PWCC expands its lending activities
 

at what point do they run afoul of banking regulations. Pawn shops are regulated. Cash advances are one thing loans with interest are another entirely, no?

PWCC and PSA continue to thrive despite the relentless withering condemnation of the Net 54 board. I guess there's a moral in there somewhere.

Maybe they comply.

Or a lack of them.

Just another example of how some cards are becoming even more like investments, and not so much just a hobby anymore. Maybe it will go far enough so that one day TPGs are finally forced to comply with some standardized rules and become subject to independent oversight. Aaaahhhhh, one can dream, right?

Obviously everyone who’s anyone is getting into the vault game these days.

And I suppose there’s some subset of the population that will find it useful…

But I just don’t trust anyone to hold onto my cards for me!

If I hold them in the vault for the next 30 years, what’s to keep them from wandering off, getting filched, or mysteriously disappearing? Can I swing by the vault every few weeks to check in on them? If others are swinging by the vault, are they fingering my items as they pass by?

And for that matter, what happens if these vault companies go under? Based on all of the crypto “banks” that have gone under and taken people’s crypto with them, it seems like the same problem could easily exist here.

Even if there are published policies and safeguards and insurance and whatnot, why risk it if it’s never really been tested to really know for sure?

And that’s overlooking the most obvious drawback - staring at pictures on a screen and knowing that my collection is (hopefully) sitting in a vault somewhere is not the same thing as actually enjoying them!!!

It won't happen unless someone makes it happen. Who is that someone?

I joked a few years ago about auction houses having their own credit line you can use for purchases.

That is no longer a joke.

I do not use a vault. But I do think the vault concept is a great idea. Not only does it legally avoid state tax (if the vault is in a tax exempt state and the card is held there long enough), but it’s an apparently very safe place to store valuable assets. Would people question someone who had their cards sent to a Bank of America safety deposit box located in Delaware (or Oregon)? This is very similar to that, except it’s PWCC/Goldin/EBay, etc instead of Bank of America.

If you trust the vault owner (and that’s a legit “if”), and you don’t care about seeing and touching your cards on a regular basis… than why not? This especially true if you are buying expensive cards and savings tens of thousands on taxes. And you don’t have to worry about theft, fire, flood, etc., can use these cards as collateral for loans, have a third party inventory and track your cards, and you can resell them right there without having to deal with mail.

Meanwhile, you are going to see generic vaults pop up all over. Banks are closing brick and mortar locations, and with them, the safety deposits contained therein. There will be a shift to private vaults (or safety deposit spaces). It’s no different than self storage for expensive/important stuff. The vault is for cards specifically, but it’s coming on a more general, mainstream level

Regarding state taxes- it is not avoidance if the card is sent and remains in the tax exempt state for a meaningful duration. I am not sure what that is, but 2 years is most definitely sufficient. It’s also sufficient if it’s sent there and leaves within months bc it’s sold to another. There are real and substantial business reasons for sending your cards to a vault, especially if they are assets, that have nothing to do with tax avoidance - safe protection, storage, serve as collateral for a loan, third party inventory/tracking/reporting (they make your collection “spreadsheets”), ease of resale, etc.

This is Desperate. I''LL CONTINUE TO AVOID PWCC AT ALL COST.

I do think many people use the vault option to avoid taxes and take their cards out of the vault very quickly, and then fail to pay their state the taxes that automatically would have been collected by ebay.

Why is it desperate? Brent is smart and sees ways to generate revenue.

I guess living in Oregon, I forget that everyone else gets to pay sales taxes, sometimes up to 10%.

And there goes my competitive advantage when competing against other bidders for high priced items!

That is tax avoidance, and those people could get in trouble. Also, it would make sense if the vault was required to collect and pay over state taxes for items removed from a vault and sent to a tax state within X months of receipt. I don’t know if such a law/requirement exists.

I believe it is up to the individual to pay state use tax, I can't see how that is the vault owner's burden.

I’m guessing it’s just a matter of time until CA and other states get wise to the vaults and start requiring reporting to get their use tax from the collector. I just don’t see the states being willing to forego that much revenue without a fight.

I am sure there is something agency or bailment law that states could use to impose some burden on the vault. I know it’s somewhat different, but if eBay has to issue 1099s to anyone who sells more than $600 (or something like that), than I am sure “they” can find a way to make a vault collect sales taxes on item received and released within a certain period.

It’s a brave new world. It will be interesting to see how this shakes out. The states love all of this new revenue. They will fight hard to ensure it if they start losing enough to vaults.

Personally, I don’t think state sales taxes should be due on items bought for investment. We don’t pay sales tax on stock, bonds, and precious metals in many states. Why cards held for investment? We don’t “use” or consume cards.

I meant that under current law there is no such burden. Absent some constitutional impediment there can always be new laws and regulations.

I think this is great news! PWCC saw a need and filled it for their customers. I have never had a problem with PWCC and still use their platform to purchase cards most recently this week. I even have a handful of cards in the Vault. I know not all on this board agree with or deal with PWCC but I like the loan concept and cards as collateral.

FWIW PWCC collects state taxes when you pay for the items and have them shipped to you.

As seller, but not when you buy a card off ebay and have it shipped to the vault, as I understand it.

I know the Alt platform announced they would be offering a similar program several months ago. If I remember correctly the rate was nearly 10% and the loan to value was something like 60% of perceived value.

So now people can leverage off their house value or stock portfolio or sports collectibles or some type of unsecured loan. You can buy a fraction of a stock, baseball card or a house too. Very interesting times we live in.

Two words: Leverage and betting on the come.

It's a nice lending model and very profitable, the risk is all on you and the asset. When the chips are down they don't even have to come after you, they just lock down your asset which they already have in their possession. I'm in lending and I would love to read the fine print on this program and would probably participate in it as a lender.

You have a collection of cards that are valued at today's value but if your precious 48 Jackie drops in value I'm keeping your card and you owe me money and I'll come get it.

Same model as mortgage backed securities in 2008, or putting 20k in card purchases on you credit card and not doing the math. My vote is no if you want to sleep at night.

Makes me wonder how much in these loans is outstanding.

Certainly if there’s a lot out there, then that just further raises the odds that a significant downturn leads to forced liquidations and a downward spiral.

It's a fools errand.

“Leverage upon leverage upon leverage. What could possibly go wrong?”

- every banker in the country in 2007

LOL

If I knew of some way to do it, I would. But I would need to get the entire hobby/investing community to buy in and all agree. That will never happen though.

We've discussed this before. To my knowledge no state has a period of time in their sales and use tax laws for this specific situation. However, I had mentioned once before how California has a specific 1 year threshold for vehicles brought into California. Bought it less than a year before bringing it into CA and you owe CA the difference between the sales tax you would have paid them had you originally bought the vehicle in CA, less whatever sales tax you did pay to another state when you bought it. Own the vehicle a year or more before bringing it into CA, and CA gets no sales/use tax.

So the concept of moving assets you own from one state to another doesn't necessarily and/or automatically trigger sales/use tax being owed to the state you're moving them into. If you leave cards in a vault for a reasonable period of time before taking them out and to your home, your resident state will likely not come looking for sales/use tax on those cards. We just haven't had this issue come up in any courts yet, to my knowledge, nor had any state spell out in their statutes how long you'd have to leave the cards in a vault for before you could then safely bring them home without any sales/use tax being due your resident state. At least not yet.

Thinking back to my tax class that is tax evasion. Tax avoidance is good, tax evasion is breaking the law.

tax avoidance—An action taken to lessen tax liability and maximize after-tax income. tax evasion—The failure to pay or a deliberate underpayment of taxes.

It seems like it would be very easy for states with sales tax on collectibles to close this loophole.

This is what I am concerned about with PWCC's lending activities and using the Vault as leverage. Has anyone who uses Vaults checked on what happens if PWCC goes bankrupt? Can they take your cards and use it to pay off their creditors? This is what happened to some of the crypto firms like Celsius that went bankrupt. Folks who kept their crypto in those firms were not able to access their holdings anymore. If leverage like this is propping up card values, this may be what may ultimately cause the market to pop later.

If the Feds or states wanted to collect more taxes, it'd probably be easier for them to extend to PWCC and auction houses to send 1099s to consignors who sell over $600 like they already do for ebay.

Phil, I agree with you 100% that this is likely not a good deal for the borrowers. And I also agree that it’s real good to be the lender on this one. Nevertheless, the arrangement provides liquidity for a relatively illiquid asset and I feel consenting adults should be able to transact however they choose, even if it’s more dangerous for one party. And, I believe that people should be responsible for their actions- if you are a big enough boy to buy a card and borrow against it, then don’t bitch when you lose your card to pay back the lender.

Regarding a propped up industry, this does smack of the Big Short in many ways (in a mini sense). Similarly, a super-high stock market propped up by buyers on margin loans. It most definitely appears that this will have an unhappy ending for some; I suspect most own the shiny stuff. But that’s how we learn and grow. Maybe it takes some pain to get regulation and oversight. Ultimately, these loans have utility.

Who is John Galt?

This will have the same effect as "negative AM" loans and 100% financing did on the housing market, which led to great financial crisis. I just don't think it will wreak havoc any further than the hobby itself. Although a little different to the hype when I was collecting in the 80s, it certainly does rhyme.

Agreed. Institutional lending on collectibles has been around for a long time but the asset class is more mature. It's one thing to have a Monet sitting in a Bank vault as collateral, another having a Luka Doncic sitting in an AH vault.

Sports cards as an asset class is very, very young, with that comes a lot of volatility and risk, and as an asset class leans more towards the stock market model than the Art market. How are those NFT's working out for ya'? Meme stocks? Crypto? Sometimes we're not as smart as we think we are and it's never a good idea to over leverage an asset class to buy more of the same asset class. There will be some investors that may use this tool wisely but there will be plenty who don't.

Live and learn though.

[QUOTE=Schlesinj;2261823If I remember correctly the rate was nearly 10% and the loan to value was something like 60% of perceived value.[/QUOTE]

That would be my model, although 60% might be a little high. You can also do a deep dive and offer 8% on Ruth, Gehrig, Cobb, etc. and 12% on the shiny stuff, adjusting the ltv accordingly.

It could make the collecting market interesting and it could lure alot of people to their vault that might not normally go to them.

For example. Collectors like me tend to miss out on some great items that we need to have (really I want but we are addicted). Sadly not liquid enough and miss out alot and I know i can pay things back most times fast but I cannot buy the item do to lack of funds. IF I put it in their vault. WHICH I AM NOT CURRENTLY CONSIDERING. I would have the funds available so if a "must have" came available I could get it and not miss out.

That could be a strong incentive.

Unless I’m misunderstanding the offer, you would still need to put 40% down up front. Obviously 40% is less than 100%, but for nice pieces that don’t come cheap, it might be similarly challenging to come up with 40% as to come up with 100%.

If you’re not buying from PWCC directly, it’s also unclear to me whether PWCC would front you the cash to buy it from someone else. If you’re buying an item from another auction house, then I suspect you would need to pay 100%, have it shipped to the vault, and then you could borrow the 60% against it.

Bottom line is that I’m not sure that it solves the problem of coming up with the cash to pay for the item in the first place.

Now, if you had a bunch of items in the vault, and you wanted to go out and buy some more, then borrowing against the items in the vault definitely could solve the problem of coming up with cash to make the original purchase for your new item(s).

Net54baseball Vault available soon.
.

I'm sure you'll get lots of takers here!

At a minimum, we will all trust you more than we trust Jeter.

Hi

I am sure you do not have to put money down to borrow money. Basically they will loan you up to 60% of the value of your cards that you have in their fault. This way if you default on the loan they have your cards already but can take possession of it and then sell it. And the 40% covers them and their expenses and the loan plus interest you have paid if you did not default

Heavily armed facility over the border into Mexico could possibly offer additional tax benefits.

I’m not sure having my cards stored in a flip top on a shelf in your garage qualifies as a vault.

Whatever. It's way better than that.

But if you're buying new cards, then you don't have them in the vault yet. So it's unclear to me how PWCC would lend you cash to buy new cards that you haven't yet put into their vault. I suppose if the seller already had them in the vault, and PWCC was just moving them over to your account, then maybe PWCC would lend you the money to buy that card, and you could just put 40% down and borrow the rest.

The comp with BAM is a bit ridiculous. Banks are VERY highly regulated, and failure rates are absurdly low.

PWCC may own a vault that has similar features to a bank vault but that's where the similarity ends. The risk in keeping cards in one of these vaults isn't that someone will break in, or there will be a fire. That is marketing and appears it is working. Loss due to theft or fire is covered by insurance.

The real risk is that the business fails, a bankruptcy follows, and your cards are being held / secured by another party. Which has happened in other vault type business, wine for instance. Add in that folks are borrowing against those cards and in the case of a business failure, someone else will have dibs on your stuff.

I know business failure is hard to fathom after the crazy 10 year bull run but large companies fail on the regular, none of us have any idea what PWCC's financials look like.

PWCC wants to keep everything IN HOUSE. The cards have to be in the Vault in order to get a loan/cash advance on the cards. If you buy $10,000 worth of cards from REA, PWCC wants you to ship the cards to the Vault and then you can get the loan/cash advance on the $10,000 once the cards are there. PWCC wants you to use the funds to spend in their weekly/monthly auctions. They want to sell the same card/s over and over again to generate revenue. They get the 20% every time a card sells on their platform and they don't have to ship it since its kept in the Vault. Win-win for PWCC.