting a 'deal' coming to the Midwest to buy a cheap hunter prospect. . . at least the profits have fueled my horse "hobby" and built me a great stable last year. Awesome to have a hobby that pays for itself.

I have no idea how y'all do it when you have to pay board . . . :)

tidy rabbit
Jun. 29, 2009, 04:12 PM
Unless you are the trainer and have your own farm I don't see how you can make money on a horse.

If you've got your own set up then it becomes a real opportunity; but if you're paying board and training and shipping and horse shows and everything else that goes along with it, you'll be lucky to break even.

Buying a young horse and putting it in training at a barn that costs 1200 a month in board (or more), plus training, plus shoeing & vet, horse shows & transportation and the ever lovin' sales commission.... forget it. Go put your dollars in a CD account.

Sunny's Mom
Jun. 29, 2009, 05:13 PM
As far as I know, they don't ask you any particulars about any livestock you own - where you keep it, what you pay for it, what you intend to do with it. Livestock is exempt, period. However, I will say, these are the OLD rules - pre-Bush's virtual shut-down in, whatever it was, 2005? But no, livestock was not required to be sold to satisfy creditors. Like things like household items that could be really valuable like crystal and such.

Be very careful here. The "exemptions" from the bankruptcy estate are based on state laws - so they can vary from state to state. I'd check with a lawyer in the bk practice area if this was something you were seriously considering.

If you were doing a reorg (where you pay your creditors back over 3-5 years) and not a liquidation, the bankruptcy trustee might not give you enough monthly income to allow you to keep the horse (i.e. board/training money) so you would have a problem. Congress changed the bankruptcy laws in 2005 to benefit the credit card companies, so if you make too much money you can't do a liquidation anymore - you have to try a reorg. The trustee will put you on a monthly budget, the rest of your money goes to pay back your bills.

I'm guessing that there aren't too many bankruptcy trustees that would want the responsibility of having to care for and arrange for the sale of a horse - but you never know.

mortebella
Jun. 29, 2009, 09:58 PM
Oh, yeah, man. If anybody's thinking BK, they need to have a lawyer. Not a move to make without one, especially now. :eek:

phoenix mom
Jun. 29, 2009, 10:19 PM
Investment horse= you invest a lot of money and own a horse. It is about the love you invest in the animal and the relationship you develop, not the money you make.

snaffle635
Jun. 29, 2009, 10:56 PM
I have had two "investment" horses that worked out well, financially, for me. Ironically, neither was supposed to be an investment.

I'll admit, it is risky. But it can be done. :)

Congrats, Alterrain! You must have a good eye, whether you know it or not.

fourmares
Jun. 30, 2009, 02:41 AM
Investment horse... trainer convinces owner to buy nice young horse. Owner pays trainer commission... owner then pays trainer to train, ride and show horse until it's worth more money.... horse is then sold for hopefully more than horse was bought for... owner pays trainer commission. Trainer, who has made a bunch of money in the deal, pats owner on back and tells owner what a good investment said horse was. Owner only really sees the difference between buying price and selling price and is happy... trainer finds nice new horse for owner to buy. Owner pays trainer commission. Owner pays trainer, etc.

Rue Belle
Jun. 30, 2009, 07:20 AM
to be honest... this is how our "flip" works:

i am a trainer... and i lease the farm i work at.

i buy a horse that is cheaper than what i expect him to become: if it's a childrens eq (2'6) potential, no more than 10K... if it's a possible big eq horse, no more than 25K. (in our area, 2'6 horses sell for 30K and under... depending if they are good in their division. big eq horses can go for 100K and under... but i've never sold one that high yet. so that is why i have different levels for different types.) it has to be a decent mover, sweet tempered, show a lead change in turnout or undersaddle, and show a willingness to jump. the horse also has to fit into my program with my current students.

a lot of my students can't buy a horse. so i use the said horse in the advance-rider lessons for a time. in the mean time, i'm heavily schooling it myself. when i found a match, i lease it to one of my students. they pay either half or full board plus shoes. if the horse gets half leased to someone else at the same time, then shoes are split. i pay for all vet expenses. the kids who get matched up, usually want to show, and they pay the show fees. i have had a lot of flips win local medals, which causes their value to jump. its usually after the show season, i sell them.

then i don't up-grade my next flip horse. i use the profit towards improvements on the farm for my customers. i think it works out for everyone. my customers get to ride horses nicer than they can afford. many of them have won state finals that they would never of had mounts to show on. and i think it makes them better riders.

besides this way, i can't see how it works for ammies, unless you absolutely love the horse.

Janet
Jun. 30, 2009, 11:11 AM
I think thre is a difference between a "sales prospect" or "sales project", whihc is what most people have been describing, and an "investment horse".

"Sales projects" usually involve buying a horse for 4 figures and selling it for 5 figures, or buying for low 5 figures and selling for high 5 figures. You might or might not make an actual "profit" once you factor in all the expenses, but you at least partially subsidizd your ridning habit.

An "investment horse" is usually MUCH more expensive to start with, the owner is NOT generally the one doing the riding/training, and the expectation is that BIG wins (major Grand Prix, Olympics, etc) will both produce significant prize money and provide a major increase in sales price.

JMHO

Dixon
Jun. 30, 2009, 12:02 PM
Livestock are assets you are allowed to keep in a bankruptcy. If you know you're going down the drain, go buy something you can pet and feed treats to before you file the papers. I'd say that'll take some of the sting out of it.

Lovely. This is how animals wind up neglected and malnourished, if not dead. How the hell can a bankrupt person afford to properly feed and care for animals? To suggest that someone should buy a pet when bankruptcy is imminent, "to take the sting out of it," promotes animal cruelty.

ESG
Jun. 30, 2009, 12:58 PM
What exactly is an investment horse? I know a few people who have them but I don't really understand how or why. Anyone care to elaborate?! :yes:

It's very simple. An investment horse is one that you invest all your extra capital into, in hopes of recouping it, plus some. About the same chance of making money on it as buying an investment boat - none! :p

Seriously, if someone starts trying to talk you into buying an investment horse, run the other way. They're trying to sucker you. Don't fall for it.

If they're particularly persistent, just ask, "If it's such a good investment, why aren't you buying in?" The usual answer is that the person can't afford it. And that's your reply; "Neither can I. Thanks for asking, though."

snaffle635
Jun. 30, 2009, 04:16 PM
Lovely. This is how animals wind up neglected and malnourished, if not dead. How the hell can a bankrupt person afford to properly feed and care for animals? To suggest that someone should buy a pet when bankruptcy is imminent, "to take the sting out of it," promotes animal cruelty.

Oh, for Pete's sake, mortebella was kidding.

meupatdoes
Jun. 30, 2009, 04:38 PM
I really don't understand why so many people on this thread are saying that an amateur could never make money on a horse.

Yes, any ammy who buys a prospect should only buy a horse that they would have enjoyed riding even if they lost all the money, and should only invest money they can afford to lose, but it is actually possible to make money even after board, training and commissions have been paid.

Now, there are some trainers with whom this becomes very difficult because they insist on jacking up their commission and will only offer the horse to trainers they are in cahoots with and charge out the wazoo for board and training etc etc etc, BUT if all parties are honest it can work out well for all parties.

There are definitely some amateurs out there who have made money even on horses they paid board, training and commission on, and they probably had honest and skillful trainers to help them along the way.

Ravencrest_Camp
Jun. 30, 2009, 06:38 PM
An "investment horse" is usually MUCH more expensive to start with, the owner is NOT generally the one doing the riding/training, and the expectation is that BIG wins (major Grand Prix, Olympics, etc) will both produce significant prize money and provide a major increase in sales price.

JMHO

I thought that was called a tax write off.