Given today's real estate market

[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.

[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%.

[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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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!

[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